NICHOLS PLC — Interim / Quarterly Report 2017

Jul 20, 2017

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RNS Number : 5682L

Nichols PLC

20 July 2017

Date:	Embargoed until 0700 Thursday 20 July 2017
Contacts:	John Nichols, Non-Executive Chairman
Marnie Millard, Group Chief Executive Officer Tim Croston, Group Chief Financial Officer Andrew Milne, Group Commercial Director
Nichols plc
Telephone: 01925 222 222
Website: www.nicholsplc.co.uk
Alex Brennan	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 & BOARD APPOINTMENT

Nichols plc ('Nichols' or the 'Group'), the soft drinks Group, announces its Interim results for the half year ended 30 June 2017 (the 'period').

Nichols is an international soft drinks business with sales in over 85 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.

Highlights:

*Profit Before Tax and EPS were adjusted measures in 2016, excluding the exceptional gain recognised.	Half Year ended 30 June 2017	Half Year ended 30 June 2016	% movement
	£m	£m
Group Revenue	63.5	56.5	+12.4%
Operating Profit	12.7	11.9	+7.1%
Operating Profit margin	20.0%	21.0%
Adjusted Profit Before Tax*	12.7	11.9	+6.8%
PBT margin	20.0%	21.1%
Adjusted EPS (basic)*	27.67	25.77	+7.4%
Interim dividend	10.1 pence	9.0 pence	+12.2%

John Nichols, Non-Executive Chairman, said:

"Nichols has delivered another strong performance in the first half of the year. Our sales momentum, which continues to outperform the UK market coupled with successful management of input costs has delivered solid profit growth."

"Whilst we anticipate that market conditions will remain challenging during the second half of the year, we have a clear strategy and, underpinned by the strength of our brands and our diversified business model, we are confident of delivering full year results in line with expectations."

Chairman's Statement

The Group has delivered another strong performance in the first half of 2017. Revenue has increased by 12.4% (10.7% on a constant currency basis) and despite input cost challenges faced in the UK, the Group's Profit Before Tax grew by 6.8% with the interim dividend being increased by 12.2%.

Trading

Total Group revenue grew by 12.4% to £63.5m in the first six months of 2017 (H1 2016: £56.5m). Once again, the growth has been delivered from both our UK and international trading which highlights the strength of our diversified business model.

In the UK, revenue totalled £47.5m (H1 2016: £44.5m) an increase of 6.7% compared to the prior year. This performance compares favourably to the total soft drinks market which showed total growth of 2.9% in the same period (Nielsen year to date to 17 June 2017). Within the UK, the Vimto brand has continued to outperform the market with sales up 10% versus the same period in 2016. The Vimto brand's strong growth has been driven by both the Still and Carbonate segments and this sustained performance demonstrates the strength of our core brand.      

International revenues increased by 33.5% in the period to £16.0m (H1 2016: £12.0m), which is 24.7% on a constant currency basis. In Africa, revenues were up by 30.9% (20.2% on a constant currency basis), which continues the strong momentum reported in 2016 (H1 2016: +21.0%). Sales to the Middle East were 19.8% ahead of the same period in 2016 (15.9% on a constant currency basis). As anticipated, the first quarter benefited from shipments of concentrate for Ramadan 2017, some of which were originally scheduled for Q4 2016.

Acquisition of DJ Drink Solutions Limited

Acquisitions are a key component of our strategic growth plan, as demonstrated in recent years with our successful move into frozen beverages via the purchase of The Noisy Drinks Co. Limited and the addition of the Feel Good brand. We are therefore delighted to announce the acquisition of 100% of the shares in DJ Drink Solutions Limited ('DJ') on 2 June 2017. DJ is the largest of our Out of Home dispensed soft drinks distributors covering the North West and North East regions. This acquisition consolidates our route to market in the two regions and is consistent with our successful business model already operating in other regions in the UK.  

Dividend

Reflecting the Board's continued confidence in the outlook for the Group, the Board is pleased to announce an interim dividend of 10.1 pence per share, an increase of 12.2% compared to the prior year (2016: 9.0 pence). The interim dividend will be paid on 25 August 2017 to shareholders registered on 28 July 2017; the ex-dividend date is 27 July 2017. 

Board Appointment

Following John Longworth's departure at the AGM in April, we are delighted to announce the appointment of Helen Keays to the Board as an Independent Non-Executive Director and Chair of the Remuneration Committee with effect from 1 September 2017.

Helen has a background in marketing and brings a wealth of non-executive experience to the Board and is currently Senior Independent Director at Domino's Pizza Group plc and a Non- Executive Director and Chair of Remuneration at Communisis plc.

Helen Margaret Keays (aged 53) has held the following directorships within the five years prior to the date of this announcement:

Name	Current directorships	Previous directorships
Helen Keays	Communisis plc	Majestic Wine plc
	Domino's Pizza Group plc	Mattioli Woods plc
	SBT Trading Limited

There are no other disclosures in respect of AIM Rule 17 and Schedule 2 part (g).

Summary and Outlook

In summary, the Board is pleased with the Group's performance in the first half of 2017. We have delivered double-digit revenue growth, managed the industry wide input cost pressures with a 6.8% increase in Profit Before Tax and announce a 12.2% increase in the interim dividend.

Whilst we anticipate that market conditions will remain challenging during the second half of the year, the Board currently expects our full year earnings to be in line with expectations. 

John Nichols

Non-Executive Chairman

19 July 2017 

CONSOLIDATED INCOME STATEMENT

		Half year ended	Half year ended						Full year ended
30-Jun-17	30-Jun-16						31-Dec-16
			Unaudited before exceptional items		Unaudited exceptional items		Unaudited after exceptional items		Audited
Unaudited
			£'000		£'000		£'000		£'000
£'000
Revenue		63,504	56,520		-		56,520		117,349
Operating profit (pre-exceptional items)		12,717	11,869		-		11,869		30,325
Exceptional items		-	-		1,087		1,087		1,087
Finance income		74	118		-		118		214
Finance expense		(60)	(67)		-		(67)		(134)
Profit before taxation		12,731	11,920		1,087		13,007		31,492
Taxation		(2,534)	(2,423)		(217)		(2,640)		(6,015)
Profit for the financial period		10,197	9,497		870		10,367		25,477
Earnings per share (basic)		27.67p	25.77p				28.13p		69.13p
Earnings per share (diluted) - all activities		27.65p	25.74p				28.10p		69.07p
Dividends paid per share		20.30p					17.60p		26.60p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Unaudited		Unaudited		Audited
	Half year ended 30-Jun-2017		Half year ended 30-Jun-2016		Full year ended 31-Dec-2016
	£'000		£'000		£'000
Profit for the financial period	10,197		10,367		25,477
## Items that will not be reclassified subsequently to profit or loss ## Re-measurement of net defined benefit liability	-		-		(3,472)
Deferred taxation on pension obligations and employee benefits	-		-		601
Other comprehensive income for the period	-		-		(2,871)
## Total comprehensive income for the period	10,197		10,367		22,606

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	Unaudited		Unaudited		Audited
	30-Jun-2017		30-Jun-2016		31-Dec-2016
	£'000		£'000		£'000
ASSETS
Non-current assets
Property, plant and equipment	9,924		8,019		8,715
Goodwill	29,415		22,593		23,061
Intangibles	6,006		6,163		6,084
Deferred tax assets	1,436		1,098		1,436
## Total non-current assets	46,781		37,873		39,296
Current assets
Inventories	6,036		6,731		6,717
Trade and other receivables	36,957		33,045		31,508
Cash and cash equivalents	29,276		32,778		39,754
## Total current assets	72,269		72,554		77,979
Total assets	119,050		110,427		117,275
## LIABILITIES
## Current liabilities
Trade and other payables	20,624		27,521		21,456
Current tax liabilities	2,607		2,315		2,355
## Total current liabilities	23,231		29,836		23,811
## Non-current liabilities
Pension obligations	5,954		3,012		6,395
Deferred tax liabilities	1,101		1,104		1,101
## Total non-current liabilities	7,055		4,116		7,496
## Total liabilities	30,286		33,952		31,307
Net assets	88,764		76,475		85,968
## 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	(268)		(573)		(358)
Retained earnings	80,871		68,887		78,165
## Total equity	88,764		76,475		85,968

CONSOLIDATED STATEMENT OF CASH FLOWS

	Unaudited Half year ended 30-Jun-2017		Unaudited Half year ended 30-Jun-2016		Audited Full year ended 31-Dec-2016
	£'000	£'000	£'000	£'000	£'000	£'000
Profit for the financial period		10,197		10,367		25,477
Cash flows from operating activities
Adjustments for:
Depreciation	362		453		954
Amortisation	78		78		157
Exceptional credit	-		(1,087)		(1,087)
Loss/ (profit) on sale of property, plant and equipment	15		3		(6)
Finance income	(74)		(118)		(214)
Finance expense	60		67		134
Tax expense recognised in the income statement	2,534		2,640		6,015
Change in inventories	536		(2,395)		(2,382)
Change in trade and other receivables	(5,448)		(4,487)		(3,036)
Change in trade and other payables	(859)		7,429		1,229
Change in pension obligations	(441)		(881)		(970)
		(3,237)		1,702		794
Cash generated from operating activities		6,960		12,069		26,271
Tax paid		(2,314)		(3,040)		(6,116)
Net cash generated from operating activities		4,646		9,029		20,155
Cash flows from investing activities
Finance income	74		118		214
Proceeds from sale of property, plant and equipment	3		-		17
Acquisition of property, plant and equipment	(1,758)		(1,237)		(2,442)
Acquisition of subsidiary, net of cash acquired	(6,040)		(4,056)		(3,715)
Net cash used in investing activities		(7,721)		(5,175)		(5,926)
Cash flows from financing activities
Funds from ESOT/ (share options exercised)	84		(26)		(107)
Dividends paid	(7,487)		(6,488)		(9,806)
Net cash used in financing activities		(7,403)		(6,514)		(9,913)
Net (decrease)/ increase in cash and cash equivalents		(10,478)		(2,660)		4,316
Cash and cash equivalents at beginning of period		39,754		35,438		35,438
Cash and cash equivalents at end of period		29,276		32,778		39,754

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 2016, 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 2016. 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.         New Accounting Standards

There are a number of new accounting standards, along with amendments and interpretations to standards, which are effective for future year-ends that have not been applied in preparing these Interim results. Management has in particular considered the potential impact of the implementation of IFRS 9, IFRS 15 and IFRS 16. It is expected that neither IFRS 9 nor IFRS 15 will have a material impact on the consolidated financial statements of the Group. Management are reviewing the impact of IFRS 16, which will become effective for the 31 December 2019 year end. The current total minimum lease payments on operating leased assets is £3.2m which is considered materially similar to the asset and liability that would be recognised if IFRS 16 were effective at the current time.

3.         Exceptional Gain in 2016

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 triggered 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 was disclosed as an exceptional gain in 2016.  

4.         Dividends

The interim dividend of 10.1 pence (2016: 9.0 pence) will be paid on 25 August 2017 to shareholders registered on 28 July 2017. The ex-dividend date is 27 July 2017.

5.         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 2017 of 36,853,794 (six months to 30 June 2016 of 36,849,942 and 12 months to 31 December 2016 of 36,853,888).

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 20 July 2017.

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

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