Nwf Regulatory News (NWF)

2 Feb 2006 07:01

NWF Group PLC02 February 2006 Embargoed until 07.01, Thursday 2 February 2006 NWF GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 NOVEMBER 2005 NWF Group plc ("NWF"), the diversified sales and distribution business, todayannounces interim results for the six months ended 30 November 2005. Commenting on the results, Roy Willis, Chairman said: "Both turnover and profitbefore taxation have shown significant improvement compared to the previous halfyear and the Group has traded in line with management's expectation during theperiod with all four businesses ahead of the same period last year." Financial highlights (comparative figures for six months to 30 November 2004*): • Turnover increased by 23% to £134m (2004: £109m) • Profit on ordinary activities before taxation increased by 87% to £1.8m (2004: £1.0m) • Basic earnings per share increased by 117% to 15.2p (2004: 7.0p) • Interim dividend increased by 7% to 4.6p (2004: 4.3p) • Raised £5.7m through equity share placing in December *Comparatives above restated to reflect the adoption of FRS 17 and FRS 21 Divisional highlights: • Distribution: all three warehousing sites fully and profitably occupied throughout the six months; appointed a Primary Consolidation Centre for Somerfield in August; preparation for the £15m building programme at Wardle well in hand and expected to be completed by early 2007 • Feeds: 45% volume increase in a competitive market, of which 30% came from expansion into the South West; established new blend plants at Ayr, Penrith and Exeter during the period • Fuels: turnover increased by 21% to £83 million on volumes up 9% to 145 million litres; Broadland Fuels acquired in August • Garden Centres: benefits of new focus and contribution from 2004 Victoria acquisition; operating result improved by 81%; acquisition of Woodford Park Garden Centre announced today On the outlook for the coming months Roy Willis added: "The Board joins me inexpressing confidence that the improvement in the Group's trading performanceachieved in the first six months will continue in the second half of the yearand beyond." For further information please visit www.nwf.co.uk or contact: Graham Scott, Chief Executive John WestPaul Grundy, Finance Director Claire MellyNWF Group plc Tavistock CommunicationsTel: 01829 260260 Tel: 020 7920 3150 Chairman's Statement I am delighted to report the interim results for NWF Group for the six monthsended 30 November 2005. Both turnover and profit before taxation have shownsignificant improvement compared to the previous half year and the Group hastraded in line with management's expectation during the period with all fourbusinesses ahead of the same period last year. Where applicable, comparatives referred to below have been restated to reflectthe two financial reporting standards which the Group has adopted for the firsttime during this period, relating to pensions (FRS17) and dividends unapprovedat the balance sheet date (FRS21). Profit before taxation of £1.8 million is a significant uplift from last year'slevel of £1.0 million which was depressed by a number of non-recurringrestructuring items. The steps taken last year (notably the move into theDeeside warehouse, the Country Stores disposal and the acquisitions of VictoriaGarden Centre and of JGW Thomas & Son Ltd) have laid the foundations for furthergrowth in the Group. During the reporting period, we have strengthened the Group again in a number ofareas. The acquisitions of Broadland Fuels Ltd and Nutrition Express Ltd bothtook place in August. Boughey Distribution was appointed as a PrimaryConsolidation Centre by Somerfield Stores Ltd and new feed blending plants wereestablished at Ayr, Penrith and Exeter. We have also separately announced todaythe acquisition of Woodford Park Garden Centre in south Manchester. In addition,after the period end, shareholders approved the placing of 1,071,843 new shareswith a number of institutions to raise £5.7 million net of expenses inconjunction with the funding of new warehouses at Wardle in 2006/07. Results Group turnover for the six months to 30 November 2005 increased by 23% from £109million to £134 million. Operating profit increased to £2.4 million (2004: £1.7million). Before goodwill amortisation of £0.2 million (2004: £0.1 million),pre-tax profit was £2.1 million (2004: £1.1 million). Basic earnings per share before goodwill amortisation were 17.9 pence (2004: 8.1pence), basic earnings per share were 15.2 pence (2004: 7.0 pence) and dilutedearnings per share were 14.9 pence (2004: 6.8 pence). The adoption of FRS17 and FRS21 has not had a material impact on the aboveresults, the divisional operating performances referred to below or the restatedcomparative figures. Dividend The Board has maintained its progressive dividend policy by approving an interimdividend per share of 4.6 pence (2004: 4.3 pence) which will be paid on 2 May2006 to shareholders on the register on 31 March 2006. The shares will tradeex-dividend on 29 March 2006. Operations The Distribution business saw operating profit increase by 32% from £708,000 to£934,000 on turnover up by 24% to £14 million (2004: £11 million). All threewarehousing sites (Wardle, Deeside and Winsford) were fully and profitablyoccupied throughout the six months. The division was appointed a PrimaryConsolidation Centre for Somerfield Stores Ltd in August 2005. Preparation forthe £15 million building programme at Wardle, due to start in early summer 2006,is well in hand and expected to be completed by early 2007. Feeds saw a 45% volume increase in a competitive market, of which 30% came fromour expansion into the South West. Turnover rose by 40% from £22 million to £31million while operating profit improved slightly from £691,000 to £716,000.Firmer raw material prices by the end of the period dampened earlier progress onmargins and thus profits. The division established new blend plants at Ayr(Scotland), Penrith (Cumbria) and Exeter (Devon) during the period. Fuels operated against a backdrop of continuing high product prices, withturnover increasing by 21% from £68 million to £83 million on a volume increaseof 9% to 145 million litres. Operating profit was £823,000 compared to £782,000last time. All depots performed well with Broadland Fuels in East Anglia,acquired in August 2005, having an immaterial effect on results during theperiod. Garden Centres benefited from a new focus on this activity and from thecontribution of Victoria Garden Centre, acquired in November 2004. Turnover was£6 million (2004: £7 million, which included £2 million from the nowdiscontinued Country Stores operations). The operating loss of £83,000 showed asignificant turnround of 81% from a loss of £448,000 last year. Garden centresare normally expected to make the majority of their profits in our second halfyear. The Group has also separately announced the acquisition of Woodford ParkGarden Centre for an estimated total consideration of £1.95 million, includingstock of approximately £700,000, and has entered into a new 35 year propertylease with an initial annual rent of £600,000, reviewable every five years.Woodford Park has been developed over the past decade and has grown to be one ofthe UK's largest destination garden centres with unaudited turnover of £6.4million for the year ending 31 January 2005. The total site measures 9.5 acresand the garden centre has won a number of industry awards over the years. Thecentre lies on the A5102, the major road running between Wilmslow and Stockport. Board and prospects I would like to restate my AGM announcements that I will be retiring after thisyear's AGM to be succeeded by Mark Hudson, currently Deputy Chairman, and thatGraham Scott has agreed to extend his period of office as Chief Executive untilat least the end of 2007. The Board joins me in expressing confidence that the improvement in the Group'strading performance achieved in the first six months will continue in the secondhalf of the year and beyond. Roy WillisChairman2 February 2006 Group profit and loss account Half year to Half year to Year toHalf year ended 30 November 2005 30 Nov 2005 30 Nov 2004 31 May 2005 --------------------------------------- £'000 £'000 £'000 Restated Restated Turnover 133,616 108,565 235,648 ------------------------------------Operating costs before provisions release (131,226) (106,832) (231,313)Release of provisions no longer required - - 1,066 ------------------------------------ Operating costs (131,226) (106,832) (230,247) ------------------------------------ Operating profit 2,390 1,733 5,401 Exceptional item - loss on disposal of business: ------------------------------------Surplus over net tangible assets - 450 595Less: goodwill previously written off - (780) (780) ------------------------------------ - (330) (185) Interest payable (485) (326) (850) Other finance costs - FRS17 (64) (91) (181) ------------------------------------ Profit on ordinary activities before taxation 1,841 986 4,185 Taxation (625) (429) (1,312) ------------------------------------ Profit after taxation 1,216 557 2,873 Dividends paid (note 5) (1,000) (963) (1,305) ------------------------------------Profit/(loss) transferred to/(from) reserves 216 (406) 1,568 ==================================== Earnings per share (note 1) Basic before goodwill amortisation 17.9p 8.1p 39.9p Basic 15.2p 7.0p 36.1p Diluted 14.9p 6.8p 35.0p Proposed dividend per share 4.6p 4.3p 16.7p Summarised group balance sheetAt 30 November 2005 30 Nov 2005 30 Nov 2004 31 May 2005 --------------------------------------- £'000 £'000 £'000 Restated Restated Intangible assets 8,199 5,187 7,300Tangible assets 23,858 22,483 23,591Stocks 6,332 5,708 5,372Debtors 37,979 28,745 29,843Cash and bank balances 54 36 36Creditors: amounts falling due within one year (38,587) (31,295) (27,537) ------------------------------------Total assets less current liabilities 37,835 30,864 38,605Creditors: amounts falling due after more than one year (13,821) (9,157) (15,012)Provision for liabilities and charges (813) (902) (837) ------------------------------------Net assets excluding pension liability 23,201 20,805 22,756Pension liability (note 5) (4,399) (3,516) (4,403) ------------------------------------Net assets including pension liability 18,802 17,289 18,353 ====================================Total equity shareholders' funds 18,802 17,289 18,353 Reconciliation of movements in equity shareholders' fundsHalf year ended 30 November 2005 Half year to Half year to Year to 30 Nov 2005 30 Nov 2004 31 May 2005 --------------------------------------- £'000 £'000 £'000 Restated Restated Opening equity shareholders' funds as previously stated 21,648 19,443 19,443Prior year adjustment - FRS17 (note 5) (4,283) (3,469) (3,469)Prior year adjustment - FRS21 (note 5) 988 963 963 ------------------------------------Opening equity shareholders' funds as restated 18,353 16,937 16,937 Profit after taxation 1,216 557 2,873Dividends paid (1,000) (963) (1,305)Share capital issued including premium 236 - 6Goodwill resurrected on disposal of business - 780 780Actuarial loss on group pension scheme (note 5) - - (1,341)Taxation associated with group pension scheme (3) (22) 403 ------------------------------------Closing equity shareholders' funds 18,802 17,289 18,353 ==================================== Summarised group cash flow statementHalf year ended 30 November 2005 Half year to Half year to Year to 30 Nov 2005 30 Nov 2004 31 May 2005 --------------------------------------- £'000 £'000 £'000 Restated Restated Operating profit before provision releases 2,390 1,733 4,335Release of provisions no longer required - - 1,066Goodwill amortisation 217 91 300Depreciation charge 1,447 1,210 2,515Increase in working capital (2,104) (3,033) (5,160)Other (68) (162) (350) ------------------------------------Operating cash inflow/(outflow) 1,882 (161) 2,706Interest (457) (357) (863)Taxation (752) (834) (1,519)Dividends (1,000) (963) (1,305)Purchase of tangible fixed assets (1,241) (2,012) (2,790)Sale of tangible fixed assets 32 72 98Acquisitions including (cash)/bank overdraft acquired (916) (3,061) (5,272)Disposal of business - 1,258 1,561Deferred acquisition payments (1,030) (400) (400) ------------------------------------Net cash outflow before financing (3,482) (6,458) (7,784)Term loan and HP finance movements (311) (529) (2,361)Medium term loan received - 3,000 9,000Issue of ordinary share capital 236 - 6 ------------------------------------Decrease in cash in the period (3,557) (3,987) (1,139) ==================================== Reconciliation of net cash flow to movement in net debtHalf year ended 30 November 2005 Half year to Half year to Year to 30 Nov 2005 30 Nov 2004 31 May 2005 --------------------------------------- £'000 £'000 £'000 Decrease in cash per cash flow statement (3,557) (3,987) (1,139)Cash outflow/(inflow) from decrease/(increase) in HP and debt financing 311 (2,471) (6,639) ------------------------------------Change in net debt resulting from cash flows (3,246) (6,458) (7,778)HP and lease finance acquired with acquisition - - - Net debt brought forward (15,897) (8,119) (8,119) ------------------------------------Net debt carried forward (19,143) (14,577) (15,897) ==================================== Analysis of net debt: Cash and bank balances 54 36 36Overdrafts (7,406) (6,679) (3,831)HP and lease finance due within one year (45) (45) (45)Debt due within one year (600) (787) (600)HP and lease finance due after one year (46) (102) (57)Debt due after one year (11,100) (7,000) (11,400) ------------------------------------ (19,143) (14,577) (15,897) ==================================== Segmental analysisHalf year ended 30 November 2005 Half year to Half year to Year to 30 Nov 2005 30 Nov 2004 31 May 2005 --------------------------------------- £'000 £'000 £'000 Restated Restated TurnoverDistribution 13,632 10,998 22,000Feeds 30,809 22,036 53,090Fuels 82,734 68,179 145,486Garden centres 6,441 7,352 15,072 ------------------------------------ 133,616 108,565 235,648 ==================================== Operating profitDistribution 934 708 1,197Feeds 716 691 1,851Fuels 823 782 2,633Garden centres (83) (448) (280) ------------------------------------ 2,390 1,733 5,401 ==================================== Net operating assetsDistribution 11,806 11,336 12,150Feeds 17,121 9,113 12,795Fuels 5,761 6,876 8,391Garden centres 12,678 11,367 11,420 ------------------------------------ 47,366 38,692 44,756 ==================================== Notes: 1. The calculation of basic earnings per share before goodwill amortisationfor the half year is based on profit after taxation and before goodwillamortisation of £1,433,000 (2004: £648,000, as restated - see note 4) and on8,025,568 (2004: 7,961,123) ordinary shares representing the weighted averagenumber of shares in issue during the period. The calculation of basic earnings per share for the half year is based on profitafter taxation of £1,216,000 (2004: £557,000, as restated - see note 4) and on8,025,568 (2004: 7,961,123) ordinary shares representing the weighted averagenumber of shares in issue during the period. The calculation of diluted earnings per share for the half year is based on thefigures shown above amended for the weighted average dilutive effect (162,396shares) of share options outstanding through the period (2004: 241,322 shares). 2. The Group acquired Broadland Fuels Limited on 17 August 2005 for aconsideration of £0.7 million. The book value of net assets acquired amounted to£0.2 million, resulting in provisional goodwill of £0.5 million. The results forthe period since acquisition are not material. 3. The Group acquired Nutrition Express Limited on 19 August 2005 for aconsideration of £0.5 million, of which £0.2 million is deferred depending oncertain financial targets being met. The book value of net assets acquiredamounted to £nil, resulting in provisional goodwill of £0.5 million. The resultsfor the period since acquisition are not material. 4. The figures for the half year ended 30 November 2005 and the comparativefigures for the half year ended 30 November 2004 are unaudited. The comparativefigures for the year ended 31 May 2005 are based on an abridged version of theaccounts for that year filed with the Registrar of Companies, on which anunqualified audit opinion has been given, and then adjusted for certain changesin accounting policies. Details of the changes in accounting policies are givenin notes 5 to 7 below. 5. The above financial statements have been prepared on the basis ofaccounting policies set out in the 2005 Annual Report and Accounts with thefollowing exceptions. For the financial year beginning on 1 June 2005, the Grouphas adopted the new Financial Reporting Standard FRS21 ("Events after thebalance sheet date") and also implemented in full the requirements of FRS17("Retirement benefits") where previously the Group had only adopted the requiredtransitional disclosure requirements. The comparative figures for the year ended31 May 2005 and for the half year ended 30 November 2004 have been restated toreflect the impact of these two standards (see notes 6 and 7). 6. The adoption of FRS 21 has meant that the Group is no longer able torecognise dividends approved after the balance sheet date as a liability withinthe financial period to which they relate. As a consequence, the openingreserves at 1 June 2005 have been increased by £988,000 (2004: £963,000) and theprofit transferred to reserves for the half years ended 30 November 2005 and 30November 2004 have been reduced by £617,000 and £621,000 respectively. Theretained profit for the year ended 31 May 2005 has increased by £25,000. 7. The full implementation of FRS 17 requires the deficit within theGroup's defined benefit pension scheme to be recognised on the balance sheet netof the related deferred tax asset. As a result, the opening reserves at 1 June2005 have been reduced by £4,283,000 (2004: £3,469,000). The impacts of fullimplementation on the profit and loss accounts and on the total recognised gainsand losses for the half years ended 30 November 2005 and 30 November 2004 arenot material. The profit and loss effect for the year ended 31 May 2005 is adecrease in operating costs of £349,000, an increase in other finance costs of£181,000, an increase in taxation of £44,000 and therefore an increase in profitafter taxation of £124,000. The total recognised gains and losses for the yearended 31 May 2005 have reduced by £938,000. 8. Copies of the Interim Report will be sent to shareholders on 6 February2006. Further copies may be obtained from the Company Secretary at NWF Groupplc, Wardle, Nantwich, Cheshire, CW5 6BP. 2006 Financial calendar Interim dividend paid 2 May 2006Financial year end 31 May 2006Preliminary announcement of full year results August 2006Publication of Annual Report and Accounts September 2006Annual General Meeting 26 September 2006Final dividend paid 1 November 2006 This information is provided by RNS The company news service from the London Stock Exchange