Final Results - Year Ended 31 December 1999

Nichols(J.N.)(Vimto) PLC 29 March 2000 Contacts: John Nichols, Chairman J N Nichols (Vimto) plc Telephone: 01925 222222 Alistair Mackinnon-Musson Philip Dennis Square Mile Communications Telephone: 0171 601 1000 A copy of this press release is also available on www.nicholsplc.co.uk/prelims.htm J N NICHOLS (VIMTO) PLC Preliminary Results J N Nichols (Vimto) plc announces its preliminary results for the year to 31 December 1999. The Group has four principal operations: Nichols Foods (manufacturer and supplier to the vending, foodservice and retail markets), Soft Drinks (primarily involved in the manufacture and sale of Vimto and other soft drinks through out the world), Stockpack (contract packer for the food industry) and Beverage Systems (hot beverage systems and Cabana soft drinks on draught). The key points are: * Turnover increased by 10.5% to £80.7m * Earnings per share increased by 11.5% * Total dividend increased to 8.5p * Restructuring of the Soft Drinks Operation completed * Restructuring of Cabana Soft Drinks completed * Balmoral Trading Limited acquired for £5.97m and integrating well * Reorganisation of Group Board * John Nichols became Executive Chairman * Gary Unsworth became Group Managing Director Commenting John Nichols, Chairman, said: 'Over the last year the Group has successfully been though a period of substantial restructuring. We are already experiencing the benefits, which will continue to flow though in the year ahead. The Group is now in a much stronger position and we look forward to the future with confidence'. CHAIRMAN'S STATEMENT 1999 was a year of immense change for the group, as we continued to re-shape it to face the challenges of a constantly changing marketplace. These changes were successfully implemented and in summary they included: * The relocation of the whole of the group's Soft Drinks Operation from three separate sites into one, brand new and purpose built facility at Stone Cross, Golborne. The new factory and offices cover 132,000 square feet and the whole site 7.65 acres. * The acquisition in March 1999 for £5.97 million of Balmoral Trading Limited, the UK's leading supplier of hot beverage systems to the catering and leisure industries. * After disposing of the Wythenshawe site, as a result of the re-location mentioned above, the Group's head office function was also moved to new leased premises, Laurel House, in Newton-le- Willows. Laurel House is in close proximity to both Nichols Foods and the Soft Drinks Operation and the group's international operation has also been re-located there. * The manufacturing of all of Cabana Soft Drinks' syrups for draught dispense was integrated into Nichols Foods, which also assumed responsibility for the sales and marketing activities that support all of Cabana's third party distributors. * The rights to produce the Sunkist brand were acquired from Cadbury Schweppes and this has already proved to be a very positive move for the Group. Further development of what is already a well recognised brand in the marketplace is underway. Turnover for the year to 31 December 1999 was £80.7 million (1998: £73.0 million) and profit before tax was £8.75 million (1998: £8.11 million). Earnings per share were 16.37 pence (1998: 14.67 pence) and the directors have recommended a final dividend of 5.6 pence per share, bringing the total for the year to 8.5 pence per share (1998: 8.2 pence). This will be paid on 15 May 2000, to those shareholders registered on 14 April 2000. In December 1999, the company bought and cancelled 1,900,000 shares. This will increase the earnings attributable to the remaining shares in issue in the future. Capital expenditure in the year amounted to £9.2 million. About half of this related to the relocation of the Soft Drinks Operation into the Stone Cross site which commenced in 1998. All of the above initiatives place the group in an even stronger position to face the future with confidence. With varying degrees of success, our operational divisions coped well with the changes made and the performance of each is reported in summary below. NICHOLS FOODS Nichols Foods continues to operate within the 'out-of-home' food and beverage markets of vending and foodservice and it also has a growing business within the retail market. The vending market, where ingredients are supplied to the operators of vending equipment, remains the division's largest market sector. Structural changes in the industry have led to a consolidation of customers and Nichols Foods has achieved significant success in re- tendering for these larger 'merged' accounts. The company's successful strategy of supplying its own branded products, alongside selected high street named products such as Nestle Gold Blend, Kenco and PG Tips, continues. During 1999, Nichols Foods became the internal supplier of dry ingredients to Balmoral and the manufacturer of all Cabana Soft Drinks' syrups for draught dispense. For these reasons and to allow valid comparisons with the previous years trading, we have combined the results of Nichols Foods, Balmoral and Cabana to report sales as £49.2m (1998 £42.2m) and the operating profit £4.6m (1998 £5.1m). SOFT DRINKS OPERATION The soft drinks market in 1999 was buoyant, especially when compared to the poor summer weather of the previous year. Vimto Cordial again increased its market share and it now has over 7% of the 'red / black dilutable' sector. Vimto 'No Added Sugar' Cordial produced 39% year on year growth in both volume and sales and is capitalising on the continued trend towards low or no added sugar products. Although the performance of Vimto Cordial was very strong, in the carbonates market the competition between major retailers created the most price sensitive and competitive soft drinks market for some years. This required additional investment in media advertising, promotional activity and trading support, which naturally had an impact on margins. Significant progress was made, however, through wholesale and cash & carry outlets that service the independent trade and garage forecourt markets, developing and widening product distribution and growing volumes. Internationally, Vimto increased its worldwide sales by 2.5% despite the strength of sterling, with notable gains in both Africa and the Middle East more than offsetting some disappointing results in Russia. Additionally, during 1999, Vimto was launched in the central African country of Cameroon, being produced locally in 330ml and 650ml returnable bottles. The forward international strategy is to sell a wider range of group products, other than Vimto, into overseas markets. We are therefore pleased to report the first international orders for Indigo, the Group's refreshing natural energy drink launched in the UK in 1996, have now been received. The combined affect of increasing Vimto brand share of the cordial market, new business from Sunkist, improving international sales and more favourable summer weather, has resulted in the turnover of the Soft Drinks Operation increasing to £25.44m (1998: 23.92m). The relocation of the Soft Drinks Operation from sites at Wythenshawe, Southampton and Haydock into the brand new purpose built facility at Stone Cross, Golborne took place during the first quarter of 1999. The economies of scale gained by this move, however, were offset by the increased expenditure in brand support, trade discounting and increased operational costs. These factors resulted in the operating profit for the Soft Drinks Operation being in line with the previous year at £3.9 million. STOCKPACK It is disappointing to have to report another difficult year for Stockpack, our contract packing operation, that co-packs dry ingredients and promotional items for many of the UK's leading blue chip food and confectionery manufacturers. The co-packing market place experienced some significant changes during 1999, the most significant being the change in emphasis of the major supermarkets who moved towards a 'price down' strategy and away from a 'promotional-led' policy of adding value through either banding packs together or offering promotional items along with the original purchase. As Stockpack supports much of this type of marketing activity, co-packing many of these multi and special gift packs, it naturally suffered in the downturn, as the predicted sales volumes of these goods did not materialise. However, it is also particularly encouraging to note that the nature of co-packing has changed and is now increasingly being regarded by our major customers as a valuable extension to their own businesses making Stockpack an integral part of our client's manufacturing base. Although the first half of the year was particularly weak over all for Stockpack, sales order books in the second half held up well, as the UK confectionery market built stocks ahead of the Christmas period. Turnover for the year was £6.10 million (1998: £ 6.90 million) producing an operating loss of £0.3 million (1998: £0.3 million). During the year we strengthened relationships with existing key customers and added three further blue chip companies to our client portfolio. This will provide Stockpack with more stability as we move forward. Some significant contracts are in place for the year ahead, which gives Stockpack a firm foundation on which to move forward with greater confidence. BEVERAGE SYSTEMS The acquisition of Balmoral Trading in March 1999 and the transfer of the manufacturing of Cabana Soft Drinks' syrup production into Nichols Foods has allowed us to present a joint report on Balmoral and Cabana under the new heading of Beverage Systems. Balmoral is the market leader in supplying hot beverage systems to the catering trade and leisure industry. It's blue chip customers include Burger King, Little Chef, First Leisure, Tussauds Group, Avenance and BP. One of the key drivers behind the acquisition of Balmoral was the strategic fit between hot beverage systems complementing the cold soft drinks on draught offered by Cabana Soft Drinks. The coming year will realise many more synergies between both operations, particularly in the sales and customer service areas. Cabana has seen significant changes in the way the business is operated. The transfer of the manufacturing of all of Cabana Soft Drinks' syrups for draught dispense from Preston into Nichols Foods has enabled improved concentration and focus on sales and marketing to all areas of the Cabana nationwide distributor network which services over 6000 outlets. The Balmoral business has been part of the group for only 9 months and it has integrated well. Although the financial performance obviously does not reflect a full year's trading, the board has confidence the synergies, particularly with Cabana, will be fully reflected in the current year. John Nichols Chairman 29 March 2000 CONSOLIDATED PROFIT AND LOSS ACCOUNT Year ended 31 December 1999 1999 1998 £'000 £'000 Turnover Continuing operations 74,178 72,966 Acquisitions 6,542 - --------- --------- Turnover 80,720 72,966 Cost of sales 61,757 53,835 --------- --------- Gross profit 18,963 19,131 Net operating expenses 10,725 9,928 --------- --------- Operating profit Continuing operations 7,855 9,203 Acquisitions 383 - --------- --------- Operating profit 8,238 9,203 Exceptional item 906 (1,440) --------- --------- Profit on ordinary activities before interest 9,144 7,763 Net interest (396) 342 --------- --------- Profit on ordinary activities before taxation 8,748 8,105 Tax on profit on ordinary activities 2,547 2,619 --------- --------- Profit for the financial year 6,201 5,486 Equity dividends 3,197 3,059 --------- --------- Retained profit for the year 3,004 2,427 --------- --------- Earnings per share (basic) 16.37p 14.67p Earnings per share (diluted) 16.34p 14.65p Dividends per share 8.50p 8.20p There were no recognised gains or losses in 1999 or 1998 other than the profit for the year. BALANCE SHEETS At 31 December 1999 Group Parent 1999 1998 1999 1998 £'000 £'000 £'000 £'000 Fixed assets Intangible assets 5,782 - - - Tangible assets 32,320 27,325 18,376 14,379 Investments: shares in group undertakings - - 17,460 10,203 Investments: own shares 540 588 540 588 ------ ------ ------ ------ 38,642 27,913 36,376 25,170 ------ ------ ------ ------ Current assets Assets held for resale - 484 - 484 Stocks 7,083 6,929 1,109 1,984 Debtors 15,975 15,070 12,313 10,182 Cash at bank and in hand 410 1,426 3 108 ------ ------ ------ ------ 23,468 23,909 13,425 12,758 Creditors Amounts falling due within one year 26,743 20,220 19,838 10,371 ------ ------ ------ ------ Net current (liabilities) / assets (3,275) 3,689 (6,413) 2,387 Total assets less current liabilities 35,367 31,602 29,963 27,557 Provisions for liabilities and charges 2,193 1,584 1,062 527 ------ ------ ------ ------ 33,174 30,018 28,901 27,030 ------ ------ ------ ------ Share capital and reserves Called up share capital 3,697 3,696 3,697 3,696 Share premium account 3,255 746 3,255 746 Capital redemption reserve 1,209 1,019 1,209 1,019 Merger reserve - - 775 775 Profit and loss account 25,013 24,557 19,965 20,794 ------ ------ ------ ------ Equity shareholders' funds 33,174 30,018 28,901 27,030 ------ ------ ------ ------ CONSOLIDATED CASH FLOW STATEMENT Year ended 31 December 1999 1999 1998 £'000 £'000 £'000 £'000 Cash inflow from operating activities 14,639 8,332 Returns on investments and servicing of finance Interest receivable 25 366 Interest payable (416) (15) Interest element of hire purchase contracts (5) (9) Net cash (outflow) / inflow from returns on investments ------ ------ and servicing of finance (396) 342 Taxation (2,588) (3,422) Capital expenditure and financial investment Purchase of tangible fixed assets (9,165) (11,147) Proceeds of sales of tangible fixed assets 477 143 Proceeds of sale of own shares 13 - Net cash outflow from capital expenditure ------ ------ and financial investment (8,675) (11,004) Acquisitions and disposals Acquisition of subsidiary undertaking (4,557) - Net borrowings acquired with subsidiary (107) ------ ------ Net cash outflow from acquisitions and disposals (4,664) - Equity dividends paid (3,123) (3,037) ------ ------ Cash outflow before use of liquid resources and financing (4,807) (8,789) Management of liquid resources Cash withdrawn regarding short term deposits 4,000 Increase in short term borrowings 8,000 - ------ ------ Net cash inflow from management of liquid resources 8,000 4,000 Financing Capital element of hire purchase contracts (43) (17) Cancellation of own shares (2,548) (1,471) ------ ------ Net cash outflow from financing (2,591) (1,488) ------ ------ Increase / (decrease) in cash in the year 602 (6,277) ------ ------ RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES 1999 1998 £'000 £'000 Operating profit 8,238 9,203 Exceptional item 906 (1,440) Depreciation - intangible fixed assets 225 - Depreciation - tangible fixed assets 4,043 3,247 Loss / (profit) on sale of tangible fixed assets 410 (19) Write down of own shares 25 36 Loss on disposal of own shares 10 - Decrease / (increase) in stocks 1,093 (1,476) Decrease / (increase) in debtors 667 (845) (Decrease) in creditors (978) (374) ------ ------ 14,639 8,332 ------ ------ RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 1999 1998 £'000 £'000 (Increase) / decrease in cash in the period (602) 6,277 Net cash outflow from management of liquid resources 8,000 4000 Cash outflow from reduction in hire purchase contracts (43) (17) ------ ------ Movement in net debt / (funds) in the year 7,355 10,260 Net debt / (funds)at 1 January 1999 4,269 (5,991) ------ ------ Net debt at 31 December 1999 11,624 4,269 ------ ------ NOTES 1. Earnings per share is calculated on the basis of earnings of £6,201,000 (1998 - £5,486,000) and the weighted average number of shares in issue for the year of 37,884,216 (1998 - 37,402,333). 2. The annual report will be mailed to shareholders on or about 5 April 2000. Copies will be available after that date from: The Secretary, J N Nichols (Vimto) plc, Laurel House, 3 Woodlands Park, Ashton Road, Newton-le-Willows, WA12 0HH. 3. The proposed final dividend, if approved, will be paid on 15 May 2000 to shareholders registered on 14 April 2000. 4. The Annual General Meeting will be held at the registered office, Laurel House, 3 Woodlands Park, Ashton Road, Newton- le-Willows, WA12 0HH on Wednesday 10 May 2000 at 11am.

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