REG - Nichols PLC - 2021 Preliminary Results
02/03/2022 07:00
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RNS Number : 2938D Nichols PLC 02 March 2022
2 March
2022
Nichols plc
2021 PRELIMINARY RESULTS
Nichols plc ('Nichols' or the 'Group'), the diversified soft drinks Group,
announces its Preliminary Results for the year ended 31 December 2021 (the
'period').
Year ended Year ended
31 December 2021 31 December 2020 Movement
£m £m
Group Revenue 144.3 118.7 +21.6%
Adjusted Operating Profit1 21.9 11.7 +88.1%
Operating (Loss)/Profit (17.6) 6.6 (366.8%)
Adjusted Profit Before Tax (PBT)1 21.8 11.6 +87.9%
(Loss)/Profit Before Tax (PBT) (17.7) 6.5 (370.0%)
Adjusted PBT Margin1 15.1% 9.8% 5.3ppts
PBT Margin (12.2%) 5.5% (17.7ppts)
EBITDA2 23.7 16.5 +44.1%
Adjusted earnings per share (basic)1 46.15p 25.56p +80.6%
(Loss)/earnings per share (basic) (60.04p) 13.14p (556.9%)
Cash and cash equivalents 56.7 47.3 +19.8%
Proposed Final Dividend 13.3p 8.8p +51.1%
Full year dividend 23.1p 36.8p (37.2%)
· Vimto Brand value in the UK +6.3%(3)
o Vimto squash outperformed the dilutes market by +10.4%(3)
o Vimto Brand value +13.2%(4) since 2019 versus the wider soft drinks market
of +11.0%(4)
· Vimto Brand continues to progress internationally, with revenue
+21.0% (underlying(5) +9.8%)
o Africa and Rest of World significantly ahead
o Underlying(5) Middle East revenues broadly flat (-2.0%)
· Out of Home (OoH) continues to recover from the pandemic with
revenues +77.4%
o Revenues -31.4% versus 2019, with Q4 improving run rates versus
pre-Omicron
o Fixed costs still weighing heavily on overall financial performance
· Gross margin improvement to 45.2% (2020: 41.8%)
o Completion of Middle East marketing investment
o Significant volume recovery in OoH
· Continued strong cash performance, Free Cash Flow(6) +£17.5m
(2020: £17.6m)
o Cash Conversion(7) at 103% (2020: 186%)
· OoH impairment review completed and strategic review commenced
· Exceptional charge of £39.5m
o £36.2m of this attributable to non-cash impairment of OoH Goodwill
o £0.6m operational review and restructuring (cumulative £0.9m)
o £2.6m net liability relating to tax and interest on historic incentive
schemes
· Final dividend of 13.3p proposed, reflecting 2x cover(8)
1 Excluding Exceptional items
2 EBITDA is the statutory profit before tax, interest, depreciation, and
amortisation
3 Source: Nielsen, Total Coverage 12 months to 1 January 2022
4 Source: Nielsen, Total Coverage 12 months to 1 January 2022 vs. 12 months to
4 January 2020
5 Excluding the impact of the Group's marketing investment in the Middle East
6 Free Cash Flow is the net increase in cash and cash equivalents before
acquisition funding and dividends
7 Cash Conversion is the Free Cash Flow / Adjusted Profit After Tax
8 Dividend cover is adjusted basic earnings per share divided by the dividend
per share
John Nichols, Non-Executive Chairman, commented:
"The continued strengthening of the Vimto brand, both in the UK and
internationally, combined with the benefits of our diversified business model,
has ensured another resilient financial performance in the period. We have
achieved significant outperformance of the Vimto brand in dilutes in the UK,
and we delivered solid growth internationally, particularly in Africa where we
continue to grow, and critically delivered a robust performance in the Middle
East. In this, my 50th year with the Group, I would like to wholeheartedly
thank everyone for their efforts.
The Coronavirus pandemic has continued to present significant challenges for
us all throughout 2021. Our first and most important objective continued to be
the protection and wellbeing of our employees and customers. Throughout these
difficult times, I have been delighted to witness how our colleagues have
pulled together and consistently demonstrated their values and commitment to
our business.
The Group enters 2022 with excellent momentum and in a strong financial
position. The Group's Adjusted PBT(1) expectations for the year FY22(2) are
unchanged, whilst we remain mindful of the well-publicised inflationary
pressures which are now being realised.
In the medium term for 2023 we expect continued revenue growth as well as
inflationary and legislation cost pressure. We expect to see high single digit
growth in Group Adjusted PBT(1) versus FY22.
The Board believes the Group is well positioned to deliver against its
long-term growth plans."
1 Excluding exceptional items
2 FY22 expectations refers to a Group compiled market consensus of adjusted
PBT £25.2m
Contacts
Andrew Milne, Group Chief Executive Officer
David Rattigan, Group Chief Financial Officer
Nichols plc
Telephone: 0192 522 2222
Website: www.nicholsplc.co.uk (http://www.nicholsplc.co.uk)
Alex Brennan / Hattie Dreyfus / Elfie Kent Steve Pearce / Rachel Hayes
Hudson Sandler Singer Capital Markets (Nominated Adviser & Broker)
Telephone: 0207 796 4133 Telephone: 0207 496 3000
Email: nichols@hudsonsandler.com (mailto:nichols@hudsonsandler.com) Website: www.singercm.com (http://www.singercm.com)
Notes to Editors:
Nichols plc is an international diversified soft drinks business with sales in
over 73 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 SLUSH PUPPiE, Feel Good, Starslush,
ICEE, Levi Roots and Sunkist.
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014
Chairman's Statement
The continued strengthening of the Vimto brand, both in the UK and
internationally, combined with the benefits of our diversified business model,
has ensured another resilient financial performance in the period. We have
achieved significant outperformance of the Vimto brand in dilutes in the UK,
and we delivered solid growth internationally, particularly in Africa where we
continue to grow, and critically delivered a robust performance in the Middle
East. In this, my 50th year with the Group, I would like to wholeheartedly
thank everyone for their efforts.
The Coronavirus pandemic has continued to present significant challenges for
us all throughout 2021. Our first and most important objective continued to be
the protection and wellbeing of our employees and customers. Throughout these
difficult times, I have been delighted to witness how our colleagues have
pulled together and consistently demonstrated their values and commitment to
our business.
As Out of Home (OoH) recovers from the impact of the pandemic, management
focus has ensured a strengthening of our balance sheet in the period, with
cash and cash equivalents at the end of the period at £56.7m (2020: £47.3m).
We are now well positioned to deliver our long-term growth plans as the impact
of the pandemic subsides.
Trading
Total Group revenues for the period were £144.3m, an increase of 21.6%
compared to 2020 and importantly, broadly in line with pre-Covid 2019 levels.
Both the Still and Carbonates product categories have recovered strongly in
the period. Revenue of Still products increased by 10.2% to £72.4m (2020:
£65.7m), now ahead of 2019 (£71.7m), driven by the strong performance of the
Vimto Squash brand in the UK. Revenue from Carbonated products increased 35.8%
to £71.9m (2020: 53.0m; 2019: £75.3m), driven largely by the gradual
recovery of the Group's OoH route to market as outlets reopened, and by strong
growth in Africa.
In the UK, revenue increased by 21.8% versus last year to £111.6m (2020:
£91.6m) as the OoH route to market recovered and the Vimto brand progressed.
For the first time, Vimto brand's value in the UK has exceeded £100m, and
increased by +6.3% according to Nielson(1), with Vimto Squash outperforming
the dilutes market by +10.4%.
Sales across our International markets were £32.7m, an increase of 21.0%
(underlying +9.8% adjusting for the impact of the completion of the Group's
marketing investment in the Middle East) versus the prior year (2020:
£27.0m). Performance in Africa at +17.1% was particularly pleasing given the
long-term opportunity presented by these markets.
Share buy back
On December 14, 2021, the Group announced its intention to conduct on-market
purchases under a share buyback programme to repurchase up to
453,486 ordinary shares of 10p each in the capital of the Group (the
"Ordinary Shares"), representing up to approximately 1.2 per cent of the
Group's issued share capital, pursuant to the authority obtained at the
Group's most recent annual general meeting, held on 28 April 2021 (the
"Buyback").
The purpose of the Buyback is to meet future obligations under the Group's
SAYE Option Scheme and/or Long-Term Incentive Plan. The Buyback will be funded
from the Group's existing cash resources and all Ordinary Shares repurchased
will be held in treasury. Repurchases may be made up to and including 23
August 2022. Any repurchases made following the Group's 2022 annual general
meeting will be conditional on further shareholders' approval being obtained.
During December 2021, the Group repurchased 68,000 Ordinary shares under this
authority, with a nominal value of £6,800.
Dividend
In 2020 the Board advised a dividend policy of broadly 2x cover, which
balances shareholder distributions with the investment needs and growth
opportunities of the business post-pandemic.
The Board therefore propose a final dividend of 13.3p, which together with the
interim, results in a full year dividend for 2021 of 23.1p. The ex-dividend
date will be 24 March 2022 and payment will be made on 5 May 2022 subject to
shareholder approval at the Group's AGM on the 27 April 2022.
1 Nielsen Total Coverage 12 months to 1 January 2022
Outlook
The Group enters 2022 with excellent momentum and in a strong financial
position. The Group's Adjusted PBT(1) expectations for the year FY22(2) are
unchanged, whilst we remain mindful of the well-publicised inflationary
pressures which are now being realised.
In the medium term for 2023 we expect continued revenue growth as well as
inflationary and legislation cost pressure. We expect to see high single digit
growth in Group Adjusted PBT(1) versus FY22.
The Board believes the Group is well positioned to deliver against its
long-term growth plans.
1 Excluding exceptional items
2 FY22 expectations refers to a Group compiled market consensus of adjusted
PBT £25.2m
John Nichols
Non-Executive Chairman
2 March 2022
Chief Executive Officer's Statement
The value of the Group's diversification across both the UK and
internationally has once again in 2021 proved to be pivotal to the success the
business has achieved. The Vimto brand has been the driving force of growth
both at home and abroad, and its unique flavour and taste continues to be
loved by consumers around the globe.
One of the key challenges during the year has been maintaining the
availability of our products in our customers' outlets. Globally, we have seen
a number of shortages on key ingredients, logistical challenges and
insufficient labour availability in certain markets. I am pleased we have
shown extremely strong resilience to maintain excellent service levels and
ensure our consumers can still enjoy our brands every day through our enhanced
focus on operational excellence.
The soft drinks market in the UK has proved to be extremely resilient during
2021. Growth in the UK on-trade sector has been strong as we observed fewer
restrictions and closures across the hospitality sector versus 2020. Within
the UK retail sector, the momentum that was built in 2020, as more people
consumed products at home, has continued into 2021 with robust growth being
delivered both in stores and via growing online platforms.
All the international geographies we operate in have suffered a number of
challenges similar to those felt in the UK, but our brands have shown to be
very resilient and demonstrated their strength. Our continued focus on driving
growth across a range of global markets throughout the year has proved
beneficial. We have delivered excellent in-market execution across the Middle
East, Africa, Europe and the USA. As a result, we have driven growth and
market share gains in all these markets.
We continue to build long-term partnerships with several key customers and
distributors both in the UK and abroad who I would like to thank for their
continued loyalty and support.
UK Soft Drinks
(statistics given below are as measured by Nielsen for the 12 months to 1
January 2022)
In 2021, volumes in the £9.6bn UK soft drinks market grew by +2.3%, whilst
value sales grew by +8.5% versus the prior year. Within the soft drinks
market, the strongest value growth was delivered across the Energy, Water and
Flavoured Carbonates sub-categories, whilst Mixers, Dilutes and Lemonade all
suffered declines versus 2020.
The soft drinks category remains intensely competitive and promotionally
driven. However, we continue to add value by focusing on strong in-market
execution, product innovation and new distribution gains.
For the first time in its 113 year history, the Vimto brand achieved value
sales worth in excess of £100m, a significant milestone and an achievement
that all of our people should be extremely proud of.
Within the UK packaged sector, our dilutes portfolio delivered very strong
growth. It significantly outperformed the market and gained share versus our
competitors. As a result of this out performance, we have firmly consolidated
our position as the No.2 brand in the dilutes market.
Our still Ready-to-Drink portfolio delivered double digit growth in the UK
marketplace, with our 500ml range being the standout performer across all the
sectors it operates in.
It is also pleasing that our carbonates range delivered +8.8% growth, driven
by our performance across our cans portfolio.
Delivering strong growth across all three sub-categories we operate in has
been encouraging against the tough market conditions we faced during 2021.
We have also continued to ensure that all of our new product innovation and
marketing activity heavily focuses on driving our 'No Added Sugar' ranges as
part of our healthier future strategic commitments and, as a result, we have
made strong progress across the year.
In 2021, innovation has again been at the core of our growth. We have launched
two new flavours across the range and moved our broader flavours range into a
2L dilutes format. We have also fortified our dilutes portfolio with the
addition of Vitamin C and D and brought to market a brand new look to our
packaging. Launching new flavours and concepts are crucial to ensuring we
attract new consumers to the Vimto brand and stay relevant to their changing
needs and tastes.
Core to the brand's growth in 2021 has been the introduction of our new
marketing campaign Find Your Different, which first aired in the spring. It
was launched with two through the line executions - one focused on a
masterbrand campaign to drive top of mind awareness and a dilutes vitamin D
campaign to target parents and families. It was a fully integrated campaign
across TV, Video on Demand, Digital, Outdoor and Social. We also ensured we
supported the activity in store across our key national accounts.
Our Levi Roots brand had another successful year in 2021. Strong growth of
+24.7% was achieved, with the core flavours and pack formats delivering this
uplift. The key focus has been on new distribution gains and strong in-market
execution.
During 2021, we relaunched our Feel Good brand into the marketplace. We have
repositioned the brand as a 100% natural product with a strong set of ESG
commitments. We have successfully started to build distribution both in single
and multipack formats across the retail, foodservice and convenience channels
in the UK.
We continue to work in partnership with all our customers across the UK
grocery, foodservice, wholesale and discount channels. It has been more
important than ever during 2021 to have these strong relationships in place,
and we will continue to put our customers' needs at the heart of what we do to
ensure all our consumers can enjoy our products every day.
The UK On-Trade
Following an extremely tough year in 2020 for the UK On-Trade, we have seen
the sector recover strongly in 2021 as outlets reopened. However, the industry
has had to face challenges with some restrictions still in place impacting
footfall, as well as staff shortages and logistics issues.
New trends have emerged across the sector due to the pandemic, with consumers
now much more positive about "al fresco" dining and visiting outdoor
hospitality venues, a boom in the suburbs as people are shifting away from
visits to city centres and consumers adopting a "live for the moment" mindset.
I am pleased with our progress across our Out of Home (OoH) business, as we
have delivered +77.4% sales growth versus 2020. However, versus 2019, the
channel is still down -31.4% due to some restrictions remaining in place.
Encouragingly, year-on-year growth has been delivered across all the channels
we operate in within OoH. A key driver of this has been due to the support we
have provided to our customers throughout the last two years, which has
enabled them to reopen their businesses as restrictions have eased. As a
result, we have also retained a number of key contracts with important
customers.
Innovation remained important during 2021, and we launched ICEE and Starslush
ZERO (no sugar) products to complement our current ranges. These launches
support our ambition to offer consumers balanced and healthier choices.
Consumer feedback to date has been extremely positive regarding the new
additions.
During the year, we continued to ensure we invested in exciting marketing
campaigns across the sector, which included in-outlet and digital campaigns.
Finally, we secured a long-term agreement to be the exclusive partner to
distribute the global No.1 uncarbonated frozen brand - SLUSH PUPPiE.
However, the OoH drinks market has been significantly impacted by the pandemic
with the prolonged closure of many outlets. Whilst recognising the hospitality
trade has shown growth and is beginning to return to pre-Covid-19 levels, it
is doing so at a pace slower than previously forecast and the margin
progression after overheads anticipated previously is now not likely to be
achieved without transformational change, in terms of how the Group services
the trade and its wider customer base. Therefore, a full strategic review into
the Group's OoH route to market has commenced.
Throughout 2021 we continued to focus on supporting our customers and partners
across our entire OoH channel. Ensuring that our valued customers received the
right service to guarantee product availability during the various challenges
the industry encountered has demonstrated the resilience of our supply chains
and delivery model. I am extremely proud of the team's focus and commitment to
support our partners during this challenging period and throughout the ongoing
recovery from the impact of the pandemic.
Vimto International
During 2021 the challenges presented by the Covid-19 pandemic and supply chain
restrictions in the UK have been echoed across all our International markets.
Considering these challenges, I feel extremely proud that the teams have
delivered +21.0% sales growth versus 2020. It is particularly pleasing that
this growth has been delivered across all our key markets through strong
execution, innovation, new and exciting marketing campaigns and new
distribution wins.
Our growth across the African continent in 2021 has been extremely strong,
delivering sales growth of +17.1% versus last year. This has been delivered
through a combination of our integrated marketing campaigns, new flavours,
extending our pack formats and a strong focus on market execution in a number
of our core markets. In Algeria, we launched a new 2L pack format across our
carbonates range. This was aimed at capturing the take home/multi-serve
opportunity in the market and has been well received by our customers and
consumers across the country. In Sudan, we launched a range of still products
to extend our portfolio in this market. We have invested in strong marketing
campaigns to drive consumer awareness and the resulting sales performance has
been positive.
The Middle East market has once again proved extremely resilient, delivering
+33.6% sales growth versus 2020. This has been against tough market conditions
due to rising taxes and conflicts taking place across the region.
Our long-standing (over 90 years) partner, Aujan Coca-Cola Bottling Company
(ACCBC), delivered another outstanding marketing campaign during Ramadan. The
"Sweet Togetherness" campaign - which promoted the introduction of a No Added
Sugar product alongside themes of togetherness, health, cooking and value for
money - was heavily focused on driving awareness via online channels. The
campaign was extremely popular and reached 2.5 billion views on TikTok and
2.5m views on YouTube.
Our partner in the Yemen faced many operational challenges due to the ongoing
hostilities in the country, but still delivered a robust performance on the
back of strong in-market execution and distribution gains.
2021 has again seen us deliver another strong performance across the USA with
our long-standing partners, the Ziyad brothers. Through excellent in-market
execution and strong marketing campaigns, we delivered +21.6% sales growth
versus the previous year.
Across all of our European territories, we again focused on expanding new
points of distribution for our core products within key customers, which
resulted in us delivering market share gains and positive sales momentum.
Summary
As we focus on 2022, I have no doubt that we will continue to operate in a
challenging and changing environment that will continue for a sustained
period. Inflationary headwinds are going to be a key threat which we will aim
to mitigate through savings realised as part of our operational change
programme and the implementation of appropriate pricing strategies.
Over many years, soft drinks has proven to be a highly resilient category
which has again been evident in 2021. I feel confident that given our high
brand equity, diverse business model, strengthened balance sheet, clear ESG
commitments and exceptional people, we can continue to achieve our long-term
strategic objectives and deliver continued profitable growth.
Andrew Milne
Chief Executive Officer
2 March 2022
Chief Financial Officer's Statement
Revenue
Group revenues were £144.3m, an increase of 21.6% compared to 2020 and,
encouragingly, broadly in line with 2019 levels.
Both the Still and Carbonates product categories have recovered strongly in
the period. Revenue of Still products increased by 10.2% to £72.4m (2020:
£65.7m), now ahead of 2019 (£71.7m). Revenue from Carbonated products
increased 35.8% to £71.9m (2020: 53.0m; 2019: £75.3m).
The Group's packaged routes to market delivered another year of strong growth
both in the UK and internationally.
UK packaged revenues improved by 8.5%, driven by the performance of the Vimto
& Levi Roots brands. There was a particularly strong performance within
the Multiple and Discount Retailers, where revenues increased by 7.0% (2020:
increase of 9.5%), as distribution points increased significantly over the
pandemic period (2020 and 2021) and consumers increasingly chose Vimto.
Revenues across Convenience, Delivered Wholesale and Cash and Carry recovered
in 2021 following the severity of 2020's lockdowns and increased by 11.3%
(2020: decrease of 10.9%).
International revenues improved by 21.0%.
Africa revenues improved 17.1% (2020: increase of 7.4%) with significant
progress achieved across our African markets. Middle East revenues increased
by 33.6% (2020: decrease of 36.8%) with in-market volumes performing
resiliently through Ramadan despite the challenges posed from the introduction
of the Sweetened Beverage Tax in 2020. The Group's marketing investment in the
region (reported as part of the Group's revenue line) was, in agreement with
our local partner, completed during the year. Underlying revenues were broadly
flat, decreasing by 2.0% versus 2020. Our rest of world markets continued the
momentum of the prior period with revenue growth of 14.2% (2020: increase of
17.3%), with the US and Europe continuing to perform well, building on
increased brand awareness generated within the Middle East and Africa.
Our OoH route to market continues to recover from the impact of the pandemic,
with revenues up by 77.4% versus 2020, when the OoH route to market was
severely impacted by closures due to the pandemic and subsequent lockdowns.
Revenues remain down by 31.4% versus 2019. We are encouraged that trade within
the hospitality industry has begun to show growth and return towards
pre-Covid-19 levels, with Q4 in particular seeing improving run rates pre the
emergence of the Omicron variant. However, the long-term impact of Covid-19 on
the hospitality industry remains uncertain. As a result, and as previously
announced, due to the ongoing challenges in the OoH market, the Board has
carried out an impairment review into its OoH route to market and will
recognise an impairment charge of £36.2m in the current year. In addition,
the Board has commenced a strategic review of the Group's OoH route to market.
The impact of movements in foreign exchange rates on revenue year-on-year was
immaterial, at approximately £0.6m adverse.
Gross Profit
Gross profit at £65.2m was £15.6m higher than 2020 (£49.6m) and 3.4
percentage points higher at 45.2% (2020: 41.8%). Of this increase, £9.4m
resulted from the additional volumes delivered across all of the Group's
routes to market in the period. The current gross margin percentage is more
aligned to the years immediately preceding the pandemic (2019: 47.6%, 2018:
45.7%, 2017: 45.7%).
As noted previously the Group's Middle East marketing investment (reported as
part of the Group's revenue line) was, in agreement with our local partner,
completed during the year. £2.7m (2021: £0.8m investment, 2020: £3.5m
investment) of the year-on-year improvement in gross profit was due to this
change. Customer price and mix has further contributed £1.8m to gross profit
largely due to a return of revenues from the Group's In-house and National OoH
customers, effectively rebalancing the Group margins.
The Group was better placed in 2021 to plan for Covid-19 disruption, following
the restructuring at our manufacturing site in Ross at the end of 2020 to more
effectively align labour and volumes, combined with a consistent approach from
the UK Government in terms of the easing of lockdown restrictions.
Consequently, the costs associated with stock write off and under recovery
seen in the previous year were not repeated (2021: £0.4m cost, 2020: £2.1m
cost) and benefited margin by £1.7m versus the prior year. The Group
continued to support its OoH customers with new for old stock following the
reopening of outlets post the Q1 2021 lockdown.
During the year, the Group was prepared for and able to mitigate a large
proportion of raw material and contract manufacturing inflation. However, in
Q4 2021 significant inflationary pressures were experienced and are expected
to continue through 2022.
Distribution Expenses
Distribution expenses within the Group are those associated with the UK
packaged route to market and for OoH the distribution costs incurred from
factory to depot. Final leg distribution costs within OoH are reported within
Administration costs.
Distribution expenses totalled £9.1m (2020: £8.0m), an increase of 14.4%,
due to a combination of higher trading volumes across both of our UK routes to
market and significant inflationary pressure experienced since Q2 2021. In
both routes to market, significant disruption was experienced through the
summer and autumn months due to driver shortages. The Group entered into a new
5-year distribution arrangement in H2 2021 that both builds significant
additional capacity, given the Group's growth plans, and improves efficiency.
Administration Expenses
Administration expenses, excluding exceptional items, totalled £34.1m (2020:
£30.0m), an increase of £4.1m or 13.7%.
Through the early pandemic, in 2020, management focused on reducing
discretionary spend and realigning marketing investment. This resulted in
significant cost reductions; no bonuses or LTIPs were accrued and labour costs
(recruitment etc.) were managed closely. The Group also benefited in 2020 from
deferred consideration credits of £1.3m following completion of the Noisy
Drink Company North West Limited and Adrian Mecklenburgh Limited acquisitions.
In 2021 the Group ran its highly successful 'Find Your Different' marketing
campaign, investing an additional £1.9m. The campaign increased Vimto's
awareness with new consumers, helping fuel the distribution expansion seen in
the year and which is planned to continue into 2022.
Reinstatement of the Group's Bonus and LTIP schemes led to an additional
£2.3m charge in the year.
Restructuring through 2020 meant costs reduced by £1.2m in the period; this
was partly offset by an increase in staff related travel and entertainment
costs of £0.5m.
The detailed exercise, commenced in 2020, to trace and verify assets held at
the Group's OoH customer outlets completed in the period and fully utilised
the provision established in the prior period (£1.1m), resulting in a
positive year on year comparison. Strict OoH capital allocation through 2020
and 2021 has meant the Group's depreciation charge has now peaked and is level
in 2021 versus 2020.
Revaluation of working capital balances across the year resulted in foreign
exchange losses. In comparison with prior year, the year on year impact is
£0.4m adverse (2021: net loss £0.2m, 2020: net gain £0.2m).
Exceptional Costs
The Group has incurred £39.5m of exceptional costs during the year (2020:
£5.1m), £38.9m of which is non-cash.
The impact of Covid-19 has resulted in a difficult period of trade for OoH
with many outlets being closed for a prolonged period of time. Whilst trade
within the hospitality industry has begun to show growth and return towards
pre-Covid-19 levels, it is doing so at a slower pace than previously forecast
and is only forecast to fully return to pre-pandemic levels through 2022.
Growth projections beyond 2022 are expected to be lower than previously
estimated given that a number of outlets are expected not to re-open and
footfall is expected to be restricted for a prolonged period as staffing
shortages and local restrictions/social distancing is either mandated or
occurs naturally, as was experienced through 2021.
Whilst cost pressure is expected to be fully recovered within OoH, the gross
margin progression anticipated previously is now not likely to be achieved
without transformational change in terms of how the Group services the trade
and its wider customer base. Overhead cost estimates have been reviewed and
increased to reflect both inflationary pressures and the cost estimates
required to serve the customer base, given the complexities of the current
business environment and model. As a result, and in response to this
challenging climate, during 2022 the Board has commenced a full strategic
review into its OoH route to market in terms of customer and product mix, as
well as ways to ensure appropriate margin and profitability going forward.
As a result of the impairment review, management have recognised an impairment
charge of £36.2m in the current year, impairing the entire Goodwill held.
In Q4 2020 the Group commenced a review of its UK operational supply chains.
The project has progressed steadily with significant change already
implemented, including entering into new 5-year contract manufacturing and
distribution arrangements that both build significant additional capacity,
given the Group's growth plans, and improve efficiency. These specific
projects are expected to be completed through 2022, with further foundation
work progressing. As a result of this work, the Group has incurred a further
£0.6m of costs (2020: £0.3m) in the year, with additional costs expected in
2022.
In previous annual reports, the Group reported a contingent liability in
respect of historic contracts with some of its senior management relating to
incentive schemes which were designed to motivate, retain and engage those key
employees. HMRC were of the view that the arrangements should have been taxed
as employment income, which the Group and its advisors had previously
disputed. During the period a tribunal was convened to consider the
dispute of the Group's scheme as well as similar schemes operated by other
companies. Subsequent to the year end, the tribunal found that the
arrangements should have been taxed as employment income. Accordingly, as at
31 December 2021, the Group has recognised a net liability of £2.6m in
relation to this ruling, being a reasonable estimate of the final outcome,
including the Group's additional tax liability, interest costs and amounts
expected to be recovered.
Due to the one-off nature of these charges, the Board is treating these items
as exceptional costs and their impact has been removed in all adjusted
measures throughout this report.
Operating Loss/Adjusted Operating Profit
Adjusted operating profit at £21.9m was up £10.2m, an 88.1% increase on
prior year (2020: £11.7m). An operating loss of £17.6m (2020: £6.6m profit)
is after charging exceptional items of £39.5m (2020: £5.1m charge) during
the period. For reference adjusted operating profit in 2019 was £32.4m.
Finance Costs
Net finance costs of £0.1m (2020: £nil) were broadly in the line with the
prior year.
Loss before tax/Adjusted profit before tax and tax rate
Reported loss before tax was £17.7m (2020: £6.5m profit). Adjusted profit
before tax increased by 87.9% to £21.8m (2020: £11.6m). The tax charge on
adjusted profit before tax for the period of £4.8m (2020: £2.2m) represents
an effective tax rate of 21.9% (2020: 18.7%). The increase in effective tax
rate is largely due to deferred tax balances as at 31 December 2021 being
recognised at 25%, following an amendment to the UK Corporation Tax rate being
enacted during the year to increase the rate of tax from 19% to 25% with
effect from 1 April 2023.
For reference profit before tax in 2019 was £32.4m.
Balance Sheet and Cash and Cash Equivalents
The Group has continued to focus on the strength of its balance sheet during
the period.
As noted above, management have recognised an impairment charge of £36.2m
during the period, impairing the entire Goodwill held for the Group.
Strict OoH capital allocation through 2020 and 2021 has meant that the Group's
investment in property, plant and equipment reduced by £3.0m.
The Group invested £3.8m into Inventories during the year to ensure security
of customer service given the volatility experienced in UK supply chains and
to protect stock levels, given changes planned through H1 2022 to the Group's
Dilutes contract manufacturing arrangements.
The unwind of working capital experienced in 2020, that led to a cash
conversion of 186% in that year, has largely been protected. Cash conversion
for the period was 103%. The increase in Trade and other Receivables by £7.0m
(2020: decrease of £8.6m versus 2019) was more than offset by the Group's
increase in Trade and other Payables, up by £7.1m (2020: decrease of £1.6m
versus 2019) and Provisions increase of £4.2m.
The Group recorded a net £2.6m liability (recorded within both Other
Receivables and Provisions), representing the additional tax liability and
interest costs arising from the HMRC ruling into the treatment of the Group's
historic incentive schemes for some of its senior management.
The Group again delivered a strong Free Cash Flow of £17.5m (2020: £17.6m).
Cash and cash equivalents at the end of the year were £56.7m (2020: £47.3m).
The Group has focused significantly on cash management throughout the pandemic
years of 2020 and 2021, with particular emphasis on balancing the needs of its
various stakeholders by working flexibly with shareholders, staff, customers,
and the UK Government as events developed. At the same time, the Board has
remained focused on ensuring the Group remains well positioned to deliver both
our long-term growth plans.
Earnings per share
On an adjusted basis, diluted earnings per share (EPS) was 46.09 pence (2020:
25.54p). Total adjusted EPS increased to 46.15p pence (2020: 25.56p) with
basic EPS at -60.04 pence (2020: 13.14p).
Pensions
The Group operates two employee benefit plans, a defined benefit plan that
provides benefits based on final salary, which is now closed to new members,
and a defined contribution group personal plan. At 31 December 2021, the Group
recognised a surplus on its UK defined benefit scheme of £5.3m (2020: surplus
£0.3m).
With the agreement of Trustees, assets were transferred from equities to
reduce the overall value at risk (£10m to £5m) during the year, securing the
gains achieved over the last 2 years. Funding, assets versus liabilities, is
now at 108% versus 83% at the time of the last valuation (April 2020).
David Rattigan
Chief Financial Officer
2 March 2022
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2021
2021 2020
£'000 £'000
Continuing operations
Revenue 144,328 118,657
Cost of sales (79,153) (69,021)
Gross profit 65,175 49,636
Distribution expenses (9,129) (7,979)
Administrative expenses (73,601) (35,077)
Operating (loss)/profit (17,555) 6,580
Finance income 57 150
Finance expenses (158) (190)
(Loss)/profit before taxation (17,656) 6,540
Taxation (4,512) (1,686)
(Loss)/profit for the year (22,168) 4,854
(Loss)/earnings per share (basic) (60.04p) 13.14p
(Loss)/earnings per share (diluted) (60.04p) 13.13p
Adjusted for exceptional items
Operating (loss)/profit (17,555) 6,580
Exceptional items 39,477 5,074
Adjusted operating profit 21,922 11,654
(Loss)/profit before taxation (17,656) 6,540
Exceptional items 39,477 5,074
Adjusted profit before taxation 21,821 11,614
Adjusted earnings per share (basic) 46.15p 25.56p
Adjusted earnings per share (diluted) 46.09p 25.54p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2021
2021 2020
£'000 £'000
(Loss)/profit for the financial year (22,168) 4,854
Items that will not be reclassified subsequently to profit or loss
Re-measurement of net defined benefit liability 4,083 (155)
Deferred taxation on pension obligations and employee benefits (962) 32
Other comprehensive income/(expense) for the year 3,121 (123)
Total comprehensive (expense)/income for the year (19,047) 4,731
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2021
2021 2020
ASSETS £'000 £'000
Non-current assets
Property, plant and equipment 17,099 20,126
Goodwill - 36,244
Intangibles 5,546 6,206
Pension surplus 5,276 347
Total non-current assets 27,921 62,923
Current assets
Inventories 9,706 5,921
Trade and other receivables 36,124 29,143
Corporation tax recoverable 743 671
Cash and cash equivalents 56,674 47,294
Total current assets 103,247 83,029
Total assets 131,168 145,952
LIABILITIES
Current liabilities
Trade and other payables 28,791 21,669
Provisions 4,242 -
Total current liabilities 33,033 21,669
Non-current liabilities
Other payables 1,954 2,922
Deferred tax liabilities 3,155 1,485
Total non-current liabilities 5,109 4,407
Total liabilities 38,142 26,076
Net assets 93,026 119,876
EQUITY
Share capital 3,697 3,697
Share premium reserve 3,255 3,255
Capital redemption reserve 1,209 1,209
Other reserves 676 394
Retained earnings 84,189 111,321
Total equity 93,026 119,876
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
2021 2020
£'000 £'000 £'000 £'000
Cash flows from operating activities
(Loss)/profit for the financial year (22,168) 4,854
Adjustments for:
Depreciation and amortisation 4,969 4,971
Impairment losses on goodwill and intangible assets 36,244 3,820
Impairment losses on property, plant and equipment - 1,016
Loss on sale of property, plant and equipment 63 71
Finance income (57) (150)
Finance expense 158 190
Tax expense recognised in the income statement 4,512 1,686
(Increase)/decrease in inventories (3,785) 2,440
(Increase)/decrease in trade and other receivables (6,804) 9,220
Increase/(decrease) in trade and other payables 7,429 (838)
Increase in provisions 4,242 -
Change in pension obligations (846) (755)
Fair value gain on derivative financial instruments (178) -
45,947 21,671
Cash generated from operating activities 23,779 26,525
Tax paid (3,878) (5,017)
Net cash generated from operating activities 19,901 21,508
Cash flows from investing activities
Finance income 57 150
Proceeds from sale of property, plant and equipment 2 35
Acquisition of property, plant and equipment (1,239) (2,701)
Acquisition of intangible assets - (170)
Payment of contingent consideration (67) (880)
Net cash used in investing activities (1,247) (3,566)
Cash flows from financing activities
Payment of lease liabilities (1,189) (1,254)
Purchase of own shares (1,217) -
Dividends paid (6,868) (10,338)
Net cash used in financing activities (9,274) (11,592)
Net increase in cash and cash equivalents 9,380 6,350
Cash and cash equivalents at 1 January 47,294 40,944
Cash and cash equivalents at 31 December 56,674 47,294
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 31 December 2021
Called up share capital Share premium reserve Capital redemption reserve
£'000 £'000 £'000 Other reserves Retained earnings Total
£'000 £'000 equity
£'000
At 1 January 2020 3,697 3,255 1,209 253 116,928 125,342
Dividends - - - - (10,338) (10,338)
Movement in ESOT - - - 24 - 24
Credit to equity for equity-settled share based payments - - - 117 - 117
Transactions with owners - - - 141 (10,338) (10,197)
Profit for the year - - - - 4,854 4,854
Other comprehensive expense - - - - (123) (123)
Total comprehensive income - - - - 4,731 4,731
At 1 January 2021 3,697 3,255 1,209 394 111,321 119,876
Dividends - - - - (6,868) (6,868)
Movement in ESOT - - - 10 - 10
Credit to equity for equity-settled share based payments - - - 272 - 272
Purchase of own shares
- - - - (1,217) (1,217)
Transactions with owners - - - 282 (8,085) (7,803)
Loss for the year - - - - (22,168) (22,168)
Other comprehensive income - - - - 3,121 3,121
Total comprehensive expense - - - - (19,047) (19,047)
At 31 December 2021 3,697 3,255 1,209 676 84,189 93,026
NOTES
1. Basis of Preparation
The preliminary financial information does not constitute statutory accounts
for the financial years ended 31 December 2021 and 31 December 2020, but has
been derived from those accounts. The accounting policies remained unchanged
from those set out in the 2020 annual report.
Statutory accounts for 2020 have been delivered to the Registrar of Companies
and those for the financial year ended 31 December 2021 will be delivered
following the Group's Annual General Meeting. The auditors have reported on
those accounts and their reports were unqualified, did not draw attention to
any matters by way of emphasis, and did not contain a statement under 498(2)
or 498(3) of the Companies Act 2006.
2. Going Concern
In assessing the appropriateness of adopting the going concern basis in
preparing the Annual Report and financial statements, the Directors have
considered the current financial position of the Group, its principal risks
and uncertainties and the potential impact of future Covid-19 restrictions.
The review performed considers severe but plausible downside scenarios that
could reasonably arise within the period.
The estimated impacts of Covid-19 restrictions are primarily based around our
Out of Home market and the potential for future lockdowns within the
hospitality industry. Our modelling has sensitised trading within this market
to reflect varying degrees of lockdowns with the most severe scenario assuming
that some restrictions will persist throughout the whole of 2022.
In addition to the further impacts of Covid-19, alternative scenarios,
including the potential impact of key principal risks from a financial and
operational perspective, have been modelled with the resulting implications
considered.
In all cases, the business model remained robust. The Group's diversified
business model and strong balance sheet entering 2022, combined with its
strong cash generation in 2021, all provide resilience against these factors
and the other principal risks that the Group is exposed to. At the 31 December
2021 the Group had cash and cash equivalents of £56.7m with no external bank
borrowings. This equates to 87% of 2021 gross profit.
On the basis of these reviews, the Directors consider the Group has adequate
resources to continue in operational existence for the foreseeable future
(being at least one year following the date of approval of the Annual Report)
and, accordingly, consider it appropriate to adopt the going concern basis in
preparing the financial statements.
3. Segmental Reporting
The Board considers the business from a product perspective and reviews the
Group's performance based on the operating segments identified below. There
has been no change to the segments during the period. Based on the nature of
the products sold by the Group, the types of customers and methods of
distribution, management consider reporting operating segments at the Still
and Carbonate level to be reasonable, particularly in light of market research
and industry data made available by Nielsen. Gross profit is the measure used
to assess the performance of each operating segment.
Still Carbonate Group
£'000 £'000 £'000
Year ended 31 December 2021
Sales 72,393 71,935 144,328
Gross Profit 37,980 27,195 65,175
Year ended 31 December 2020
Sales 65,688 52,969 118,657
Gross Profit 32,817 16,819 49,636
A geographical split of revenue is provided below:
Year ended Year ended
31 December 2021 31 December 2020
£'000 £'000
Geographical split of revenue
Middle East 9,765 7,309
Africa 16,410 14,010
Rest of the World 6,523 5,712
Total exports 32,698 27,031
United Kingdom 111,630 91,626
Total revenue 144,328 118,657
4. Exceptional items
Year ended Year ended
31 December 31 December 2020
2021
£'000 £'000
Impairment of goodwill and intangible assets 36,244 3,820
Review of UK packaged supply chain 620 277
Historic incentive scheme 2,613 -
Redundancy costs - 723
Restructuring costs - 254
39,477 5,074
The Group has incurred £39.5m of exceptional costs during the year (2020:
£5.1m), £38.9m of which is non-cash.
Following the annual impairment review of the Group's Out of Home Cash
Generating Unit ('CGU'), the Group has incurred a non-cash impairment to
Goodwill of £36.2m. Further detail is provided in note 6.
In Q4 2020 the Group commenced a review of its UK operational supply chains.
The project has progressed steadily with significant change already
implemented, including entering into new 5-year contract manufacturing and
distribution arrangements that both build significant additional capacity,
given the Group's growth plans, and improve efficiency. These specific
projects are expected to be completed through 2022, with further foundation
work progressing. As a result of this work, the Group has incurred a further
£0.6m of costs (2020: £0.3m) in the year, with additional costs expected in
2022.
In previous annual reports, the Group reported a contingent liability in
respect of historic contracts with some of its senior management relating to
incentive schemes which were designed to motivate, retain and engage those key
employees. HMRC were of the view that the arrangements should have been taxed
as employment income, which the Group and its advisors had previously
disputed. During the period a tribunal was convened to consider the dispute of
the Group's scheme as well as similar schemes operated by other companies.
Subsequent to the year end, the tribunal found that the arrangements should
have been taxed as employment income. Accordingly, as at 31 December 2021, the
Group has recognised a net liability of £2.6m in relation to this ruling,
being a reasonable estimate of the final outcome, including the Group's
additional tax liability, interest costs and amounts expected to be recovered.
Due to the one-off nature of these charges, the Board is treating these items
as exceptional costs and their impact has been removed in all adjusted
measures throughout this report.
5. Earnings Per Share
Basic earnings per share is calculated by dividing the Group's profit after
tax for the year by the weighted average number of ordinary shares in issue
during the financial year. Diluted earnings per share is calculated by
adjusting the weighted average number of ordinary shares in issue assuming the
conversion of all potentially dilutive ordinary shares.
The earnings per share calculations for the period are set out in the table
below:
Loss Weighted average number of shares Loss per share
£'000
31 December 2021
Basic loss per share (22,168) 36,919,085 (60.04p)
Dilutive effect of share options -
Diluted loss per share (22,168) 36,919,085 (60.04p)
Adjusted earnings per share before exceptional items has been presented in
addition to the earnings per share as defined in IAS 33 Earnings per share,
since, in the opinion of the Directors, this provides shareholders with a more
meaningful representation of the earnings derived from the Groups' operations.
It can be reconciled from the basic earnings per share as follows:
(Loss)/ Weighted average number of shares (Loss)/earnings
earnings per share
£'000
31 December 2021
Basic loss per share (22,168) 36,919,085 (60.04p)
Exceptional items after taxation 39,206
Adjusted basic earnings per share 17,038 36,919,085 46.15p
Diluted effect of share options 48,656
Adjusted diluted earnings per share 17,038 36,967,741 46.09p
6. Non-current Assets
Property, Plant & Equipment Goodwill Intangibles
£'000 £'000 £'000
Cost
At 1 January 2021 35,932 38,748 9,760
Additions 1,347 - -
Disposals (3,191) - -
At 31 December 2021 34,088 38,748 9,760
Depreciation and Amortisation
At 1 January 2021 15,806 2,504 3,554
Charge for the period 4,309 - 660
Disposals (3,126) - -
Impairment - 36,244 -
At 31 December 2021 16,989 38,748 4,214
Net book value
At 31 December 2020 20,126 36,244 6,206
At 31 December 2021 17,099 - 5,546
Goodwill and intangible assets with indefinite lives are tested at least
annually for impairment and whenever there are indications that the assets
might be impaired. The recoverable amount of a cash-generating unit (CGU) is
based on its value in use, being the present value of the projected cash flows
of the CGU.
An annual impairment review was performed on the Goodwill (£36.2m) and
Intangible assets with indefinite lives (£2.6m), all of which relate the
Group's Out of Home Business. The value in use calculation uses cash flow
projections from financial budgets approved by management in addition to
annual growth projections for the next five years and into perpetuity.
The impact of Covid-19 has resulted in a difficult period of trade for Out of
Home with many outlets being closed for a prolonged period of time. Whilst
trade within the hospitality industry has begun to show growth and return
towards pre-Covid-19 levels, it is doing so at a slower pace than previously
forecast and is only forecast to fully return to pre-pandemic levels through
2022. Growth projections beyond 2022 are expected to be lower than previously
estimated given a number of outlets are expected not to open and footfall is
expected to be restricted for a prolonged period as staffing shortages and
local restrictions/social distancing is either mandated or occurs naturally,
as was experienced through 2021.
The Group has experienced unprecedented cost inflation towards the end of 2021
which will impact returns in 2022 and beyond. Whilst cost pressure is expected
to be fully recovered within Out of Home, the gross margin progression
anticipated previously is now not likely to be achieved without
transformational change in terms of how the business services the trade and
its wider customer base. Overhead cost estimates have been reviewed and
increased to reflect both inflationary pressures and the cost estimates
required to serve the customer base given the complexities of the current
business environment/model. As a result, and in response to this challenging
climate, during 2022 the Board has commenced a full strategic review into its
Out of Home route to market in terms of customer and product mix as well as
ways to ensure appropriate margin and appropriate profitability going forward.
The pre-tax discount rate applied to cash projections is 8.2% (2020: 8.2%) and
cashflows beyond the five year period are extrapolated using a 2% growth rate
(2020: 2%) (being the average of cashflow growth in years 3-5). Based on the
review it was concluded that the fair value less costs of disposal were not
supported by the value in use calculated. As a result of this analysis,
management have recognised an impairment charge of £36.2m in the current
year, impairing the entire Goodwill held. The impairment charge has been
recognised as an exceptional item within these financial statements.
Key assumptions
The calculation of value in use is most sensitive to the following
assumptions:
• Revenue growth
• Gross margin
• Overheads
• Discount rate
• Growth rates estimates used to extrapolate cash flows beyond the forecast
period
Revenue growth - Based on the continued impact of coronavirus and subsequent
hospitality lockdowns, the Board's view on the outlook for the industry
recovery is that whilst there will be continued revenue growth, it will be at
a slower pace than previously anticipated. Within the year-end impairment
review, revenue growth of 1% per annum has been forecast for each of the five
years. This compares to the previously assumed 3% revenue growth noted within
the prior year review.
A faster rate of recovery would increase the value in use calculation and
therefore reduce any impairment noted. A year-on-year increase in annual
revenue of 4% per year over the five year period forecast would result in no
impairment being required for Out of Home.
Gross margin - Based on the continued impact of coronavirus and the impact
of inflationary pressures including fuel, labour and materials, the gross
margins forecast previously (2021 and previous impairment models) are not
expected to be achieved without transformational change in terms of how the
Group services the trade and its wider customer base. Gross margins included
within the impairment review are based on budget expectations and anticipated
changes over the five year forecast period.
A softening of inflationary pressures and improvement in material input prices
would lead to an improvement in the gross margin forecast. An increase of
6ppts in the gross margin by the end of the five year forecast period would
result in no impairment required for Out of Home.
Overheads - Overhead cost estimates have been reviewed and increased to
reflect both inflationary pressures and the cost estimates required to serve
the customer base given the complexities of the current business
environment/model.
A reduction in overheads would result in an increase in the value in use
calculation and thus a reduced impairment. A reduction in overheads by 13.7%
at the end of the five year forecast period would result in no impairment to
Out of Home.
Discount rate - Discount rates represent the current market assessment of the
risks specific to the Out of Home CGU, taking into consideration the time
value of money and risks of the underlying assets that have not been
incorporated in the cash flow estimates. The discount rate calculation is
based on the specific circumstances of the Group and is derived from its
weighted average cost of capital (WACC). Adjustments to the discount rate are
made to factor in the specific amount and timing of the future tax flows in
order to reflect a pre-tax discount rate.
A reduction in the pre-tax discount rate to 4.5% (i.e. -3.7ppts) would result
in no impairment.
Growth rate estimates - The long-term growth rate used to extrapolate the
period of review is based upon management's expectations of the Out of Home
CGUs' ongoing potential and is considered consistent with the drinks
hospitality industry as a whole. An increase of 4ppts from 2% to 6% growth
into perpetuity would be required for there to be no impairment.
7. Defined Benefit Pension Scheme
The Group operates a defined benefit plan in the UK. A full actuarial
valuation was carried out on 5 April 2020 and updated at 31 December 2021 by
an independent qualified actuary.
A summary of the pension surplus position is provided below:
Pension surplus £'000
At 1 January 2021 347
Current service cost (26)
Scheme administrative expenses (43)
Net interest income 10
Actuarial gains 4,083
Contributions by employer 905
At 31 December 2021 5,276
8. Provisions
In previous annual reports, the Group reported a contingent liability in
respect of historic contracts with some of its senior management relating to
incentive schemes which were designed to motivate, retain and engage those key
employees. HMRC were of the view that the arrangements should have been taxed
as employment income, which the Group and its advisors had previously
disputed. During the period a tribunal was convened to consider the dispute of
the Group's scheme as well as similar schemes operated by other companies.
Subsequent to the year end, the tribunal found that the arrangements should
have been taxed as employment income.
Accordingly, as at 31 December 2021, the Group has recognised a provision of
£4.2m in relation to this ruling, being the Group's additional tax liability
and interest costs.
Included within other receivables is a reimbursement asset in respect of these
historic contracts.
9. Contingent consideration
Within the Consolidated Statement of Cash Flows there is a £0.1m (2020:
£0.9m) cash outflow in relation to the payment of contingent consideration.
These payments relate to contingent consideration paid for acquisitions made
in previous financial years.
10. Dividends
The final dividend proposed is 13.3p, which will become ex-dividend on the 24
March 2022 and paid, subject to shareholder approval, on 5 May 2022.
Annual Report
The annual report will be mailed to shareholders and made available on our
website during March 2022. Copies will be available after that date from: The
Secretary, Nichols plc, Laurel House, Woodlands Park, Ashton Road,
Newton-le-Willows, WA12 0HH.
Cautionary Statement
This Preliminary 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 Preliminary Report should not be relied
on by any other party or for any other purpose.
-Ends-
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