Interim Results
Nichols PLC
02 August 2006
Date: Embargoed until 07.00hrs, Wednesday 2 August 2006
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 2006.
The Group has two principal operations:
1) Soft Drinks (primarily involved in the sale of soft drinks, including
Vimto, throughout the world and Panda & Sunkist in the UK) and
2) Beverage Systems (Cabana, soft drinks on draught 'dispense')
Highlights:
• Sales from continuing operations up 6.7% on June 2005
• Profit before tax up 15.1% (on continuing activities & before exceptional
items) on June 2005
• EPS up 18.8% to 5.11 pence (2005: 4.30 pence)
• Interim dividend up 4.8% to 3.30 pence per share (2005: 3.15 pence)
• Cash inflow of £8.76 million (2005: outflow of £8.04 million) in first
half (before financing)
• Net cash balance at period end £2.44 million (2005: £9.01 million debt)
• Vimto continues to grow market share at maintained margin on increased
volumes
• Panda successfully re-formulated, re-launched and to be supported by
national TV & cinema advertising during the school holidays
• International sales (of Vimto) ahead of last year
• Five new distributors added to the Cabana business
Commenting John Nichols, Chairman, said:
'We are now a stronger and more focused business with no borrowings, positive
cash and our core brands, particularly Vimto, continuing to perform strongly in
a highly competitive market place'.
'Given the momentum we now have and with better than average summer weather so
far, we anticipate that our full year results will show further progress'.
Chairman's Statement
The Group's re-shaping continues to produce real benefits and I am therefore
extremely pleased to report a fourth consecutive year of improved Interim
profits and a much stronger balance sheet and cash position.
In the six months to 30 June 2006 profit on continuing activities before
exceptional items was up 15.1% on last year to £2.27 million (2005: £1.97
million). Turnover on continuing operations was also ahead, up 6.7% to £26.19
million (2005: £24.54 million).
The first half year saw the disposal of Balmoral, our hot beverage business, in
mid-January for £6.5 million in cash and in March the sale of a surplus freehold
property in Golborne, Greater Manchester, for a further £6.1 million in cash.
The combination of these two events also enabled the Group to repay all its bank
borrowings in the first half, resulting in a net cash inflow (before financing)
of £8.76 million (2005: £8.04 million outflow).
We are now a highly focused soft drinks and dispense business, comprising two
operations: 1) Soft Drinks - the sale of the Vimto brand throughout the world
and the Panda and Sunkist brands in the UK; and 2) Beverage Systems - namely
Cabana, soft drinks on draught ('dispense'). All our efforts and investment are
now concentrated on these two areas.
Soft Drinks Operation
I am delighted to report that our core Vimto brand has continued to grow its
share in a highly competitive marketplace. This has also been achieved with a
sensible mix of promotional activity enabling us to maintain our margin and to
grow successfully both our sales value as well as our sales volumes.
In April we re-launched the Panda brand, aimed at the children's market, as a
natural flavoured, sugar free, soft drink. To date it has been very well
received by the trade and for the first time ever, during the school holidays it
is being supported by a national TV and cinema advertising campaign.
Today, Vimto is available in over 65 countries overseas and our international
business (sales of the Vimto brand) has performed well in the first half year,
with our core long-term markets in the Middle East and Africa both showing
increased sales over last year.
Beverage Systems Operation
With the disposal of Balmoral in January 2006, this division is now entirely
focused on dispensing cold soft drinks on draught. In the first half year we
successfully attracted five new distributors to our Cabana business and the
transformation of beverage systems to a franchised distribution model continues.
2006 is a year of transition for Beverage Systems, but given the changes made to
date, it is now well on its way to securing a place as the third largest
operator in this sector.
Results
Turnover on continuing operations in the half year to 30 June 2006 was up 6.7%
to £26.19 million (2005: £24.54 million).
Profit before tax increased by 15.1% to £2.27 million (2005: £1.97 million,
pre-exceptional).
Exceptional items comprise an exceptional gain of £2.16 million on the disposal
of Balmoral Trading Limited and a gain of £0.13 million on the disposal of the
long leasehold property at Golborne. This was offset by £2.11 million of
exceptional charges associated with the re-structuring of our Cabana business,
principally non-cash items relating to asset impairment and onerous lease
contracts.
FRS 17 costs, including interest charges, relate to the company adopting the new
accounting standard in relation to the final salary pension scheme, which is now
closed to new members.
FRS 20 'Share Based Payments' will be adopted for the first time in 2006; the
Interim results include an estimate of the impact on the half year results.
Cash inflow (before financing) was £8.76 million (2005: £8.04 million outflow)
with net cash balances of £2.44 million (2005: £9.01 million debt).
Earnings per share increased by 18.8% to 5.11 pence (2005: 4.30 pence).
Given the consistent progress we have made, the strong cash position, and our
confidence in the future, the Board has approved a 4.8% increase in the Interim
dividend to 3.30 pence per share (2005: 3.15 pence).
The dividend will be paid on 15 September 2006 to shareholders registered on 11
August 2006. The ex-dividend date will be 9 August 2006.
Outlook
The Group is now a stronger and more focused business with no borrowings,
positive cash and its core brands, particularly Vimto, continuing to perform
strongly in a highly competitive market place. We expect this robust trading to
continue into the second half of the year.
Given the momentum we now have in our core business and with a better than
average summer so far, we anticipate that our full year results will show
further progress.
John Nichols
Chairman
2 August 2006
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Unaudited Unaudited Audited
Half year ended 30 June 2006 Restated
Before Exceptional Total Half year ended Full year
exceptional items and 30 June 2005 ended
items and FRS17 31 Dec 2005
FRS17 charges
charges
£'000 £'000 £'000 £'000 £'000
Turnover
Continuing operations 26,188 0 26,188 24,542 51,521
Discontinued operations 0 0 0 5,994 11,815
26,188 0 26,188 30,536 63,336
Operating profit / (loss)
Continuing operations 2,250 (2,170) 80 2,255 6,166
Discontinued operations 0 0 0 276 537
Profit on disposal of 0 2,166 2,166 0 0
subsidiary undertaking and
tangible fixed assets
Net interest receivable / (payable) 25 (60) (35) (280) (707)
Profit before taxation 2,275 (64) 2,211 2,251 5,996
Taxation 336 675 1,999
Profit after taxation 1,875 1,576 3,997
Earnings per share (basic) 5.11p 4.30p 10.91p
Earnings per share (diluted) 5.09p 4.28p 10.88p
Dividends per share 3.30p 3.15p 9.25p
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
Restated
30 June 2006 30 June 2005 31 Dec 2005
£'000 £'000 £'000
Fixed assets
Intangible assets 9,248 9,718 9,504
Tangible assets 4,053 13,564 13,563
13,301 23,282 23,067
Current assets
Stocks 3,053 4,799 3,972
Debtors 17,599 16,892 14,592
Cash at bank and in hand 2,448 0 0
23,100 21,691 18,564
Creditors
Amounts falling due within one year 13,097 21,808 17,532
Net current assets / (liabilities) 10,003 (117) 1,032
Total assets less current liabilities 23,304 23,165 24,099
Creditors
Amounts falling due after one year 0 1,271 750
23,304 21,894 23,349
Provisions for liabilities and charges 2,287 1,182 1,452
Net assets excluding pension liability 21,017 20,712 21,897
Pension liability 4,406 3,223 4,906
Net assets including pension liability 16,611 17,489 16,991
Share capital & reserves
Called up 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 (698) (698) (698)
Profit and loss account 9,148 10,026 9,528
Shareholders' funds 16,611 17,489 16,991
CONSOLIDATED CASH FLOW
Unaudited Restated Audited
Half year Half year Full year
ended ended ended
30 June 2006 30 June 2005 31 Dec 2005
£'000 £'000 £'000
Operating profit before exceptional items 2,250 2,531 6,703
Exceptional items - non cash costs 1,930 0 (159)
Exceptional items - cash costs (232) (346) (1,194)
Amortisation and depreciation 829 961 2,061
(Profit)/ loss on sale of tangible fixed 8 111 (7)
assets
Working capital movements (4,972) 755 3,300
Pension scheme contributions (500) (500) (1,000)
Cash flow from operating activities (687) 3,512 9,704
after exceptional items
Returns on investments and
servicing of finance (35) (280) (575)
Taxation (482) (778) (2,004)
Capital expenditure, fixed asset
disposals and financial investment 5,760 (744) (1,556)
Acquisitions and disposals 6,455 (7,609) (8,215)
Equity dividends paid (2,255) (2,144) (3,309)
Cash inflow/ (outflow) before use of 8,756 (8,043) (5,955)
liquid resources
Financing - increase in short term deposits 0 2,750 2,750
Financing - repayment of borrowings (6,308) (2,725) 217
Increase / (decrease) in cash 2,448 (8,018) (2,988)
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Unaudited Restated Audited
Half year ended Half year ended Full year ended
30 June 2006 30 June 2005 31 Dec 2005
£'000 £'000 £'000
Profit for the period 1,875 1,576 3,997
Actual return less expected return 0 0 1,004
on pension scheme assets
Experience gains and losses arising 0 0 (1,194)
on the scheme liabilities
Changes in the assumptions 0 0 (2,316)
underlying the present value of the
scheme liabilities
Movement on deferred taxation 0 0 752
relating to pension liability
Total recognised gains and losses 1,875 1,576 2,243
for the period
Prior year adjustment 0 (3,723) (1,579)
Total recognised gains and losses 1,875 (2,147) 664
since last financial statements
Notes:
1. Basis of preparation
The figures for 31 December 2005 are extracted from the financial statements for
that year which received an unqualified auditor's report and have been filed
with the Registrar of Companies. The Interim results which are unaudited have
been prepared in accordance with accounting policies adopted for the year ended
31 December 2005 and have been approved by the board. The information set out
in this Interim report does not constitute statutory accounts within the meaning
of the Companies Act.
2. Profit Before Tax (and exceptional items)
Profit before tax (and exceptional items) can be split between continuing and
discontinued activities as shown in the table below.
June 2006 June 2005 December 2005
PBT on continuing activities 2,275 1,975 6,644
PBT on discontinued activities 0 276 537
Profit Before Tax 2,275 2,251 7,181
3. Dividends
The Interim dividend of 3.30p (2005: 3.15p) will be paid on 15 September 2006 to
shareholders registered on 11 August 2006. The ex dividend date is 9 August
2006.
4. Earnings per share
Earnings per share are based on the weighted average number of shares in issue
in the six months to 30 June 2006 of 36,693,536 (six months to 30 June 2005 of
36,656,419 and 12 months to 31 December 2005 of 36,633,627).
5. Change in accounting policies
FRS 20 'Share Based Payments' will be adopted for the first time in the
financial statements for the year ended 31 December 2006. The Interim financial
statements include an estimate of the impact of the FRS 20 charge on the half
year results.
The impact of FRS 21 'Events after the balance sheet' has resulted in a
restatement in the comparative Interim profit and loss and balance sheet figures
to reflect the dividend declared after the prior year Interim period not being
recognised as a liability in the prior year Interim balance sheet.
In respect of FRS 17 'Retirement Benefits', no interim valuation of the assets
and liabilities of the scheme has been carried out and accordingly, the
statement of total recognised gains and losses has not been updated to reflect
any actuarial gain or loss. An estimate of the charge has however been made and
this is reflected in the profit and loss account.
6. Exceptional Items
On 12 January 2006, the group disposed of Balmoral Trading Limited for a cash
consideration of £6.5m.
On 3 March 2006, the group completed the sale of surplus long leasehold property
at Golborne for a cash consideration of £6.1m.
During the period, Cabana changed its business model from an in house model to a
distributor based model. This has resulted in an impairment of the fixed assets
of £1.6m, a provision for onerous leases of £0.4m and redundancy costs of £0.1m.
7. This statement will be mailed to shareholders on or about 14 August 2006
and copies will be available from The Secretary, Nichols plc, Laurel House, 5
Woodlands Park, Ashton Road, Newton-le-Willows, WA12 0HH after that date.
Copies of this statement are now available on the Investor Relations section of
the company's website: www.nicholsplc.co.uk.
-ENDS-
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