TIDMNICL
RNS Number : 8957F
Nichols PLC
21 July 2021
21 July 2021
Nichols plc
2021 INTERIM RESULTS
Strong performance with robust growth
Nichols plc ('Nichols' or the 'Group'), the diversified soft
drinks Group, announces its unaudited interim results for the half
year ended 30 June 2021 (the 'period').
Half year Half year
ended ended Movement
30 June 2021 30 June 2020
GBPm GBPm
-------------- -------------- -----------
Group Revenue 67.4 59.2 +13.8%
-------------- -------------- -----------
Adjusted Operating Profit
1 9.0 6.8 +32.9%
------------------------------ -------------- -------------- -----------
Operating Profit 8.8 3.0 +195.1%
------------------------------ -------------- -------------- -----------
Adjusted Profit Before
Tax (PBT) 1 8.9 6.8 +31.6%
-------------- -------------- -----------
Profit Before Tax (PBT) 8.6 2.9 +193.4%
-------------- -------------- -----------
Adjusted PBT Margin 1 13.2% 11.5% +1.7ppts
-------------- -------------- -----------
PBT Margin 12.8% 4.9% +7.9ppts
-------------- -------------- -----------
EBITDA 2 11.2 9.3 +20.4%
-------------- -------------- -----------
Adjusted Earnings per Share
(basic) 1 19.52p 14.94p +30.7%
-------------- -------------- -----------
Earnings per Share (basic) 18.93p 4.59p +312.4%
-------------- -------------- -----------
Cash and Cash Equivalents(3) 47.4 47.3 +0.2%
-------------- -------------- -----------
Interim Dividend 9.8p 28.0p (4) (65.0%)
------------------------------ -------------- -------------- -----------
-- Vimto Brand Value in the UK +2.7% YTD with Vimto Dilutes significantly
outperforming the market(5)
-- UK revenue up +5.5% with Out of Home ("OoH") revenues broadly in line
with prior year following encouraging Q2 performance
-- Vimto international growth of +42.3% versus prior year
-- Vimto 'in market' Middle East volumes remained resilient through
Ramadan with full year 'in market' volumes expected to remain in
line with pre-Sweetened Beverage Tax levels
-- Vimto in Africa delivered strong revenue growth of +22.8%
-- Vimto continues to progress across the rest of the world, delivering
revenue growth of 49.3%
-- The business continues to invest in UK operational change in order
to ensure continued agility and growth given future prospects
-- Strong cash and cash equivalents at GBP47.4m (31 December 2020: GBP47.3m)
-- Interim dividend of 9.8p
-- 2021 Financial Guidance remains unchanged(6)
-- New long-term agreement signed with J & J Snack Foods Corp. to manufacture,
manage, distribute and sell the SLUSH PUPPiE brand across the UK,
Ireland and Europe
1 Excluding Exceptional items of GBP0.3m (H1 2020: GBP3.8m)
2 EBITDA is the statutory profit before tax, interest,
depreciation and amortisation
3 The comparison is to 31 December 2020. All other comparatives
compare to the six months ending 30 June 2020 unless otherwise
stated
4 Final dividend FY19 (28.0p) withdrawn. Same value paid as
interim dividend FY20
5 Nielsen Total Coverage Year to Date, 19 June 2021
6 FY21 Adjusted PBT of GBP18.9m (FY20 Actual GBP11.6m)
John Nichols, Non-Executive Chairman, commented:
"Our first and most important objective through the Covid-19
pandemic has been the continued safety and wellbeing of our
employees and customers. Throughout these challenging times, our
colleagues have consistently demonstrated their commitment to our
business and our customers, and I would again like to
wholeheartedly thank everyone for their support.
The continued strong performance of the Vimto brand, the Group's
robust balance sheet and our diversified business model has ensured
a resilient financial performance in the period with growth across
each of our reporting segments.
The UK Government's planned roadmap out of lockdown continues
and although at a more cautious pace than originally planned , the
Group's positive start to the year means that we remain confident
that it will achieve the Board's expectations for the year. Longer
term, the Board is currently assessing the impact of inflationary
pressures affecting logistics, labour, plastics and costs
associated with increasing environmental legislation."
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 / Elfie Kent Steve Pearce / Rachel Hayes
Hudson Sandler Singer Capital Markets (Nominated
Adviser)
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 Regulation (EU) No 596/2014.
Executive Review
Revenue
Despite exceptionally tough trading conditions, particularly in
the OoH route to market, and against very strong comparatives in
packaged routes to market, the Board is pleased to report a strong
half year performance with Group revenues of GBP67.4m, an increase
of 13.8% compared to the prior year (H1 2020: GBP59.2m), and
encouragingly with growth achieved across each of our reporting
segments.
The Still and Carbonate product segments achieved revenue growth
of 9.8% (to GBP35.6m) and 18.6% (to GBP31.8m) respectively, driven
by both strong UK and International Packaged performance.
The Vimto brand continues to perform strongly in all of its
markets. In the UK the Vimto brand value increased by 2.7%(1)
according to Nielson. In Africa, the Middle East, Europe and the US
we continued to see significant progress year on year, with
international revenues increasing 42.3% versus the prior year.
Driven by continued progress within the UK packaged route to
market, UK revenue increased by 5.5% to GBP48.4m (H1 2020:
GBP45.9m). UK packaged revenues improved by 5.0%, underpinned by
the strong performance of the Vimto brand, particularly within
Dilutes, where the brand's squash products significantly
outperformed the market(1) . Despite the strong H1 2020 comparative
(which included a very warm Spring and significant increases in
consumer buying as the UK entered its first lockdown), the Group
saw revenues increase 5.0% within UK retailers. Revenues within
Convenience, Delivered Wholesale and Cash and Carry channels were
broadly flat year on year, with both current and prior year periods
significantly subdued due to the impact of outlet closures.
Within our OoH route to market the Group has worked closely with
its partners to support the re-opening of the sector. Pleasingly,
we started to see significant numbers of outlets gradually open
through Q2, resulting in half year revenues broadly in line with
those of the prior year. Q2 revenues were 843.7% ahead of those in
the same quarter last year, when the UK was in a period of national
lockdown, and the Board believes there is a more stable outlook for
H2 given the success of the UK vaccination programme. Given the
break in the link between infection and hospitalisation, there is
now significant confidence that the re-opening of outlets will be
permanent.
Towards the end of the period, the Group was pleased to sign a
significant new agreement with J & J Snack Foods Corp for Vimto
Out of Home to revive the iconic SLUSH PUPPiE frozen drink brand in
the UK. The long-term agreement gives Vimto Out of Home, part of
Nichols plc, the rights to manufacture, manage, distribute and sell
the SLUSH PUPPiE brand across the UK, Ireland, and Europe. Using
its expertise as the UK's leading frozen beverage supplier, the
Group plans to refresh and relaunch the brand.
Sales across our international markets were up 42.3% at GBP19.0m
(H1 2020: GBP13.3m), with double digit growth in all markets.
Despite the ongoing pandemic, Middle East volumes performed
resiliently through Ramadan, and 'in market' volumes across the
Middle East are expected to be broadly flat through 2021. The
Group, alongside its local partner, continues to invest in
offsetting some of the pricing impact of the Sweetened Beverage Tax
("SBT"). In Africa, the strong growth seen in the prior year (7.4%)
has continued at the start of this year with revenues improving by
22.8% to GBP10.2m (H1 2020: GBP8.3m). Rest of World revenues
(largely Europe and the US) experienced growth of 49.3% to GBP3.7m
(H1 2020: GBP2.5m).
The impact of movements in foreign exchange rates on revenue
year on year was GBP0.2m adverse as Sterling strengthened against
the Euro and US Dollar.
Gross Profit
Gross profit at GBP29.9m was GBP5.4m higher than H1 2020
(GBP24.6m) and 2.9 percentage points higher at 44.4% (H1 2020:
41.5%) with progress seen in both the Still and Carbonate
segments.
Of the GBP5.4m improvement, approximately GBP2.7m is due to the
volume effect of increased revenues from our Packaged routes to
markets. Significant OoH stock write offs in H1 2020 provided an
additional GBP0.7m of gross profit year on year whilst the
balancing GBP2.0m is a net price/mix effect of improved
contribution from revenues into the Middle East and Africa
supported by a positive SBT comparison.
1 Nielsen Total Coverage Year to Date 19 June 2021
Across the Middle East we remain very pleased with the results
reported since the introduction of the SBT, with 'in market'
volumes expected to be broadly in line with levels prior to the
tax's introduction.
Distribution Expenses
Distribution expenses totalled GBP4.2m (H1 2020: GBP3.8m), an
increase of 11.5% versus the same period last year.
Although a significant proportion of the increase is volume
related, the Group experienced supply and price pressure across its
supply chains. Container availability for international shipments
has driven up prices and created trading challenges. In the UK,
Brexit and the tightening of IR35 legislation have created a
shortage of drivers, which, when combined with increasing fuel
costs, points to significant inflationary pressure over the coming
months.
Administration Expenses
Administration expenses, excluding exceptional items, totalled
GBP16.7m (H1 2020: GBP14.0m), an increase of GBP2.7m or 19.3%.
The Group has incurred a number of significant comparative
movements year on year which are highlighted below.
The Group recommenced its investment in marketing spend with the
TV and social media campaign 'Vimto, Find Your Different',
increasing comparative costs by GBP1.2m year on year.
In both 2019 and 2020 the Group had administrative credits of
GBP1.1m and GBP1.3m respectively following the release of
unrealised deferred consideration initially recognised at the
acquisition of both Adrian Mecklenburgh and Noisy North West. There
have been no adjustments in 2021. Of the GBP1.3m from 2020, GBP1.1m
was released in Q1 2020, therefore increasing comparative costs by
a further GBP1.1m.
The Group incurred a foreign exchange loss in the first half
year of GBP0.5m as a result of the strengthening of Sterling
against both the Euro and the US Dollar. This compares with a
GBP0.4m gain in H1 2020.
Throughout the pandemic the Group has placed a strong focus on
controlling overhead costs whilst ensuring the business is able to
'Build Back Better' as restrictions ease. This focus on reducing
discretionary spend remained in place at the start of this year
whilst recognising the changing environment and the increasing
easing of restrictions across the UK, resulting in net comparative
savings of GBP0.5m. This year on year saving largely relates to the
organisational changes implemented in H2 2020.
Exceptional Costs
As noted in the 2020 Annual Report and Accounts, during Q4 2020
the Group commenced a review of its UK packaged supply chain in
order to ensure continued agility and growth given future prospects
. This review has continued during the first half year resulting in
GBP0.3m of exceptional costs (project and contract development
costs) during the period with further costs expected during the
second half of 2021.
Exceptional costs in the first half of 2020 were GBP3.8m and
related to the non-cash impairment of the Group's goodwill and
intangible assets of its 'Feel Good" brand.
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.
Operating Profit
Adjusted Operating Profit of GBP9.0m was up GBP2.2m, a 32.9%
increase on the prior year (H1 2020: GBP6.8m). Operating profit of
GBP8.8m (H1 2020: GBP3.0m) is after charging exceptional items
during the period.
The strengthening of Sterling against the Euro and the US Dollar
during the period resulted in an overall foreign exchange loss to
operating profit in the year of GBP0.5m (2020 H1: GBP0.4m
gain).
Finance Costs
Net Finance costs of GBP0.1m (H1 2020: GBPnil) were broadly in
the line with the prior year.
Profit before tax and tax rate
Adjusted profit before tax increased by 31.6% to GBP8.9m (H1
2020: GBP6.8m). The tax charge on adjusted profit before tax for
the period of GBP1.7m (H1 2020: GBP1.2m) represents an effective
tax rate of 19% (H1 2020: 18%). Reported profit before tax was
GBP8.6m, an increase of 193.4% compared to the prior year (H1 2020:
GBP2.9m).
Balance Sheet and Cash and Cash Equivalents
Despite the impact of the pandemic on trading, cash and cash
equivalents at the end of the period remained strong at GBP47.4m
(H1 2020: GBP46.8m), broadly in line with the 2020 year end
position (GBP47.3m).
The continued strength of the Group's closing balance sheet
reflects its diversified routes to market and asset light model.
These attributes enable the Group to continue supporting its
stakeholders by:
-- Replacing old stock with new (GBP0.3m), free of charge for
its OoH customers following the second
lockdown as well as providing enhanced credit terms;
-- Continued full payment of taxes; and
-- Not participating in Government loan or payment deferral opportunities.
As expected, following the gradual re-opening of outlets in the
Q2, the Group has begun to see a re-investment into working capital
as the Group's debtors and inventories begin to return to 2019
levels. The Group's debtors and inventories are GBP8.4m higher than
at the year end, offset by an increase of GBP4.5m in creditors as
volumes have increased. The Group continues to focus on working
capital management and has seen very low capital expenditure in the
period of GBP0.6m (H1 2020: GBP1.9m). Increased investment is
expected during the second half as OoH re-opens fully.
Despite this working capital outflow, the Group was pleased to
generate Free Cash Flow of GBP3.4m (H1 2020: GBP6.7m).
Earnings per share
Total adjusted basic EPS increased to 19.52 pence (H1 2020:
14.94p) with basic EPS at 18.93 pence (H1 2020: 4.59p). On an
adjusted basis, diluted EPS was 19.49 pence (H1 2020: 14.93p).
Dividend
As disclosed in the Group's 2020 Annual Report, the Board
evolved the dividend policy to reflect the balance of shareholder
needs and the clear opportunities for growth that will exist in the
soft drinks market post the pandemic.
In line with the new policy, dividend cover is broadly 2x the
adjusted earnings of the Group. As a result, the interim dividend
for 2021 will be 9.8p per share to be paid on 10 September 2021
with a record date of 30 July 2021.
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 2021, the Group recognised a surplus on its UK
defined benefit scheme of GBP3.9m (31 December 2020: surplus
GBP0.3m).
During the start of 2021, the Group has agreed with the Trustees
a de-risking future funding plan for the defined benefit scheme.
The reinvestment to de-risked funds was largely completed in the
first half of 2021.
Outlook
The UK Government's planned roadmap out of lockdown continues
and although at a more cautious pace than originally planned , the
Group's positive start to the year means that we remain confident
that it will achieve the Board's expectations for the year. Longer
term, the Board is currently assessing the impact of inflationary
pressures affecting logistics, labour, plastics and costs
associated with increasing environmental legislation.
Andrew Milne
Chief Executive Officer
David Rattigan
Chief Financial Officer
21 July 2021
CONSOLIDATED INCOME STATEMENT
Unaudited
Unaudited Half year Audited
Half year to Year ended
to 30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 67,392 59,213 118,657
Cost of sales (37,448) (34,641) (69,021)
---------------------------------------- ------------ ----------- -------------
Gross profit 29,944 24,572 49,636
Distribution expenses (4,244) (3,806) (7,979)
Administrative expenses (16,945) (17,799) (35,077)
---------------------------------------- ------------ ----------- -------------
Operating profit 8,755 2,967 6,580
Finance income 24 113 150
Finance expenses (149) (139) (190)
---------------------------------------- ------------ ----------- -------------
Profit before taxation 8,630 2,941 6,540
Taxation (1,640) (1,244) (1,686)
---------------------------------------- ------------ ----------- -------------
Profit for the period 6,990 1,697 4,854
---------------------------------------- ------------ ----------- -------------
Earnings per share (basic) 18.93p 4.59p 13.14p
Earnings per share (diluted) 18.91p 4.59p 13.13p
Adjusted for exceptional items
Operating profit 8,755 2,967 6,580
Exceptional items 267 3,820 5,074
---------------------------------------- ------------ ----------- -------------
Adjusted operating profit 9,022 6,787 11,654
---------------------------------------- ------------ ----------- -------------
Profit before taxation 8,630 2,941 6,540
Exceptional items 267 3,820 5,074
---------------------------------------- ------------ ----------- -------------
Adjusted profit before taxation 8,897 6,761 11,614
---------------------------------------- ------------ ----------- -------------
Adjusted earnings per share (basic) 19.52p 14.94p 25.56p
Adjusted earnings per share (diluted) 19.49p 14.93p 25.54p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited
Unaudited Half year Audited
Half year to Year ended
to 30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
Profit for the financial period 6,990 1,697 4,854
Items that will not be classified
subsequently to profit or loss:
Re-measurement of net defined
benefit liability 3,176 (2,347) (155)
Deferred taxation on pension obligations
and employee benefits (603) 295 32
Other comprehensive income/(expense)
for the period 2,573 (2,052) (123)
Total comprehensive income/(expense)
for the period 9,563 (355) 4,731
------------------------------------------- ------------ ----------- -------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 June 30 June 31 December
2021 2020 2020
ASSETS GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 18,706 22,002 20,126
Goodwill 36,244 36,081 36,244
Intangibles 5,866 6,470 6,206
Deferred tax assets - 578 -
Pension surplus 3,925 - 347
----------------------------------- ---------- ---------- -------------
Total non-current assets 64,741 65,131 62,923
Current assets
Inventories 6,563 6,787 5,921
Trade and other receivables 37,979 33,745 29,814
Cash and cash equivalents 47,427 46,781 47,294
----------------------------------- ---------- ---------- -------------
Total current assets 91,969 87,313 83,029
----------------------------------- ---------- ---------- -------------
Total assets 156,710 152,444 145,952
----------------------------------- ---------- ---------- -------------
LIABILITIES
Current liabilities
Trade and other payables 25,860 20,746 21,669
Total current liabilities 25,860 20,746 21,669
Non-current liabilities
Other payables 2,724 3,073 2,922
Pension obligations and employee
benefits - 1,880 -
Deferred tax liabilities 2,024 1,701 1,485
---------- ---------- -------------
Total non-current liabilities 4,748 6,654 4,407
----------------------------------- ---------- ---------- -------------
Total liabilities 30,608 27,400 26,076
----------------------------------- ---------- ---------- -------------
Net assets 126,102 125,044 119,876
----------------------------------- ---------- ---------- -------------
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 306 310 394
Retained earnings 117,635 116,573 111,321
Total equity 126,102 125,044 119,876
----------------------------------- ---------- ---------- -------------
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 2020 3,697 3,255 1,209 253 116,928 125,342
Dividends - - - - - -
Movement in ESOT - - - 3 - 3
Credit to equity for
equity-settled share
based payments - - - 54 - 54
Transactions with owners - - - 57 - 57
-------------------------- ---------- --------- ------------ ---------- ---------- ---------
Profit for the period - - - - 1,697 1,697
Other comprehensive
expense - - - - (2,052) (2,052)
-------------------------- ---------- --------- ------------ ---------- ---------- ---------
Total comprehensive
expense - - - - (355) (355)
-------------------------- ---------- --------- ------------ ---------- ---------- ---------
At 30 June 2020 3,697 3,255 1,209 310 116,573 125,044
-------------------------- ---------- --------- ------------ ---------- ---------- ---------
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
-------------------------- ---------- --------- ------------ ---------- ---------- ---------
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
Half year to Half year to Year ended
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Profit for the financial
period 6,990 1,697 4,854
Adjustments for:
Depreciation and amortisation 2,464 2,434 4,971
Impairment losses on goodwill
and intangible assets - 3,820 3,820
Impairment losses on property,
plant and equipment - - 1,016
Loss on sale of property,
plant and equipment 8 58 71
Finance income (24) (113) (150)
Finance expense 149 139 190
Tax expense recognised in
the income statement 1,640 1,244 1,686
Change in inventories (642) 1,574 2,440
Change in trade and other
receivables (7,774) 4,659 9,220
Change in trade and other
payables 4,457 (1,677) (838)
Change in pension obligations (402) (720) (755)
(124) 11,418 21,671
Cash generated from operating
activities 6,866 13,115 26,525
Tax paid (2,094) (4,047) (5,017)
--------------------------------------- -------- -------- -------- -------- ---------- ---------
Net cash generated from operating
activities 4,772 9,068 21,508
Cash flows from investing
activities
Finance income 24 113 150
Proceeds from sale of property,
plant and equipment - - 35
Acquisition of property,
plant and equipment (632) (1,888) (2,701)
Acquisition of intangible
assets - - (170)
Payment of contingent consideration
(note 9) (67) (880) (880)
Net cash used in investing
activities (675) (2,655) (3,566)
Cash flows from financing
activities
Payment of lease liabilities (715) (576) (1,254)
Dividends paid (3,249) - (10,338)
--------------------------------------- -------- -------- -------- -------- ---------- ---------
Net cash used in financing
activities (3,964) (576) (11,592)
Net increase in cash and
cash equivalents 133 5,837 6,350
Cash and cash equivalents
at start of period 47,294 40,944 40,944
--------------------------------------- -------- -------- -------- -------- ---------- ---------
Cash and cash equivalents
at end of period 47,427 46,781 47,294
--------------------------------------- -------- -------- -------- -------- ---------- ---------
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 2020, 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 2021 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 21 July 2021.
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 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 OoH market and the length of time that lockdown
restrictions may be in place for 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 persist throughout the remainder of
2021, with OoH performance only beginning to return to pre COVID-19
levels during the second half of 2022.
In addition to the continued impact 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, combined with its strong cash
generation all provide resilience against these factors and the
other principal risks that the Group is exposed to. At the 30 June
2021 the Group had cash and cash equivalents of GBP47.4m 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. Impact of Covid-19 on Financial Statements
In light of the effects of Covid-19 and social distancing
measures on the Group's business and customers, the Directors have
considered the impact on the accounting judgements and estimates
within the financial statements. All commercial and operational
impacts of Covid-19 have been treated within the underlying results
and no Covid-19 impact has been treated as exceptional.
Expected credit loss provisions on the Group's trade receivables
have been reviewed in light of potential increased risk of bad
debt, particularly in relation to smaller independent
customers.
The Group has accessed the funds made available by the
Government under the Job Retention Scheme. This was used to
partially offset the payroll expense incurred for employees who
were furloughed. Through the first quarter of the year (Q1)
continued customer outlet closures meant that a number of our OoH
team were furloughed, all returning to work by the half year end.
The business has paid furloughed employees at 100% of salary
throughout the period and only furloughed employees where
reductions in workload have been deemed temporary due to Government
restrictions. The financial contribution made by the Government
from the scheme to Nichols was GBP0.7m during the period.
Our offices and depots have remained open in a Covid secure
manner throughout the year for wellbeing purposes or office
critical activities, but the vast majority of office-based
employees have worked effectively from home. High levels of service
have continued to be provided to all of our customers.
4. 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 2021
Revenue 35,558 31,834 67,392
Gross Profit 18,572 11,372 29,944
Half year to 30 June 2020
Revenue 32,381 26,832 59,213
Gross Profit 16,391 8,181 24,572
Year ended 31 December 2020
Revenue 65,688 52,969 118,657
Gross Profit 32,817 16,819 49,636
A geographical split of revenue is provided below:
Half year Half year Year ended
to to 31 December
30 June 30 June 2020
2021 2020
GBP'000 GBP'000 GBP'000
Geographical split of revenue
Middle East 5,126 2,596 7,309
Africa 10,164 8,274 14,010
Rest of the World 3,675 2,462 5,712
United Kingdom 48,427 45,881 91,626
----------- ----------- --------------
Total revenue 67,392 59,213 118,657
----------- ----------- --------------
5. Exceptional items
In order to allow a better understanding of the underlying
trading performance of the Group, items which by virtue of their
nature and size do not reflect the Group's underlying performance
have been reported as exceptional items within administrative
expenses. These items are as follows:
Half year Half year Year ended
to to 31 December
30 June 30 June 2020
2021 2020
GBP'000 GBP'000 GBP'000
Review of UK packaged supply chain 267 - 277
Impairment of goodwill and intangibles - 3,820 3,820
Redundancy costs - - 723
Restructuring costs - - 254
267 3,820 5,074
----------- ----------- -------------
As noted in the 2020 Annual Report and Accounts, during Q4 2020
the Group commenced a review of its UK packaged supply chain in
order to ensure continued agility and growth given future prospects
. This review has continued during the first half year resulting in
GBP0.3m of exceptional costs (project and contract development
costs) during the period, with further costs expected during the
second half of 2021.
For the prior period ended 30 June 2020, the Group recognised
GBP3.8m of exceptional costs in relation to the non-cash impairment
of the Group's goodwill and intangible assets of its 'Feel Good"
brand.
6. 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:
Earnings Weighted average Earnings per
number of shares share
GBP'000
30 June 2021
Basic earnings per share 6,990 36,916,403 18.93p
Dilutive effect of share options 48,035
Diluted earnings per share 6,990 36,964,438 18.91p
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 Groups' operations. It can be reconciled
from the basic earnings per share as follows:
Earnings Weighted average Earnings per
number of shares share
GBP'000
30 June 2021
Basic earnings per share 6,990 36,916,403 18.93p
Exceptional items after taxation 216
Adjusted basic earnings per
share 7,206 36,916,403 19.52p
Diluted effect of share options 48,035
Adjusted diluted earnings per
share 7,206 36,964,438 19.49p
7. Non-current Assets
Property, Goodwill Intangibles
Plant
& Equipment
GBP'000 GBP'000 GBP'000
Cost
At 1 January 2021 35,932 36,244 9,760
Additions 712 - -
Disposals (123) - -
At 30 June 2021 36,521 36,244 9,760
------------- --------- ------------
Depreciation and Amortisation
At 1 January 2021 15,806 - 3,554
Charge for the period 2,124 - 340
On disposals (115) - -
At 30 June 2021 17,815 - 3,894
------- ------
Net book value
At 1 January 2021 20,126 36,244 6,206
At 30 June 2021 18,706 36,244 5,866
------- ------- ------
8. 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 2021 by an independent qualified actuary.
A summary of the pension surplus position is provided below:
Pension surplus GBP'000
At 1 January 2021 347
Current service cost (15)
Net interest income 3
Actuarial gains 3,176
Contributions by employer 414
At 30 June 2021 3,925
--------
9. Contingent consideration
Within the Statement of Cash Flows there is a GBP0.1m (H1 2020:
GBP0.9m) 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.
10. Contingent Liability
The Group had previously entered into contracts with some of its
senior management relating to incentive schemes which were designed
to motivate, retain and engage those key employees. HMRC have
written to the Group with their initial view that the arrangements
should have been taxed as employment income which the Group and its
advisors dispute.
If HMRC pursues its current position and is successful in its
argument, then the Group may have to pay up to GBP3.4m (H1 2020:
GBP3.4m) in Income Tax and National Insurance. In addition, the
Group may have to pay up to GBP0.7m of interest to HMRC.
The employees who are party to the contracts have formally
indemnified the Group in relation to income tax and employees'
National Insurance and an amount of up to GBP2.6m (H1 2020:
GBP2.6m) can be requested from them.
The Directors have obtained external advice and on the basis of
this do not believe that the Group has a liability for any
additional tax or National Insurance.
The tribunal appeal was heard during Spring 2021. However, the
outcome is currently pending and unknown. In common with such
disputes with HMRC, it may take some time to settle and the
Directors are unable to assess how long this will take and the
timing of any potential settlement if required.
The likelihood and timing of any potential settlement remains
unchanged from 31 December 2020.
11. Dividends
During the second half of last year the Board evolved the
dividend policy to reflect the balance of shareholder needs and the
clear opportunities for growth that will exist in the soft drinks
market post the pandemic.
Dividend cover is broadly 2x adjusted earnings of the Group. As
a result, the interim dividend for 2021 will be 9.8p per share to
be paid on 10 September 2021 with a record date of 30 July
2021.
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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