PRELIMINARY RESULTS

RNS Number : 9233Y

Nichols PLC

08 March 2012

 



Date:	Embargoed until 07.00am, Thursday 8 March 2012
Contacts:	John Nichols, Non-Executive Chairman
	Brendan Hynes, Group Chief Executive Tim Croston, Group Finance Director
	Nichols plc
	Telephone:  [phone]
	Website:www.nicholsplc.co.uk
	Nick Lyon / Alex Brennan	Nick Tulloch
	Hudson Sandler	N+1 Brewin (Nominated Adviser)
	Telephone:[phone]	Telephone:  [phone]
	Email: [e-mail]	Website: www.corporatefinance.brewin.co.uk

Nichols plc

PRELIMINARY RESULTS

Nichols plc, the soft drinks group, announces its Preliminary results for the year ended 31 December 2011.

Nichols plc is a highly focused soft drinks business. Its brand portfolio includes Vimto, which is sold in over 65 countries and Levi Roots, Weight Watchers, Sunkist & Panda which are sold in the UK. The Group has a leading market position in both the "Still" and "Carbonate" drinks categories and also in the soft drinks on dispense market, where its brands include Cabana & Ben Shaws.

Highlights:

·     Group sales up 18% to £98.9m (2010: £83.9m)

·     Profit before tax up 20% to £18.1m (2010: £15.1m pre-exceptional)

·     EPS up 20% to 36.28p (2010: 30.22p pre-exceptional)

·     Proposed final dividend of 10.30p making the total dividend for the year 15.30p up 13% (2010:13.55p)

·     Net cash £20.1m (2010: £15.0m)

·     UK soft drinks sales grew at more than twice the market growth rate

·     International sales grew by 31% against the prior year

Commenting John Nichols, Non-Executive Chairman, said:

"2011 was another record year with an outstanding performance in the face of the most challenging UK retail environment seen in a decade. Our strong portfolio of brands and our growing international presence have helped drive significant growth in sales, profitability and cash generation.

While 2012 will remain challenging we are confident of delivering profitable growth in the current year and beyond."

Chairman's Statement

We delivered another outstanding performance in 2011 with significant growth in sales, profitability and cash generation.

Group sales increased by 18% to £98.9m driven by our strong portfolio of brands and our significant international presence. This has been achieved despite the most challenging UK retail environment seen in a decade.

The year also saw high levels of cost inflation in the UK soft drinks industry affecting all our key raw materials. Whilst this had a negative impact on our UK gross margins, the effect on Group operating margin has been mitigated by a combination of ongoing productivity improvements in the UK and the strength of our international business. As a result, the Group's operating profit increased by 20% to £18.1m, maintaining the return on sales at 18%.         

Results

	Year ended 31 Dec 2011	Year ended 31 Dec 2010	% movement
	£m	£m
Group Revenue	98.9	83.9	+18%
Operating Profit	18.1	15.1	+20%
Operating Profit R.O.S.	18%	18%
Profit Before Tax	18.1	15.1	+20%
Net Cash	20.1	15.0	+34%
EPS (basic)	36.3p	30.2p	+20%

Trading

We are pleased to report that all our businesses delivered excellent growth in the year.

The UK soft drinks market, like the general grocery market, suffered relatively low volume growth in 2011 as a consequence of the ongoing economic downturn affecting consumer spending. However, our UK soft drinks sales outperformed the market, increasing by 15%, more than twice the growth rate of the UK market at 7% (AC Nielsen 52 weeks data to 24 December 2011). Whilst Vimto remains our key brand, we are also continuing the strategy of broadening our portfolio and in April 2011 launched the Levi Roots range of Caribbean drinks, which added an incremental £2.5m sales in its first 9 months of trading.   

With the economic downturn continuing to affect the UK consumer, the importance and strength of our significant international business is evident. In 2011 our total international sales grew by 31% against the prior year, sales to the Middle East were 24% higher on the back of strong in-country sales of the Vimto brand and our African sales were up a further 28% against tough comparatives (2010: 56% growth).   

The acquisition of the remaining 50% of Dayla Liquid Packing Ltd boosted our soft drinks on dispense sales which were 20% up on the prior year. This is a strong performance in a very challenging market.

Dividend

Based on the 2011 performance and the Board's confidence in the ongoing strength of the Group, we are pleased to recommend a final dividend of 10.3 pence per share. This takes the total 2011 dividend to 15.30 pence (2010: 13.55 pence), an increase of 13%. If approved, the final dividend will be paid on 4 May 2012 to shareholders registered on 30 March 2012, the ex-dividend date is 28 March 2012.

Outlook

In summary, the UK trading environment in 2011 turned out to be every bit as challenging as anticipated with consumer spending down and input costs up. However our strong brands, healthy balance sheet and thriving international business have enabled the Group to perform very strongly and deliver significant sales and profit growth.  

We would agree with the general consensus that 2012 will be just as challenging; the UK soft drinks market will see continued high level of promotions, further cost inflation and relatively low volume growth. Despite this backdrop, we again expect to outperform the market by continuing to invest in our brands, launching new products such as the recently announced Weight Watchers brand and delivering further growth in our international markets.

Therefore we are confident that the Group is well placed to deliver profitable growth in 2012 and beyond.

John Nichols

Non-Executive Chairman

8 March 2012

Chief Executive Statement

The Soft Drinks Market

During 2011 the overall soft drinks market, excluding the "on trade", grew by 7.0% in value terms and 2.0% in volume terms (AC Nielsen 52 weeks data to 24 Dec 2011). This represents a modest improvement on the previous year, the main growth categories being sports, energy and carbonated fruit drinks. The Nichols plc brand portfolio continues to be positioned predominantly in the still and carbonate sectors of the soft drinks market.

The economic and consumer backdrop continues to be a challenge, particularly in the UK, which combined with significant raw material cost inflation and high levels of price promotion, meant that the market remained extremely competitive throughout the year.

In this uncertain market, our strategy has remained consistent. We have succeeded in growing our share of the market both in the UK and in a number of our international markets. As a result Group sales increased by 18% year on year and operating margins were maintained, despite the high level of raw material inflation.

In March 2011, we acquired the remaining 50% equity stake in Dayla Liquid Packing Ltd (Dayla), giving us full access to the premium juice category. Dayla has now been fully integrated into the still and carbonate segments of the Group.

Group Financial Performance

2011 saw another strong financial performance from the Group, which was again ahead of both internal and external expectations. This was achieved despite strong growth comparatives from the previous year, a difficult economic and consumer backdrop in the UK and significant raw material inflation.

In summary, in 2011 we delivered:

·   18% sales growth

·   20% profit growth

·   20% earnings per share growth

·   13% dividend growth

Cash conversion was also ahead of expectations and we finished the year with £20.1m of cash in the bank.

We have also had another record year for investment behind our core brands both in the UK and overseas. This has helped drive a further increase in our market share in the year across both the still and carbonate categories.

Trading Highlights

The Group is now an international business, with an enviable stable of brands, selling to over 65 countries worldwide. We have leading market positions in both the still and carbonate drinks categories, and growth is being driven by a healthy mix of organic growth and new product development.

In April 2011, we launched an innovative new range of Caribbean drinks under the Levi Roots (Levi) brand. The World Cuisine category is one of the fastest growing sectors of the soft drinks market and reflects the changing tastes of the modern consumer and the increasing growth in "World Cuisine" options. We are really pleased with how the Levi brand has been received in its first year by both the trade and the consumer and plan more unique flavours in 2012.

Total UK sales increased by 14% to £77.8m (2010:£68.0m). This was achieved through a combination of increased market share for both Vimto and Sunkist in the UK, new product extensions such as the Vimto sports cap, as well as the launch of Levi Roots.

We invested record levels in marketing in 2011, and again increased penetration bringing almost half a million new consumers into the Vimto brand.

Following the full acquisition of Dayla in early 2011 we have now fully integrated this business into the Group. Dayla, which supplies premium juice to the UK and European hotels and restaurant market, has now been combined with our existing soft drinks on dispense products, to create a broader range and a stronger focus on the  "out of home" market sector.

Internationally, 2011 was another very successful year with sales increasing by 31% to £21.1m. This has been driven by Vimto further increasing its market share particularly in the core markets of the Middle East, Africa and Northern Europe.

In the Middle East sales grew by 24% year on year with growth across both still and carbonate products. In December 2011, our long standing partner in the Middle East Aujan Industries, announced a joint venture with Coca Cola to distribute its brands, including Vimto within the region. The global strength of Coca Cola combined with the local market knowledge of Aujan Industries provides a strong platform for the continued success and the future growth and development of the Vimto brand in this region.

We sell to 28 countries in Africa and in 2011 increased sales by 28% in this region, despite very strong sales comparatives from the previous year.  During the year we also signed two new, important distribution agreements in Africa, which bodes well for the long term growth prospects of this market.

In summary, we have achieved further growth from our existing core markets, both in the UK and overseas, which combined with new product developments and innovative new brand launches, enabled the Group to once again deliver strong top and bottom line growth in 2011.

Corporate Responsibility

Nichols plc prides itself on having a sustainable business strategy which takes into account our wider corporate, environmental and social responsibilities.

Sustainability and the Environment

We continue to make good progress on each of the four key areas targeted.  These are:

·      Climate change

·      Waste and packaging

·      Water

·      Transport

We continue to work actively with the British Soft Drinks Association (BSDA), the Food and Drink Federation (FDF), the Waste & Resources Action Programme (WRAP) and our key suppliers on environmental improvements. We are also signatories to the Courtauld Commitment.

Our high standards in health and safety continued in 2011 and we are an active member of Valpack, ensuring our compliance with waste regulations, and minimising the direct impact our business activities have on the external environment.

Community

Our commitment to the wider community continued in 2011 as we actively look for opportunities to give something back in return for the support we receive.  In 2011 our charity team once again worked hard at raising funds on behalf of our chosen charity Derian House.  Events included a 10k run, a fund raising golf day and a variety of other activities involving our customers, suppliers and advisors.

Employees

Our core values emphasise the importance of customer service, quality, professionalism, teamwork and mutual support. We have a strong emphasis on learning and development and we see our people as a top priority for the business and critical to our continuing success.

We aim to continue to deliver high results in everything we do and this has once again been recognised externally with Nichols PLC winning the North West Institute of Directors Board of the Year and being shortlisted for the AIM Company of the Year in 2011.

Brendan Hynes

Group Chief Executive

8 March 2012 

Consolidated income statement

Year ended 31 December 2011

	Total	Before exceptional items	Exceptional items	Total
	2011	2010	2010	2010
	£'000	£'000	£'000	£'000
Revenue	98,912	83,899	0	83,899
Cost of sales	(52,683)	(42,153)	0	(42,153)
Gross profit	46,229	41,746	0	41,746
Distribution expenses	(5,862)	(5,450)	0	(5,450)
Administrative expenses	(22,218)	(21,179)	(293)	(21,472)
Operating profit	18,149	15,117	(293)	14,824
Finance income	72	129	0	129
Finance expense	(116)	(163)	0	(163)
Profit before taxation	18,105	15,083	(293)	14,790
Taxation	(4,779)	(4,042)	76	(3,966)
Profit for the financial year attributable to equity holders of the parent	13,326	11,041	(217)	10,824
Earnings per share (basic)	36.28p			29.63p
Earnings per share (diluted)	36.25p			29.59p
Dividends paid per share	14.10p			12.55p

 

Consolidated statement of comprehensive income

Year ended 31 December 2011

	2011	2010
	£'000	£'000
Profit for the financial year	13,326	10,824
Other comprehensive (expense)/ income
Defined benefit plan actuarial (loss)/ gain	(2,926)	74
Deferred taxation on pension obligations and employee benefits	842	28
Other comprehensive (expense)/ income for the year	(2,084)	102
Total comprehensive income for the year	11,242	10,926

Statement of financial position

Year ended 31 December 2011

		Group			Parent
		2011	2010		2011	2010
ASSETS		£'000	£'000		£'000	£'000
Non-current assets
Property, plant and equipment		1,374	1,288		461	477
Goodwill		13,658	11,914		0	0
Investments		0	0		16,566	14,266
Deferred tax assets		2,579	2,587		2,512	2,514
Total non-current assets		17,611	15,789		19,539	17,257
Current assets
Inventories		5,790	3,418		4,056	1,754
Trade and other receivables		21,118	16,272		16,510	11,858
Cash and cash equivalents		20,111	14,967		17,871	13,182
Total current assets		47,019	34,657		38,437	26,794
Total assets		64,630	50,446		57,976	44,051
LIABILITIES
Current liabilities
Trade and other payables		20,073	14,165		21,154	14,099
Current tax liabilities		1,752	1,533		1,138	826
Provisions		139	365		99	278
Total current liabilities		21,964	16,063		22,391	15,203
Non-current liabilities
Pension obligations		6,313	4,135		6,313	4,135
Deferred tax liabilities		51	72		0	0
Total non-current liabilities		6,364	4,207		6,313	4,135
Total liabilities		28,328	20,270		28,704	19,338
Net assets		36,302	30,176		29,272	24,713
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		(546)	(629)		229	146
Retained earnings		28,687	22,644		20,882	16,406
Total equity		36,302	30,176		29,272	24,713

Consolidated statement of cash flows

Year ended 31 December 2011

	2011	2011	2010	2010
	£'000	£'000	£'000	£'000
Profit for the financial year		13,326		10,824
Cash flows from operating activities
Adjustments for:
Depreciation	467		542
Loss on sale of property, plant and equipment	26		241
Equity-settled share based payment transactions	0		(627)
Finance income	(72)		(129)
Tax expense recognised in the income statement	4,779		3,966
Change in inventories	(1,674)		(724)
Change in trade and other receivables	(4,069)		(886)
Change in trade and other payables	4,794		2,439
Change in provisions	(226)		110
Change in pension obligations	(748)		(534)
		3,277		4,398
Cash generated from operating activities		16,603		15,222
Tax paid		(3,794)		(3,777)
Net cash generated from operating activities		12,809		11,445
Cash flows from investing activities
Finance income	72		139
Proceeds from sale of property, plant and equipment	1		5
Acquisition of property, plant and equipment	(302)		(503)
Acquisition of subsidiary, net of cash acquired	(2,300)		0
Acquisition of subsidiary's net overdraft	(24)		0
Acquisition of business trade and assets	0		(2,733)
Net cash used in investing activities		(2,553)		(3,092)
Cash flows from financing activities
Disposal of own shares	83		0
Dividends paid	(5,195)		(4,601)
Net cash used in financing activities		(5,112)		(4,601)
Net increase in cash and cash equivalents		5,144		3,752
Cash and cash equivalents at 1 January		14,967		11,215
Cash and cash equivalents at 31 December		20,111		14,967

Consolidated statement of changes in equity

Year ended 31 December 2011

	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 2010	3,697	3,255	1,209	(357)	16,654	24,458
Dividends	0	0	0	0	(4,601)	(4,601)
Transfer of own shares	0	0	0	(473)	(353)	(826)
Movement in ESOT	0	0	0	2	18	20
IFRS 2 "Share based payment" charge	0	0	0	199	0	199
Transactions with owners	0	0	0	(272)	(4,936)	(5,208)
Profit for the year	0	0	0	0	10,824	10,824
Other comprehensive income	0	0	0	0	102	102
At 1 January 2011	3,697	3,255	1,209	(629)	22,644	30,176
Dividends	0	0	0	0	(5,195)	(5,195)
Movement in ESOT	0	0	0	83	(4)	79
Transactions with owners	0	0	0	83	(5,199)	(5,116)
Profit for the year	0	0	0	0	13,326	13,326
Other comprehensive income	0	0	0	0	(2,084)	(2,084)
At 31 December 2011	3,697	3,255	1,209	(546)	28,687	36,302

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 2011 and 31 December 2010, but has been derived from those accounts.  Statutory accounts for 2010 have been delivered to the Registrar of Companies and those for the financial year ended 31 December 2011 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 36.28 pence (2010: 29.63 pence and 30.22 pence pre-exceptional items).

Annual Report

The annual report will be mailed to shareholders on or around 2 April 2012.  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 2 May 2011 at 11.00am.

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

 

END

 

 

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