REG - Nichols PLC - 2024 Interim Results
24/07/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240724:nRSX5487Xa&default-theme=true
RNS Number : 5487X Nichols PLC 24 July 2024
24 July 2024
(the "Company" or the "Group")
2024 INTERIM RESULTS
Strong first half profit performance and special dividend issued.
FY24 Adjusted PBT expected to be slightly ahead of expectations.
Nichols plc, the diversified soft drinks Group, is pleased to announce its
unaudited Interim Results for the half year ended 30 June 2024 (the 'Period'),
with trading during the Period continuing to progress strongly, reflecting the
ongoing delivery of the Group's strategic priorities.
Key Financials
Half year ended Half year ended
30 June 2024 30 June 2023 Movement
Group Revenue £84.0m £85.5m -1.8%
Adjusted Operating Profit(1) £13.1m £11.5m +14.1%
Adjusted Profit Before Tax (PBT)(1) £14.5m £12.3m +18.0%
Operating Profit £10.4m £10.3m +0.5%
Profit Before Tax (PBT) £11.8m £11.2m +5.8%
Adjusted Operating Profit Margin(1) 15.6% 13.4% +220bps
Adjusted PBT Margin(1) 17.3% 14.4% +290bps
Operating Profit Margin 12.4% 12.1% +30bps
PBT Margin 14.1% 13.0% +110bps
Adjusted Earnings per Share (basic)(1) 29.87p 25.70p +16.2%
Earnings per Share (basic) 24.29p 23.31p +4.2%
Cash and Cash Equivalents £70.3m £56.1m +25.2%
Free cash flow(2) £9.0m £5.4m +65.4%
Adjusted Return on capital employed(3) 27.1% 25.9% +120bps
Interim Dividend per share 14.9p 12.6p +18.3%
Special Dividend per share 54.8p - -
Andrew Milne, Chief Executive Officer of Nichols, commented:
"I am pleased to report further strategic progress in the first half,
resulting in strong double digit increases in adjusted profit before tax and
adjusted earnings per share. As a result of our progress, the Board's high
levels of confidence in the outlook and the strength of our balance sheet, we
are pleased to announce a special dividend of 54.8p per share - which equates
to a total of £20m - alongside an 18% increase in the interim dividend to
14.9p per share. This reflects a long history of strong cash flow generation
and the Board's commitment to delivering attractive shareholder returns.
Positive trading momentum in our UK Packaged business reflected further market
share gains in squash and carbonates, driven by increased marketing
investment, growth from innovation, and distribution gains. Our biggest ever
UK promotional campaign was launched towards the end of the Period, and we are
confident this will support the continued growth of the Vimto brand over the
summer.
Whilst mindful of continued pressure on consumer spending, despite levels of
inflation stabilising, our diversified business model and the enduring
strength of the Vimto brand have enabled us to deliver a strong performance.
As a result, we now expect full-year profitability to be slightly ahead of
current market expectations and we remain confident that Nichols is well
placed to deliver its strategic growth ambitions."
Strategic highlights
UK Packaged
· Strong market share growth in the UK driven by both squash and
carbonate categories
· The Vimto brand achieved its highest ever UK annual retail sales value
of £109m(4), reflecting increased marketing investment and growth from
innovation and distribution gains
International Packaged
· Strong in-market execution across the Middle East during the key
Ramadan trading period
· Commenced phased can production in Senegal, enabling us to better serve
this key market in West Africa by bringing production closer to the end
consumer, with benefits expected to be delivered in H2
Out of Home (OoH)
· Implementation of the OoH strategic review was largely concluded in the
Period, delivering significant improvements in profitability
Financial highlights
· UK Packaged revenues +5.3% to £45.4m (H1 2023: £43.1m)
- Underpinned by volume growth of 4.9%, reflecting product innovation,
distribution gains and increased marketing investment
· International Packaged revenues -6.9% to £20.0m (H1
2023: £21.5m)
- As expected, due to the timing of shipments into the Middle East and
reduced volumes in Africa, given the impact of one-off launch volumes last
year
- Strong performance forecast in H2
· OoH revenues -11.3% to £18.6m (H1 2023: £21.0m)
- Reflecting the planned reduction in activity having exited several
unprofitable accounts, identified as part of the OoH Strategic Review.
· Group revenue declined by -1.8% to £84.0m (H1 2023: £85.5m)
· Gross margin increased by +2.9ppt to 44.0% (H1 2023: 41.1%)
- Absolute gross margin increased by £1.8m reflecting UK volume growth
and pricing actions taken in FY23 to mitigate significant inflationary
pressures over the last 18 months.
· Adjusted profit before tax growth of +18.0% to £14.5m and adjusted
operating profit growth of +14.1% to £13.1m
- Improved gross margin together with a reduction in administrative
costs as a result of implementing the OoH strategic plan.
· Exceptional costs of £2.7m
- £2.7m charge relating to investment in the Group's new ERP system,
which is progressing well.
- £0.2m charge relating to the implementation of the OoH review, that
will conclude in H2.
- £0.2m credit relating to the recovery of costs relating to Group's
historical incentive scheme.
· Strong cash and cash equivalents at £70.3m (H1 2023: £56.1m, 31
December 2023: £67.0m)
- Increased net interest receipts of £1.4m (H1 2023: £0.8m)
· Interim dividend increased to 14.9p (H1 2023: 12.6p)
· Special dividend of 54.8p per share equating to an aggregate of £20m
to be paid with the interim dividend
Outlook
The Company has begun trading in Q3 positively and in line with management
expectations. Reflecting the progress made in H1 and underpinned by the
Group's ongoing focus on driving margin improvement, the Board now expects to
report full year adjusted profit before tax slightly ahead of current market
expectations.(5)
Notes
(1)( ) Excluding exceptional items
(2) Free cash flow is the net increase in cash and cash equivalents before
acquisition funding and dividends
(3 )Adjusted return on capital employed is the rolling 12 months' adjusted
operating profit divided by the average period-end capital employed
(4) Nielsen IQ RMS data for the Squash, Flavoured Carbonates, RTD Stills,
Flavoured Water, and Energy categories YTD to 15.06.24 for the GB Total
Coverage market
(5) FY24 expectations refers to Group compiled market consensus for FY24
adjusted PBT of £28.8m at 23 July 2024
Contacts:
Nichols plc Telephone: 0192 522 2222
Andrew Milne, Chief Executive Officer
Richard Newman, Chief Financial Officer
Singer Capital Markets (NOMAD & Broker) Telephone: 0207 496 3000
Steve Pearce / Jen Boorer Website: www.singercm.com (http://www.singercm.com/)
Hudson Sandler (Financial PR) Telephone: 0207 796 4133
Alex Brennan / Hattie Dreyfus / Harry Griffiths Email: nichols@hudsonsandler.com (mailto:nichols@hudsonsandler.com)
Notes to Editors:
Nichols plc is an international diversified soft drinks business with sales in
over 60 countries. 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,
Starslush, ICEE, Levi Roots and Sunkist.
For more information about Nichols, visit: www.nicholsplc.co.uk
(http://www.nicholsplc.co.uk/)
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic
law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the company's obligations under Article 17 of
MAR.
Notes to Editors:
Nichols plc is an international diversified soft drinks business with sales in
over 60 countries. 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,
Starslush, ICEE, Levi Roots and Sunkist.
For more information about Nichols, visit: www.nicholsplc.co.uk
(http://www.nicholsplc.co.uk/)
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic
law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the company's obligations under Article 17 of
MAR.
Notes to Editors:
Nichols plc is an international diversified soft drinks business with sales in
over 60 countries. 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,
Starslush, ICEE, Levi Roots and Sunkist.
For more information about Nichols, visit: www.nicholsplc.co.uk
(http://www.nicholsplc.co.uk/)
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic
law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the company's obligations under Article 17 of
MAR.
Executive Review
Revenue
The Board is pleased to report an encouraging half year performance as
Packaged revenues increased by 1.3% to £65.4m (H1 2023: £64.5m) while
overall Group revenues declined by 1.8% to £84.0m (H1 2023: £85.5m),
reflecting the expected rationalisation of the OoH business.
Encouragingly, UK Packaged revenues increased by 5.3% to £45.4m (H1
2023: £43.1m) underpinned by volume growth of 4.9% reflecting new product
innovation, expanding distribution and increased marketing investment. Growth
from innovation includes a strong performance from Vimto Energy, which
launched in 2023, together with an expanded range of core Vimto products
including flavour extensions and a new children's range of smaller format
packs. Distribution gains have been achieved across a number of convenience
format stores, for core products within the 'ready to drink' portfolio. The
Group's biggest ever promotional campaign ('Love the Taste') was launched
towards the end of the Period that will support growth of the Vimto brand over
the summer months.
International Packaged revenues declined by 6.9% to £20.0m (H1
2023: £21.5m). The significant growth seen within Africa in previous years
reversed in the first half with revenues down 10.1% to £11.8m (H1
2023: £13.1m), due to the strong comparator as a result of significant
launch volumes into Ivory Coast during the first half of 2023. Production of
canned products commenced in Senegal on a phased basis late in the Period,
which will bring benefits in the second half of the year as the Group
transfers increasing volumes to a local concentrate model rather than a
finished product export model. As a result, revenues will reduce although
margins will improve.
Middle East revenues in the Period also declined by 29.3%, reflecting the
timing of shipments related to Vimto's typically strong trading period of
Ramadan which will see stronger volumes in Q4 as the date moves forward each
year. The Group's Rest of World markets saw strong revenue growth of 37.1%,
with the US and Europe continuing to perform well building on increased
brand awareness and strong in-market execution.
OoH revenues declined by 11.3% to £18.6m (H1 2023: £21.0m), reflecting
the planned reduction in activity having exited several unprofitable accounts
and product offerings, identified as part of the OoH Strategic Review. As
anticipated, the absolute profitability of the business has improved
significantly as a consequence of reducing the cost base and focusing
resources more efficiently within OoH.
The impact of movements in foreign exchange rates on revenue year-on-year was
immaterial, at approximately -£0.2m adverse.
Gross Profit
Gross profit of £37.0m was £1.8m higher than H1 2023 (£35.2m) and 2.9
percentage points higher at 44.0%.
The cost of goods inflation experienced in 2022 and 2023 stabilised into the
first half of the year, although underlying costs remain significantly higher
than two years ago. The Group has been able to fully mitigate cumulative cost
increases by working with its customers and suppliers across the whole of its
supply chain, identifying the optimal balance of mitigating actions and price
recovery. The impact of movements in foreign exchange rates on gross profit
was -£0.1m adverse.
Distribution Expenses
Distribution expenses within the Group are those associated with
the UK Packaged route to market, and for OoH are the distribution costs
incurred from factory to depot. Final leg distribution costs within the OoH
business are reported within administrative expenses.
Distribution expenses increased by 3.2% to £5.2m (H1 2023: £5.0m),
largely reflecting increased volumes in the UK business. Inflationary
pressures around increased fuel prices were reduced.
Administrative Expenses
Administration expenses, excluding exceptional items, totalled £18.7m (H1
2023: £18.7m). Additional costs incurred in the Period largely relate to
payroll and staff related costs in response to cost-of-living pressures,
alongside further investment in marketing spend to drive brand equity within
the Packaged business. These additional expenses have been offset by a
significant reduction in overhead costs related to the OoH business following
implementation of the actions identified through the strategic review process.
Exceptional Costs
The Group incurred £2.7m of exceptional costs during the Period (H1
2023: £1.1m).
Business Change Programme and Systems Development
The Group has continued to build a new enterprise resource planning (ERP)
system, focused on driving business transformation. The design phase of the
project has concluded with the system architecture currently being built ahead
of an extensive testing period during H2. The new system is expected to be
operational in Q1 2025. Costs of £2.7m were incurred in the Period.
Out of Home Strategic Review and Restructuring
In 2022, the Group completed a strategic review into its OoH route to market,
assessing customer and product mix as well as reviewing ways to enhance net
margin and profitability going forward. The Group incurred £0.2m of costs
in the Period, with most recommendations having been implemented.
Historic Incentive Scheme
During 2022, the Group settled with HMRC a £4.3m tax and interest charge
relating to an historic incentive scheme and has now achieved a significant
recovery of debts from current and previous employees who had indemnified the
Company. Provisions relating to the recovery of these amounts have been
reduced by £0.2m, with full cost recovery now expected by early 2025.
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.
Finance Income
Net finance income of £1.4m (H1 2023: £0.8m) was significantly up on the
prior year, as the Group ensured the best return for its increasing deposits
given higher interest rate rises over the Period.
Adjusted Operating Profit and Operating Profit
Adjusted operating profit, excluding exceptional items, increased by 14.1% to
£13.1m reflecting volume growth in the UK, improving margins and tight
controls of the overall cost base whilst maintaining investment in our brands.
Adjusted Profit Before Tax, Profit Before Tax and Tax Rate
Adjusted profit before tax, excluding exceptional items, increased by 18.0%
to £14.5m (H1 2023: £12.3m). The tax charge on adjusted profit before tax
for the Period of £3.6m (H1 2023: £2.9m) represents an effective tax rate
of 24.8% (H1 2023: 23.8%). The increase in the effective rate is consistent
with published rates. Profit before tax was £11.8m, an improvement of 5.8%
compared to the prior year (H1 2023: £11.2m) reflecting the increased
operating profits and interest income, partially offset by the increased
exceptional costs largely relating to investment in the Group's new enterprise
resource planning (ERP) system.
Balance Sheet and Cash and Cash Equivalents
The continued strength of the Group's closing balance sheet reflects its
diversified routes to market and asset light model. Cash and cash equivalents
at the end of the Period remained strong at £70.3m (H1 2023: £56.1m, 31
December 2023: £67.0m).
The Group has seen its working capital marginally increase since the start of
the year (+£0.1m), principally driven by debtors and strong Q2 sales. Capital
expenditure in the Period was £0.1m (H1 2023: £0.1m) and was historically
weighted towards our OoH business where a re-focus on capital allocation and
spend has been actioned following the strategic review. The Group's current
Return on Capital Employed is 27.1% (H1 2023: 25.9%).
Earnings per share
Adjusted basic EPS increased to 29.87 pence (H1 2023: 25.70p) with basic EPS
at 24.29 pence (H1 2023: 23.31p). On an adjusted basis, diluted EPS
was 29.86 pence (H1 2023: 25.68p).
Dividend and Capital Allocation
In line with the Group's dividend policy, dividend cover is broadly 2x the
adjusted earnings of the Group. As a result, the interim dividend for 2024
will be 14.9p per share, to be paid on 6 September 2024 with a record date of
2 August 2024 and an ex-dividend date of 1 August 2024.
In the Group's preliminary results statement, the Board set out its approach
to capital allocation and committed to identifying surplus cash reserves for
distribution to shareholders. Having considered the investment needs and
capital structure of the business, the Board has approved a special dividend
of 54.8p per share equivalent to an aggregate distribution of £20m. This
payment reflects a long history of strong cash flow generation by the Company
and the Board's confidence in its future prospects. We will continue to keep
our capital allocation policy under review ensuring we maintain sufficient
resources to fund future growth opportunities, whilst balancing shareholder
returns.
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 30 June 2024, the Group
recognised a surplus on its UK defined benefit scheme of £3.7m (31
December 2023: surplus £4.0m).
Outlook
The Board is pleased with the Group's trading performance and strategic
progress in the first half of 2024. Consumer spending is still under pressure
despite levels of inflation stabilising. However, we exit the first half with
strong momentum and we remain confident that the Group, underpinned by its
diversified business model and the enduring strength of the Vimto brand, is
well placed to achieve its long-term strategic ambitions and deliver strong
returns for our shareholders.
The Company has begun trading in Q3 positively and in line with management
expectations. Reflecting the progress made in H1 and underpinned by the
Group's ongoing focus on driving margin improvement the Board now expects to
report full year Adjusted Profit Before Tax(1) slightly ahead of current
market expectations(2).
Andrew Milne
Chief Executive Officer
Richard Newman
Chief Financial Officer
24 July 2024
(1) ( )Excluding exceptional items
(2 ) FY24 expectations refers to Group compiled market consensus for FY24
adjusted PBT of £28.8m at 23 July 2024
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
Half year to Half year to Year ended
30 June 30 June 31 December 2023
2024 2023 £'000
£'000 £'000
Continuing operations
Revenue 83,976 85,546 170,741
Cost of sales (47,021) (50,356) (98,565)
Gross profit 36,955 35,190 72,176
Distribution expenses (5,171) (5,009) (9,567)
Administrative expenses (21,402) (19,846) (40,323)
Operating profit 10,382 10,335 22,286
Finance income 1,458 866 2,095
Finance expenses (37) (48) (123)
Profit before taxation 11,803 11,153 24,258
Taxation (2,927) (2,649) (5,896)
Profit for the Period 8,876 8,504 18,362
Earnings per share (basic) 24.29p 23.31p 50.34p
Earnings per share (diluted) 24.28p 23.29p 50.32p
Adjusted for exceptional items
Operating profit 10,382 10,335 22,286
Exceptional items 2,713 1,144 2,907
Adjusted operating profit 13,095 11,479 25,193
Profit before taxation 11,803 11,153 24,258
Exceptional items 2,713 1,144 2,907
Adjusted profit before taxation 14,516 12,297 27,165
Adjusted earnings per share (basic) 29.87p 25.70p 56.41p
Adjusted earnings per share (diluted) 29.86p 25.68p 56.39p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Half year to 30 June Unaudited Audited
2024 Half year to Year ended
31 December
£'000 30 June
2023
2023
£'000
£'000
Profit for the financial Period 8,876 8,504 18,362
Items that will not be classified subsequently to profit or loss:
Re-measurement of net defined benefit liability (360) 69 (192)
Deferred taxation on pension obligations and employee benefits 90 (17) 48
Other comprehensive (expense)/income for the Period (270) 52 (144)
Total comprehensive income for the Period 8,606 8,556 18,218
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 June 30 June 31 December
2024 2023 2023
ASSETS £'000 £'000 £'000
Non-current assets
Property, plant and equipment 8,773 10,247 9,457
Intangibles 215 297 256
Pension surplus 3,715 4,257 4,014
Total non-current assets 12,703 14,801 13,727
Current assets
Inventories 10,491 10,595 8,809
Trade and other receivables 42,205 42,001 41,393
Corporation tax receivable - 986 -
Cash and cash equivalents 70,291 56,128 67,030
Total current assets 122,987 109,710 117,232
Total assets 135,690 124,511 130,959
LIABILITIES
Current liabilities
Trade and other payables 32,899 29,533 30,719
Corporation tax payable 74 - 318
Total current liabilities 32,973 29,533 31,037
Non-current liabilities 1,801 2,378
Other payables 1,865
Deferred tax liabilities 626 687 715
Total non-current liabilities 2,427 3,065 2,580
Total liabilities 35,400 32,598 33,617
Net assets 100,290 91,913 97,342
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 2,151 1,481 1,845
Retained earnings 89,978 82,271 87,336
Total equity 100,290 91,913 97,342
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
Half year to Half year to Year ended
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000 £'000 £'000 £'000
Cash flows from operating activities
Profit for the financial Period 8,876 8,504 18,362
Adjustments for:
Depreciation and amortisation 975 1,193 2,343
Loss on sale of property, plant and equipment 56 74 67
Finance income (1,458) (866) (2,095)
Finance expense 37 48 123
Tax expense recognised in the income statement 2,927 2,649 5,896
(Increase)/decrease in inventories (1,682) (163) 1,623
Increase in trade and other receivables (405) (2,096) (1,549)
Increase/(decrease) in trade and other payables 1,971 (928)
384
Change in pension obligations (61) (63) (81)
Fair value gain on derivative financial instruments (30) (344)
(285)
2,330 (496) 6,426
Cash generated from operating activities 11,206 8,008 24,788
(3,171) (2,939) (4,776)
Tax paid
8,035 5,069 20,012
Net cash generated from operating activities
Cash flows from investing activities
Finance income 1,458 866 2,095
Acquisition of property, plant and equipment (146) (138) (479)
Proceeds from sale of property, plant and equipment 15 - 192
Net cash from investing activities 1,327 728 1,808
Cash flows from financing activities (409) (385) (909)
Payment of lease liabilities
Dividends paid (5,692) (5,580) (10,177)
Net cash used in financing activities (6,101) (5,965) (11,086)
Net increase/ (decrease) in cash and cash equivalents 3,261 (168) 10,734
Cash and cash equivalents at start of Period 67,030 56,296 56,296
Cash and cash equivalents at end of Period 70,291 56,128 67,030
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Called up share capital Share premium reserve Capital redemption reserve Other reserves Retained earnings Total
£'000 £'000 £'000 equity
£'000 £'000
£'000
At 1 January 2023 3,697 3,255 1,209 1,280 79,295 88,736
Dividends - - - - (5,580) (5,580)
Movement in ESOT - - - (2) - (2)
Credit to equity for equity-settled share-based payments - - - 203 - 203
Transactions with owners - - - 201 (5,580) (5,379)
Profit for the Period - - - - 8,504 8,504
Other comprehensive income - - - - 52 52
Total comprehensive income - - - - 8,556 8,556
At 30 June 2023 3,697 3,255 1,209 1,481 82,271 91,913
Called up share capital Share premium reserve Capital redemption reserve Other reserves Retained earnings Total
£'000 £'000 £'000 equity
£'000 £'000
£'000
At 1 January 2024 3,697 3,255 1,209 1,845 87,336 97,342
Dividends - - - - (5,692) (5,692)
Movement in ESOT - - - 4 - 4
Share option exercise - - - - (272) (272)
Credit to equity for equity-settled share-based payments - - - 302 - 302
Transactions with owners - - - 306 (5,964) (5,658)
Profit for the Period - - - - 8,876 8,876
Other comprehensive expense - - - - (270) (270)
Total comprehensive income - - - - 8,606 8,606
At 30 June 2024 3,697 3,255 1,209 2,151 89,978 100,290
Treasury shares used for share option exercises are held within retained
earnings.
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 2023,
prepared in accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006 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.
These condensed consolidated interim financial statements for the half year
reporting period ended 30 June 2024 have been prepared in accordance with IAS
34 Interim financial reporting and also in accordance with the measurement and
recognition principles of UK adopted international accounting standards. 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.
The interim financial statements were authorised for issue by the Board of
Directors on 24 July 2024.
2. Going Concern
In assessing the appropriateness of adopting the going concern basis in
preparing the Interim Report and financial statements, the Directors have
considered the current financial position of the Group and its principal risks
and uncertainties. The review performed considers severe but plausible
downside scenarios that could reasonably arise within the Period.
Our modelling has sensitised the impacts of Russia's invasion of Ukraine and
the conflict within Yemen, in particular their impact on global supply chains
and macroeconomic inflationary factors. 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 provide resilience against these
factors and the other principal risks that the Group is exposed to. At 30 June
2024 the Group had cash and cash equivalents of £70.3m with no external bank
borrowings.
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 this Interim Report
and financial statements) and, accordingly, consider it appropriate to adopt
the going concern basis in preparing the financial statements.
3. Segmental Reporting
The Board, as the entity's chief operating decision maker, analyses the
Group's internal reports to enable an assessment of performance and allocation
of resources. The operating segments are based on these reports.
The accounting policies of the reportable segments are the same as the Group's
accounting policies. Segment performance is evaluated based on adjusted
operating profit (excluding exceptional items), finance income and exceptional
items. This is the measure reported to the Board for the purpose of resource
allocation and assessment of segment performance.
Half year to Packaged
30 June 2024 UK Middle East Africa Rest of World Total Packaged Out of Home Total Segments Central(1) Total Group
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 45,386 3,466 11,754 4,752 65,358 18,618 83,976 - 83,976
Adjusted operating profit 18,779 2,964 21,743 (8,648) 13,095
Net finance income 1,421
Adjusted profit before tax 14,516
Exceptional items (2,713)
Profit before tax 11,803
Half year to Packaged
30 June 2023 UK Middle East Africa Rest of World Total Packaged Out of Home Total Segments Central(1) Total Group
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 43,097 4,905 13,081 3,466 64,549 20,997 85,546 - 85,546
Adjusted operating profit 17,988 1,352 19,340 (7,861) 11,479
Net finance income 818
Adjusted profit before tax 12,297
Exceptional items (1,144)
Profit before tax 11,153
Year ended Packaged
31 December 2023 UK Middle East Africa Rest of World Total Packaged Out of Home Total Segments Central(1) Total Group
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 83,914 12,963 22,184 8,122 127,183 43,558 170,741 - 170,741
Adjusted operating profit 36,317 5,063 41,380 (16,187) 25,193
Net finance income 1,972
Adjusted profit before tax 27,165
Exceptional items (2,907)
Profit before tax 24,258
(1) Central includes the Group's central and corporate costs, which relate to
salaries and head office overheads such as rent and rates, insurance and IT
maintenance as well as the costs associated with the Board and Executive
Leadership Team, Governance and Listed Company costs.
A geographical split of revenue is provided below:
Half year to Half year to Year ended
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Geographical split of revenue
Middle East 3,466 4,905 12,963
Africa 11,754 13,081 22,184
Rest of World 4,852 3,301 8,518
Total exports 20,072 21,287 43,665
United Kingdom 63,904 64,259 127,076
Total revenue 83,976 85,546 170,741
4. Exceptional items
Half year to Half year to Year ended
30 June 2024 30 June 31 December
2023 2023
£'000 £'000 £'000
Business Change Programme and Systems Development 2,733 519 1,722
Out of Home Strategic Review and Restructuring 179 569 1,784
Historic incentive scheme (199) 56 (599)
2,713 1,144 2,907
The Group incurred £2.7m of exceptional costs during the Period (H1 2023:
£1.1m).
Business Change Programme and Systems Development
The Group has continued to build a new enterprise resource planning (ERP)
system, focused on driving business transformation. The design phase of the
project has concluded with the system architecture currently being built ahead
of an extensive testing period during H2. The new system is expected to be
operational in Q1 2025. Costs of £2.7m were incurred in the Period.
Out of Home Strategic Review and Restructuring
In 2022 the Group completed a strategic review into its OoH route to market,
assessing customer and product mix as well as reviewing ways to enhance net
margin and profitability going forward. The Group incurred £0.2m of costs
in the Period with most recommendations having been implemented.
Historic Incentive Scheme
During 2022, the Group settled with HMRC a £4.3m tax and interest charge
relating to an historic incentive scheme and has now achieved a significant
recovery of debts from current and previous employees who had indemnified the
Company. Provisions relating to the recovery of these amounts have been
reduced by £0.2m, with full cost recovery now expected by early 2025.
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 profit after tax for
the Period of the Group by the weighted average number of ordinary shares in
issue during the Period. The weighted average number of ordinary shares is
calculated by adjusting the shares in issue at the beginning of the Period by
the number of shares bought back or issued during the Period multiplied by a
time-weighting factor. 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:
Weighted average number of shares
Earnings Earnings per share
£'000
30 June 2024
Basic earnings per share 8,876 36,544,818 24.29p
Dilutive effect of share options 6,448
Diluted earnings per share 8,876 36,551,266 24.28p
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 Group's operations.
It can be reconciled from the basic earnings per share as follows:
Weighted average number of shares
Earnings Earnings per share
£'000
30 June 2024
Basic earnings per share 8,876 36,544,818 24.29p
Exceptional items after taxation 2,040
Adjusted basic earnings per share 10,916 36,544,818 29.87p
Diluted effect of share options 6,448
Adjusted diluted earnings per share 10,916 36,551,266 29.86p
6. Non-current Assets
Property, Plant & Equipment
Intangibles
£'000 £'000
Cost
At 1 January 2024 31,674 9,998
Additions 321 -
Disposals (2,966) -
At 30 June 2024 29,029 9,998
Depreciation and Amortisation
At 1 January 2024 22,217 9,742
Charge for the Period 934 41
On disposals (2,895) -
At 30 June 2024 20,256 9,783
Net book value
At 1 January 2024 9,457 256
At 30 June 2024 8,773 215
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 2023 and updated at 30 June 2024 by an
independent qualified actuary.
A summary of the pension surplus position is provided below:
Pension surplus £'000
At 1 January 2024 4,014
Current service cost (6)
Scheme administrative expenses (34)
Net interest income 89
Actuarial losses (360)
Contributions by employer 12
At 30 June 2024 3,715
8. Dividends
Dividend cover is broadly 2x adjusted earnings of the Group. As a result, the
interim dividend for 2024 will be 14.9p per share to be paid on 6 September
2024 with a record date of 2 August 2024.
In the Group's preliminary results statement the Board set out its approach to
capital allocation and committed to identifying surplus cash reserves for
distribution to shareholders. Having considered the investment needs and
capital structure of the business, the Board has approved a special dividend
of 54.8p per share equivalent to an aggregate distribution of £20m. This
payment reflects a long history of strong cash flow generation by the Company
and the Board's confidence in its future prospects. We will continue to keep
our capital allocation policy under review ensuring we maintain sufficient
resources to fund future growth opportunities, whilst balancing shareholder
returns.
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.
-Ends-
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 (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR UOUKRSBUBUARRecent news on Nichols
See all newsREG - Nichols PLC - Grant of SAYE Options and PDMR Dealings
AnnouncementREG - Nichols PLC - Holding(s) in Company
AnnouncementREG - Nichols PLC - Result of Annual General Meeting
AnnouncementREG - Nichols PLC - AGM Trading Update
AnnouncementREG - Nichols PLC - Holding(s) in Company
Announcement