Last checked at 20 Jul 2017 07:00
Date: | Embargoed until 0700 Thursday 20 July 2017
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Contacts: | John Nichols, Non-Executive Chairman | |
Marnie Millard, Group Chief Executive Officer Tim Croston, Group Chief Financial OfficerAndrew Milne, Group Commercial Director | ||
Nichols plc | ||
Telephone: 01925 222 222 | ||
Website: www.nicholsplc.co.uk | ||
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Alex Brennan | Richard Lindley | |
Hudson Sandler | N+1 Singer (Nominated Adviser) | |
Telephone: 020 7796 4133 | Telephone: 0207 496 3000 | |
Email: nichols@hspr.com |
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Nichols plc
INTERIM RESULTS & BOARD APPOINTMENT
Nichols plc ('Nichols' or the 'Group'), the soft drinks Group, announces its Interim results for the half year ended 30 June 2017 (the 'period').
Nichols is an international soft drinks business with sales in over 85 countries, selling products in both the Still and Carbonate categories. The Group is home to the iconic Vimto brand which is popular in the UK and around the world, particularly in the Middle East and Africa. Other brands in its portfolio include Feel Good, Starslush, Levi Roots and Sunkist.
Highlights:
*Profit Before Tax and EPS were adjusted measures in 2016, excluding the exceptional gain recognised.
| Half Year ended 30 June 2017 | Half Year ended 30 June 2016 | % movement |
| £m | £m |
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Group Revenue | 63.5 | 56.5 | +12.4% |
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Operating Profit | 12.7 | 11.9 | +7.1% |
Operating Profit margin | 20.0% | 21.0% |
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Adjusted Profit Before Tax* | 12.7 | 11.9 | +6.8% |
PBT margin | 20.0% | 21.1% |
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Adjusted EPS (basic)* | 27.67 | 25.77 | +7.4% |
Interim dividend | 10.1 pence | 9.0 pence | +12.2% |
John Nichols, Non-Executive Chairman, said:
"Nichols has delivered another strong performance in the first half of the year. Our sales momentum, which continues to outperform the UK market coupled with successful management of input costs has delivered solid profit growth."
"Whilst we anticipate that market conditions will remain challenging during the second half of the year, we have a clear strategy and, underpinned by the strength of our brands and our diversified business model, we are confident of delivering full year results in line with expectations."
Chairman's Statement
The Group has delivered another strong performance in the first half of 2017. Revenue has increased by 12.4% (10.7% on a constant currency basis) and despite input cost challenges faced in the UK, the Group's Profit Before Tax grew by 6.8% with the interim dividend being increased by 12.2%.
Trading
Total Group revenue grew by 12.4% to £63.5m in the first six months of 2017 (H1 2016: £56.5m). Once again, the growth has been delivered from both our UK and international trading which highlights the strength of our diversified business model.
In the UK, revenue totalled £47.5m (H1 2016: £44.5m) an increase of 6.7% compared to the prior year. This performance compares favourably to the total soft drinks market which showed total growth of 2.9% in the same period (Nielsen year to date to 17 June 2017). Within the UK, the Vimto brand has continued to outperform the market with sales up 10% versus the same period in 2016. The Vimto brand's strong growth has been driven by both the Still and Carbonate segments and this sustained performance demonstrates the strength of our core brand.
International revenues increased by 33.5% in the period to £16.0m (H1 2016: £12.0m), which is 24.7% on a constant currency basis. In Africa, revenues were up by 30.9% (20.2% on a constant currency basis), which continues the strong momentum reported in 2016 (H1 2016: +21.0%). Sales to the Middle East were 19.8% ahead of the same period in 2016 (15.9% on a constant currency basis). As anticipated, the first quarter benefited from shipments of concentrate for Ramadan 2017, some of which were originally scheduled for Q4 2016.
Acquisition of DJ Drink Solutions Limited
Acquisitions are a key component of our strategic growth plan, as demonstrated in recent years with our successful move into frozen beverages via the purchase of The Noisy Drinks Co. Limited and the addition of the Feel Good brand. We are therefore delighted to announce the acquisition of 100% of the shares in DJ Drink Solutions Limited ('DJ') on 2 June 2017. DJ is the largest of our Out of Home dispensed soft drinks distributors covering the North West and North East regions. This acquisition consolidates our route to market in the two regions and is consistent with our successful business model already operating in other regions in the UK.
Dividend
Reflecting the Board's continued confidence in the outlook for the Group, the Board is pleased to announce an interim dividend of 10.1 pence per share, an increase of 12.2% compared to the prior year (2016: 9.0 pence). The interim dividend will be paid on 25 August 2017 to shareholders registered on 28 July 2017; the ex-dividend date is 27 July 2017.
Board Appointment
Following John Longworth's departure at the AGM in April, we are delighted to announce the appointment of Helen Keays to the Board as an Independent Non-Executive Director and Chair of the Remuneration Committee with effect from 1 September 2017.
Helen has a background in marketing and brings a wealth of non-executive experience to the Board and is currently Senior Independent Director at Domino's Pizza Group plc and a Non- Executive Director and Chair of Remuneration at Communisis plc.
Helen Margaret Keays (aged 53) has held the following directorships within the five years prior to the date of this announcement:
Name | Current directorships | Previous directorships |
Helen Keays | Communisis plc | Majestic Wine plc |
| Domino's Pizza Group plc | Mattioli Woods plc |
| SBT Trading Limited |
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There are no other disclosures in respect of AIM Rule 17 and Schedule 2 part (g).
Summary and Outlook
In summary, the Board is pleased with the Group's performance in the first half of 2017. We have delivered double-digit revenue growth, managed the industry wide input cost pressures with a 6.8% increase in Profit Before Tax and announce a 12.2% increase in the interim dividend.
Whilst we anticipate that market conditions will remain challenging during the second half of the year, the Board currently expects our full year earnings to be in line with expectations.
John Nichols
Non-Executive Chairman
19 July 2017
CONSOLIDATED INCOME STATEMENT
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| Half year ended | Half year ended | Full year ended | |||||
30-Jun-17 | 30-Jun-16 | 31-Dec-16 | |||||||
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| Unaudited before exceptional items | Unaudited exceptional items | Unaudited after exceptional items | Audited | |||
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Unaudited | |||||||||
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| £'000 | £'000 | £'000 | £'000 | ||||
£'000 | |||||||||
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Revenue | 63,504 | 56,520 | - | 56,520 | 117,349 | ||||
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Operating profit (pre-exceptional items) | 12,717 | 11,869 | - | 11,869 | 30,325 | ||||
Exceptional items | - | - | 1,087 | 1,087 | 1,087 | ||||
Finance income | 74 | 118 | - | 118 | 214 | ||||
Finance expense | (60) | (67) | - | (67) | (134) | ||||
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Profit before taxation | 12,731 | 11,920 | 1,087 | 13,007 | 31,492 | ||||
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Taxation | (2,534) | (2,423) | (217) | (2,640) | (6,015) | ||||
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Profit for the financial period | 10,197 | 9,497 | 870 | 10,367 | 25,477 | ||||
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Earnings per share (basic) | 27.67p | 25.77p |
| 28.13p | 69.13p | ||||
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Earnings per share (diluted) - all activities | 27.65p | 25.74p |
| 28.10p | 69.07p | ||||
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Dividends paid per share | 20.30p |
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| 17.60p | 26.60p | ||||
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| Unaudited |
| Unaudited |
| Audited |
| Half year ended 30-Jun-2017 |
| Half year ended 30-Jun-2016 |
| Full year ended 31-Dec-2016 |
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£'000 |
| £'000 |
| £'000 |
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Profit for the financial period | 10,197 |
| 10,367 |
| 25,477 |
Items that will not be reclassified subsequently to profit or loss
Re-measurement of net defined benefit liability | - |
| - |
| (3,472) |
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Deferred taxation on pension obligations and employee benefits | - |
| - |
| 601 |
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Other comprehensive income for the period | - |
| - |
| (2,871) |
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Total comprehensive income for the period | 10,197 |
| 10,367 |
| 22,606 |
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| Unaudited |
| Unaudited |
| Audited |
| 30-Jun-2017 |
| 30-Jun-2016 |
| 31-Dec-2016 |
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| £'000 |
| £'000 |
| £'000 |
ASSETS |
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Non-current assets |
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Property, plant and equipment | 9,924 |
| 8,019 |
| 8,715 |
Goodwill | 29,415 |
| 22,593 |
| 23,061 |
Intangibles | 6,006 |
| 6,163 |
| 6,084 |
Deferred tax assets | 1,436 |
| 1,098 |
| 1,436 |
Total non-current assets | 46,781 |
| 37,873 |
| 39,296 |
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Current assets |
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Inventories | 6,036 |
| 6,731 |
| 6,717 |
Trade and other receivables | 36,957 |
| 33,045 |
| 31,508 |
Cash and cash equivalents | 29,276 |
| 32,778 |
| 39,754 |
Total current assets | 72,269 |
| 72,554 |
| 77,979 |
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Total assets | 119,050 |
| 110,427 |
| 117,275 |
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LIABILITIES |
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Current liabilities |
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Trade and other payables | 20,624 |
| 27,521 |
| 21,456 |
Current tax liabilities | 2,607 |
| 2,315 |
| 2,355 |
Total current liabilities | 23,231 |
| 29,836 |
| 23,811 |
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Non-current liabilities |
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Pension obligations | 5,954 |
| 3,012 |
| 6,395 |
Deferred tax liabilities | 1,101 |
| 1,104 |
| 1,101 |
Total non-current liabilities | 7,055 |
| 4,116 |
| 7,496 |
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Total liabilities | 30,286 |
| 33,952 |
| 31,307 |
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Net assets | 88,764 |
| 76,475 |
| 85,968 |
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EQUITY |
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Share capital | 3,697 |
| 3,697 |
| 3,697 |
Share premium reserve | 3,255 |
| 3,255 |
| 3,255 |
Capital redemption reserve | 1,209 |
| 1,209 |
| 1,209 |
Other reserves | (268) |
| (573) |
| (358) |
Retained earnings | 80,871 |
| 68,887 |
| 78,165 |
Total equity | 88,764 |
| 76,475 |
| 85,968 |
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CONSOLIDATED STATEMENT OF CASH FLOWS
| Unaudited Half year ended 30-Jun-2017 | Unaudited Half year ended 30-Jun-2016 | Audited Full year ended 31-Dec-2016 | |||
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| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
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Profit for the financial period |
| 10,197 |
| 10,367 |
| 25,477 |
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Cash flows from operating activities |
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Adjustments for: |
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Depreciation | 362 |
| 453 |
| 954 |
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Amortisation | 78 |
| 78 |
| 157 |
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Exceptional credit | - |
| (1,087) |
| (1,087) |
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Loss/ (profit) on sale of property, plant and equipment | 15 |
| 3 |
| (6) |
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Finance income | (74) |
| (118) |
| (214) |
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Finance expense | 60 |
| 67 |
| 134 |
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Tax expense recognised in the income statement | 2,534 |
| 2,640 |
| 6,015 |
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Change in inventories | 536 |
| (2,395) |
| (2,382) |
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Change in trade and other receivables | (5,448) |
| (4,487) |
| (3,036) |
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Change in trade and other payables | (859) |
| 7,429 |
| 1,229 |
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Change in pension obligations | (441) |
| (881) |
| (970) |
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| (3,237) |
| 1,702 |
| 794 |
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Cash generated from operating activities |
| 6,960 |
| 12,069 |
| 26,271 |
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Tax paid |
| (2,314) |
| (3,040) |
| (6,116) |
Net cash generated from operating activities |
| 4,646 |
| 9,029 |
| 20,155 |
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Cash flows from investing activities |
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Finance income | 74 |
| 118 |
| 214 |
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Proceeds from sale of property, plant and equipment | 3 |
| - |
| 17 |
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Acquisition of property, plant and equipment | (1,758) |
| (1,237) |
| (2,442) |
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Acquisition of subsidiary, net of cash acquired | (6,040) |
| (4,056) |
| (3,715) |
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Net cash used in investing activities |
| (7,721) |
| (5,175) |
| (5,926) |
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Cash flows from financing activities |
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Funds from ESOT/ (share options exercised) | 84 |
| (26) |
| (107) |
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Dividends paid | (7,487) |
| (6,488) |
| (9,806) |
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Net cash used in financing activities |
| (7,403) |
| (6,514) |
| (9,913) |
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Net (decrease)/ increase in cash and cash equivalents |
| (10,478) |
| (2,660) |
| 4,316 |
Cash and cash equivalents at beginning of period |
| 39,754 |
| 35,438 |
| 35,438 |
Cash and cash equivalents at end of period |
| 29,276 |
| 32,778 |
| 39,754 |
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NOTES
1. Basis of Preparation
The financial information set out in this Interim Report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2016, 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 498 (2) or (3) of the Companies Act 2006.
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 2016. The Interim Report has not been audited or reviewed in accordance with the International Standard on Review Engagement 2410 issued by the Auditing Practices Board.
2. New Accounting Standards
There are a number of new accounting standards, along with amendments and interpretations to standards, which are effective for future year-ends that have not been applied in preparing these Interim results. Management has in particular considered the potential impact of the implementation of IFRS 9, IFRS 15 and IFRS 16. It is expected that neither IFRS 9 nor IFRS 15 will have a material impact on the consolidated financial statements of the Group. Management are reviewing the impact of IFRS 16, which will become effective for the 31 December 2019 year end. The current total minimum lease payments on operating leased assets is £3.2m which is considered materially similar to the asset and liability that would be recognised if IFRS 16 were effective at the current time.
3. Exceptional Gain in 2016
Having initially taken a 49% stake in The Noisy Drinks Co. Limited (Noisy) in March 2015, the Group acquired the remaining shares on 8 January 2016. Under International Financial Reporting Standards, the latter transaction triggered a deemed disposal of the initial 49% of the shares in Noisy and a subsequent acquisition of 100% of the shares. As a consequence, a profit on disposal amounting to £1.1m arose due to the increase in value of the 49% between March 2015 and January 2016. This profit was disclosed as an exceptional gain in 2016.
4. Dividends
The interim dividend of 10.1 pence (2016: 9.0 pence) will be paid on 25 August 2017 to shareholders registered on 28 July 2017. The ex-dividend date is 27 July 2017.
5. Earnings Per Share
Basic earnings per share are based on the weighted average number of shares in issue in the six months to 30 June 2017 of 36,853,794 (six months to 30 June 2016 of 36,849,942 and 12 months to 31 December 2016 of 36,853,888).
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
Interim Report
The interim report will be available on the Company's website (www.nicholsplc.co.uk) on or around 20 July 2017.
Cautionary Statement
This Interim 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 Report should not be relied on by any other party or for any other purpose.