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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Nichols PLC | AQSE:NICL.GB | Aquis Stock Exchange | Ordinary Share | GB0006389398 | Ordinary Shares 10p |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -40.00 | -3.01% | 1,290.00 | 1,240.00 | 1,340.00 | 1,330.00 | 1,298.91 | 1,330.00 | 500 | 15:39:38 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Feb 2023 to Feb 2025
TIDMNICL
RNS Number : 1678H
Nichols PLC
26 July 2023
26 July 2023
Nichols plc
2023 INTERIM RESULTS
Encouraging trading performance and strategic progress
Nichols plc ('Nichols' or the 'Group'), the diversified soft drinks group, announces its unaudited Interim Results for the half year ended 30 June 2023 (the 'period').
Hot Features
Premium
Half year Half year
ended ended Movement
30 June 2023 30 June 2022
GBPm GBPm
-------------- -------------- -----------
Group Revenue 85.5 80.2 +6.6%
-------------- -------------- -----------
Adjusted Profit Before
Tax (PBT) 1 12.3 11.3 +9.1%
-------------- -------------- -----------
Profit Before Tax (PBT) 11.2 10.1 +10.5%
-------------- -------------- -----------
Adjusted PBT Margin 1 14.4% 14.0% +0.4ppts
-------------- -------------- -----------
PBT Margin 13.0% 12.6% +0.4ppts
-------------- -------------- -----------
Statutory EBITDA 2 11.6 12.4 (6.5%)
-------------- -------------- -----------
Adjusted Earnings per Share
(basic) 1 25.70p 24.80p +3.6%
-------------- -------------- -----------
Earnings per Share (basic) 23.31p 22.22p +4.9%
-------------- -------------- -----------
Cash and Cash Equivalents 56.1 49.2 +14.2%
-------------- -------------- -----------
Free cash flow 3 5.4 (2.6) + 310.2%
-------------- -------------- -----------
Adjusted Return on capital
employed 4 25.9% 25.2% +0.7ppts
-------------- -------------- -----------
Statutory Return on capital
employed 5 14.3% (14.3%) +28.6ppts
-------------- -------------- -----------
Interim Dividend 12.6p 12.4p +1.6%
----------------------------- -------------- -------------- -----------
Strategic and operational highlights
-- Strong top line growth delivered across the business
o Focus on accelerating Packaged division in line with strategic plan
o Continued accelerated momentum in International Packaged geographies
-- Significant progress on implementation of Out of Home (OoH) Strategic Review -- Impacts of inflation actively managed
Financial highlights
-- Group revenue increased by 6.6% to GBP85.5m (H1 2022: GBP80.2m)
o Packaged revenues +10.4% to GBP64.5m (H1 2022: GBP58.5m)
-- International Packaged revenues +24.6% to GBP21.5m (H1 2022: GBP17.2m)
- Middle East revenue +17.5% - Continued momentum in Africa leading to +26.1% growth - ROW markets +29.8%
-- UK Packaged revenues +4.5% to GBP43.1m (H1 2022: GBP41.3m)
- Ongoing focus on value over volume
o OoH revenues down 3.5% to GBP21.0m (H1 2022: GBP21.8m)
-- Reflects planned reduction in activity post OoH Strategic Review
-- Gross margin % slightly lower at 41.1% (H1 2022: 42.8%)
o Absolute gross margin increased by GBP0.8m
o Cost of goods inflation recovered through price and mitigating actions
-- Exceptional charge of GBP1.1m largely relating to the Group Systems Review and OoH Strategic Review
-- Strong cash and cash equivalents at GBP56.1m (H1 2022: GBP49.2m, 31 December 2022: GBP56.3m), increased interest receipts
-- Increased interim dividend of 12.6p (H1 2022: 12.4p) -- Confidence in 2023 Group expectations(6) which remain unchanged
Andrew Milne, Chief Executive Officer, commented:
"We are pleased with our encouraging first half performance which again reflects the strength of the Vimto brand. Particularly pleasing is the growth in our core Packaged business, and the continued accelerated momentum across our international markets with very strong performances in Africa, the Middle East and the rest of the world.
The Group achieved significant strategic progress during the period, particularly in relation to our Out of Home business where we are making positive changes to simplify operations and focus on the areas of greatest opportunity and profitability. We are on-track to deliver the material benefits of these changes from FY 2024. Meanwhile, we remain focused on accelerating growth in Packaged, both in the UK and internationally, in line with our strategic plan.
We are mindful that consumer spend is still under pressure from continuing high levels of inflation. However, the Group's track record, strong brands and diversified business model, alongside the resilience of the wider soft drinks market, support the Board's confidence in the Group's long-term growth prospects, and that the Group's Adjusted PBT(1) for FY 2023 will be in line with expectations(6) ."
1 Excluding exceptional items
2 EBITDA is the statutory profit before tax, interest, depreciation, and amortisation
3 Free Cash Flow is the net movement in cash and cash equivalents before acquisition funding and dividends
4 Adjusted return on capital employed is the adjusted operating profit divided by the average period-end capital employed
5 Statutory return on capital employed is the operating profit divided by the average period-end capital employed
6 FY23 expectations refers to a Group compiled market consensus of adjusted PBT GBP25.2m
Contacts
Nichols plc Telephone: 0192 522 2222
Andrew Milne, Group Chief Executive
Officer
David Taylor, Interim Chief Financial
Officer
--------------------------------------- ----------------------------------
Singer Capital Markets (NOMAD Telephone: 0207 496 3000
& Broker)
Website: www.singercm.com
Steve Pearce / Jen Boorer
----------------------------------
Hudson Sandler (Financial PR) Telephone: 0207 796 4133
Alex Brennan / Charlotte Cobb Email: nichols@hudsonsandler.com
/ Harry Griffiths
--------------------------------------- ----------------------------------
Notes to Editors:
Nichols plc is an international diversified soft drinks business with sales in over 73 countries. 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, Starslush, ICEE, Levi Roots and Sunkist.
For more information about Nichols, visit: www.nicholsplc.co.uk
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the company's obligations under Article 17 of MAR.
Executive Review
Revenue
The Board is pleased to report an encouraging half year performance with Group revenues of GBP85.5m, an increase of 6.6% compared to the prior year (H1 2022: GBP80.2m).
The Group's Packaged route to market delivered a strong performance across all regions with revenues increasing by 10.4% to GBP64.5m (H1 2022: GBP58.5m).
Within this, the Group's International Packaged business performed particularly strongly, with revenues up 24.6% and all regions experiencing double digit growth. The significant growth seen within Africa in previous years has continued into 2023, with revenues up 26.1% to GBP13.1m (H1 2022: GBP10.4m), delivered through a combination of new and existing geographies. Middle East revenues in the period also improved, by 17.5%, with in-market volumes performing well through Vimto's typically strong trading period of Ramadan (+10%). The Group's rest of world markets saw revenue growth of 29.8%, with the US and Europe continuing to perform well, building on increased brand awareness and strong in-market execution.
Within the UK Packaged route to market, the Group saw revenues of GBP43.1m, 4.5% ahead of the prior year (H1 2022: GBP41.3m). The business remains focused on its value over volume strategy in order to protect margins.
Following the initial implementation of the previously announced outputs of the Group's Out of Home (OoH) Strategic Review, as expected, revenues within this segment declined by 3.5% to GBP21.0m (H1 2022: GBP21.8m). The actions from the review will continue to be implemented into the second half of the year, with the benefits being realised from FY 2024.
The impact of movements in foreign exchange rates on revenue year-on-year was immaterial, at approximately +GBP0.2m.
Gross Profit
Gross profit of GBP35.2m was GBP0.8m higher than H1 2022 (GBP34.4m) and 1.7 percentage points lower at 41.1%.
The cost of goods inflation experienced in 2022 continued into the first half of the year, with underlying inflation at around 16%. The Group has been able to fully mitigate this by working with its customers and suppliers across the whole of its supply chain, identifying the optimal balance of mitigating actions and price recovery. Excluding the impact of the input costs and the price recovery, gross profit % was comparable with H1 2022.
The impact of movements in foreign exchange rates on gross profit was +GBP0.2m.
Distribution Expenses
Distribution expenses within the Group are those associated with the UK Packaged route to market, and for OoH are the distribution costs incurred from factory to depot. Final leg distribution costs within the OoH business are reported within Administrative Expenses.
Distribution expenses increased by 7.7% to GBP5.0m (H1 2022: GBP4.7m), reflecting inflationary pressures, particularly around increased fuel prices, which were experienced in H2 2022 into H1 2023.
Administrative Expenses
Administration expenses excluding exceptional items totalled GBP18.7m (H1 2022: GBP18.5m), an increase of GBP0.2m or 1.1% year-on-year. Additional costs incurred in the period largely relate to payroll and staff related costs in response to cost-of-living pressures, alongside further investment in marketing spend to drive brand equity within the Packaged business. These additional expenses have been partially offset by savings across other cost centres.
Segment Operating Profit
We have, for the first time, included an analysis of segment profitability (see note 3) which identifies adjusted operating profit by business route to market before central costs. Our Packaged business has performed well, delivering an additional GBP1.5m of profit despite substantial inflation within our supply chain which has led to a slight fall in segment operating margin to 27.9% (H1 2022: 28.1%). OoH has also performed in line with our strategic expectations during a period of considerable change for the business, operating margins were lower at 6.4% (H1 2022: 7.5%). Central costs have increased by GBP1.0m on the prior year principally as a result of cost-of-living increases to wages and salaries.
Exceptional Costs
The Group incurred GBP1.1m of exceptional costs during the period (H1 2022: GBP1.2m).
Out of Home Strategic Review
In 2022 the Group completed a strategic review into its OoH route to market, assessing customer and product mix as well as reviewing ways to enhance net margin and profitability going forward. T he Group incurred GBP0.6m of costs in the period as these recommendations have begun to be implemented. Additional costs will be incurred through the second half of 2023.
Historic incentive scheme
During 2022 the Group settled with HMRC the GBP4.3m tax and interest charges relating to a historic incentive scheme and has commenced recovery of debts from current and previous employees who had indemnified the Company. The Group incurred legal costs in the period of GBP0.1m in relation to the case.
Group Systems Review
The Group has commenced a project to implement a new enterprise resource planning (ERP) system, focused on driving business transformation and is expected to be operational at the end of 2024. Costs of GBP0.5m were incurred in the period.
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.
Finance Costs
Net finance income of GBP0.8m (H1 2022: GBP0.1m) was significantly up on the prior year, as the Group ensured the best return for its deposits following the Bank of England interest rate rises.
Profit before tax and tax rate
Adjusted profit before tax, pre-exceptional items, increased by 9.1% to GBP12.3m (H1 2022: GBP11.3m). The tax charge on adjusted profit before tax for the period of GBP2.9m (H1 2022: GBP2.2m) represents an effective tax rate of 23.8% (H1 2022: 19.5%). The increase in the effective rate is consistent with published rates. Reported profit before tax was GBP11.2m, an increase of 10.5% compared to the prior year (H1 2022: GBP10.1m).
Balance Sheet and Cash and Cash Equivalents
The continued strength of the Group's closing balance sheet reflects its diversified routes to market and asset light model.
Cash and cash equivalents at the end of the period remained strong at GBP56.1m (H1 2022: GBP49.2m, 31 December 2022: GBP56.3m).
The Group has seen its working capital marginally increase since the start of the year (+GBP3.2m), principally driven by debtors and strong Q2 sales. Capital expenditure in the period was GBP0.1m (H1 2022: GBP0.9m) and was historically weighted towards our OoH business where a re-focus on capital allocation and spend has been actioned following the strategic review.
The Group's current Return on Capital Employed is 25.9% (H1 2022: 25.2%).
Earnings per share
Total adjusted basic EPS increased to 25.70 pence (H1 2022: 24.80p) with basic EPS at 23.31 pence (H1 2022: 22.22p). On an adjusted basis, diluted EPS was 25.68 pence (H1 2022: 24.77p).
Dividend
In line with the Group's dividend policy, dividend cover is broadly 2x the adjusted earnings of the Group. As a result, the interim dividend for 2023 will be 12.6p per share, to be paid on 8 September 2023 with a record date of 4 August 2023 and an ex-dividend date of 3 August 2023.
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 2023, the Group recognised a surplus on its UK defined benefit scheme of GBP4.3m (31 December 2022: surplus GBP4.1m).
Outlook
The Board is pleased with the Group's trading performance and strategic progress in the first half of 2023. The progress in the UK and International Packaged businesses during the first half will support the long-term performance of the business.
We are mindful that consumer spend is still under pressure from continuing high levels of inflation. However, the Group's track record, strong brands and diversified business model, alongside the resilience of the wider soft drinks market, support the Board's confidence in the Group's long-term growth prospects, and that the Group's Adjusted PBT(1) for FY 2023 will be in line with expectations(2) .
Andrew Milne
Chief Executive Officer
David Taylor
Interim Chief Financial Officer
26 July 2023
1 Excluding exceptional items
2 FY23 expectations refers to a Group compiled market consensus of adjusted PBT GBP25.2m
CONSOLIDATED INCOME STATEMENT
Unaudited
Unaudited Half year Audited
Half year to Year ended
to 30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 85,546 80,232 164,926
Cost of sales (50,356) (45,880) (93,905)
---------------------------------------- ------------ ----------- -------------
Gross profit 35,190 34,352 71,021
---------------------------------------- ------------ ----------- -------------
Distribution expenses (5,009) (4,651) (10,677)
Administrative expenses (19,846) (19,667) (46,888)
---------------------------------------- ------------ ----------- -------------
Operating profit 10,335 10,034 13,456
---------------------------------------- ------------ ----------- -------------
Finance income 866 126 514
Finance expenses (48) (63) (134)
---------------------------------------- ------------ ----------- -------------
Profit before taxation 11,153 10,097 13,836
---------------------------------------- ------------ ----------- -------------
Taxation (2,649) (1,969) (2,201)
---------------------------------------- ------------ ----------- -------------
Profit for the period 8,504 8,128 11,635
---------------------------------------- ------------ ----------- -------------
Earnings per share (basic) 23.31p 22.22p 31.86p
Earnings per share (diluted) 23.29p 22.19p 31.82p
Adjusted for exceptional items
Operating profit 10,335 10,034 13,456
Exceptional items 1,144 1,173 11,146
Adjusted operating profit 11,479 11,207 24,602
Profit before taxation 11,153 10,097 13,836
Exceptional items 1,144 1,173 11,146
Adjusted profit before taxation 12,297 11,270 24,982
Adjusted earnings per share (basic) 25.70p 24.80p 55.38p
Adjusted earnings per share (diluted) 25.68p 24.77p 55.32p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited
Unaudited Half year Audited
Half year to Year ended
to 30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
Profit for the financial period 8,504 8,128 11,635
Items that will not be classified
subsequently to profit or loss:
Re-measurement of net defined
benefit liability 69 910 (2,071)
Deferred taxation on pension obligations
and employee benefits (17) (228) 459
Other comprehensive income/(expense)
for the period 52 682 (1,612)
------------------------------------------- ------------ ----------- -------------
Total comprehensive income for
the period 8,556 8,810 10,023
------------------------------------------- ------------ ----------- -------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
ASSETS GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 10,247 16,073 10,958
Intangibles 297 5,226 88
Pension surplus 4,257 6,621 4,125
-------------------------------- ---------- ---------- -------------
Total non-current assets 14,801 27,920 15,171
Current assets
Inventories 10,595 14,751 10,432
Trade and other receivables 42,001 38,548 39,561
Corporation tax receivable 986 1,017 695
Cash and cash equivalents 56,128 49,167 56,296
-------------------------------- ---------- ---------- -------------
Total current assets 109,710 103,483 106,984
-------------------------------- ---------- ---------- -------------
Total assets 124,511 131,403 122,155
-------------------------------- ---------- ---------- -------------
LIABILITIES
Current liabilities
Trade and other payables 29,533 30,193 30,711
Provisions - 4,242 -
------------------------------- ---------- ---------- -------------
Total current liabilities 29,533 34,435 30,711
Non-current liabilities
Other payables 2,378 1,953 2,038
Deferred tax liabilities 687 3,307 670
-------------------------------- ---------- ---------- -------------
Total non-current liabilities 3,065 5,260 2,708
-------------------------------- ---------- ---------- -------------
Total liabilities 32,598 39,695 33,419
-------------------------------- ---------- ---------- -------------
Net assets 91,913 91,708 88,736
-------------------------------- ---------- ---------- -------------
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 1,481 943 1,280
Retained earnings 82,271 82,604 79,295
-------------------------------- ---------- ---------- -------------
Total equity 91,913 91,708 88,736
-------------------------------- ---------- ---------- -------------
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited
Half year Unaudited Audited
to Half year to Year ended
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Profit for the financial
period 8,504 8,128 11,635
Adjustments for:
Depreciation and amortisation 1,193 2,318 4,521
Impairment losses on intangible
and fixed assets - - 8,714
Loss on sale of property,
plant and equipment 74 61 186
Finance income (866) (126) (514)
Finance expense 48 63 134
Tax expense recognised in
the income statement 2,649 1,969 2,201
Increase in inventories (163) (5,045) (726)
Increase in trade and other
receivables (2,096) (2,939) (4,100)
(Decrease)/increase in trade
and other payables (928) 2,110 2,963
Decrease in provisions - - (4,242)
Change in pension obligations (63) (435) (920)
Fair value (gain)/loss on
derivative financial instruments (344) 515 662
------------------------------------- -------- -------- -------- --------- -------- ---------
(496) (1,509) 8,879
Cash generated from operating
activities 8,008 6,619 20,514
Tax paid (2,939) (2,319) (4,178)
------------------------------------- -------- -------- -------- --------- -------- ---------
Net cash generated from
operating activities 5,069 4,300 16,336
Cash flows from investing
activities
Finance income 866 126 514
Acquisition of property,
plant and equipment (138) (913) (1,245)
Payment of contingent consideration
(note 8) - (71) (71)
------------------------------------- -------- -------- -------- --------- -------- ---------
Net cash from/(used in)
investing activities 728 (858) (802)
Cash flows from financing
activities
Payment of lease liabilities (385) (554) (995)
Purchase of own shares - (5,534) (5,534)
Dividends paid (5,580) (4,861) (9,383)
------------------------------------- -------- -------- -------- --------- -------- ---------
Net cash used in financing
activities (5,965) (10,949) (15,912)
Net decrease in cash and
cash equivalents (168) (7,507) (378)
Cash and cash equivalents
at start of period 56,296 56,674 56,674
------------------------------------- -------- -------- -------- --------- -------- ---------
Cash and cash equivalents
at end of period 56,128 49,167 56,296
------------------------------------- -------- -------- -------- --------- -------- ---------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Called Share Capital Other Retained Total
up share premium redemption reserves earnings equity
capital reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2022 3,697 3,255 1,209 676 84,189 93,026
Dividends - - - - (4,861) (4,861)
Movement in ESOT - - - (2) - (2)
Credit to equity for
equity-settled share-based
payments - - - 269 - 269
Purchase of own shares - - - - (5,534) (5,534)
Transactions with
owners - - - 267 (10,395) (10,128)
----------------------------- ---------- --------- ------------ ---------- ---------- ---------
Profit for the period - - - - 8,128 8,128
Other comprehensive
income - - - - 682 682
----------------------------- ---------- --------- ------------ ---------- ---------- ---------
Total comprehensive
income - - - - 8,810 8,810
----------------------------- ---------- --------- ------------ ---------- ---------- ---------
At 30 June 2022 3,697 3,255 1,209 943 82,604 91,708
----------------------------- ---------- --------- ------------ ---------- ---------- ---------
Called Share Capital Other Retained Total
up share premium redemption reserves earnings equity
capital reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2023 3,697 3,255 1,209 1,280 79,295 88,736
Dividends - - - - (5,580) (5,580)
Movement in ESOT - - - (2) - (2)
Credit to equity for
equity-settled share-based
payments - - - 203 - 203
Transactions with
owners - - - 201 (5,580) (5,379)
----------------------------- ---------- --------- ------------ ---------- ---------- ---------
Profit for the period - - - - 8,504 8,504
Other comprehensive
income - - - - 52 52
----------------------------- ---------- --------- ------------ ---------- ---------- ---------
Total comprehensive
income - - - - 8,556 8,556
----------------------------- ---------- --------- ------------ ---------- ---------- ---------
At 30 June 2023 3,697 3,255 1,209 1,481 82,271 91,913
----------------------------- ---------- --------- ------------ ---------- ---------- ---------
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 2022, 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 2023 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 26 July 2023.
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. The review performed considers severe but plausible downside scenarios that could reasonably arise within the period.
Our modelling has sensitised the impacts of Russia's continued invasion of Ukraine, in particular their impact on global supply chains and macroeconomic inflationary factors. 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 provide resilience against these factors and the other principal risks that the Group is exposed to. At the 30 June 2023 the Group had cash and cash equivalents of GBP56.1m 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. Segmental Reporting
The Board, as the entity's chief operating decision maker, analyses the Group's internal reports to enable an assessment of performance and allocation of resources. The operating segments are based on these reports.
During the year, the Group changed its reportable segments to ensure the appropriate strategic focus across the business given the differing strategic challenges between its Packaged and Out of Home routes to market. The Group is now segmented into the operating segments Packaged, Out of Home and Central. This replaces the operating segments, Stills and Carbonates used in previous reporting periods.
The new segmental reporting allows the Group to deliver on its strategic ambitions of accelerated growth across the Packaged business, both in the UK and Internationally, and maximise value within the Out of Home business, whilst providing oversight to manage central overheads from a total Group perspective.
This is the first time results have been presented in these segments within the Group's Interim financial statements and thus the results reported for the previous half year to 30 June 2022 and financial year to 31 December 2022 have also been re-presented for comparison purposes.
The accounting policies of the reportable segments are the same as the Group's accounting policies. Segment performance is evaluated based on adjusted operating profit (excluding exceptional items), finance income and exceptional items. This is the measure reported to the Board for the purpose of resource allocation and assessment of segment performance.
Half year to Packaged
----------------------------------------------------
30 June 2023 UK Middle Africa Rest Total Out Total Central(1) Total
East of World Packaged of Home Segments Group
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 43,097 4,905 13,081 3,466 64,549 20,997 85,546 - 85,546
------------------ -------- -------- -------- ---------- ---------- --------- ---------- ----------- --------
Adjusted
operating
profit 17,988 1,352 19,340 (7,861) 11,479
Net finance
income 818
Adjusted profit
before tax 12,297
Exceptional items (1,144)
------------------ -------- -------- -------- ---------- ---------- --------- ---------- ----------- --------
Profit before
tax 11,153
------------------ -------- -------- -------- ---------- ---------- --------- ---------- ----------- --------
Half year to Packaged
----------------------------------------------------
30 June 2022 UK Middle Africa Rest Total Out Total Central(1) Total
East of World Packaged of Home Segments Group
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 41,258 4,176 10,372 2,670 58,476 21,756 80,232 - 80,232
------------------ -------- -------- -------- ---------- ---------- --------- ---------- ----------- --------
Adjusted
operating
profit 16,453 1,621 18,074 (6,867) 11,207
Net finance
income 63
Adjusted profit
before tax 11,270
Exceptional items (1,173)
------------------ -------- -------- -------- ---------- ---------- --------- ---------- ----------- --------
Profit before
tax 10,097
------------------ -------- -------- -------- ---------- ---------- --------- ---------- ----------- --------
Year ended Packaged
----------------------------------------------------
31 December 2022 UK Middle Africa Rest Total Out Total Central(1) Total
East of World Packaged of Home Segments Group
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 82,813 11,752 18,870 6,420 119,855 45,071 164,926 - 164,926
----------------- -------- -------- -------- ---------- ---------- --------- ---------- ----------- ---------
Adjusted
operating
profit 34,338 3,537 37,875 (13,273) 24,602
Net finance
income 380
Adjusted profit
before tax 24,982
Exceptional
items (11,146)
----------------- -------- -------- -------- ---------- ---------- --------- ---------- ----------- ---------
Profit before
tax 13,836
----------------- -------- -------- -------- ---------- ---------- --------- ---------- ----------- ---------
(1) Central includes the Group's central and corporate costs, which relate to salaries and head office overheads such as rent and rates, insurance and IT maintenance as well as the costs associated with the Board and Executive Leadership Team, Governance and Listed Company costs.
A geographical split of revenue is provided below:
Half year Half year Year ended
to to 31 December
30 June 30 June 2022
2023 2022
GBP'000 GBP'000 GBP'000
Geographical split of revenue
Middle East 4,905 4,176 11,752
Africa 13,081 10,372 18,870
Rest of the World 3,301 3,059 7,350
----------- ----------- --------------
Total exports 21,287 17,607 37,972
United Kingdom 64,259 62,625 126,954
----------- ----------- --------------
Total revenue 85,546 80,232 164,926
----------- ----------- --------------
4. Exceptional items
Half year Half year Year ended
to to 31 December
30 June 30 June 2022
2023 2022
GBP'000 GBP'000 GBP'000
Out of Home Strategic Review 569 48 518
Historic incentive scheme 56 54 134
Group Systems Review 519 - 316
Review of UK packaged supply chain - 1,071 1,464
Impairment of intangibles and fixed
assets - - 8,714
1,144 1,173 11,146
----------- ----------- -------------
The Group incurred GBP1.1m of exceptional costs during the period (H1 2022: GBP1.2m).
Out of Home Strategic Review
In 2022 the Group completed a strategic review into its OoH route to market, assessing customer and product mix as well as reviewing ways to enhance net margin and profitability going forward. T he Group incurred GBP0.6m of costs in the period as these recommendations have begun to be implemented. Additional costs will be incurred through the second half of 2023.
Historic incentive scheme
During 2022 the Group settled with HMRC the GBP4.3m tax and interest charges relating to a historic incentive scheme and has commenced recovery of debts from current and previous employees who had indemnified the Company. The Group incurred legal costs in the period of GBP0.1m in relation to the case.
Group Systems Review
The Group has commenced a project to implement a new enterprise resource planning (ERP) system, focussed on driving business transformation and is expected to be operational at the end of 2024. Costs of GBP0.5m were incurred in the period.
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.
5. 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. The weighted average number of ordinary shares is calculated by adjusting the shares in issue at the beginning of the period by the number of shares bought back or issued during the period multiplied by a time-weighting factor. 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:
Weighted average
Earnings number of shares Earnings per
share
GBP'000
30 June 2023
Basic earnings per share 8,504 36,478,934 23.31p
Dilutive effect of share options 38,891
Diluted earnings per share 8,504 36,517,825 23.29p
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 Group's operations. It can be reconciled from the basic earnings per share as follows:
Weighted average
Earnings number of shares Earnings per
share
GBP'000
30 June 2023
Basic earnings per share 8,504 36,478,934 23.31p
Exceptional items after taxation 872
Adjusted basic earnings per
share 9,376 36,478,934 25.70p
Diluted effect of share options 38,891
Adjusted diluted earnings per
share 9,376 36,517,825 25.68p
6. Non-current Assets
Property,
Plant
& Equipment Intangibles
GBP'000 GBP'000
Cost
At 1 January 2023 35,311 9,760
Additions 765 -
Transfers (238) 238
Disposals (1,626) -
At 30 June 2023 34,212 9,998
------------- --------------
Depreciation and Amortisation
At 1 January 2023 24,353 9,672
Charge for the period 1,164 29
On disposals (1,552) -
At 30 June 2023 23,965 9,701
-------- ------
Net book value
At 1 January 2023 10,958 88
At 30 June 2023 10,247 297
------- ----
7. 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 2023 by an independent qualified actuary.
A summary of the pension surplus position is provided below:
Pension surplus GBP'000
At 1 January 2023 4,125
Current service cost (44)
Net interest income 96
Actuarial gains 69
Contributions by employer 11
At 30 June 2023 4,257
--------
8. Contingent Consideration
Within the Statement of Cash Flows there is a GBP0.1m cash outflow in the prior period in relation to the payment of contingent consideration. This payment relates to the final stage of contingent consideration paid for an acquisition made in previous financial years.
9. Provisions
During the second half of FY22, the Group settled with HMRC the tax and interest charges regarding the historic incentive scheme provided at 30 June 2022 (GBP4.2m). Recovery of debts from current and previous management who had indemnified the Company has commenced during FY23. Included within other receivables is a reimbursement asset in respect of these historic contracts.
10. Dividends
Dividend cover is broadly 2x adjusted earnings of the Group. As a result, the interim dividend for 2023 will be 12.6p per share to be paid on 8 September 2023 with a record date of 4 August 2023.
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-
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July 26, 2023 02:00 ET (06:00 GMT)
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