Marnie Millard, Group Chief Executive Officer Tim Croston, Group Chief Financial Officer Andrew Milne, Group Chief Operating Officer
Nichols plc
Telephone: 01925 222 222
Website:www.nicholsplc.co.uk
Alex Brennan/ Hattie Dreyfus
Hudson Sandler
Richard Lindley/ Rachel Hayes
Telephone: 020 7796 4133
N+1 Singer(Nominated Adviser and Broker)
Email: nichols@ hudsonsandler.com
Telephone: 0207 496 3000 Website:www.n1singer.com
Nichols plc
2019 INTERIM RESULT & BOARD CHANGES
Nichols plc ('Nichols' or the 'Group'), the soft drinks Group, announces its Interim results for the half year ended 30 June 2019 (the 'period').
Financial Highlights:
*EBITDA is the statutory profit before tax, interest, depreciation and amortisation
Half Year ended 30 June 2019
Half Year ended 30 June 2018
% movement
£m
£m
Group Revenue
71.6
65.0
10.2%
Operating Profit
13.3
13.1
2.1%
Operating Profit margin
18.6%
20.1%
Profit Before Tax (PBT)
13.3
13.1
2.0%
PBT Margin
18.6%
20.1%
EBITDA*
15.3
14.0
9.7%
Earnings per share (basic)
29.63p
28.81p
2.8%
Interim dividend
12.4p
11.3p
9.7%
John Nichols, Non-Executive Chairman, said:
"Nichols plc has delivered another good trading performance in the first half of 2019, with growth across both the UK and international markets. As a result, revenue, profit before tax and earnings per share have all increased during the period, and we have increased the interim dividend by 9.7%."
Chairman's Statement
I am pleased to announce that the Group has delivered a good trading performance for the first six months of 2019. The Group's revenue, profit before tax and earnings per share have all increased during the period, and we have increased the interim dividend by 9.7%.
Trading
Total Group revenue in the period increased by 10.2% to £71.6m against the prior year (H1 2018: £65.0m). Across the Group, revenue from Still products has increased by 11.6% to £33.9m driven by Vimto dilute in the UK and Vimto concentrate sales to the Middle East. Sales of Carbonate products grew by 8.4% to £37.7m as a result of the Africa performance and Out of Home (OoH) growth.
Sales were strong in our international markets, albeit against softer prior year comparatives. International revenues totalled £14.5m in the period (H1 2018: £11.2m), with sales to the Middle East in line with expectations at £4.6m (H1 2018: £2.1m). Elsewhere in our international markets, sales to Africa grew by 12.6% to £7.6m, driven by strong execution in our core markets.
In the UK, revenue increased by 6.2% to £57.1m (H1 2018: £53.8m) as sales of Vimto grew by 4.0%, against very strong prior year comparatives (H1 2018: +9.0%). Year to date growth in the total soft drinks market was 4.1% (Nielsen to 15 June 2018) reducing from 5.7% in May (Nielsen to 18 May 2019) as the industry laps last year's record summer weather. Elsewhere in the UK business, OoH sales increased by 11.8% to £21.5m (H1 2018: £19.2m).
Profit
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) increased by 9.7% to £15.3m (H1 2018: £14.0m).
To support the trading growth, the Group has invested in its infrastructure during the period. In addition, administrative expenses include the retranslation cost of US Dollar and Euro currency balances reflecting adverse forex movements.
Profit Before Tax at the half year was £13.3m, 2.0% ahead of the prior period.
Dividend
Reflecting the Board's ongoing confidence in the Group's financial position, we are pleased to recommend an interim dividend of 12.4 pence per share (H1 2018: 11.3 pence).
The interim dividend will be paid on 30 August 2019 to shareholders registered on 26 July 2019; the ex-dividend date is 25 July 2019.
The Board intends to deliver continued returns to shareholders through a progressive dividend policy, with increases aligned to growth in earnings per share with the alignment being fully implemented by 2021.
Board changes
After 14 years with the Group and 10 years as Group Chief Financial Officer, Tim Croston has informed the Board of his intention to step down from the Board by 30 June 2020. The notice that Tim has given the Board affords sufficient time to ensure a smooth transition to his successor, with the recruitment process commencing immediately.
Separately, we are delighted to announce that Andrew Milne who has served on the Board since January 2016 as Group Commercial Director has been promoted to the role of Group Chief Operating Officer with immediate effect.
On behalf of the Board I would like to thank Tim for his significant contribution to the Group during the last 14 years and wish Andrew every success in his new role.
Summary and outlook
The Board is pleased with the Group's performance in the first six months of 2019 in both our UK and international markets.
While UK trading conditions are expected to remain challenging, as a result of the Group's diversified business model and sales momentum, the Board is confident that full year earnings will be delivered in line with its expectations.
John Nichols
Non-Executive Chairman
16 July 2019
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
Notes to Editors:
Nichols plc 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, ICEE, Levi Roots and Sunkist.
CONSOLIDATED INCOME STATEMENT
Unaudited
Unaudited
Audited
Half year ended
Half year ended
Full year ended
30-Jun-2019
30-Jun-2018
31-Dec-2018
£'000
£'000
£'000
Revenue
71,611
64,989
142,037
Operating Profit
13,337
13,058
31,638
Finance income
120
75
192
Finance expense
(118)
(60)
(77)
Profit Before Taxation
13,339
13,073
31,753
Taxation
(2,419)
(2,436)
(6,238)
Profit for the financial period
10,920
10,637
25,515
Earnings Per Share (basic)
29.63p
28.81p
69.23p
Earnings Per Share (diluted) - all activities
29.62p
28.79p
69.19p
Dividends paid per share
26.80p
23.40p
34.70p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited
Unaudited
Audited
Half year ended 30-Jun-2019
Half year ended 30-Jun-2018
Full year ended 31-Dec-2018
£'000
£'000
£'000
Profit for the financial period
10,920
10,637
25,515
Items that will not be reclassified subsequently to profit or loss Re-measurement of net defined benefit liability
-
-
(412)
Deferred taxation on pension obligations and employee benefits
-
-
(44)
Other comprehensive income/ (expense) for the period
-
-
(456)
Total comprehensive income for the period
10,920
10,637
25,059
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited
Unaudited
Audited
30-Jun-2019
30-Jun-2018
31-Dec-2018
£'000
£'000
£'000
ASSETS
Non-current assets
Property, plant and equipment
20,885
14,391
14,572
Goodwill
38,585
33,726
34,451
Intangibles
8,414
7,767
7,748
Deferred tax assets
835
1,065
835
Total non-current assets
68,719
56,949
57,606
Current assets
Inventories
8,767
6,212
7,164
Trade and other receivables
42,440
34,120
38,153
Cash and cash equivalents
29,504
37,148
38,896
Total current assets
80,711
77,480
84,213
Total assets
149,430
134,429
141,819
LIABILITIES
Current liabilities
Trade and other payables
26,437
26,296
22,339
Current tax liabilities
2,531
2,479
2,814
Total current liabilities
28,968
28,775
25,153
Non-current liabilities
Trade and other payables
3,093
-
-
Pension obligations
2,215
2,521
2,755
Deferred tax liabilities
2,013
1,602
1,801
Total non-current liabilities
7,321
4,123
4,556
Total liabilities
36,289
32,898
29,709
Net assets
113,141
101,531
112,110
EQUITY
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
666
157
666
Retained earnings
104,314
93,213
103,283
Total equity
113,141
101,531
112,110
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Half year ended 30-Jun-2019
Unaudited Half year ended 30-Jun-2018
Audited Full year ended 31-Dec-2018
£'000
£'000
£'000
£'000
£'000
£'000
Profit for the financial period
10,920
10,637
25,515
Cash flows from operating activities
Adjustments for:
Depreciation and amortisation
2,009
934
2,179
Loss on sale of property, plant and equipment
2
32
127
Finance income
(120)
(75)
(192)
Finance expense
118
60
77
Tax expense recognised in the income statement
2,419
2,436
6,238
Change in inventories
(1,332)
(1,321)
(2,274)
Change in trade and other receivables
(2,812)
684
(3,347)
Change in trade and other payables
1,008
3,079
1,197
Change in pension obligations
(540)
(400)
(578)
752
5,429
3,427
Cash generated from operating activities
11,672
16,066
28,942
Tax paid
(2,760)
(2,555)
(5,679)
Net cash generated from operating activities
8,912
13,511
23,263
Cash flows from investing activities
Finance income
120
75
192
Acquisition of property, plant and equipment
(3,288)
(2,314)
(3,857)
Acquisition of trade and assets
-
-
(143)
Acquisition of subsidiary
(4,718)
(1,549)
(3,814)
Net cash used in investing activities
(7,886)
(3,788)
(7,622)
Cash flows from financing activities
Payment of lease liabilities
(529)
-
-
Dividends paid
(9,889)
(8,633)
(12,803)
Net cash used in financing activities
(10,418)
(8,633)
(12,803)
Net (decrease)/ increase in cash and cash equivalents
(9,392)
1,090
2,838
Cash and cash equivalents at beginning of period
38,896
36,058
36,058
Cash and cash equivalents at end of period
29,504
37,148
38,896
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 2018, 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 2018, aside from the fact that this is the first set of the Group's financial statements where IFRS 16 has been applied, the impact of which is detailed in section 2 below. 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
IFRS 16, Leases
IFRS 16, Leases has replaced IAS 17, Leases with effect from 1 January 2019. The adoption of IFRS 16 has resulted in the Group recognising right-of-use assets and lease liabilities on the consolidated statement of financial position for all contracts that are, or contain, a lease. The new standard removes the distinction between operating and finance leases, with all leases now being accounted for by recognising a right-of-use asset and a lease liability except for leases of low value assets and leases with a term of 12 months or less ("short term leases").
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group's incremental borrowing rate on commencement of the lease is used.
Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are depreciated on a straight-line basis over the remaining term of the lease.
The Group has identified non-cancellable operating lease commitments totalling £4.7m as at 1 January 2019, relating to property leases for operational sites and motor vehicles. The Group has applied the modified retrospective transition approach to its leases with effect from 1 January 2019, whereby the asset and liability values recognised are equal to one another, with no adjustment to opening reserves. The impact of adopting IFRS 16 on a modified retrospective basis was therefore to recognise a right-of-use asset and a lease liability of £4.1m at 1 January 2019.
The Group has presented right-of-use assets within property, plant and equipment, with the corresponding liabilities presented within trade and other payables split between current and non-current liabilities on the consolidated statement of financial position.
The Group has classified the principal portion of lease payments within financing activities and the interest portion within operating activities on the consolidated statement of cash flows. Lease payments for short-term leases and low-value assets not included in the measurement of the lease liability are classified as cash flows from operating activities.
The application of IFRS 16 has resulted in an increase in depreciation and finance costs offset by a decrease in rental costs, resulting in no material impact on Profit Before Tax. However, the application of IFRS 16 has increased reported EBITDA by the amount of its current operating lease cost, which for the 6 months ended 30 June 2019 was £0.5m.
3. Dividends
The interim dividend of 12.4 pence (2018: 11.3 pence) will be paid on 30 August 2019 to shareholders registered on 26 July 2019; the ex-dividend date is 25 July 2019.
4. 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 2019 of 36,857,600 (six months to 30 June 2018 of 36,857,624 and 12 months to 31 December 2018 of 36,857,758).
Interim Report
The interim report will be available on the Group's website (www.nicholsplc.co.uk) on or around 17 July 2019.
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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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