2016 Preliminary Results

 

Date:	Embargoed until 0700 Thursday 2 March 2017
Contacts:	John Nichols, Non-Executive Chairman
	Marnie Millard, Group Chief Executive Officer Tim Croston, Group Chief Financial Officer Andrew Milne, Group Commercial 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' or the 'Group'), the soft drinks Group, announces its Preliminary results for the year ended 31 December 2016.

 

Nichols is an international soft drinks business with sales in over 85 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 Feel Good, Starslush, Levi Roots and Sunkist.

 

Highlights:

 

*Adjusted measures of Profit Before Tax and EPS are pre the exceptional gain	Year ended 31 Dec 2016	Year ended 31 Dec 2015	% movement
	£m	£m
Group Revenue	117.3	109.3	+7.4%
Operating Profit	30.3	27.8	+9.0%
Operating Profit margin	25.8%	25.5%
Adjusted Profit Before Tax*	30.4	28.0	+8.6%
Adjusted EPS (basic)*	66.18p	60.33p	+9.7%
Final dividend	20.3p	17.6p	+15.3%

 

John Nichols, Non-Executive Chairman, said:

 

"2016 has been another very good year for Nichols plc with the Group delivering continued progress against our growth strategy. This has resulted in a 9.7% increase in basic earnings per share* and a 15.3% rise in the final dividend.

 

The Group has a clear strategy for growth and whilst the soft drinks market is likely to remain challenging in 2017, the Board remains confident of delivering continued success underpinned by our strong brands, diversification and successful track record of profitable growth."

 

 

 

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
 

 

 

Chairman's Statement

 

I am delighted to report that 2016 was another very good year for Nichols plc. The Group's revenues increased by 7.4%, operating profit grew by 9.0% and adjusted basic earnings per share was 9.7% ahead of the prior year.

 

Trading

 

The Group's total revenue was £117.3m, 7.4% up on the prior year (2015: £109.3m). This growth came from both our UK and international markets, which emphasises the strength of our diversified business model. As a result of the revenue growth, operating profit increased to £30.3m, 9.0% ahead of 2015 (£27.8m).

 

Total sales in the UK were £90.7m, 7.0% up on the prior year (2015: £84.8m) which is particularly pleasing given the challenging trading environment. The growth was driven by a strong performance from the Vimto brand and the successful integration of The Noisy Drinks Co. Limited (Noisy) following the full acquisition of the frozen drinks company in January 2016.

 

Sales from the Vimto brand grew 4.7% in the year, significantly outperforming the UK soft drinks market where sales growth was 1.0% (Nielsen year to date 31 December 2016). The addition of frozen drinks has enhanced our Out of Home offer to the customer, which also includes dispense and packaged soft drinks across both the Still and Carbonate market. As a result, we believe Vimto Out of Home offers a unique proposition to this segment of the soft drinks market.

 

International sales for 2016 totalled £26.6m, representing an 8.8% increase on the prior year (2015: £24.4m) and a 2.7% increase on a constant exchange rate basis. This excellent result was driven by sales to our African markets where revenues grew by 32.5% to £10.5m (up 19.7% on a constant exchange rate basis). In the Middle East, in-market Vimto sales showed healthy growth and whilst sales of concentrate were slightly down on the prior year, this was simply a result of the timing of shipments ahead of Ramadan in 2017.

 

Exceptional gain

 

As described in the Chief Financial Officer's Report, the exceptional gain in 2016 related to the step-acquisition of Noisy, which was accounted for as an investment in associate prior to the remaining 51% of shares being acquired in January 2016. 

 

Dividend

 

Following another strong performance and reflecting the Board's continued confidence in the outlook for the Group, the Board is pleased to recommend a final dividend of 20.3 pence per share (2015: 17.6 pence). If accepted by our shareholders, the total dividend for 2016 will be 29.3 pence (2015: 25.6 pence), an increase of 14.5% on the prior year.

 

Subject to shareholder approval, the final dividend will be paid on 5 May 2017 to shareholders registered on 7 April 2017; the ex-dividend date is 6 April 2017. 

 

Board Changes

Following six years of service as a Non-Executive Director, John Longworth has indicated that he will be stepping down from the Board at the AGM on 26 April 2017. The Board would like to thank John for his service and wish him a happy and successful future. The process to replace John is underway and a further announcement will be made in due course.

 

Outlook

In 2017, we will maintain focus on our stated growth strategy. This includes developing our core brands and markets whilst investing in innovation and seeking further acquisition opportunities.

 

In summary, the Board is very pleased with the strong performance in 2016 and is confident that the Group is well placed to continue this trend in to 2017. 

 

 

 

 

John Nichols

Non-Executive Chairman

1 March 2017 

 

 

 

 

 

 

Chief Executive Officer's Report

 

I am very pleased with the excellent performance that Nichols plc delivered in 2016 reflecting strong progress made across the business despite the global soft drinks environment remaining challenging. Group revenues increased 7.4% and profit before tax (pre-exceptional gain) increased 8.6%. This performance was driven by new product development, contributions from acquired businesses and geographical growth. The Group continues to maintain its firm focus of ensuring we deliver our strategy of driving value over volume in all areas of the business. There is no doubt that the heritage of the Vimto brand continues to resonate with our consumers across the globe. We strive hard to ensure Vimto is as relevant today as it was back in 1908 when the brand was born. Available in over 85 countries worldwide, Vimto always brings a smile to the face of our consumers whilst having a refreshingly different approach to each of its local markets.

 

With the addition of the Feel Good brand, we are continuing to develop our portfolio to meet the ever-changing needs of our consumers. We integrated Noisy during 2016 following the acquisition of the remaining 51% shareholding in January 2016, representing a further successful example of our diversification strategy.

 

In March 2016, the UK Chancellor announced the Government's plan to introduce a soft drinks levy due to be effective from April 2018. As a business with a diversified product portfolio and market presence, I believe the Group is well positioned to both comply with and mitigate the effect of the levy.

 

The UK Soft Drinks Market

 

(As measured by Nielsen year to date 31 December 2016)

 

In 2016, volumes in the UK soft drinks market increased by a modest 1.5%. The total value of the soft drinks market grew by a marginal 1.0% year on year to a total value of £7.6 billion.

 

Within the soft drinks market, sectors that experienced growth were Fruit Juice, Water and Mixers. However, Cola, Dilutables and Fruit Drinks all declined.

 

Despite this backdrop, the Vimto Brand value increased to £72.5m delivering growth of 4.7%. Whilst the category remains highly competitive and promotionally driven, we have maintained our stance of focussing on value over volume. Vimto Dilutes outperformed the market by 3 percentage points and was the only top three squash brand to achieve growth. Our ready to drink range delivered a year on year increase of 25.6%, making Vimto the fastest growing brand in this sector.

 

The UK On-Trade

 

(As measured by CGA, Total Licensed, year to date to 26 November 2016)

 

The UK on trade soft drinks sector also saw modest volume increase of 0.8%. However, sales value was up by a healthy 3.7%. Both packaged soft drinks and draught contributed to the value performance with consumers seeking branded and premium soft drinks. Other categories such as craft beers, wines, and spirits also experienced growth primarily from premium offerings. Soft drinks are becoming more influential in the sales mix as consumers are enjoying premium spirits with quality branded mixers. 

 

 

 

Operational Review

 

Vimto UK

 

We achieved an overall sales increase of the Vimto brand of 4.7%, with all ranges performing positively. However, we remain focussed on growing our still range of products and we are pleased to report that Still sales during 2016 increased by 5.4%. The best performer within the range was the 500ml, which saw strong sales growth of 28.1%. We continued to see good progress from Vimto Mini's, introduced in 2014, which gathered strong sales momentum in 2016 as a result of distribution gains, prominent facings in front of store chillers and the second year of our distribution drive in the Midlands. Vimto carbonates also returned to growth with sales up 3.3%.

 

To support the growth of our still ready to drink products, we created a new above the line marketing campaign in 2016. A new ReMixed orange toad joined our original purple Vimtoad in new creative content primarily targeting the teenage market. A new advert was aired via video on demand which achieved 13 million views and featured in an extensive cinema programme that was seen by nearly 8 million people. With our target audience in mind, digital media also formed a large part of the marketing campaign. This included a highly successful partnership with Snapchat where "Vimto" lenses were available for a day. The consumer response far surpassed what we expected and the results Snapchat have seen previously, demonstrating the tremendous engagement we achieve when we communicate with teenagers through Vimto. The activity achieved 8 million plays, 950 thousand shares and a total of 10.5 million views.

 

The advertising campaign also supported the launch of Vimto ReMix early in 2016 when we introduced two new variants to the Vimto range. With exciting new juices and flavours, they both have an added dash of our secret Vimto taste and I am delighted to report ReMix has delivered an incremental £3.4m to the Vimto brand value since launch. This represents one of our most successful pieces of new product development since the launch of the original Vimto brand over 100 years ago.

 

We also brought to market new pack formats to meet the needs of both our customers and consumers, for example, a bespoke 3 litre squash bottle was designed for one of our discounter customers.

 

In Manchester and Birmingham, Selfridges invited us to install an off shelf fixture full of Vimto products. The "Vimto Fun Factory" includes all of our packaged soft drinks products, offers Vimto Slush and a collection of our most successful confectionery products. Both parties have been extremely pleased with its performance and it truly represents the spirit and the love our consumers have for Vimto.

 

In July 2015, we acquired the Feel Good brand. Feel Good is a range of completely natural soft drinks with absolutely no added sugar. We have already spread some "Feel Goodness" as both carbonated and still juice drinks were relaunched in September 2016. Feel Good has delicious new recipes and the packaging has been redesigned to present a more modern image supporting the unique positioning of the product range. In UK grocery, we introduced a 4 x 275ml take home pack and we have secured new listings for 2017 including Feel Good Kid's juice drink in a prominent high street café chain. Our marketing activities included a strong consumer communication plan and in store sampling to support the relaunch in the second half of 2016.

 

Vimto International

 

Our international business again performed strongly in 2016 as we saw our long-term international investment strategy deliver results. A star performer for 2016 was the African region with sales growth of 32.5% (19.7% on a constant exchange rate basis). Pleasingly we saw good growth from our core markets including Senegal and Guinea, as well as new territories that came on stream contributing to strong Vimto concentrate sales. We are particularly pleased with the brand's launch in Sudan and the work of our partner in that territory who executed some tremendous in-market activation.

 

Our partner in the Middle East, Aujan Coca-Cola Beverages Company, delivered another successful 360-degree marketing campaign, which included TV and outdoor advertising, in-store activation and digital content during Ramadan. We saw magnificent in-store execution with Vimto concentrate bottles creating a replica model of the Burj Khalifa, towering to an unbelievable eight metres tall and Vimto brand take overs of the Supermarket's Ramadan aisles. As a result, Vimto brand cordial sales in its largest market of Saudi Arabia were up 3% versus a cordial market, which saw a decline of 2.5% (as measured by Nielsen MAT July 2016). Social media is becoming increasingly important in the Middle East and 2016 saw Vimto enter into a new era of communication with younger people. The output of this activity saw some extraordinary results with 104 million impressions over a two day period and 4.1m views. Bloomingdales' flagship store in Dubai repeated the successful 2015 personalised Vimto cordial bottle promotion. This year however, every personalised bottle was stylised with Swarovski crystals. The promotion saw a huge amount of activity on social media with one of UAE's most famous female singers, Ahlam Al Shamsi, who has four million followers, promoting her very own named Vimto cordial bottle. Whilst we are synonymous with Ramadan, it is key that the brand remains relevant to the younger generation and becomes an everyday drink of choice. Therefore, it was particularly pleasing to see the growth we achieved in the Still category with our 250ml bottle and cartons.

 

Part of the strategy for Noisy included overseas growth. Both Heide Park, a theme park in Germany and Gardaland, an amusement park in Italy have a long-standing relationship with Noisy. With Nichols plc's international expertise we will look to continue to expand this area of our international activities.

 

Vimto Out of Home

 

It has been an exciting year for Vimto Out of Home, which delivered strong revenue growth of 17.0%. We acquired the final shareholding in Noisy in January 2016 and secured new business wins in various major outlets including Morrisons café, in Compass Group and Greene King. In 2016, we installed 35.0% more machines than we did in the previous year, demonstrating our growth.

 

A new marketing initiative was launched by Vimto Out of Home to support its unique proposition of offering both equipment and products to its customers. This included a new website, trade communication programme and in-field marketing sales material. We are able to showcase our range of equipment from dispensed soft drinks to frozen soft drinks and from Coca-Cola to milkshakes, which are relevant to customers ranging from independent landlords to buyers of large leisure groups.

 

Corporate Responsibility

 

2016 has proved to be another challenging year for the soft drinks industry, notably including the UK Government's decision to announce the introduction of the Soft Drinks Industry Levy that will come into force in April 2018. Whilst consultation is ongoing, the following information has been published: drinks containing less than 5 grams of sugar per 100ml will be exempt from the levy, juice and juice drinks with no added sugar will also be levy free and drinks that contain a milk content over 75% will be exempt.

 

We have taken the issues of childhood obesity and sugar reduction seriously for many years. All of the Group's recent new product development has been wholly focussed on no added sugar basis, all advertising has featured our no added sugar (NAS) ranges and we have constantly reduced the levels of sugar in all of our products. As a result, we have made significant progress in 2016:

·     Vimto NAS brand sales value were up 19%

·     In 2016, NAS represented a total of 41% of our Vimto sales, compared to 33% in 2015

·     11.0% of our shoppers are buying more NAS than a year ago

·     ReMix, which has no added sugar, has added an incremental £3.4m to the Vimto Brand value

·     Our squash range is already levy free

 

Our community

 

We continued our work with Warrington Youth Club as our chosen charity. Warrington Youth Club believes in "inspiring young people to achieve" and supports young people's development by offering opportunities to 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.

 

Not to be outdone by our male colleagues' achievement in 2014, a group of eleven women from Vimto volunteered to climb Kilimanjaro in March 2016. Following a six month intensive training programme that required huge dedication in terms of time and support from our families, all eleven of us successfully climbed 5,895 metres to reach the summit. As a result, we were able, through the people and companies who kindly sponsored us, to buy three new and much needed mini buses for the Youth Club.

 

Our People

 

We have welcomed a large number of new colleagues in 2016 and we are very happy to have all the staff from Noisy join the Vimto family. Our operations now stretch from Stirling to Southampton with stop offs at our factory in Ross-on-Wye and our newly acquired site in Thurrock. It has been a hugely challenging year but as always, our people have responded to the changes with huge "Vim and Vigour".

 

I would like to express my appreciation for all the efforts our teams continue to show.

 

Every day, the teams demonstrate our company values as they continue to DELIVER WOW and MAKE A DIFFERENCE by FINDING A BETTER WAY.

 

We have a group of people who are PASSIONATE ABOUT WHAT THEY DO and ARE PROUD TO BE PART OF OUR FAMILY.

 

However, most importantly THEY CREATE FUN.

 

Thank you all!

 

Our Vision

 

We continue to develop our rolling five-year strategy. Our activities for both our home and overseas markets centre on four core pillars:

 

More from the Core

 

We still have headroom for growth in our Vimto brand in both our UK and overseas markets. Our relentless focus on 500ml and No Added Sugar new product development will continue as will international product development to ensure Vimto is fit for all its local markets.

 

Healthier Future

 

The relaunch of Feel Good in the UK and further new product development will see it firmly lead the category as a natural healthier alternative soft drink. We will continue to focus all our marketing activities on Vimto No Added Sugar. Through product development, we will ensure Vimto is able to meet the challenge of the sugar levy due in 2018.

 

Thirst for New

 

New product development and acquisition across the Group remains core to the growth of the Group.

 

Wherever Whenever

 

With our diversified portfolio and our flexible out-sourced global production model, it ensures we are able to meet the needs of our consumers. We want to make sure our products are available wherever and whenever our customers want them. We are keen to continue to develop and expand our large presence in the Middle East and seek new partners in the African region. The recently opened Indian market will be a long-term growth project and we seek to make progress in Malaysia and Indonesia in the medium term. In the UK, we will build on our successful Midlands campaign and we will aim to grow distribution in the South of England.

 

Outlook

 

I am very pleased with the performance by the Group during 2016. Whilst we do anticipate some cost and foreign exchange pressures in 2017, we believe we remain well placed to mitigate the impact through careful cost control and price recovery strategies.

 

We continue to invest in all parts of our organisation, which includes both our brands and our people. Making sure that our brand portfolio is fit for the future is critical to ensuring the long-term success of the business. The ongoing and planned diversification of the Group means that we are able to take decisions that will deliver long-term sustainable success. There is no doubt that challenges will remain in the soft drinks market and current economic uncertainty is here to stay in the short term. However, I believe our diversification across different routes to market, our geographical reach and our track record of successful and profitable brand growth puts us in a strong position to deliver future success.      

 

 

 

Marnie Millard

Chief Executive Officer

1 March 2017

 

 

 

 

 

Chief Financial Officer's Report

 

In 2016 Nichols delivered another strong set of results as the Group continued its trend of delivering sustained profit growth whilst also increasing its sales in both the UK and export markets. One of the aims of our growth strategy is to leverage the benefits of our diverse business model. Our 2016 performance again demonstrates the importance of this strategy as we have delivered growth from across the Group despite a backdrop of the continuing challenges faced in the UK market.  

 

Income statement

 

Group sales totalled £117.3m, an increase of £8.0m (7.4%) compared to the prior year (2015: £109.3m).

 

Business segments revenue	2016 £m	2015 £m	Year on year growth £m                           %
Still	59.5	54.8	4.7	8.6%
Carbonate	57.8	54.5	3.3	6.1%
Total	117.3	109.3	8.0	7.4%

 

The majority of the sales growth came from the Still segment which was driven by the Vimto brand and the incremental sales of frozen beverage following the acquisition of Noisy. The Carbonate segment included positive growth from our sales to Africa.  

 

UK sales

 

I am pleased to report strong growth in the UK, where sales increased by 7.0% to £90.7m, an additional £5.9m compared to the prior year (2015: £84.8m). This result was particularly pleasing given that we had targeted top line growth following a flat performance in 2015.  

Within the UK, one of the key drivers of this growth was Vimto, with sales into the grocery market increasing by 4.7%. This is another strong performance for the brand and significantly outperforms the total market which increased by 1.0% in the same period (Nielsen year to date 31 December 2016). The Vimto increase in sales came from the Still category, which increased by 14.0% and Carbonate, which was up 3.3% compared to 2015. Elsewhere in the portfolio, sales from the Levi Roots brand declined due to its performance in the UK grocery market.

 

The other pleasing factor behind our UK performance is the incremental sales from the acquisition of Noisy. Post the full acquisition which was completed 8 January 2016, the net year on year sales benefit to the Group was £5.8m. Noisy is a good strategic fit with our Out of Home business and adds frozen beverages to our portfolio of products for this sector which also includes dispense and packaged soft drinks.

 

International sales

 

International sales totalled £26.6m (2015: £24.4m), delivering growth of £2.2m (8.8%) compared to last year and 2.7% on a constant exchange rate basis. The majority (c83%) of our international sales are in our two key regions: Africa and the Middle East.

 

Sales to our African markets grew by an underlying 19.7% and buoyed by the stronger Euro, reported sales increased by 32.5%. This performance came from both core and new markets. Importantly, from a value point of view, the trend shows an increasing proportion of concentrate sales with in-country producers rather than sales of finished goods via in-country distributors.

 

Whilst our sales of concentrate to the Middle East were 7.0% down on the prior year, it is important to note that in-country sales of Vimto showed healthy growth during 2016. Therefore, as explained in previous years, the timing of shipments around our year-end is driven by the supply chain requirements ahead of the following year's Ramadan period. Ramadan 2017 commences 27 May and we anticipate several shipments of concentrate early in Q1 2017.

 

Elsewhere, sales in our remaining international markets totalled £4.6m (2015: £4.2m), an increase of 10.8% compared to the prior year.

 

Gross profit

 

Gross profit totalled £59.1m for the year, an increase of 11.6% compared to the prior year. In addition to the trading growth, our continued focus on value over volume has contributed to the increase in gross margin, which was 50.4% compared to 48.5% in the prior year.

 

Distribution expenses

 

The majority of our distribution expenses relate to warehousing and haulage in our UK business. The total cost in 2016 of £6.3m (2015: £5.5m) equates to 5.3% of sales up from 5.0% in 2015 as a result of a differing sales mix due to the growth in our Out of Home business and the acquisition of Noisy.

 

Administrative expenses

 

The total cost of overheads in 2016 was £22.5m, which was £2.9m higher than the prior year. The increase year on year is largely due to the inclusion of the administration costs associated with the addition of Noisy (the acquired business). Administrative costs include depreciation and amortisation, salaries and bonuses, administrative costs, marketing costs, as well as other overheads.

 

Operating profit

 

As a result of the strong trading performance, operating profit increased by 9.0% to £30.3m (2015: £27.8m). Consequently, the operating profit margin has increased to 25.8% (2015: 25.5%).

 

Exceptional gain

 

Having initially taken a 49% stake in Noisy in March 2015, the Group acquired the remaining shares on 8 January 2016. Under International Financial Reporting Standards, the latter transaction triggers a deemed disposal of the initial 49% of the shares in Noisy and a subsequent acquisition of 100% of the shares. As a consequence, a gain on disposal amounting to £1.1m arose due to the increase in value of the 49% between March 2015 and January 2016. This gain is disclosed as an exceptional credit and is the only exceptional item arising in the year.

 

Taxation

 

The pre-exceptional effective tax rate is 19.8%, marginally lower than the prior year (2015: 20.7%) reflecting the reduction in the standard rate of Corporation Tax. The exceptional gain is not subject to tax.

 

Profit before tax and exceptional items

 

Profit before tax and exceptional items (PBT) increased by 8.5% to £30.4m (2015: £28.0m). The Group maintained its impressive record of PBT growth having delivered a 68% increase in the last five years with a Compound Annual Growth Rate of 11%.

 

T J Croston

Chief Financial Officer

1 March 2017

 

 

 

 

 

 

Consolidated income statement

Year ended 31 December 2016

 

	2016			2015
	Before exceptional items	Exceptional items	Total		Total
	£'000	£'000	£'000		£'000
Revenue	117,349	-	117,349		109,279
Cost of sales	(58,234)	-	(58,234)		(56,296)
Gross profit	59,115	-	59,115		52,983
Distribution expenses	(6,271)	-	(6,271)		(5,483)
Administrative expenses	(22,519)	-	(22,519)		(19,666)
Operating profit	30,325	-	30,325		27,834
Finance income	214	1,087	1,301		213
Finance expense	(134)	-	(134)		(201)
Share of income from associate	-	-	-		190
Profit before taxation	30,405	1,087	31,492		28,036
Taxation	(6,015)	-	(6,015)		(5,803)
Profit for the financial year attributable to equity holders of the parent	24,390	1,087	25,477		22,233
Earnings per share (basic)			69.13p		60.33p
Earnings per share (diluted)			69.07p		60.25p
Earnings per share (basic) - before exceptional items			66.18p		60.33p
Earnings per share (diluted) - before exceptional items			66.12p		60.25p
All results relate to continuing operations.

 

 

 

Consolidated statement of comprehensive income

Year ended 31 December 2016

 

			2016			2015
			£'000			£'000
Profit for the financial year			25,477			22,233
Other comprehensive income/ (expense) that will not be reclassified to profit or loss
Re-measurement of net defined benefit liability			(3,472)			1,632
Deferred taxation on pension obligations and employee benefits			601			(274)
Other comprehensive (expense)/ income for the year			(2,871)			1,358
Total comprehensive income for the year			22,606			23,591

 

Statement of financial position

Year ended 31 December 2016

 

		Group			Parent
		2016	2015		2016	2015
ASSETS		£'000	£'000		£'000	£'000
Non-current assets
Property, plant and equipment		8,715	6,061		3,970	3,928
Goodwill		23,061	19,108		2,504	2,504
Investments		-	-		16,566	16,566
Investment in equity accounted associate		-	2,970		-	-
Intangibles		6,084	1,316		1,316	1,316
Deferred tax assets		1,436	1,098		1,436	1,098
Total non-current assets		39,296	30,553		25,792	25,412
Current assets
Inventories		6,717	3,945		3,914	2,430
Trade and other receivables		31,508	27,860		25,020	20,765
Cash and cash equivalents		39,754	35,438		25,768	22,907
Total current assets		77,979	67,243		54,702	46,102
Total assets		117,275	97,796		80,494	71,514
LIABILITIES
Current liabilities
Trade and other payables		21,456	18,127		21,008	16,981
Current tax liabilities		2,355	2,679		357	1,160
Total current liabilities		23,811	20,806		21,365	18,141
Non-current liabilities
Pension obligations and employee benefits		6,395	3,893		6,395	3,893
Deferred tax liabilities		1,101	86		-	-
Total non-current liabilities		7,496	3,979		6,395	3,893
Total liabilities		31,307	24,785		27,760	22,034
Net assets		85,968	73,011		52,734	49,480
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		(358)	(547)		417	228
Retained earnings		78,165	65,397		44,156	41,091
Total equity		85,968	73,011		52,734	49,480

 

 

 

Consolidated statement of cash flows

Year ended 31 December 2016                                        

	2016		2015
	£'000	£'000	£'000	£'000
Cash flows from operating activities
Profit for the financial year		25,477		22,233
Adjustments for:
Depreciation and amortisation	1,111		502
(Profit)/ loss on sale of property, plant and equipment	(6)		16
Finance income - non-exceptional	(214)		(213)
Finance expense	134		201
Finance income - exceptional gain	(1,087)		-
Tax expense recognised in the income statement	6,015		5,803
Change in inventories	(2,382)		767
Change in trade and other receivables	(3,036)		(4,335)
Change in trade and other payables	1,229		(1,560)
Change in pension obligations	(970)		(665)
		794		516
Cash generated from operating activities		26,271		22,749
Tax paid		(6,116)		(4,639)
Net cash generated from operating activities		20,155		18,110
Cash flows from investing activities
Finance income	214		213
Proceeds from sale of property, plant and equipment	17		5
Acquisition of property, plant and equipment	(2,442)		(1,768)
Acquisition of subsidiary	(3,715)		(157)
Acquisition of trade and assets	-		(3,820)
Acquisition of associate investment	-		(2,970)
Net cash used in investing activities		(5,926)		(8,497)
Cash flows from financing activities
Share options exercised	(107)		(69)
Dividends paid	(9,806)		(8,589)
Net cash used in financing activities		(9,913)		(8,658)
Net increase in cash and cash equivalents		4,316		955
Cash and cash equivalents at 1 January		35,438		34,483
Cash and cash equivalents at 31 December		39,754		35,438

 

 

 

Consolidated statement of changes in equity

Year ended 31 December 2016

 

	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 2015	3,697	3,255	1,209	(560)	50,477	58,078
Dividends	-	-	-	-	(8,589)	(8,589)
Movement in ESOT	-	-	-	13	(82)	(69)
Transactions with owners	-	-	-	13	(8,671)	(8,658)
Profit for the year	-	-	-	-	22,233	22,233
Other comprehensive income	-	-	-	-	1,358	1,358
Total comprehensive income	-	-	-	-	23,591	23,591
At 1 January 2016	3,697	3,255	1,209	(547)	65,397	73,011
Dividends	-	-	-	-	(9,806)	(9,806)
Movement in ESOT	-	-	-	189	(32)	157
Transactions with owners	-	-	-	189	(9,838)	(9,649)
Profit for the year	-	-	-	-	25,477	25,477
Other comprehensive expense	-	-	-	-	(2,871)	(2,871)
Total comprehensive income	-	-	-	-	22,606	22,606
At 31 December 2016	3,697	3,255	1,209	(358)	78,165	85,968

 

 

 

 

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 2016 and 31 December 2015, 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 2015 annual report, aside from as below regarding the exceptional gain recognised. Statutory accounts for 2015 have been delivered to the Registrar of Companies and those for the financial year ended 31 December 2016 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts and their reports were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

 

Exceptional gain

 

In the year, the Group has acquired the remaining 51% share of Noisy, which was previously accounted for as an investment in associate. In calculating goodwill, the fair value of consideration has been calculated using the cash consideration plus the directors' best estimate of deferred consideration at the acquisition date plus the fair value of the 49% interest already owned. To calculate goodwill, this calculation has been compared to the net assets at the date of acquisition of the remaining 51% of shares of Noisy, including an assessment of the fair value of intangible assets. The exceptional gain recognised relates to the excess of the fair value of the 49% interest over its book value.

 

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 69.13 pence (2015: 60.33 pence).

Basic earnings per share (pre exceptional items) is 66.18 pence (2015: 60.33 pence).

 

Segmental information

 

The Board 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 Board considers the business from a product perspective and reviews the Group on the operating segments identified below. There has been no change to the segments during the year. 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. Gross profit is the measure used to assess the performance of each operating segment as identified as a KPI in the Chief Financial Officer's Report.

 

	Revenue		Gross Profit
	2016 £'000	2015 £'000	2016 £'000	2015 £'000
Still	59,523	54,791	34,702	30,452
Carbonate	57,826	54,488	24,413	22,531
Total	117,349	109,279	59,115	52,983

 

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 Board and consequently there is no reconciliation between the Group's assets per the statement of financial position and the segment assets.

 

Annual report

 

The annual report will be mailed to shareholders and made available on our website on or around 30 March 2017. 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 Nichols plc, Laurel House, Woodlands Park, Ashton Road, Newton-le-Willows, WA12 0HH on 26 April 2017 at 11.00am.

 

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