2021 Interim Results

RNS Number : 8957F

Nichols PLC

21 July 2021

 

21 July 2021       

Nichols plc

2021 INTERIM RESULTS

Strong performance with robust growth

Nichols plc ('Nichols' or the 'Group'), the diversified soft drinks Group, announces its unaudited interim results for the half year ended 30 June 2021 (the 'period').

	Half year ended 30 June 2021	Half year ended 30 June 2020	Movement
	£m	£m
Group Revenue	67.4	59.2	+13.8%
Adjusted Operating Profit 1	9.0	6.8	+32.9%
Operating Profit	8.8	3.0	+195.1%
Adjusted Profit Before Tax (PBT) 1	8.9	6.8	+31.6%
Profit Before Tax (PBT)	8.6	2.9	+193.4%
Adjusted PBT Margin 1	13.2%	11.5%	+1.7ppts
PBT Margin	12.8%	4.9%	+7.9ppts
EBITDA 2	11.2	9.3	+20.4%
Adjusted Earnings per Share (basic) 1	19.52p	14.94p	+30.7%
Earnings per Share (basic)	18.93p	4.59p	+312.4%
Cash and Cash Equivalents3	47.4	47.3	+0.2%
Interim Dividend	9.8p	28.0p 4	(65.0%)

●	Vimto Brand Value in the UK +2.7% YTD with Vimto Dilutes significantly outperforming the market5
●	UK revenue up +5.5% with Out of Home ("OoH") revenues broadly in line with prior year following encouraging Q2 performance
●	Vimto international growth of +42.3% versus prior year
○		Vimto 'in market' Middle East volumes remained resilient through Ramadan with full year 'in market' volumes expected to remain in line with pre-Sweetened Beverage Tax levels
○		Vimto in Africa delivered strong revenue growth of +22.8%
○		Vimto continues to progress across the rest of the world, delivering revenue growth of 49.3%
●	The business continues to invest in UK operational change in order to ensure continued agility and growth given future prospects
●	Strong cash and cash equivalents at £47.4m (31 December 2020: £47.3m)
●	Interim dividend of 9.8p
●	2021 Financial Guidance remains unchanged6
●	New long-term agreement signed with J & J Snack Foods Corp. to manufacture, manage, distribute and sell the SLUSH PUPPiE brand across the UK, Ireland and Europe

1 Excluding Exceptional items of £0.3m (H1 2020: £3.8m)

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

3 The comparison is to 31 December 2020. All other comparatives compare to the six months ending 30 June 2020 unless otherwise stated

4 Final dividend FY19 (28.0p) withdrawn. Same value paid as interim dividend FY20

5 Nielsen Total Coverage Year to Date, 19 June 2021

6 FY21 Adjusted PBT of £18.9m (FY20 Actual £11.6m)

John Nichols, Non-Executive Chairman, commented:

"Our first and most important objective through the Covid-19 pandemic has been the continued safety and wellbeing of our employees and customers. Throughout these challenging times, our colleagues have consistently demonstrated their commitment to our business and our customers, and I would again like to wholeheartedly thank everyone for their support.

The continued strong performance of the Vimto brand, the Group's robust balance sheet and our diversified business model has ensured a resilient financial performance in the period with growth across each of our reporting segments.

The UK Government's planned roadmap out of lockdown continues and although at a more cautious pace than originally planned , the Group's positive start to the year means that we remain confident that it will achieve the Board's expectations for the year. Longer term, the Board is currently assessing the impact of inflationary pressures affecting logistics, labour, plastics and costs associated with increasing environmental legislation."  

Contacts

Andrew Milne, Group Chief Executive Officer David Rattigan, Group Chief Financial Officer
Nichols plc
Telephone: [phone]
Website: www.nicholsplc.co.uk
Alex Brennan / Elfie Kent	Steve Pearce / Rachel Hayes
Hudson Sandler	Singer Capital Markets (Nominated Adviser)
Telephone: [phone]	Telephone: [phone]
Email: [e-mail]	Website:  www.singercm.com

Notes to Editors:

Nichols plc is an international diversified soft drinks business with sales in over 73 countries, selling products in both the Still and Carbonate categories. 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, Feel Good, Starslush, ICEE, Levi Roots and Sunkist.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

Executive Review

Revenue

Despite exceptionally tough trading conditions, particularly in the OoH route to market, and against very strong comparatives in packaged routes to market, the Board is pleased to report a strong half year performance with Group revenues of £67.4m, an increase of 13.8% compared to the prior year (H1 2020: £59.2m), and encouragingly with growth achieved across each of our reporting segments.

The Still and Carbonate product segments achieved revenue growth of 9.8% (to £35.6m) and 18.6% (to £31.8m) respectively, driven by both strong UK and International Packaged performance.

The Vimto brand continues to perform strongly in all of its markets. In the UK the Vimto brand value increased by 2.7%¹ according to Nielson. In Africa, the Middle East, Europe and the US we continued to see significant progress year on year, with international revenues increasing 42.3% versus the prior year.

Driven by continued progress within the UK packaged route to market, UK revenue increased by 5.5% to £48.4m (H1 2020: £45.9m). UK packaged revenues improved by 5.0%, underpinned by the strong performance of the Vimto brand,  particularly within Dilutes, where the brand's squash products significantly outperformed the market¹. Despite the strong H1 2020 comparative (which included a very warm Spring and significant increases in consumer buying as the UK entered its first lockdown), the Group saw revenues increase 5.0% within UK retailers. Revenues within Convenience, Delivered Wholesale and Cash and Carry channels were broadly flat year on year, with both current and prior year periods significantly subdued due to the impact of outlet closures.

Within our OoH route to market the Group has worked closely with its partners to support the re-opening of the sector. Pleasingly, we started to see significant numbers of outlets gradually open through Q2, resulting in half year revenues broadly in line with those of the prior year. Q2 revenues were 843.7% ahead of those in the same quarter last year, when the UK was in a period of national lockdown, and the Board believes there is a more stable outlook for H2 given the success of the UK vaccination programme. Given the break in the link between infection and hospitalisation, there is now significant confidence that the re-opening of outlets will be permanent.

Towards the end of the period, the Group was pleased to sign a significant new agreement with J & J Snack Foods Corp for Vimto Out of Home to revive the iconic SLUSH PUPPiE frozen drink brand in the UK. The long-term agreement gives Vimto Out of Home, part of Nichols plc, the rights to manufacture, manage, distribute and sell the SLUSH PUPPiE brand across the UK, Ireland, and Europe. Using its expertise as the UK's leading frozen beverage supplier, the Group plans to refresh and relaunch the brand.

Sales across our international markets were up 42.3% at £19.0m (H1 2020: £13.3m), with double digit growth in all markets. Despite the ongoing pandemic, Middle East volumes performed resiliently through Ramadan, and 'in market' volumes across the Middle East are expected to be broadly flat through 2021. The Group, alongside its local partner, continues to invest in offsetting some of the pricing impact of the Sweetened Beverage Tax ("SBT"). In Africa, the strong growth seen in the prior year (7.4%) has continued at the start of this year with revenues improving by 22.8% to £10.2m (H1 2020: £8.3m). Rest of World revenues (largely Europe and the US) experienced growth of 49.3% to £3.7m (H1 2020: £2.5m).

The impact of movements in foreign exchange rates on revenue year on year was £0.2m adverse as Sterling strengthened against the Euro and US Dollar.

Gross Profit

Gross profit at £29.9m was £5.4m higher than H1 2020 (£24.6m) and 2.9 percentage points higher at 44.4% (H1 2020: 41.5%) with progress seen in both the Still and Carbonate segments.

Of the £5.4m improvement, approximately £2.7m is due to the volume effect of increased revenues from our Packaged routes to markets. Significant OoH stock write offs in H1 2020 provided an additional £0.7m of gross profit year on year whilst the balancing £2.0m is a net price/mix effect of improved contribution from revenues into the Middle East and Africa supported by a positive SBT comparison.

1 Nielsen Total Coverage Year to Date 19 June 2021

Across the Middle East we remain very pleased with the results reported since the introduction of the SBT, with 'in market' volumes expected to be broadly in line with levels prior to the tax's introduction.

Distribution Expenses

Distribution expenses totalled £4.2m (H1 2020: £3.8m), an increase of 11.5% versus the same period last year.

Although a significant proportion of the increase is volume related, the Group experienced supply and price pressure across its supply chains. Container availability for international shipments has driven up prices and created trading challenges. In the UK, Brexit and the tightening of IR35 legislation have created a shortage of drivers, which, when combined with increasing fuel costs, points to significant inflationary pressure over the coming months.

Administration Expenses

Administration expenses, excluding exceptional items, totalled £16.7m (H1 2020: £14.0m), an increase of £2.7m or 19.3%.

The Group has incurred a number of significant comparative movements year on year which are highlighted below.

The Group recommenced its investment in marketing spend with the TV and social media campaign 'Vimto, Find Your Different', increasing comparative costs by £1.2m year on year.

In both 2019 and 2020 the Group had administrative credits of £1.1m and £1.3m respectively following the release of unrealised deferred consideration initially recognised at the acquisition of both Adrian Mecklenburgh and Noisy North West. There have been no adjustments in 2021. Of the £1.3m from 2020, £1.1m was released in Q1 2020, therefore increasing comparative costs by a further £1.1m.

The Group incurred a foreign exchange loss in the first half year of £0.5m as a result of the strengthening of Sterling against both the Euro and the US Dollar. This compares with a £0.4m gain in H1 2020.

Throughout the pandemic the Group has placed a strong focus on controlling overhead costs whilst ensuring the business is able to 'Build Back Better' as restrictions ease. This focus on reducing discretionary spend remained in place at the start of this year whilst recognising the changing environment and the increasing easing of restrictions across the UK, resulting in net comparative savings of £0.5m. This year on year saving largely relates to the organisational changes implemented in H2 2020. 

Exceptional Costs

As noted in the 2020 Annual Report and Accounts, during Q4 2020 the Group commenced a review of its UK packaged supply chain in order to ensure continued agility and growth given future prospects . This review has continued during the first half year resulting in £0.3m of exceptional costs (project and contract development costs) during the period with further costs expected during the second half of 2021.

Exceptional costs in the first half of 2020 were £3.8m and related to the non-cash impairment of the Group's goodwill and intangible assets of its 'Feel Good" brand.

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.

Operating Profit

Adjusted Operating Profit of £9.0m was up £2.2m, a 32.9% increase on the prior year (H1 2020: £6.8m). Operating profit of £8.8m (H1 2020: £3.0m) is after charging exceptional items during the period.

The strengthening of Sterling against the Euro and the US Dollar during the period resulted in an overall foreign exchange loss to operating profit in the year of £0.5m (2020 H1: £0.4m gain).

Finance Costs

Net Finance costs of £0.1m (H1 2020: £nil) were broadly in the line with the prior year.

Profit before tax and tax rate

Adjusted profit before tax increased by 31.6% to £8.9m (H1 2020: £6.8m). The tax charge on adjusted profit before tax for the period of £1.7m (H1 2020: £1.2m) represents an effective tax rate of 19% (H1 2020: 18%). Reported profit before tax was £8.6m, an increase of 193.4% compared to the prior year (H1 2020: £2.9m).

Balance Sheet and Cash and Cash Equivalents

Despite the impact of the pandemic on trading, cash and cash equivalents at the end of the period remained strong at £47.4m (H1 2020: £46.8m), broadly in line with the 2020 year end position (£47.3m).

The continued strength of the Group's closing balance sheet reflects its diversified routes to market and asset light model. These attributes enable the Group to continue supporting its stakeholders by:

· Replacing old stock with new (£0.3m), free of charge for its OoH customers following the second lockdown as well as   providing enhanced credit terms;

· Continued full payment of taxes; and

· Not participating in Government loan or payment deferral opportunities.

As expected, following the gradual re-opening of outlets in the Q2, the Group has begun to see a re-investment into working capital as the Group's debtors and inventories begin to return to 2019 levels. The Group's debtors and inventories are £8.4m higher than at the year end, offset by an increase of £4.5m in creditors as volumes have increased. The Group continues to focus on working capital management and has seen very low capital expenditure in the period of £0.6m (H1 2020: £1.9m). Increased investment is expected during the second half as OoH re-opens fully.

Despite this working capital outflow, the Group was pleased to generate Free Cash Flow of £3.4m (H1 2020: £6.7m).

Earnings per share

Total adjusted basic EPS increased to 19.52 pence (H1 2020: 14.94p) with basic EPS at 18.93 pence (H1 2020: 4.59p). On an adjusted basis, diluted EPS was 19.49 pence (H1 2020: 14.93p).

Dividend

As disclosed in the Group's 2020 Annual Report, the Board evolved the dividend policy to reflect the balance of shareholder needs and the clear opportunities for growth that will exist in the soft drinks market post the pandemic.

In line with the new policy, dividend cover is broadly 2x the adjusted earnings of the Group. As a result, the interim dividend for 2021 will be 9.8p per share to be paid on 10 September 2021 with a record date of 30 July 2021.

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 2021, the Group recognised a surplus on its UK defined benefit scheme of £3.9m (31 December 2020: surplus £0.3m).

During the start of 2021, the Group has agreed with the Trustees a de-risking future funding plan for the defined benefit scheme. The reinvestment to de-risked funds was largely completed in the first half of 2021.

Outlook

The UK Government's planned roadmap out of lockdown continues and although at a more cautious pace than originally planned , the Group's positive start to the year means that we remain confident that it will achieve the Board's expectations for the year. Longer term, the Board is currently assessing the impact of inflationary pressures affecting logistics, labour, plastics and costs associated with increasing environmental legislation.

Andrew Milne

Chief Executive Officer

David Rattigan

Chief Financial Officer

21 July 2021

CONSOLIDATED INCOME STATEMENT

		Unaudited Half year to 30 June 2021 £'000	Unaudited Half year to 30 June 2020 £'000	Audited Year ended 31 December 2020 £'000
Continuing operations
Revenue		67,392	59,213	118,657
Cost of sales		(37,448)	(34,641)	(69,021)
Gross profit		29,944	24,572	49,636
Distribution expenses		(4,244)	(3,806)	(7,979)
Administrative expenses		(16,945)	(17,799)	(35,077)
Operating profit		8,755	2,967	6,580
Finance income		24	113	150
Finance expenses		(149)	(139)	(190)
Profit before taxation		8,630	2,941	6,540
Taxation		(1,640)	(1,244)	(1,686)
Profit for the period		6,990	1,697	4,854
Earnings per share (basic)		18.93p	4.59p	13.14p
Earnings per share (diluted)		18.91p	4.59p	13.13p
Adjusted for exceptional items
Operating profit		8,755	2,967	6,580
Exceptional items		267	3,820	5,074
Adjusted operating profit		9,022	6,787	11,654
Profit before taxation		8,630	2,941	6,540
Exceptional items		267	3,820	5,074
Adjusted profit before taxation		8,897	6,761	11,614
Adjusted earnings per share (basic)		19.52p	14.94p	25.56p
Adjusted earnings per share (diluted)		19.49p	14.93p	25.54p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		Unaudited Half year to 30 June 2021 £'000	Unaudited Half year to 30 June 2020 £'000	Audited Year ended 31 December 2020 £'000
Profit for the financial period		6,990	1,697	4,854
Items that will not be classified subsequently to profit or loss:
Re-measurement of net defined benefit liability		3,176	(2,347)	(155)
Deferred taxation on pension obligations and employee benefits		(603)	295	32
Other comprehensive income/(expense) for the period		2,573	(2,052)	(123)
Total comprehensive income/(expense) for the period		9,563	(355)	4,731

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		Unaudited 30 June 2021	Unaudited 30 June 2020	Audited 31 December 2020
ASSETS		£'000	£'000	£'000
Non-current assets
Property, plant and equipment		18,706	22,002	20,126
Goodwill		36,244	36,081	36,244
Intangibles		5,866	6,470	6,206
Deferred tax assets		-	578	-
Pension surplus		3,925	-	347
Total non-current assets		64,741	65,131	62,923
Current assets
Inventories		6,563	6,787	5,921
Trade and other receivables		37,979	33,745	29,814
Cash and cash equivalents		47,427	46,781	47,294
Total current assets		91,969	87,313	83,029
Total assets		156,710	152,444	145,952
LIABILITIES
Current liabilities
Trade and other payables		25,860	20,746	21,669
Total current liabilities		25,860	20,746	21,669
Non-current liabilities Other payables		2,724	3,073	2,922
Pension obligations and employee benefits		-	1,880	-
Deferred tax liabilities		2,024	1,701	1,485
Total non-current liabilities		4,748	6,654	4,407
Total liabilities		30,608	27,400	26,076
Net assets		126,102	125,044	119,876
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		306	310	394
Retained earnings		117,635	116,573	111,321
Total equity		126,102	125,044	119,876

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 2020	3,697	3,255	1,209	253	116,928	125,342
Dividends	-	-	-	-	-	-
Movement in ESOT	-	-	-	3	-	3
Credit to equity for equity-settled share based payments	-	-	-	54	-	54
Transactions with owners	-	-	-	57	-	57
Profit for the period	-	-	-	-	1,697	1,697
Other comprehensive expense	-	-	-	-	(2,052)	(2,052)
Total comprehensive expense	-	-	-	-	(355)	(355)
At 30 June 2020	3,697	3,255	1,209	310	116,573	125,044
	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 2021	3,697	3,255	1,209	394	111,321	119,876
Dividends	-	-	-	-	(3,249)	(3,249)
Movement in ESOT	-	-	-	(2)	-	(2)
Debit to equity for equity-settled share based payments	-	-	-	(86)	-	(86)
Transactions with owners	-	-	-	(88)	(3,249)	(3,337)
Profit for the period	-	-	-	-	6,990	6,990
Other comprehensive income	-	-	-	-	2,573	2,573
Total comprehensive income	-	-	-	-	9,563	9,563
At 30 June 2021	3,697	3,255	1,209	306	117,635	126,102

CONSOLIDATED STATEMENT OF CASH FLOWS

			Unaudited Half year to 30 June 2021		Unaudited Half year to 30 June 2020		Audited Year ended 31 December 2020
			£'000	£'000	£'000	£'000	£'000	£'000
Cash flows from operating activities
Profit for the financial period				6,990		1,697		4,854
Adjustments for:
Depreciation and amortisation			2,464		2,434		4,971
Impairment losses on goodwill and intangible assets			-		3,820		3,820
Impairment losses on property, plant and equipment			-		-		1,016
Loss on sale of property, plant and equipment			8		58		71
Finance income			(24)		(113)		(150)
Finance expense			149		139		190
Tax expense recognised in the income statement			1,640		1,244		1,686
Change in inventories			(642)		1,574		2,440
Change in trade and other receivables			(7,774)		4,659		9,220
Change in trade and other payables			4,457		(1,677)		(838)
Change in pension obligations			(402)		(720)		(755)
				(124)		11,418		21,671
Cash generated from operating activities				6,866		13,115		26,525
Tax paid				(2,094)		(4,047)		(5,017)
Net cash generated from operating activities				4,772		9,068		21,508
Cash flows from investing activities
Finance income			24		113		150
Proceeds from sale of property, plant and equipment			-		-		35
Acquisition of property, plant and equipment			(632)		(1,888)		(2,701)
Acquisition of intangible assets			-		-		(170)
Payment of contingent consideration (note 9)			(67)		(880)		(880)
Net cash used in investing activities				(675)		(2,655)		(3,566)
Cash flows from financing activities Payment of lease liabilities			(715)		(576)		(1,254)
Dividends paid			(3,249)		-		(10,338)
Net cash used in financing activities				(3,964)		(576)		(11,592)
Net increase in cash and cash equivalents				133		5,837		6,350
Cash and cash equivalents at start of period				47,294		40,944		40,944
Cash and cash equivalents at end of period				47,427		46,781		47,294

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 2020, 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 2021 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 21 July 2021.

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 and the potential impact of further COVID-19 restrictions. The review performed considers severe but plausible downside scenarios that could reasonably arise within the period.

The estimated impacts of COVID-19 restrictions are primarily based around our OoH market and the length of time that lockdown restrictions may be in place for the hospitality industry. Our modelling has sensitised trading within this market to reflect varying degrees of lockdowns with the most severe scenario assuming that some restrictions will persist throughout the remainder of 2021, with OoH performance only beginning to return to pre COVID-19 levels during the second half of 2022.

In addition to the continued impact of COVID-19, 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, combined with its strong cash generation all provide resilience against these factors and the other principal risks that the Group is exposed to. At the 30 June 2021 the Group had cash and cash equivalents of £47.4m 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.  Impact of Covid-19 on Financial Statements

In light of the effects of Covid-19 and social distancing measures on the Group's business and customers, the Directors have considered the impact on the accounting judgements and estimates within the financial statements. All commercial and operational impacts of Covid-19 have been treated within the underlying results and no Covid-19 impact has been treated as exceptional.

Expected credit loss provisions on the Group's trade receivables have been reviewed in light of potential increased risk of bad debt, particularly in relation to smaller independent customers.

The Group has accessed the funds made available by the Government under the Job Retention Scheme. This was used to partially offset the payroll expense incurred for employees who were furloughed. Through the first quarter of the year (Q1) continued customer outlet closures meant that a number of our OoH team were furloughed, all returning to work by the half year end. The business has paid furloughed employees at 100% of salary throughout the period and only furloughed employees where reductions in workload have been deemed temporary due to Government restrictions. The financial contribution made by the Government from the scheme to Nichols was £0.7m during the period.

Our offices and depots have remained open in a Covid secure manner throughout the year for wellbeing purposes or office critical activities, but the vast majority of office-based employees have worked effectively from home. High levels of service have continued to be provided to all of our customers.

4.  Segmental Reporting

The Board considers the business from a product perspective and reviews the Group's performance based on the reporting operating segments identified below. There has been no change to the segments during the period. Based on the nature of the products sold by the Group, the types of customers and methods of distribution, management consider reporting operating segments at the Still and Carbonate level to be reasonable, particularly in light of market research and industry data made available by Nielsen. Gross profit is the measure used to assess the performance of each operating segment.

		Still	Carbonate	Group
		£'000	£'000	£'000
Half year to 30 June 2021
Revenue		35,558	31,834	67,392
Gross Profit		18,572	11,372	29,944

Half year to 30 June 2020
Revenue	32,381	26,832	59,213
Gross Profit	16,391	8,181	24,572

Year ended 31 December 2020
Revenue	65,688	52,969	118,657
Gross Profit	32,817	16,819	49,636

A geographical split of revenue is provided below:

		Half year to 30 June 2021	Half year to 30 June 2020	Year ended 31 December 2020
		£'000	£'000	£'000
Geographical split of revenue
Middle East		5,126	2,596	7,309
Africa		10,164	8,274	14,010
Rest of the World		3,675	2,462	5,712
United Kingdom		48,427	45,881	91,626
Total revenue		67,392	59,213	118,657

5.  Exceptional items

In order to allow a better understanding of the underlying trading performance of the Group, items which by virtue of their nature and size do not reflect the Group's underlying performance have been reported as exceptional items within administrative expenses. These items are as follows:

		Half year to 30 June 2021	Half year to 30 June 2020	Year ended 31 December 2020
		£'000	£'000	£'000
Review of UK packaged supply chain		267	-	277
Impairment of goodwill and intangibles		-	3,820	3,820
Redundancy costs		-	-	723
Restructuring costs		-	-	254
		267	3,820	5,074

As noted in the 2020 Annual Report and Accounts, during Q4 2020 the Group commenced a review of its UK packaged supply chain in order to ensure continued agility and growth given future prospects. This review has continued during the first half year resulting in £0.3m of exceptional costs (project and contract development costs) during the period, with further costs expected during the second half of 2021.

For the prior period ended 30 June 2020, the Group recognised £3.8m of exceptional costs in relation to the non-cash impairment of the Group's goodwill and intangible assets of its 'Feel Good" brand.

6.  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. 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 2021
Basic earnings per share		6,990	36,916,403	18.93p
Dilutive effect of share options			48,035
Diluted earnings per share		6,990	36,964,438	18.91p

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 Groups' 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 2021
Basic earnings per share		6,990	36,916,403	18.93p
Exceptional items after taxation		216
Adjusted basic earnings per share		7,206	36,916,403	19.52p
Diluted effect of share options			48,035
Adjusted diluted earnings per share		7,206	36,964,438	19.49p

7.  Non-current Assets

		Property, Plant & Equipment	Goodwill	Intangibles
		£'000	£'000	£'000
Cost
At 1 January 2021		35,932	36,244	9,760
Additions		712	-	-
Disposals		(123)	-	-
At 30 June 2021		36,521	36,244	9,760

Depreciation and Amortisation
At 1 January 2021	15,806	-	3,554
Charge for the period	2,124	-	340
On disposals	(115)	-	-
At 30 June 2021	17,815	-	3,894

Net book value
At 1 January 2021	20,126	36,244	6,206
At 30 June 2021	18,706	36,244	5,866

8.  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 2021 by an independent qualified actuary.

A summary of the pension surplus position is provided below:

Pension surplus	£'000
At 1 January 2021	347
Current service cost	(15)
Net interest income	3
Actuarial gains	3,176
Contributions by employer	414
At 30 June 2021	3,925

9.  Contingent consideration

Within the Statement of Cash Flows there is a £0.1m (H1 2020: £0.9m) cash outflow in the period in relation to the payment of contingent consideration. These payments relate to contingent consideration paid for acquisitions made in previous financial years.

10. Contingent Liability

The Group had previously entered into contracts with some of its senior management relating to incentive schemes which were designed to motivate, retain and engage those key employees. HMRC have written to the Group with their initial view that the arrangements should have been taxed as employment income which the Group and its advisors dispute.

If HMRC pursues its current position and is successful in its argument, then the Group may have to pay up to £3.4m (H1 2020: £3.4m) in Income Tax and National Insurance. In addition, the Group may have to pay up to £0.7m of interest to HMRC.

The employees who are party to the contracts have formally indemnified the Group in relation to income tax and employees' National Insurance and an amount of up to £2.6m (H1 2020: £2.6m) can be requested from them.

The Directors have obtained external advice and on the basis of this do not believe that the Group has a liability for any additional tax or National Insurance.

The tribunal appeal was heard during Spring 2021. However, the outcome is currently pending and unknown. In common with such disputes with HMRC, it may take some time to settle and the Directors are unable to assess how long this will take and the timing of any potential settlement if required.

The likelihood and timing of any potential settlement remains unchanged from 31 December 2020.

11. Dividends

During the second half of last year the Board evolved the dividend policy to reflect the balance of shareholder needs and the clear opportunities for growth that will exist in the soft drinks market post the pandemic.

Dividend cover is broadly 2x adjusted earnings of the Group. As a result, the interim dividend for 2021 will be 9.8p per share to be paid on 10 September 2021 with a record date of 30 July 2021.

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-

 

END

 

 

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