REG - NWF Group PLC - Half Year Results
31/01/2024 07:00
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RNS Number : 4330B NWF Group PLC 31 January 2024
For release 7.00am Wednesday 31 January 2024
NWF Group plc
NWF Group plc: half year results for the six months ended 30 November 2023
NWF Group plc ('NWF' or 'the Group'), the specialist distributor, today
announces its half year results for the six months ended 30 November 2023.
H1 2023 H1 2022 %
Financial highlights
Revenue £472.9m £541.8m (12.7)
Headline operating profit1 £4.0m £6.8m (41.2)
Headline profit before taxation1 £3.4m £6.2m (45.2)
Diluted headline earnings per share1 5.1p 9.9p (48.5)
Interim dividend per share 1.0p 1.0p -
Net cash 2 £13.3m £1.2m >100.0
Statutory results
Operating profit £4.6m £6.7m (31.3)
Profit before taxation £3.8m £5.9m (35.6)
Diluted earnings per share 5.5p 9.3p (40.9)
Net debt (including IFRS 16 lease liabilities) £14.3m £30.0m 52.3
1 Headline operating profit excludes exceptional items (see note 4)
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.
2 Net cash excluding IFRS 16 lease liabilities.
Group highlights
• Normalising market conditions in Fuels and Feeds resulted in
lower margins and therefore lower profitability as expected.
• The Food business delivered a strong performance supporting the
recently announced investment in the new Lymedale warehouse.
• Strong financial position, with a £13.3 million cash position at the
end of the half year, supporting the £8.5 million investment in the fit out
of the Lymedale warehouse as well as a pipeline of potential acquisition
opportunities in Fuels.
• The Board's full year trading expectations remain unchanged ahead
of the seasonally more significant second half.
Business highlights
Fuels - headline operating profit of £0.7 million (H1 2022: £2.6 million).
Volumes were ahead of the prior year driven by commercial demand, offset by
the expected normalising of margins from the abnormally elevated level
experienced in the prior year, alongside lower demand for domestic heating
oil.
Food - headline operating profit of £2.9 million (H1 2022: £2.1 million).
Strong performance with increased storage volumes and distribution activity
from the continued high level of customer demand.
Feeds - headline operating profit of £0.4 million (H1 2022: £2.1 million).
Volumes lower than prior year, reflecting the reduction in the overall market.
A lower milk price and reduced volatility in raw material prices compared to
the prior year resulted in the expected normalising of margins.
Chris Belsham, Chief Executive Designate, NWF Group plc, commented:
"We have experienced a more challenging first half than in recent years, but
our underlying expectations for the full year remain unchanged. Our
performance in Food has been particularly positive and has in part offset the
less supportive market conditions in Fuels and Feeds. Our recently announced
investment in the new Lymedale warehouse highlights the growing customer
demand in the Food business, increasing our capacity by 39%.
We continue to focus on our long-term growth strategy of development by both
organic investment and through targeted acquisitions, supported by our strong
financial position and confidence in NWF's potential and future prospects."
A virtual meeting is being held today for analysts starting at 9.30am. For
login details please contact NWF@mhpgroup.com
(https://url.avanan.click/v2/___mailto:NWF@mhpgroup.com___.YXAxZTpud2Zncm91cDphOm86OGRiOTg1Y2RlOGNlZDY4MjVjOTg2MmFkZDIwMWY4YWI6NjpiNDMwOjYzZTEzYWI4Y2U3OWRjMDJiN2MzNDhlOGEzYmY3YTlkZTBjNmFmNmM5NDJiOGNjMjllMjc4OWZhYTFlMmRkZDc6cDpU)
.
Information for investors, including analyst consensus forecasts, can be found
on the Group's website at www.nwf.co.uk
(https://url.avanan.click/v2/___http:/www.nwf.co.uk/___.YXAxZTpud2Zncm91cDphOm86OGRiOTg1Y2RlOGNlZDY4MjVjOTg2MmFkZDIwMWY4YWI6NjphNTk2OjhmN2IwYjJkZjlkNmZhYWQ3YTI1NjQ3MGRiMDY1ODlhZDk4ODQwNjRlYmQ5ZjJmNzJiMDFiMTY4YzUwNDExM2M6cDpU)
.
Richard Whiting, Chief Executive Reg Hoare/ Mike Bell/
Chris Belsham, Chief Executive Designate Catherine Chapman/ Ed Allsopp
Katie Shortland, Chief Financial Officer Christian Harte Peel Hunt LLP (Nominated advisor and broker)
Tel: 020 7418 8900
NWF Group plc MHP Communications
Tel: 01829 260 260
Tel: 07711191518
Chair's statement
The first half of the year delivered lower overall profitability than the
prior year, which was anticipated with normalising market conditions for Fuels
and Feeds. In Fuels, although volumes increased, margins reduced due to stable
supply conditions combined with lower demand for domestic heating oil, which
reflected the mild autumn weather. In Food, there was a strong performance
driven by the continued high levels of demand from customers with the business
utilising overflow storage facilities as planned. In line with its stated
strategy, the Group has expanded the capacity of the Food business with the
signing of the lease for the new Lymedale warehouse which will add an
additional 52,000 pallet spaces, representing a 39% increase in capacity.
Feeds performance was in line with expectations as reduced volatility in raw
material prices led to the expected normalising of margins. Feeds market
volumes were lower, reflecting the lower milk price and the high level of
forage available to farmers.
Results
Revenue for the half year ended 30 November 2023 was 12.7% lower at £472.9
million (H1 2022: £541.8 million), primarily as a result of lower commodity
prices in Fuels and Feeds. Headline operating profit 1 (#_ftn1) was lower at
£4.0 million (H1 2022: £6.8 million), with the prior year having benefitted
from significant outperformance resulting from volatility in commodity prices
in both Fuels and Feeds. Headline profit before taxation 1 was down 45.2% to
£3.4 million (H1 2022: £6.2 million).
Basic headline earnings per share 1 was 5.1p (H1 2022: 9.9p) and diluted
headline earnings per share 1 was 5.1p (H1 2022: 9.9p).
Net cash generated from operations for the period amounted to £9.0 million
(H1 2022: £0.5 million absorbed). Cash generation was higher as a result of
the unwind of £4.0 million short-term timing differences relating to supply
constraints in the fuels market at November 2022 and £1.3 million legal
settlement monies received. Net capital expenditure in the period was £1.6
million (H1 2022: £1.3 million).
Net cash at the period end, excluding the impact of IFRS 16, was materially
higher at £13.3 million (H1 2022: £1.2 million net cash), reflecting the
Group's strong cash generation.
The Group's banking facilities of £61.0 million are committed to May 2026 and
NWF continues to operate with substantial headroom. Net debt including the
impact of IFRS 16 was £14.3 million (H1 2022: £30.0 million).
Net assets at 30 November 2023 increased to £79.6 million (30 November 2022:
£70.2 million). The IAS 19R defined benefits pension scheme valuation deficit
has decreased from £9.6 million as at 31 May 2023 to £8.8 million at the
half year, as a result of higher asset values offsetting the slight decrease
in the discount rate assumption.
The Board has approved an unchanged interim dividend per share of 1.0p (H1
2022: 1.0p), in line with its policy. This will be paid on 1 May 2024 to
shareholders on the register as at 22 March 2024. The shares will trade
ex-dividend on 21 March 2024. The Group has increased the annual dividend by
approximately 5% in each of the last ten years, reflecting the Group's strong
underlying financial performance and position.
Operations
Fuels
Revenue decreased by 14.2% to £344.8 million (H1 2022: £401.8 million) as a
result of lower oil prices offsetting an increase in volume. Headline
operating profit was £0.7 million (H1 2022: £2.6 million).
Volumes increased by 9.3% to 328 million litres (H1 2022: 300 million litres)
with growth in commercial diesel and gas oil volumes, together with the
contribution from Sweetfuels and Geoff Boorman Fuels (acquired in December
2022 and July 2023 respectively). Domestic heating oil volumes (excluding
acquisitions) were flat, reflecting the warm autumn. In the first half Brent
Crude averaged $82.49 per barrel (H1 2022: $99.08 per barrel) and ended the
reporting period at $82.83 per barrel.
In the previous year, the oil distribution market suffered from supply issues
which created uncertainty for customers and supported elevated margins as NWF
benefitted from national supply agreements and a UK-wide depot network to
continue to service its domestic and commercial customers. In the current
financial year, supply conditions have been stable and, as expected, margins
are normalising as a result.
The UK fuels distribution market remains highly fragmented, and the Board
believes the opportunity for NWF to expand its depot network, broadening the
customer base and leveraging scale efficiencies, remains significant. The
Group has a strong and established acquisition and integration track record
and is actively exploring several opportunities. The two most recent
acquisitions (Sweetfuels and Geoff Boorman Fuels) have been successfully
integrated and contributed as expected during the period.
Food
Revenue increased by 9.7% to £39.5 million (H1 2022: £36.0 million),
reflecting increased activity. Headline operating profit was £2.9 million (H1
2022: £2.1 million).
Demand from our ambient grocery customers remained high during the period,
which was reflected in storage volumes averaging 135,000 spaces (H1 2022:
122,000) and peaking at just over 141,000 pallet spaces. Capacity at the
Wardle and Crewe sites totals 135,000 pallet spaces, meaning the business made
efficient use of overflow storage facilities as planned. The increase in
storage volume led to throughput being 8.8% higher than the prior year thereby
driving increased revenue and profitability.
The high level of demand from both existing and new customers supports the
signing of the lease for the 332,000 ft(2) Lymedale warehouse and the £8.5
million investment in its fit out, which was signed on 9 January 2024. The
work on the fit out of Lymedale has already commenced and the site is expected
to be fully operational by early autumn of this year. This is in line with our
stated strategy for the Food business of targeting warehouse expansion, where
it is backed by customer and retailer demand and follows on from the
successful investment in the Group's Crewe warehouse, which opened in 2020.
In its first full financial year of operational activity, the year ending 31
May 2026, Lymedale is expected to deliver additional annualised operating
profits of approximately £2.8 million. As a result of IFRS 16 interest in
respect of the warehouse lease and associated additional leased vehicles, this
will result in incremental annualised headline PBT of approximately £1.2
million in the financial year ending 31 May 2026, increasing to £2.5 million
in the financial year ending 31 May 2035 as the IFRS 16 lease liability
reduces.
Feeds
Revenue decreased by 14.8% to £88.6 million (H1 2022: £104.0 million) mainly
reflecting lower commodity and therefore selling prices in the period.
Headline operating profit was £0.4 million (H1 2022: £2.1 million) with the
business having benefitted from highly volatile commodity prices and a record
high milk price in the prior year.
Volumes were 5.5% lower at 225,000 tonnes (H1 2022: 238,000 tonnes) as a
result of good grazing conditions and a high level of forage availability
following mild weather in the period, with the Group also choosing to forego
some low margin merchant blend volume. DEFRA data suggests the ruminant feed
market was 1.4% lower.
In contrast with the prior year, commodity prices were stable over the period
with no supply concerns. Average milk price over the period was 22% lower than
the comparative period and was 38.2p per litre at the end of November (H1
2022: 51.1p per litre). Milk production was 1% lower for the period
year-on-year. Whilst average milk price was lower than the comparative period,
this was matched by a 20% decrease in average feed costs thereby maintaining
farmers' margins and supporting continued confidence in the dairy sector.
Our operational platform, with key mills close to customers in the northern,
central and southern regions, continues to provide an effective base for
future development. Investment has continued into NWF's Feeds training academy
to develop our future nutritionists.
Outlook and future prospects
As the Board expected, profitability in the first half was lower than in
recent prior years, as pricing is normalising in Fuels and Feeds. In addition,
the mild autumn weather impacted demand for both domestic heating oil and
ruminant animal feed. In Fuels, demand for heating oil has increased as we
moved into winter, albeit the weather has been comparatively mild to date. In
Food, high demand has continued to be efficiently managed and we will continue
to require overflow storage facilities until Lymedale capacity starts to
become available in early autumn. In Feeds, margins and costs are being
effectively managed as market volumes remain subdued and commodity prices
stable.
With the winter months to come, which are typically more material to the
Group's performance, the Board's expectations for the full year are unchanged,
with a more significant second half weighting than last year. However, as
stated in the announcement of the Lymedale investment, the initial ramp-up
costs are expected to impact headline PBT in the current financial year ending
31 May 2024 by approximately £1.7 million. The net impact in the financial
year ending 31 May 2025 is expected to be zero, as ramp-up costs are offset by
revenue, with a full run rate of profitability achieved during the financial
year ending 31 May 2026. Our financial position is strong and we continue to
focus on development opportunities, both organic and through targeted
acquisitions, which underpin our continued confidence in NWF's growth
potential and future prospects.
I look forward to updating shareholders later this year.
Philip Acton
Chair
31 January 2024
Condensed consolidated income statement
for the half year ended 30 November 2023 (unaudited)
Note Half year Half year Year
ended ended ended
30 November 30 November 31 May
2023 2022 2023
£m £m £m
Revenue 3 472.9 541.8 1,053.9
Cost of sales and administrative expenses (469.6) (535.1) (1,033.3)
Other income 4 1.3 - -
Headline operating profit1 4.0 6.8 21.0
Exceptional items 4 0.9 - -
Amortisation of acquired intangibles (0.3) (0.1) (0.4)
Operating profit 3 4.6 6.7 20.6
Finance costs 5 (0.8) (0.8) (1.7)
Headline profit before taxation1 3.4 6.2 19.6
Exceptional items 4 0.9 - -
Amortisation of acquired intangibles (0.3) (0.1) (0.4)
Net finance cost in respect of the defined benefit pension scheme (0.2) (0.2) (0.3)
Profit before taxation 3.8 5.9 18.9
Income tax expense 6 (1.1) (1.3) (4.0)
Profit for the period attributable to equity shareholders 2.7 4.6 14.9
Earnings per share (pence)
Basic 7 5.5 9.3 30.2
Diluted 7 5.5 9.3 30.1
Headline earnings per share (pence)1
Basic 7 5.1 9.9 31.4
Diluted 7 5.1 9.9 31.3
1 Headline operating profit is statutory operating profit of £4.0
million (H1 2022: £6.7 million profit) before exceptional items of £0.9
million (H1 2022: £Nil) and amortisation of acquired intangibles of £0.3
million (H1 2022: £0.1 million). Headline profit before taxation is statutory
profit before taxation of £3.8 million (H1 2022: £5.9 million profit),
after adding back the net finance cost in respect of the Group's defined
benefit pension scheme of £0.2 million (H1 2022: £0.2 million), the
exceptional items and the amortisation of acquired intangibles. Headline
earnings per share also takes into account the taxation effect thereon.
The notes form an integral part of this condensed consolidated Half Year
Report.
Condensed consolidated statement of comprehensive income
for the half year ended 30 November 2023 (unaudited)
Half year Half year Year
ended ended ended
30 November 30 November 31 May
2023 2022 2023
£m £m £m
Profit for the period attributable to equity shareholders 2.7 4.6 14.9
Items that will never be reclassified to profit or loss:
Re-measurement loss on the defined benefit pension scheme (0.2) (2.2) (2.3)
Tax on items that will never be reclassified to profit or loss (0.8) 0.3 1.0
Total comprehensive income for the period 1.7 2.7 13.6
The notes form an integral part of this condensed consolidated Half Year
Report.
Condensed consolidated balance sheet
as at 30 November 2023 (unaudited)
Note 30 November 30 November 31 May
2023 2022 2023
£m £m £m
Non-current assets
Property, plant and equipment 43.3 44.1 43.7
Right of use assets 26.7 30.5 29.1
Intangible assets 33.6 22.5 31.8
103.6 97.1 104.6
Current assets
Inventories 7.8 10.3 7.4
Trade and other receivables 9 101.2 115.9 87.4
Reimbursement assets 1.4 2.7 1.7
Current income tax asset 0.4 - -
Cash and cash equivalents 9 13.3 1.2 16.3
Derivative financial instruments 9 0.2 0.4 0.2
124.3 130.5 113.0
Total assets 227.9 227.6 217.6
Current liabilities
Trade and other payables 9 (104.6) (108.5) (92.5)
Current income tax liabilities - (0.4) (0.8)
Lease liabilities 9 (9.5) (9.6) (9.8)
Provision for liabilities (1.7) (2.9) (1.9)
Derivative financial instruments 9 (0.1) (0.2) (0.1)
(115.9) (121.6) (105.1)
Non-current liabilities
Lease liabilities 9 (18.1) (21.6) (20.0)
Provision for liabilities (0.2) (0.6) (0.8)
Deferred income tax liabilities (5.3) (3.1) (4.2)
Retirement benefit obligations (8.8) (10.5) (9.6)
(32.4) (35.8) (34.6)
Total liabilities (148.3) (157.4) (139.7)
Net assets 79.6 70.2 77.9
Equity
Share capital 10 12.4 12.4 12.4
Share premium 0.9 0.9 0.9
Retained earnings 66.3 56.9 64.6
Total equity 79.6 70.2 77.9
The notes form an integral part of this condensed consolidated Half Year
Report.
Condensed consolidated statement of changes in equity
for the half year ended 30 November 2023 (unaudited)
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 period - - 4.6 4.6
Items that will never be reclassified to profit or loss:
Re-measurement loss on the defined benefit pension scheme - - (2.2) (2.2)
Tax on items that will never be reclassified to profit or loss - - 0.3 0.3
Total comprehensive income for the period - - 2.7 2.7
Transactions with owners:
Issue of shares 0.1 - (0.1) -
Value of employee services - - (0.6) (0.6)
Total transactions with owners 0.1 - (0.7) (0.6)
Balance at 30 November 2022 12.4 0.9 56.9 70.2
Profit for the period - - 10.3 10.3
Items that will never be reclassified to profit or loss:
Re-measurement gain on the defined benefit pension scheme - - (0.1) (0.1)
Tax on items that will never be reclassified to profit or loss - - 0.7 0.7
Total comprehensive income for the period - - 10.9 10.9
Transactions with owners:
Dividend paid - - (3.7) (3.7)
Credit to equity for equity-settled share-based payments - - 0.5 0.5
Total transactions with owners - - (3.2) (3.2)
Balance at 31 May 2023 12.4 0.9 64.6 77.9
Profit for the period - - 2.7 2.7
Items that will never be reclassified to profit or loss:
Re-measurement loss on the defined benefit pension scheme - - (0.2) (0.2)
Tax on items that will never be reclassified to profit or loss - - (0.8) (0.8)
Total comprehensive income for the period - - 1.7 1.7
Balance at 30 November 2023 12.4 0.9 66.3 79.6
The notes form an integral part of this condensed consolidated Half Year
Report.
Condensed consolidated cash flow statement
for the half year ended 30 November 2023 (unaudited)
Half year Half year Year
ended ended ended
30 November 30 November 31 May
2023 2022 2023
£m £m £m
Cash flows from operating activities
Operating profit 4.6 6.7 20.6
Adjustments for:
Depreciation and amortisation 8.1 7.5 15.3
Profit on disposal of fixed assets (0.1) (0.4) (0.5)
Fair value profit on financial derivative - - (0.1)
Share-based payment expense - - 0.5
Value of employee services - (0.6) (0.7)
Contributions to pension scheme not recognised in income statement (1.2) (1.1) (2.2)
Operating cash flows before movements in working capital 11.4 12.1 32.9
Movements in working capital:
(Increase)/decrease in inventories (0.4) (0.5) 2.4
(Increase)/decrease in receivables (12.2) (19.5) 8.7
Increase/(decrease) in payables 10.2 7.4 (7.0)
Net cash generated/(absorbed) from operations 9.0 (0.5) 37.0
Interest paid (0.6) (0.6) (1.4)
Income tax paid (2.0) (1.2) (3.1)
Net cash generated/(absorbed) from operating activities 6.4 (2.3) 32.5
Cash flows from investing activities
Purchase of intangible assets - - (0.1)
Purchase of property, plant and equipment (2.0) (1.3) (3.1)
Acquisition of subsidiaries - cash paid (net of cash acquired) (2.6) - (9.5)
Proceeds on sale of property, plant and equipment 0.4 0.6 1.0
Net cash absorbed by investing activities (4.2) (0.7) (11.7)
Cash flows from financing activities
Capital element of leases (5.2) (4.9) (9.9)
Dividends paid - - (3.7)
Net cash absorbed by financing activities (5.2) (4.9) (13.6)
Net movement in cash and cash equivalents (3.0) (7.9) 7.2
Cash and cash equivalents at beginning of period 16.3 9.1 9.1
Cash and cash equivalents at end of period 13.3 1.2 16.3
The notes form an integral part of this condensed consolidated Half Year
Report.
Notes to the condensed consolidated half year report
for the half year ended 30 November 2023 (unaudited)
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
address of its 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.
These condensed consolidated interim financial statements ('interim financial
statements') were approved by the Board for issue on 31 January 2024.
These interim financial statements do not constitute statutory accounts within
the meaning of Section 434 of the Companies Act 2006. The interim financial
statements for the half years ended 30 November 2023 and 30 November 2022 are
neither audited nor reviewed by the Company's auditors. Statutory accounts for
the year ended 31 May 2023 were approved by the Board of Directors on 1 August
2023 and delivered to the Registrar of Companies. The report of the auditors
on those accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under Section 498 of the Companies
Act 2006.
2. Basis of preparation and accounting policies
Except as described below, these interim financial statements have been
prepared in accordance with the principal accounting policies used in the
Group's consolidated financial statements for the year ended 31 May 2023.
These interim financial statements should be read in conjunction with those
consolidated financial statements, which have been prepared in accordance with
the international accounting standards in conformity with the requirements of
the Companies Act 2006 and the UK-adopted International Accounting Standards
('IFRS').
These interim financial statements do not fully comply with IAS 34 'Interim
Financial Reporting', as is currently permissible under the rules of AIM.
Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to expected total annual earnings.
The triennial actuarial valuation of the Group's defined benefit pension
scheme has been largely completed during the half year ended 30 November
2023, with a valuation date of 31 December 2022. The last triennial actuarial
valuation was completed in the year ended 31 May 2021, with a deficit of
£16.8 million at the valuation date of 31 December 2019. In these interim
financial statements, this liability has been updated in order to derive the
IAS 19R valuation as of 30 November 2023. It is expected that the triennial
valuation will continue existing Group contributions of £2.1 million per
annum, and a continued percentage increase based on total dividend growth over
£3.1 million will be paid.
The Directors consider that headline operating profit, headline profit before
taxation, headline earnings per share and headline EBITDA measures, referred
to in these interim 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,
amortisation of acquired intangibles, exceptional items and the taxation
effect thereon where relevant. 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.
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 7 of these interim financial
statements.
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, asset impairment
and income from legal settlements. In determining whether an item should be
disclosed as an exceptional item, the Directors consider qualitative as well
as quantitative 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.
The Group tests annually for impairment, or at the end of each reporting date
if there is any indication that an asset may be impaired. This involves using
key judgements including estimates of future business performance and cash
generation, discount rates and long‑term growth rates.
Certain statements in these interim financial statements 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 actual results and events could differ materially from
those expressed or implied by these forward-looking statements.
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.
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.
3. 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 product/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 are
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 headline operating profit. Finance income and costs are not
included in the segment results which are 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 current income tax assets and cash and cash
equivalents. Segment liabilities exclude deferred income tax liabilities,
borrowings and retirement benefit obligations. Excluded items are part of the
reconciliation to consolidated total assets and liabilities.
Half year ended 30 November 2023 Note Fuels Food Feeds Group
£m £m £m £m
Revenue
Total revenue 348.3 39.5 88.6 476.4
Inter-segment revenue (3.5) - - (3.5)
Revenue 344.8 39.5 88.6 472.9
Result
Headline operating profit 0.7 2.9 0.4 4.0
Exceptional items - - - 0.9
Amortisation of acquired intangibles (0.3) - - (0.3)
Operating profit as reported 4.6
Finance costs 5 (0.8)
Profit before taxation 3.8
Income tax expense 6 (1.1)
Profit for the period 2.7
Other information
Depreciation and amortisation 3.2 3.3 1.6 8.1
Fixed asset additions 0.7 0.4 0.9 2.0
As at 30 November 2023 Fuels Food Feeds Group
£m £m £m £m
Balance sheet
Assets
Segment assets 113.4 51.5 49.3 214.2
Cash and cash equivalents 13.3
Current income tax receivable 0.4
Consolidated total assets 227.9
Liabilities
Segment liabilities (90.9) (24.5) (18.8) (134.2)
Deferred income tax liabilities (5.3)
Retirement benefit obligations (8.8)
Consolidated total liabilities (148.3)
Half year ended 30 November 2022 Note Fuels Food Feeds Group
£m £m £m £m
Revenue
Total revenue 406.1 36.1 104.0 546.2
Inter-segment revenue (4.3) (0.1) - (4.4)
Revenue 401.8 36.0 104.0 541.8
Result
Headline operating profit 2.6 2.1 2.1 6.8
Amortisation of acquired intangibles (0.1) - - (0.1)
Operating profit as reported 6.7
Finance costs 5 (0.8)
Profit before taxation 5.9
Income tax expense 6 (1.3)
Profit for the period 4.6
Other information
Depreciation and amortisation 2.9 3.0 1.5 7.4
Fixed asset additions 0.2 0.6 0.5 1.3
As at 30 November 2022 Fuels Food Feeds Group
£m £m £m £m
Balance sheet
Assets
Segment assets 119.4 52.4 54.6 226.4
Cash and cash equivalents 1.2
Consolidated total assets 227.6
Liabilities
Segment liabilities (96.9) (23.6) (22.9) (143.4)
Current income tax liabilities (0.4)
Deferred income tax liabilities (3.1)
Retirement benefit obligations (10.5)
Consolidated total liabilities (157.4)
Year ended 31 May 2023 Fuels Food Feeds Group
Note £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 5 (1.7)
Profit before taxation 18.9
Income tax expense 6 (4.0)
Profit for the year 14.9
Other information
Depreciation and amortisation 6.0 6.3 3.0 15.3
Fixed asset additions 0.7 1.1 1.3 3.1
As at 31 May 2023 Fuels Food Feeds Group
£m £m £m £m
Balance sheet
Assets
Segment assets 101.9 50.0 49.4 201.3
Cash at bank and in hand 16.3
Consolidated total assets 217.6
Liabilities
Segment liabilities (78.0) (23.2) (23.9) (125.1)
Deferred income tax liabilities (4.2)
Current income tax liabilities (0.8)
Retirement benefit obligations (9.6)
Consolidated total liabilities (139.7)
4. Profit before taxation - exceptional items
Half year Half year Year
ended ended ended
30 November 30 November 31 May
2023 2022 2023
£m £m £m
Legal claim settlement1 1.3 - -
ERP implementation costs (0.4) - -
Exceptional costs 0.9 - -
1 Following a decision by the European Commission sanctioning a cartel
during the period 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.
5. Finance costs
Half year Half year Year
ended ended ended
30 November 30 November 31 May
2023 2022 2023
£m £m £m
Interest on bank loans and overdrafts 0.2 0.3 0.8
Finance costs on lease liabilities relating to IFRS 16 0.4 0.3 0.6
Net finance cost in respect of the defined benefit pension scheme 0.2 0.2 0.3
Total finance costs 0.8 0.8 1.7
6. Income tax expense
The income tax expense for the half year ended 30 November 2023 is based upon
management's best estimate of the weighted average annual tax rate expected
for the full financial year ending 31 May 2024 of 27.0% (H1 2022: 21.9%).
7. Earnings per share
The calculation of basic and diluted earnings per share is based on the
following data:
Half year Half year Year
ended ended ended
30 November 30 November 31 May
2023 2022 2023
£m £m £m
Earnings
Earnings for the purposes of basic and diluted earnings per share, being 2.7 4.6 14.9
profit for the period attributable to equity shareholders
Half year Half year Year
ended ended ended
30 November 30 November 31 May
2023 2022 2023
'000 '000 '000
Number of shares
Weighted average number of shares for the purposes of basic earnings per share 49,411 49,302 49,355
Weighted average dilutive effect of conditional share awards (note 10) 21 106 196
Weighted average number of shares for the purposes of diluted earnings per 49,432 49,408 49,551
share
The calculation of basic and diluted headline earnings per share is based on
the following data:
Half year Half year Year
ended ended ended
30 November 30 November 31 May
2023 2022 2023
£m £m £m
Profit for the period attributable to equity shareholders 2.7 4.6 14.9
Add back:
Net finance cost in respect of the defined benefit pension scheme 0.2 0.2 0.3
Exceptional items (0.9) - -
Amortisation of acquired intangibles 0.3 0.1 0.4
Tax effect of the above 0.2 - (0.1)
Headline earnings 2.5 4.9 15.5
8. 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, and
the net consideration paid 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, brand and customer value 2.2
Property, plant and equipment 0.3
Trade and other receivables 0.3
Deferred tax liability (0.2)
2.6
Provisional goodwill 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 gross consideration 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 period ended 30 November 2023.
The following amounts have been recognised within the consolidated income
statement in respect of the acquisition made in the half year: revenue of
£3.6 million and operating loss before tax of £0.1 million.
Had the acquisition taken place at the start of the financial year, the
consolidated income statement would show revenue of £4.4 million and
operating loss before tax of £0.1 million.
9. Financial instruments
The Group's financial instruments comprise cash, bank overdrafts, invoice
discounting advances, lease liabilities, commodity derivatives and various
items such as receivables and payables, which arise from its operations. All
financial instruments in 2023 and 2022 were denominated in Sterling. There is
no significant foreign exchange risk in respect of these instruments.
The carrying amounts of all of the Group's financial instruments are measured
at amortised cost in the financial statements, with the exception of
derivative financial instruments being forward supply contracts. Derivative
financial instruments are measured at fair value subsequent to initial
recognition.
IFRS 13 (amended) 'Financial Instruments: Disclosures' requires disclosure of
financial instruments measured at fair value, grouped into Levels 1 to 3
below, based on the degree to which the fair value is observable:
• Level 1 fair value measurements are those derived from unadjusted
quoted prices in active markets for identical assets or liabilities;
• Level 2 fair value measurements are those derived from inputs,
other than quoted prices included within Level 1 above, that are observable
for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices); and
• Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
All of the Group's derivative financial instruments were classified as Level 2
in the current and prior periods. There were no transfers between levels in
both the current and prior periods.
The book and fair values of financial assets are as follows:
Total book and fair value 30 November 30 November 31 May
2023 2022 2023
£m £m £m
Trade and other receivables1 92.6 109.1 84.1
Financial assets carried at amortised cost: cash and cash equivalents 13.3 1.2 16.3
Financial assets carried at fair value: derivatives 0.2 0.4 0.2
Financial assets 106.1 110.7 100.6
1 Excludes prepayments.
The book and fair values of financial liabilities are as follows:
Total book and fair value 30 November 30 November 31 May
2023 2022 2023
£m £m £m
Financial liabilities carried at amortised cost:
Trade and other payables1 103.2 107.2 92.5
Lease liabilities repayable within one year 9.5 9.6 9.8
Financial liabilities carried at fair value: derivatives 0.1 0.2 0.1
112.8 117.0 102.4
Lease liabilities repayable after one year 18.1 21.6 20.0
Financial liabilities 130.9 138.6 122.4
1 Excludes social security and other taxes.
10. Share capital
Number Total
of shares £m
'000
Allotted and fully paid: ordinary shares of 25p each
Balance at 31 May 2022 49,134 12.3
Issue of shares (see below) 274 0.1
Balance at 30 November 2022 49,408 12.4
Issue of shares - -
Balance at 31 May 2023 49,408 12.4
Issue of shares (see below) 24 -
Balance at 30 November 2023 49,432 12.4
During the half year ended 30 November 2023, 23,564 shares (H1 2022: 273,800)
with an aggregate nominal value of £5,890 (H1 2022: £68,450) were issued
under the Company's conditional Performance Share Plan.
The maximum total number of ordinary shares that may vest in the future in
respect of conditional Performance Share Plan awards outstanding at 30
November 2023 amounted to 1,291,025 (H1 2022: 857,210) shares. These shares
will only be issued subject to satisfying certain performance criteria.
11. Post balance sheet events
On 9 January 2024 the Group entered into a 15-year lease, with a 12-year
tenant only break clause for a warehouse property. The balance sheet position
of the Group will increase by a right-of-use asset of £26.5 million and an
associated lease liability of £25.2 million.
2023 financial calendar
Interim dividend
paid
1 May 2024
Financial year
end
31 May 2024
Full year results announcement Early
August 2024
Publication of Annual Report and Accounts Late August 2024
Annual General
Meeting
26 September 2024
Final dividend
paid
Early December 2024
1 (#_ftnref1) Headline operating profit excludes exceptional items
(see note 4) 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.
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