TIDMNICL
RNS Number : 8298T
Nichols PLC
27 July 2022
27 July 2022 Nichols Plc
2022 INTERIM RESULTS
Encouraging revenue and earnings growth as Out of Home recovers
from the pandemic
Nichols plc ('Nichols' or the 'Group'), the diversified soft
drinks Group, announces its unaudited Interim Results for the half
year ended 30 June 2022 (the 'period').
Half year Half year
ended ended Movement
30 June 2022 30 June 2021
GBPm GBPm
-------------- -------------- -----------
Group Revenue 80.2 67.4 +19.1%
-------------- -------------- -----------
Adjusted Operating Profit
1 11.2 9.0 +24.2%
----------------------------- -------------- -------------- -----------
Operating Profit 10.0 8.8 +14.6%
----------------------------- -------------- -------------- -----------
Adjusted Profit Before
Tax (PBT) 1 11.3 8.9 +26.7%
-------------- -------------- -----------
Profit Before Tax (PBT) 10.1 8.6 +17.0%
-------------- -------------- -----------
Adjusted PBT Margin 1 14.0% 13.2% +0.8ppts
-------------- -------------- -----------
PBT Margin 12.6% 12.8% (0.2ppts)
-------------- -------------- -----------
EBITDA 2 12.4 11.2 +10.6%
-------------- -------------- -----------
Adjusted Earnings per Share
(basic) 1 24.80p 19.52p +27.0%
-------------- -------------- -----------
Earnings per Share (basic) 22.22p 18.93p +17.4%
-------------- -------------- -----------
Cash and Cash Equivalents
3 49.2 56.7 (13.2%)
-------------- -------------- -----------
Return on capital employed
4 25.2% 14.6% +10.6%
-------------- -------------- -----------
Interim Dividend 12.4p 9.8p +26.5%
----------------------------- -------------- -------------- -----------
-- Vimto Brand value in the UK +5.7%(5)
o Vimto continues to outperform the dilutes market, by
+9.1%(5)
-- UK revenues increased by 29.3% to GBP62.6m (H1 2021: GBP48.4m)
o UK Packaged route to market volume flat versus UK soft drinks
down 4.3% as consumer spending slows
o Out of Home (OoH) continues to recover from the pandemic, with
revenues +131.9%
-- Strategic review of OoH progressing
-- I nternational revenues -7.2% to GBP17.6m (H1 2021: GBP19.0m), (Q2 +4%)
o Middle East phasing of shipments largely weighted to H2
-- 'In-market' volume of cordial Oct to Apr, +10%, post completion of marketing investment
o Continued progress in Africa, +2.0%
-- Q2 +11%, Q1 -4% impacted by national driver industrial action in Spain
o US shipments constrained through 2022 due to ongoing container
shortages
-- Gross margin 42.8% (H1 2021: 44.4%)
o Higher proportion of lower margin UK carbonate revenues as OoH
recovers
-- Exceptional charge of GBP1.2m largely relating to Operational Change Programme
o Transfer of Dilutes contract manufacturing successfully
completed
-- Strong cash and cash equivalents at GBP49.2m (31 December 2021: GBP56.7m)
o Completion of the Group's treasury share buyback programme (H1
2022 spend GBP5.5m)
-- Facilitates the Group's SAYE Option Scheme and/or Long-Term Incentive Plan
o Renewed post pandemic working capital investment, net GBP5.9m
outflow
-- Interim dividend of 12.4p, +26.5% (H1 2021: 9.8p)
-- 2022 Group expectations(6) remain unchanged
o Significant and accelerating inflationary pressures,
particularly ingredient and packaging costs
o Customer, supplier and operational mitigation actions
underway
1 Excluding Exceptional items of GBP1.2m (H1 2021: GBP0.3m)
2 EBITDA is the statutory profit before tax, interest,
depreciation, and amortisation
3 The comparison is to 31 December 2021. All other comparatives
compare to the six months ending 30 June 2021 unless otherwise
stated
4 Return on Capital Employed is the rolling 12 months adjusted
operating profit as a percentage of the average period-end capital
employed, excluding the effect of Goodwill impairment
5 Source: Nielsen IQ RMS data for the Total Soft Drinks category
for the YTD ending 18 June 2022 for the GB Total Coverage
market
6 FY22 expectations refers to a Group compiled market consensus
of adjusted PBT GBP25.2m
John Nichols, Non-Executive Chairman, commented:
"I'm pleased to report an encouraging financial performance in
the first half of the year with 27% increases to both Adjusted
PBT(1) and the half year dividend. In the UK, the Vimto brand
continues to outperform the broader squash market, and the Group's
Out of Home route to market experienced good growth as the wider
leisure sector continues to recover from the impact of the
pandemic. After some disruption to shipments affecting our
International business in Q1, I am pleased to report a recovery in
Q2 which has so far continued into the second half of the year.
Whilst the Group is not immune to the significant and
accelerating inflationary pressures impacting the consumer and the
soft drinks market, we have taken swift mitigating actions where
possible and the Group's Adjusted PBT(1) expectations(2) for the
full year remain unchanged. The Board remains mindful of the
potential earnings impact of continued inflation into FY23 and
beyond. We have a long-term track record of growth, a proven,
diversified strategy, and a quality range of brands. All of this is
underpinned by a strong balance sheet. As a result, the Board
remains confident that the Group is well positioned to deliver its
long-term growth plans."
1 Excluding Exceptional items of GBP1.2m (H1 2021: GBP0.3m)
2 FY22 expectations refers to a Group compiled market consensus
of adjusted PBT GBP25.2m
Contacts
Andrew Milne, Group Chief Executive Officer
David Rattigan, Group Chief Financial Officer
Nichols plc
Telephone: 0192 522 2222
Website: www.nicholsplc.co.uk
Alex Brennan / Hattie Dreyfus Steve Pearce / Rachel Hayes
Hudson Sandler Singer Capital Markets (NOMAD
& Broker)
Telephone: 0207 796 4133 Telephone: 0207 496 3000
Email: nichols@hudsonsandler.com Website: www.singercm.com
Notes to Editors:
Nichols plc is an international diversified soft drinks business
with sales in over 73 countries, selling products in both the Still
and Carbonate categories. The Group is home to the iconic Vimto
brand which is popular in the UK and around the world, particularly
in the Middle East and Africa. Other brands in its portfolio
include SLUSH PUPPiE, Feel Good, Starslush, ICEE, Levi Roots and
Sunkist.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the company's obligations under Article 17 of MAR.
Executive Review
Revenue
The Board is pleased to report an encouraging half year
performance with Group revenues of GBP80.2m, an increase of 19.1%
compared to the prior year (H1 2021: GBP67.4m).
The Still and Carbonate product segments achieved revenue growth
of 4.9% (to GBP37.3m) and 34.9% (to GBP42.9m) respectively, driven
largely by a strong UK OoH recovery.
UK revenues increased by 29.3% to GBP62.6m (H1 2021:
GBP48.4m).
Within the UK Packaged route to market, revenues increased by
5.1%.
The UK soft drinks industry is experiencing a period of
significant and accelerating ingredient, packaging, and
distribution inflation and overall market volumes are down 4.3%(1)
. Our UK Packaged volumes were largely flat in the period versus
last year, driven by the market out performance of the Vimto brand
(in both value and volume terms) across both the Dilutes and Ready
to Drink ("RTD") subcategories, as well as strong growth for both
our Levi Roots and Feel Good brands.
Our UK OoH route to market continues to recover from the
two-year pandemic, and experienced significant growth of 131.9%
versus the prior period, which was impacted by lockdown
restrictions. H1 2022 revenues are now ahead of those experienced
in H1 2019, although 2019 revenues exclude the full roll out of the
ICEE brand into cinemas (through Q4 2019 and Q1 2020). As
previously advised, the Board commenced a strategic review of the
Group's OoH route to market. The review is progressing and the
Board expects to report on its findings at the end of this
financial year.
International revenues fell by 7.2% to GBP17.6m (H1 2021:
GBP19.0m), as various markets were impacted by logistics
challenges, particularly in Q1, and the phasing of shipments
between the first and second half of the year.
Middle East revenues in the period fell by 18.5% to GBP4.2m (H1
2021: GBP5.1m) primarily due to the phasing of shipments between
the first and second half of the year. The underlying performance
in the Middle East remains very encouraging with in-market volumes
of cordial up 10% for the period from October 2021 to April 2022.
African revenue growth was up 2.0% to GBP10.4m (H1 2021: GBP10.2m)
for the period, recovering strongly in Q2 (+11%) from the
challenges experienced in Q1 (-4%) when shipment timings were
severely impacted towards the end of the quarter by national driver
industrial action in Spain. Rest of World sales (largely Europe and
the US) fell by 16.8% to GBP3.1m (H1 2021 GBP3.7m). Whilst the
Group continued to see progress across Europe (+18.6%), its US
sales remain severely constrained (-54.1%) by a shortage of
shipping containers available for trans-Atlantic routes and this
situation is expected to continue for the remainder of this
year.
The impact of movements in foreign exchange rates on revenue
year-on-year was immaterial, at approximately GBP0.2m
favourable.
Gross Profit
Gross profit of GBP34.4m was GBP4.5m higher than H1 2021
(GBP29.9m) and 1.6 percentage points lower at 42.8%. The reduction
in gross margin percentage was largely a result of increased lower
margin carbonate revenues in H1 2022 versus H1 2021, as OoH opened
up fully post the pandemic.
Of the GBP4.5m improvement, approximately GBP4.2m is due to the
net volume effect of increased revenues versus the prior period.
The remaining GBP0.3m is the year-on-year effect of the marketing
investment in the Middle East.
The Group is experiencing significant ingredient and packaging
inflation and, whilst ongoing mitigation actions have provided
relief in the first half of the year, inflationary pressures
continue to accelerate. The Group continues to work with its
customers and suppliers across the whole of the supply chain to
identify the optimal balance of mitigation actions and price
recovery.
Distribution Expenses
Distribution expenses within the Group are those associated with
the UK Packaged route to market, and for OoH, the distribution
costs incurred from factory to depot. Final leg distribution costs
within OoH are reported within Administrative Expenses.
1 Nielsen IQ RMS data for the Total Soft Drinks category for the
YTD ending 18 June 2022 for the GB Total Coverage market
Distribution expenses increased by 9.6% to GBP4.7m (H1 2021:
GBP4.2m) due to a combination of higher trading volumes, in
particular OoH, and significant inflationary pressure experienced
in H2 2021. The Group entered into a new 5-year distribution
arrangement in H2 2021 that built significant additional capacity,
given the Group's growth plans, and also provided a platform for
future efficiency opportunities. Service levels have now stabilised
following the significant supply chain disruption experienced in H2
2021 across the wider UK supply chain.
Administrative Expenses
Administrative Expenses, excluding exceptional items, totalled
GBP18.5m (H1 2021: GBP16.7m), an increase of GBP1.8m or 10.9%.
Following the pandemic, the Group's investment in OoH support
teams returned to more normalised levels, increasing by GBP0.9m
versus the prior period. Given the growth opportunities in-situ,
the Group has also increased investment in its International and UK
Packaged commercial and operational capabilities by GBP0.5m.
The Group continued to further invest in marketing following the
significant increase in spend through 2021, with costs up GBP0.2m
versus the prior period (full year +GBP1.9m versus 2020, H1 2021
+GBP1.2m versus H1 2020), building successfully on its 'Find Your
Different' campaign.
The Group reward system incorporates retention levers and these
along with this year's accrued bonus charge increased costs by
GBP0.6m versus H1 2021. Additionally the Group had a positive
foreign exchange movement year-on-year of GBP0.5m (H1 2022: GBPnil
net of forward currency contracts, H1 2021: GBP0.5m loss).
Exceptional Costs
The Group has incurred GBP1.2m of exceptional costs during the
year (H1 2021: GBP0.3m).
In Q4 2020, the Group commenced a review of its UK operational
supply chain. As a result of the review, a strategic decision was
taken to move Dilutes production to a new contract manufacturer,
which was successfully completed in the period. This decision was
taken in order to provide additional manufacturing capacity, whilst
taking advantage of higher speed lines and more efficient bottling
processes. Significant costs were incurred during H1 in making this
change, including additional storage capacity, new systems,
restructuring costs and legal fees. Given the exceptional nature
and scale of this change, the costs incurred have been treated as
exceptional within these financial statements in order to provide a
better understanding of the Group's underlying trading
performance.
In previous annual reports, the Group reported a contingent
liability in respect of historic contracts with some of its senior
management, relating to incentive schemes which were designed to
motivate, retain and engage those key employees. HMRC were of the
view that the arrangements should have been taxed as employment
income, which the Group and its advisors had previously disputed.
During FY21, a tribunal was convened to consider the dispute of the
Group's scheme as well as similar schemes operated by other
companies. The tribunal found that the arrangements should have
been taxed as employment income. As at 31 December 2021, the Group
recognised a net liability of GBP2.6m in relation to this ruling,
being a reasonable estimate of the final outcome, including the
Group's additional tax liability, interest costs and amounts
expected to be recovered. There has been no update or change to
this key judgement as at the half year. During the period, there
have been legal costs of GBP54k incurred in relation to this
matter.
As signalled in the latest Annual Report, the Group commenced
its full strategic review into the OoH route to market during the
period. During H1, there have been costs of GBP48k incurred in
relation to this review, with further costs expected in H2 2022.
The review is progressing and the Board expects to report on its
findings at the end of this financial year.
Operating Profit
Adjusted Operating Profit of GBP11.2m, pre-exceptional items,
was up GBP2.2m, a 24.2% increase on the prior year (H1 2021:
GBP9.0m). Operating profit of GBP10.0m (H1 2021: GBP8.8m) is after
charging exceptional items during the period.
The Group has a number of forward currency contracts in place to
mitigate the impact of fluctuations in the Euro and Dollar. The
foreign exchange impact, net of forward currency contracts, during
the current year is GBPnil (2021 H1: GBP0.5m loss).
Finance Costs
Net finance income of GBP0.1m (H1 2021 net finance cost:
GBP0.1m) largely as a result of a strengthening of the Group's
pension surplus during the year.
Profit before tax and tax rate
Adjusted profit before tax, pre-exceptional items, increased by
26.7% to GBP11.3m (H1 2021: GBP8.9m). The tax charge on adjusted
profit before tax for the period of GBP2.2m (H1 2021: GBP1.7m)
represents an effective tax rate of 19.5% (H1 2021: 19%). Reported
profit before tax was GBP10.1m, an increase of 17.0% compared to
the prior year (H1 2021: GBP8.6m).
Balance Sheet and Cash and Cash Equivalents
The continued strength of the Group's closing balance sheet
reflects its diversified routes to market and asset light
model.
Cash and cash equivalents at the end of the period remained
strong at GBP49.2m (31 December 2021: GBP56.7m, H1 2021:
GBP47.4m).
The Group completed the treasury share buyback programme in H1,
spending GBP5.5m in order to facilitate future servicing of the
Group's SAYE Option Scheme and/or Long-Term Incentive Plan .
As expected, following the full re-opening of OoH outlets this
year, the Group has seen a re-investment into working capital. The
Group's debtors and inventories are GBP8.0m higher than at the year
end, offset by an increase of GBP2.1m in creditors as OoH volumes
in particular increased. Capital expenditure in the period is
GBP0.9m (H1 2021: GBP0.6m).
Inventory levels have also been impacted by both higher
ingredient and packaging costs and the additional stock holding
introduced as contingency for the transfer of Dilutes contract
manufacturing, which was successfully completed in the first half
of the year.
The Group's current Return on Capital Employed is 25.2%(1) (H1
2021: 14.6%).
Earnings per share
Total adjusted basic EPS increased to 24.80 pence (H1 2021:
19.52p) with basic EPS at 22.22 pence (H1 2021: 18.93p). On an
adjusted basis, diluted EPS was 24.77 pence (H1 2021: 19.49p).
Dividend
In line with the Group's dividend policy, dividend cover is
broadly 2x the adjusted earnings of the Group. As a result, the
interim dividend for 2022 will be 12.4p per share, to be paid on 9
September 2022 with a record date of 5 August 2022.
Pensions
The Group operates two employee benefit plans, a defined benefit
plan that provides benefits based on final salary, which is now
closed to new members, and a defined contribution group personal
plan. At 30 June 2022, the Group recognised a surplus on its UK
defined benefit scheme of GBP6.6m (31 December 2021: surplus
GBP5.3m).
Outlook
Whilst the Group is not immune to the significant and
accelerating inflationary pressures impacting the consumer and the
soft drinks market, we have taken swift mitigating actions where
possible and the Group's Adjusted PBT expectations for the full
year remain unchanged. The Board remains mindful of the potential
earnings impact of continued inflation into FY23 and beyond. We
have a long-term track record of growth, a proven, diversified
strategy, and a quality range of brands. All of this is underpinned
by a strong balance sheet. As a result, the Board remains confident
that the Group is well positioned to deliver its long-term growth
plans.
Andrew Milne
Chief Executive Officer
David Rattigan
Chief Financial Officer
27 July 2022
1 Return on Capital Employed is the rolling 12 months adjusted
operating profit as a percentage of the average period-end capital
employed, excluding the effect of Goodwill impairment
CONSOLIDATED INCOME STATEMENT
Unaudited
Unaudited Half year Audited
Half year to Year ended
to 30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 80,232 67,392 144,328
Cost of sales (45,880) (37,448) (79,153)
---------------------------------------- ------------ ----------- -------------
Gross profit 34,352 29,944 65,175
Distribution expenses (4,651) (4,244) (9,129)
Administrative expenses (19,667) (16,945) (73,601)
---------------------------------------- ------------ ----------- -------------
Operating profit/(loss) 10,034 8,755 (17,555)
Finance income 126 24 57
Finance expenses (63) (149) (158)
---------------------------------------- ------------ ----------- -------------
Profit/(loss) before taxation 10,097 8,630 (17,656)
Taxation (1,969) (1,640) (4,512)
---------------------------------------- ------------ ----------- -------------
Profit/(loss) for the period 8,128 6,990 (22,168)
---------------------------------------- ------------ ----------- -------------
Earnings/(loss) per share (basic) 22.22p 18.93p (60.04p)
Earnings/(loss) per share (diluted) 22.19p 18.91p (60.04p)
Adjusted for exceptional items
Operating profit/(loss) 10,034 8,755 (17,555)
Exceptional items 1,173 267 39,477
---------------------------------------- ------------ ----------- -------------
Adjusted operating profit 11,207 9,022 21,922
---------------------------------------- ------------ ----------- -------------
Profit/(loss) before taxation 10,097 8,630 (17,656)
Exceptional items 1,173 267 39,477
---------------------------------------- ------------ ----------- -------------
Adjusted profit before taxation 11,270 8,897 21,821
---------------------------------------- ------------ ----------- -------------
Adjusted earnings per share (basic) 24.80p 19.52p 46.15p
Adjusted earnings per share (diluted) 24.77p 19.49p 46.09p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited
Unaudited Half year Audited
Half year to Year ended
to 30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
Profit/(loss) for the financial
period 8,128 6,990 (22,168)
Items that will not be classified
subsequently to profit or loss:
Re-measurement of net defined
benefit liability 910 3,176 4,083
Deferred taxation on pension obligations
and employee benefits (228) (603) (962)
Other comprehensive income for
the period 682 2,573 3,121
Total comprehensive income/(expense)
for the period 8,810 9,563 (19,047)
------------------------------------------- ------------ ----------- -------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
ASSETS GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 16,073 18,706 17,099
Goodwill - 36,244 -
Intangibles 5,226 5,866 5,546
Pension surplus 6,621 3,925 5,276
-------------------------------- ---------- ---------- -------------
Total non-current assets 27,920 64,741 27,921
Current assets
Inventories 14,751 6,563 9,706
Trade and other receivables 38,548 36,917 36,124
Corporation tax receivable 1,017 1,062 743
Cash and cash equivalents 49,167 47,427 56,674
-------------------------------- ---------- ---------- -------------
Total current assets 103,483 91,969 103,247
-------------------------------- ---------- ---------- -------------
Total assets 131,403 156,710 131,168
-------------------------------- ---------- ---------- -------------
LIABILITIES
Current liabilities
Trade and other payables 30,193 25,860 28,791
Provisions 4,242 - 4,242
Total current liabilities 34,435 25,860 33,033
Non-current liabilities
Other payables 1,953 2,724 1,954
Deferred tax liabilities 3,307 2,024 3,155
---------- ---------- -------------
Total non-current liabilities 5,260 4,748 5,109
-------------------------------- ---------- ---------- -------------
Total liabilities 39,695 30,608 38,142
-------------------------------- ---------- ---------- -------------
Net assets 91,708 126,102 93,026
-------------------------------- ---------- ---------- -------------
EQUITY
Share capital 3,697 3,697 3,697
Share premium reserve 3,255 3,255 3,255
Capital redemption reserve 1,209 1,209 1,209
Other reserves 943 306 676
Retained earnings 82,604 117,635 84,189
Total equity 91,708 126,102 93,026
-------------------------------- ---------- ---------- -------------
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited
Half year Unaudited Audited
to Half year to Year ended
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Profit/(loss) for the financial
period 8,128 6,990 (22,168)
Adjustments for:
Depreciation and amortisation 2,318 2,464 4,969
Impairment losses on goodwill
and intangible assets - - 36,244
Loss on sale of property,
plant and equipment 61 8 63
Finance income (126) (24) (57)
Finance expense 63 149 158
Tax expense recognised in
the income statement 1,969 1,640 4,512
Increase in inventories (5,045) (642) (3,785)
Increase in trade and other
receivables (2,939) (7,774) (6,804)
Increase in trade and other
payables 2,110 4,457 7,429
Increase in provisions - - 4,242
Change in pension obligations (435) (402) (846)
Fair value loss/(gain) on
derivative financial instruments 515 - (178)
(1,509) (124) 45,947
Cash generated from operating
activities 6,619 6,866 23,779
Tax paid (2,319) (2,094) (3,878)
------------------------------------- -------- --------- -------- -------- ---------- ---------
Net cash generated from
operating activities 4,300 4,772 19,901
Cash flows from investing
activities
Finance income 126 24 57
Proceeds from sale of property,
plant and equipment - - 2
Acquisition of property,
plant and equipment (913) (632) (1,239)
Payment of contingent consideration
(note 8) (71) (67) (67)
Net cash used in investing
activities (858) (675) (1,247)
Cash flows from financing
activities
Payment of lease liabilities (554) (715) (1,189)
Purchase of own shares (5,534) - (1,217)
Dividends paid (4,861) (3,249) (6,868)
------------------------------------- -------- --------- -------- -------- ---------- ---------
Net cash used in financing
activities (10,949) (3,964) (9,274)
Net (decrease)/increase in
cash and cash equivalents (7,507) 133 9,380
Cash and cash equivalents
at start of period 56,674 47,294 47,294
------------------------------------- -------- --------- -------- -------- ---------- ---------
Cash and cash equivalents
at end of period 49,167 47,427 56,674
------------------------------------- -------- --------- -------- -------- ---------- ---------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Called Share Capital Other Retained Total
up share premium redemption reserves earnings equity
capital reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2021 3,697 3,255 1,209 394 111,321 119,876
Dividends - - - - (3,249) (3,249)
Movement in ESOT - - - (2) - (2)
Debit to equity for
equity-settled share-based
payments - - - (86) - (86)
Transactions with
owners - - - (88) (3,249) (3,337)
----------------------------- ---------- --------- ------------ ---------- ---------- ---------
Profit for the period - - - - 6,990 6,990
Other comprehensive
income - - - - 2,573 2,573
----------------------------- ---------- --------- ------------ ---------- ---------- ---------
Total comprehensive
income - - - - 9,563 9,563
----------------------------- ---------- --------- ------------ ---------- ---------- ---------
At 30 June 2021 3,697 3,255 1,209 306 117,635 126,102
----------------------------- ---------- --------- ------------ ---------- ---------- ---------
Called Share Capital Other Retained Total
up share premium redemption reserves earnings equity
capital reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2022 3,697 3,255 1,209 676 84,189 93,026
Dividends - - - - (4,861) (4,861)
Movement in ESOT - - - (2) - (2)
Credit to equity for
equity-settled share-based
payments - - - 269 - 269
Purchase of own shares - - - - (5,534) (5,534)
Transactions with
owners - - - 267 (10,395) (10,128)
----------------------------- ---------- --------- ------------ ---------- ---------- ---------
Profit for the period - - - - 8,128 8,128
Other comprehensive
income - - - - 682 682
----------------------------- ---------- --------- ------------ ---------- ---------- ---------
Total comprehensive
income - - - - 8,810 8,810
----------------------------- ---------- --------- ------------ ---------- ---------- ---------
At 30 June 2022 3,697 3,255 1,209 943 82,604 91,708
----------------------------- ---------- --------- ------------ ---------- ---------- ---------
NOTES
1. Basis of Preparation
The financial information set out in this Interim Report does
not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. The Group's statutory financial statements for
the year ended 31 December 2021, prepared in accordance with
International Accounting Standards in conformity with the
requirements of the Companies Act 2006 have been filed with the
Registrar of Companies. The auditor's report on those financial
statements was unqualified and did not contain a statement under
Section 498 (2) or (3) of the Companies Act 2006.
These condensed consolidated interim financial statements for
the half year reporting period ended 30 June 2022 have been
prepared in accordance with IAS 34 'Interim financial reporting'
and also in accordance with the measurement and recognition
principles of UK adopted international accounting standards. The
Interim Report has not been audited or reviewed in accordance with
the International Standard on Review Engagement 2410 issued by the
Auditing Practices Board.
The interim financial statements were authorised for issue by
the Board of Directors on 27 July 2022.
2. Going Concern
In assessing the appropriateness of adopting the going concern
basis in preparing the Interim Report and financial statements, the
Directors have considered the current financial position of the
Group, its principal risks and uncertainties and the potential
impact of any further Covid-19 restrictions. The review performed
considers severe but plausible downside scenarios that could
reasonably arise within the period.
The estimated impacts of Covid-19 restrictions are primarily
based around our Out of Home market and the potential for future
lockdowns within the hospitality industry. Our modelling has
sensitised trading within this market to reflect varying degrees of
lockdowns with the most severe scenario assuming that some
restrictions will return in the second half of 2022 and into
2023.
During Q4 2021 and Q1 2022 the Group experienced a period of
significant inflation against which a number of mitigation actions
were introduced. These are largely evidenced in the H1 results
announced. Our modelling has sensitised the impacts of Russia's
invasion of Ukraine in February, in particular their impact on
global supply chains and macroeconomic inflationary factors.
In addition to the further impacts of Covid-19, alternative
scenarios, including the potential impact of key principal risks
from a financial and operational perspective, have been modelled
with the resulting implications considered. In all cases, the
business model remained robust. The Group's diversified business
model and strong balance sheet provide resilience against these
factors and the other principal risks that the Group is exposed to.
At the 30 June 2022 the Group had cash and cash equivalents of
GBP49.2m with no external bank borrowings.
On the basis of these reviews, the Directors consider the Group
has adequate resources to continue in operational existence for the
foreseeable future (being at least one year following the date of
approval of this Interim Report and financial statements) and,
accordingly, consider it appropriate to adopt the going concern
basis in preparing the financial statements.
3. Segmental Reporting
The Board considers the business from a product perspective and
reviews the Group's performance based on the reporting operating
segments identified below. There has been no change to the segments
during the period. Based on the nature of the products sold by the
Group, the types of customers and methods of distribution,
management consider reporting operating segments at the Still and
Carbonate level to be reasonable, particularly in light of market
research and industry data made available by Nielsen. Gross profit
is the measure used to assess the performance of each operating
segment.
Still Carbonate Group
GBP'000 GBP'000 GBP'000
Half year to 30 June 2022
Revenue 37,303 42,929 80,232
Gross Profit 18,679 15,673 34,352
Half year to 30 June 2021
Revenue 35,558 31,834 67,392
Gross Profit 18,572 11,372 29,944
Year ended 31 December 2021
Revenue 72,393 71,935 144,328
Gross Profit 37,980 27,195 65,175
A geographical split of revenue is provided below:
Half year Half year Year ended
to to 31 December
30 June 30 June 2021
2022 2021
GBP'000 GBP'000 GBP'000
Geographical split of revenue
Middle East 4,176 5,126 9,765
Africa 10,372 10,164 16,410
Rest of the World 3,059 3,675 6,523
----------- ----------- --------------
Total exports 17,607 18,965 32,698
United Kingdom 62,625 48,427 111,630
----------- ----------- --------------
Total revenue 80,232 67,392 144,328
----------- ----------- --------------
4. Exceptional items
Half year Half year Year ended
to to 31 December
30 June 30 June 2021
2022 2021
GBP'000 GBP'000 GBP'000
Review of UK packaged supply chain 1,071 267 620
Historic incentive scheme 54 - 2,613
Strategic review of Out of Home business 48 - -
Impairment of goodwill and intangibles - - 36,244
1,173 267 39,477
----------- ----------- -------------
In Q4 2020, the Group commenced a review of its UK operational
supply chain. As a result of the review, a strategic decision was
taken to move Dilutes production to a new contract manufacturer,
which was successfully completed in the period. This decision was
taken in order to provide additional manufacturing capacity, whilst
taking advantage of higher speed lines and more efficient bottling
processes. Significant costs were incurred during H1 in making this
change, including additional storage capacity, new systems,
restructuring costs and legal fees. Given the exceptional nature
and scale of this change, the costs incurred have been treated as
exceptional within these financial statements in order to provide a
better understanding of the Group's underlying trading
performance.
In previous annual reports, the Group reported a contingent
liability in respect of historic contracts with some of its senior
management, relating to incentive schemes which were designed to
motivate, retain and engage those key employees. HMRC were of the
view that the arrangements should have been taxed as employment
income, which the Group and its advisors had previously disputed.
During FY21, a tribunal was convened to consider the dispute of the
Group's scheme as well as similar schemes operated by other
companies. The tribunal found that the arrangements should have
been taxed as employment income. As at 31 December 2021, the Group
recognised a net liability of GBP2.6m in relation to this ruling,
being a reasonable estimate of the final outcome, including the
Group's additional tax liability, interest costs and amounts
expected to be recovered. There has been no update or change to
this key judgement as at the half year. During the period, there
have been legal costs of GBP54k incurred in relation to this
matter.
As signalled in the latest Annual Report, the Group commenced
its full strategic review into the OoH route to market during the
period. During H1, there have been costs of GBP48k incurred in
relation to this review, with further costs expected in H2 2022.
The review is progressing and the Board expects to report on its
findings at the end of this financial year.
Due to the one-off nature of these charges, the Board is
treating these items as exceptional costs and their impact has been
removed in all adjusted measures throughout this report.
5. Earnings Per Share
Basic earnings per share is calculated by dividing the profit
after tax for the period of the Group by the weighted average
number of ordinary shares in issue during the period. Diluted
earnings per share is calculated by adjusting the weighted average
number of ordinary shares in issue assuming the conversion of all
potentially dilutive ordinary shares.
The earnings per share calculations for the period are set out
in the table below:
Weighted average
Earnings number of shares Earnings per
share
GBP'000
30 June 2022
Basic earnings per share 8,128 36,576,987 22.22p
Dilutive effect of share options 48,451
Diluted earnings per share 8,128 36,625,438 22.19p
Adjusted earnings per share before exceptional items has been
presented in addition to the earnings per share as defined in IAS
33 Earnings per share, since in the opinion of the Directors, this
provides shareholders with a more meaningful representation of the
earnings derived from the Group's operations. It can be reconciled
from the basic earnings per share as follows:
Weighted average
Earnings number of shares Earnings per
share
GBP'000
30 June 2022
Basic earnings per share 8,128 36,576,987 22.22p
Exceptional items after taxation 944
Adjusted basic earnings per
share 9,072 36,576,987 24.80p
Diluted effect of share options 48,451
Adjusted diluted earnings per
share 9,072 36,625,438 24.77p
6. Non-current Assets
Property,
Plant
& Equipment Intangibles
GBP'000 GBP'000
Cost
At 1 January 2022 34,088 9,760
Additions 1,033 -
Disposals (219) -
At 30 June 2022 34,902 9,760
------------- --------------
Depreciation and Amortisation
At 1 January 2022 16,989 4,214
Charge for the period 1,998 320
On disposals (158) -
At 30 June 2022 18,829 4,534
------- ------
Net book value
At 1 January 2022 17,099 5,546
At 30 June 2022 16,073 5,226
------- ------
7. Defined Benefit Pension Scheme
The Group operates a defined benefit plan in the UK. A full
actuarial valuation was carried out on 5 April 2020 and updated at
30 June 2022 by an independent qualified actuary.
A summary of the pension surplus position is provided below:
Pension surplus GBP'000
At 1 January 2022 5,276
Current service cost (26)
Net interest income 50
Actuarial gains 910
Contributions by employer 411
At 30 June 2022 6,621
--------
8. Contingent consideration
Within the Statement of Cash Flows there is a GBP0.1m (H1 2021:
GBP0.1m) cash outflow in the period in relation to the payment of
contingent consideration. These payments relate to contingent
consideration paid for acquisitions made in previous financial
years.
9. Provisions
In previous annual reports, the Group reported a contingent
liability in respect of historic contracts with some of its senior
management relating to incentive schemes which were designed to
motivate, retain and engage those key employees. HMRC were of the
view that the arrangements should have been taxed as employment
income, which the Group and its advisors had previously disputed.
During the previous year, a tribunal was convened to consider the
dispute of the Group's scheme as well as similar schemes operated
by other companies. The tribunal found that the arrangements should
have been taxed as employment income.
Accordingly, as at 30 June 2022, the Group has recognised a
provision of GBP4.2m (31 December 2021: GBP4.2m, 30 June 2021: nil)
in relation to this ruling, being the Group's additional tax
liability and interest costs.
Included within other receivables is a reimbursement asset in
respect of these historic contracts.
There has been no update or change to this key judgement as at
the half year.
10. Dividends
Dividend cover is broadly 2x adjusted earnings of the Group. As
a result, the interim dividend for 2022 will be 12.4p per share to
be paid on 9 September 2022 with a record date of 5 August
2022.
Cautionary Statement
This Interim Report has been prepared solely to provide
additional information to shareholders to assess the Group's
strategies and the potential for those strategies to succeed. The
Interim Report should not be relied on by any other party or for
any other purpose.
-Ends-
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