Nichols plc Regulatory News (NICL)

2 Aug 2007 07:01

Nichols PLC02 August 2007 Date: Embargoed until 07.00hrs, Thursday 2 August 2007 Contacts: John Nichols, Executive Chairman Brendan Hynes, Group Finance Director Nichols plc Telephone: 01925 222222 Website: www.nicholsplc.co.uk Alistair Mackinnon-Musson Nicola Savage Hudson Sandler Telephone: 020 7796 4133 Email: nichols@hspr.com Photographs available: On request from Hudson Sandler, as above Nichols plc INTERIM RESULTS Nichols plc, the soft drinks group, announces its Interim results for the sixmonths to 30 June 2007. 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) and 2. Dispense Systems (namely the Cabana & Beacon cold soft drinks on draught ' dispense' businesses) Highlights: • Turnover up 6.1% • Profit on continuing activities before tax and exceptional items up 14.9% • Increased cash balances; Interim dividend up 6.1% • Core Vimto brand has continued its UK growth; International performance strong • Cariel integration is going well; four new distributors signed for Dispense Systems • Further progress is expected for the full year; Board confident of the future Commenting John Nichols, Chairman, said: "I am delighted to report that, for the fifth consecutive year, we have madepositive progress during the first half. This has been achieved despite thesoft drinks market generally being highly competitive and the extreme wetweather conditions experienced so far this summer". "Although we expect market volatility to continue throughout the second half, westill believe our core brands will continue to perform well in a difficult UKmarket, and that we will also see growth internationally for the full year.Combined with the improving performance of our Dispense Systems Operation, weanticipate showing further progress at the full year". Chairman's Statement I am delighted to report that, for the fifth consecutive year, we have madepositive progress during the first half. We have achieved this despite the softdrinks market generally being highly competitive and the extreme wet weatherconditions experienced so far this summer. Results The Interim results to June 2007 are the first set of trading results producedby Nichols PLC using the measurement basis of International Financial ReportingStandards (IFRS). An analysis of the impact of IFRS, together withreconciliation from UK GAAP to IFRS, was reported separately on 30 July 2007. Turnover in the six months to 30 June 2007 at £27.8 million was 6.1% up on thefirst half of last year (2006: £26.2 million). This includes £0.5 million ofsales relating to Cariel Soft Drinks acquired in April 2007. Profit oncontinuing activities before tax and exceptional items was up 14.9% at £2.77million (2006: restated £2.41 million). Earnings per share decreased by 4.6% to 5.43 pence (2006: restated 5.69 pence)mainly due to the higher effective tax rate in 2007. The Group also had increased positive cash balances of £5.8 million at the endof June 2007 (2006: £2.4 million). The acquisition of Cariel Soft Drinks, a cold soft drinks on draught businessbased in Dunblane Scotland, was in line with the aim to grow our core business.This acquisition, combined with the four new distributors signed in the firsthalf of 2007, will help underpin the continued improvement in trading at ourDispense Systems Operation that is anticipated during the remainder of 2007 andbeyond. Soft Drinks Operation After a better than expected start to the year, particularly in April, themonths of May and June saw the general soft drinks market dominated by acombination of deep promotional activity and extreme wet weather, both of whichhave made trading extremely difficult in the first half of the year. Despite these exceptionally challenging market conditions, I am pleased toreport that our core Vimto brand has continued to grow, particularly in the 'Carbonates' and 'Ready to Drink' sectors, both of which have seen market sharegains in the first half. Internationally, the Vimto brand has also performed strongly, particularly inthe Middle East, where sales were ahead in the first six months due to thetiming of Ramadan. This uplift, however, is largely a timing issue, withforecast sales in the second half consequently being lower than normal, althoughin total, International sales for the year are expected to be ahead of thosemade in 2006. In overall terms we still expect to see growth in the full year from our SoftDrinks Operation. Dispense Systems Operation The transformation of our Dispense Systems Operation to an 'external distributormodel' is now complete. This means that in 17 of the 19 UK regions covered,provision of the actual dispense equipment and its subsequent maintenance are nolonger the responsibility of the Group. Having effectively 'out-sourced' theseaspects, long term agreements are now in place with the 17 externaldistributors, whereby Nichols supplies them with the consumable 'syrups' and 'juices' from which the dispense drink product is mixed at the point of sale. In the first half of 2007 we successfully attracted four new distributors to thedivision and completed the acquisition of Cariel Soft Drinks, both of whichincrease geographical coverage and significantly strengthen our market position. Our Dispense Systems Operation is now firmly positioned as the UK's third majorplayer in this sector and with its turnaround complete, we expect to see thefinancial benefits of our strategy coming through in the second half of 2007. Dividend This is our fifth consecutive year of improved Interim profits which, combinedwith our strong cash position and our confidence in the future, means the Boardhas approved a 6.1% increase in the Interim dividend to 3.50 pence per share(2006: 3.30 pence). The Interim dividend will be paid on the 7 September 2007 to shareholdersregistered on the 10 August 2007. The ex-dividend date will be 8 August 2007. Outlook The extremely poor summer weather to date, combined with higher than normalpromotional activity in the market, means that we expect the soft drinks marketgenerally to remain fairly volatile throughout the second half of the year. Despite these factors, however, we still believe our core brands will continueto perform well and that we will see further growth internationally. Combinedwith the improving performance of our Dispense Systems Operation, we anticipateshowing further progress in sales for the full year at Group level. On 19 March 2007, Nichols PLC announced it was in preliminary discussionsregarding the possibility of an offer being made for the entire issued and to beissued share capital of the Group. These discussions continue, although there isno certainty that an offer will be made. Further announcements will be made asappropriate. John NicholsChairman2 August 2007 CONSOLIDATED INCOME STATEMENT Unaudited Unaudited Unaudited Unaudited Unaudited Restated before Restated after Restated before Restated after exceptional exceptional exceptional exceptional items items items items Half year ended Half year ended Half year ended Full year ended Full year ended 30 June 07 30 June 06 30 June 06 31 Dec 06 31 Dec 06 £'000 £'000 £'000 £'000 £'000 Revenue - continuing activities 27,802 26,188 26,188 52,296 52,296 Operating profit - continuing 2,702 2,446 336 7,897 5,287activities Profit on disposal of non-current 0 0 128 0 128assetsFinance income 127 86 86 156 156Finance expense (62) (121) (121) (98) (98) Profit before taxation 2,767 2,411 429 7,955 5,473 Taxation 767 (284) 379 2,296 1,238 Profit from continuing activities 2,000 2,695 50 5,659 4,235 Profit on disposal of discontinued 0 0 2,038 0 2,038operations Profit for the period 2,000 2,695 2,088 5,659 6,273 Earnings per share (basic) - total 5.43p 5.69p 17.10pand continuing activities Earnings per share (diluted) - 5.42p 5.67p 17.08ptotal and continuing activities Dividends paid per share 6.50p 3.30p 9.40p The accompanying notes form an integral part of these financial statements. CONSOLIDATED BALANCE SHEET Unaudited Unaudited Unaudited 30 June 2007 30 June 2006 31 Dec 2006 £'000 £'000 £'000ASSETSNon-current assetsProperty, plant and equipment 2,891 4,053 3,179Goodwill 10,771 9,504 9,624Deferred tax asset 1,945 2,125 1,892Total non-current assets 15,607 15,682 14,695 Current assetsInventories 2,689 3,053 2,169Trade and other receivables 15,615 17,599 12,364Cash and cash equivalents 5,826 2,448 7,460Total current assets 24,130 23,100 21,993 Total assets 39,737 38,782 36,688 LIABILITIES Current liabilitiesTrade and other payables 12,131 11,979 8,366Current tax payable 750 1,118 598Total current liabilities 12,881 13,097 8,964 Non-current liabilitiesRetirement benefit obligations 6,504 6,508 6,504Provisions 746 2,353 1,211Total non-current liabilities 7,250 8,861 7,715 Total liabilities 20,131 21,958 16,679 Net assets 19,606 16,824 20,009 EQUITYShare capital 3,697 3,697 3,697Share premium account 3,255 3,255 3,255Capital redemption reserve 1,209 1,209 1,209Other reserves (487) (698) (487)Retained earnings 11,932 9,361 12,335Total equity 19,606 16,824 20,009 The accompanying notes form an integral part of these financial statements. CONSOLIDATED CASH FLOW STATEMENT Unaudited Unaudited Unaudited Half year ended Half year ended Full year ended 30 June 2007 30 June 2006 31 Dec 2006 £'000 £'000 £'000 £'000 £'000 £'000 Profit for the period 2,000 2,088 6,273 Cash flows from operating activitiesAdjusted for:Depreciation 388 573 794Non-current asset impairment 0 0 1,935Loss/(profit) on sale of property, plant and 24 (2,158) (2,136)equipmentShare option charge 50 0 100Interest receivable (127) (86) (156)Interest payable 62 121 98Taxation expense recognised in the income statement 767 379 1,238Change in inventories (462) (721) 163Change in receivables (3,000) (3,806) (194)Change in payables 3,605 1,665 (2,326)Change in provisions (465) 1,698 556Change in employee benefits 0 (500) (504) 842 (2,835) (432)Cash generated from operations 2,842 (747) 5,841 Interest paid (62) (61) (72)Taxation paid (669) (482) (1,654)Net cash used in operating activities (731) (543) (1,726) Cash flows from investing activitiesInterest received 127 86 156Proceeds from sale of property, plant and equipment 424 6,103 7,474Acquisition of property, plant and equipment (348) (343) (837)Disposal of discontinued operation, net of cash 0 6,455 6,455costsPurchase of subsidiary undertakings (1,251) 0 0Net overdrafts acquired with subsidiary (144) 0 0Additional consideration in respect of a prior (150) 0 (120)acquisitionNet cash used in investing activities (1,342) 12,301 13,128 Cash flows from financing activitiesRepayment of borrowings 0 (6,308) (6,308)Dividends paid (2,403) (2,255) (3,475)Net cash used in financing activities (2,403) (8,563) (9,783) Net (decrease)/increase in cash and cash (1,634) 2,448 7,460equivalentsCash and cash equivalents at beginning of period 7,460 0 0Cash and cash equivalents at end of period 5,826 2,448 7,460 STATEMENT OF RECOGNISED INCOME AND EXPENSE Unaudited Unaudited Half year Half year Full year ended ended ended 30 June 2007 30 June 2006 31 Dec 2006 £'000 £'000 £'000 Actuarial movement in defined benefit schemes 0 0 91 Deferred taxation on pension scheme deficit 0 0 (27) Net income recognised directly in equity 0 0 64 Profit for the period 2,000 2,088 6,273 Total recognised income and expense 2,000 2,088 6,337for the period NOTES 1. Basis of Preparation The financial information set out in this interim report does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. Thegroup's statutory financial statements for the year ended 31 December 2006,prepared under UK GAAP, have been filed with the Registrar of Companies. Theauditor's report on those financial statements was unqualified and did notcontain a statement under Section 237 (2) of the Companies Act 1985. The accounting policies for the group can be found in the transition documentwhich was published via the Regulatory News Service (RNS) on 30 July 2007. 2. Dividends The interim dividend of 3.50p (2006: 3.30p) will be paid on 7 September 2007 toshareholders registered on 10 August 2007. The ex dividend date is 8 August2007. 3. Earnings per share Earnings per share are based on the weighted average number of shares in issuein the six months to 30 June 2007 of 36,905,548 (six months to 30 June 2006 of36,693,536 and 12 months to 31 December 2006 of 36,685,868). 4. Acquisitions On 6 April 2007 the group acquired the assets and liabilities of Cariel SoftDrinks Limited for £1.25m. The acquisition was made to increase thegeographical range of the group's Dispense business and to enhance Cabana'sposition as the third largest operator in the dispense sector in the UK. Theassets acquired were: Provisional fair values £000'sNon-current assets 197Inventories 58Trade and other receivables 251Trade and other payables (258)Overdraft (144)Net assets acquired 104 Cash consideration 1,251Provisional goodwill 1,147 The turnover since acquisition was £473,000 and the operating profit was£41,000. These have not been disclosed separately in the income statement asthey are not considered to be material. Management have reviewed the fair value of the assets and liabilities acquired.At this time the review of intangible assets acquired is ongoing. Any necessaryadjustments to goodwill following the conclusion of this exercise will bereflected in the year end financial statements. - ENDS - This information is provided by RNS The company news service from the London Stock Exchange