Interim Results

NWF Group PLC 31 January 2005 Embargoed until 07.00, Monday 31 January 2005 NWF GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 NOVEMBER 2004 NWF Group plc ('NWF'), the diversified sales and distribution business, today announces interim results for the six months ended 30 November 2004. Commenting on the results, Roy Willis, Chairman said: 'The six months ended 30 November 2004 have been very busy for the Group with several developments taking place which will serve us well in future years. The Board has again pursued its progressive dividend policy by approving an interim dividend of 4.3p per share (2003: 4.2p), which will be paid on 2 May 2005 to shareholders on the register on 1 April 2005. The shares will trade ex-dividend on 30 March 2005.' Financial highlights (comparative figures for six months to 30 November 2003): â€¢Turnover increased by 22% to Â£108.6m (2003: Â£89.3m) â€¢Profit before tax and exceptional item Â£1.3m (2003: 1.5m) â€¢Basic earnings per share, before exceptional item, 10.6p (2003: 13.2p) â€¢Interim dividend 4.3p (2003: 4.2p) Divisional highlights â€¢Distribution - 19,000 pallet warehouse at Deeside, Chester now fully utilised benefiting from new contract with Patak's Food â€¢Feeds increased its market share with volumes of 137,000 tonnes in a reduced market, improved margins and successfully acquired JGW Thomas & Son, feed manufacturer in Umberleigh, Devon â€¢Fuels increased volumes by 12% with all depots contributing to this performance â€¢Garden Centres (previously Retail) suffered from poor summer weather and a late start to Christmas; completed the disposal of its six Country Stores and acquired Victoria Garden Centre in Yorkshire On the outlook for the coming months Roy Willis added: 'The Board remains confident about prospects for the second half year when the majority of the Group's profit is normally earned and looks forward to the full benefits of the various actions we have taken, in future years.' For further information please visit www.nwf.co.uk or contact: Graham Scott, Chief Executive John West Paul Grundy, Finance Director Claire Melly NWF Group plc Tavistock Communications Tel: 01829 260260 Tel: 020 7920 3150 NWF Group plc Interim Report 2004/05 Chairman's statement For the six months ended 30 November 2004 I am pleased to report NWF Group's interim results for the six months ended 30 November 2004. This has been a very busy half year for the Group with several developments taking place which will serve us well in future years. During the period, the Group acquired Victoria Garden Centre based in Yorkshire, disposed of its six Country Stores and leased a new warehouse near Chester. Additionally, in December 2004, the Group acquired JGW Thomas & Son Limited, a feed manufacturer based in Devon. For the six months to 30 November 2004, operating profit was Â£1,619,000 (2003: Â£1,749,000) on turnover up by 22% to Â£109 million (2003: Â£89 million). In addition, the Group incurred an exceptional loss of Â£330,000 (2003: Â£nil) on the disposal of the Country Stores, after writing off goodwill amounting to Â£780,000 which had previously been transferred directly to reserves. Excluding this exceptional loss, profit before taxation was Â£1,293,000 and basic earnings per share were 10.6 pence; including the exceptional loss these figures become Â£963,000 (2003: Â£1,521,000) and 6.7 pence (2003: 13.2 pence) respectively. The Board has again pursued its progressive dividend policy by approving an interim dividend of 4.3p per share (2003: 4.2p) which will be paid on 2 May 2005 to shareholders on the register on 1 April 2005. The shares will trade ex-dividend on 30 March 2005. The Distribution business saw operating profit fall from Â£811,000 to Â£664,000 on increased turnover of Â£11m (2003: Â£8m). The reason for this lay partly in the one-off start-up costs associated with taking on the lease of a 19,000 pallet warehouse at Deeside, just outside Chester. This warehouse is now fully utilised with the recently announced contract with Patak's Food Limited accounting for most of this volume in conjunction with HP Foods. We will shortly review our medium term strategy for the location of distribution sites, having recently been granted planning permission to build additional warehouses at Wardle. Feeds increased its market share yet again by maintaining volume at around 137,000 tonnes in a reduced market. Margins recovered from last year with lower raw material prices and improved efficiencies leading to a higher operating profit of Â£649,000 (2003: Â£253,000). The installation of the blends lines at Wardle and at Kirkbride were completed as was the construction of extra storage bins at the Wardle mill. In December, we announced the acquisition of JGW Thomas & Son Ltd, an animal feed manufacturer based in Umberleigh, Devon. This move gives us comprehensive access to the major dairy farming areas from Central Scotland to Cornwall. Fuels had to contend with abnormally high product prices and poor margins early in the half year but this situation improved in the later months. Fuel is still trading at historically high prices. Volumes were 12% higher than in 2003, particularly on road fuel with heating oil demand flat in a mild Autumn. Operating profit was an excellent Â£761,000 (2003: Â£644,000) given the difficult market conditions. All depots contributed well to this performance, including those from our most recent acquisition at Nottingham and Birmingham. In the three Garden Centres which we operated throughout the period, local contributions were markedly down on last year because of poor summer weather and a late start to Christmas. The result for the whole division, named Retail in previous periods, was further reduced by the costs of exiting our Country Stores and the overall operating loss was Â£455,000 (2003: Â£41,000 profit). This includes some Â£140,000 of margin losses and other costs incurred in the run-up to closing the Isle of Man store in September. In November, we completed the sale of our five remaining Country Stores resulting in an overall exceptional loss before taxation of Â£330,000 on exiting this sector, after recognising the non-cash write-down of historic goodwill acquired several years ago. At the same time, we announced the acquisition of Victoria Garden Centre, a major site in Yorkshire, with annual sales in excess of Â£4m. These moves underline our strategy of focusing our retail business exclusively on large garden centres. I am delighted that Graham Scott has agreed to remain as Chief Executive until at least the end of 2006. Alan Fulker, Finance Director for 15 years, retired in August with our gratitude for his lengthy period of excellent stewardship of the Group's finances. As announced earlier in the year, Paul Grundy became Finance Director on 1 September 2004. Mike Guest left the company in November with our thanks for his success in building our Distribution business. The Board remains confident about prospects for the second half year when the majority of the Group's profit is normally earned and looks forward to the full benefits of the various actions described above in future years. Roy Willis Chairman 31 January 2005 Group profit and loss account Half year to 30 November 2004 Unaudited Unaudited Audited Half year to Half year to Year to 30 Nov 2004 30 Nov 2003 31 May 2004 ----------- ----------- ---------- Â£'000 Â£'000 Â£'000 Turnover 108,565 89,279 198,770 Operating costs (106,946) (87,530) (193,055) ------------ ----------- ---------- Operating profit 1,619 1,749 5,715 ------------ Exceptional item - loss on disposal of operation: Surplus over net tangible assets 450 - - Less: goodwill previously written off (780) - - ----------- (330) - - ----------- Interest payable (326) (228) (546) ----------- ----------- ----------- Profit on ordinary activities before taxation 963 1,521 5,169 Taxation (429) (472) (1,740) ----------- ----------- ----------- Profit after taxation 534 1,049 3,429 Equity dividends payable (342) (334) (1,298) ----------- ----------- ---------- Profit transferred to reserves 192 715 2,131 ----------- ----------- ---------- Earnings per share (see note 1) Basic before exceptional item 10.6p 13.2p 43.1p Basic 6.7p 13.2p 43.1p Diluted 6.5p 12.9p 42.0p Dividends per share 4.3p 4.2p 16.3p Summarised group balance sheet At 30 November 2004 Unaudited Unaudited Audited 30 Nov 2004 30 Nov 2003 31 May 2004 ------------ ----------- ------------ Â£'000 Â£'000 Â£'000 Intangible assets 5,187 3,443 3,348 Tangible assets 22,483 19,377 18,610 Stocks 5,708 5,846 5,899 Debtors 28,745 22,463 22,516 Cash and bank balances 36 26 25 Creditors: amounts falling due within one year (31,637) (27,396) (25,696) ------------ ----------- ----------- Total assets less current liabilities 30,522 23,759 24,702 Creditors: amounts falling due after more than one year (9,157) (4,913) (4,353) Provision for liabilities and charges (950) (819) (906) ----------- ----------- ----------- Net assets 20,415 18,027 19,443 ----------- ----------- ----------- Total equity shareholders' funds 20,415 18,027 19,443 ----------- ----------- ----------- Reconciliation of movements in equity shareholders' funds Half year to 30 November 2004 Unaudited Unaudited Audited Half year to Half year to Year to 30 Nov 2004 30 Nov 2003 31 May 2004 ------------ ------------- ------------ Â£'000 Â£'000 Â£'000 Profit after taxation 534 1,049 3,429 Dividends (342) (334) (1,298) Share capital issued including premium - 1 1 Goodwill resurrected on disposal of operation 780 - - ------------ ------------- ----------- Net addition to equity shareholders' funds 972 716 2,132 Opening equity shareholders' funds 19,443 17,311 17,311 ------------ ------------- ----------- Closing equity shareholders' funds 20,415 18,027 19,443 ------------ ------------- ----------- Summarised group cash flow statement Half year to 30 November 2004 Unaudited Unaudited Audited Half year to Half year to Year to 30 Nov 2004 30 Nov 2003 31 May 2004 ------------ ------------ ------------ Â£'000 Â£'000 Â£'000 Operating profit 1,619 1,749 5,715 Goodwill amortisation 91 81 175 Depreciation 1,210 1,095 2,260 (Increase)/decrease in working capital (3,033) (1,228) 49 Other (48) (15) (103) ------------- ------------ ------------ Operating cash (outflow)/inflow (161) 1,682 8,096 Interest (357) (226) (520) Taxation (834) (1,036) (1,949) Equity dividends (963) (860) (1,195) Purchase of tangible fixed assets (2,012) (2,741) (3,183) Sale of tangible fixed assets 72 5 139 Acquisitions including bank overdraft acquired (3,061) (926) (925) Disposals of businesses 1,258 - - Deferred acquisition payments (400) (509) (509) ------------ ----------- ----------- Net cash (outflow)/inflow before financing (6,458) (4,611) (46) Term loan and HP finance movements (529) (512) (1,052) Medium term loan received 3,000 1,400 1,400 Issue of ordinary share capital - 1 1 ------------- ------------ ----------- (Decrease)/increase in cash in the period (3,987) (3,722) 303 ------------- ------------ ----------- Reconciliation of net cash flow to movement in net debt Half year to 30 November 2004 Unaudited Unaudited Audited Half year to Half year to Year to 30 Nov 2004 30 Nov 2003 31 May 2004 ------------- ----------- ------------ Â£'000 Â£'000 Â£'000 (Decrease)/increase in cash per cash flow statement (3,987) (3,722) 303 Cash (inflow) from (increase) in HP and debt financing (2,471) (888) (348) ------------- ------------- ------------ Change in net debt resulting from cash flows (6,458) (4,610) (45) HP and lease finance acquired with acquisition - (174) (174) Net debt brought forward (8,119) (7,900) (7,900) -------------- -------------- ------------ Net debt carried forward (14,577) (12,684) (8,119) -------------- -------------- ------------ Analysis of net debt: Cash and bank balances 36 26 25 Overdrafts (6,679) (6,707) (2,681) HP and lease finance due within one year (45) (45) (45) Debt due within one year (787) (1,045) (1,065) HP and lease finance due after one year (102) (126) (103) Debt due after one year (7,000) (4,787) (4,250) ------------ ------------- ------------ (14,577) (12,684) (8,119) ------------ ------------- ------------ Segmental analysis Half year to 30 November 2004 Unaudited Unaudited Audited Half year to Half year to Year to 30 Nov 2004 30 Nov 2003 31 May 2004 ------------ ----------- ----------- Â£'000 Â£'000 Â£'000 Turnover Distribution 10,998 8,108 16,683 Feeds 22,036 20,850 49,837 Fuels 68,179 52,582 114,969 Garden centres (including Country Stores) 7,352 7,739 17,281 ------------ ----------- ----------- 108,565 89,279 198,770 ------------- ----------- ----------- Operating profit Distribution 664 811 1,586 Feeds 649 253 1,278 Fuels 761 644 2,066 Garden centres (including Country Stores) (455) 41 785 ------------- ------------ ----------- 1,619 1,749 5,715 ------------- ------------ ----------- Net operating assets Distribution 11,289 10,384 9,803 Feeds 9,076 9,146 8,690 Fuels 5,371 3,839 3,933 Garden centres (including Country Stores) 7,721 5,919 4,789 ------------- ------------ ----------- 33,457 29,288 27,215 ------------- ------------ ----------- Notes: 1. The calculations of basic earnings per share for the half year are based on profit after taxation before exceptional item of Â£843,000 (2003: Â£1,049,000), on profit after taxation after exceptional item of Â£534,000 (2003: Â£1,049,000) and on 7,961,123 (2003: 7,960,278) ordinary shares representing the weighted average number of shares in issue during the period. The calculation of the diluted earnings per share for the half year is based on the figures shown above amended for the weighted average dilutive effect (241,322 shares) of share options outstanding through the period (2003:196,660). 2. The Group acquired the trade and certain assets of Victoria Garden Centre on 2 November 2004 for a consideration of Â£6.1 million, of which Â£3.2 million is deferred and payable in equal instalments over the next three years. The book value of net assets acquired amounted to Â£4.2 million, resulting in goodwill of Â£1.9 million. The results for the period since acquisition are not material. 3. The Group closed its Country Store located on the Isle of Man on 30 September 2004 and disposed of the trade and certain assets of its UK Country Stores on 1 November 2004. 4. The comparative figures for the year to 31 May 2004 are an abridged version of the accounts filed with the Registrar of Companies on which an unqualified audit opinion has been given. 5. The above statements have been prepared on the basis of accounting policies set out in the 2004 Annual Report and Accounts. 2005 Financial calendar Interim dividend paid 2 May 2005 Financial year end 31 May 2005 Preliminary announcement of full year results August 2005 Publication of Annual Report and Accounts September 2005 Annual General Meeting 30 September 2005 Final dividend paid 1 November 2005 Copies of the Interim Report will be sent to shareholders on Friday 4 February 2005. Further copies can be obtained from the Company Secretary at NWF Group plc, Wardle, Nantwich, Cheshire, CW5 6BP. This information is provided by RNS The company news service from the London Stock Exchange

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