REG - NWF Group PLC - Final Results
30/07/2024 07:00
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RNS Number : 2867Y NWF Group PLC 30 July 2024
For release 07.00am Tuesday 30 July 2024
NWF Group plc
NWF Group plc: Final results for the year ended 31 May 2024
"A solid financial performance, in line with market expectations despite more
challenging conditions for Fuels and Feeds relative to recent years. Focus on
growth, with investment in the new Lymedale warehouse to meet growing customer
demand in our Food business supporting our M&A strategy in Fuels."
NWF Group plc ('NWF', the 'Company' or the 'Group'), the specialist
distributor operating in UK markets, today announces its audited final results
for the year ended 31 May 2024.
2024 2023 %
Financial highlights
Revenue £950.6m £1,053.9m -9.8%
Headline operating profit1 £14.2m £21.0m -32.4%
Headline profit before taxation1 £12.5m £19.6m -36.2%
Diluted headline earnings per share(1) 19.2p 31.3p -38.7%
Total dividend per share 8.1p 7.8p +3.8%
Headline EBITDA(1) £19.4m £25.8m -24.8%
Net cash (excluding IFRS 16 lease liabilities) £10.0m £16.3m -38.7%
Statutory results
Operating profit £14.3m £20.6m -30.6%
Profit before taxation £12.2m £18.9m -35.4%
Diluted earnings per share 18.4p 30.1p -38.9%
Net debt (including IFRS 16 lease liabilities) £36.3m £13.5m +168.9%
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
• Solid results for the Group in line with the expected normalisation
of pricing in the Fuels and Feeds markets, reflecting strong operational and
commercial execution.
• In Fuels, low demand for heating oil resulting from the mild winter
mitigated through increased commercial volume and management of the cost base.
• Strong performance in Food, with increased storage levels and
throughput supporting the investment in the new 52,000 pallet space warehouse
at Lymedale, representing a 39% increase in operating capacity to support
continued customer demand.
• Effective management of gross margins and operational costs in
Feeds as the milk price reduced from the record high of the previous financial
year.
• Strong balance sheet, with a healthy cash balance providing
significant flexibility to support growth initiatives.
• Proposed increase in the total dividend of 3.8% to 8.1p per share,
representing the 13th consecutive year of increases and reflecting the Board's
confidence in the prospects of the Group.
• Performance to date in the current financial year has been
consistent with the Board's expectations.
Chair succession
· Philip Action will be standing down as Chair at the Annual General
Meeting on 26 September 2024 and, as announced on 18 July 2024, will be
replaced by Amanda Burton who joined the Board in July 2024.
Business highlights
Fuels - headline operating profit of £7.9 million (2023: £12.9 million).
Expected normalisation of market pricing and therefore margins from the
abnormally elevated level experienced in the prior year. Stable supply
conditions and oil price experienced throughout the year. The mild winter
resulted in low demand for heating oil with the business focusing on
commercial volume growth. Active management of the cost base through
optimisation of the sales team and tanker fleet as the business looks towards
its next renewal programme.
Food - headline operating profit of £3.7 million (2023: £4.2 million)
including the absorption of the ramp-up costs of £1.7 million of the new
warehouse at Lymedale. Strong performance with an increase in storage levels
and pallet throughput as customer demand continued to grow. The fit-out of
Lymedale has progressed in line with the business plan with the site now
partially operational, and expected to be operating at optimal capacity by
early autumn.
Feeds - headline operating profit of £2.6 million (2023: £3.9 million).
Weaker milk prices and reduced volatility in raw material prices compared to
the prior year resulted in the expected normalisation of margins. Against this
backdrop, the business has delivered effective management of both gross margin
and operational costs.
Chris Belsham, Chief Executive Officer, NWF Group plc, commented:
"We have delivered a solid set of results in line with market expectations,
having managed through more challenging conditions than the prior year
following the normalisation of the Fuels and Feeds markets, alongside a strong
contribution from the Food business.
"We have also delivered on our growth strategy, with one Fuels acquisition,
significant investment in organic and improvement initiatives, and a
substantial expansion of the Food business. We see further development
opportunities in the current year supported by our strong financial
position.
"Performance to date in the current financial year has been consistent with
the Board's expectations, and we remain confident about the Group's future
prospects."
A virtual meeting will be held for analysts today at 09.30a.m. Please contact
MHP Group 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.
Chris Belsham, Chief Executive Officer Reg Hoare/Catherine Chapman Mike Bell/Ed Allsopp
Katie Shortland, Chief Financial Officer
NWF Group plc MHP Group Peel Hunt LLP
(Nominated Advisor and Broker)
Tel: 01829 260 260 Tel: 07711 191518 Tel: 020 7418 8900
Chair's statement
Overview
In what will be my final annual Chair's Statement, I am pleased to report a
solid set of results for the Group in line with market expectations. As
anticipated, after two years of outperformance, the Group experienced a
normalisation of the Fuel and Feeds markets, alongside a strong contribution
from the Food business.
As a consequence of the Group's strong cash generation and the confidence in
the Group's future prospects, the Board is recommending a final dividend of
7.1p per share, to be paid to shareholders on 6 December 2024 (2023: 6.8p),
giving a total dividend of 8.1p per share (2023: 7.8p), which represents a
3.8% increase on the prior year. This is the 13th year that the Group has
increased the total dividend, reflecting the track record of profitability and
cash generation.
Our business
NWF is a specialist distributor operating in UK markets. Each of our trading
businesses is a leading player in its chosen market and benefits from scale
and capability barriers to entry. All three businesses are profitable and cash
generative. Each business trades under different brands:
Fuels NWF Fuels Limited (including a number of local sub-brands)
Food Boughey Distribution Limited
Feeds NWF Agriculture Limited, New Breed (UK) Limited and Jim Peet
Key areas of focus for the Board in 2024 were:
Responding proactively to normalising market conditions
The Group has responded well to challenging market conditions throughout the
year. In Fuels, a long period of customer concern around security of supply,
which commenced during the Covid-19 pandemic and continued due to the conflict
in Ukraine, came to an end as both supply and the oil price were very stable
across the year. This resulted in more competitive pricing, particularly of
commercial diesel and gas oil, with a corresponding impact on gross margins.
The Group responded by actively managing the cost base of the Fuels business
through optimising the sales team and fleet size whilst targeting increased
commercial volumes. In Feeds, the milk price returned to a more normal level
following the record high prices experienced in the summer and autumn of 2022.
This coincided with a significant increase in electricity costs. The business
responded by effectively managing both its gross margin and operational cost
base.
Delivering on strategy
The Group has a long-term growth strategy of development through targeted
acquisitions, organic investment, including a significant investment in new
fleet, and continuous improvement initiatives. During the year, the Group
expanded the capacity of its Food business by 39% through the investment in
the new warehouse at Lymedale to support growing customer demand. We will
continue to pursue similar opportunities if supported by demand from our
customers. The Group also remains committed to a strategy to expand its
network of fuel delivery depots to increase market share and increase
efficiency. Early in the financial year, the Group acquired the trade and
assets of Geoff Boorman Fuels LLP, but subsequently the market experienced a
lower level of interest in selling by target business owners as the fuel
market normalised. However, since the start of the new financial year the
Group has seen an increase in its active pipeline of opportunities. The Group
is also looking at opportunities to expand the Food business through targeted
acquisitions.
Cash generation
Cash generation remains a focus for the Group and it is good to report a
strong year end net cash balance of £10.0 million (excluding lease
liabilities) after the investment in the new warehouse at Lymedale, 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 remains critical across
the Group to win new business and ensure we can continue to pass on 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. We have continued to progress our CFD
disclosures, providing further qualitative information on our climate risks
and opportunities.
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 principles
should provide shareholders with confidence in how the Group operates.
Employees
The Group continues to employ more than 1,400 people across our three
businesses 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
After 11 years as a Board member of the Group, I will be standing down as
Chair at the Annual General Meeting on 26 September 2024 and, as announced on
18 July 2024, will be replaced by Amanda Burton, who joined the Board in July
2024. As also announced on 18 July 2024, Tim Cooper has joined the Board as a
Non-Executive Director and Chair of the Remuneration Committee.
I look forward to updating shareholders on the Group's continuing progress at
the time of the Annual General Meeting on 26 September 2024.
Philip Acton
Chair
30 July 2024
Business and financial review
NWF has delivered a solid result in line with market expectations. Food has
delivered a strong performance whilst Fuels and Feeds have responded
effectively to the normalisation of their respective markets. Strategic growth
has continued with the investment in the new warehouse at Lymedale.
The continued focus on cash has maintained a year end net cash position
(excluding lease liabilities) following the investment in the new warehouse at
Lymedale. This continues to demonstrate the ongoing cash-generative nature of
our business and the ability to fund acquisitions and development. We are once
again proposing an increased dividend as part of our continuing focus on
delivering shareholder returns.
Fuels delivered higher volumes, in part benefitting from increased commercial
customer orders as the mild weather across the winter resulted in low demand
for domestic heating oil. Margins normalised throughout the year from the
abnormally elevated levels experienced in the prior year, as the market
experienced stable supply conditions and a stable oil price. The lower demand
for heating oil led to more competitive pricing of diesel and gas oil. Against
this backdrop, the business actively managed its cost base through optimising
its sales team and tanker fleet.
The Food business delivered another year of strong performance improvement. As
planned, the level of customer demand for our services resulted in the
utilisation of overflow warehousing which was managed efficiently in advance
of the new warehouse at Lymedale being operational. The fit out of the new
52,000 pallet space warehouse at Lymedale commenced in January and progressed
in line with its business plan, with the site becoming partially operational
for both storage and distribution. The new facility will support the growth of
the business into FY25 and beyond.
Feeds delivered a solid performance from slightly lower volumes as ideal grass
growing conditions across the summer and autumn provided farmers with extra
forage for the winter. This was partially mitigated by the wet winter and
spring which extended the usual winter season demand into April. Weaker milk
prices and reduced volatility in raw material prices compared to the prior
year resulted in the expected normalisation of margins. Against this backdrop,
the business has delivered effective management of both gross margin and
operational costs.
The Group reported headline operating profit of £14.2 million (2023: £21.0
million) and headline profit before tax of £12.5 million (2023: £19.6
million). Operating profit was £14.3 million (2023: £20.6 million). Diluted
headline earnings per share was 19.2p (2023: 31.3p).
Cash management remains strong with net cash of £10.0 million (2023: net cash
of £16.3 million) excluding lease liabilities, after £9.7 million of net
capital expenditure (2023: £2.2 million).
Fuels
Fuels experienced more challenging market conditions than recent years, as
customer concerns regarding the security of supply, which had commenced in the
pandemic and continued through the start of the conflict in Ukraine, came to
an end and the market experienced a year of stable supply and low volatility
in the oil price. As expected, this led to a normalisation of market pricing
and therefore margins. The second mild winter in a row reduced demand for
heating oil which increased competition for commercial diesel and gas oil
volumes with a corresponding further impact on market price and therefore
margin. We responded to these market dynamics through targeting additional
commercial volume whilst actively managing our cost base to optimise our sales
team and size of our tanker fleet.
Volumes increased by 3.6% to 659 million litres (2023: 636 million litres).
Revenue decreased by 10.5% to £677.8 million (2023: £757.2 million) as a
consequence of lower oil prices. The average Brent Crude oil price in the year
was $83 per barrel compared to $90 per barrel in the prior year. The
volatility during the year was low with a high of $92 per barrel in September
2023 and a low of $75 per barrel in June 2023.
Headline operating profit was £7.9 million (2023: £12.9 million) as a
consequence of a normalisation in the market and a stronger mix towards
commercial volumes, which resulted in a reported net profit of 1.2 pence per
litre (2023: 2.0 pence per litre).
One acquisition was completed in the last financial year; the trade and assets
of Geoff Boorman Fuels LLP (Kent) were acquired for £2.6 million in July
2023. This accretive acquisition adds 19 million litres of fuel to our
business in a full year. The acquisition pipeline of active opportunities has
significantly improved in recent months and this remains a focus for our
development activity. Whilst we have a proven post-acquisition integration
plan, we are undertaking further improvement initiatives to drive more
efficiency and value from acquisitions.
The Fuels business operates a network of 27 depots which service domestic and
mainly SME commercial customers in the local area. We believe there is
significant opportunity to grow this network and improve its efficiency by
reducing the distance travelled for each delivery as we increase the depot
density in a given region. The depot network also provides the opportunity to
supply larger, more complex, commercial customers who require reliable service
in multiple locations. As such, we continue to invest in enhancing the
capabilities for the Fuels business, including investment in the tanker fleet,
which we believe will improve efficiencies and provide a strong platform for
continued growth through both acquisitions and organic volume growth.
With nearly 107,000 customers (2023: 100,000) being supplied across 27 fuel
depots in the year (2023: 27), 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. We continue to closely monitor
developments in biofuels such as HVO to ensure the business is well placed to
participate in the energy transition of the UK economy.
Food
Food delivered a strong performance improvement as a result of increased
storage levels which supported a higher level of pallet throughput. As
planned, the new business gained from existing and new accounts required the
utilisation of overflow warehousing throughout the year. This was managed
efficiently with a high level of service maintained for customers and
additional costs to the business effectively controlled.
The increased demand from customers supported the investment in the new
warehouse at Lymedale, signed and announced in January 2024, with the fit-out
commencing immediately and progressing in line with its business plan to be
partially operational by 31 May 2024 (and fully operational by early autumn of
this year) to support the future growth of the business.
Revenue increased by 9.6% to £77.7 million (2023: £70.9 million). Storage
utilisation overall was at an average of 137,000 pallets (2023: 122,000
pallets), with warehouses effectively utilised across the year. Demand for our
customers' products increased in spite of food inflation continuing through
the year. Throughput was 6.0% higher than prior year, whilst storage levels
were up 12%, highlighting a positive overall increase in the stock turn of our
customers' products.
As a result of the Lymedale investment, the capacity of the Food business will
increase by 52,000 pallets to a total of 187,000 owned pallet spaces,
supporting strategic growth and ongoing demand from its customers for ambient
grocery consolidation and distribution. The Group's capacity was 100,000
pallet spaces prior to the opening of the Crewe warehouse in 2020.
The pipeline of new business from existing and new accounts continues to be
strong and provides confidence in the prospects for the business. We continue
to look for opportunities to service this customer demand, whether through
further additional warehouse facilities or through targeted acquisitions.
Headline operating profit was £3.7 million (2023: £4.2 million). This
included the ramp-up costs of £1.7 million in respect of the opening and fit
out of the new warehouse at Lymedale.
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
are a leading specialist in consolidating ambient grocery products in the UK,
with high service levels, industry leading systems and a consistent operating
performance being the key components of the customer proposition.
Feeds
Total feed volume decreased by 2.9% to 499,000 tonnes (2023: 514,000 tonnes).
This reflected the ideal grass growing conditions across the summer and autumn
which provided farmers with significant forage stocks for the winter. This was
partly mitigated by the wet winter and spring which extended the usual winter
season demand into April. The overall ruminant market volume increased by
1.4%, according to DEFRA data.
Following extremely volatile prices in the prior year, FY24 saw very stable
commodity prices with a basket of commodities(1) only moving within a range of
15% in the year (prior year 29%). This volatility in the prior year was driven
by uncertainty around the war in Ukraine and its material impact on
agricultural commodity markets.
Revenue was lower at £195.1 million (2023: £225.8 million) mainly reflecting
lower commodity prices. Headline operating profit was £2.6 million (2023:
£3.9 million) with the prior year having benefitted from record high milk
prices and volatility in commodity prices. With the normalisation in the
market, and the significant increase in electricity costs, the business
focused on effective management of both margin and the operational cost base.
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 fifth 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.
The average milk price for the year of 38.0p per litre compared to an average
in the prior year of 46.9p per litre. The peak milk price in the year was
39.2p per litre compared to a record high of 51.6p per litre in the prior
year. At the end of the financial year the milk price was stable at 38.1p per
litre. Milk production was 0.8% lower at 12.3 billion litres (2023: 12.4
billion litres).
Feeds has a very broad customer base, working with over 4,400 farmers across
the UK. This base, and the underlying robust demand for milk and dairy
products, results in a reasonably stable overall demand for ruminant feed
deliveries in most market conditions.
(1 A basket of commodities consists of the weighted average raw material spot
price for 12 standard ingredients of a basic ruminant diet.)
Outlook
In Fuels, we are the third largest distributor in the UK and have a clear
growth strategy to consolidate a fragmented fuels distribution market and
drive great efficiency whilst delivering organic volume growth. With a strong
pipeline, acquisitions are being actively pursued and the opportunity for
growth remains significant. We continue to invest in enhancing the
capabilities for the Fuels business, including investment in the tanker fleet.
In Food, the delivery of the new warehouse at Lymedale is progressing in line
with the business plan and we are targeting further additional businesses to
support our ambition to continue to expand our warehouse and transport
operations through further warehouse development or targeted acquisitions.
Having absorbed ramp-up costs in FY24, Lymedale is expected to have a net
neutral impact in FY25, whilst incurring IFRS 16 interest charges in respect
of the warehouse lease and associated additional leased vehicles.
In Feeds, stable commodity and milk prices are expected to result in solid
demand and we are continuing to seek volume growth on the back of our Academy,
additions to the sales team and utilising an effective national operations
platform.
The Group has demonstrated its capability to deliver a solid performance in
more challenging conditions than the prior year. We continue to focus on our
long-term growth strategy of development through targeted acquisitions,
organic investment including significant investment in new fleet and
improvement initiatives, supported by our strong financial position and
confidence in NWF's potential and prospects.
Performance to date in the current financial year has been consistent with the
Board's expectations. Overall, the Board continues to remain confident about
the Group's future prospects.
Group results
For the year ended 31 May 2024
2024 2023
£m £m
Revenue 950.6 1,053.9
Cost of sales and administrative expenses (936.3) (1,032.9)
Headline operating profit(1) 14.2 21.0
Exceptional income 1.3 -
Exceptional expenses (0.5) -
Amortisation of acquired intangibles (0.7) (0.4)
Operating profit 14.3 20.6
Financing costs (2.1) (1.7)
Headline profit before tax(1) 12.5 19.6
Exceptional income 1.3 -
Exceptional expenses (0.5) -
Amortisation of acquired intangibles (0.7) (0.4)
Net finance cost in respect of defined benefit pension scheme (0.4) (0.3)
Profit before taxation 12.2 18.9
Income tax expense (3.1) (4.0)
Profit for the year 9.1 14.9
Headline EPS(1) 19.2 31.4
Diluted headline EPS(1) 19.2 31.3
Dividend per share 8.1 7.8
Headline dividend cover(1) 2.4 4.0
Headline interest cover 35.5 26.3
1 Headline operating profit is statutory operating profit of
£14.3 million (2023: £20.6 million) before exceptional income of £1.3
million (2023: £Nil), exceptional expenses of £0.5 million (2023: £Nil) and
amortisation of acquired intangibles of £0.7 million (2023: £0.4 million).
Headline profit before taxation is statutory profit before taxation of £12.2
million (2023: £18.9 million) after adding back the net finance cost in
respect of the Group's defined benefit pension scheme of £0.4 million (2023:
£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. ROCE is
headline operating profit of £14.2 million over capital employed of £85.4
million.
Group revenue decreased by 9.8% to £950.6 million (2023: £1,053.9 million)
with revenue reflecting a normalised commodity position across Fuels and Feeds
and an increase in activity levels in Food. Headline operating profit was
£14.2 million, a decrease of 32.4% (2023: £21.0 million). Operating profit
decreased by 30.6% to £14.3 million (2023: £20.6 million).
Financing costs increased by £0.4 million to £2.1 million, reflecting
increases in IFRS 16 interest costs of £0.7 million to £1.3 million, offset
with a decrease in interest on bank debt of £0.4 million to £0.4 million
(2023: £0.8 million). Headline interest cover was 35.5x (excluding IAS 19 net
pension finance costs and IFRS 16 lease interest) (2023: 26.3x).
Headline profit before taxation decreased by 36.2% to £12.5 million (2023:
£19.6 million). Profit before taxation decreased by £6.7 million to £12.2
million (2023: £18.9 million). There were £0.8 million of net exceptional
income in the year (2023: £Nil).
The tax charge for the year was £3.1 million (2023: £4.0 million). The
effective tax rate for the year was 25.4% (2023: 21.2%). The post-tax profit
for the year was £9.1 million (2023: £14.9 million).
The headline earnings per share of 19.2p represented a decrease of 38.9%
(2023: 31.4p); diluted headline earnings per share decreased by 38.7% to 19.2p
(2023: 31.3p). The proposed full-year dividend per share increased by 3.8% to
8.1p which reflects the Board's confidence in the future prospects of the
Group. The proposed dividend equates to a dividend cover ratio of 2.4x.
The finance costs in respect of the defined benefit pension scheme were £0.4
million (2023: £0.3 million).
Balance sheet summary
As at 31 May 2024
2024 2023
£m £m
Property, plant and equipment, and intangible assets 82.3 75.5
Right of use assets 45.9 29.1
Net working capital 5.7 2.3
Current income tax assets 0.6 -
Reimbursement assets 1.8 1.7
Derivative financial instruments 0.3 0.1
Net cash (excluding IFRS 16 lease liabilities) 10.0 16.3
Lease liabilities (46.3) (29.8)
Provision for liabilities (3.3) (2.7)
Current income tax liabilities - (0.8)
Deferred income tax liabilities (7.1) (4.2)
Retirement benefit obligations (4.5) (9.6)
Net assets 85.4 77.9
The Group increased net assets by £7.5 million to £85.4 million (2023:
£77.9 million) reflecting a profit for the year of £9.1 million (2023:
£14.9 million), and a reduction in the pension deficit driven by the
Company strategy.
Tangible and intangible assets increased by £6.8 million to £82.3 million as
at 31 May 2024 (2023: £75.5 million) as a result of the Food warehouse
expansion at Lymedale (£6.2 million), and the trade and assets of Geoff
Boorman Fuels LLP in Fuels (£2.6 million). Right of use assets increased by
£16.8 million to £45.9 million as a result of the Lymedale warehouse
expansion. The depreciation (excluding IFRS 16 depreciation on right of use
assets) and amortisation charges for the year to 31 May 2024 were £5.0
million and £0.9 million respectively (2023: £4.8 million and £0.6 million
respectively).
Group level ROCE(1) (based on headline operating profit) was 16.5% as at 31
May 2024 (2023: 27.6%) reflecting the profit achieved in year and the
increased investment in the business.
Net working capital increased by £3.4 million in the year. The Group's
inventories increased by £0.7 million to £8.1 million (2023: £7.4 million)
with trade and other receivables increasing to £88.7 million (2023: £87.4
million), reflecting customer mix and a decrease in trade and other payables
to £91.1 million (2023: £92.5 million) as oil and commodity prices reduced.
Net cash (excluding lease liabilities) decreased by £6.3 million to £10.0
million (2023: net cash £16.3 million), as a result of investment in the
business and working capital movements driven by volume, timing and customer
mix and a reduction in the pension scheme deficit.
The deficit of the Group's defined benefit pension scheme decreased by £5.1
million to £4.5 million (2023: £9.6 million). The value of pension scheme
assets increased by £3.3 million to £32.9 million (2023: £29.6 million) as
a result of investment returns and contribution. The value of the scheme
liabilities decreased by £1.8 million to £37.4 million (2023: £39.2
million). There was a decrease in the discount rate used to calculate the
present value of the future obligations (2024: 5.25%; 2023: 5.35%) The
discount rate is based on the yield available on AA rated corporate bonds,
which decreased during the year.
Cash flow and banking facilities
For the year ended 31 May 2024
2024 2023
£m £m
Operating cash flows before movements in working capital and provisions 28.3 32.9
Working capital movements (3.0) 4.1
Net finance costs (1.7) (1.4)
Tax paid (2.7) (3.1)
Net cash generated from operating activities 20.9 32.5
Capital expenditure (net of receipts from disposals) (9.7) (2.2)
Capitalised costs associated with leases (1.1) -
Acquisition of subsidiaries - cash paid (net of cash acquired) (2.6) (9.5)
Net cash used in investing activities (13.4) (11.7)
Repayment of capital element of leases (9.9) (9.9)
Dividends paid (3.9) (3.7)
Net cash used in financing activities (13.8) (13.6)
Net (decrease)/increase in cash and cash equivalents (6.3) 7.2
Cash and cash equivalents at beginning of year 16.3 9.1
Cash and cash equivalents at end of year 10.0 16.3
The closing net cash (excluding IFRS 16 lease liabilities) was £10.0 million
(2023: net cash £16.3 million).
The cash impact of working capital movements was a cash outflow of £3.0
million. Net cash generated from operating activities and after IFRS 16 lease
payments was £11.0 million (2023: £22.6 million) representing a cash
conversion ratio of 77.5% of headline operating profit (2023: 107.6%).
Net capital expenditure in the year at £9.7 million (2023: £2.2 million) was
higher than the annual depreciation charge, excluding IFRS 16 depreciation, of
£5.0 million (2023: £4.8 million). largely due to the investment in the
Lymedale warehouse.
The Group's banking facilities, totalling £61.0 million, were renewed in May
2023 and are committed through to 31 May 2026 as a minimum 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 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 businesses 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.
• 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 businesses 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
businesses.
• Strategic development and change management - Significant
development of the Group is only achievable via significant acquisitions,
several smaller transactions or material investment. The current strategic
plan is focused on Fuels and Food acquisitions and warehouse investment. The
Group has a well-established acquisition and integration process and a
successful track record in opening new warehouse facilities.
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 £61.0 million and includes a £1.0 million overdraft that is renewed
annually. The Group is profitable and cash generative and has a strong balance
sheet position and a good relationship with its lender. As at 31 May 2024 the
Group had available funds of £71.0 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 2026.
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 2024 was 190.5p
(31 May 2023: 259.5p) and the range of market prices during the year was
between 275.0p and 173.5p.
Chris Belsham
Katie Shortland
Chief Executive Officer Chief Financial
Officer
Consolidated income statement
for the year ended 31 May 2024
2024 2023
Note £m £m
Revenue 4 950.6 1,053.9
Cost of sales (903.4) (999.8)
Gross profit 47.2 54.1
Administrative expenses (32.9) (33.5)
Headline operating profit¹ 14.2 21.0
Exceptional income 5 1.3 -
Exceptional expenses 5 (0.5) -
Amortisation of acquired intangibles (0.7) (0.4)
Operating profit 4 14.3 20.6
Finance costs 6 (2.1) (1.7)
Headline profit before taxation¹ 12.5 19.6
Net finance cost in respect of the defined benefit pension scheme (0.4) (0.3)
Exceptional income 5 1.3 -
Exceptional expenses 5 (0.5) -
Amortisation of acquired intangibles (0.7) (0.4)
Profit before taxation 12.2 18.9
Income tax expense 7 (3.1) (4.0)
Profit for the year attributable to equity shareholders 9.1 14.9
Earnings per share (pence)
Basic 8 18.4 30.2
Diluted 8 18.4 30.1
Headline earnings per share (pence)(¹)
Basic 8 19.2 31.4
Diluted 8 19.2 31.3
1 Headline operating profit is statutory operating profit of £14.3
million (2023: £20.6 million) before exceptional income of £1.3 million
(2023: £Nil), exceptional expenses of £0.5 million (2023: £Nil) and
amortisation of acquired intangibles of £0.7 million (2023: £0.4 million).
Headline profit before taxation is statutory profit before taxation of £12.2
million (2023: £18.9 million) after adding back the net finance cost in
respect of the Group's defined benefit pension scheme of £0.4 million (2023:
£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 (2023: continued operations).
Consolidated statement of comprehensive income
for the year ended 31 May 2024
2024 2023
£m £m
Profit for the year attributable to equity shareholders 9.1 14.9
Items that will not be reclassified to income statement:
Remeasurement gain/(loss) on defined benefit pension scheme 3.1 (2.3)
Tax on items that will not be reclassified to income statement (0.7) 1.0
Total other comprehensive income/(expense) 2.4 (1.3)
Total comprehensive income for the year 11.5 13.6
Consolidated balance sheet
as at 31 May 2024
2024 2023
Note £m £m
Non-current assets
Property, plant and equipment 49.0 43.7
Right of use assets 45.9 29.1
Intangible assets 33.3 31.8
128.2 104.6
Current assets
Inventories 8.1 7.4
Trade and other receivables 88.7 87.4
Current taxation assets 0.6 -
Reimbursement assets 1.8 1.7
Cash and cash equivalents 12 10.0 16.3
Derivative financial instruments 0.3 0.2
109.5 113.0
Total assets 237.7 217.6
Current liabilities
Trade and other payables (91.1) (92.5)
Current taxation liabilities - (0.8)
Lease liabilities (8.0) (9.8)
Provisions for liabilities (1.9) (1.9)
Derivative financial instruments - (0.1)
(101.0) (105.1)
Non-current liabilities
Lease liabilities (38.3) (20.0)
Provisions for liabilities (1.4) (0.8)
Deferred taxation liabilities (7.1) (4.2)
Retirement benefit obligations 13 (4.5) (9.6)
(51.3) (34.6)
Total liabilities (152.3) (139.7)
Net assets 85.4 77.9
Equity
Share capital 10 12.4 12.4
Share premium 0.9 0.9
Retained earnings 72.1 64.6
Total shareholders' funds 85.4 77.9
Consolidated statement of changes in equity
for the year ended 31 May 2024
Share Share Retained Total
capital premium earnings equity
£m £m £m £m
Balance at 1 June 2022 12.3 0.9 54.9 68.1
Profit for the year attributable to equity shareholders - - 14.9 14.9
Items that will not be reclassified to income statement:
Remeasurement gain on defined benefit pension scheme (note 13) - - (2.3) (2.3)
Tax on items that will not 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 13.6
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
Profit for the year attributable to equity shareholders - - 9.1 9.1
Items that will not be reclassified to income statement:
Remeasurement gain on defined benefit pension scheme(note 13) - - 3.1 3.1
Tax on items that will not be reclassified to income statement - - (0.7) (0.7)
Total other comprehensive income - - 2.4 2.4
Total comprehensive income for the year - - 11.5 11.5
Transactions with owners:
Dividends paid (note 9) - - (3.9) (3.9)
Debit to equity for equity-settled share-based payments - - (0.1) (0.1)
Total transactions with owners - - (4.0) (4.0)
Balance at 31 May 2024 12.4 0.9 72.1 85.4
Consolidated cash flow statement
for the year ended 31 May 2024
2024 2023
£m £m
Cash flows from operating activities
Profit before tax 12.2 18.9
Adjustments for:
Depreciation and amortisation 17.1 15.3
(Profit) on disposal of property, plant and equipment (0.3) (0.5)
Net finance costs 2.1 1.7
Share-based payment expense (0.1) 0.5
Value of employee services - (0.7)
Fair value (profit) on financial derivatives (0.2) (0.1)
Contribution to pension scheme not recognised in income statement (2.5) (2.2)
Operating cash flows before movements in working capital and provisions 28.3 32.9
Movements in working capital:
(Increase)/decrease in inventories (0.7) 2.4
(Increase)/decrease in trade and other receivables (0.9) 8.7
(Decrease) in trade and other payables (1.4) (7.0)
Net cash generated from operations 25.3 37.0
Net finance costs (1.7) (1.4)
Income tax paid (2.7) (3.1)
Net cash generated from operating activities 20.9 32.5
Cash flows used in investing activities
Purchase of intangible assets - (0.1)
Purchase of property, plant and equipment (10.3) (3.1)
Capitalised legal costs associated with leases (1.1) -
Acquisition of trade and assets - cash paid (net of cash acquired) (2.6) (9.5)
Proceeds on sale of property, plant and equipment 0.6 1.0
Net cash used in investing activities (13.4) (11.7)
Cash flows used in financing activities
Principal elements of leases payments (9.9) (9.9)
Dividends paid (3.9) (3.7)
Net cash used in financing activities (13.8) (13.6)
Net increase in cash and cash equivalents (6.3) 7.2
Cash and cash equivalents at beginning of year 16.3 9.1
Cash and cash equivalents at end of year 10.0 16.3
Notes to the Group financial statements
for the year ended 31 May 2024
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 Wardle, Nantwich, Cheshire
CW5 6BP. The Company has its primary listing on AIM, part of the London Stock
Exchange.
2. Material accounting policies
The Group's material accounting policies are set out below.
Basis of preparation
The Group financial statements have been prepared in accordance with
UK-adopted International Accounting Standards ("IFRS") and with the
requirements of the Companies Act 2006 applicable to companies reporting under
those standards. The Group financial statements have been prepared under 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 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 £61.0 million and includes a £1.0 million overdraft that is renewed
annually. The Group is profitable and cash generative and has a strong balance
sheet position and a good relationship with its lender. As at 31 May 2024 the
Group had available funds of £71.0 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 2026.
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 therefore continues to adopt the going concern basis of accounting
in preparing the annual financial statements.
Alternative performance measures ('APMs')
The Directors consider that the: 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.
As the headline operating profit and headline profit before taxation exclude
the income or costs detailed above the Directors acknowledge this may result
in the headline metrics being materially higher or lower than the statutory
operating profit and profit before tax.
Headline EBITDA refers to reported operating profit after adding back
exceptional items, depreciation on property, plant and equipment 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 2023.
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
Amendments to FRS 101 and FRS 102 International Tax Reform 1 January 2023
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
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
Amendment to IAS 7 and IFRS 7 Supplier Finance 1 January 2024
Amendments to IAS 1 Non-current Liabilities with Covenants 1 June 2024
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 2024 or 31 May 2023, but is
derived from those accounts.
Statutory accounts for 2023 have been delivered to the Registrar of Companies.
The auditors, PricewaterhouseCoopers LLP, have reported on the 2023 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 2024 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 12 August 2024. 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
groceries 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 taxation assets and cash and cash
equivalents. 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
2024 £m £m £m £m
Revenue
Total revenue 684.9 77.8 195.1 957.8
Inter-segment revenue (7.1) (0.1) - (7.2)
Revenue 677.8 77.7 195.1 950.6
Result
Headline operating profit 7.9 3.7 2.6 14.2
Amortisation of acquired intangibles (0.7) (0.7)
Exceptional income 1.3
Exceptional expenses (0.5)
Operating profit as reported 14.3
Finance costs (note 6) (2.1)
Profit before taxation 12.2
Income tax expense (note 7) (3.1)
Profit for the year 9.1
Other information
Depreciation and amortisation 6.4 7.5 3.2 17.1
Property, plant and equipment additions 1.7 6.9 1.7 10.3
Fuels Food Feeds Group
2024 £m £m £m £m
Balance sheet
Assets
Segment assets 99.6 76.8 51.3 227.7
Cash and cash equivalents (note 12) 10.0
Consolidated total assets 237.7
Liabilities
Segment liabilities (71.6) (44.4) (24.7) (140.7)
Deferred taxation liabilities (7.1)
Retirement benefit obligations (note 13) (4.5)
Consolidated total liabilities (152.3)
Fuels Food Feeds Group
2023 £m £m £m £m
Revenue
Total revenue 765.0 70.9 225.8 1,061.7
Inter-segment revenue (7.8) - - (7.8)
Revenue 757.2 70.9 225.8 1,053.9
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 6) (1.7)
Profit before taxation 18.9
Income tax expense (note 7) (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 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 16.3
Consolidated total assets 217.6
Liabilities
Segment liabilities (78.0) (23.2) (23.9) (125.1)
Deferred taxation liabilities (4.2)
Current taxation liabilities (0.8)
Retirement benefit obligations (note 13) (9.6)
Consolidated total liabilities (139.7)
( )
5. Profit before taxation - exceptional items
Exceptional items by type are as follows:
2024 2023
£m £m
Legal claim settlement(1) 1.3 -
ERP implementation costs(2) (0.5) -
Net exceptional income 0.8 -
( )
(1) following a decision by the European Commission sanctioning a cartel
during the period from 1997 to 2011, NWF participated in a group action to
recover damages arising from certain supplier expenses relating to that
period. The parties are no longer in dispute regarding this matter. Settlement
monies of £1.3 million were received.
(2) ERP implementation costs comprise initial preliminary appraisals relating
to a future ERP implementation within the Group.
6. Finance costs
2024 2023
£m £m
Interest on bank loans and overdrafts 0.4 0.8
Finance costs on lease liabilities relating to IFRS 16 1.3 0.6
Total interest expense 1.7 1.4
Interest on the net defined benefit liability (note 13) 0.4 0.3
Total finance costs 2.1 1.7
7. Income tax expense
2024 As restated
2023
£m £m
Current tax
UK corporation tax on profits for the year 1.5 3.8
Adjustments in respect of prior years (0.2) -
Current tax expense 1.3 3.8
Deferred tax
Origination and reversal of temporary differences 0.5 -
Accelerated capital allowances 1.4 0.4
Adjustments in respect of prior years (0.1) (0.3)
Effect of increased tax rate on opening balances - 0.1
Deferred tax expense 1.8 0.2
Total income tax expense 3.1 4.0
Deferred tax has been further split to separate deferred tax on accelerated
capital allowances, prior year figures have been restated to show the
comparative. The restatement has had no impact on the total income tax
expense.
Pillar Two legislation has been enacted in the UK, the jurisdiction that the
Group operates. The legislation will be effective for the Group's financial
year beginning 1 June 2024. The Group is in scope of the enacted legislation
and has performed an assessment of the Group's potential exposure to Pillar
Two income taxes. The assessment of the potential exposure to Pillar Two
income taxes is based on the most recent tax provisioning and financial
statements for the constituent entities in the Group. The Group operates and
pays income tax solely within the United Kingdom, the profit before tax for
the year ended 31 May 2024 was £12.2 million, and tax expense recognised in
the income statement was £3.1 million, giving an effective tax rate of 25.4%.
Based on this assessment, the Group does not expect a material exposure to
Pillar Two income taxes for any of the entities within the Group. The Group
has applied the mandatory temporary exception under IAS 12 in relation to the
accounting for deferred taxes arising from the implementation of the Pillar
Two rules. During the year ended 31 May 2024, corporation tax has been
calculated at 25% of estimated assessable profits for the year (2023: blended
tax of 20% (being 19% until 31 March 2023 and 25% thereon)).
The tax charge for the year can be reconciled to the profit per the income
statement as follows:
2024 2023
£m £m
Profit before taxation 12.2 18.9
Profit before taxation multiplied by the standard rate of UK corporation tax 3.1 3.8
of 25% (2023: 20%)
Effects of:
- income not taxable (0.1) -
- expenses not deductible for tax purposes - 0.4
- super-deduction allowance - (0.1)
- non qualifying depreciation 0.2 -
- impact of share-based payments 0.2 0.1
- impact of increased tax rate on opening balances - 0.1
- adjustments in respect of prior years (0.3) (0.3)
Total income taxation expense 3.1 4.0
A debit of £0.7 million (2023: £0.6 million credit) has been recognised in
comprehensive income relating to the deferred tax movement on the actuarial
gain on the defined benefit pension scheme of £3.1 million. The tax charge in
the current year is the same (2023: higher) than the standard tax charge.
8. Earnings per share
The calculation of basic and diluted earnings per share is based on the
following data:
2024 2023
Earnings (£m)
Earnings for the purposes of basic and diluted earnings per share being profit 9.1 14.9
for the year attributable to equity shareholders
Number of shares ('000)
Weighted average number of shares for the purposes of basic earnings per share 49,426 49,355
Weighted average dilutive effect of conditional share awards 13 196
Weighted average number of shares for the purposes of diluted earnings per 49,439 49,551
share
Earnings per ordinary share (pence)
Basic earnings per ordinary share 18.4 30.2
Diluted earnings per ordinary share 18.4 30.1
Headline earnings per ordinary share (pence)
Basic headline earnings per ordinary share 19.2 31.4
Diluted headline earnings per ordinary share 19.2 31.3
The calculation of basic and diluted headline earnings per share is based on
the following data:
2024 2023
£m £m
Profit for the year attributable to equity shareholders 9.1 14.9
Add back/(deduct):
Interest on the net defined benefit liability 0.4 0.3
Net exceptional items (0.8) -
Amortisation of acquired intangibles 0.7 0.4
Tax effect of the above 0.1 (0.1)
Headline earnings 9.5 15.5
9. Dividends paid
2024 2023
£m £m
Final dividend for the year ended 31 May 2023 of 6.8p (2022: 6.5p) per share 3.4 3.2
Interim dividend for the year ended 31 May 2024 of 1.0p (2023: 1.0p) per share 0.5 0.5
Amounts recognised as distributions to equity shareholders in the year 3.9 3.7
Proposed final dividend for the year ended 31 May 2024 of 7.1p (2023: 6.8p) 3.5 3.4
per share
The proposed final dividend is subject to approval at the AGM on 26 September
2024 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 2022 49,134 12.3
Issue of shares (see below) 274 0.1
Balance at 31 May 2023 49,408 12.4
Issue of shares (see below) 31 -
Balance at 31 May 2024 49,439 12.4
During the year ended 31 May 2024, 31,418 shares (2023: 273,800 shares) with
an aggregate nominal value of £7,855 (2023: £68,450) 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
2024, amounted to 1,259,464 (31 May 2023: 1,202,049). These shares will only
be issued subject to satisfying certain performance criteria.
There is a single class of ordinary shares in issue. There are no restrictions
on dividends or the repayment of capital.
Share premium includes any premiums received on issue of share capital. Any
transaction costs associated with the issuing of shares are deducted from
share premium.
Retained earnings includes all current and prior period retained profits and
losses.
11. Business combinations
On 7 July 2023, the Group acquired the trade and specified assets of Geoff
Boorman Fuels LLP, a 17 million litre fuel distributor servicing rural Kent
and East Sussex. The purchase price for the acquisition was £2.6 million, the
net cash outflow was £2.7 million after acquisition costs.
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 1.3
Intangible assets - brand 0.8
Intangible assets - customer relationships 0.2
Property, plant and equipment 0.3
Trade and other receivables 0.5
Trade and other payables (0.1)
Deferred taxation (0.4)
2.6
Provisional goodwill of £1.3 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:
£m
Total consideration - cash paid on completion (2.6)
Acquisition-related costs (0.1)
Net consideration paid (2.7)
Acquisition-related costs of £0.1 million have been charged to the income
statement in the year ended 31 May 2024.
The following amounts have been recognised within the consolidated income
statement in respect of the acquisition made in the year: revenue - £9.2
million and operating profit before tax - £0.3 million.
Had the acquisition taken place at the start of the financial year, the
consolidated income statement would have recognised: revenue - £10.0
million and operating profit before tax - £0.3 million.
12. Analysis of cash and cash equivalents and reconciliation to net debt
Other
1 June Cash non-cash 31 May
2023 flow movements 2024
£m £m £m £m
Cash and cash equivalents 16.3 (6.3) - 10.0
Total Group (excluding lease liabilities) 16.3 (6.3) - 10.0
Lease liabilities (29.8) 9.9 (26.4) (46.3)
Total Group (including lease liabilities) (13.5) 3.6 (26.4) (36.3)
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 2024, with a deficit of £7.6 million at the valuation date of 31
December 2022. 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 2024. The next full triennial
valuation will be completed in the year ending 31 May 2026.
The triennial valuation resulted in Group contributions of £2.1 million per
annum plus a continued 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:
2024 2023
£m £m
Present value of defined benefit obligations (37.4) (39.2)
Fair value of scheme assets 32.9 29.6
Deficit in the scheme recognised as a liability in the balance sheet (4.5) (9.6)
Related deferred taxation asset 1.2 2.4
Net pension liability (3.3) (7.2)
Changes in the present value of the defined benefit obligation are as follows:
2024 2023
£m £m
At 1 June 39.2 49.0
Interest cost 2.0 1.7
Remeasurement losses/(gains)
- actuarial losses/gains arising from changes in financial assumptions 1.4 (11.5)
- actuarial (gains)/losses arising from changes in demographic assumptions (0.5) 0.3
- actuarial (gains)/losses on experience assumptions (2.9) 1.6
Benefits paid (1.8) (1.9)
At 31 May 37.4 39.2
Changes in the fair value of scheme assets are as follows:
2024 2023
£m £m
At 1 June 29.6 39.7
Interest income 1.6 1.5
Remeasurement gains/(losses):
- actuarial gains/(losses) on plan assets 1.1 (11.9)
Contributions by employer 2.7 2.6
Expenses (0.3) (0.4)
Benefits paid (1.8) (1.9)
At 31 May 32.9 29.6
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 value of the 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 (1.0) 1.0
0.25% change in RPI inflation 0.6 (0.6)
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 and discount 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 2025 and four
years of the businesses strategic plans thereafter. Subsequent cashflows 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.
Valuation of acquired intangibles
IFRS 3 requires separately identifiable intangible asset to be recognise on
acquisitions. The principal estimates used in valuing these intangibles are
generally based on the future cash flow forecasts to be generated by these
assets and the selection of appropriate discount rates to apply to the cash
flows.
A 1% increase in the discount rate applied to the future cash flows would
reduce the value attributable to acquired intangibles by £0.1 million.
Assessment of insurance claim provision and corresponding reimbursement assets
Under IAS 37, a provision for third party insurance claims is recognised for
the full amount of the liability at the point in time that the obligation can
be reliably estimated. The Group considers this to be when the insurance
company assesses the claim and when it registers it as accepted.
Correspondingly, a reimbursement asset for an equal amount is recognised at
the same time, when it becomes virtually certain that the reimbursement will
be received if the entity settles the liability.
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 and Accounts and
the financial statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have prepared the Group financial
statements in accordance with UK-adopted International Accounting Standards
("IFRS") and the Parent Company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting
Standards, comprising FRS 101 'Reduced Disclosure Framework', and applicable
law).
Under company law, Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs
of the Group and Parent Company and of the profit or loss of the Group for
that period. In preparing the financial statements, the Directors are required
to:
· select suitable accounting policies and then apply them
consistently;
· state whether applicable UK-adopted International Accounting Standards
have been followed for the Group financial statements and United Kingdom
Accounting Standards, comprising FRS 101 have been followed for the Parent
Company financial statements, subject to any material departures disclosed and
explained in the financial statements;
· make judgements and accounting estimates that are reasonable and
prudent; and
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Parent Company will
continue in business.
The Directors are responsible for safeguarding the assets of the Group and
Parent Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are also responsible for keeping adequate accounting records
that are sufficient to show and explain the Group's and Parent Company's
transactions and disclose with reasonable accuracy at any time the financial
position of the Group and Parent Company and enable them to ensure that the
financial statements comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the Parent
Company's website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in other
jurisdictions.
The Company's Annual Report for the year ended 31 May 2024, which will be
posted to shareholders during the week commencing 12 August 2024, 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:
In the case of each Director in office at the date the Directors' Report is
approved:
· so far as the Director is aware, there is no relevant audit
information of which the Group's and Parent Company's auditors are unaware;
and
· they have taken all the steps that they ought to have taken as a
Director in order to make themselves aware of any relevant audit information
and to establish that the Group's and Parent Company's auditors are aware of
that information.
16. Post balance sheet events
There are no post balance sheet events to disclose.
17. Financial calendar
Annual General Meeting 26 September 2024
Dividend:
- ex-dividend date 31 October 2024
- record date 1 November 2024
- payment date 6 December 2024
Announcement of half-year results Early February 2025
Publication of Interim Report Early February 2025
Interim dividend paid May 2025
Financial year end 31 May 2025
Announcement of full-year results Early August 2025
Publication of Annual Report and Accounts Late August 2025
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