REG - NWF Group PLC - Final Results
01/08/2023 07:00
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RNS Number : 8132H NWF Group PLC 01 August 2023
For release 07.00 am Tuesday 1 August 2023
NWF Group plc
NWF Group plc: Final results for the year ended 31 May 2023
"A very strong set of results, significantly ahead of market expectations at
the start of the financial year, with all divisions performing strongly,
successful acquisitions in line with our growth strategy and refinancing to
support continued development."
NWF Group plc ('NWF' or 'the Group'), the specialist distributor of fuel, food
and feed across the UK, today announces its audited final results for the year
ended 31 May 2023.
2023 2022 %
Financial highlights
Revenue £1,053.9m £878.6m +20.0%
Headline operating profit1 £21.0m £21.8m -3.7%
Headline profit before taxation1 £19.6m £20.9m -6.2%
Diluted headline earnings per share1 31.3p 34.8p -9.8%
Total dividend per share 7.8p 7.5p +4.0%
Headline EBITDA(1) £25.8m £26.6m -3.0%
Net cash (excluding IFRS 16 lease liabilities) £16.3m £9.0m +81.1%
Statutory results
Operating profit £20.6m £13.2m +56.1%
Profit before taxation £18.9m £12.0m +57.5%
Diluted earnings per share 30.1p 17.0p +77.6%
Net debt (including IFRS 16 lease liabilities) £13.5m £19.2m -27.6%
1 Headline operating profit and EBITDA excludes exceptional
items and amortisation of acquired intangibles. Headline profit before
taxation excludes exceptional items, amortisation of acquired intangibles and
the net finance cost in respect of the Group's defined benefit pension scheme.
Diluted headline earnings per share also takes into account the taxation
effect thereon.
Highlights:
• Very strong results for the Group in spite of inflationary and
cost-of-living challenges.
• Record revenues, with robust levels of profitability, against
tough comparatives which benefitted from significant one-off gains.
• Resilient performance from Fuels as a result of providing
excellent service to customers amidst supply constraints and volatile oil
prices.
• Two fuel acquisitions completed in line with the strategy to
consolidate the market, adding 39 million litres per annum.
• Strong performance improvement in Food with increased outbound
activity and backloads along with warehouses at an effective operating
capacity throughout the year, whilst continuing to win new business.
• Outstanding performance in Feeds, supporting ruminant farming
customers who benefited from record high milk prices.
• The balance sheet remains strong with a healthy cash balance at
the year-end providing significant flexibility to support investment driven
growth.
• Continued increase in shareholder returns; proposed increase in
the total dividend of 4.0% to 7.8p per share, reflecting the strong
performance and the Board's confidence in the prospects of the business.
• Performance to date in the current financial year has been in line
with the Board's expectations.
Divisional highlights:
Fuels - headline operating profit of £12.9 million (2022: £17.2 million).
Resilient performance across the year in spite of the cost-of-living crisis
and a mild winter impacting demand for heating oil. Localised supply shortages
were overcome by national supply agreements and trunking fuel across the
country to meet the needs of our customers across the depot network. Two
acquisitions completed in the last twelve months.
Food - headline operating profit of £4.2 million (2022: £2.8 million).
Continued successful development with an increase in outloads and backloads
supported by a fully utilised warehouse operation with improved operating
efficiencies. New business wins have continued in the year.
Feeds - headline operating profit of £3.9 million (2022: £1.8 million).
Outstanding performance as a result of a resilient farming customer base, a
record milk price and a desire to optimise yields through nutritional advice.
The performance also benefited from significant commodity price gains in the
summer months of 2022.
Richard Whiting, Chief Executive, NWF Group plc, commented:
"NWF has delivered another great result, significantly ahead of the market
expectations at the start of our financial year. The three divisions have
performed ahead of expectations in the year in spite of inflationary and
cost-of-living challenges. Strategic growth has been delivered with the
completion of two fuel acquisitions. With a strong positive cash position at
year end and long-term banking facilities in place, the Group is well
positioned to continue its successful development."
It has been my privilege to lead NWF for the last 15 years and in retiring
from the role next year I am delighted that Chris Belsham will be my
successor."
A virtual meeting will be held for analysts today at 09.30a.m. Please contact
MHP for further details at nwf@mhpgroup.com (mailto:nwf@mhpgroup.com) .
Information for investors, including analyst consensus forecasts, can be found
on the Group's website at www.nwf.co.uk.
Richard Whiting, Chief Executive Reg Hoare/Catherine Chapman Mike Bell/Ed Allsopp
Chris Belsham, Chief Executive Designate
NWF Group plc MHP Group Peel Hunt LLP
(Nominated Advisor and Broker)
Tel: 01829 260 260 Tel: 020 3128 8339 Tel: 020 7418 8900
Chair's statement
Overview
I am pleased to report another year of significant progress for the Group,
exceeding the market expectations that were established at the start of the
financial year. In a year with significant challenges from inflationary
pressures and the cost-of-living crisis, it has been particularly positive to
deliver strong performances from all three divisions.
As a consequence of the continued progress achieved, the Group's strong cash
generation and the growing confidence in the Group's future prospects, the
Board is recommending a final dividend of 6.8p per share, to be paid to
shareholders on 8 December 2023 (2022: 6.5p), giving a total dividend of 7.8p
per share (2022: 7.5p), which represents a 4.0% increase on the prior year.
This is the twelfth year that the Group has increased the dividend,
highlighting continual sustained improvements in performance.
Our business
NWF is a specialist distributor delivering fuel, food and feed across the UK.
Each of our trading divisions has scale and good market position and is
profitable and cash generative. Each division trades under different brands
with their own brand architecture as follows:
Fuels NWF Fuels (including a number of local sub-brands)
Food Boughey
Feeds NWF Agriculture, SC Feeds, New Breed and Jim Peet
Key areas of focus for the Board in 2023 were:
Responding proactively to market conditions
The Group has responded well to challenging market conditions throughout the
year. Inflation has been one of the most significant challenges and as a
specialist distributor it is critical that we operate efficiently, provide a
high level of service and effectively pass through inflationary costs, which
all divisions have achieved. The UK experienced localised shortages for fuel
supplies, particularly in the autumn and winter months. We have been able to
mitigate this through our national supply agreements and the ability to move
fuel around the country, demonstrating the value of our depot network, to
ensure we maintained service to our customers. The cost-of-living crisis
impacted consumers and we expect some of the volume decline in heating oil was
a result of consumers trying to use less energy, albeit the majority of the
volume reduction was a consequence of the mild winter. Volume in Food and
Feeds was not impacted by the market conditions as the demand for ambient
groceries was robust as was the case for milk and dairy products, which are
basic necessities.
Delivering on strategy
The Group has a clearly articulated strategy which has a focus on expanding
the Fuels depot network through acquisitions, consolidating a fragmented
market. Two acquisitions have been completed in the last twelve months and
there is a strong and active pipeline of opportunities. In Food, following the
successful expansion with the Crewe warehouse, we continue to evaluate the
opportunities to further expand our business with additional warehousing space
backed by customer contracts. In Feeds we are focused on developing
nutritionists through the NWF Academy who can increase volumes and utilise our
national operations platform.
Cash generation
Cash generation remains a focus for the Group and it is good to report a
strong year-end net cash balance of £16.3 million (excluding lease
liabilities), which highlights both the cash generative nature of our business
and the capability and flexibility to finance growth investment opportunities.
Rewarding good service
The consistent focus on excellence in customer service has been critical
across the Group to win new business and ensure we can pass on inflationary
cost increases as a specialist distributor.
ESG framework
The Board recognises the importance and value of ESG. We have established a
target of net zero by 2040 and continued the focus on our four sustainability
pillars across the Group. An executive steering committee meets regularly,
reviewing detailed performance measures. A key development in the year has
been the completion of our first TCFD disclosures, in compliance with The
Companies (Strategic Report) (Climate-related Financial Disclosure)
Regulations 2022, Sections 414C, 414CA and 414CB of the Companies Act 2006, to
place requirements on certain publicly quoted companies and large private
companies to incorporate TCFD-aligned climate disclosures in their annual
reports.
We continue to adopt the Quoted Companies Alliance Corporate Governance Code
('the QCA Code') which we believe has been constructed in a simple, practical
and effective style and that meaningful compliance with its ten main
principles should provide shareholders with confidence in how the Group
operates.
Employees
The Group continues to employ more than 1,300 people across our three
divisions and Head Office. I would like to offer my personal thanks to all our
employees for their outstanding efforts and commitment to the Group over the
last year.
Board changes
Richard Whiting, CEO, has informed the Board of his plan to retire from NWF in
March 2024 after leading the Group successfully for the last 15 years. We are
pleased to announce Chris Belsham, will succeed Richard as CEO from March 2024
as part of a managed succession plan and will, from today, become Chief
Executive Designate. Katie Shortland, currently Finance & Transformation
Director at Midland Expressway Ltd, will join the Board as Chief Financial
Officer in October 2023. I will continue to lead the Group as Chair through
this important transitionary period until the AGM of 2024.
I look forward to updating shareholders on the Group's continuing progress at
the time of the Annual General Meeting on 28 September 2023.
Philip Acton
Chair
1 August 2023
Business and financial review
NWF has delivered another great result, significantly ahead of the market
expectations at the start of our financial year. The three divisions have
performed ahead of expectations in the year in spite of inflationary and
cost-of-living challenges. Strategic growth has been delivered with the
completion of two fuel acquisitions.
The continued focus on cash and very strong profit performance has increased
the year end net cash position (excluding lease liabilities), which both
demonstrates the ongoing cash-generative nature of our business and the
ability to fund acquisitions and development. In line with our established
progressive dividend policy, we are proposing an increased dividend as part of
our continuing focus on driving shareholder returns.
Fuels delivered a significant performance in the year in spite of lower demand
for heating oil as a consequence of a mild winter and consumers looking to
minimise expenditure on energy, given higher prices. During the autumn and
winter there were localised supply issues which were to our benefit as we have
national supply agreements and are able to move fuel effectively across the
country, demonstrating the value of our depot network, to meet our customers'
needs. This delivered higher than normal returns in the financial year and
reflects the flexibility and strong operating model of the business.
The Food division delivered another year of strong performance improvement,
ahead of our expectations. The result was delivered through an increased
number of outloads of our customers' products and ancillary backloads, along
with fully utilising the warehouse infrastructure with improved operating
efficiencies. New business has been won and we are currently utilising
overflow warehousing to manage this higher level of storage demand.
Feeds has delivered an outstanding year as a result of a number of positive
factors. The record high milk price for our dairy farmers has driven an
increased focus on nutritional advice to deliver additional volumes for our
customers. This has required the use of higher value and added value products
which supported performance. In addition, in the summer months of 2022, gains
were made on higher feed prices, having purchased commodities earlier in the
year at lower prices before the Ukraine conflict started.
The Group delivered headline operating profit of £21.0 million (2022: £21.8
million) and headline profit before tax of £19.6 million (2022: £20.9
million). Operating profit was £20.6 million (2022: £13.2 million). Diluted
headline earnings per share was 31.4p (2022: 34.8p).
Cash management remains strong with net cash of £16.3 million (2022: net cash
of £9.0 million) excluding lease liabilities, after £2.1 million of net
capital expenditure (2022: £3.2 million).
Fuels
Fuels' resilient performance was delivered by meeting customers' needs through
a period of continued significant price volatility and some localised
shortages of fuels, particularly during the autumn and winter period as the UK
moved away from using oil from Russia. We were able to maintain a good service
level across all 27 fuel depots as a result of national agreements across a
number of refineries and fuels terminals and the ability to move fuel across
the country to areas of shortages which drove higher returns. The relatively
mild winter reduced demand for heating oil along with the cost-of-living
crisis leading consumers to try and use less to offset higher prices. Heating
oil remained a lower cost source of home heating in comparison to natural gas,
the price of which was capped during the period.
Volumes declined by 4.1% to 636 million litres (2022: 663 million litres).
Revenue increased by 21.9% to £757.2 million (2022: £621.1 million) as a
consequence of higher oil prices, an increased diesel mix of fuel as a result
of the mild winter and duty changes to gas oil implemented in April 2022. The
average Brent Crude oil price in the year was $90 per barrel compared to $87
per barrel in the prior year. The volatility during the year was significant
with a high of $124 per barrel in June 2022 and a low of $74 per barrel in May
2023.
Headline operating profit was £12.9 million (2022: £17.2 million) as a
consequence of higher returns arising from supply concerns and pricing
volatility which results in a net profit of 2.0 pence per litre, higher than
expected. The prior year had one-off gains as a result of shortages and
volatility from the start of the Ukraine conflict which was reported on last
year.
Two acquisitions have been completed in the last twelve months. Sweetfuels
(Oxfordshire) was acquired in December 2022 for £10.0 million (on a cash
free/debt free basis with a normal level of working capital) and Geoff Boorman
Fuels (Kent) for £2.6 million in July 2023. These accretive acquisitions add
39 million litres of fuel to our business in a full year. The acquisition
pipeline of opportunities is healthy and this remains a focus for our
development activity. We have a proven post-acquisition integration plan,
retaining the local brand and customer facing parts of the business and
centralising finance, IT, procurement and credit control.
The Fuels division operates on a decentralised model with depot management
teams focused on optimising performance for the specific conditions of their
local markets. This model supported our ability to respond swiftly and
effectively to the increased consumer demand and significant commodity price
volatility. We continue to believe that our model is the most effective way to
maximise performance, given the industry structure, but we also believe there
are opportunities to leverage benefits from the breadth of our growing
network. As such, we continue to invest in enhancing systems and capabilities
for the Fuels division which we believe will improve efficiencies and provide
a strong platform for continued growth.
With over 100,000 customers (2022: 109,000) being supplied across 27 fuel
depots in the year (2022: 25), Fuels operates in large and robust markets and,
as a business, it has consistently proved it can effectively manage the impact
of volatility in oil prices. The industry remains highly fragmented, with many
small operators, which provides NWF with further opportunities to consolidate
the market and increase its market share.
Food
Food delivered a strong performance improvement as a result of increased
outloads and associated backhaul work, fully utilised warehouses throughout
the year and improved efficiency levels. Delivering a high level of service
and operating efficiently has supported the division in both passing through
inflationary cost increases and winning additional business from existing and
new customers in the year. Labour turnover has reduced and we are fully
resourced for both drivers and warehouse staff. A focus of the team has been
on non-financial initiatives including healthcare and wellbeing to improve
retention levels.
Revenue increased by 13.3% to £70.9 million (2022: £62.6 million). Storage
overall was at an average of 122,000 pallets (2022: 118,000 pallets), with
warehouses effectively utilised across the year. Demand for our customers'
products increased in spite of the cost-of-living crisis. Retailers have
reported stable demand for ambient grocery and demand has particularly
increased from the discounters winning business from the higher priced
retailers. Outloads were 7% higher than prior year whilst storage levels were
up 3%, highlighting a positive overall increase in the stock turn of our
customers' products.
New business has been gained from existing and new accounts to the extent that
overflow warehousing is being utilised over the summer peak period. We
continue to evaluate opportunities to further expand the warehouse base backed
by customer contracts.
Headline operating profit was £4.2 million (2022: £2.8 million). Whilst the
packing room increased activity strongly in the year and e-fulfilment was
stable, it was not sufficient to offset a reduction in Palletline contribution
which suffered as hauliers used their own vehicles more as a result of lower
overall economic activity and reduced network throughput.
Demand for our customers' products continues to be stable and the outlook for
most product categories handled by the business is resilient. The business
operates in a competitive supply chain and needs to continually demonstrate
the value and service that it provides to food manufacturers and importers. We
have a leading position in consolidating ambient grocery products in the North
West, with high service levels, industry leading systems and a consistent
operating performance being the key components of its customer proposition.
Feeds
Feeds is focused on providing nutritional advice and on-time deliveries of
animal feed to farmers across the country. Total feed volume decreased by 2.7%
to 514,000 tonnes (2022: 528,000 tonnes). This reduction was marginally lower
than the overall market and resulted from a mild autumn and a later transition
to indoor housing for dairy herds.
Commodity prices were extremely volatile during the year. In comparison to
prior year, a basket of commodities was 5% higher overall, but from the start
of the year to the end in May 2023 they fell 27%. This volatility has in part
been driven by uncertainty around the Ukraine conflict and its material impact
on agricultural commodity markets.
Revenue was higher at £225.8 million (2022: £194.9 million) reflecting the
higher feed prices more than offsetting lower volumes in the year. Headline
operating profit was £3.9 million (2022: £1.8 million). The outstanding
performance improvement has been driven by farmers utilising nutritional
advice to optimise diets and added value products to benefit from a record
high milk price. In addition, the division benefitted from commodities
purchased prior to the Ukraine conflict being utilised over the summer period
when feed prices had increased.
We have continued investment in the NWF Academy in which new trainees engage
on an 18-month structured training programme to become future NWF
nutritionists. The Academy has recruited a fourth group to the programme,
which has been well received across the industry. Graduates of the programme
are now developing as successful nutritionists in our national sales team.
Milk prices in the UK increased to a record of 51.6 pence per litre in
December 2022, supporting farming customers' higher feed, energy and labour
costs. The average price for the year of 46.5p per litre compared to an
average in the prior year of 34.4p per litre. At the end of the financial year
the milk price had fallen to below 40p per litre. Milk production was 0.8%
higher at 12.4 billion litres (2022: 12.3 billion litres).
Feeds has a very broad customer base, working with over 4,000 farmers across
the UK. This base, and the underlying robust demand for milk and dairy
products, results in a reasonably stable overall demand for our feed in most
market conditions.
Outlook
In Fuels, we have a proven depot-based operating model and a clear growth
strategy to consolidate a fragmented fuels distribution market. With a strong
pipeline, acquisitions are being actively pursued and the opportunity for
growth remains significant.
In Food, we are targeting additional business to support our ambition to
expand our warehouse and transport operations and leverage our team's
capability.
In Feeds, with commodity prices remaining volatile but farmers supported by a
good milk price, demand is anticipated to remain solid and we are seeking
volume growth on the back of our Academy, additions to the sales team and
utilising an effective national operations platform.
The Group has again demonstrated its capability to deliver a very strong
performance and has great resilience. With a positive cash position, long term
funding in place and the cash-generative capability of the Group we will
continue to consider acquisition opportunities, building on our successful
track record of acquiring and integrating businesses, as well as investment in
organic development.
Performance to date in the current financial year has been in line with the
Board's expectations. Overall, the Board continues to remain confident about
the Group's prospects.
Group results
For the year ended 31 May 2023
2023 2022
£m £m
Revenue 1,053.9 878.6
Cost of sales and administrative expenses (1,032.9) (865.4)
Headline operating profit(1) 21.0 21.8
Exceptional items - (8.3)
Amortisation of acquired intangibles (0.4) (0.3)
Operating profit 20.6 13.2
Financing costs (1.7) (1.2)
Headline profit before tax(1) 19.6 20.9
Exceptional items - (8.3)
Amortisation of acquired intangibles (0.4) (0.3)
Net finance cost in respect of defined benefit pension scheme (0.3) (0.3)
Profit before taxation 18.9 12.0
Income tax expense (4.0) (3.6)
Profit for the year 14.9 8.4
Headline EPS(1) 31.4 35.0p
Diluted headline EPS(1) 31.3 34.8p
Dividend per share 7.8 7.5p
Headline dividend cover(1) 4.0 4.6
Headline interest cover 26.3 54.5
1 Headline operating profit is statutory operating profit of
£20.6 million (2022: £13.2 million) before exceptional items of £Nil (2022:
£8.3 million) and amortisation of acquired intangibles of £0.4 million
(2022: £0.3 million). Headline profit before taxation is statutory profit
before taxation of £18.9 million (2022: £12.0 million) after adding back the
net finance cost in respect of the Group's defined benefit pension scheme of
£0.3 million (2022: £0.3 million), the exceptional items and amortisation of
acquired intangibles. Headline EPS also takes into account the taxation effect
thereon. Headline dividend cover is calculated using diluted headline EPS.
Group revenue increased by 20.0% to £1,053.9 million (2022: £878.6 million)
with revenue growth from higher commodity prices in Fuels and Feeds and an
increase in activity levels in Food. Headline operating profit was £21.0
million, a decrease of 3.7% (2022: £21.8 million). Operating profit increased
56.1% to £20.6 million (2022: £13.2 million).
Financing costs increased by £0.5 million to £1.7 million reflecting the
increase in interest rates. This included the interest on bank debt of £0.8
million (2022: £0.4 million) and headline interest cover was 26.3x (excluding
IAS 19 net pension finance costs and IFRS 16 lease interest) (2022: 54.5x).
Headline profit before taxation decreased by 6.2% to £19.6 million (2022:
£20.9 million). Profit before taxation increased by £6.9 million to £18.9
million (2022: £12.0 million). There were no exceptional items in the year
(2022: £8.3 million).
The tax charge for the year was £4.0 million (2022: £3.6 million). The
effective tax rate for the year was 21.2% (2022: 30.0%). The post-tax profit
for the year was £14.9 million (2022: £8.4 million).
The headline earnings per share of 31.4p represented a decrease of 10.3%
(2022: 35.0p); diluted headline earnings per share decreased by 9.8% to 31.4p
(2022: 34.8p). The proposed full-year dividend per share increased by 4.0% to
7.8p which reflects the strong performance and the Board's confidence in the
prospects of the business. The proposed dividend equates to a dividend cover
ratio of 4.0x.
The finance costs in respect of the defined benefit pension scheme were £0.3
million (2022: £0.3 million).
Balance sheet summary
As at 31 May 2023
2023 2022
£m £m
Tangible and intangible fixed assets 75.5 68.1
Right of use assets 29.1 27.5
Net working capital 2.3 5.4
Reimbursement assets 1.7 2.8
Derivative financial instruments 0.1 0.2
Net cash (excluding IFRS 16 lease liabilities) 16.3 9.0
Lease liabilities (29.8) (28.2)
Provision for liabilities (2.7) (3.8)
Current income tax liabilities (0.8) (0.4)
Deferred income tax liabilities (4.2) (3.2)
Retirement benefit obligations (9.6) (9.3)
Net assets 77.9 68.1
The Group increased net assets by £9.8 million to £77.9 million (2022:
£68.1 million) reflecting a profit for the year of £14.9 million (2022:
£8.4 million), strong cash conversion and a positive movement in working
capital.
Tangible and intangible fixed assets increased by £7.4 million to £75.5
million as at 31 May 2023 (2022: £68.1 million) as a result of the
acquisition of Sweetfuels Limited in Fuels. The depreciation (excluding IFRS
16 depreciation on right of use assets) and amortisation charges for the year
to 31 May 2023 were £4.8 million and £0.6 million respectively (2022: £4.6
million and £0.5 million respectively).
Group level ROCE (based on headline operating profit) was 28.6% as at 31 May
2023 (2022: 30.3%).
Net working capital decreased by £3.1 million in the year with all three
divisions experiencing a reduction. The Group's inventories decreased by £2.4
million to £7.4 million (2022: £9.8 million) with trade and other
receivables decreasing to £87.4 million (2022: £96.2 million) and a decrease
in trade and other payables to £92.5 million (2022: £100.6 million) as oil
and commodity prices reduced.
Net cash (excluding lease liabilities) increased by £7.3 million to £16.3
million (2022: net cash £9.0 million), as a result of ongoing disciplined
cash management, a strong trading performance and some short-term working
capital benefits due to the timing of the year end.
The deficit of the Group's defined benefit pension scheme increased by £0.3
million to £9.6 million (2022: £9.3 million). The value of pension scheme
assets decreased by £10.1 million to £29.6 million (2022: £39.7 million) as
a result of lower asset values. The value of the scheme liabilities decreased
by £9.8 million to £39.2 million (2022: £49.0 million) driven by a
significant increase in the discount rate used to calculate the present value
of the future obligations (2023: 5.35%; 2022: 3.45%). The discount rate is
based on the yield available on AA rated corporate bonds, which have increased
during the year.
Cash flow and banking facilities
For the year ended 31 May 2023
2023 2022
£m £m
Operating cash flows before movements in working capital and provisions 32.9 34.4
Working capital movements 4.1 (0.7)
Interest paid (1.4) (0.9)
Tax paid (3.1) (2.7)
Net cash generated from operating activities 32.5 30.1
Capital expenditure (net of receipts from disposals) (2.2) (3.2)
Acquisition of subsidiaries - cash paid (net of cash acquired) (9.5) -
Net cash used in investing activities (11.7) (3.2)
Net decrease in bank borrowings - (9.5)
Repayment of capital element of leases (9.9) (8.8)
Dividends paid (3.7) (3.5)
Net cash used in financing activities (13.6) (21.8)
Net increase in cash and cash equivalents 7.2 5.1
Cash and cash equivalents at beginning of year 9.1 4.0
Cash and cash equivalents at end of year 16.3 9.1
The closing net cash (excluding IFRS 16 lease liabilities) was £16.3 million
(2022: net cash £9.1 million).
The cash impact of working capital movements was a cash inflow of £4.1
million. Net cash generated from operating activities and after IFRS 16 lease
payments was £22.6 million (2022: £21.3 million) representing a cash
conversion ratio of 107.6% of headline operating profit (2022: 97.7%).
Net capital expenditure in the year at £2.1 million (2022: £3.2 million) was
lower than the annual depreciation charge, excluding IFRS 16 depreciation, of
£4.8 million (2022: £4.6 million).
The Group's banking facilities, totalling £61.0 million, were renewed in May
2023 and are committed through to 31 May 2026 with the exception of the bank
overdraft facility of £1.0 million which is renewed annually. There remains
substantial facility headroom available to support the development of the
Group. Within the total facility of £61.0 million, the Group has an invoice
discounting facility, the availability of which depends on the level of trade
receivables available for refinancing and which is subject to a maximum
drawdown of £50.0 million. In addition, the Group has agreed an accordion of
£10.0 million on each of the invoice discounting facility and the revolving
credit facility. The banking facilities are provided subject to ongoing
compliance with conventional banking covenants against which the Group has
substantial levels of headroom.
Principal risks and uncertainties
As with all businesses, the Group is affected by a number of risks and
uncertainties, some of which are beyond our control. The principal risks and
uncertainties which could have a material adverse impact on the Group are:
• Commodity prices and volatility in raw material prices - The
Group's Feeds and Fuels divisions operate in sectors which are vulnerable to
volatile commodity prices both for fuel and for raw materials.
• Transitional risks of climate change - The long-term profitability
of our current businesses is more likely to be impacted by Government strategy
and policy in relation to the decarbonisation of the economy, rather than as a
direct impact of climate change. The view of the Board is that the main risk
to the Group is a transitional risk as the Government introduces policies
which could negatively impact the Group. There are also potential additional
costs to the Group, arising from the need to redesign and replace
infrastructure as the UK economy seeks to decarbonise.
• Pension scheme volatility - Increases in the ongoing deficit
associated with the Group's defined benefit pension scheme would adversely
impact on the strength of the Group's balance sheet and could lead to an
increase in cash contributions payable by the Group.
• Recruitment, retention and development of key people - Recruiting
and retaining the right people is crucial for the success of the Group and its
development. Furthermore, the Group is entering a stage of transition at the
Board and Senior Executive level as a consequence of planned retirements.
There is a risk around a limited number of key Executives across the Group.
• Infrastructure and IT systems - IT system failures or business
interruption events (such as cyber incidents) could have a material impact on
the Group's ability to operate effectively.
• Non-compliance with legislation and regulations - The Group
operates in diverse markets and each sector has its own regulatory and
compliance frameworks which require ongoing monitoring to ensure that the
Group maintains full compliance with all legislative and regulatory
requirements. Any incident of major injury or fatality or which results in
significant environmental damage could result in reputational or financial
damage to the Group.
• Impact of weather on earnings volatility - The demand for both the
Fuels and Feeds divisions is impacted by weather conditions and the severity
of winter conditions, which directly affect the short-term demand for heating
oil and animal feeds. The inherent uncertainty regarding weather conditions
represents a risk of volatility in the profitability of the Fuels and Feeds
divisions.
• Strategic growth and change management - Significant development
of the Group is only achievable via a significant acquisition or several
smaller transactions. The current strategic plan is focused on Fuel
acquisitions, which tend to be smaller and therefore do not represent a
significant risk on an individual basis.
Further information on the Group's mitigating actions against risks and
uncertainties will be detailed in the Annual Report.
Going concern
The Group's banking facilities, provided by NatWest Group, were renewed on 31
May 2023 and are committed until 31 May 2026, which provides a credit facility
of £61.0m and includes a £1.0m overdraft that is renewed annually. The Group
is profitable, cash generative, has a strong balance sheet position and a good
relationship with its lender. As at 31 May 2023 the Group had available funds
of £77.3 million (based on cash balances, invoice discounting availability,
RCF and overdraft facilities), against which the Group was not utilised.
The Board has prepared cash flow forecasts for the period to 31 May 2025.
Under this base case scenario, the Group is expected to continue to have
significant headroom relative to the funding available to it and to comply
with its banking covenants.
The Board has also considered a severe downside scenario based on a
significant and sustained reduction in Fuels' profitability alongside
underperformance in Food and Feeds. This downside scenario excludes any
mitigating actions that the Board would be able to take to reduce costs. Under
this scenario, the Group would still expect to have sufficient headroom in its
financing facilities.
Accordingly, the Directors, having made suitable enquiries, and based on
financial performance to date and forecasts along with the available banking
facilities, have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future. The
Group therefore continues to adopt the going concern basis of accounting in
preparing the annual financial statements.
Share price
The market price per share of the Company's shares at 31 May 2023 was 259.5p
(31 May 2022: 220.0p) and the range of market prices during the year was
between 220.0p and 286.0p.
Richard Whiting Chris Belsham
Chief Executive Chief Executive Designate
Consolidated income statement
for the year ended 31 May 2023
2023 2022
Note £m £m
Revenue 4 1,053.9 878.6
Cost of sales (999.8) (823.3)
Gross profit 54.1 55.3
Administrative expenses (33.5) (42.1)
Headline operating profit¹ 21.0 21.8
Exceptional items 5 - (8.3)
Amortisation of acquired intangibles (0.4) (0.3)
Operating profit 4 20.6 13.2
Finance costs 6 (1.7) (1.2)
Headline profit before taxation¹ 19.6 20.9
Net finance cost in respect of the defined benefit pension scheme (0.3) (0.3)
Exceptional items 5 - (8.3)
Amortisation of acquired intangibles (0.4) (0.3)
Profit before taxation 18.9 12.0
Income tax expense 7 (4.0) (3.6)
Profit for the year attributable to equity shareholders 14.9 8.4
Earnings per share (pence)
Basic 8 30.2 17.1
Diluted 8 30.1 17.0
Headline earnings per share (pence)(¹)
Basic 8 31.4 35.0
Diluted 8 31.3 34.8
1 Headline operating profit is statutory operating profit of £21.0
million (2022: £13.2 million) before exceptional items of £Nil (2022: £8.3
million) and amortisation of acquired intangibles of £0.4 million (2022:
£0.3 million). Headline profit before taxation is statutory profit before
taxation of £18.9 million (2022: £12.0 million) after adding back the net
finance cost in respect of the Group's defined benefit pension scheme of £0.3
million (2022: £0.3 million), the exceptional items and amortisation of
acquired intangibles. Headline earnings per share also takes into account the
taxation effect thereon.
The results relate to continuing operations.
Consolidated statement of comprehensive income
for the year ended 31 May 2023
2023 2022
£m £m
Profit for the year attributable to equity shareholders 14.9 8.4
Items that will never be reclassified to income statement:
Remeasurement (loss)/gain on defined benefit pension scheme (2.3) 4.0
Tax on items that will never be reclassified to income statement 1.0 (1.0)
Total other comprehensive (expense)/income (1.3) 3.0
Total comprehensive income for the year 13.6 11.4
Consolidated balance sheet
as at 31 May 2023
2023 2022
Note £m £m
Non-current assets
Property, plant and equipment 43.7 45.4
Right of use assets 29.1 27.5
Intangible assets 31.8 22.7
104.6 95.6
Current assets
Inventories 7.4 9.8
Trade and other receivables 87.4 96.2
Reimbursement assets 1.7 2.8
Cash and cash equivalents 12 16.3 9.1
Derivative financial instruments 0.2 0.4
113.0 118.3
Total assets 217.6 213.9
Current liabilities
Trade and other payables (92.5) (100.6)
Current income tax liabilities (0.8) (0.4)
Lease liabilities (9.8) (8.6)
Provisions for liabilities (1.9) (3.1)
Derivative financial instruments (0.1) (0.2)
(105.1) (112.9)
Non-current liabilities
Lease liabilities (20.0) (19.7)
Provisions for liabilities (0.8) (0.7)
Deferred income tax liabilities (4.2) (3.2)
Retirement benefit obligations 13 (9.6) (9.3)
(34.6) (32.9)
Total liabilities (139.7) (145.8)
Net assets 77.9 68.1
Equity
Share capital 10 12.4 12.3
Share premium 0.9 0.9
Retained earnings 64.6 54.9
Total equity 77.9 68.1
Consolidated statement of changes in equity
for the year ended 31 May 2023
Share Share Retained Total
capital premium earnings equity
£m £m £m £m
Balance at 1 June 2021 12.3 0.9 46.3 59.5
Profit for the year - - 8.4 8.4
Items that will never be reclassified to income statement:
Actuarial gain on defined benefit pension scheme (note 13) - - 4.0 4.0
Tax on items that will never be reclassified to income statement - - (1.0) (1.0)
Total other comprehensive income - - 3.0 3.0
Total comprehensive income for the year - - 11.4 11.4
Transactions with owners:
Issue of shares - - - -
Dividends paid (note 9) - - (3.5) (3.5)
Value of employee services - - (0.1) (0.1)
Credit to equity for equity-settled share-based payments - - 0.8 0.8
Total transactions with owners - - (2.8) (2.8)
Balance at 31 May 2022 12.3 0.9 54.9 68.1
Profit for the year - - 14.9 14.9
Items that will never be reclassified to income statement:
Actuarial loss on defined benefit pension scheme (note 13) - - (2.3) (2.3)
Tax on items that will never be reclassified to income statement - - 1.0 1.0
Total other comprehensive expense - - (1.3) (1.3)
Total comprehensive income for the year - - 13.6 13.2
Transactions with owners:
Issue of shares 0.1 - (0.1) -
Dividends paid (note 9) - - (3.7) (3.7)
Value of employee services - - (0.6) (0.6)
Credit to equity for equity-settled share-based payments - - 0.5 0.5
Total transactions with owners 0.1 - (3.9) (3.8)
Balance at 31 May 2023 12.4 0.9 64.6 77.9
Consolidated cash flow statement
for the year ended 31 May 2023
2023 2022
£m £m
Cash flows from operating activities
Profit before tax 18.9 12.0
Adjustments for:
Depreciation and amortisation 15.3 14.0
(Profit)/loss on disposal of property, plant and equipment (0.5) -
Impairment of assets - 8.4
Finance costs 1.7 1.2
Share-based payment expense 0.5 0.8
Value of employee services (0.7) (0.1)
Fair value loss/(profit) on financial derivatives 0.1 (0.1)
Contribution to pension scheme not recognised in income statement (2.2) (1.8)
Operating cash flows before movements in working capital and provisions 33.1 34.4
Movements in working capital:
Decrease/(increase) in inventories 2.4 (3.2)
Decrease/(increase) in trade and other receivables 8.7 (23.9)
(Decrease)/increase in trade and other payables (7.0) 26.4
Net cash generated from operations 37.0 33.7
Interest paid (1.4) (0.9)
Income tax paid (3.1) (2.7)
Net cash generated from operating activities 32.5 30.1
Cash flows used in investing activities
Purchase of intangible assets (0.1) (0.2)
Purchase of property, plant and equipment (3.1) (3.4)
Acquisition of subsidiaries - cash paid (net of cash acquired) (9.5) -
Proceeds on sale of property, plant and equipment 1.0 0.4
Net cash used in investing activities (11.7) (3.2)
Cash flows used in financing activities
Decrease in bank borrowings - (9.5)
Capital element of finance leases (9.9) (8.8)
Dividends paid (3.7) (3.5)
Net cash used in financing activities (13.6) (21.8)
Net increase in cash and cash equivalents 7.2 5.1
Cash and cash equivalents at beginning of year 9.1 4.0
Cash and cash equivalents at end of year 16.3 9.1
Notes to the Group financial statements
for the year ended 31 May 2023
1. General information
NWF Group plc ('the Company') is a public limited company incorporated and
domiciled in England, United Kingdom, under the Companies Act 2006. The
principal activities of NWF Group plc and its subsidiaries (together 'the
Group') are the sale and distribution of fuel oils, the warehousing and
distribution of ambient groceries and the manufacture and sale of animal
feeds. Further information on the nature of the Group's operations and
principal activities is set out in the Group financial statements.
The address of the Company's registered office is NWF Group plc, Wardle,
Nantwich, Cheshire CW5 6BP. The Company has its primary listing on AIM, part
of the London Stock Exchange.
2. Significant accounting policies
The Group's principal accounting policies are set out below.
Basis of preparation
On 31 December 2020, IFRS as adopted by the European Union at that date were
brought into UK law and became UK-adopted International Accounting Standards,
with future changes being subject to endorsement by the UK endorsement Board.
The Group transitioned to the UK-adopted International Accounting Standards in
the Group financial statements on 1 June 2021. This change constitutes a
change in accounting framework. However, there is no impact recognition,
measurement or disclosure in the period reported as a result of the change in
framework. The Group financial statements have been prepared in accordance
with UK-adopted International Accounting Standards and with the requirements
of the Companies Act 2006 applicable to companies reporting under those
standards. The Group financial statements have been prepared on the going
concern basis and on the historical cost convention modified for the
revaluation of certain financial instruments.
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates, which are outlined in note 14
below. It also requires management to exercise its judgement in the process of
applying the Group's accounting policies. The accounting policies have been
applied consistently throughout the period, other than where new policies have
been adopted.
Going concern
Based on financial performance to date and forecasts along with the available
banking facilities, there is a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable
future. The Group therefore continues to adopt the going concern basis of
accounting in preparing the annual financial statements.
The Board has prepared cash flow forecasts for the period to 31 May 2025.
Under this base case scenario, the Group is expected to continue to have
significant headroom relative to the funding available to it and to comply
with its banking covenants.
The Board has also considered a severe downside scenario based on a
significant and sustained reduction in Fuels' profitability alongside
underperformance in Food and Feeds. This downside scenario excludes any
mitigating actions that the Board would be able to take to reduce costs. Under
this scenario, the Group would still expect to have sufficient headroom in its
financing facilities.
The Group's banking facilities, provided by NatWest Group, were renewed on 31
May 2023 and are committed until 31 May 2026, which provides a credit facility
of £61.0m and includes a £1.0m overdraft that is renewed annually. The Group
is profitable, cash generative, has a strong balance sheet position and a good
relationship with its lender. As at 31 May 2023 the Group had available funds
of £77.3 million (based on cash balances, invoice discounting availability,
RCF and overdraft facilities), against which the Group was not utilised.
The Group therefore continues to adopt the going concern basis of accounting
in preparing the annual financial statements.
Alternative performance measures ('APMs')
The Directors consider that headline operating profit, headline profit before
taxation, headline EBITDA, headline ROCE and headline earnings per share
measures, referred to in these Group financial statements, provide useful
information for shareholders on underlying trends and performance.
Headline operating profit is reported operating profit after adding back
exceptional items and amortisation of acquired intangibles.
Headline profit before taxation is reported profit before taxation after
adding back the net finance cost in respect of the Group's defined benefit
pension scheme, exceptional items and amortisation of acquired intangibles, to
show the underlying performance of the Group.
Headline EBITDA refers to reported operating profit after adding back
exceptional items and amortisation of acquired intangibles. The headline
EBITDA calculation excludes the impact of IFRS 16 depreciation.
Headline ROCE refers to the return on capital employed calculated as headline
operating profit as a proportion of year end net assets.
The calculation of headline earnings includes any exceptional impact of
remeasuring deferred tax balances. The calculations of basic and diluted
headline earnings per share are shown in note 8.
Exceptional items
The Group's income statement separately identifies exceptional items. Such
items are those that, in the Directors' judgement, are one-off in nature or
non-operating and need to be disclosed separately by virtue of their size or
incidence and may include, but are not limited to, restructuring costs,
acquisition-related costs, costs of implementing new systems, cyber-related
costs, impairment of assets and income from legal or insurance settlements. In
determining whether an item should be disclosed as an exceptional item, the
Directors consider quantitative as well as qualitative factors such as the
frequency, predictability of occurrence and significance. This is consistent
with the way financial performance is measured by management and reported to
the Board. Disclosing exceptional items separately provides additional
understanding of the performance of the Group.
Forward-looking statements
Certain statements in this results announcement are forward looking. The terms
'expect', 'anticipate', 'should be', 'will be' and similar expressions
identify forward-looking statements. Although the Board of Directors believes
that the expectations reflected in these forward-looking statements are
reasonable, such statements are subject to a number of risks and uncertainties
and events could differ materially from those expressed or implied by these
forward-looking statements.
Adoption of new and revised standards
The following new standards, amendments to standards or interpretations are
mandatory for the first time for the financial year beginning 1 June 2022.
The Company has adopted the following new standards, amendments and
interpretations now applicable. None of these standards and interpretations
have had any material effect on the Company's results or net assets.
Standard or interpretation Content Applicable for financial year
beginning on
IFRS 4 Insurance Contracts 1 June 2022
The following standards, amendments and interpretations are not yet effective
and have not been adopted early by the Company:
Standard or interpretation Content Applicable for financial year
beginning on
Amendments to IAS 1 Presentation of Financial Statements 1 June 2023
Amendments to IAS 8 Accounting Policies 1 June 2023
Amendments to IAS 12 Income Taxes 1 June 2023
Amendments to IFRS 17 Insurance Contracts 1 June 2023
IFRS Practice Statement 2 Making Materiality Judgements 1 June 2023
Amendments to IFRS 16 Leases on sale and leaseback 1 June 2024
These standards are not expected to have a material impact on the Company in
the current or future reporting periods and on foreseeable future
transactions.
3. Group Annual Report and statutory accounts
The financial information set out above does not constitute the Group's
statutory accounts for the years ended 31 May 2023 or 31 May 2022, but is
derived from those accounts.
Statutory accounts for 2022 have been delivered to the Registrar of Companies.
The auditors, PricewaterhouseCoopers LLP, have reported on the 2022 accounts;
the report (i) was unqualified, (ii) did not include a reference to any
matters to which the auditors drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement under Section
498(2) or (3) of the Companies Act 2006.
The statutory accounts for 2023 will be delivered to the Registrar of
Companies following the Annual General Meeting. The auditors,
PricewaterhouseCoopers LLP, have reported on these accounts and their report
is unqualified, does not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their report and
does not include a statement under either Section 498(2) or (3) of the
Companies Act 2006.
The Annual Report and full financial statements will be posted to shareholders
during the week commencing 14 August 2023. Further copies will be available to
the public, free of charge, from the Company's Registered Office at NWF Group
plc, Wardle, Cheshire CW5 6BP, or can be viewed on the Company's website:
www.nwf.co.uk.
4. Segment information
The chief operating decision-maker has been identified as the Board of
Directors ('the Board'). The Board reviews the Group's internal reporting in
order to assess performance and allocate resources. The Board has determined
that the operating segments, based on these reports, are Fuels, Food and
Feeds.
The Board considers the business from a products/services perspective. In the
Board's opinion, all of the Group's operations are carried out in the same
geographical segment, namely the UK.
The nature of the products/services provided by the operating segments is
summarised below:
Fuels - sale and distribution of domestic heating, industrial
and road fuels
Food - warehousing and distribution of clients' ambient
grocery and other products to supermarket and other retail distribution
centres
Feeds - manufacture and sale of animal feeds and other
agricultural products
Segment information about the above businesses is presented below.
The Board assesses the performance of the operating segments based on a
measure of operating profit ('headline operating profit'). Finance income and
costs are not included in the segment result that is assessed by the Board.
Other information provided to the Board is measured in a manner consistent
with that in the financial statements.
Inter-segment transactions are entered into under the normal commercial terms
and conditions that would also be available to unrelated third parties.
Segment assets exclude deferred income tax assets and cash at bank and in
hand. Segment liabilities exclude taxation, borrowings and retirement benefit
obligations. Excluded items are part of the reconciliation to consolidated
total assets and liabilities.
Fuels Food Feeds Group
2023 £m £m £m £m
Revenue
Total revenue 765.0 70.9 225.8 1061.7
Inter-segment revenue (7.8) - - (7.8)
Revenue 757.2 70.9 225.8 1053.9
Result
Headline operating profit 12.9 4.2 3.9 21.0
Amortisation of acquired intangibles (0.4) - - (0.4)
Operating profit as reported 20.6
Finance costs (note 7) (1.7)
Profit before taxation 18.9
Income tax expense (note 8) (4.0)
Profit for the year 14.9
Other information
Depreciation and amortisation 6.0 6.3 3.0 15.3
Property, plant and equipment additions (note 12) 0.7 1.1 1.3 3.1
Fuels Food Feeds Group
2023 £m £m £m £m
Balance sheet
Assets
Segment assets 101.9 50.0 49.4 201.3
Cash and cash equivalents (note 18) 16.3
Consolidated total assets 217.6
Liabilities
Segment liabilities (78.0) (23.2) (24.9) (125.1)
Deferred income tax liabilities (note 24) (4.2)
Current income tax liabilities (0.8)
Retirement benefit obligations (note 26) (9.6)
Consolidated total liabilities (139.7)
Fuels Food Feeds Group
2022 £m £m £m £m
Revenue
Total revenue 628.9 62.7 194.9 886.5
Inter-segment revenue (7.8) (0.1) - (7.9)
Revenue 621.1 62.6 194.9 878.6
Result
Headline operating profit 17.2 2.8 1.8 21.8
Segment exceptional item (note 5) - - (8.4) (8.4)
Group exceptional item (note 5) 0.1
Amortisation of acquired intangibles (0.3) - - (0.3)
Operating profit as reported 13.2
Finance costs (note 6) (1.2)
Profit before taxation 12.0
Income tax expense (note 7) (3.6)
Profit for the year 8.4
Other information
Depreciation and amortisation 5.2 5.9 2.9 14.0
Property, plant and equipment additions 0.9 1.1 1.4 3.4
Fuels Food Feeds Group
2022 £m £m £m £m
Balance sheet
Assets
Segment assets 106.5 48.3 50.0 204.8
Cash and cash equivalents 9.1
Consolidated total assets 213.9
Liabilities
Segment liabilities (88.7) (20.1) (24.1) (132.9)
Deferred income tax liabilities (3.2)
Current income tax liabilities (0.4)
Retirement benefit obligations (note 13) (9.3)
Consolidated total liabilities (145.8)
( )
5. Profit before taxation - exceptional items
A net exceptional cost of £Nil (2022: £8.3 million) is included in
administrative expenses. Exceptional items by type are as follows:
2023 2022
£m £m
Impairment of goodwill and other intangible assets - 7.9
Impairment of property, plant and equipment - 0.5
Insurance reclaim credit - (0.1)
Net exceptional cost - 8.3
6. Finance costs
2023 2022
£m £m
Interest on bank loans and overdrafts 0.8 0.4
Finance costs on lease liabilities relating to IFRS 16 0.6 0.5
Total interest expense 1.4 0.9
Net finance cost in respect of defined benefit pension schemes (note 13) 0.3 0.3
Total finance costs 1.7 1.2
7. Income tax expense
2023 2022
£m £m
Current tax
UK corporation tax on profits for the year 3.8 3.8
Adjustments in respect of prior years - (0.1)
Current tax expense 3.8 3.7
Deferred tax
Origination and reversal of temporary differences 0.4 (0.1)
Adjustments in respect of prior years (0.3) -
Effect of increased tax rate on opening balances 0.1 -
Deferred tax expense 0.2 (0.1)
Total income tax expense 4.0 3.6
During the year ended 31 May 2023, corporation tax has been calculated at 20%
of estimated assessable profits for the year (2022: 19%).
The tax charge for the year can be reconciled to the profit per the income
statement as follows:
2023 2022
£m £m
Profit before taxation 18.9 12.0
Profit before taxation multiplied by the standard rate of UK corporation tax 3.8 2.3
of 20% (2022: 19%)
Effects of:
- expenses not deductible for tax purposes 0.4 1.7
- super-deduction allowance (0.1) (0.1)
- impact of share-based payments 0.1 (0.2)
- impact of increased tax rate on opening balances 0.1 -
- adjustments in respect of prior years (0.3) (0.1)
Total income tax expense 4.0 3.6
A net £0.5 million has been recognised in Other Comprehensive Income,
relating to a £0.1 million debit to equity arising on the movement within the
deferred tax provision (2022: £1.4 million) offset with a movement in current
tax of a credit of £0.4 million (2022: £0.4 million).
The tax charge in the current year is higher than the standard tax charge as a
result of the level of the Group's disallowable expenses, which are largely
related to acquisition expenses.
8. Earnings per share
The calculation of basic and diluted earnings per share is based on the
following data:
2023 2022
Earnings (£m)
Earnings for the purposes of basic and diluted earnings per share being profit 14.9 8.4
for the year attributable to equity shareholders
Number of shares ('000)
Weighted average number of shares for the purposes of basic earnings per share 49,355 49,109
Weighted average dilutive effect of conditional share awards 196 299
Weighted average number of shares for the purposes of diluted earnings per 49,551 49,408
share
Earnings per ordinary share (pence)
Basic earnings per ordinary share 30.2 17.1
Diluted earnings per ordinary share 30.1 17.0
Headline earnings per ordinary share (pence)
Basic headline earnings per ordinary share 31.4 35.0
Diluted headline earnings per ordinary share 31.3 34.8
The calculation of basic and diluted headline earnings per share is based on
the following data:
2023 2022
£m £m
Profit for the year attributable to equity shareholders 14.9 8.4
Add back/(deduct):
Net finance cost in respect of defined benefit pension scheme 0.3 0.3
Exceptional items - 8.3
Amortisation of acquired intangibles 0.4 0.3
Tax effect of the above (0.1) (0.1)
Headline earnings 15.5 17.2
9. Dividends paid
2023 2022
£m £m
Final dividend for the year ended 31 May 2022 of 6.5p (2021: 6.2p) per share 3.2 3.0
Interim dividend for the year ended 31 May 2023 of 1.0p (2022: 1.0p) per share 0.5 0.5
Amounts recognised as distributions to equity shareholders in the year 3.7 3.5
Proposed final dividend for the year ended 31 May 2023 of 6.8p (2022: 6.5p) 3.4 3.2
per share
The proposed final dividend is subject to approval at the AGM on 28 September
2023 and has not been included as a liability in these Group financial
statements.
10. Share capital
Number
of shares Total
'000 £m
Allotted and fully paid: ordinary shares of 25p each
Balance at 1 June 2021 49,004 12.3
Issue of shares (see below) 130 -
Balance at 31 May 2022 49,134 12.3
Issue of shares (see below) 274 0.1
Balance at 31 May 2023 49,408 12.4
During the year ended 31 May 2023, 273,800 shares (2022: 130,198 shares) with
an aggregate nominal value of £68,450 (2022: £32,550) were issued under the
Group's conditional Performance Share Plan.
The maximum total number of ordinary shares, which may vest in the future in
respect of conditional Performance Share Plan awards outstanding at 31 May
2023, amounted to 1,202,049 (31 May 2022: 1,386,289). These shares will only
be issued subject to satisfying certain performance criteria.
11. Business combinations
On 21 December 2022, the Group acquired 100% of the share capital of
Sweetfuels Limited, a 20 million litre fuel distributor based in Faringdon in
Oxfordshire. The headline purchase price for the acquisition was £10.0
million on a cash and debt free basis and before excess cash and acquisition
costs. The total consideration paid was £14.3 million, after adjusting the
purchase price for cash acquired and the normalisation of working capital. The
net consideration paid was £10.2 million after adjusting for cash acquired
and acquisition expenses.
Details of the total consideration and the provisional fair values of the
assets and liabilities acquired are shown below:
Fair value of assets acquired
£m
Intangible assets - Goodwill 6.5
Intangible assets - Brand 0.8
Intangible assets - Customer relationships 2.3
Property, plant and equipment 0.5
Stock 0.2
Trade and other receivables 2.5
Cash 4.8
Trade and other payables (1.8)
Current income tax liability (0.6)
Deferred tax liability (0.9)
14.3
Provisional goodwill of £6.5 million arises from the acquisition and is
attributable to the acquired business and the expected economies of scale from
combining the operations of the Group and the acquisition. None of the
goodwill is expected to be deductible for income tax purposes.
As the acquisition was made in the year, the above amounts are provisional and
subject to adjustment.
Net cash outflow arising on the acquisition:
2023
£m
Total gross consideration (14.3)
Excess cash acquired 4.8
Net cash flow arising on completion (9.5)
Additional debt like items acquired at completion (0.5)
Headline purchase price (10.0)
Acquisition-related costs (0.2)
Net consideration paid (10.2)
Acquisition-related costs of £0.2 million have been charged to the income
statement in the year ended 31 May 2023.
The following amounts have been recognised within the consolidated income
statement in respect of the acquisition made in the year: revenue - £7.2
million, profit - £0.4 million.
Had the acquisition taken place at the start of the financial year, the
consolidated income statement would show: revenue - £14.9 million, profit -
£1.1 million.
In its last financial year to 31 July 2022 Sweetfuels Limited made an
operating profit of £1.8 million.
12. Analysis of cash and cash equivalents and reconciliation to net debt
Other
1 June Cash non-cash 31 May
2022 flow movements 2023
£m £m £m £m
Cash and cash equivalents 9.1 7.2 - 16.3
Borrowings - - - -
Hire purchase obligations(¹) (0.1) 0.1 - -
Total Group (excluding lease liabilities) 9.0 7.3 - 16.3
Lease liabilities (excluding hire purchase obligations transferred) (28.2) 10.5 (12.1) (29.8)
Total Group (including lease liabilities) (19.2) 17.8 (12.1) (13.5)
(1) Following the adoption of IFRS 16 'Leases', hire purchase
obligations are now recognised within lease liabilities, shown here for
comparative purposes only.
13. Retirement benefit obligations
The Group operates a defined benefit pension scheme providing benefits based
on final pensionable earnings, which is closed to future accrual.
NWF Group Benefits Scheme
The scheme is administered by a fund that is legally separated from the Group.
The trustees of the pension fund are required by law to act in the interest of
the fund and of all relevant stakeholders in the scheme. The trustees are
responsible for the investment policy with regard to the assets of the fund.
The scheme was closed to new members during the year ended 31 May 2002 and
closed to future accrual with effect from April 2016.
The triennial actuarial valuation of this scheme was completed in the year
ended 31 May 2021, with a deficit of £16.8 million at the valuation date of
31 December 2019. The present value of the defined benefit obligation and the
related current service cost were measured using the Projected Unit Credit
Method. In these financial statements this liability has been updated in order
to derive the IAS 19R valuation as of 31 May 2022. The next full triennial
valuation will be completed in the year ending 31 May 2024.
The triennial valuation resulted in Group contributions of £2.1 million per
annum, including recovery plan payments of £1.8 million for financial years
ending 31 May 2021 and 31 May 2022. From 1 June 2022 to 31 December 2027,
recovery plan payments of £2.1 million per annum will be paid. In addition,
from 1 January 2022 a percentage increase based on total dividend growth over
£3.1 million will be paid.
The amounts recognised in the balance sheet in respect of the defined benefit
scheme are as follows:
2023 2022
£m £m
Present value of defined benefit obligations (39.2) (49.0)
Fair value of scheme assets 29.6 39.7
Deficit in the scheme recognised as a liability in the balance sheet (9.6) (9.3)
Related deferred tax asset 2.4 2.3
Net pension liability (7.2) (7.0)
Changes in the present value of the defined benefit obligation are as follows:
2023 2022
£m £m
At 1 June 49.0 60.0
Interest cost 1.7 1.2
Remeasurement (gains)/losses:
- actuarial gains arising from changes in financial assumptions (11.5) (10.2)
- actuarial losses/(gains) arising from changes in demographic assumptions 0.3 (0.6)
- actuarial losses on experience assumptions 1.6 0.4
Benefits paid (1.9) (1.8)
At 31 May 39.2 49.0
Changes in the fair value of scheme assets are as follows:
2023 2022
£m £m
At 1 June 39.7 45.1
Interest income 1.5 0.9
Remeasurement losses:
- actuarial losses on plan assets (11.9) (6.4)
Contributions by employer 2.6 2.2
Expenses (0.4) (0.3)
Benefits paid (1.9) (1.8)
At 31 May 29.6 39.7
14. Critical accounting estimates and judgements
The Group makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual
results. The assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
Defined benefit pension scheme - valuation assumptions
The balance sheet carrying values of defined benefit pension scheme surpluses
or deficits are calculated using independently commissioned actuarial
valuations. These valuations are based on a number of assumptions, including
the most appropriate mortality rates to apply to the profile of scheme members
and the financial assumptions regarding discount rates and inflation. All of
these are estimates of future events and are therefore uncertain.
Significant actuarial assumptions for the determination of the defined benefit
liability are discount rate, price inflation and mortality. The sensitivity
analyses shown below have been determined based on reasonably possible changes
of the respective assumptions occurring at the balance sheet dates, while
holding all other assumptions constant.
Increase Decrease
Impact on defined benefit obligation £m £m
0.25% change in discount rate (1.3) 1.3
0.25% change in RPI inflation 0.9 (0.9)
One-year change in the life expectancy at age 65 1.5 (1.5)
Assessment of impairment
The Group tests annually for impairment of goodwill and fixed asset balances,
which involves using key judgements including estimates of future business
performance and cash generation, discount rates and long-term growth rates.
The recoverable amounts of CGUs are determined using value in use
calculations. The value in use calculations use post-tax cash flow projections
based on the Board-approved budget for the year ending 31 May 2024 and four
years of divisional strategic plans thereafter. Subsequent cash flows are
extrapolated using an estimated growth rate of 2%.
These value in use calculations are subject to a series of sensitivity
analyses using reasonable assumptions concerning the future performance of the
CGUs and assessing the impact of a 1% increase in the discount rate.
Carrying value of trade receivables
The Group holds material trade receivable balances, and the calculations of
provisions for impairment are estimates of future events and therefore
uncertain. IFRS 9 requires the Group to consider forward-looking information
and the probability of default when calculating expected credit losses. The
Group considers reasonable and supportable customer-specific and market
information about past events, current conditions and forecasts of future
economic conditions when measuring expected credit losses.
From a completeness perspective, the Directors are not aware of any other
critical judgements within the Group that give rise to a significant risk of
material adjustment within the next financial year.
15. Directors' responsibilities statement
The Directors are responsible for preparing the Annual Report in accordance
with applicable laws and regulations and consider that the Annual Report,
taken as a whole, is fair, balanced and understandable and that it provides
the information necessary for shareholders to assess the Company's
performance, business model and strategy.
The Company's Annual Report for the year ended 31 May 2023, which will be
posted to shareholders on or before 16 August 2023, contains the following
statement regarding responsibility for the Strategic Report, the Directors'
Report (including the Corporate Governance Report), the Board Report on
Remuneration and the financial statements included within the Annual Report:
Each of the Directors confirms that to the best of their knowledge:
• the Group financial statements, which have been prepared in
accordance with UK-adopted International Accounting Standards, comprising
FRS101 and with the requirements of the Companies Act 2006 applicable to
companies reporting under those standards, give a true and fair view of the
assets, liabilities, financial position and results of the Group;
• the Strategic Report includes a fair review of the development and
performance of the business and the position of the Group, together with a
description of the principal risks and uncertainties that it faces;
• there is no relevant audit information of which the Group's and
Company's auditors are unaware; and
• each Director has taken all the steps that they ought to have
taken as a Director to make themselves aware of any relevant audit information
and to establish that the Company's auditors are aware of that information.
16. Post balance sheet events
On 7 July 2023, the Group acquired 100% of the trade and assets of Geoff
Boorman Fuels LLP, a 19 million litre fuel distributor based in Edenbridge in
Kent, supplying mainly domestic customers across the South-West to the borders
of Kent, Sussex and Surrey. The net cash consideration of £2.6 million on a
debt and cash free basis was settled at completion.
17. Financial calendar
Annual General Meeting 28 September 2023
Dividend:
- Ex-dividend date 2 November 2023
- Record date 3 November 2023
- Payment date 8 December 2023
Announcement of half-year results Early February 2024
Publication of Interim Report Early February 2024
Interim dividend paid May 2024
Financial year end 31 May 2024
Announcement of full-year results Early August 2024
Publication of Annual Report and Accounts Late August 2024
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