TIDMNWF
RNS Number : 1053H
NWF Group PLC
30 July 2019
7.00am Tuesday 30(th) July 2019
NWF Group plc
NWF Group plc: Final results for the year ended 31 May 2019
NWF Group plc ('NWF' or 'the Group'), the specialist distributor
of fuel, food and feed across the UK, today announces its audited
final results for the year ended 31 May 2019.
Financial highlights 2019 2018 %
------------------------------ ------------ ------------ --------
Revenue GBP671.3m GBP611.0m +9.9%
Headline operating profit* GBP10.2m GBP10.6m -3.8%
Headline profit before
taxation* GBP9.7m GBP10.2m -4.9%
Fully diluted headline
earnings per share* 15.8p 16.7p -5.4%
Total dividend per share 6.6p 6.3p +4.8%
Net debt GBP10.4m GBP6.4m
Net debt to EBITDA 0.7x 0.4x
Statutory results
Operating profit GBP9.6m GBP10.6m -9.4%
Profit before taxation GBP8.7m GBP9.7m -10.3%
Fully diluted earnings
per share 13.9p 15.9p -12.6%
* Headline operating profit excludes exceptional items and
amortisation of acquired intangibles. Headline profit before
taxation excludes exceptional items, amortisation of acquired
intangibles and the net finance cost in respect of the Group's
defined benefit pension scheme. Diluted headline EPS also takes
into account the taxation effect thereon.
Operational highlights:
-- Strong results - ahead of original market expectations but behind the record prior year
-- Revenue growth in all three divisions - a result of increased
activity and higher commodity prices
-- Very strong profit improvement in Food - improved operational
effectiveness with new customers
-- Balance sheet remains strong with net debt at 0.7x EBITDA
-- Delivery of strategy with three Fuels acquisitions increasing
our penetration and geographic reach
-- Increased dividend reflecting the Board's confidence in the business
Fuels acquisitions:
-- Delivery of strategy with three Fuels acquisitions increasing
our penetration, scale and geographic reach:
o Midland Fuel Oil (December 2018) and Consols Oils (April 2019)
previously announced adding 37 million litres per annum
combined
o Ribble Fuel Oils announced today - a 75 million litre business
trading across four depot locations in the North West of
England
-- Together the three acquisitions add c. 20% to the Group's annualised fuel volumes
Divisional highlights:
-- Fuels - headline operating profit of GBP5.6 million (2018:
GBP6.9 million). Solid results from across the depot network
benefiting from a volatile oil price and including two acquisitions
within the financial year. Prior year benefited from extreme winter
conditions.
-- Food - headline operating profit of GBP1.8 million (2018:
GBP0.7 million). Very strong performance with improved operational
effectiveness managing new customers won in the last 18 months and
supporting requirements for customers who stored additional
products as a result of Brexit preparations.
-- Feeds - headline operating profit of GBP2.8 million (2018:
GBP3.0 million). Results stable with increased summer demand offset
by weaker winter ruminant feed demand. Overall volumes were stable,
with the business managing volatile commodity prices
effectively.
Richard Whiting, Chief Executive, NWF Group plc, commented:
"NWF has delivered a result ahead of original market
expectations and the business is continuing to develop in line with
our strategy. The Fuels division has performed well in spite of a
mild winter and has completed three acquisitions adding 20% to its
volumes. Food has outperformed management's expectations with new
customers and employees working effectively in a business which has
been at capacity throughout the year. Feeds has delivered a stable
result in spite of variable market conditions. We are proposing an
increased dividend and continue to see opportunity for further
strategic and operational progress. Trading in the current
financial year to date has been in line with our expectations."
A meeting is being held today for analysts at 9.30 a.m. at MHP
Communications, 6 Agar Street, London, WC2N 4HN.
To view a short video of the results presentation please follow
this link: http://bit.ly/NWFfy19
Information for investors, including analyst consensus
forecasts, can be found on the Group's website at www.nwf.co.uk
Richard Whiting, Chief Reg Hoare / Patrick Mike Bell / Ed Allsopp
Executive Hanrahan
Chris Belsham, Finance MHP Communications Peel Hunt LLP
Director
NWF Group plc Tel: 020 3128 8100 (Nominated Adviser)
Tel: 01829 260 260 Tel: 020 7418 8900
CHAIRMAN'S STATEMENT
Overview
I am pleased to report another year of good progress with the
business delivering a strong set of results. In addition, we
completed two Fuels acquisitions during the year as well as Ribble
Fuel Oils, completing after the year end, in line with our
strategic plan. The net debt position of the Group is in line with
our expectations, with cash generation being utilised to finance
growth and acquisitions, and remained below 1.0x EBITDA at year
end.
The benefit of the NWF diversified and service-led business
model was clearly demonstrated in the year. The significant
improvement in Food more than offset the marginally lower operating
profit in Feeds. Fuels performed well, although not at the levels
seen in the previous year where it benefited from extreme weather
conditions.
As a consequence of the good progress achieved and the Group's
cash generation, the Board is recommending a final dividend of 5.6p
per share (record date: 1 November 2019, payment date: 5 December
2019) (2018: 5.3p) giving a total dividend of 6.6p per share (2018:
6.3p), a 4.8% increase on the prior year.
Our business
NWF Group is a specialist distributor delivering fuel, food and
feed across the UK. Each of our trading divisions has scale, good
market position, are profitable and cash generative. Each division
trades under different brands with their own brand architecture as
follows:
-- Fuels: NWF Fuels (including a number of local sub-brands)
-- Food: Boughey
-- Feeds: NWF Agriculture, SC Feeds, New Breed and Jim Peet
Key areas of focus for the Board in 2019 were:
Responding proactively to market conditions
The Group has responded well to some volatile market conditions
experienced during the year. The warm, dry summer increased demand
for animal feed whilst reducing the demand for heating oil. The
mild winter also reduced demand for heating oil (particularly
compared to the record demand in FY18) and for animal feed as
grazing conditions were good. In Food, additional demand was
experienced with customers seeking to hold extra stock in advance
of the end of March as part of their Brexit planning. We secured
additional warehouse space to meet our customers' needs during this
period.
Delivering on strategy
The Group completed the acquisition of two Fuels businesses
during the year, and one shortly after the year end, in line with
our strategic plan. Our geographic reach was broadened through
these acquisitions. Midland Fuel Oil Supplies operates to the south
and east of Birmingham and Consols Oils operates in Cornwall.
Ribble Fuel Oils operates in the North West extending our presence
north and into Yorkshire. The UK fuels distribution market remains
very fragmented and we see significant opportunity to expand our
depot network through consolidation and leverage the benefits of
our scale and expertise across a growing network.
Cash generation
Cash generation remains a focus for the Group and net debt has
been maintained at less than 1.0x EBITDA in spite of increased
commodity costs and completing two acquisitions before the year
end.
Rewarding good service
The consistent focus on excellence in customer service across
the Group has been critical to our continued development and has
enabled gains to be achieved in each of the three divisions in the
year.
Commodity volatility
Volatility in oil and feed commodity prices was significant and
the businesses managed this volatility effectively. In Fuels, oil
(which is purchased on the spot market) oscillated between $50 per
barrel and $86 per barrel for Brent Crude with further volatility
resulting from exchange rates. In line with market practice, Feeds
buys most of its raw materials under forward purchase contracts.
Significant changes in feed input commodities were successfully
managed through feed prices during the year.
Corporate governance
Your Board recognises the importance of good corporate
governance and welcomes the changes to the AIM Rules which require
the adoption of a recognised governance code and how the principles
of that code are complied with. We have elected to adopt the Quoted
Companies Alliance Corporate Governance Code ('the QCA Code') which
we believe has been constructed in a simple, practical and
effective style and that meaningful compliance with its ten main
principles should provide shareholders with confidence in how the
Group operates.
Board and stakeholders
My thanks go to my colleagues, our employees and all who have
supported NWF throughout the year both inside and outside the
Group.
I look forward to updating shareholders on the Group's
continuing progress at the time of the Annual General Meeting on 26
September 2019.
Philip Acton
Chairman
30 July 2019
BUSINESS AND FINANCIAL REVIEW
NWF has delivered a strong set of results and continues to
complete acquisitions in line with the Group's strategy. The record
prior year benefited from the extreme weather conditions,
favourable especially to Fuels. The Fuels division has performed
well despite a mild winter and has completed three acquisitions
with two being completed in the year. Food has outperformed with
new customers and employees working effectively in a business which
has been full throughout the year. In Feeds, a consistent result
has been delivered despite variable market conditions. The strong
performance has been converted into cash to fund growth initiatives
and acquisitions. We are proposing an increased dividend and
continue to see opportunity for further strategic and operational
progress.
The Group delivered headline operating profit of GBP10.2 million
(2018: GBP10.6 million) and headline profit before tax was 4.9%
lower at GBP9.7 million (2018: GBP10.2 million). Diluted headline
earnings per share was 5.4% lower at 15.8p (2018: 16.7p).
Cash management remains strong with net debt of GBP10.4 million
(2018: GBP6.4 million), representing 0.7x EBITDA, after GBP2.8
million of net capital expenditure and GBP4.5 million of net
acquisition expenditure (including acquisition-related costs and
deferred consideration).
Fuels
Fuels has delivered a good performance, benefiting from its high
level of customer service and managing a volatile oil price
effectively. Profitability was lower than the record prior year
when extreme weather conditions were experienced for some months.
Underlying growth was delivered on gas oil with the milder
conditions reducing demand for heating oil. Revenue growth
reflected the higher oil price and contribution from
acquisitions.
Volumes rose 1.7% to 552 million litres (2018: 543 million
litres), and revenue increased by 10.6% to GBP443.0 million (2018:
GBP400.7 million) as a result of higher oil prices and increased
volumes. On a like for like basis (excluding acquisitions in the
year) volumes were stable. The average Brent Crude oil price in the
year was $70 per barrel compared to $63 per barrel in the prior
year.
Headline operating profit was GBP5.6 million (2018: GBP6.9
million) with the impact of the mild winter being partially offset
by volatility in the price of oil.
Good strategic progress has been made with three acquisitions;
Midland (Midlands), Consols (South West) and, after the year end,
Ribble (North West), expanding the depot network with five
additional locations and adding over 20% to the volume of the
division representing 110 million litres.
The Fuels division operates on a de-centralised model with depot
management teams focussed on optimising performance for the
specific conditions of their local market. We continue to believe
that this is the most effective way to maximise performance, given
the industry structure, but we also believe there are opportunities
to leverage benefits from the breadth of our growing network. As
such we are investing in enhanced systems and capabilities for the
Fuels division which we believe will improve efficiencies and
provide a strong platform for continued growth.
With 63,000 customers (2018: 59,000) being supplied across 20
fuel depots in the year (2018: 19), Fuels operates in markets that
are large and robust and, as a business, it has consistently proved
it can effectively manage the volatility in oil prices. The
industry remains highly fragmented, with many small operators,
which we continue to believe provides an opportunity for NWF to
further increase market share.
Food
This has been a year of significant improvement, with new
customers won in 2018 and 2019 delivering improved operating
effectiveness. The business has had high storage levels throughout
the year as a result of new customers and customers requiring
additional stock in preparation for Brexit.
Revenue increased by 18.6% to GBP47.9 million (2018: GBP40.4
million). Storage overall was at an average of 100,000 pallets
(2018: 90,000 pallets), with external warehousing being utilised
throughout the year. Significantly, total outloads increased by
8.5% on the prior year reflecting the increased activity of new
customers won in the last 18 months. Headline operating profit was
GBP1.8 million (2018: GBP0.7 million), reflecting the significant
improvements in managing new customers, improving prices and
improving operating effectiveness. The e-fulfilment business has
continued to grow in the year with seven customers now utilising
the service.
Additional stock was stored for our customers prior to the end
of March as a Brexit contingency. The additional costs incurred
utilising overflow warehousing on their behalf were recovered from
customers, with the majority of stock having been shipped by the
year end.
Demand for our customers' products continues to be stable and
the outlook for most product categories handled by the business is
resilient. The business operates in a competitive supply chain and
needs to continually demonstrate the value and service that it
provides to food manufacturers and importers. The business has a
leading position in consolidating ambient grocery products in the
North West, with high service levels, industry leading systems and
a strong operating performance being the key components of its
customer proposition.
Feeds
There has been some volatility in the feeds market during the
year with a significant increase in demand from farmers in the long
dry summer period who increased feed rates to offset a lack of
forage. In the winter this was reversed with good grazing
conditions reducing ruminant feed demand, particularly for sheep
feed in comparison to the long cold winter in FY18. Commodity
prices increased by over 10% to the end of August and then
consistently fell to end the year 14% lower. Customers experienced
higher summer prices but then gained relief into the autumn and
winter periods.
Investment was made in operations and ensured high service
levels were maintained across the country throughout the year.
Revenue increased by 6.2% to GBP180.4 million (2018: GBP169.9
million) broadly as a result of increased feed prices. Headline
operating profit was GBP2.8 million (2018: GBP3.0 million). Total
feed volume was stable at 591,000 tonnes (2018: 589,000
tonnes).
A key strategic priority for the business remains to increase
the nutritional focus in Feeds by providing high quality advice and
value-added products to our farming customers. New products have
been successfully launched in the year, backed by training and
multi-channel communications with farming customers.
Average milk prices in Great Britain were stable, increasing
from 27.1p to 27.9p per litre over the period with a high of 31.6p
per litre in November 2018. On the back of this more positive
environment, milk production increased by 1.6% to 12.6 billion
litres (2018: 12.4 billion litres).
Feeds has a very broad customer base, working with over 4,750
farmers across the country. This base, and the underlying robust
demand for milk and dairy products, results in a reasonably stable
overall demand for our feed in most market conditions.
Outlook
In Fuels, we have a proven depot operating model and are
leveraging our capability by increasing the depot network through
acquisitions.
In Food, we are focused on continuing to improve efficiency
working with our customers and managing the variable demand
patterns that have been a consequence of businesses preparing for
Brexit. We remain focused on continuing to provide excellent levels
of service and value to our customers and supermarkets across the
UK.
In Feeds, current margins and volumes are in line with our
expectations for this time of the year. Our mills in the North,
Cheshire and the South West are aligned to the needs of our farming
customers in these key areas of the country.
With regards to Brexit, the fundamentals of our markets are
unchanged and we continue to monitor and plan contingencies with
customers and suppliers.
The Group has established a solid platform for further
development, has strong cash flows and flexible banking facilities
to fund growth and a strong asset base that provides resilience. We
will therefore continue to consider acquisition opportunities,
building on our successful track record of acquiring and
integrating businesses, as well as investment in organic
development.
Performance to date in the current financial year has been in
line with the Board's expectations. Overall, the Board continues to
remain confident about the Group's future prospects.
Group results
Year ended 31 May 2019 2018
GBPm GBPm
------------------------------------------- -------- --------
Revenue 671.3 611.0
Cost of sales and administrative expenses (661.7) (600.4)
------------------------------------------- -------- --------
Headline operating profit* 10.2 10.6
Exceptional items (0.5) -
Amortisation of acquired intangibles (0.1) -
------------------------------------------- -------- --------
Operating profit 9.6 10.6
Financing costs (0.9) (0.9)
------------------------------------------- -------- --------
Headline profit before tax* 9.7 10.2
Exceptional items (0.5) -
Amortisation of acquired intangibles (0.1) -
Net finance cost in respect of defined
benefit pension scheme (0.4) (0.5)
Profit before taxation 8.7 9.7
Income tax expense (1.9) (1.9)
------------------------------------------- -------- --------
Profit for the year 6.8 7.8
------------------------------------------- -------- --------
Headline EPS* 15.8p 16.8p
------------------------------------------- -------- --------
Diluted headline EPS* 15.8p 16.7p
------------------------------------------- -------- --------
Dividend per share 6.6p 6.3p
------------------------------------------- -------- --------
Headline dividend cover* 2.4 2.7
------------------------------------------- -------- --------
Interest cover 20.4 26.5
------------------------------------------- -------- --------
* Headline operating profit is statutory operating profit of
GBP9.6 million (2018: GBP10.6 million) before exceptional items of
GBP0.5 million (2018: GBPNil) and amortisation of acquired
intangibles of GBP0.1 million (2018: GBPNil). Headline profit
before taxation is statutory profit before taxation of GBP8.7
million (2018: GBP9.7 million) after adding back the net finance
cost in respect of the Group's defined benefit pension scheme of
GBP0.4 million (2018: GBP0.5 million), the exceptional items and
amortisation of acquired intangibles. Headline EPS also takes into
account the taxation effect thereon. Headline dividend cover is
calculated using diluted headline EPS.
Group revenue increased by 9.9% to GBP671.3 million (2018:
GBP611.0 million) reflecting higher activity levels and increased
oil and commodity prices. Headline operating profit was GBP10.2
million, a decrease of 3.8% (2018: GBP10.6 million).
Financing costs (excluding those in respect of the defined
benefit pension scheme) increased by GBP0.1 million to GBP0.5
million, reflecting the acquisitions made during the year, with
interest cover of 20.4x (excluding IAS 19 net pension finance
costs) (2018: 26.5x).
Headline profit before taxation decreased by 4.9% to GBP9.7
million (2018: GBP10.2 million). Profit before taxation decreased
by GBP1.0 million to GBP8.7 million (2018: GBP9.7 million). There
were exceptional items in the year of GBP0.5 million relating to
GMP equalisation and acquisition costs (2018: GBPNil).
The headline basic earnings per share of 15.8p represented a
decrease of 6.0% (2018: 16.8p), whilst diluted headline earnings
per share decreased by 5.4% to 15.8p (2018: 16.7p). The proposed
full year dividend per share increased by 4.8% to 6.6p which
reflects the Board's confidence in the Group, its strong underlying
cash generation and its future prospects. The proposed dividend
equates to a dividend cover ratio of 2.4x.
The finance costs in respect of the defined benefit pension
scheme were slightly lower than prior year at GBP0.4 million (2018:
GBP0.5 million) reflecting the lower average pension deficit across
the year.
The tax charge for the year was GBP1.9 million (2018: GBP1.9
million) which represents an effective tax rate, pre-exceptionals,
of 20.8%, which is in line with our underlying rate (2018: 20.0%).
The Group's future underlying effective rate of tax is expected to
fall in line with the decrease in the main rate of corporation tax.
The post-tax profit for the year was GBP6.8 million (2018: GBP7.8
million).
Balance sheet summary
As at 31 May
2019 2018
GBPm GBPm
-------------------------------------- ------- -------
Tangible and intangible fixed assets 70.2 67.9
Net working capital 6.3 2.5
Net debt (10.4) (6.4)
Contingent deferred consideration - (0.8)
Current tax liabilities (1.1) (1.1)
Deferred tax liabilities (net) (0.6) (0.5)
Provisions - (0.1)
Retirement benefit obligations (17.3) (17.1)
Net assets 47.1 44.4
-------------------------------------- ------- -------
The Group increased net assets by GBP2.7 million to GBP47.1
million (31 May 2018: GBP44.4 million). This reflects the robust
trading performance during the year with a retained profit for the
year of GBP3.7 million (2018: GBP4.9 million) partially offset by
an increase in the accounting valuation of the pension deficit.
Tangible and intangible fixed assets increased by GBP2.3 million
to GBP70.2 million as at 31 May 2019 (31 May 2018: GBP67.9 million)
largely as a result of the intangible assets arising on
acquisitions. The depreciation and amortisation charges for the
year to 31 May 2019 were GBP3.9 million and GBP0.8 million
respectively (2018: GBP3.7 million and GBP0.8 million
respectively).
Group level ROCE (based on headline operating profit) is 13.4%
as at 31 May 2019 (31 May 2018: 15.1%).
Net working capital increased by GBP3.8 million in the year as a
result of commodity prices and a high level of trading in May 2019.
The Group's inventories decreased by GBP0.1 million to GBP5.6
million (31 May 2018: GBP5.7 million) with trade and other
receivables increasing to GBP67.2 million (31 May 2018: GBP64.1
million) and a decrease in trade and other payables to GBP66.7
million (31 May 2018: GBP67.5 million).
Net debt increased by GBP4.0 million to GBP10.4 million (31 May
2018: GBP6.4 million), reflecting the acquisitions in the year. At
the year end, the Group's net debt to EBITDA ratio was 0.7x (2018:
0.4x).
The deficit of the Group's defined benefit pension scheme
increased by GBP0.2 million to GBP17.3 million (31 May 2018:
GBP17.1 million). The value of pension scheme assets increased by
GBP1.7 million to GBP38.0 million (31 May 2018: GBP36.3 million)
predominantly as a result of asset returns and the value of the
scheme liabilities increased by GBP1.9 million to GBP55.3 million
(31 May 2018: GBP53.4 million) as a result of the decrease in the
discount rate used to calculate the present value of the future
obligations (31 May 2019: 2.50%; 31 May 2018: 2.75%).
Cash flow and banking facilities
Year ended 31 May
2019 2018
GBPm GBPm
---------------------------------------------- ------- -------
Operating cash flows before movements in
working capital and provisions 12.8 13.9
Working capital movements (3.9) 1.0
Utilisation of provision (0.1) (0.2)
Interest paid (0.5) (0.4)
Tax paid (1.9) (1.4)
---------------------------------------------- ------- -------
Net cash generated from operating activities 6.4 12.9
Capital expenditure (net of receipts from
disposals) (2.8) (2.9)
Acquisition of subsidiaries - cash paid (3.5) -
(net of cash acquired)
Payment of contingent deferred consideration (0.8) (0.5)
Net cash absorbed by investing activities (7.1) (3.4)
Net increase/(decrease) in bank borrowings 6.2 (7.0)
Capital element of finance lease and HP
payments (0.1) (0.1)
Dividends paid (3.1) (2.9)
Net increase/(decrease) in cash and cash
equivalents 2.3 (0.5)
Cash and cash equivalents at beginning of
year 0.5 1.0
---------------------------------------------- ------- -------
Cash and cash equivalents at end of year 2.8 0.5
---------------------------------------------- ------- -------
The Group has completed two acquisitions in the year with a
total consideration (net of cash acquired) of GBP3.5 million. The
closing net debt of GBP10.4 million represents a net debt to EBITDA
ratio of 0.7x.
Working capital increased as a result of commodity prices and a
high level of trading in May 2019. Net cash generated from
operating activities was GBP6.4 million (2018: GBP12.9 million)
representing a cash conversion ratio of 62.7% of headline operating
profit (2018: 121.7%).
Net capital expenditure in the year at GBP2.8 million (2018:
GBP2.9 million) was lower than the annual depreciation charge of
GBP3.9 million (2018: GBP3.7 million) reflecting the move to
contract hire tankers in Fuels.
The Group's banking facilities, totalling GBP65.0 million, were
renewed in June 2018 and are committed through to 31 October 2023
with the exception of the bank overdraft facility of GBP1.0 million
and the GBP4.0 million bank guarantee facility which are renewed
annually. There remains substantial facility headroom available to
support the development of the Group. Within the total facility of
GBP65.0 million, the Group has an invoice discounting facility, the
availability of which depends on the level of trade receivables
available for refinancing and which is subject to a maximum
drawdown of GBP50.0 million. The banking facilities are provided
subject to ongoing compliance with conventional banking covenants
against which the Group has substantial levels of headroom.
Principal risks and uncertainties
As with all businesses, the Group is affected by a number of
risks and uncertainties, some of which are beyond our control. The
principal risks and uncertainties which could have a material
adverse impact on the Group are:
-- Brexit - The uncertainty around the implications of the UK
leaving the European Union and potential associated exchange rate
volatility creates commodity price risk. There is also some
uncertainty around demand in agriculture given the trading
relationship with Europe and the subsidy support received by
farmers.
-- Commodity prices and volatility in raw material prices - The
Group's Feeds and Fuels divisions operate in sectors which are
vulnerable to volatile commodity prices both for fuel and for raw
materials.
-- Impact of climate on earnings volatility - The demand for
both the Feeds and Fuels divisions are impacted by climatic
conditions and the severity of winter conditions in particular,
which directly affect the demand for heating products and animal
feeds. The inherent uncertainty regarding climatic conditions
represents a risk of volatility in the profitability of the Fuels
and Feeds divisions.
-- Pension scheme volatility - Increases in the ongoing deficit
associated with the Group's defined benefit pension scheme would
adversely impact on the strength of the Group's balance sheet and
could lead to an increase in cash contributions payable by the
Group.
-- Recruitment, retention and development of key people -
Recruiting and retaining the right people is crucial for the
success of the Group and its development.
-- Infrastructure and IT systems - IT system failures or business interruption events (such as cyber-attacks) could have a material impact on the Group's ability to operate effectively.
-- Non-compliance with legislation and regulations - The Group
operates in diverse markets and each sector has its own regulatory
and compliance frameworks which require ongoing monitoring to
ensure that the Group maintains full compliance with all
legislative and regulatory requirements. Any incident of major
injury or fatality or which results in significant environmental
damage could result in reputational or financial damage to the
Group.
-- Strategic growth and change management - A failure to
identify, execute or integrate acquisitions, change management
programmes or other growth opportunities could impact on the
profitability and strategic development of the Group.
Going concern
The Group has an agreement with The Royal Bank of Scotland Group
for credit facilities totalling GBP65.0 million. With the exception
of the bank overdraft facility of GBP1.0 million and the GBP4.0
million bank guarantee facility, which are renewed annually, these
facilities are committed through to 31 October 2023.
Accordingly, the Directors, having made suitable enquiries, and
based on financial performance to date and forecasts along with the
available banking facilities, have a reasonable expectation that
the Group has adequate resources to continue in operational
existence for the foreseeable future. The Group therefore continues
to adopt the going concern basis of accounting in preparing the
annual financial statements.
Share price
The market price per share of the Company's shares at 31 May
2019 was 169.0p (31 May 2018: 205.5p) and the range of market
prices during the year was between 136.5p and 212.5p.
Richard Whiting Chris Belsham
Chief Executive Finance Director
CONSOLIDATED INCOME STATEMENT
2019 2018
Note GBPm GBPm
-------------------------------------------- ----- -------- --------
Revenue 4 671.3 611.0
Cost of sales (640.4) (580.7)
-------------------------------------------- ----- -------- --------
Gross profit 30.9 30.3
Administrative expenses (21.3) (19.7)
-------------------------------------------- ----- -------- --------
Headline operating profit* 10.2 10.6
Exceptional items 5 (0.5) -
Amortisation of acquired intangibles (0.1) -
-------------------------------------------- ----- -------- --------
Operating profit 4 9.6 10.6
Finance costs 6 (0.9) (0.9)
-------------------------------------------- ----- -------- --------
Headline profit before taxation* 9.7 10.2
Exceptional items 5 (0.5) -
Amortisation of acquired intangibles (0.1) -
Net finance cost in respect of defined
benefit pension scheme (0.4) (0.5)
-------------------------------------------- ----- -------- --------
Profit before taxation 5 8.7 9.7
Income tax expense** 7 (1.9) (1.9)
-------------------------------------------- ----- -------- --------
Profit for the year attributable to equity
shareholders 6.8 7.8
-------------------------------------------- ----- -------- --------
Earnings per share (pence)
Basic 8 13.9 16.0
Diluted 8 13.9 15.9
-------------------------------------------- ----- -------- --------
Headline earnings per share (pence)*
Basic 8 15.8 16.8
Diluted 8 15.8 16.7
-------------------------------------------- ----- -------- --------
* Headline operating profit is statutory operating profit of
GBP10.2 million (2018: GBP10.6 million) before exceptional items of
GBP0.5 million (2018: GBPNil) and amortisation of acquired
intangibles of GBP0.1 million (2018: GBPNil). Headline profit
before taxation is statutory profit before taxation of GBP8.7
million (2018: GBP9.7 million) after adding back the net finance
cost in respect of the Group's defined benefit pension scheme of
GBP0.4 million (2018: GBP0.5 million), the exceptional items and
amortisation of acquired intangibles. Headline EPS also takes into
account the taxation effect thereon.
** Taxation on exceptional items in the current year has reduced
the charge by GBP0.1 million (2018: GBPNil).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2019 2018
GBPm GBPm
-------------------------------------------- ------ ------
Profit for the year attributable to equity
shareholders 6.8 7.8
Items that will never be reclassified
to profit or loss:
Re-measurement (loss)/gain on defined
benefit pension scheme (1.2) 2.0
Tax credit/(charge) on items that will
never be reclassified to profit or loss 0.2 (0.4)
--------------------------------------------- ------ ------
Total comprehensive income for the year 5.8 9.4
--------------------------------------------- ------ ------
CONSOLIDATED BALANCE SHEET
2019 2018
Note GBPm GBPm
----------------------------------- ----- -------- -------
Non-current assets
Property, plant and equipment 45.5 45.7
Intangible assets 24.7 22.2
Deferred income tax assets 3.1 3.1
----------------------------------- ----- -------- -------
73.3 71.0
----------------------------------- ----- -------- -------
Current assets
Inventories 5.6 5.7
Trade and other receivables 67.2 64.1
Cash at bank and in hand 12 2.8 0.5
Derivative financial instruments 0.2 0.2
----------------------------------- ----- -------- -------
75.8 70.5
----------------------------------- ----- -------- -------
Total assets 149.1 141.5
----------------------------------- ----- -------- -------
Current liabilities
Trade and other payables (66.7) (67.5)
Current income tax liabilities (1.1) (1.1)
Borrowings 12 (0.2) (0.1)
Contingent deferred consideration - (0.8)
(68.0) (69.5)
----------------------------------- ----- -------- -------
Non-current liabilities
Borrowings 12 (13.0) (6.8)
Deferred income tax liabilities (3.7) (3.6)
Retirement benefit obligations 13 (17.3) (17.1)
Provisions - (0.1)
----------------------------------- ----- -------- -------
(34.0) (27.6)
----------------------------------- ----- -------- -------
Total liabilities (102.0) (97.1)
----------------------------------- ----- -------- -------
Net assets 47.1 44.4
----------------------------------- ----- -------- -------
Equity
Share capital 10 12.2 12.2
Other reserves 34.9 32.2
----------------------------------- ----- -------- -------
Total shareholders' equity 47.1 44.4
----------------------------------- ----- -------- -------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Retained Total
capital premium earnings equity
GBPm GBPm GBPm GBPm
---------------------------------------------- --------- --------- ---------- --------
Balance at 1 June 2017 12.1 0.9 24.7 37.7
---------------------------------------------- --------- --------- ---------- --------
Profit for the year - - 7.8 7.8
Items that will never be reclassified
to profit or loss:
Actuarial gain on defined benefit
pension scheme - - 2.0 2.0
Tax on items that will never be reclassified
to profit or loss - - (0.4) (0.4)
---------------------------------------------- --------- --------- ---------- --------
Total comprehensive income for the
year - - 9.4 9.4
---------------------------------------------- --------- --------- ---------- --------
Transactions with owners:
Dividends paid (note 9) - - (2.9) (2.9)
Issue of shares 0.1 - (0.1) -
Value of employee services - - 0.2 0.2
---------------------------------------------- --------- --------- ---------- --------
0.1 - (2.8) (2.7)
---------------------------------------------- --------- --------- ---------- --------
Balance at 31 May 2018 12.2 0.9 31.3 44.4
---------------------------------------------- --------- --------- ---------- --------
Profit for the year - - 6.8 6.8
Items that will never be reclassified
to profit or loss:
Actuarial loss on defined benefit
pension scheme - - (1.2) (1.2)
Tax on items that will never be reclassified
to profit or loss - - 0.2 0.2
---------------------------------------------- --------- --------- ---------- --------
Total comprehensive income for the
year - - 5.8 5.8
---------------------------------------------- --------- --------- ---------- --------
Transactions with owners:
Dividends paid (note 9) - - (3.1) (3.1)
Issue of shares - - - -
Value of employee services - - (0.1) (0.1)
Credit to equity for equity-settled
share-based payments - - 0.1 0.1
---------------------------------------------- --------- --------- ---------- --------
- - (3.1) (3.1)
---------------------------------------------- --------- --------- ---------- --------
Balance at 31 May 2019 12.2 0.9 34.0 47.1
---------------------------------------------- --------- --------- ---------- --------
CONSOLIDATED CASH FLOW STATEMENT
2019 2018
GBPm GBPm
-------------------------------------------------- ----- ------
Cash flows from operating activities
Operating profit 9.6 10.6
Adjustments for:
Depreciation and amortisation 4.7 4.5
Profit on disposal of fixed assets (0.1) (0.1)
Share-based payment expense - 0.2
Contribution to pensions scheme not recognised
in income statement (1.4) (1.3)
Operating cash flows before movements in
working capital and provisions 12.8 13.9
Movements in working capital:
Decrease/(increase) in inventories 0.3 (1.5)
Increase in receivables (0.9) (2.8)
(Decrease)/increase in payables (3.3) 5.3
Utilisation of provision (0.1) (0.2)
-------------------------------------------------- ----- ------
Net cash generated from operations 8.8 14.7
Interest paid (0.5) (0.4)
Income tax paid (1.9) (1.4)
-------------------------------------------------- ----- ------
Net cash generated from operating activities 6.4 12.9
-------------------------------------------------- ----- ------
Cash flows from investing activities
Purchase of intangible assets (0.2) (0.2)
Purchase of property, plant and equipment (2.8) (2.9)
Proceeds on sale of property, plant and equipment 0.2 0.2
Acquisitions of subsidiaries - cash paid
(net of cash acquired) (3.5) -
Payment of contingent deferred consideration (0.8) (0.5)
Net cash absorbed by investing activities (7.1) (3.4)
-------------------------------------------------- ----- ------
Cash flows from financing activities
Increase/(decrease) in bank borrowings 6.2 (7.0)
Capital element of finance lease and hire
purchase payments (0.1) (0.1)
Dividends paid (3.1) (2.9)
-------------------------------------------------- ----- ------
Net cash generated from/(used in) financing
activities 3.0 (10.0)
-------------------------------------------------- ----- ------
Net movement in cash and cash equivalents 2.3 (0.5)
Cash and cash equivalents at beginning of
period 0.5 1.0
-------------------------------------------------- ----- ------
Cash and cash equivalents at end of period
(note 12) 2.8 0.5
-------------------------------------------------- ----- ------
NOTES
1. General information
NWF Group plc ('the Company') is a public limited company
incorporated and domiciled in the UK under the Companies Act 2006.
The principal activities of NWF Group plc and its subsidiaries
(together 'the Group') are the sale and distribution of fuel oils,
the warehousing and distribution of ambient groceries and
manufacture and the sale of animal feeds. Further information on
the nature of the Group's operations and principal activities are
set out in the Annual Report.
The address of the Company's 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.
2. Significant accounting policies
The Group's principal accounting policies, all of which have
been applied consistently to all of the years presented, are set
out below. IFRS 9 and IFRS 15 are effective from 1 June 2018.
Basis of preparation
The Group financial statements have been prepared in accordance
with International Financial Reporting Standards as endorsed by the
European Union ('IFRS'), International Financial Reporting
Standards Interpretation Committee ('IFRS IC') interpretations and
those provisions of the Companies Act 2006 applicable to companies
reporting under IFRS. The Group financial statements have been
prepared on the going concern basis and on the historical cost
convention modified for the revaluation of certain financial
instruments.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates, which
are outlined in note 14 below. It also requires management to
exercise its judgement in the process of applying the Group's
accounting policies.
Headline profit before taxation and headline earnings
The Directors consider that headline operating profit, headline
profit before taxation and headline earnings per share measures,
referred to in these condensed Group financial statements, provide
useful information for shareholders on underlying trends and
performance.
Headline operating profit is statutory operating profit before
exceptional items and the amortisation of acquired intangibles.
Headline profit before taxation is statutory profit before taxation
after adding back the net finance cost in respect of the Group's
defined benefit pension scheme, exceptional items and the
amortisation of acquired intangibles
The calculations of basic and diluted headline earnings per
share are shown in note 8.
Exceptional 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. In determining
whether an item should be disclosed as an exceptional item, the
Directors consider quantitative as well as qualitative factors such
as the frequency, predictability of occurrence and significance.
This is consistent with the way financial performance is measured
by management and reported to the Board.
Forward-looking statements
Certain statements in this results announcement are forward
looking. The terms 'expect', 'anticipate', 'should be', 'will be'
and similar expressions identify forward-looking statements.
Although the Board of Directors believes that the expectations
reflected in these forward-looking statements are reasonable, such
statements are subject to a number of risks and uncertainties and
events could differ materially from those expressed or implied by
these forward-looking statements.
Adoption of new and revised standards
The following new standards, amendments to standards or
interpretations are mandatory for the first time for the financial
year beginning 1 June 2018.
The Group has adopted the following new standards, amendments
and interpretations now applicable. None of these standards and
interpretations have had any material effect on the Group's results
or net assets.
Applicable
for
financial
years
beginning
Standard or interpretation Content on
-------------------------- ------------------------------------- -----------
IFRS 9 Financial Instruments: Classification
and Measurement 1 June 2018
IFRS 15 Revenue from Contracts with Customers 1 June 2018
Amendment to IFRS 2 Share-based Payments 1 June 2018
Amendment to IAS 40 Investment Properties 1 June 2018
Annual improvements to Various
IFRS 2014 - 2016 1 June 2018
-------------------------- ------------------------------------- -----------
The following standards, amendments and interpretations are not
yet effective and have not been adopted early by the Group:
Applicable
for
financial
years
beginning
Standard or interpretation Content on
----------------------------- -------------------------------------- -----------
IFRIC 22 Foreign currency transactions 1 June 2019
and advance consideration
IFRIC 23 Uncertainty over income tax treatments 1 June 2019
Annual improvements 2015-2017 Various 1 June 2019
IFRS 16 Leases 1 June 2019
----------------------------- -------------------------------------- -----------
With the exception of IFRS 16, none of these standards and
interpretations are expected to have a material effect on the
Group's results or net assets.
IFRS 16 'Leases' is effective for financial years commencing on
or after 1 January 2019. For the Group, transition to IFRS 16 will
take place on 1 June 2019. The standard requires lessees to
recognise assets and liabilities for all leases, unless the lease
term is shorter than 12 months, or the asset value is low. For the
Group, it will result in the recognition of almost all leases on
the balance sheet as a right of use asset, with a corresponding
lease liability.
The Group currently leases both properties and vehicles under a
series of operating lease contracts which will be impacted by the
new standard. These types of leases can no longer be recognised as
operating leases and will need to be brought onto the Group's
balance sheet from the date of adoption of the new standard. The
Group has elected to apply the following practical expedients:
-- In determining whether existing contracts meet the definition
of a lease, the Group will not reassess those contracts previously
identified as leases and will not apply the standard to those
contracts not previously identified as leases.
-- Short-term leases (leases of shorter than 12 months and
leases with fewer than 12 months remaining) as at the date of
adoption of the new standard will not be within the scope of IFRS
16.
-- Leases for which the asset is of low value, for example
photocopiers, will not be within the scope of IFRS 16.
The Group has elected to apply the simplified transition
approach with the cumulative effect of initially applying this
standard as an adjustment to the opening balance of retained
earnings as at 1 June 2019. The Group estimates that the impact of
IFRS 16 will be material to items in the balance sheet but not
overall net assets, with an estimated increase in assets of GBP16.5
million and an increase in liabilities of GBP16.5 million at 1 June
2019. The net effect of IFRS 16 on the income statement is expected
to be a GBP0.1 million reduction in profit before taxation. There
will be no net cash flow impact arising from the adoption of the
new standard.
3. Group Annual Report and statutory accounts
The financial information set out above does not constitute the
Group's statutory accounts for the years ended 31 May 2019 or 31
May 2018, but is derived from those accounts.
Statutory accounts for 2018 have been delivered to the Registrar
of Companies. The auditors, PricewaterhouseCoopers LLP, have
reported on the 2018 accounts; the report (i) was unqualified, (ii)
did not include a reference to any matters to which the auditors
drew attention by way of emphasis without qualifying their report,
and (iii) did not contain a statement under Section 498(2) or (3)
of the Companies Act 2006.
The statutory accounts for 2019 will be delivered to the
Registrar of Companies following the Annual General Meeting. The
auditors, PricewaterhouseCoopers LLP, have reported on these
accounts, their report is unqualified, does not include a reference
to any matters to which the auditors drew attention by way of
emphasis without qualifying their report, and, does not include a
statement under either Section 498(2) or (3) of the Companies Act
2006.
The Annual Report and full financial statements will be posted
to shareholders during the week commencing 19 August 2019. Further
copies will be available to the public, free of charge, from the
Company's Registered Office at NWF Group Plc, Wardle, Cheshire CW5
6BP or viewed on the Company's website: www.nwf.co.uk.
4. Segment information
The chief operating decision-maker has been identified as the
Board of Directors ('the Board'). The Board reviews the Group's
internal reporting in order to assess performance and allocate
resources. The Board has determined that the operating segments,
based on these reports, are Fuels, Food and Feeds.
The Board considers the business from a 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 is 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 operating profit. Finance income and costs
are not included in the segment result that is assessed by the
Board. Other information provided to the Board is measured in a
manner consistent with that in the financial statements.
Inter-segment transactions are entered into under the normal
commercial terms and conditions that would also be available to
unrelated third parties.
Segment assets exclude deferred income tax assets and cash at
bank and in hand. Segment liabilities exclude taxation, borrowings,
contingent deferred consideration and retirement benefit
obligations. Excluded items are part of the reconciliation to
consolidated total assets and liabilities.
Fuels Food Feeds Group
2019 GBPm GBPm GBPm GBPm
-------------------------------------- ------ ------ ------ ------
Revenue
Total revenue 449.5 48.4 180.4 678.3
Inter-segment revenue (6.5) (0.5) - (7.0)
-------------------------------------- ------ ------ ------ ------
Revenue 443.0 47.9 180.4 671.3
-------------------------------------- ------ ------ ------ ------
Result
Headline operating profit 5.6 1.8 2.8 10.2
------ ------ ------
Segment exceptional item (note
5) (0.2) - - (0.2)
Group exceptional item (note
5) (0.3)
Amortisation of acquired intangibles (0.1) - - (0.1)
------
Operating profit as reported 9.6
Finance costs (note 6) (0.9)
------
Profit before taxation 8.7
Income tax expense (note 7) (1.9)
-------------------------------------- ------ ------ ------ ------
Profit for the year 6.8
-------------------------------------- ------ ------ ------ ------
Other information
Depreciation and amortisation 1.4 1.6 1.7 4.7
Fixed asset additions 0.5 0.6 1.7 2.8
-------------------------------------- ------ ------ ------ ------
Fuels Food Feeds Group
2019 GBPm GBPm GBPm GBPm
--------------------------------- ------- ------ ------- --------
Balance sheet
Assets
Segment assets 61.2 30.3 51.7 143.2
--------------------------------- ------- ------ -------
Deferred income tax assets 3.1
Cash at bank and in hand 2.8
--------------------------------- ------- ------ ------- --------
Consolidated total assets 149.1
--------------------------------- ------- ------ ------- --------
Liabilities
Segment liabilities (46.4) (5.3) (15.0) (66.7)
--------------------------------- ------- ------ -------
Current income tax liabilities (1.1)
Deferred income tax liabilities (3.7)
Borrowings (note 12) (13.2)
Retirement benefit obligations
(note 13) (17.3)
--------------------------------- ------- ------ ------- --------
Consolidated total liabilities (102.0)
--------------------------------- ------- ------ ------- --------
Fuels Food Feeds Group
2018 GBPm GBPm GBPm GBPm
------------------------------- ------ ------ ------ ------
Revenue
Total revenue 406.2 41.0 169.9 617.1
Inter-segment revenue (5.5) (0.6) - (6.1)
------------------------------- ------ ------ ------ ------
Revenue 400.7 40.4 169.9 611.0
------------------------------- ------ ------ ------ ------
Result
Headline operating profit 6.9 0.7 3.0 10.6
Operating profit as reported 6.9 0.7 3.0 10.6
Finance costs (note 6) (0.9)
------
Profit before taxation 9.7
Income tax expense (note 7) (1.9)
------------------------------- ------ ------ ------ ------
Profit for the year 7.8
------------------------------- ------ ------ ------ ------
Other information
Depreciation and amortisation 1.4 1.6 1.5 4.5
Fixed asset additions 0.7 0.7 1.5 2.9
------------------------------- ------ ------ ------ ------
Fuels Food Feeds Group
2018 GBPm GBPm GBPm GBPm
----------------------------------- ------- ------ ------- -------
Balance sheet
Assets
Segment assets 54.3 30.9 52.7 137.9
----------------------------------- ------- ------ -------
Deferred income tax assets 3.1
Cash at bank and in hand 0.5
----------------------------------- ------- ------ ------- -------
Consolidated total assets 141.5
----------------------------------- ------- ------ ------- -------
Liabilities
Segment liabilities (44.7) (4.6) (18.3) (67.6)
----------------------------------- ------- ------ -------
Current income tax liabilities (1.1)
Deferred income tax liabilities (3.6)
Borrowings (note 12) (6.9)
Contingent deferred consideration (0.8)
Retirement benefit obligations
(note 13) (17.1)
----------------------------------- ------- ------ ------- -------
Consolidated total liabilities (97.1)
----------------------------------- ------- ------ ------- -------
5. Profit before taxation - exceptional items
An exceptional cost of GBP0.5 million (2018: GBPNil) is included
in administrative expenses. Exceptional items by type are as
follows:
2019 2018
GBPm GBPm
-------------------------- ------ ------
GMP Equalisation 0.3 -
Acquisition-related costs 0.2 -
-------------------------- ------ ------
Exceptional costs 0.5 -
-------------------------- ------ ------
GMP Equalisation - On 26 October 2018, the High Court issued a
judgement involving the Lloyds Banking Group defined benefit
pension schemes. The judgement concluded that the schemes should
equalise pension benefits for men and women in relation to
guaranteed minimum pension (GMP) benefits. The judgement has
implications for many defined benefit schemes, including the NWF
Group Benefits Scheme.
We have worked with our actuarial advisors to understand the
implications of the High Court judgement for the NWF Group Benefits
Scheme and as a result, have recorded a non-cash GBP0.3 million
pre-tax exceptional expense to reflect our best estimate of the
effect on our reported pension liabilities.
The Directors have made the judgement that the estimated effect
of GMP equalisation on the Group's pension liabilities is a past
service cost that should be reflected through the consolidated
income statement and that any subsequent change in the estimate of
that should be recognised in other comprehensive income. The
judgement is based on the fact that the reported pension
liabilities for the NWF Group Benefits Scheme did not previously
include any amount in respect of GMP equalisation.
Acquisition-related costs - the acquisition-related costs
comprise of professional fees and other costs in relation to the
two acquisitions made during the year. Of the total cost, GBP0.2
million impacted cash in the year.
6. Finance costs
2019 2018
GBPm GBPm
------------------------------------------------ ------ ------
Interest on bank loans and overdrafts 0.5 0.4
Total interest expense 0.5 0.4
Net finance cost in respect of defined benefit
pension scheme (note 13) 0.4 0.5
------------------------------------------------ ------ ------
Total finance costs 0.9 0.9
------------------------------------------------ ------ ------
7. Income tax expense
2019 2018
GBPm GBPm
--------------------------------------------------- ------ ------
Current tax
UK corporation tax on profits for the year 2.0 1.9
Adjustments in respect of prior years 0.1 (0.1)
--------------------------------------------------- ------ ------
Current tax expense 2.1 1.8
--------------------------------------------------- ------ ------
Deferred tax
Origination and reversal of temporary differences (0.2) -
Adjustments in respect of prior years - 0.1
--------------------------------------------------- ------ ------
Deferred tax (income)/expense (0.2) 0.1
--------------------------------------------------- ------ ------
Total income tax expense 1.9 1.9
--------------------------------------------------- ------ ------
During the year ended 31 May 2019, corporation tax has been
calculated at 19.0% of estimated assessable profit for the year
(2018: 19.0%).
Reductions in the UK corporation tax rate, to 17.0% with effect
from 1 April 2020, were substantively enacted into law before the
balance sheet date. In the opinion of the Directors, the relevant
timing differences are expected to reverse after 1 April 2020 and
therefore deferred tax has been provided at a rate of 17.0%.
The tax charge for the year can be reconciled to the profit per
the income statement as follows:
2019 2018
GBPm GBPm
--------------------------------------------------- ------ ------
Profit before taxation 8.7 9.7
--------------------------------------------------- ------ ------
Profit before taxation multiplied by the standard
rate of 19.0% (2018: 19.0%) 1.6 1.8
Effects of:
- expenses not deductible for tax purposes 0.2 0.1
- adjustments in respect of prior years 0.1 -
Total income tax expense 1.9 1.9
--------------------------------------------------- ------ ------
The Directors expect that the Group will have a higher than
standard tax charge in the future as a result of the level of the
Group's disallowable expenses.
8. Earnings per share
The calculation of basic and diluted earnings per share is based
on the following data:
2019 2018
------------------------------------------------------------ ------- -------
Earnings (GBPm)
Earnings for the purposes of basic and diluted
earnings per share being profit for the year attributable
to equity shareholders 6.8 7.8
------------------------------------------------------------ ------- -------
Number of shares (000s)
Weighted average number of shares for the purposes
of basic earnings per share 48,735 48,658
Weighted average dilutive effect of conditional
share awards 15 173
------------------------------------------------------------ ------- -------
Weighted average number of shares for the purposes
of diluted earnings per share 48,750 48,831
------------------------------------------------------------ ------- -------
Earnings per ordinary share (pence)
Basic earnings per ordinary share 13.9 16.0
Diluted earnings per ordinary share 13.9 15.9
------------------------------------------------------------ ------- -------
Headline earnings per ordinary share (pence)
Basic headline earnings per ordinary share 15.8 16.8
Diluted headline earnings per ordinary share 15.8 16.7
------------------------------------------------------------ ------- -------
The calculation of basic and diluted headline earnings per share
is based on the following data:
2019 2018
GBPm GBPm
--------------------------------------------------------- ------ ------
Profit for the year attributable to equity shareholders 6.8 7.8
Add back/(deduct):
Net finance cost in respect of defined benefit
pension scheme 0.4 0.5
Exceptional items 0.5 -
Amortisation of acquired intangibles 0.1 -
Tax effect of the above (0.1) (0.1)
--------------------------------------------------------- ------ ------
Headline earnings 7.7 8.2
--------------------------------------------------------- ------ ------
9. Equity dividends
2019 2018
GBPm GBPm
------------------------------------------------- ------ ------
Final dividend for the year ended 31 May 2018
of 5.3p (2017: 5.0p) per share 2.6 2.4
Interim dividend for the year ended 31 May 2019
of 1.0p (2018: 1.0p) per share 0.5 0.5
------------------------------------------------- ------ ------
Amounts recognised as distributions to equity
shareholders in the year 3.1 2.9
------------------------------------------------- ------ ------
Proposed final dividend for the year ended 31
May 2019 of 5.6p (2018: 5.3p) per share 2.7 2.6
------------------------------------------------- ------ ------
10. Share capital
Number
of shares Total
(000s) GBPm
------------------------------------------------ ----------- ------
Authorised: ordinary shares of 25p each
Balance at 1 June 2017, 31 May 2018 and 31 May
2019 80,000 20.0
------------------------------------------------ ----------- ------
Number
of shares Total
(000s) GBPm
------------------------------------------------- ----------- ------
Allotted and fully paid: ordinary shares of 25p
each
Balance at 1 June 2017 48,644 12.1
Issue of shares 16 0.1
------------------------------------------------- ----------- ------
Balance at 31 May 2018 48,660 12.2
Issue of shares (see below) 90 -
------------------------------------------------- ----------- ------
Balance at 31 May 2019 48,750 12.2
------------------------------------------------- ----------- ------
During the year ended 31 May 2019, 89,920 (2018: 15,900) shares
with an aggregate nominal value of GBP22,480 (2018: GBP3,975) were
issued under the Group's conditional Performance Share Plan.
The maximum total number of ordinary shares, which may vest in
the future in respect of conditional Performance Share Plan awards
outstanding at 31 May 2019, amounted to 1,216,945 (31 May 2018:
1,096,487). These shares will only be issued subject to satisfying
certain performance criteria.
11. Business combinations
On 1 December 2018, the Group acquired 100% of the share capital
of Midland Fuel Oil Supplies Limited, a 12 million litre fuel
distributor based in Solihull. On 3 April 2019, the Group acquired
100% of the share capital of Consols Oils Limited, a 25 million
litre fuel distributor based in Redruth. The combined net
consideration for the two Fuels acquisitions was GBP3.5 million
before acquisition costs.
Details of the total consideration and the provisional fair
values of the assets and liabilities acquired are shown below:
Initial fair
value of
assets acquired
GBPm
-------------------------------------------- -----------------
Intangible assets - Goodwill 2.5
Intangible assets - Brand 0.1
Intangible assets - Customer Relationships 0.5
Property, plant and equipment 1.0
Stock 0.2
Trade and other receivables 2.2
Cash 1.5
Trade and other payables (2.5)
Hire purchase obligations (0.2)
Current income tax liability (0.1)
Deferred tax liability (0.2)
5.0
-------------------------------------------- -----------------
Provisional goodwill of GBP2.5 million arises from the
acquisitions and is attributable to the acquired business and the
expected economies of scale from combining the operations of the
Group and the two acquisitions. None of the goodwill is expected to
be deductible for income tax purposes.
As the acquisitions were made in the year, the above amounts are
provisional and subject to adjustment.
Net cash outflow arising on the acquisition:
GBPm
------------------------------------ ------
Total consideration - cash paid
on completion (5.0)
Cash and cash equivalents acquired 1.5
------------------------------------ ------
(3.5)
Acquisition-related costs (0.2)
------------------------------------ ------
(3.7)
------------------------------------ ------
Acquisition-related costs of GBP0.2 million have been charged to
the income statement (included within exceptional costs) in the
year ended 31 May 2019.
The following amounts have been recognised within the
consolidated income statement in respect of the two acquisitions
made in the year: revenue - GBP6.8 million, profit - GBP0.1
million.
Had the two acquisitions taken place at the start of the
financial year, the consolidated income statement would show a pro
forma increase as follows: revenue - GBP23.1 million, profit -
GBP0.5 million.
12. Analysis of cash and cash equivalents and reconciliation to
net debt
Other
1 June Cash non-cash 31 May
2018 flow movements 2019
GBPm GBPm GBPm GBPm
--------------------------- ------- ------ ----------- -------
Cash and cash equivalents 0.5 2.3 - 2.8
Debt due after 1 year (6.8) (6.2) - (13.0)
Hire purchase obligations
due within 1 year (0.1) 0.1 (0.2) (0.2)
Hire purchase obligations - - - -
due after 1 year
--------------------------- ------- ------ ----------- -------
Total Group (6.4) (3.8) (0.2) (10.4)
--------------------------- ------- ------ ----------- -------
13. Retirement benefit scheme
The Group operates a defined benefit pension scheme providing
benefits based on final pensionable earnings.
NWF Group Benefits Scheme
The scheme is administered by a fund that is legally separated
from the Group. The trustees of the pension fund are required by
law to act in the interest of the fund and of all relevant
stakeholders in the scheme. The trustees are responsible for the
investment policy with regard to the assets of the fund.
The scheme was closed to new members during the year ended 31
May 2002 and closed to future accrual with effect from April
2016.
The latest full triennial actuarial valuation of this scheme was
completed in the year ended 31 May 2018, with a deficit of GBP19.1
million at the valuation date of 31 December 2016. The present
value of the defined benefit obligation and the related current
service cost were measured using the Projected Unit Credit Method.
In these financial statements this liability has been updated in
order to derive the IAS 19R valuation as of 31 May 2019. The next
full triennial valuation will be completed in the year ending 31
May 2021.
The amounts recognised in the balance sheet in respect of the
defined benefit scheme are as follows:
2019 2018
GBPm GBPm
------------------------------------------------- ------- -------
Present value of defined benefit obligations (55.3) (53.4)
Fair value of scheme assets 38.0 36.3
------------------------------------------------- ------- -------
Deficit in the scheme recognised as a liability
in the balance sheet (17.3) (17.1)
Related deferred tax asset 2.9 2.9
------------------------------------------------- ------- -------
Net pension liability (14.4) (14.2)
------------------------------------------------- ------- -------
Changes in the value of the defined benefit obligation are as
follows:
2019 2018
GBPm GBPm
------------------------------- ------ ------
At 1 June 17.1 19.9
Current service cost 0.1 -
Past service cost 0.3 -
Scheme expense 0.3 0.4
Interest cost 0.4 0.5
Contributions by employer (2.1) (1.7)
Re-measurement losses/(gains) 1.2 (2.0)
At 31 May 17.3 17.1
------------------------------- ------ ------
14. Critical accounting estimates and judgements
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The assumptions that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are discussed below.
Defined benefit pension scheme - valuation assumptions
The balance sheet carrying values of defined benefit pension
scheme surpluses or deficits are calculated using independently
commissioned actuarial valuations. These valuations are based on a
number of assumptions, including the most appropriate mortality
rates to apply to the profile of scheme members and the financial
assumptions regarding discount rates and inflation. All of these
are estimates of future events and are therefore uncertain.
Valuation of acquired intangibles
IFRS 3 requires separately identifiable intangible assets to be
recognised on acquisitions. The principal estimates used in valuing
these intangibles are generally based on the future cash flow
forecast to be generated by these assets, and the selection of
appropriate discount rates to apply to the cash flows.
15. Directors' responsibilities statement
The Directors are responsible for preparing the Annual Report in
accordance with applicable laws and regulations and consider that
the Annual Report, taken as a whole, is fair, balanced and
understandable and that it provides the information necessary for
shareholders to assess the Company's performance, business model
and strategy.
The Company's Annual Report for the year ended 31 May 2019,
which will be posted to shareholders on or before 23 August 2019,
contains the following statement regarding responsibility for the
Strategic Report, the Directors' Report (including the Corporate
Governance Report), the Board Report on Remuneration and the
financial statements included within the Annual Report:
"Each of the Directors confirm that to the best of their
knowledge:
-- the Group financial statements, which have been prepared in
accordance with IFRSs as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and
result of the Group;
-- the strategic report includes a fair review of the
development and performance of the business and the position of the
Group, together with a description of the principal risks and
uncertainties that it faces;
-- there is no relevant audit information of which the Company's auditors are unaware; and
-- each Director has taken all the steps that they ought to have
taken as a Director to make themselves aware of any relevant audit
information and to establish that the Company's auditors are aware
of that information."
16. Post balance sheet event
On 10 July 2019, in line with the Group's strategy, the Group
acquired 100% of the share capital of David Hermon Hodge Group
Limited, a 75 million litre fuel distributor based in the North
West, trading as Ribble Fuel Oils. The consideration of GBP4.5
million was satisfied in cash and the assumption of debt. A fair
value exercise is underway and will be disclosed in the next half
year report.
17. Financial calendar
Annual Report to be published 23 August 2019
Annual General Meeting 26 September 2019
Final dividend:
- ex-dividend date 31 October 2019
- record date 1 November 2019
- payment date 5 December 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR BRGDRCBDBGCC
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July 30, 2019 02:00 ET (06:00 GMT)
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