Last checked at 6 Aug 2008 07:00
| Date: | Embargoed until 07.00am, Wednesday 6 August 2008 | |
| Contacts: | John Nichols, Non-Executive Chairman | |
| Brendan Hynes, Group Chief Executive | ||
| Nichols plc | ||
| Telephone: 01925 222222 | ||
| Website:www.nicholsplc.co.uk | ||
| Alistair Mackinnon-Musson | Richard Evans | |
| Nicola Savage | Brewin Dolphin Ltd | |
| Hudson Sandler | (Nominated Adviser) | |
| Telephone:020 7796 4133 | Telephone: 0845 213 4853 | |
| Email: nichols@hspr.com | Website: www.corporatefinance.brewin.co.uk | |
Nichols plc
INTERIM RESULTS
"2008 is Vimto's Centenary Year"
Nichols plc, the soft drinks group, announces its Interim results for the six months to 30 June 2008.
The group is a highly focused soft drinks and dispensed cold drinks business, comprising two operations:
1. Soft Drinks (sales and marketing of the Vimto brand throughout the world, where it is now available in over 65 countries and of the Panda & Sunkist brands in the UK).
2. Dispense Systems (namely the Cabana, Beacon & Cariel cold soft drinks on draught 'dispense' businesses)
Highlights:
Group profit before tax up 15.5%
Group sales up 5.0%
EPS (basic) up 16.4%
Interim dividend up 7.1% to 3.75 pence per share (2007: 3.50 pence)
Core brand - Vimto - grew its market share again, particularly in carbonates and ready to drink
International sales of Vimto continued to grow strongly
Dispense Operation: revenues up 4% and profitability approaching acceptable levels
New Group Finance Director - Taylor Purkis - joined in July 2008
Further solid progress expected for the full year
Commenting John Nichols, Non-Executive Chairman, said:
"The economic uncertainty is obviously set to continue and at this stage we can see no real signs of improvement, however, we remain optimistic but cautious that we are doing the right things in a very tough market. We believe our core brand of Vimto will continue to perform well and grow, both organically and in new international markets. In addition, we expect our Dispense Systems Operation to continue to strengthen and improve its market share and profitability. In overall terms we therefore expect to show further, solid progress in the full year".
Chairman's Statement
I am extremely pleased to report, once again, we have made further progress in the first half of 2008. This progress is despite the ongoing highly competitive nature of the UK soft drinks market and the general consumer and economic uncertainty experienced so far this year.
Results
Sales at £29.2 million are 5.0% up on last year (2007: £27.8 million), with profit before tax up 15.5% at £3.20 million (2007: £2.77 million).
The group also increased its cash position to £6.24 million at the end of June 2008 (2007: £5.82 million).
Earnings per share (basic) increased by 16.4% to 6.32 pence (2007: 5.43 pence).
Soft Drinks Operation
The weather over recent months has been changeable and general market conditions remained very challenging, with heavy promotional activity again being a key feature of the first half. Despite this, I am pleased to report that our core Vimto brand has continued to grow its market share, particularly in the carbonate and ready to drink sectors.
The Panda brand has not performed well in the first half of 2008, primarily driven by the decline in the 'Kids Carbonate' market and a number of multiple retailers moving away from single bottles into multi-packs. This move has resulted in less space being allocated to the Panda brand. We are reviewing our multi-pack options for the second half, but this is unlikely to mitigate the volume decline in the current year.
Along with the rest of the soft drinks industry, we have also experienced input cost inflation on a number of raw materials and packaging items, however, our focus on value along with tight control of marketing expenditure, has enabled us to maintain our overall margin.
Internationally, the Vimto brand has once again performed well, particularly in the Middle East, where sales of concentrate were ahead in the first half due to the earlier timing of Ramadan.
In overall terms, we are currently on track to deliver further growth in the full year from our Soft Drinks Operation.
Dispense Systems Operation
Our Dispense Systems business is now firmly positioned as the third largest player in this sector and with its turnaround complete, we have seen some of the planned financial benefits in the first half.
In revenue terms we are 4% ahead year on year, despite the higher proportion of distributor sales made under the new 'external distributor model'. Overheads are also lower and profitability is now approaching acceptable levels.
Dividend
This is our sixth consecutive year of improved Interim profits which, combined with our strong cash position and our confidence in the future, means the Board has approved a 7.1% increase in the Interim dividend to 3.75 pence per share (2007: 3.50 pence).
The Interim dividend will be paid on the 3 September 2008 to shareholders registered on the 15 August 2008.
Board Change
In our AGM Statement made on 14 May 2008 we announced the appointment of Taylor Purkis as Group Finance Director. Taylor (40), who joined us in July, is a Fellow of the Chartered Association of Certified Accountants and was previously the Finance Director of the European operations of Energizer Inc., a global branded consumer goods company, listed on the New York Stock Exchange. On behalf of the Board, I would like to extend a warm welcome to Taylor and wish him well in his new position.
Outlook
The uncertainty around the general economic and consumer environment has obviously continued into the second half of 2008. At this stage we can see no real signs of improvement and therefore we remain optimistic but cautious that we are fundamentally doing the right things in a challenging market.
We believe our core brand of Vimto will continue to perform well despite difficult market conditions and we anticipate both organic and new market growth internationally. Meanwhile, our Dispense Systems Operation continues to strengthen and improve its market share and profitability.
In overall terms we therefore expect the group to show further, solid progress in the full year.
John Nichols
Non-Executive Chairman
6 August 2008
CONSOLIDATED INCOME STATEMENT
| Unaudited | Unaudited | Audited | Audited | |
| before exceptional items | after exceptional items | |||
| Half year ended 30 Jun 2008 | Half year ended 30 Jun 2007 | Full year ended 31 Dec 2007 | Full year ended 31 Dec 2007 | |
| £'000 | £'000 | £'000 | £'000 | |
| Revenue | 29,152 | 27,802 | 55,276 | 55,276 |
| Operating profit | 3,145 | 2,702 | 8,742 | 7,764 |
| Finance income | 118 | 127 | 291 | 291 |
| Finance expense | (61) | (62) | (7) | (7) |
| Profit before taxation | 3,202 | 2,767 | 9,026 | 8,048 |
| Taxation | (876) | (767) | (2,672) | (2,379) |
| Profit for the financial period | 2,326 | 2,000 | 6,354 | 5,669 |
| Earnings per share (basic) - all activities | 6.32p | 5.43p | 15.49p | |
| Earnings per share (diluted) - all activities | 6.31p | 5.42p | 15.47p | |
| Dividends paid per share | 6.90p | 6.50p | 10.00p |
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED BALANCE SHEET
| Unaudited | Unaudited | Audited | |||
| 30 Jun 2008 | 30 Jun 2007 | 31 Dec 2007 | |||
| £'000 | £'000 | £'000 | |||
| ASSETS | |||||
| Non-current assets | |||||
| Property, plant and equipment | 2,092 | 2,891 | 2,448 | ||
| Goodwill | 11,150 | 10,771 | 10,910 | ||
| Deferred tax assets | 1,197 | 1,972 | 1,197 | ||
| Total non-current assets | 14,439 | 15,634 | 14,555 | ||
| Current assets | |||||
| Inventories | 2,880 | 2,689 | 2,509 | ||
| Trade and other receivables | 16,059 | 15,615 | 13,177 | ||
| Cash and cash equivalents | 6,241 | 5,826 | 7,814 | ||
| Total current assets | 25,180 | 24,130 | 23,500 | ||
| Total assets | 39,619 | 39,764 | 38,055 | ||
| LIABILITIES | |||||
| Current liabilities | |||||
| Trade and other payables | 11,218 | 12,131 | 8,828 | ||
| Current tax liabilities | 633 | 750 | 1,058 | ||
| Provisions | 446 | 746 | 681 | ||
| Total current liabilities | 12,297 | 13,627 | 10,567 | ||
| Non-current liabilities | |||||
| Pension obligations | 3,635 | 6,504 | 3,635 | ||
| Deferred tax liabilities | 404 | 27 | 356 | ||
| Total non-current liabilities | 4,039 | 6,531 | 3,991 | ||
| Total liabilities | 16,336 | 20,158 | 14,558 | ||
| Net assets | 23,283 | 19,606 | 23,497 | ||
| EQUITY | |||||
| Share capital | 3,697 | 3,697 | 3,697 | ||
| Additional paid in capital | 3,255 | 3,255 | 3,255 | ||
| Capital redemption reserve | 1,209 | 1,209 | 1,209 | ||
| Other reserves | (492) | (487) | (492) | ||
| Retained earnings | 15,614 | 11,932 | 15,828 | ||
| Total equity | 23,283 | 19,606 | 23,497 | ||
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
| Unaudited Half year ended 30 Jun 2008 | Unaudited Half year ended 30 Jun 2007 | Audited Full year ended 31 Dec 2007 | ||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Profit for the financial period | 2,326 | 2,000 | 5,669 | |||
| Cash flows from operating activities | ||||||
| Adjustments for: | ||||||
| Depreciation | 346 | 388 | 782 | |||
| Loss on sale of property, plant and equipment | 9 | 24 | 27 | |||
| Equity-settled share-based payment transactions | 50 | 50 | 192 | |||
| Interest receivable | (118) | (127) | (291) | |||
| Interest payable | 61 | 62 | 7 | |||
| Tax expense recognised in the income statement | 876 | 767 | 2,379 | |||
| Change in inventories | (371) | (462) | (299) | |||
| Change in trade and other receivables | (2,882) | (3,000) | (570) | |||
| Change in trade and other payables | 2,339 | 3,605 | 159 | |||
| Change in provisions | (235) | (465) | (530) | |||
| Change in pension obligations | 0 | 0 | (347) | |||
| 75 | 842 | 1,509 | ||||
| Cash generated from operating activities | 2,401 | 2,842 | 7,178 | |||
| Tax paid | (1,253) | (669) | (1,800) | |||
| Net cash generated from operating activities | 1,148 | 2,173 | 5,378 | |||
| Cash flows from investing activities | ||||||
| Interest received | 118 | 127 | 291 | |||
| Proceeds from sale of property, plant and equipment | 40 | 424 | 455 | |||
| Acquisition of property, plant and equipment | (38) | (348) | (336) | |||
| Acquisition of subsidiary, net of cash acquired | (240) | (1,401) | (1,365) | |||
| Acquisition of subsidiary's net overdraft | 0 | (144) | (144) | |||
| Net cash used in investing activities | (120) | (1,342) | (1,099) | |||
| Cash flows from financing activities | ||||||
| Interest paid | (61) | (62) | (4) | |||
| Repurchase of own shares | 0 | 0 | (224) | |||
| Dividends paid | (2,540) | (2,403) | (3,697) | |||
| Net cash used in financing activities | (2,601) | (2,465) | (3,925) | |||
| Net (decrease)/increase in cash and cash equivalents | (1,573) | (1,634) | 354 | |||
| Cash and cash equivalents at beginning of period | 7,814 | 7,460 | 7,460 | |||
| Cash and cash equivalents at end of period | 6,241 | 5,826 | 7,814 | |||
STATEMENT OF RECOGNISED INCOME AND EXPENSE
| Unaudited | Unaudited | Audited | |||
| Half year ended 30 Jun 2008 | Half year ended 30 Jun 2007 | Full year ended 31 Dec 2007 | |||
| £'000 | £'000 | £'000 | |||
| Defined benefit plan actuarial gain | 0 | 0 | 2,522 | ||
| Deferred taxation on pension obligations | 0 | 0 | (933) | ||
| Income and expense recognised directly in equity | 0 | 0 | 1,589 | ||
| Profit for the financial period | 2,326 | 2,000 | 5,669 | ||
| Total recognised income and expense for the period | 2,326 | 2,000 | 7,258 | ||
NOTES
1. Basis of Preparation
The financial information set out in this interim report does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The group's statutory financial statements for the year ended 31 December 2007, prepared under IFRS, have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985.
The interim financial information has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) and on the same basis and using the same accounting policies as used in the financial statements for the year ended 31 December 2007. The interim financial statements have not been audited or reviewed in accordance with the International Standard on Review Engagement 2410 issued by the Auditing Practices Board.
2. Dividends
The interim dividend of 3.75p (2007: 3.50p) will be paid on 3 September 2008 to shareholders registered on 15 August 2008.
3. Earnings Per Share
Earnings per share are based on the weighted average number of shares in issue in the six months to 30 June 2008 of 36,844,393 (six months to 30 June 2007 of 36,905,548 and 12 months to 31 December 2007 of 36,602,810).
Cautionary Statement
This interim management report has been prepared solely to provide additional information to shareholders to assess the group's strategies and the potential for those strategies to succeed. The interim management report should not be relied on by any other party or for any other purpose.
- ENDS -