Nwf Regulatory News (NWF)

8 Aug 2006 07:01

NWF Group PLC08 August 2006 Embargoed until 07.00, 8 August 2006 NWF GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2006 NWF Group plc ("NWF"), the diversified sales and distribution business, todaymakes the preliminary announcement of its audited results for the year ended 31May 2006. Commenting on the results, J Roy Willis, Chairman said: "NWF has delivered astrong result for 2006 with all of its four businesses showing underlying gainsover the previous year. In 2005, the previous run of seven years of compoundaverage double-digit growth had been interrupted mainly by investment anddivestment activities in our Distribution and Garden Centre divisions. Ipredicted in my last statement that we would return to our growth path in 2006which we indeed have. In addition, we have laid foundations for yet furtherdevelopment of the Group." Financial Highlights (comparative figures for year to 31 May 2005): * Turnover increased by 24% to £293 m (2005: £236 m) * Pre tax profit before goodwill amortisation up 33% to £6.0 m (2005: £4.5m) * Pre tax profit increased by 32% to £5.5 m (2005: £4.2 m) * Basic earnings per share up 16% to 41.7p (2005: 36.1p) * Dividend per share for the year increased by 7.8% to 18.0p (2005:16.7p) * All four businesses' underlying performances ahead of last year * Preparations underway for major warehouse development Divisional Highlights: * Distribution - turnover up by 24% to £27m with £2.1m record operating profit from high storage demand at all locations * Feeds - another year of market share gains and became firmly established as a national player; turnover increased by 35% to £72m * Fuels - outstanding year in difficult market; turnover up 22% to £178m and operating profit increase of 8% to £2.8m * Garden Centres - £0.3m operating profit; turnround of £0.6m from 2005 loss of £0.3m. Continued expansion of number of large sites Graham Scott, Chief Executive, added: "It has been rewarding to see that thereturn to growth in profitability that we envisaged a year ago has indeed takenplace. The 2005 results were somewhat distorted by one-off restructuring andstart-up costs and by the release of certain historic provisions. These factorsnow lie behind us in reporting 2006 which can be taken as a new base year forcontinuing progress." For further information please visit www.nwf.co.uk or contact: Graham Scott, Chief Executive John WestPaul Grundy, Finance Director Clemmie CarrNWF Group plc Tavistock CommunicationsTel: 01829 260 260 Tel: 020 7920 3150 NWF Group plc Preliminary results for the year ended 31 May 2006 Chairman's Statement Key points for 2006: * Turnover up 24% to £293m (2005: £236m) * Profit before taxation and goodwill amortisation increased by 33% to £6.0m (2005: £4.5m) * Profit before taxation increased by 32% to £5.5m (2005: £4.2m) * Basic earnings per share up 16% to 41.7p (2005: 36.1p) * Full year dividend per share increased by 7.8% to 18.0p (2005: 16.7p) * All four businesses' underlying performances ahead of last year * Preparations underway for major warehouse development NWF has delivered a strong result for 2006 with all of its four businessesshowing underlying gains over the previous year. In 2005, the previous run ofseven years of compound average double-digit growth had been interrupted mainlyby investment and divestment activities in our Distribution and Garden Centredivisions. I predicted in my last statement that we would return to our growthpath in 2006 which we indeed have. In addition, we have laid foundations for yetfurther development of the Group. Results Turnover has increased by 24% to £292.9m (2005: £235.6m). Operating profit is upby 24% to £6.7m (2005: £5.4m), profit before tax before goodwill amortisationhas increased by 33% to £6.0m (2005: £4.5m) and profit before tax has risen from£4.2m to £5.5m, up by 32%. Eliminating the effect of last year's provisionreleases, the increases in operating profit and profit before tax become 55% and77% respectively. Basic earnings per share increased by 16% to 41.7 pence (2005:36.1 pence). Prior year comparatives in this statement and elsewhere in the preliminaryresults have been restated where applicable to reflect the adoption for thefirst time of FRS 17 (pensions) and FRS 21 (dividends unapproved at the balancesheet date). Cash flows and funding The Group generated £9.1m (2005: £2.7m) net cash from operating activities andthe net cash outflow before financing reduced to £1.9m (2005: £7.8m outflow).£5.7m (net of expenses) was raised by an equity placing in December 2005 as partfunding for the Wardle warehouse development project. Uses of funds included£2.7m of net capital expenditure (2005: £2.7m) and £4.1m in acquisition payments(2005: £5.7m) including deferred payments of £1.0m (2005: £0.4m) relating toprevious transactions. Despite significant investment, interest cover (excludingFRS 17 finance cost) for the year was 6.2 times (2005: 6.4 times) and year endgearing was 46% (2005: 87%). Dividend We propose a final dividend per share of 13.4 pence (2005: 12.4 pence), bringingthe total for the year to 18.0 pence. This represents an increase of 7.8% onlast year's total of 16.7 pence and this is covered 2.2 times (2005: 2.1 times).Subject to shareholder approval, the final dividend will be paid on 1 November2006 to shareholders on the register at the close of business on 18 August 2006.The shares will trade ex-dividend on 16 August 2006. Trading results It was pleasing to see all four divisions developing well. Distribution had acomplete year of three fully-occupied sites and achieved a record profit. TheFeeds business moved ahead again in market share and consolidated its positionas a national leader in its market. Fuels had an outstanding year with anothernew record profit in a difficult market of high and variable product prices. TheGarden Centre division expanded further and benefitted from concentrating solelyon its core activity. Acquisitions and investments A small operating site in Purfleet, Essex, was leased by our Distributionbusiness in May 2006 to facilitate logistics in the South East. NutritionExpress Ltd, a specialist feeds distributor, was acquired by the Feeds divisionin August 2005. Leased blending plants were also established by Feeds near Ayr,Penrith and Exeter in the Autumn of 2005. Broadland Fuels Ltd in Norfolk wasacquired by the Fuels division in August 2005. In July 2006, after the year end,Browns of Burwell (Suffolk) was also acquired by the Fuels business. In GardenCentres, Woodford Park in South Manchester was acquired in February 2006,bringing our total of large garden centres to five. The lease of a greenfieldgarden centre site with planning permission in East Manchester was acquired inJune 2006, which will be developed during our 2006/07 year. Customers, suppliers, shareholders and colleagues As this is my last report to you as your Chairman, I would particularly like tostress how valuable and welcome the support to the Group continues to be fromour customers and suppliers, from shareholders and advisers and, not least, fromemployees at every level. I would like to express my thanks to you all and myvery best wishes for the further success of the Group. I will be retiring at theforthcoming Annual General Meeting and the Board intends to appoint in my steadMark Hudson, currently Deputy Chairman. In anticipation of my departure from theBoard, we welcome David Southworth who joined us as a non-executive director inMay 2006. Outlook for the current year Having reported on a solid 2006, the Board is confident that our businesses willcontinue to move forward in their normal activities. The new financial year hasopened satisfactorily and I will give my customary update on first quartertrading at the Annual General Meeting in September. J Roy WillisChairman8 August 2006 NWF Group plc Preliminary results for the year ended 31 May 2006 Chief Executive's Review The Group It has been rewarding to see that the return to growth in profitability that weenvisaged a year ago has indeed taken place. Total turnover of £293m has risenby 24% from £236m last year. Operating profit of £6.7m (2005: £5.4m) is also upby 24%, although this represents a 55% increase before the effect of releasingcertain historic provisions in last year's result which were no longer required.Similarly, the 32% increase in profit before tax from £4.2m to £5.5m translatesto a 77% rise on the same basis. As was the case for our interim results, the Group has adopted for the firstfull year the financial reporting standards relating to pensions (FRS 17) anddividends unapproved at the balance sheet date (FRS 21). Where applicable,comparatives referred to below have been restated to reflect the impact of thesestandards. Distribution The underlying stories in Distribution this year have been the profitable use ofthe Deeside warehouse, high demand for space all year at each of its three sitesand bringing the Wardle warehouse expansion project to the starting blocks forcompletion, as planned, in early 2007. Turnover rose by 24% from £22.0m to£27.2m and operating profit rose by 73% from £1.2m to £2.1m. A small operatingbase was set up at Purfleet in Essex to assist with vehicle utilisation anddistribution into and from the South East. Feeds Feeds had another year of market share gains and became firmly established as anational player with the ability to supply ruminant feeds from Argyll toCornwall. Blending plants were established near Ayr, Penrith and Exeter tocomplement the pelleted feeds and blends produced at Wardle and Wixland.Turnover rose 35% from £53.1m to £71.9m. Operating profit fell by 17% from £1.9mto £1.5m on tight average margins, but eliminating the effect of last year'sprovision release the underlying operating result was 4% higher, representing areal improvement in a difficult market. Nutrition Express Ltd, a specialistimporter of minerals, fats and milk powders, was acquired in August and has beenintegrated into the parent business. Fuels In a period of high world prices for oil products, the Fuels business achievedanother outstanding result. Demand was firm throughout the year with volumesrising 12% to 320m litres (2005: 285m litres). Turnover increased by 22% from£145.5m to £178.2m and operating profit rose from £2.6m to £2.8m, an increase of7% which translates to a 36% increase before the effect of last year's provisionrelease. Broadland Fuels Ltd, based initially at three locations near Norwich,was acquired in August and has proved to be a successful step into a new ruralarea. This was followed, after the year end, by the acquisition of Browns ofBurwell in Suffolk which will extend our coverage in East Anglia. Garden Centres Four garden centres were operated for the whole year with Woodford Park joiningthe Group in February 2006. The Spring weather was not kind to gardeners andlike for like sales for the three which operated throughout both years were 4%down on 2005. Margin and expense control, however, mitigated this industry-wideeffect to some extent. Total sales (note that the Country Stores disposed of in2005 accounted for £2.4m sales in the previous year) were 3% up on 2005, takingturnover from £15.1m to £15.6m, of which £2.1m was contributed by Woodford Park.Operating profit showed a welcome £0.6m turnround from the loss of £0.3m in 2005to £0.3m positive in 2006. In July 2006, we acquired Arthur A Gent & Sons Ltd, acompany with leasehold land and planning permission to build a garden centre ina rapidly developing retail area in Ashton-under-Lyne, Manchester. This newfacility is scheduled to open in March 2007. Outlook for 2006/07 All four businesses remain focussed on profitable growth. Distribution will makethe largest single step with the construction of three new warehouses that willadd around 60,000 pallet spaces to Wardle's capacity, an increase of 133%. Therewill be little financial effect in 2006/07, a part-year effect in 2007/08 and2008/09 will be the first financial year in which we expect a full twelve monthsprofitable use of the enlarged capacity. Feeds will concentrate on streamliningits own manufacturing and logistics capabilities to utilise all of the assetsand improve the bottom line yet further. Fuels will continue to run its existingbusiness well while looking for more geographical development opportunities inits favoured locations. Garden Centres will have five major sites to operateplus the start-up at Ashton and will introduce more sophisticated purchasing andmarketing practices. Graham ScottChief Executive8 August 2006 NWF GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNT Note 2006 2005 * Restated ---------------------------- £'000 £'000 TURNOVER 1 292,873 235,648 ----------------------------Cost of sales before provisions release (270,229) (219,298)Release of provisions no longer required 1 - 349 ----------------------------COST OF SALES (270,229) (218,949) ----------------------------GROSS PROFIT 22,644 16,699 ----------------------------Administrative expenses before provisions release (15,922) (12,015)Release of provisions no longer required 1 - 717 ----------------------------ADMINISTRATIVE EXPENSES (15,922) (11,298) ----------------------------OPERATING PROFIT 1 6,722 5,401LOSS ON DISPOSAL OF BUSINESS: Surplus over net tangible assets - 595Less: goodwill resurrected on disposal - (780) ---------------------------- - (185)Bank interest payable (1,088) (850)Other finance costs - FRS17 (127) (181) ----------------------------PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 5,507 4,185Taxation on ordinary activities 2 (1,958) (1,312) ----------------------------PROFIT FOR THE FINANCIAL YEAR 3,549 2,873 ============================Earnings per share Basic 3 41.7p 36.1pDiluted 3 40.8p 35.0p All of the Group's turnover is derived from continuing operations. * Prior year comparative restatement where applicable to reflect the adoption ofFRS 17 (pensions) and FRS 21 (dividends unapproved at the balance sheet date) -see note 6. NWF GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2006 CONSOLIDATED BALANCE SHEET 2006 2006 2005 2005 *Restated *Restated ------------------------------------------ £'000 £'000 £'000 £'000FIXED ASSETS Intangible assets 9,285 7,300Tangible assets 25,005 23,591 ---------- ---------- 34,290 30,891CURRENT ASSETS Stocks 7,094 5,372 Debtors 39,515 29,843 Cash and bank balances 945 36 ---------- ---------- 47,554 35,251 CREDITORS - Amounts falling due within one year (34,646) (27,537) ---------- ---------- NET CURRENT ASSETS 12,908 7,714 ---------- ----------TOTAL ASSETS LESS CURRENT LIABILITIES 47,198 38,605 CREDITORS - Amounts falling due after more than one year (15,219) (15,012) PROVISIONS FOR LIABILITIES AND CHARGES Deferred taxation (1,112) (837) ---------- ----------NET ASSETS EXCLUDING PENSION LIABILITY 30,867 22,756 Pension liability (3,223) (4,403) ---------- ----------NET ASSETS INCLUDING PENSION LIABILITY 27,644 18,353 ========== ==========CAPITAL AND RESERVES Equity share capital 2,285 1,991Share premium 6,231 541Revaluation reserve 1,421 1,446Other reserves 302 302Profit and loss account 17,405 14,073 ---------- ----------TOTAL EQUITY SHAREHOLDERS' FUNDS 27,644 18,353 ========== ========== * Prior year comparative restatement where applicable to reflect the adoption ofFRS 17 (pensions) and FRS 21 (dividends unapproved at the balance sheet date) -see note 6. NWF GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2006 CONSOLIDATED CASH FLOW STATEMENT Note 2006 2006 2005 2005 ------------------------------------ £'000 £'000 £'000 £'000 NET CASH INFLOW FROM OPERATING ACTIVITIES 4 9,111 2,706 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest paid (1,210) (863) TAXATION Corporation tax paid (1,598) (1,519) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Purchase of tangible fixed assets (2,822) (2,790) Sale of tangible fixed assets 99 98 ---------- ---------- NET CASH OUTFLOW FROM CAPITAL EXPENDITURE (2,723) (2,692) ACQUISITIONS AND DISPOSALS Acquisition of businesses (3,050) (5,330) (Bank overdraft) / cash acquired with business (25) 58 Deferred payment for businesses acquired in prior years (1,030) (400) Disposal of business - 1,561 ---------- ---------- NET CASH OUTFLOW FROM ACQUISITIONS AND DISPOSALS (4,105) (4,111) EQUITY DIVIDENDS PAID (1,421) (1,305) ---------- ---------- NET CASH OUTFLOW BEFORE FINANCING (1,946) (7,784) FINANCING Medium term loan received 2,000 9,000Medium term loan repayments (1,300) (2,315)Hire purchase finance repayments (161) (46)Shares issued for cash consideration including premium 5,983 6 ---------- ----------INCREASE / (DECREASE) IN CASH IN THE YEAR 4,576 (1,139) ========== ========== NWF GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2006 NOTES 1. SEGMENTAL INFORMATION Business Turnover Turnover Operating Operating Net Net operating profit profit operating assets (Restated - assets (Restated - see note 6) see note 6) 2006 2005 2006 2005 2006 2005---------------------------------------------------------------------------------------------------- £'000 £'000 £'000 £'000 £'000 £'000Distribution 27,226 22,000 2,072 1,197 11,737 12,125Feeds 71,911 53,090 1,543 1,851 16,866 12,719Fuels 178,151 145,486 2,823 2,633 8,674 8,365Garden Centres 15,585 15,072 284 (280) 12,046 11,497 ------------------------------------------------------------------------------------- 292,873 235,648 6,722 5,401 49,323 44,706==================================================================================================== Included within the 2006 operating profit figures above are the followingprovision releases: Distribution £nil (2005: £140,000); Feeds £nil (2005:£362,000); Fuels £nil (2005: £564,000). 2. TAXATION 2006 2005 Restated ----------------------- £'000 £'000 UK Corporation tax at 30% (2005 - 30%) 1,819 1,273Deferred tax charge 80 36 ----------------------- 1,899 1,309Prior year - current tax (credit) / charge (58) 97 - deferred tax charge / (credit) 117 (94) -----------------------Total tax charge 1,958 1,312 ======================= 3. EARNINGS PER SHARE The calculation of basic earnings per share is based on profit after tax for thefinancial year of £3,549,000 (2005: £2,873,000 restated), divided by 8,520,000ordinary shares being the weighted average number of ordinary shares in issue(2005 - 7,962,000). Earnings per ordinary share is adjusted to a fully diluted basis by adding tothe weighted number of shares in issue in the calculation, the weighted averagenumber of 169,000 (2005 - 238,000) dilutive ordinary shares in respect ofoutstanding share options. 4. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES 2006 2006 2005 2005 Restated Restated --------------------------------------- £'000 £'000 £'000 £'000 Operating profit before provision releases 6,722 4,335 Release of provisions no longer required (note 1) - 1,066 ---------- ---------- 6,722 5,401 Goodwill amortisation 468 300Depreciation charge 2,728 2,515Profit on sale of tangible assets (40) (24)(Increase) / decrease in stocks (1,014) 287 Increase in debtors (8,786) (5,907) Increase in creditors 9,161 460 Difference between pension charge and cash contribution (128) (326) ---------- ---------- (767) (5,486) ---------- ----------Net cash inflow from operating activities 9,111 2,706 ========== ========== 5. ANALYSIS OF NET DEBT Other At 31 May non-cash At 31 May 2005 Cash flow changes 2006 ------------------------------------------ £'000 £'000 £'000 £'000 Cash and bank balances 36 909 - 945Bank overdraft (3,831) 3,667 - (164) ------------------------------------------ (3,795) 4,576 - 781Debt due within one year (600) 600 - -HP liabilities due within one year (45) 161 (364) (248)Debt due after one year (11,400) (1,300) - (12,700)HP liabilities due after one year (57) - (587) (644) ------------------------------------------Total (15,897) 4,037 (951) (12,811) ========================================== 6. ACCOUNTING POLICIES The financial statements for the year ended 31 May 2006 have been prepared inaccordance with applicable accounting standards, using the same principalaccounting policies as set out in the Annual Report for the year ended 31 May2005 with the following exceptions: For the financial year beginning on 1 June 2005, the Group has adopted the newFinancial Reporting Standard FRS21 ("Events after the balance sheet date") andalso implemented in full the requirements of FRS17 ("Retirement benefits") wherepreviously the Group had only adopted the required transitional disclosurerequirements. The comparative figures for the year ended 31 May 2005 have beenrestated to reflect the impact of these two standards as detailed below. The adoption of FRS 21 means that the Group no longer recognises dividendsapproved after the balance sheet date as a liability within the financial periodto which they relate. As a consequence, the opening reserves at 1 June 2005 havebeen increased by £988,000 (2004: £963,000) and the retained profit for the yearended 31 May 2006 has increased by £236,000 (2005: £25,000). The full implementation of FRS 17 requires the deficit within the Group'sdefined benefit pension scheme to be recognised on the balance sheet net of therelated deferred tax asset. As a result, the opening reserves at 1 June 2005have been reduced by £4,283,000 (2004: £3,469,000). For the year ended 31 May2006, staff costs have reduced by £128,000 (2005: £349,000), interest payableand similar charges have increased by £127,000 (2005: £181,000), profit for theyear has therefore increased by £1,000 (2005: £124,000) and total recognisedgains and losses have increased by £1,179,000 (2005: £982,000 decrease). The Group has also complied with the presentation requirements of FRS 25("Financial Instruments: Disclosure and Presentation"); accordingly, dividendspaid are no longer disclosed on the face of the profit and loss account but as adistribution out of profit and loss reserves. 7. FINANCIAL CALENDAR Annual Report to be published 23 August 2006Annual General Meeting 26 September 2006Dividend:- ex-dividend date 16 August 2006- record date 18 August 2006- payment date 1 November 2006 8. ANNUAL REPORT This preliminary announcement does not form the Group's statutory accounts. Thefigures shown in this release have been extracted from the Group's full auditedfinancial statements which, for the year ended 31 May 2005, have been delivered,and, for the year ended 31 May 2006 will be delivered, to the Registrar ofCompanies. Both carry an unqualified audit report. After 23 August 2006, copies of the Annual Report can be obtained from theCompany's registered office at Wardle, Nantwich, Cheshire, CW5 6BP or viewed onthe Company's Website: www.nwf.co.uk This information is provided by RNS The company news service from the London Stock Exchange