Nichols PLC
02 August 2007
Date: Embargoed until 07.00hrs, Thursday 2 August 2007
Contacts: John Nichols, Executive Chairman
Brendan Hynes, Group Finance Director
Nichols plc
Telephone: 01925 222222
Website: www.nicholsplc.co.uk
Alistair Mackinnon-Musson
Nicola Savage
Hudson Sandler
Telephone: 020 7796 4133
Email: nichols@hspr.com
Photographs available: On request from Hudson Sandler, as above
Nichols plc
INTERIM RESULTS
Nichols plc, the soft drinks group, announces its Interim results for the six
months to 30 June 2007.
The Group is a highly focused soft drinks and dispensed cold drinks business,
comprising two operations:
1. Soft Drinks (sales and marketing of the Vimto brand throughout the world,
where it is now available in over 65 countries and of the Panda & Sunkist
brands in the UK) and
2. Dispense Systems (namely the Cabana & Beacon cold soft drinks on draught '
dispense' businesses)
Highlights:
• Turnover up 6.1%
• Profit on continuing activities before tax and exceptional items up 14.9%
• Increased cash balances; Interim dividend up 6.1%
• Core Vimto brand has continued its UK growth; International performance
strong
• Cariel integration is going well; four new distributors signed for
Dispense Systems
• Further progress is expected for the full year; Board confident of the
future
Commenting John Nichols, Chairman, said:
'I am delighted to report that, for the fifth consecutive year, we have made
positive progress during the first half. This has been achieved despite the
soft drinks market generally being highly competitive and the extreme wet
weather conditions experienced so far this summer'.
'Although we expect market volatility to continue throughout the second half, we
still believe our core brands will continue to perform well in a difficult UK
market, and that we will also see growth internationally for the full year.
Combined with the improving performance of our Dispense Systems Operation, we
anticipate showing further progress at the full year'.
Chairman's Statement
I am delighted to report that, for the fifth consecutive year, we have made
positive progress during the first half. We have achieved this despite the soft
drinks market generally being highly competitive and the extreme wet weather
conditions experienced so far this summer.
Results
The Interim results to June 2007 are the first set of trading results produced
by Nichols PLC using the measurement basis of International Financial Reporting
Standards (IFRS). An analysis of the impact of IFRS, together with
reconciliation from UK GAAP to IFRS, was reported separately on 30 July 2007.
Turnover in the six months to 30 June 2007 at £27.8 million was 6.1% up on the
first half of last year (2006: £26.2 million). This includes £0.5 million of
sales relating to Cariel Soft Drinks acquired in April 2007. Profit on
continuing activities before tax and exceptional items was up 14.9% at £2.77
million (2006: restated £2.41 million).
Earnings per share decreased by 4.6% to 5.43 pence (2006: restated 5.69 pence)
mainly due to the higher effective tax rate in 2007.
The Group also had increased positive cash balances of £5.8 million at the end
of June 2007 (2006: £2.4 million).
The acquisition of Cariel Soft Drinks, a cold soft drinks on draught business
based in Dunblane Scotland, was in line with the aim to grow our core business.
This acquisition, combined with the four new distributors signed in the first
half of 2007, will help underpin the continued improvement in trading at our
Dispense Systems Operation that is anticipated during the remainder of 2007 and
beyond.
Soft Drinks Operation
After a better than expected start to the year, particularly in April, the
months of May and June saw the general soft drinks market dominated by a
combination of deep promotional activity and extreme wet weather, both of which
have made trading extremely difficult in the first half of the year.
Despite these exceptionally challenging market conditions, I am pleased to
report that our core Vimto brand has continued to grow, particularly in the '
Carbonates' and 'Ready to Drink' sectors, both of which have seen market share
gains in the first half.
Internationally, the Vimto brand has also performed strongly, particularly in
the Middle East, where sales were ahead in the first six months due to the
timing of Ramadan. This uplift, however, is largely a timing issue, with
forecast sales in the second half consequently being lower than normal, although
in total, International sales for the year are expected to be ahead of those
made in 2006.
In overall terms we still expect to see growth in the full year from our Soft
Drinks Operation.
Dispense Systems Operation
The transformation of our Dispense Systems Operation to an 'external distributor
model' is now complete. This means that in 17 of the 19 UK regions covered,
provision of the actual dispense equipment and its subsequent maintenance are no
longer the responsibility of the Group. Having effectively 'out-sourced' these
aspects, long term agreements are now in place with the 17 external
distributors, whereby Nichols supplies them with the consumable 'syrups' and '
juices' from which the dispense drink product is mixed at the point of sale.
In the first half of 2007 we successfully attracted four new distributors to the
division and completed the acquisition of Cariel Soft Drinks, both of which
increase geographical coverage and significantly strengthen our market position.
Our Dispense Systems Operation is now firmly positioned as the UK's third major
player in this sector and with its turnaround complete, we expect to see the
financial benefits of our strategy coming through in the second half of 2007.
Dividend
This is our fifth consecutive year of improved Interim profits which, combined
with our strong cash position and our confidence in the future, means the Board
has approved a 6.1% increase in the Interim dividend to 3.50 pence per share
(2006: 3.30 pence).
The Interim dividend will be paid on the 7 September 2007 to shareholders
registered on the 10 August 2007. The ex-dividend date will be 8 August 2007.
Outlook
The extremely poor summer weather to date, combined with higher than normal
promotional activity in the market, means that we expect the soft drinks market
generally to remain fairly volatile throughout the second half of the year.
Despite these factors, however, we still believe our core brands will continue
to perform well and that we will see further growth internationally. Combined
with the improving performance of our Dispense Systems Operation, we anticipate
showing further progress in sales for the full year at Group level.
On 19 March 2007, Nichols PLC announced it was in preliminary discussions
regarding the possibility of an offer being made for the entire issued and to be
issued share capital of the Group. These discussions continue, although there is
no certainty that an offer will be made. Further announcements will be made as
appropriate.
John Nichols
Chairman
2 August 2007
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Unaudited Unaudited Unaudited
Restated before Restated after Restated before Restated after
exceptional exceptional exceptional exceptional
items items items items
Half year ended Half year ended Half year ended Full year ended Full year ended
30 June 07 30 June 06 30 June 06 31 Dec 06 31 Dec 06
£'000 £'000 £'000 £'000 £'000
Revenue - continuing activities 27,802 26,188 26,188 52,296 52,296
Operating profit - continuing 2,702 2,446 336 7,897 5,287
activities
Profit on disposal of non-current 0 0 128 0 128
assets
Finance income 127 86 86 156 156
Finance expense (62) (121) (121) (98) (98)
Profit before taxation 2,767 2,411 429 7,955 5,473
Taxation 767 (284) 379 2,296 1,238
Profit from continuing activities 2,000 2,695 50 5,659 4,235
Profit on disposal of discontinued 0 0 2,038 0 2,038
operations
Profit for the period 2,000 2,695 2,088 5,659 6,273
Earnings per share (basic) - total 5.43p 5.69p 17.10p
and continuing activities
Earnings per share (diluted) - 5.42p 5.67p 17.08p
total and continuing activities
Dividends paid per share 6.50p 3.30p 9.40p
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Unaudited
30 June 2007 30 June 2006 31 Dec 2006
£'000 £'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 2,891 4,053 3,179
Goodwill 10,771 9,504 9,624
Deferred tax asset 1,945 2,125 1,892
Total non-current assets 15,607 15,682 14,695
Current assets
Inventories 2,689 3,053 2,169
Trade and other receivables 15,615 17,599 12,364
Cash and cash equivalents 5,826 2,448 7,460
Total current assets 24,130 23,100 21,993
Total assets 39,737 38,782 36,688
LIABILITIES
Current liabilities
Trade and other payables 12,131 11,979 8,366
Current tax payable 750 1,118 598
Total current liabilities 12,881 13,097 8,964
Non-current liabilities
Retirement benefit obligations 6,504 6,508 6,504
Provisions 746 2,353 1,211
Total non-current liabilities 7,250 8,861 7,715
Total liabilities 20,131 21,958 16,679
Net assets 19,606 16,824 20,009
EQUITY
Share capital 3,697 3,697 3,697
Share premium account 3,255 3,255 3,255
Capital redemption reserve 1,209 1,209 1,209
Other reserves (487) (698) (487)
Retained earnings 11,932 9,361 12,335
Total equity 19,606 16,824 20,009
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Unaudited
Half year ended Half year ended Full year ended
30 June 2007 30 June 2006 31 Dec 2006
£'000 £'000 £'000 £'000 £'000 £'000
Profit for the period 2,000 2,088 6,273
Cash flows from operating activities
Adjusted for:
Depreciation 388 573 794
Non-current asset impairment 0 0 1,935
Loss/(profit) on sale of property, plant and 24 (2,158) (2,136)
equipment
Share option charge 50 0 100
Interest receivable (127) (86) (156)
Interest payable 62 121 98
Taxation expense recognised in the income statement 767 379 1,238
Change in inventories (462) (721) 163
Change in receivables (3,000) (3,806) (194)
Change in payables 3,605 1,665 (2,326)
Change in provisions (465) 1,698 556
Change in employee benefits 0 (500) (504)
842 (2,835) (432)
Cash generated from operations 2,842 (747) 5,841
Interest paid (62) (61) (72)
Taxation paid (669) (482) (1,654)
Net cash used in operating activities (731) (543) (1,726)
Cash flows from investing activities
Interest received 127 86 156
Proceeds from sale of property, plant and equipment 424 6,103 7,474
Acquisition of property, plant and equipment (348) (343) (837)
Disposal of discontinued operation, net of cash 0 6,455 6,455
costs
Purchase of subsidiary undertakings (1,251) 0 0
Net overdrafts acquired with subsidiary (144) 0 0
Additional consideration in respect of a prior (150) 0 (120)
acquisition
Net cash used in investing activities (1,342) 12,301 13,128
Cash flows from financing activities
Repayment of borrowings 0 (6,308) (6,308)
Dividends paid (2,403) (2,255) (3,475)
Net cash used in financing activities (2,403) (8,563) (9,783)
Net (decrease)/increase in cash and cash (1,634) 2,448 7,460
equivalents
Cash and cash equivalents at beginning of period 7,460 0 0
Cash and cash equivalents at end of period 5,826 2,448 7,460
STATEMENT OF RECOGNISED INCOME AND EXPENSE
Unaudited Unaudited
Half year Half year Full year
ended ended ended
30 June 2007 30 June 2006 31 Dec 2006
£'000 £'000 £'000
Actuarial movement in defined benefit schemes 0 0 91
Deferred taxation on pension scheme deficit 0 0 (27)
Net income recognised directly in equity 0 0 64
Profit for the period 2,000 2,088 6,273
Total recognised income and expense 2,000 2,088 6,337
for the period
NOTES
1. Basis of Preparation
The financial information set out in this interim report does not constitute
statutory accounts as defined in Section 240 of the Companies Act 1985. The
group's statutory financial statements for the year ended 31 December 2006,
prepared under UK GAAP, 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 237 (2) of the Companies Act 1985.
The accounting policies for the group can be found in the transition document
which was published via the Regulatory News Service (RNS) on 30 July 2007.
2. Dividends
The interim dividend of 3.50p (2006: 3.30p) will be paid on 7 September 2007 to
shareholders registered on 10 August 2007. The ex dividend date is 8 August
2007.
3. Earnings per share
Earnings per share are based on the weighted average number of shares in issue
in the six months to 30 June 2007 of 36,905,548 (six months to 30 June 2006 of
36,693,536 and 12 months to 31 December 2006 of 36,685,868).
4. Acquisitions
On 6 April 2007 the group acquired the assets and liabilities of Cariel Soft
Drinks Limited for £1.25m. The acquisition was made to increase the
geographical range of the group's Dispense business and to enhance Cabana's
position as the third largest operator in the dispense sector in the UK. The
assets acquired were:
Provisional fair values
£000's
Non-current assets 197
Inventories 58
Trade and other receivables 251
Trade and other payables (258)
Overdraft (144)
Net assets acquired 104
Cash consideration 1,251
Provisional goodwill 1,147
The turnover since acquisition was £473,000 and the operating profit was
£41,000. These have not been disclosed separately in the income statement as
they are not considered to be material.
Management have reviewed the fair value of the assets and liabilities acquired.
At this time the review of intangible assets acquired is ongoing. Any necessary
adjustments to goodwill following the conclusion of this exercise will be
reflected in the year end financial statements.
- ENDS -
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