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Nichols PLC (NICL)

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Thursday 05 March, 2015

Nichols PLC

Preliminary Results

RNS Number : 5833G
Nichols PLC
05 March 2015
 



 

Date:

Embargoed until 0700 Thursday 5th March 2015

 

Contacts:

John Nichols, Non-Executive Chairman

Marnie Millard, Group Chief Executive

Tim Croston, Group Finance Director

Nichols plc

Telephone:  01925 222222

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: [email protected]

 

 

 

Nichols plc

PRELIMINARY RESULTS

 

Nichols plc ('Nichols', the 'Group'), the soft drinks Group, announces its Preliminary results for the year ended 31 December 2014 (the 'period').

 

Nichols plc is a highly focused soft drinks business.  Its brand portfolio includes Vimto, which is sold in over 65 countries and Levi Roots, Sunkist and Panda which are sold in the UK.  The Group has a leading market position in both the "Still" and "Carbonate" drinks categories.

 

Highlights:

 

 

Year ended

31 Dec 2014

Year ended

31 Dec 2013

% movement

All references below are pre-exceptional items

£m

£m


 




Group Revenue (2013 restated, see notes page 14 )

109.2

105.5

+3.5%





Operating Profit

25.6

22.4

+14.1%

Operating Profit margin 

23%

21%


Profit Before Tax

25.7

22.5

+14.1%

Net Cash

34.5

34.3






EPS (basic)

55.0p

45.8p

20.2%

 

John Nichols, Non-Executive Chairman, said:

 

"2014 was another strong year for Nichols as the Group once again outperformed the wider soft drinks market on its way to delivering double digit operating profit growth, pre-exceptional items. This strong outcome is again underpinned by the strength and heritage of our core Vimto brand both in the UK and internationally, as well as the diversity of our products and markets. 

 

We remain focused on delivering our growth strategy both in the UK and internationally and we look forward to the year ahead with confidence."

 

Chairman's Statement

 

I am delighted to report another strong performance for the Nichols Group. Once again, our sales growth has outperformed the soft drinks market (as measured by Nielsen), we have delivered double digit profit growth and the Group continues to be cash generative.

 

Trading

Group sales totalled £109.2m, an increase of 3.5% compared to the prior year and represents growth of 4.1% on a constant exchange rate basis.  In addition to the sales increase we continued with our strategy of focusing on value over volume and our operating margin improved to 23% (2013: 21%) driven by healthy international growth. As a result, profit before tax (pre-exceptional items) grew by 14.1% to £25.7m (2013: £22.5m).

 

One of the key strengths of our business is the diversity of our markets. Our Still and Carbonate revenues span both the domestic and international regions with sales of packaged products, dispensed products and concentrate.

 

In the UK our total sales increased by 3.3%, out-performing the soft drinks market growth of 0.4% (Nielsen MAT to 3 January 2015).  During 2014 we continued to invest in our brands and in the spring we successfully introduced the new Vimtoad advertising campaign along with a complete redesign of the Vimto packaging. These activities contributed to a healthy 4.5% growth in UK sales of the Vimto brand, which was achieved despite the continued challenging trading conditions in the UK grocery market.

 

Driven by our performance in the Middle East, international sales increased by 4.3% to £24.1m. The underlying increase was even stronger at 7.3% when viewed on a constant exchange rate basis. It was encouraging to see Vimto concentrate sales to our key Middle East market increase by 12.3% on the back of strong in-country demand for the brand. Elsewhere sales to our African markets again performed well, increasing 3.9% on a reported basis, or 8.6% on a constant exchange rate basis against the prior year.

 

Exceptional cost

 

As reported in our Interim announcement, the Group's Income Statement includes a one-off exceptional cost of £7.8m with regard to damages awarded against Nichols plc in the High Court. The cash payment was settled in the second half of 2014.

 

Dividend

 

After another strong performance in 2014 and reflecting the Board's continued confidence in the outlook, I am pleased to recommend a final dividend of 15.3 pence per share (2013: 13.3 pence). If approved by our shareholders, the total dividend for 2014 will be 22.4 pence per share (2013: 19.62 pence), an increase of 14.2% on the prior year.

 

The final dividend will be paid on 5 May 2015 to shareholders registered on 7 April 2015; the ex-dividend date is 2 April 2015. 

 

Board Change

 

Eric Healey, Non-Executive Director is stepping down from the Board today and we would like to thank Eric for his contribution to Nichols plc's success over the last four years.  A successor will be appointed in due course. 



Outlook

 

2014 proved to be another successful year for the Group. Despite the ongoing challenges within the UK grocery sector, our UK sales again outperformed the soft drinks market and in particular the Vimto brand performance was strong. General consensus suggests that the UK grocery market will continue to be challenging into 2015 and against that back drop it is important to emphasise the Group's diverse income streams, with less than 25% of Group sales coming from the UK major multiple retailers.  As we progress into 2015, we will continue to deliver our growth strategy, including further investment in our brands and markets both in the UK and overseas.

 

In summary, the Group has continued to perform successfully in 2014 delivering increased sales, strong profit growth and has maintained a robust balance sheet. The Board is confident that the Group is well placed to continue this trend into 2015.

 

John Nichols

Non-Executive Chairman

5 March 2015 

 

 

CHIEF EXECUTIVE'S REPORT 2015

 

I am very pleased with Nichols' strong performance and continued progress during the year, delivering 14.1% profit growth (pre-exceptional items) in what remained a challenging soft drinks market globally.

 

Nichols is a focused international soft drinks Group and the home of Vimto.  The Vimto brand, now 106 years old is distributed and sold in more than 65 countries worldwide.  The strength and heritage of our core brand continues to be a key element of the Group's growth and success. 

 

The diversification of our business underpins the Group's track record of consistent growth. Our leading portfolio of soft drinks brands, as well as established UK, International and Out of Home operations, means we are able to grow and generate value for the Group and its shareholders.

 

 

The UK Soft Drinks Market (as measured by Nielsen MAT to 3 January 2015)

 

In 2014, volumes in the UK soft drinks market decreased by 1%. The total value of the UK soft drinks market, excluding the "on trade" channel, grew by a modest 0.4% year on year to a total value of £7.6bn.  All sectors of the market remained competitive during the year with continued reliance by many brands on heavy promotional activity to drive sales.

 

During the year we continued to execute our successful strategy of focusing on value over volume and minimising promotional driven sales. As a result the Vimto brand value grew during the year by 6.2% to £69.1m. Within the Vimto portfolio, whilst we saw strong performances from both the Still and Carbonate product categories, the most noticeable growth was from the Vimto ready to drink range which significantly outperformed the market to deliver growth of 26% versus the prior year. 

 

It is clear that over recent years the buying habits of the UK consumer have fundamentally changed as shoppers increasingly prioritise value and convenience.  Consumers now shop more frequently but are happy to visit different fascia stores to buy different products.  It is therefore critical for the ongoing success of Vimto that we continue to innovate and evolve so that all pack formats are relevant for the designated route to market and satisfy consumers' changing needs. 

 

Our commercial platforms for development and growth as detailed below reflect the changing behaviours of the consumer:

 

More from the core

·     Unlocking and exploiting growth opportunities that still exist for our core and much loved Vimto brand.

Wherever whenever

·     Extending Vimto's availability to wider geographical territories and through different routes to market.

Healthier future

·     Ensuring that our product range provides a wide range of choice to meet consumer needs for healthier drinks.

Thirst for new

·     Having a culture of innovation to develop our business and our products to meet consumers' preferences and needs.

 

Operational review

 

In 2014, the sales of our Still products grew by 5.3% to £56.1m with this product area being the strategic focus for the Vimto brand.  Supporting this required a broadening of our target audience to encompass both teens and their parents. As a result we embarked on a new communications campaign to enhance our engagement with this audience.

 

A new branded character, a giant purple toad named Vimtoad, was developed to front this campaign and explains to target consumers looking for refreshment why Vimto is both delicious and unique.  The national multi-channel campaign was launched on TV in April, with additional activity on radio, digital media and social media, as well as a nationwide sampling road show.  This was supported by trade advertising and PR to enhance retailers' interest and demand.

 

At the same time, the entire Vimto range benefited from a complete redesign, which ensured the presentation of each of our products reflected the appropriate category language. This redesign saw the launch of Vimto Fizzy Zero, which is our diet carbonated product.

 

During the year a new sector emerged in the UK soft drinks market in the form of water enhancers.  We spotted this emerging category and the potential growth opportunity early on. Vimto Squeezy was launched in January 2014 and was one of the first water enhancers to be launched in the UK market. The sales performance of this new product has been promising during the year adding in excess of £1.0m to the brand value.

 

Consolidation in the Group's Out of Home business was successfully concluded in 2014.  A product rationalisation programme was also realised during the year to simplify the business and make it more relevant for the market.

 

During 2015 we will represent Coca-Cola within our Out of Home business via the dispense route to market.  Our ability to secure distribution of the biggest global soft drink brand is indicative of our commitment to the quality and service we provide to the independent on trade sector.  

 

Internationally, in the Middle East a new above the line communications campaign for Vimto was launched by our partner Aujan Coca-Cola.  The theme "Bring them Home" was targeted at younger mothers but still emphasised the traditional family values that Vimto represents to our customers during the period of Ramadan.  This was supported with a fully integrated digital campaign helping to drive year on year market growth of 6% in the region, contributing to the growth of the Group's Still business. 

 

Within the African Business Unit, Senegal and Cameroon performed very well during the year, as did Nigeria where we were able to re-establish the presence of Vimto.   Our model within this region is to seed a territory with imported cans and, as critical mass is achieved, we seek to partner a local bottler.  As a result, in 2014 we experienced a switch in sales from cans to sales of concentrate, accounting for a 9% increase in Concentrate revenue in the overall African business.  Shipments to the West African region remained broadly stable, despite the devastating and indeed tragic outbreak of Ebola in that region during the year.

 

Non soft drinks brand licensing continues to grow within our portfolio. In 2014 we had over 20 million Vimto brand interactions with our consumers.  Vimto Jellies were successfully launched and in their first year achieved retail sales in excess of £1.0m.

 

 

Financial review

 

The Group has delivered pleasing sales growth of 3.5% to £109.2m (2013: £105.5m) despite challenging overall market conditions. We have continued with our strategy of focusing on value over volume and as a result our gross margin has remained robust and contributed to the strong profit delivery.

 

In summary in 2014 we achieved:

 

·     3.5% total sales growth to £109.2m (2013: £105.5m)

·     4.3% International sales growth to £24.1m (2013 £23.1m)

·     14.1% profit before tax growth (pre exceptional items) to £25.7m (2013: £22.5m)

·     20.2% earnings per share growth (pre exceptional items)

·     14.2% full year dividend growth

 

Cash generation remained positive in 2014 and, as a result, we finished the year with £34.5m cash in the bank. 

 

 

Corporate Responsibility

 

Issues of obesity and sugar consumption continue to challenge the soft drinks industry.  We believe that improving dietary health in the UK is a shared responsibility and we are working hard to ensure that our product range offers our consumers a range of options, as well as transparency to enable them to make an informed choice.

 

We continue to support the Government's Public Health Responsibility Deal and strive to improve our calorie reduction pledge year on year.  Since 2011 we have achieved the following:

 

       ·     A reduction of 28% in average calories per 100ml of our Ready to Drink products sold.

       ·     Proportion of our no added sugar sales has increased from 19% to 36%.

       ·     Our total use of sugar has reduced by 23%.

To support our corporate responsibility programme, we embarked on a recipe rationalisation programme at the Nichols manufacturing site in Ross-on-Wye.  This has resulted in improved manufacturing efficiencies, better labour utilisation and a reduction in energy usage and waste levels.

 

 

Community

 

I am pleased to report our key charity this year has been Warrington Youth Club. 

 

Warrington Youth Club believes in "inspiring young people to achieve" and supports young people's development by offering opportunities to gain, increase and develop skills, self awareness and confidence.  This in turn enables them to make positive and healthy life choices through a range of programmes.

 

In order to support the charity, Team Vimto climbed Kilimanjaro in early 2014 and hosted a "Dragons Den" style activity which produced some amazing performances and ideas from the students.  The co-operation between the two organisations has been mutually beneficial and highly rewarding. 


Employees

 

Our strongest asset remains the quality of our people and the excellent teamwork found across our Group.  Our business thrives on the energy, enthusiasm and positive attitude of all our colleagues.  The professionalism and capability of our people reinforces my confidence in our ability to continue to improve our performance and achieve our strategic goals together.  We have a strong and distinctive culture which we are proud of and work hard to nurture and maintain.

 

I would like to take this opportunity to thank all my colleagues for their continued effort and commitment.

 

 

Outlook

 

Overall 2014 was a good year for the Group, underpinned by our strengths of core brands, international operations and a winning team.  We look forward with continued confidence into 2015.

 

 

 

Marnie Millard

Chief Executive

5 March 2015 



 

Consolidated income statement

Year ended 31 December 2014

 


2014

2013


Before

exceptional

items

Exceptional

Items

Total

Before

exceptional

items

Exceptional items

Total


£'000

£'000

£'000

£'000

£'000

£'000





Restated


Restated

Revenue

109,205

0

109,205

105,529

0

105,529

Cost of sales

 

(59,035)

0

(59,035)

(57,430)

0

(57,430)








Gross profit

 

50,170

0

50,170

48,099

0

48,099

Distribution expenses

(5,271)

0

(5,271)

(6,063)

0

(6,063)

Administrative expenses

(19,302)

(7,768)

(27,070)

(19,609)

(3,680)

(23,289)








Operating profit

25,597

(7,768)

17,829

22,427

(3,680)

18,747

Finance income

257

0

257

347

0

347

Finance expense

(164)

0

(164)

(264)

0

(264)








 

Profit before taxation

 

25,690

 

(7,768)

 

17,922

 

22,510

 

(3,680)

 

18,830








Taxation

 

(5,413)

1,637

(3,776)

(5,645)

924

(4,721)








Profit for the financial year attributable to equity holders of the parent

20,277

(6,131)

14,146

16,865

(2,756)

14,109








Earnings per share (basic)



38.39p



38.30p

Earnings per share (diluted)



38.34p



38.25p















All results relate to continuing operations

 

 

Consolidated statement of comprehensive income

Year ended 31 December 2014

 

 

 

 

2014

 

 

2013

 

 

 

£'000

 

 

£'000

Profit for the financial year

 

 

14,146

 

 

14,109

 

 

 

 

 

 

 

Other comprehensive (expense)/income that will not be reclassified to profit or loss

 

 

 

 

 

 

Re-measurement of net defined benefit liability

 

 

(2,796)

 

 

1,909

Deferred taxation on pension obligations and employee benefits

 

 

436

 

 

(308)

 

 

 

 

 

 

 

Other comprehensive (expense)/income for the year

 

 

(2,360)

 

 

1,601

 

 

 

 

 

 

 



Statement of financial position

Year ended 31 December 2014

 

 

 

         Group

 

        Parent

 

 

2014

2013

 

2014

2013

ASSETS

 

£'000

£'000

 

£'000

£'000

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

 

4,817

1,295

 

3,759

355

Goodwill

 

16,447

16,057

 

0

0

Investments

 

0

0

 

16,566

16,566

Deferred tax assets

 

1,699

1,321

 

1,699

1,321

 

 

 

 

 

 

 

Total non-current assets

 

22,963

18,673

 

22,024

18,242

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Inventories

 

4,712

4,144

 

2,634

2,182

Trade and other receivables

 

23,525

22,721

 

21,120

20,565

Cash and cash equivalents

 

34,483

34,293

 

19,124

30,964

 

 

 

 

 

 

 

Total current assets

 

62,720

61,158

 

42,878

53,711

 

 

 

 

 

 

 

Total assets

 

85,683

79,831

 

64,902

71,953

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

19,486

18,152

 

17,210

23,107

Current tax liabilities

 

1,859

1,675

 

1,090

803

Provisions

 

0

2,018

 

0

2,018

 

 

 

 

 

 

 

Total current liabilities

 

21,345

21,845

 

18,300

25,928

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

Pension obligations

 

6,190

4,047

 

6,190

4,047

Deferred tax liabilities

 

70

0

 

0

0

 

 

 

 

 

 

 

Total non-current liabilities

 

6,260

4,047

 

6,190

4,047

 

 

 

 

 

 

 

Total liabilities

 

27,605

25,892

 

24,490

29,975

 

 

 

 

 

 

 

Net assets

 

58,078

53,939

 

40,412

41,978

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

Share capital

 

3,697

3,697

 

3,697

3,697

Share premium reserve

 

3,255

3,255

 

3,255

3,255

Capital redemption reserve

 

1,209

1,209

 

1,209

1,209

Other reserves

 

(560)

(598)

 

215

177

Retained earnings

 

50,477

46,376

 

32,036

33,640

 

 

 

 

 

 

 

Total equity

 

58,078

53,939

 

40,412

41,978

 



 

Consolidated statement of cash flows

Year ended 31 December 2014                                

 

2014

2013

      

 

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

 

Profit for the financial year

 

14,146

 

14,109

 

 

 

 

 

 

 

Adjustments for:

 

 

 

 

 

Depreciation

480

 

513

 

 

(Profit)/ loss on sale of property, plant and equipment

 

(80)

 

 

11

 

 

Finance income

(257)

 

(347)

 

 

Tax expense recognised in the income statement

3,776

 

4,721

 

 

Change in inventories

(568)

 

1,103

 

 

Change in trade and other receivables

(787)

 

1,050

 

 

Change in trade and other payables

1,324

 

(1,224)

 

 

Change in provisions

(2,018)

 

1,971

 

 

Change in pension obligations

(653)

 

(600)

 

 

 

 

1,217

 

7,198

 

 

 

 

 

 

 

Cash generated from operating activities

 

15,363

 

21,307

 

Tax paid

 

(3,465)

 

(4,765)

 

 

 

 

 

 

 

Net cash generated from operating activities

 

11,898

 

16,542

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Finance income

239

 

316

 

 

Proceeds from sale of property, plant and equipment

124

 

148

 

 

Acquisition of property, plant and equipment

(4,034)

 

(692)

 

 

Acquisition of subsidiary, net of cash acquired

(85)

 

0

 

 

Acquisition of trade and assets

(305)

 

0

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

(4,061)

 

(228)

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Acquisition of own shares

(129)

 

(127)

 

 

Dividends paid

(7,518)

 

(6,639)

 

 

 

 

 

 

 

 

Net cash used in financing activities

 

(7,647)

 

(6,766)

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

190

 

9,548

 

Cash and cash equivalents at 1 January

 

34,293

 

24,745

 

 

 

 

 

 

 

Cash and cash equivalents at 31 December

 

34,483

 

34,293

 

 

 

 



 

Consolidated statement of changes in equity

Year ended 31 December 2014

 

 

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 2013

3,697

3,255

1,209

(474)

37,308

44,995

Dividends

0

0

0

0

(6,639)

(6,639)

Movement in ESOT

0

0

0

(124)

(3)

(127)

Transactions with owners

0

0

0

(124)

(6,642)

(6,766)

Profit for the year

0

0

0

0

14,109

14,109

Other comprehensive income

0

0

0

0

1,601

1,601

Total comprehensive income

0

0

0

0

15,710

15,710

At 1 January 2014

3,697

3,255

1,209

(598)

46,376

53,939

Dividends

0

0

0

0

(7,518)

(7,518)

Movement in ESOT

0

0

0

38

(167)

(129)

Transactions with owners

0

0

0

38

(7,685)

(7,647)

Profit for the year

0

0

0

0

14,146

14,146

Other comprehensive expense

0

0

0

0

(2,360)

(2,360)

Total comprehensive income

0

0

0

0

11,786

11,786

At 31 December 2014

3,697

3,255

1,209

(560)

50,477

58,078

 

 

 

 

 

 

 

 

 

Nichols plc

NOTES TO THE PRELIMINARY FINANCIAL INFORMATION

 

Basis of Preparation

The preliminary financial information does not constitute statutory accounts for the financial years ended 31 December 2014 and 31 December 2013, but has been derived from those accounts. The accounting policies used in preparation of this preliminary announcement have remained unchanged from those set out in the 2013 annual report except as stated below. Statutory accounts for 2013 have been delivered to the Registrar of Companies and those for the financial year ended 31 December 2014 will be delivered following the Company's annual general meeting.  The auditors have reported on those accounts and their reports were unqualified and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

 

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.

 

Basic earnings per share is 38.39 pence (2013: 38.30 pence).

Basic earnings per share (pre exceptional items) is 55.03 pence (2013: 45.79 pence).

 

Segmental Information

The Executive Committee analyses the Group's internal reports to enable an assessment of performance and allocation of resources. The operating segments are based on these reports.

 

The Executive Committee reviews the Group based on the operating segments identified below. Gross profit is the measure used to assess the performance of each operating segment.

 

 

Revenue

Gross Profit

 

 

2014
£'000

2013
£'000

2014
£'000

2013
£'000

 

 

Restated

 

Restated

Still

56,025

53,225

30,756

28,721

Carbonate

53,180

52,304

19,414

19,378

Total

109,205

105,529

50,170

48,099

 

There are no sales between the two operating segments, and all revenue is earned from external customers.

 

The operating segments gross profit is reconciled to profit before taxation as per the consolidated income statement.

 

The Group's assets are managed centrally by the Management Committee and consequently there is no reconciliation between the Group's assets per the statement of financial position and the segment assets.

 

 

 

2014
£'000

2013
£'000

Capital Expenditure

4,034

692

Depreciation

480

513

 

Exceptional items

 

The Consolidated Income statement for 2014 includes the following one-off exceptional cost:

 

·     A payment of £7.77m in full and final settlement of a litigation claim from a licensee in Pakistan. The claim was in relation to unsuccessfully defending a claim from a licensee's rights to manufacture and distribute Vimto cordial in Pakistan.

 

Restatement

The revenue figure for comparative periods has been restated to include certain customer invoiced promotional investment that was previously included within administrative expenses. This change in policy reduces revenue by including certain invoiced costs associated with promotional activities and brings our reporting to a basis consistent with the accounting policy adopted by our peer group. This has no impact on the operating profit previously reported.

 

Annual Report

The annual report will be mailed to shareholders and made available on our website on or around 30th March 2015.  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 Haydock Park Racecourse, Newton le Willows, Merseyside, WA12 0HQ on 29 April 2014 at 11.00am.

 

Copies of the announcement can be found on the Investors Relations section of the company's website: www.nicholsplc.co.uk.

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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