REG - NWF Group PLC - Trading Update and Acquisition

NWFAnnouncement

22/12/2022 07:00

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RNS Number : 5453K  NWF Group PLC  22 December 2022

For release 7.00am Thursday 22 December 2022

NWF Group plc

 

NWF Group plc: Trading Update and Fuels acquisition

 

NWF Group plc ('NWF' the 'Company' or the 'Group'), the specialist distributor
of fuel, food and feed across the UK, today provides a trading update for the
six months ended 30 November 2022 (the "Period") and announces the acquisition
of Sweetfuels Limited.

Trading update

The Board is pleased to report that trading in the first half has been strong.
The Group's overall results for the Period were ahead of the prior year, with
all three divisions trading ahead of the Board's expectations.

Fuels:

Performance in the Period has been delivered by strong margins offsetting
lower year-on-year volumes. Warmer than usual weather over the Autumn months
saw reduced consumption of heating oil, as well as some deferral of purchases
in response to the increased cost. Oil prices have remained very volatile,
with Brent Crude starting the Period at $114 per barrel and ending at $83 per
barrel.

 

Food:

Trading has continued to be strong, with good storage capacity utilisation and
continued improvements in operating efficiency. Demand from customers has been
stable and service levels have remained high.

 

Feeds:

Performance momentum has remained very encouraging. Whilst volumes were a
little lower than the prior year as a result of good Autumn grazing
conditions, farmers have been focused on optimising feed rations to benefit
from a very positive milk price in the Period. Commodity prices remained
volatile across the first half and the business has been effective in passing
through inflationary cost increases.

 

Outlook

The Group has made a strong start to the current financial year, with the
seasonally more material winter months to come. As such the Board's full year
expectations are unchanged at this stage, save for the anticipated
contribution from the Sweetfuels acquisition, as set out below.

 

The first half has built on the strong performance in the prior year and we
continue to have confidence in the Group's prospects. We also continue to
target strategic development opportunities supported by our strong balance
sheet and banking facilities.

 

Acquisition

NWF is pleased to announce the acquisition of Sweetfuels Limited ("Sweetfuels"
or the "Acquisition") for a cash consideration of £10.0 million on a debt and
cash free basis.

 

Sweetfuels is a 20 million litre fuel distributor based in Faringdon,
Oxfordshire, supplying fuel to predominantly domestic customers across the
Cotswolds. The Acquisition further expands and infills NWF's geographic
coverage of its Fuels business within the UK and is aligned to the Group's
development strategy of consolidating the highly fragmented fuels market
whilst expanding its existing geographical footprint. The acquisition is
expected to be immediately earnings enhancing to the Group.

 

The Group will implement its proven post-acquisition integration plan,
retaining the local brand and customer facing parts of the business whilst
centralising suppport services. In the 12 months to 31 August 2021, Sweetfuels
generated EBITDA of £1.3 million, profit before tax of £1.2 million and had
net assets of £2.8 million.

 

The total consideration is £14.3 million which includes £4.3 million of
adjustments for surplus cash and normalised working capital. The net
consideration is therefore £10.0 million which will be funded from the
Group's existing financial resources. The Group reported net cash of £9.0m
(excluding IFRS16 lease liabilities) as at its financial year ended 31 May
2022, together with substantial bank facilities to fund investment in its
development opportunities.

 

 

Richard Whiting, Chief Executive of NWF Group plc, commented:

"We are delighted with our performance in the first half and to announce the
acquisition of Sweetfuels which adds a 26(th) depot to our UK footprint in an
attractive new geography for NWF. We have a strong platform for continued
growth as we leverage the benefits from the further expansion of our growing
network.

 

"The industry remains highly fragmented, with many small operators, which
provides us with further opportunities to consolidate the market and increase
our market share. Our pipeline of acquisition prospects remains healthy and
this remains a focus for our development activity."

 

 

Information for investors, including analyst consensus forecasts, can be found
on the Group's website at www.nwf.co.uk.

 

 Richard Whiting, Chief Executive       Reg Hoare / Catherine Chapman  Mike Bell / Ed Allsopp
 Chris Belsham, Group Finance Director

 NWF Group plc                          MHP                            Peel Hunt LLP
                                                                       (Nominated Adviser and broker)
 Tel: 01829 260 260                     Tel: 020 3128 8339             Tel: 020 7418 8900

 

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