Nwf Regulatory News (NWF)

14 Aug 2007 07:00

NWF Group PLC14 August 2007 Embargoed until 07.00, on 14 August 2007 NWF GROUP PLC ("NWF", "The Company" or "The Group") PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2007 NWF Group plc ("NWF"), the diversified sales and distribution business, todaymakes the preliminary announcement of its audited results for the year ended 31May 2007. Commenting on the results, Mark Hudson, Chairman, said: "In this, my firststatement as your new Chairman, I am delighted to report another good year forNWF in which all four businesses developed strongly." Commenting on the outlook for the current year he added: "There is no doubt thatthe prolonged wet weather of this summer has had adverse effects on both ourgarden products trading and on the prices of feeds raw materials. However,looking at the year as a whole, we are confident of continuing our growth andwill in particular have built up the turnover of our new distributionwarehouses." Financial Highlights (comparative figures for year to 31 May 2006): • Turnover increased by 9% to £320 million (2006: £293 million) • Pre tax profit before goodwill amortisation up 7% to £6.4 million (2006: £6.0 million) • Pre tax profit increased by 7% to £5.9 million (2006: £5.5 million) • Basic earnings per share were 41.2p (2006: 41.7p) • Full year dividend per share increased by 8% to 19.4p (2006:18.0p) • Initial use of new warehouse development Divisional Highlights: • Distribution - turnover down 1% to £27.0 million (2006: £27.2 million) due to a major customer change with construction and first use of one of the three new warehouses at Wardle in May. • Feeds - volumes exceeded 500,000 tonnes, a 12% increase on 2006, turnover up 13% to £81.5 million (2006: £71.9 million), record year with continuing growth and efficiency. • Fuels - operating profit up 11% to £3.1 million (2006: £2.8 million) best ever performance under tough market conditions with growth in market share. • Garden Centres - turnover up 38% to £21.5 million (2006: £15.6 million), operating profits up 130% to £0.7 million (2006: £0.3 million), six destination sites in operation by the end of the year. Graham Scott, Chief Executive, further added: "This has been anothersatisfactory year of development for the Group. We have seen a year ofsignificant investment, mainly in revenue generating fixed assets and we havecontinued to lay foundations for further growth, which will emerge as we fillour new capacities in several areas." 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 Chairman's Statement 2007 Highlights • Turnover up 9% to £320m (2006: £293m) • Pre-tax profit before goodwill amortisation up 7% to £6.4m (2006: £6.0m) • Pre-tax profit up 7% to £5.9m (2006: £5.5m) • Basic earnings per share 41.2p (2006: 41.7p) • Full year dividend per share up 8% to 19.4p (2006: 18.0p) • Initial use of new warehouse development In this, my first statement as your new Chairman, I am delighted to reportanother good year for NWF in which all four businesses developed strongly and inwhich our market capitalisation has exceeded £100 million for the first time. Turnover increased by 9% from £293 million last year to £320 million. Operatingprofit was 5% higher at £7.1 million (2006: £6.7 million). This result would have been higher but for the temporary loss of Distribution business at one warehouse earlier in the year and for the poor weather for Garden Centres in thelast month of the financial year. Profit before taxation before goodwill amortisation was £6.4 million (2006: £6.0 million) and reported profit before taxation was £5.9 million (2006: £5.5 million). The weighted average number of shares in issue during the year was increased by the 1 million share placing midway through the previous year. This has been invested in fixed assets which haveyet to be taken into fully profitable use, resulting in a marginal reduction in basic earnings per share to 41.2p (2006: 41.7p) Cash flows and funding The Group generated £12.0 million (2006: £9.1 million) net cash from operatingactivities and the net cash outflow before financing was £16.0 million (2006:£1.9 million). Uses of funds included £20.0 million of net capital investment(2006: £2.7 million) and £3.5 million in acquisition payments (2006: £4.1 million), including deferred payments of £1.8 million (2006: £1.0million) relating to previous transactions. Interest cover (excluding FRS17 finance cost)was 5.7 times (2006: 6.2 times) and year end gearing was, as planned, higher than historic levels at 97% (2006: 46%). Dividend We propose a final dividend per share of 14.5 pence (2006: 13.4 pence) whichwill bring the total for the year to 19.4 pence (2006: 18.0 pence), an increaseof 8% and which equates to dividend cover of 2.1 times (2006: 2.2 times).Subject to shareholder approval, the final dividend will be paid on 1 November2007 to shareholders on the register at the close of business on 24 August 2007and the shares will trade ex dividend on 22 August 2007. Divisional overview The main activity for Distribution was the construction and first use of thethree new warehouses at Wardle which will be the driver for further profitablebusiness in the future. In Feeds, a record result was achieved under the adverseconditions of high world commodity prices, by continuing growth and efficiency.Fuels also turned in a best-ever performance under similar conditions of highproduct prices by increasing its market share. The Garden Centre division endedthe year with six large destination sites and with a much improved performancecompared to 2006. Acquisitions and investments The sole operating company acquisition in the year was that of Browns of BurwellLtd, a fuel distributor in Suffolk which was acquired in July 2006 for£1.4 million. The major capital investments in the year have been £14.9 million in the new Distribution warehouses and their ancillary infrastructure and£3.7 million in the new Garden Centre at Ashton Park in East Manchester,following the purchase of Arthur A Gent & Sons Ltd (a dormant company holding alease and planning permission) in July 2006 for a net consideration of£0.4 million. Board changes Shareholders will join me in reiterating our thanks to Roy Willis, who retiredat the 2006 AGM after nine years as your Chairman and service as a Directorsince 1980. We look forward to welcoming Richard Whiting, who will join us on 1October 2007 to succeed Graham Scott on his retirement as Chief Executive of theGroup. Richard joins us from Heywood Williams plc where he was Group FinanceDirector. Outlook for the current year There is no doubt that the prolonged wet weather of this summer has had adverseeffects on both our garden products trading and on the prices of feeds rawmaterials. However, looking at the year as a whole, we are confident ofcontinuing our growth and will in particular have built up the turnover of ournew distribution warehouses which are expected to be fully operational in thesummer of 2008. My thanks go to all who have supported NWF through the year bothinside and outside the company. I look forward to updating shareholders on theGroup's progress at the time of the Annual General Meeting in October. Mark HudsonChairman14 August 2007 Chief Executive's Review This has been another satisfactory year of development for the Group, withprofit before tax before goodwill up by 7.5% to £6.4 million (2006: £6.0 million) on turnover of £320.4 million, an increase of 9.4% on £292.9 million last year. Three of the businesses improved their profits over 2006 while the fourth, Distribution, suffered from a well-publicised customer loss which was replaced within the year but nevertheless caused a profit downturn in 2007. We havecontinued to lay foundations for further growth within the Group, which willemerge as we fill our new capacities in several areas. We have seen a year of significant investment, mainly in revenue generatingfixed assets, with a 10.1% increase in overall net assets to £30.4 million (2006: £27.6 million). There has been a predicted rise in interest costs and gearing, which will continue in the short term as revenues and profits from these investments gradually build to planned levels. Distribution This has been an exceptionally busy year for Distribution. The warehouseinvestment project at Wardle has dominated the year and the first of the threenew warehouses was taken into use in May in line with our mid-year update. Theother two will be commissioned in the course of the summer. The rate ofacquiring new business is in line with our previous expectation of filling all60,000 new pallet places by the end of May 2008. A major customer at Deeside, HPFoods, was acquired by Heinz and its logistics taken in house by the new owner.The space was taken by Typhoo Tea but not before several months of excesscapacity had elapsed. The year's turnover was consequently down, by 1% from£27.2 million to £27.0 million and operating profits fell by 32% from £2.1 million to £1.4 million. Profits were also affected, as expected, by various start-up costs associated with the new development. Feeds Feeds moved forward again on total volumes which exceeded 500,000 tonnes for thefirst time, increasing by 12% over last year in a market for ruminant feedswhich was around 7% larger in the same period. Much of the market growth was inblends, a segment in which we saw a 26% increase. Turnover was 13% up,reflecting the effect of the higher priced raw material base, at £81.5 millioncompared to £71.9 million last year. Operating profit reached a new record forthe division at £1.9 million (2006: £1.5 million), up by 21%. We were particularly pleased by a strong performance in the South West, an area that we only entered less than three years ago, making NWF a national player in this market. We will create further blends and raw material storage capacity at Wardle in time for winter 2007/08. Fuels The Fuels business added another record year to its string of year-on-yearimprovements. Despite high world oil prices and a mild winter which cut back onheating oil demand, the division posted an operating profit of £3.1 millioncompared to £2.8 million in 2006, an increase of 11%. Total volumes on alike-for-like basis were unchanged at around 320 million litres, with extradiesel sales making up for the heating oils shortfall. Browns of Burwell, thefuel depot acquired in August 2006, was quickly assimilated into the operations,distributing 15 million litres in the period since acquisition and making auseful initial contribution to total operating profit. The fuel card marketingoperation made further progress. Garden Centres Like for like, the four more established garden centres enjoyed a 10% uplift onsales compared to 2006. This would have been higher but for the disappointingweather in May, the busiest month for the entire industry. Woodford Park had afull year in the NWF fold, adding £6.1 million further turnover while AshtonPark, completed as a green field new build on time in March 2007, added afurther £0.5 million sales. Total turnover for the division was 38% up, takingsales from £15.6 million last year to £21.5 million this year. Operating profitswere 130% up at £0.7 million (2006: £0.3 million). Average margins were improvedyear-on-year and several new concessions were introduced at various sites. Thenew Gourmet food halls at two centres traded well and this concept will beextended to other sites. Accounting standards In accordance with the London Stock Exchange rules for AIM listed companies, wewill be adopting new International Financial Reporting Standards (IFRS) in ourfinancial statements for the 2007/08 financial year onwards. This will apply toour interim results due to be published in early 2008, which will also includean explanation of the effects of changing to IFRS from existing UK basedstandards at the date of transition (1 June 2006). Outlook for 2007/08 We are looking for further improvement in the new year. Distribution shouldbenefit from the absence of last year's problems (major customer loss, start-upcosts) while filling its new space. Feeds is expected to continue to grow itsmarket share and benefit from further utilisation of blending capacity. Fuelswill look to expand its geographic coverage even further and optimise operationswithin existing depot catchment areas. Garden Centres should enjoy the benefitsof six large units with new buying and operations management while improving itsoffer and margins. I would like to add my own welcome to Richard Whiting, who will succeed me asChief Executive in the first half of this new year. I would also like to thankall of my colleagues in NWF and the friends of NWF outside the Group who havebeen so supportive over the 12 years that we have been on AIM and who havetogether built up the business to its present scale and reputation. Graham ScottChief Executive14 August 2007 NWF GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2007 CONSOLIDATED PROFIT AND LOSS ACCOUNT Note 2007 2006 ---------- ---------- £'000 £'000TURNOVER 1 320,365 292,873COST OF SALES (293,492) (270,229) ---------- ----------GROSS PROFIT 26,873 22,644ADMINISTRATIVE EXPENSES (19,822) (15,922) ---------- ----------OPERATING PROFIT 1 7,051 6,722Interest payable (1,244) (1,088)Other finance costs - FRS17 69 (127) ---------- ----------PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 5,876 5,507Taxation on ordinary activities 2 (2,105) (1,958) ---------- ----------PROFIT FOR THE FINANCIAL YEAR 3,771 3,549 ========== ==========Earnings per shareBasic 3 41.2p 41.7pDiluted 3 40.4p 40.8p All of the Group's turnover is derived from continuing operations. NWF GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2007 CONSOLIDATED BALANCE SHEET 2007 2007 2006 2006 ------- -------- -------- -------- £'000 £'000 £'000 £'000 FIXED ASSETS Intangible assets 9,254 9,285Tangible assets 44,296 25,005 -------- -------- 53,550 34,290 CURRENT ASSETS Stocks 8,063 7,094Debtors 40,027 39,515 Cash and bank balances 66 945 ------- -------- 48,156 47,554 CREDITORS - Amounts falling due within one year(47,547) (34,646) ------- --------NET CURRENT ASSETS 609 12,908 -------- --------TOTAL ASSETS LESS CURRENT LIABILITIES 54,159 47,198CREDITORS - Amounts falling due after more than one year (20,077) (15,219) -------- --------PROVISIONS FOR LIABILITIES AND CHARGES Deferred taxation (1,197) (1,112) -------- --------NET ASSETS EXCLUDING PENSION LIABILITY 32,885 30,867Pension liability (2,455) (3,223) -------- --------NET ASSETS INCLUDING PENSION LIABILITY 30,430 27,644 ======== ======== CAPITAL AND RESERVES -------- --------Equity share capital 2,286 2,285Share premium 6,234 6,231Revaluation reserve 1,396 1,421Other reserves 302 302Profit and loss account 20,212 17,405 -------- --------TOTAL EQUITY SHAREHOLDERS' FUNDS 30,430 27,644 ======== ======== NWF GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2007 CONSOLIDATED CASH FLOW STATEMENT Note 2007 2007 2006 2006 ------- ------- ------- ------- £'000 £'000 £'000 £'000 NET CASH INFLOW FROM 4 12,045 9,111OPERATING ACTIVITIES RETURNS ON INVESTMENTS AND SERVICING OF FINANCEInterest paid (1,617) (1,210) TAXATION Corporation tax paid (1,868) (1,598) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Purchase of tangible fixed assets (20,230) (2,822)Sale of tangible fixed assets 188 99 ------- -------NET CASH OUTFLOW FROM CAPITAL EXPENDITURE (20,042) (2,723) ACQUISITIONS AND DISPOSALS Acquisition of businesses (2,486) (3,050)Cash / (bank overdraft) acquired with businesses 847 (25)Deferred payment for businesses acquired in prior years (1,830) (1,030)Deferred receipt for business disposal inprior years 592 - ------- ------- NET CASH OUTFLOW FROM ACQUISITIONS AND DISPOSALS (2,877) (4,105)EQUITY DIVIDENDS PAID (1,673) (1,421) ------- -------NET CASH OUTFLOW BEFORE FINANCING (16,032) (1,946) ------- -------FINANCING Medium term loan received 5,972 2,000Medium term loan repayments - 1,300)Hire purchase finance repayments (347) (161)Shares issued for cash considerationincluding premium 4 5,983 ------- -------(DECREASE) / INCREASE IN CASH IN THE YEAR (10,403) 4,576 ======= ======= NWF GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2007 NOTES 1. SEGMENTAL INFORMATIONBusiness Turnover Turnover Operating Operating Net Net operating operating profit profit assets assets 2007 2006 2007 2006 2007 2006 ---------- --------- --------- --------- --------- --------- -------- £'000 £'000 £'000 £'000 £'000 £'000Distribution 26,985 27,226 1,411 2,072 26,267 11,737Feeds 81,522 71,911 1,861 1,543 17,463 16,866Fuels 190,402 178,151 3,126 2,823 7,771 8,674Garden 21,456 15,585 653 284 14,891 12,046Centres --------- --------- --------- --------- --------- -------- 320,365 292,873 7,051 6,722 66,392 49,323 ========== ========= ========= ========= ========= ========= ======== 2. TAXATION 2007 2006 -------- --------- £'000 £'000 -------- ---------UK Corporation tax at 30% (2006 - 30%) 1,961 1,819Deferred tax charge - deferred tax provision 53 80Deferred tax charge - FRS 17 deferred tax asset 35 - -------- --------- 2,049 1,899 -------- ---------Prior year - current tax charge / (credit) 50 (58) - deferred tax charge 6 117 -------- ---------Total tax charge 2,105 1,958 ======== ========= 3. EARNINGS PER SHARE The calculation of basic earnings per share is based on profit after tax for thefinancial year of £3,771,000 (2006: £3,549,000), divided by 9,142,000 ordinaryshares being the weighted average number of ordinary shares in issue (2006 -8,520,000). 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 193,000 (2006 - 169,000) dilutive ordinary shares in respect ofoutstanding share options. 4. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES 2007 2007 2006 2006 ------- -------- -------- -------- £'000 £'000 £'000 £'000 Operating profit 7,051 6,722Goodwill amortisation 545 468Depreciation charge 3,091 2,728Profit on sale of tangible assets (97) (40)Increase in stocks (844) (1,014)Increase in debtors (677) (8,786)Increase in creditors 3,025 9,161 Difference between pension charge andcash contributions (49) (128) 1,455 (767) -------- --------Net cash inflow from operating activities 12,045 9,111 ======== ======== 5. ANALYSIS OF NET DEBT At 31 May Cash flow Other At 31 May 2006 non-cash 2007 changes £'000 £'000 £'000 £'000 Cash and bank balances 945 (879) - 66Bank overdraft (164) (9,524) - (9,688)-------------------------------------------------------------------------------- 781 (10,403) - (9,622)Hire purchase liabilities due within one year (248) 347 (409) (310)Debt due after one year (12,700) (5,972) - (18,672) Hire purchase liabilities due after one year (644) - (211) (855)-------------------------------------------------------------------------------- Total (12,811) (16,028) (620) (29,459)================================================================================ 6. ACCOUNTING POLICIES The financial statements for the year ended 31 May 2007 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 May2006. 7. FINANCIAL CALENDAR Annual Report to be published 24 August 2007Annual General Meeting 4 October 2007Dividend: - ex-dividend date 22 August 2007 - record date 24 August 2007 - payment date 1 November 2007 8. ANNUAL REPORT This preliminary announcement does not constitute the Group's statutoryaccounts. The figures shown in this release have been extracted from the Group'sfull audited financial statements which, for the year ended 31 May 2006, havebeen delivered, and, for the year ended 31 May 2007 will be delivered, to theRegistrar of Companies. Both carry an unqualified audit report. After 24 August 2007, 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