Final Results

Nichols PLC 24 March 2004 Date: Embargoed until 07.00 am, Wednesday 24 March 2004 Contacts: John Nichols, Chairman Gary Unsworth, Chief Executive Brendan Hynes, Finance Director Nichols plc Telephone: 01925 222222 Alistair Mackinnon-Musson Philip Dennis Hudson Sandler Telephone: 020 7796 4133 Email: nichols@hspr.co.uk Nichols plc PRELIMINARY RESULTS Nichols plc, the soft drinks, food and foodservice group, announces its preliminary results for the year to 31 December 2003. The group has two principal operations: 1) Soft Drinks (primarily involved in the sale of soft drinks, including Vimto, throughout the world and Sunkist in the UK) and 2) Food Products and Beverage Systems (including Nichols Foods, the manufacturer and supplier to the vending, foodservice and retail markets; Cabana, soft drinks on draught and Balmoral, supplier of hot beverage systems). The key points are: • Pre-tax profits (before exceptionals) up 17% to £6.6m (2002 : £5.6m) • EPS (before exceptionals) up 23% to 12.47p (2002 : 10.15p) • Summer weather benefited UK Soft Drinks Operation • A move to AIM is planned Commenting John Nichols, Chairman, said: 'Despite highly competitive market conditions we saw a marked improvement in overall profitability.' 'As we move into the new financial year I believe the group has never been better positioned to respond to market opportunities or more focused on sales and marketing.' 'We expect to make further progress this year.' Chairman's Statement As expected, 2003 was a year of transition and challenge for the Nichols group, yet despite highly competitive market conditions we saw a marked improvement in overall profitability. In terms of trading, pre-tax profits (before exceptional items) in the year to 31 December 2003 increased by 17% to £6.6 million (2002: £5.6 million) on group turnover that increased only 1% to £97.1 million (2002: £96.2 million). Underlying cash flow also improved during the year and despite 'one off' exceptional cash costs of £4.0 million (mentioned in my report of last year), the group achieved an overall positive cash inflow before financing of £1.4 million (2002: inflow £3.8 million) and reduced its net borrowings to £13.5 million (2002 £14.9 million). The group's year end cash position does not take into account the proceeds to be realised from the group's freehold properties still held at Stockport and Golborne, which are currently being marketed for sale and have a market value of around £8.0 million, broadly in line with book value. Earnings per share (before exceptional items) increased to 12.47 pence (2002: 10.15 pence). The directors recommend a final dividend of 5.80 pence per share (2002: 5.80 pence), maintaining the total dividend for the year at 8.80 pence. This will be paid on 14 May 2004 to shareholders registered on 23 April 2004. The ex-dividend date is 21 April 2004. At the divisional level the favourable summer weather had a positive impact on sales in our UK Soft Drinks Operation, despite the initial challenges presented by our decision early in the year to outsource manufacturing. The outsourcing arrangements, which took effect from August and resulted in a headcount reduction of 86, have worked very well especially given the extra demands placed upon our supplier, created by the hot weather. I am pleased to report the ongoing level of savings that we anticipated from making the move have been achieved. Vimto Soft Drinks continues to retain direct control of the sales, marketing and distribution activities relating to all of its soft drinks brands. International sales of soft drinks also continued to grow during 2003, with the Vimto brand now available in India and Sri Lanka, in addition to our existing Middle Eastern and African markets. In our Food Products and Beverage Systems Operation, the Cabana (soft drinks on draught) business continues to grow sales by expanding its range of brands and the number of outlets serviced, particularly with new national account customers. Cabana now services over 5,000 sites in the UK. The fine weather, however, depressed sales of hot beverages through Balmoral (our hot beverage systems business) in the summer, but these improved towards the end of the year. In order to integrate and leverage sales, marketing and operational capabilities, the Balmoral and Cabana operations are being brought closer together. This will improve efficiencies and reduce the cost base of these businesses still further. This process is expected to be largely complete by September 2004, when the combined operation will function out of Cabana's new office at Newton-le-Willows, with a joint warehousing operation in the Midlands. Also within our Food Products and Beverage Systems Operation, Nichols Foods is seeing the benefits of recent investments with continued sales growth, but pressure on margins in this sector continues to be a concern and the complexity and performance of this business remains under review. As announced in March 2003, Stockpack, our contract packing operation previously based in Stockport, relocated on schedule to the Nichols Foods' site at Haydock, resulting in a net reduction in headcount of 130 people and significant cost savings. The Strategic Review we also announced in March 2003 has resulted in a considerable transformation of the group and we made significant progress during the year towards completing our restructuring in line with the objectives set. Given the high proportion of private investors in our company, the board believes that it is in the best interests of shareholders to seek a listing on the Alternative Investment Market (AIM) in 2004. The directors also believe the AIM market and environment are more suited to a company of our size. It is therefore our intention to affect this transfer as soon as practical following the Annual General Meeting on the 12 May 2004. In anticipation of the proposed transfer to the AIM market we have appointed Brewin Dolphin Securities as the company's broker with effect from 1 April 2004. NM Rothschild & Sons Limited will continue to act as the group's Financial Adviser. Our employees will continue to face new challenges as we look to extend our capabilities and knowledge into new markets. Their continued hard work and commitment is very much appreciated and I would like to thank them on your behalf. As we move into the new financial year, I believe the Nichols group has never been better positioned to respond to market opportunities or more focused on sales and marketing. Trading conditions are expected to remain highly competitive in 2004, however, despite this we expect to make further progress this year. John Nichols Chairman 24 March 2004 Consolidated profit and loss account year ended 31 December 2003 Before Exceptional Total Before After exceptional items exceptional exceptional items items items 2003 2003 2003 2002 2002 £'000 £'000 £'000 £'000 £'000 Turnover - continuing activities 97,110 - 97,110 96,229 96,229 Cost of sales 60,511 - 60,511 61,403 61,403 Gross profit 36,599 - 36,599 34,826 34,826 Net operating expenses 29,257 3,994 33,251 28, 250 39,430 Operating profit/(loss) - continuing 7,342 (3,994) 3,348 6,576 (4,604) activities Net interest payable 790 - 790 940 940 Profit/(loss) on ordinary activities before 6,552 (3,994) 2,558 5,636 (5,544) taxation Tax on profit/(loss) on ordinary activities 2,018 (1,198) 820 1,948 118 Profit/(loss) for the financial year 4,534 (2,796) 1,738 3,688 (5,662) Equity dividends 3,253 - 3,253 3,253 3,253 Retained profit/(loss) for the year 1,281 (2,796) (1,515) 435 (8,915) Earnings/(loss) per share (basic) 4.78p (15.57p) Earnings per share (diluted) 4.77p - Earnings per share (basic) before 12.47p 10.15p exceptional items Earnings per share (diluted) before 12.44p 10.12p exceptional items Dividends per share 8.80p 8.80p There were no recognised gains or losses in 2003 or 2002 other than the profit/ (loss) for the year. Balance sheets at 31 December 2003 Group Parent 2003 2002 2003 2002 £'000 £'000 £'000 £'000 Fixed assets Intangible assets 1,623 1,721 - - Tangible assets 27,467 28,083 13,070 13,357 Investments: shares in group undertakings - - 11,453 11,453 Investments: own shares 547 643 547 643 29,637 30,447 25,070 25,453 Current assets Stocks 7,667 9,068 510 1,064 Debtors 21,088 20,372 18,422 8,747 Cash at bank and in hand 1,366 1,743 - 7,418 30,121 31,183 18,932 17,229 Creditors Amounts falling due within one year 26,051 24,758 18,110 15,041 Net current assets 4,070 6,425 822 2,188 Total assets less current liabilities 33,707 36,872 25,892 27,641 Creditors Amounts falling due after one year 6,173 8,939 6,173 8,939 27,534 27,933 19,719 18,702 Provisions for liabilities and charges 1,979 863 1,184 141 25,555 27,070 18,535 18,561 Share capital and reserves Called up share capital 3,697 3,697 3,697 3,697 Share premium account 3,255 3,255 3,255 3,255 Capital redemption reserve 1,209 1,209 1,209 1,209 Merger reserve - - 775 775 Profit and loss account 17,394 18,909 9,599 9,625 Equity Shareholders' funds 25,555 27,070 18,535 18,561 Consolidated cash flow statement year ended 31 December 2003 2003 2002 £'000 £'000 £'000 £'000 Cash inflow from operating activities 7,953 12,753 Returns on investments and servicing of finance Interest receivable 16 12 Interest payable (806) (952) Net cash outflow from returns on investments and servicing of (790) (940) finance Taxation (1,540) (1,604) Capital expenditure and financial investment Purchase of tangible fixed assets (2,487) (3,760) Proceeds of sales of tangible fixed assets 1,456 573 Proceeds of sale of own shares 68 2 Net cash outflow from capital expenditure (963) (3,185) and financial investment Acquisitions and disposals Acquisition of subsidiary undertakings - - Net borrowings acquired with subsidiaries - - Net cash flow from acquisitions and disposals - - Equity dividends paid (3,253) (3,253) Cash inflow before financing 1,407 3,771 Financing (Decrease) in borrowings (1,784) (2,663) Net cash outflow from financing (1,784) (2,663) (Decrease)/increase in cash in the year (377) 1,108 Nichols plc NOTES TO THE PRELIMINARY FINANCIAL INFORMATION Basis of Preparation The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2003 or 2002, but is derived from those accounts. Statutory accounts for 2002 have been delivered to the Registrar of Companies and those for 2003 will be delivered following the company's Annual General meeting. The Auditors have reported on these accounts; their reports were unqualified and did not contain statements under s.237(2) or (3) of the Companies Act 1985. Earnings per Share The calculation of basic earnings per share is based on earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. Shares held in the Employee Share Ownership Trust and Employee Benefit Trust are treated as cancelled for the purposes of this calculation. The calculation of diluted earnings per share is based on the basic earnings per share adjusted to allow for the assumed conversion of all dilutive options. Dividends The proposed final dividend of 5.80 pence per share (2002 : 5.80 pence), if approved, will be paid on 14 May 2004 to shareholders registered on 23 April 2004. In addition, an interim dividend of 3.00 pence was paid on 20 October 2003. Annual Report The annual report will be mailed to shareholders on or around 12 April 2004. Copies will be available after that date from: The Secretary, Nichols plc, Laurel House, Woodlands Park, Ashton Road, Newton-le-Willows, WA12 0HH. Annual General Meeting The Annual General Meeting will be held at the registered office, Laurel House, Woodlands Park, Ashton Road, Newton-le-Willows, WA12 0HH on Wednesday 12 May 2004 at 11.00 a.m. Copies of the announcement can be found on the Investors Relations section of the company's website: www.nicholsplc.co.uk - ENDS - This information is provided by RNS The company news service from the London Stock Exchange

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