NICHOLS PLC — Interim / Quarterly Report 2016

Jul 21, 2016

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RNS Number : 7979E

Nichols PLC

21 July 2016

Date:	Embargoed until 0700 Thursday 21 July 2016
Contacts:	John Nichols, Non-Executive Chairman
Marnie Millard, Group Chief Executive Officer Tim Croston, Group Chief Finance Officer Andrew Milne, Group Commercial Director
Nichols plc
Telephone: 01925 222222
Website: www.nicholsplc.co.uk
Alex Brennan/ Nick Lyon	Richard Lindley
Hudson Sandler	N+1 Singer (Nominated Adviser)
Telephone: 020 7796 4133	Telephone: 0207 496 3000
Email: nichols@hspr.com

Nichols plc

INTERIM RESULTS

Nichols plc ('Nichols' or the 'Group'), the soft drinks Group, announces its Interim results for the period ended 30 June 2016 (the 'period').

Nichols is an international soft drinks business with sales in over 70 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 Feel Good, Starslush, Levi Roots and Sunkist. 

Financial Highlights:

All references below are pre-exceptional items	Half Year ended 30 June 2016	Half Year ended 30 June 2015	% movement
	£m	£m
Group Revenue	56.5	54.7	+3.3%
Operating Profit	11.9	10.7	+10.8%
Operating Profit margin	21%	20%
Profit Before Tax	11.9	10.9	+9.2%
PBT margin	21%	20%
EPS (basic)	25.77p	23.66p	+8.9%
Interim dividend	9.0p	8.0p	+12.5%

John Nichols, Non-Executive Chairman, said:

"The Board is pleased with the Group's strong performance in the first half of the year, with UK sales growth continuing to outperform the market. Group revenue increased by 3.3% and Group profit increased by 9%, which reflects the strengths of the Group's business model. As a result of this performance and our confidence in the outlook for Nichols, we are pleased to recommend an interim dividend of 9.0 pence per share which represents a 12.5% increase compared to the prior year."

Chairman's Statement

Nichols has produced another strong performance in the first half of 2016. Group sales have increased by 3.3%, profit growth (before exceptional credits) was 9.2% and the interim dividend has increased by 12.5% compared to the prior year.

Trading

Total revenues for the Group increased by 3.3% to £56.5m in the first half of 2016 (2015: £54.7m). This revenue growth was driven by our UK sales, which is particularly pleasing in the context of the continued challenges in the UK soft drinks market. Group operating profit increased by 10.8% to £11.9m (2015: £10.7m) delivering an increase in margin to 21% (2015: 20%) as a result of the sales growth and our continued strategy to focus on value over volume.

Our UK sales increased by 4.7% to £44.5m (2015: £42.6m).  During the same period, revenues in the overall UK soft drinks market declined by 0.5% (Source: Nielsen 6 months to 18 June 2016). This outperformance of the market was driven by the strong growth of our Still Ready To Drink range, the launch of Vimto Remix into both the Still and Carbonate categories, and most notably the incremental sales from the acquisition of The Noisy Drinks Co. Limited.

Total international sales in the period were in line with our expectations at £12.0m (2015: £12.1m).  As anticipated, the majority of our sales to the Middle-East will occur in the second half of the year due to the phasing of in-country production. In the Africa region, we have seen an excellent performance driven by our current markets and the opening of new territories.                                                                                                                                                                                                                                                         

Exceptional Profit

Having initially taken a 49% stake in The Noisy Drinks Co. Limited (Noisy) in March 2015, the Group acquired the remaining shares on 8 January 2016. Under International Financial Reporting Standards, the latter transaction triggers a deemed disposal of the initial 49% of the shares in Noisy and a subsequent acquisition of 100% of the shares. As a consequence, a profit on disposal amounting to £1.1m arose due to the increase in value of the 49% between March 2015 and January 2016. This profit is disclosed as an exceptional credit.   

Dividend

As a result of the strong Group performance in the first half of 2016 and the Board's continued confidence in the outlook, I am pleased to recommend an interim dividend of 9.0 pence per share, which represents a 12.5% increase compared to the prior year (2015: 8.0 pence).

The interim dividend will be paid on 26 August 2016 to shareholders registered on 29 July 2016. The ex-dividend date is 28 July 2016. 

Outlook

In our UK markets we expect performance in the second half of 2016 to continue the trend seen in the first six months of the year. In addition, we will re-launch the Feel Good brand in the autumn ahead of the important Christmas trading period into both the Still and Carbonate categories. As explained above, we expect a stronger second half of the year in our Middle East markets and as a result, our total international sales are anticipated to deliver growth for the full year.

In summary, the Board is pleased with the strong performance in the first half of 2016 and is confident that full year results will be in line with market expectations. 

John Nichols

Non-Executive Chairman

21 July 2016 

CONSOLIDATED INCOME STATEMENT

		Half year ended			Half year ended	Full year ended
30-Jun-16			30-Jun-15	31-Dec-15
		Unaudited before exceptional items	Unaudited exceptional items	Unaudited after exceptional items		Audited
Unaudited
		£'000	£'000	£'000	£'000	£'000
Revenue		56,520	-	56,520	54,716	109,279
Operating profit (pre-exceptional items)		11,869	-	11,869	10,709	27,834
Exceptional items		-	1,087	1,087	-	-
Finance income		118	-	118	119	213
Finance expense		(67)	-	(67)	(60)	(201)
Share of income from associate		-	-	-	147	190
Profit before taxation		11,920	1,087	13,007	10,915	28,036
Taxation		(2,423)	(217)	(2,640)	(2,197)	(5,803)
Profit for the financial period		9,497	870	10,367	8,718	22,233
Earnings per share (basic)		25.77p		28.13p	23.66p	60.33p
Earnings per share (diluted) - all activities		25.74p		28.10p	23.63p	60.25p
Dividends paid per share				17.60p	15.30p	23.30p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Unaudited		Unaudited		Audited
	Half year ended 30-Jun-2016		Half year ended 30-Jun-2015		Full year ended 31-Dec-2015
	£'000		£'000		£'000
Profit for the financial period	10,367		8,718		22,233
## Items that will not be reclassified subsequently to profit or loss ## Re-measurement of net defined benefit liability	-		-		1,632
Deferred taxation on pension obligations and employee benefits	-		-		(274)
Other comprehensive income for the period	-		-		1,358
## Total comprehensive income for the period	10,367		8,718		23,591

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	Unaudited		Unaudited		Audited
	30-Jun-2016		30-Jun-2015		31-Dec-2015
	£'000		£'000		£'000
ASSETS
Non-current assets
Property, plant and equipment	8,019		5,235		6,061
Goodwill	22,593		16,447		19,108
Investment in equity-accounted associate	-		2,927		2,970
Intangibles	6,163		-		1,316
Deferred tax assets	1,098		1,699		1,098
## Total non-current assets	37,873		26,308		30,553
Current assets
Inventories	6,731		4,696		3,945
Trade and other receivables	33,045		28,332		27,860
Cash and cash equivalents	32,778		31,814		35,438
## Total current assets	72,554		64,842		67,243
Total assets	110,427		91,150		97,796
## LIABILITIES
## Current liabilities
Trade and other payables	27,521		22,419		18,127
Current tax liabilities	2,315		2,196		2,679
## Total current liabilities	29,836		24,615		20,806
## Non-current liabilities
Pension obligations	3,012		5,309		3,893
Deferred tax liabilities	1,104		70		86
## Total non-current liabilities	4,116		5,379		3,979
## Total liabilities	33,952		29,994		24,785
Net assets	76,475		61,156		73,011
## 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	(573)		(560)		(547)
Retained earnings	68,887		53,555		65,397
## Total equity	76,475		61,156		73,011

CONSOLIDATED STATEMENT OF CASH FLOWS

	Unaudited Half year ended 30-Jun-2016		Unaudited Half year ended 30-Jun-2015		Audited Full year ended 31-Dec-2015
	£'000	£'000	£'000	£'000	£'000	£'000
Profit for the financial period		10,367		8,718		22,233
Cash flows from operating activities
Adjustments for:
Depreciation	453		239		502
Amortisation	78		-		-
Exceptional credit	1,087		-		-
Loss on sale of property, plant and equipment	3		1		16
Finance income	(118)		(119)		(213)
Finance expense	67		60		-
Share of result in associate	-		(147)		-
Tax expense recognised in the income statement	2,640		2,197		5,803
Change in inventories	(2,395)		17		767
Change in trade and other receivables	(6,661)		(4,824)		(4,335)
Change in trade and other payables	7,429		2,873		(1,359)
Change in pension obligations	(881)		(881)		(665)
		1,702		(584)		516
Cash generated from operating activities		12,069		8,134		22,749
Tax paid		(3,040)		(1,860)		(4,639)
Net cash generated from operating activities		9,029		6,274		18,110
Cash flows from investing activities
Finance income	118		136		213
Proceeds from sale of property, plant and equipment	-		1		5
Acquisition of property, plant and equipment	(1,237)		(660)		(1,768)
Acquisition of subsidiary, net of cash acquired	(4,056)		-		(157)
Acquisition of business trade and assets	-		-		(3,820)
Acquisition of associate investment	-		(2,780)		(2,970)
Net cash used in investing activities		(5,175)		(3,303)		(8,497)
Cash flows from financing activities
Share options exercised	(26)		-		(69)
Dividends paid	(6,488)		(5,640)		(8,589)
Net cash used in financing activities		(6,514)		(5,640)		(8,658)
Net (decrease)/ increase in cash and cash equivalents		(2,660)		(2,669)		955
Cash and cash equivalents at beginning of period		35,438		34,483		34,483
Cash and cash equivalents at end of period		32,778		31,814		35,438

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 2015, prepared under IFRS, 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.

The interim financial information has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) and on the same basis and using the same accounting policies as used in the financial statements for the year ended 31 December 2015. 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.

2.         Dividends

The interim dividend of 9.0p (2015: 8.0p) will be paid on 26 August 2016 to shareholders registered on 29 July 2016. The ex dividend date is 28 July 2016.

3.         Earnings Per Share

Basic earnings per share are based on the weighted average number of shares in issue in the six months to 30 June 2016 of 36,849,942 (six months to 30 June 2015 of 36,849,257 and 12 months to 31 December 2015 of 36,849,638).

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Interim Report

The interim report will be available on the Company's website (www.nicholsplc.co.uk) on or around 21 July 2016.

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.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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