2023 Interim Results

Nichols PLC
26 July 2023
 

A purple letters on a black background Description automatically generated

26 July 2023

Nichols plc

2023 INTERIM RESULTS

 

Encouraging trading performance and strategic progress

 

Nichols plc ('Nichols' or the 'Group'), the diversified soft drinks group, announces its unaudited Interim Results for the half year ended 30 June 2023 (the 'period').

 


Half year ended

30 June 2023

Half year ended

30 June 2022

 

Movement


£m

£m






Group Revenue

85.5

80.2

+6.6%





Adjusted Profit Before Tax (PBT)1

12.3

11.3

+9.1%

Profit Before Tax (PBT)

11.2

10.1

+10.5%





Adjusted PBT Margin1

14.4%

14.0%

+0.4ppts

PBT Margin

13.0%

12.6%

+0.4ppts





Statutory EBITDA2

11.6

12.4

(6.5%)





Adjusted Earnings per Share (basic)1

25.70p

24.80p

+3.6%

Earnings per Share (basic)

23.31p

22.22p

+4.9%





Cash and Cash Equivalents

56.1

49.2

+14.2%





Free cash flow3

5.4

(2.6)

+ 310.2%





Adjusted Return on capital employed4

25.9%

25.2%

+0.7ppts

Statutory Return on capital employed5

14.3%

(14.3%)

+28.6ppts





Interim Dividend

12.6p

12.4p

+1.6%

 


Strategic and operational highlights

·    Strong top line growth delivered across the business

Focus on accelerating Packaged division in line with strategic plan

Continued accelerated momentum in International Packaged geographies

·    Significant progress on implementation of Out of Home (OoH) Strategic Review

·    Impacts of inflation actively managed

 

Financial highlights

·    Group revenue increased by 6.6% to £85.5m (H1 2022: £80.2m)

Packaged revenues +10.4% to £64.5m (H1 2022: £58.5m)

§ International Packaged revenues +24.6% to £21.5m (H1 2022: £17.2m)

-      Middle East revenue +17.5%

-      Continued momentum in Africa leading to +26.1% growth

-      ROW markets +29.8%

§ UK Packaged revenues +4.5% to £43.1m (H1 2022: £41.3m)

-      Ongoing focus on value over volume

OoH revenues down 3.5% to £21.0m (H1 2022: £21.8m)

§ Reflects planned reduction in activity post OoH Strategic Review

·    Gross margin % slightly lower at 41.1% (H1 2022: 42.8%)

Absolute gross margin increased by £0.8m

Cost of goods inflation recovered through price and mitigating actions

·    Exceptional charge of £1.1m largely relating to the Group Systems Review and OoH Strategic Review

·   Strong cash and cash equivalents at £56.1m (H1 2022: £49.2m, 31 December 2022: £56.3m), increased interest receipts

·    Increased interim dividend of 12.6p (H1 2022: 12.4p)

·    Confidence in 2023 Group expectations6 which remain unchanged 

 

"We are pleased with our encouraging first half performance which again reflects the strength of the Vimto brand. Particularly pleasing is the growth in our core Packaged business, and the continued accelerated momentum across our international markets with very strong performances in Africa, the Middle East and the rest of the world.

 

The Group achieved significant strategic progress during the period, particularly in relation to our Out of Home business where we are making positive changes to simplify operations and focus on the areas of greatest opportunity and profitability. We are on-track to deliver the material benefits of these changes from FY 2024. Meanwhile, we remain focused on accelerating growth in Packaged, both in the UK and internationally, in line with our strategic plan.

 

We are mindful that consumer spend is still under pressure from continuing high levels of inflation. However, the Group's track record, strong brands and diversified business model, alongside the resilience of the wider soft drinks market, support the Board's confidence in the Group's long-term growth prospects, and that the Group's Adjusted PBT1 for FY 2023 will be in line with expectations6."

 

1 Excluding exceptional items

2 EBITDA is the statutory profit before tax, interest, depreciation, and amortisation

3 Free Cash Flow is the net movement in cash and cash equivalents before acquisition funding and dividends

4 Adjusted return on capital employed is the adjusted operating profit divided by the average period-end capital employed

5 Statutory return on capital employed is the operating profit divided by the average period-end capital employed

6 FY23 expectations refers to a Group compiled market consensus of adjusted PBT £25.2m

 

Contacts

 

Nichols plc

 

Andrew Milne, Group Chief Executive Officer

David Taylor, Interim Chief Financial Officer

 

Telephone: 0192 522 2222

Singer Capital Markets (NOMAD & Broker)

 

Steve Pearce / Jen Boorer

 

Telephone: 0207 496 3000

 

Website: www.singercm.com

Hudson Sandler (Financial PR)

 

Alex Brennan / Charlotte Cobb / Harry Griffiths

 

Telephone: 0207 796 4133

 

Email: nichols@hudsonsandler.com

 

 

Notes to Editors:

Nichols plc is an international diversified soft drinks business with sales in over 73 countries. The Group is home to the iconic Vimto brand which is popular in the UK and around the world, particularly in the Middle East and Africa. Other brands in its portfolio include SLUSH PUPPiE, Starslush, ICEE, Levi Roots and Sunkist.

For more information about Nichols, visit: www.nicholsplc.co.uk

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the company's obligations under Article 17 of MAR.



Executive Review

Revenue

The Board is pleased to report an encouraging half year performance with Group revenues of £85.5m, an increase of 6.6% compared to the prior year (H1 2022: £80.2m).

 

The Group's Packaged route to market delivered a strong performance across all regions with revenues increasing by 10.4% to £64.5m (H1 2022: £58.5m).

 

Within this, the Group's International Packaged business performed particularly strongly, with revenues up 24.6% and all regions experiencing double digit growth. The significant growth seen within Africa in previous years has continued into 2023, with revenues up 26.1% to £13.1m (H1 2022: £10.4m), delivered through a combination of new and existing geographies. Middle East revenues in the period also improved, by 17.5%, with in-market volumes performing well through Vimto's typically strong trading period of Ramadan (+10%). The Group's rest of world markets saw revenue growth of 29.8%, with the US and Europe continuing to perform well, building on increased brand awareness and strong in-market execution.

 

Within the UK Packaged route to market, the Group saw revenues of £43.1m, 4.5% ahead of the prior year (H1 2022: £41.3m). The business remains focused on its value over volume strategy in order to protect margins.

 

Following the initial implementation of the previously announced outputs of the Group's Out of Home (OoH) Strategic Review, as expected, revenues within this segment declined by 3.5% to £21.0m (H1 2022: £21.8m). The actions from the review will continue to be implemented into the second half of the year, with the benefits being realised from FY 2024.

 

The impact of movements in foreign exchange rates on revenue year-on-year was immaterial, at approximately +£0.2m.

 

Gross Profit

Gross profit of £35.2m was £0.8m higher than H1 2022 (£34.4m) and 1.7 percentage points lower at 41.1%.

 

The cost of goods inflation experienced in 2022 continued into the first half of the year, with underlying inflation at around 16%. The Group has been able to fully mitigate this by working with its customers and suppliers across the whole of its supply chain, identifying the optimal balance of mitigating actions and price recovery. Excluding the impact of the input costs and the price recovery, gross profit % was comparable with H1 2022.

 

The impact of movements in foreign exchange rates on gross profit was +£0.2m.

 

Distribution Expenses

Distribution expenses within the Group are those associated with the UK Packaged route to market, and for OoH are the distribution costs incurred from factory to depot. Final leg distribution costs within the OoH business are reported within Administrative Expenses.

 

Distribution expenses increased by 7.7% to £5.0m (H1 2022: £4.7m), reflecting inflationary pressures, particularly around increased fuel prices, which were experienced in H2 2022 into H1 2023.

 

Administrative Expenses

Administration expenses excluding exceptional items totalled £18.7m (H1 2022: £18.5m), an increase of £0.2m or 1.1% year-on-year. Additional costs incurred in the period largely relate to payroll and staff related costs in response to cost-of-living pressures, alongside further investment in marketing spend to drive brand equity within the Packaged business. These additional expenses have been partially offset by savings across other cost centres.

 

Segment Operating Profit                

We have, for the first time, included an analysis of segment profitability (see note 3) which identifies adjusted operating profit by business route to market before central costs. Our Packaged business has performed well, delivering an additional £1.5m of profit despite substantial inflation within our supply chain which has led to a slight fall in segment operating margin to 27.9% (H1 2022: 28.1%). OoH has also performed in line with our strategic expectations during a period of considerable change for the business, operating margins were lower at 6.4% (H1 2022: 7.5%). Central costs have increased by £1.0m on the prior year principally as a result of cost-of-living increases to wages and salaries.

 

Exceptional Costs

The Group incurred £1.1m of exceptional costs during the period (H1 2022: £1.2m).

 

Out of Home Strategic Review

In 2022 the Group completed a strategic review into its OoH route to market, assessing customer and product mix as well as reviewing ways to enhance net margin and profitability going forward. The Group incurred £0.6m of costs in the period as these recommendations have begun to be implemented. Additional costs will be incurred through the second half of 2023.

 

Historic incentive scheme

During 2022 the Group settled with HMRC the £4.3m tax and interest charges relating to a historic incentive scheme and has commenced recovery of debts from current and previous employees who had indemnified the Company. The Group incurred legal costs in the period of £0.1m in relation to the case.

 

Group Systems Review

The Group has commenced a project to implement a new enterprise resource planning (ERP) system, focused on driving business transformation and is expected to be operational at the end of 2024. Costs of £0.5m were incurred in the period.

 

Due to the one-off nature of these charges, the Board is treating these items as exceptional costs and their impact has been removed in all adjusted measures throughout this report.

 

Finance Costs

Net finance income of £0.8m (H1 2022: £0.1m) was significantly up on the prior year, as the Group ensured the best return for its deposits following the Bank of England interest rate rises.

 

Profit before tax and tax rate

Adjusted profit before tax, pre-exceptional items, increased by 9.1% to £12.3m (H1 2022: £11.3m). The tax charge on adjusted profit before tax for the period of £2.9m (H1 2022: £2.2m) represents an effective tax rate of 23.8% (H1 2022: 19.5%). The increase in the effective rate is consistent with published rates. Reported profit before tax was £11.2m, an increase of 10.5% compared to the prior year (H1 2022: £10.1m).

 

Balance Sheet and Cash and Cash Equivalents

The continued strength of the Group's closing balance sheet reflects its diversified routes to market and asset light model.

 

Cash and cash equivalents at the end of the period remained strong at £56.1m (H1 2022: £49.2m, 31 December 2022: £56.3m).

 

The Group has seen its working capital marginally increase since the start of the year (+£3.2m), principally driven by debtors and strong Q2 sales. Capital expenditure in the period was £0.1m (H1 2022: £0.9m) and was historically weighted towards our OoH business where a re-focus on capital allocation and spend has been actioned following the strategic review.

 

The Group's current Return on Capital Employed is 25.9% (H1 2022: 25.2%).

 

Earnings per share

Total adjusted basic EPS increased to 25.70 pence (H1 2022: 24.80p) with basic EPS at 23.31 pence (H1 2022: 22.22p). On an adjusted basis, diluted EPS was 25.68 pence (H1 2022: 24.77p).

 

Dividend

In line with the Group's dividend policy, dividend cover is broadly 2x the adjusted earnings of the Group. As a result, the interim dividend for 2023 will be 12.6p per share, to be paid on 8 September 2023 with a record date of 4 August 2023 and an ex-dividend date of 3 August 2023.

 

Pensions

The Group operates two employee benefit plans, a defined benefit plan that provides benefits based on final salary, which is now closed to new members, and a defined contribution group personal plan. At 30 June 2023, the Group recognised a surplus on its UK defined benefit scheme of £4.3m (31 December 2022: surplus £4.1m).

 

Outlook

The Board is pleased with the Group's trading performance and strategic progress in the first half of 2023. The progress in the UK and International Packaged businesses during the first half will support the long-term performance of the business.

 

We are mindful that consumer spend is still under pressure from continuing high levels of inflation. However, the Group's track record, strong brands and diversified business model, alongside the resilience of the wider soft drinks market, support the Board's confidence in the Group's long-term growth prospects, and that the Group's Adjusted PBT1 for FY 2023 will be in line with expectations2.

 

 

Andrew Milne

Chief Executive Officer

 

David Taylor

Interim Chief Financial Officer

 

26 July 2023

 

 

 

1 Excluding exceptional items

2 FY23 expectations refers to a Group compiled market consensus of adjusted PBT £25.2m

 

 

CONSOLIDATED INCOME STATEMENT



 

 



Unaudited Half year to 30 June

2023

£'000

Unaudited

Half year to

30 June

2022

£'000

Audited

Year ended

31 December 2022

£'000


 

 

 

Continuing operations

 

 

 

Revenue

85,546

80,232

164,926

Cost of sales

(50,356)

(45,880)

(93,905)

Gross profit

35,190

34,352

71,021

 

 



Distribution expenses

(5,009)

(4,651)

(10,677)

Administrative expenses

(19,846)

(19,667)

(46,888)

Operating profit

10,335

10,034

13,456

 

 



Finance income

866

126

514

Finance expenses

(48)

(63)

(134)

Profit before taxation

11,153

10,097

13,836

 

 



Taxation

(2,649)

(1,969)

(2,201)

Profit for the period

8,504

8,128

11,635


 



Earnings per share (basic)

23.31p

22.22p

31.86p

Earnings per share (diluted)

23.29p

22.19p

31.82p

 

 



 

 



Adjusted for exceptional items

 



 

 



Operating profit

10,335

10,034

13,456

Exceptional items

1,144

1,173

11,146

Adjusted operating profit

11,479

11,207

24,602

 

 



Profit before taxation

11,153

10,097

13,836

Exceptional items

1,144

1,173

11,146

Adjusted profit before taxation

12,297

11,270

24,982

 

 



Adjusted earnings per share (basic)

25.70p

24.80p

55.38p

Adjusted earnings per share (diluted)

25.68p

24.77p

55.32p


 




 



               



 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 



Unaudited Half year to 30 June

2023

£'000

Unaudited

Half year to

30 June

2022

£'000

Audited

Year ended 31 December

2022

£'000


 

 

 

Profit for the financial period

8,504

8,128

11,635

 

 



Items that will not be classified subsequently to profit or loss:

 



 

 



Re-measurement of net defined benefit liability

69

910

(2,071)

Deferred taxation on pension obligations and employee benefits

(17)

(228)

459


 



Other comprehensive income/(expense) for the period

52

682

(1,612)

 

 



Total comprehensive income for the period

8,556

8,810

10,023

 

 

 

 

 

 

 

 

 



CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 



Unaudited

30 June

2023

Unaudited

30 June

2022

Audited

31 December

2022

ASSETS


£'000

£'000

£'000

Non-current assets


 



Property, plant and equipment


10,247

16,073

10,958

Intangibles


297

5,226

88

Pension surplus


4,257

6,621

4,125



 



Total non-current assets


14,801

27,920

15,171



 



Current assets


 



Inventories


10,595

14,751

10,432

Trade and other receivables


42,001

38,548

39,561

Corporation tax receivable


986

1,017

695

Cash and cash equivalents


56,128

49,167

56,296



 



Total current assets


109,710

103,483

106,984

 


 



Total assets


124,511

131,403

122,155



 



LIABILITIES


 



Current liabilities


 



Trade and other payables


29,533

30,193

30,711

Provisions


-

4,242

-



 



Total current liabilities


29,533

34,435

30,711



 



Non-current liabilities

Other payables


2,378

1,953

 

2,038

Deferred tax liabilities


687

3,307

670

 


 



Total non-current liabilities

 

3,065

5,260

2,708

Total liabilities


32,598

39,695

33,419

 


 



Net assets


91,913

91,708

88,736

 


 



 

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


1,481

943

1,280

Retained earnings


82,271

82,604

79,295



 



Total equity


91,913

91,708

88,736

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS


Unaudited

Half year to

30 June

2023

Unaudited

Half year to

30 June

2022

Audited

Year ended

31 December

2022


£'000

£'000

£'000

£'000

£'000

£'000


 

 





Cash flows from operating activities

 

 






 

 





Profit for the financial period

 

8,504


8,128


11,635


 

 





Adjustments for:

 

 





Depreciation and amortisation

1,193

 

2,318


4,521


Impairment losses on intangible and fixed assets

-

 

-


 

8,714


Loss on sale of property, plant and equipment

74

 

61


186


Finance income

(866)

 

(126)


(514)


Finance expense

48

 

63


134


Tax expense recognised in the income statement

2,649

 

1,969



2,201


Increase in inventories

(163)

 

(5,045)


(726)


Increase in trade and other receivables

(2,096)

 

(2,939)


(4,100)


(Decrease)/increase in trade and other payables

(928)

 

2,110


 

2,963


Decrease in provisions

-

 

-


(4,242)


Change in pension obligations

(63)

 

(435)


(920)


Fair value (gain)/loss on derivative financial instruments

(344)

 

515



662



 

(496)


(1,509)


8,879


 

 



 


Cash generated from operating activities

 

8,008


6,619

 

20,514

 

Tax paid

 

(2,939)


(2,319)

 

(4,178)

 

Net cash generated from operating activities

 

5,069


4,300

 

16,336


 

 



 


Cash flows from investing activities

 

 



 


Finance income

866

 

126


514


Acquisition of property, plant and equipment

(138)

 

(913)


(1,245)


Payment of contingent consideration (note 8)

-

 

(71)


(71)


 

 

 





Net cash from/(used in) investing activities

 

728


(858)


(802)


 

 





Cash flows from financing activities

Payment of lease liabilities

(385)

 

(554)



(995)


Purchase of own shares

-

 

(5,534)


(5,534)


Dividends paid

(5,580)

 

(4,861)


(9,383)


Net cash used in financing activities

 

(5,965)


(10,949)


(15,912)


 

 





Net decrease in cash and cash equivalents

 

(168)


(7,507)


(378)

Cash and cash equivalents at start of period

 

56,296


56,674


56,674

 

 

 





Cash and cash equivalents at end of period

 

56,128


49,167


56,296

 



 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

 

Called up share capital

£'000

Share premium reserve

£'000

Capital redemption reserve

£'000

Other reserves

 

£'000

Retained earnings

 

£'000

Total

equity

 

£'000

 

 

 

 

 

 

 

At 1 January 2022

3,697

3,255

1,209

676

84,189

93,026

Dividends

-

-

-

-

(4,861)

(4,861)

Movement in ESOT

-

-

-

(2)

-

(2)

Credit to equity for equity-settled share-based payments

-

-

-

269

-

269

Purchase of own shares

-

-

-

-

(5,534)

(5,534)

Transactions with owners

-

-

-

267

(10,395)

(10,128)

Profit for the period

-

-

-

-

8,128

8,128

Other comprehensive income

-

-

-

-

682

682

Total comprehensive income

-

-

-

-

8,810

8,810

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Called up share capital

£'000

Share premium reserve

£'000

Capital redemption reserve

£'000

Other reserves

 

£'000

Retained earnings

 

£'000

Total

equity

 

£'000

At 1 January 2023

3,697

3,255

1,209

1,280

79,295

88,736

Dividends

-

-

-

-

(5,580)

(5,580)

Movement in ESOT

-

-

-

(2)

-

(2)

Credit to equity for equity-settled share-based payments

-

-

-

203

-

203

Transactions with owners

-

-

-

201

(5,580)

(5,379)

Profit for the period

-

-

-

-

8,504

8,504

Other comprehensive income

-

-

-

-

52

52

Total comprehensive income

-

-

-

-

8,556

8,556








 


 

 

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 2022, prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 have been filed with the Registrar of Companies. The Auditor's Report on those financial statements was unqualified and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

 

These condensed consolidated interim financial statements for the half year reporting period ended 30 June 2023 have been prepared in accordance with IAS 34 Interim financial reporting and also in accordance with the measurement and recognition principles of UK adopted international accounting standards. The Interim Report has not been audited or reviewed in accordance with the International Standard on Review Engagement 2410 issued by the Auditing Practices Board.

 

The interim financial statements were authorised for issue by the Board of Directors on 26 July 2023.

 

 

 

2.    Going Concern

 

In assessing the appropriateness of adopting the going concern basis in preparing the Interim Report and financial statements, the Directors have considered the current financial position of the Group, its principal risks and uncertainties. The review performed considers severe but plausible downside scenarios that could reasonably arise within the period.

 

Our modelling has sensitised the impacts of Russia's continued invasion of Ukraine, in particular their impact on global supply chains and macroeconomic inflationary factors. Alternative scenarios, including the potential impact of key principal risks from a financial and operational perspective, have been modelled with the resulting implications considered. In all cases, the business model remained robust. The Group's diversified business model and strong balance sheet provide resilience against these factors and the other principal risks that the Group is exposed to. At the 30 June 2023 the Group had cash and cash equivalents of £56.1m with no external bank borrowings.

 

On the basis of these reviews, the Directors consider the Group has adequate resources to continue in operational existence for the foreseeable future (being at least one year following the date of approval of this Interim Report and financial statements) and, accordingly, consider it appropriate to adopt the going concern basis in preparing the financial statements.

 

 

 

3.    Segmental Reporting

 

The Board, as the entity's chief operating decision maker, analyses the Group's internal reports to enable an assessment of performance and allocation of resources. The operating segments are based on these reports.

 

During the year, the Group changed its reportable segments to ensure the appropriate strategic focus across the business given the differing strategic challenges between its Packaged and Out of Home routes to market. The Group is now segmented into the operating segments Packaged, Out of Home and Central. This replaces the operating segments, Stills and Carbonates used in previous reporting periods.

 

The new segmental reporting allows the Group to deliver on its strategic ambitions of accelerated growth across the Packaged business, both in the UK and Internationally, and maximise value within the Out of Home business, whilst providing oversight to manage central overheads from a total Group perspective.

 

This is the first time results have been presented in these segments within the Group's Interim financial statements and thus the results reported for the previous half year to 30 June 2022 and financial year to 31 December 2022 have also been re-presented for comparison purposes.

 

The accounting policies of the reportable segments are the same as the Group's accounting policies. Segment performance is evaluated based on adjusted operating profit (excluding exceptional items), finance income and exceptional items. This is the measure reported to the Board for the purpose of resource allocation and assessment of segment performance.

 

 

 

Half year to

Packaged

 

 

 

 

30 June 2023

UK

Middle East

Africa

Rest of World

Total Packaged

Out of Home

Total Segments

Central1

Total Group


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000


 

 

 

 

 

 

 

 

 

Revenue

43,097

4,905

13,081

3,466

64,549

20,997

85,546

-

85,546

Adjusted operating profit





17,988

1,352

19,340

(7,861)

11,479

Net finance income









818

Adjusted profit before tax









12,297

Exceptional items









(1,144)

Profit before tax









11,153

 

 

 

 

Half year to

Packaged

 

 

 

 

30 June 2022

UK

Middle East

Africa

Rest of World

Total Packaged

Out of Home

Total Segments

Central1

Total Group


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000


 

 

 

 

 

 

 

 

 

Revenue

41,258

4,176

10,372

2,670

58,476

21,756

80,232

-

80,232

Adjusted operating profit





16,453

1,621

18,074

(6,867)

11,207

Net finance income









63

Adjusted profit before tax









11,270

Exceptional items









(1,173)

Profit before tax









10,097

 

 

 

 

Year ended

Packaged

 

 

 

 

31 December 2022

UK

Middle East

Africa

Rest of World

Total Packaged

Out of Home

Total Segments

Central1

Total Group


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000


 

 

 

 

 

 

 

 

 

Revenue

82,813

11,752

18,870

6,420

119,855

45,071

164,926

-

164,926

Adjusted operating profit





34,338

3,537

37,875

(13,273)

24,602

Net finance income









380

Adjusted profit before tax









24,982

Exceptional items









(11,146)

Profit before tax









13,836

 

 

1 Central includes the Group's central and corporate costs, which relate to salaries and head office overheads such as rent and rates, insurance and IT maintenance as well as the costs associated with the Board and Executive Leadership Team, Governance and Listed Company costs.

 

 

A geographical split of revenue is provided below:

 



Half year to

30 June

2023

Half year to

30 June

2022

Year ended

31 December

2022

 

 

£'000

£'000

£'000

Geographical split of revenue

 



Middle East

4,905

4,176

11,752

Africa

13,081

10,372

18,870

Rest of the World

3,301

3,059

7,350

Total exports

21,287

17,607

37,972

United Kingdom

64,259

62,625

126,954

Total revenue

85,546

80,232

164,926

 

 

 

 

4.    Exceptional items

 



Half year to

30 June 2023

Half year to

30 June

2022

Year ended

31 December

2022

 

£'000

£'000

£'000

 

 



Out of Home Strategic Review

569

48

518

Historic incentive scheme

56

54

134

Group Systems Review

519

-

316

Review of UK packaged supply chain

-

1,071

1,464

Impairment of intangibles and fixed assets

-

-

8,714

 

1,144

1,173

11,146

 

 



 

The Group incurred £1.1m of exceptional costs during the period (H1 2022: £1.2m).

 

Out of Home Strategic Review

In 2022 the Group completed a strategic review into its OoH route to market, assessing customer and product mix as well as reviewing ways to enhance net margin and profitability going forward. The Group incurred £0.6m of costs in the period as these recommendations have begun to be implemented. Additional costs will be incurred through the second half of 2023.

 

Historic incentive scheme

During 2022 the Group settled with HMRC the £4.3m tax and interest charges relating to a historic incentive scheme and has commenced recovery of debts from current and previous employees who had indemnified the Company. The Group incurred legal costs in the period of £0.1m in relation to the case.

 

Group Systems Review

The Group has commenced a project to implement a new enterprise resource planning (ERP) system, focussed on driving business transformation and is expected to be operational at the end of 2024. Costs of £0.5m were incurred in the period.

 

Due to the one-off nature of these charges, the Board is treating these items as exceptional costs and their impact has been removed in all adjusted measures throughout this report.

 

 

 

 

5.    Earnings per share

 

Basic earnings per share is calculated by dividing the profit after tax for the period of the Group by the weighted average number of ordinary shares in issue during the period. The weighted average number of ordinary shares is calculated by adjusting the shares in issue at the beginning of the period by the number of shares bought back or issued during the period multiplied by a time-weighting factor. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue assuming the conversion of all potentially dilutive ordinary shares.

 

The earnings per share calculations for the period are set out in the table below:

 

 



 

Earnings

Weighted average number of shares

 

Earnings per share

 

£'000

 

 

30 June 2023

 



Basic earnings per share

8,504

36,478,934

23.31p

Dilutive effect of share options


38,891

 

Diluted earnings per share

8,504

36,517,825

23.29p




 

 

 

Adjusted earnings per share before exceptional items has been presented in addition to the earnings per share as defined in IAS 33 Earnings per share, since in the opinion of the Directors, this provides shareholders with a more meaningful representation of the earnings derived from the Group's operations. It can be reconciled from the basic earnings per share as follows:

 



 

Earnings

Weighted average number of shares

 

Earnings per share

 

£'000

 

 

30 June 2023

 



Basic earnings per share

8,504

36,478,934

23.31p

Exceptional items after taxation

872


 

Adjusted basic earnings per share

9,376

36,478,934

25.70p

Diluted effect of share options


38,891

 

Adjusted diluted earnings per share

9,376

36,517,825

25.68p

 


 

6.    Non-current Assets

 



Property, Plant & Equipment

 

 

Intangibles

 

 

£'000

£'000

 

Cost

 



At 1 January 2023

35,311

9,760

 

Additions

765

-

 

Transfers

(238)

238

 

Disposals

(1,626)

-

 

At 30 June 2023

34,212

9,998

 

 

 

Depreciation and Amortisation

 



At 1 January 2023

24,353

9,672

 

Charge for the period

1,164

29

 

On disposals

(1,552)

-

 

At 30 June 2023

23,965

9,701

 

 

 

Net book value

 



At 1 January 2023

10,958

88

 

At 30 June 2023

10,247

297

 

 

 


 

7.    Defined Benefit Pension Scheme

 

The Group operates a defined benefit plan in the UK. A full actuarial valuation was carried out on 5 April 2020 and updated at

30 June 2023 by an independent qualified actuary.

 

A summary of the pension surplus position is provided below:

 

 

Pension surplus

£'000

At 1 January 2023

4,125

Current service cost

(44)

Net interest income

96

Actuarial gains

69

Contributions by employer

11

At 30 June 2023

4,257

 


 

8.    Contingent Consideration

 

Within the Statement of Cash Flows there is a £0.1m cash outflow in the prior period in relation to the payment of contingent consideration. This payment relates to the final stage of contingent consideration paid for an acquisition made in previous financial years.

  

 

9.    Provisions

 

During the second half of FY22, the Group settled with HMRC the tax and interest charges regarding the historic incentive scheme provided at 30 June 2022 (£4.2m). Recovery of debts from current and previous management who had indemnified the Company has commenced during FY23. Included within other receivables is a reimbursement asset in respect of these historic contracts.

  

 

10. Dividends

 

Dividend cover is broadly 2x adjusted earnings of the Group. As a result, the interim dividend for 2023 will be 12.6p per share to be paid on 8 September 2023 with a record date of 4 August 2023.

 


 

Cautionary Statement

 

This Interim Report has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The Interim Report should not be relied on by any other party or for any other purpose.

 

-Ends-

 

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.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 

Companies

Nichols (NICL)
UK 100

Latest directors dealings