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Nichols PLC 2021 Interim Results

21/07/2021 7:00am

UK Regulatory (RNS & others)


Nichols (LSE:NICL)
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TIDMNICL

RNS Number : 8957F

Nichols PLC

21 July 2021

21 July 2021

Nichols plc

2021 INTERIM RESULTS

Strong performance with robust growth

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

 
                                   Half year       Half year 
                                     ended           ended         Movement 
                                  30 June 2021    30 June 2020 
                                     GBPm            GBPm 
                                --------------  --------------  ----------- 
 
 Group Revenue                       67.4            59.2          +13.8% 
                                --------------  --------------  ----------- 
 
 Adjusted Operating Profit 
  1                                   9.0             6.8          +32.9% 
------------------------------  --------------  --------------  ----------- 
 Operating Profit                     8.8             3.0         +195.1% 
------------------------------  --------------  --------------  ----------- 
 
 Adjusted Profit Before 
  Tax (PBT) 1                         8.9             6.8          +31.6% 
                                --------------  --------------  ----------- 
 Profit Before Tax (PBT)              8.6             2.9         +193.4% 
                                --------------  --------------  ----------- 
 
 Adjusted PBT Margin 1               13.2%           11.5%        +1.7ppts 
                                --------------  --------------  ----------- 
 PBT Margin                          12.8%           4.9%         +7.9ppts 
                                --------------  --------------  ----------- 
 
 EBITDA 2                            11.2             9.3          +20.4% 
                                --------------  --------------  ----------- 
 
 Adjusted Earnings per Share 
  (basic) 1                         19.52p          14.94p         +30.7% 
                                --------------  --------------  ----------- 
 Earnings per Share (basic)         18.93p           4.59p        +312.4% 
                                --------------  --------------  ----------- 
 
 Cash and Cash Equivalents(3)        47.4            47.3          +0.2% 
                                --------------  --------------  ----------- 
 
 Interim Dividend                    9.8p          28.0p (4)      (65.0%) 
------------------------------  --------------  --------------  ----------- 
 
 
 
 --                         Vimto Brand Value in the UK +2.7% YTD with Vimto Dilutes significantly 
                             outperforming the market(5) 
            --   UK revenue up +5.5% with Out of Home ("OoH") revenues broadly in line 
                  with prior year following encouraging Q2 performance 
            --              Vimto international growth of +42.3% versus prior year 
              --   Vimto 'in market' Middle East volumes remained resilient through 
                    Ramadan with full year 'in market' volumes expected to remain in 
                    line with pre-Sweetened Beverage Tax levels 
              --              Vimto in Africa delivered strong revenue growth of +22.8% 
              --              Vimto continues to progress across the rest of the world, delivering 
                               revenue growth of 49.3% 
            --              The business continues to invest in UK operational change in order 
                             to ensure continued agility and growth given future prospects 
            --              Strong cash and cash equivalents at GBP47.4m (31 December 2020: GBP47.3m) 
            --              Interim dividend of 9.8p 
            --              2021 Financial Guidance remains unchanged(6) 
            --              New long-term agreement signed with J & J Snack Foods Corp. to manufacture, 
                             manage, distribute and sell the SLUSH PUPPiE brand across the UK, 
                             Ireland and Europe 
 
 

1 Excluding Exceptional items of GBP0.3m (H1 2020: GBP3.8m)

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

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

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

5 Nielsen Total Coverage Year to Date, 19 June 2021

6 FY21 Adjusted PBT of GBP18.9m (FY20 Actual GBP11.6m)

John Nichols, Non-Executive Chairman, commented:

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

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

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

Contacts

 
 
 Andrew Milne, Group Chief Executive Officer 
  David Rattigan, Group Chief Financial Officer 
 Nichols plc 
 Telephone: 0192 522 2222 
 Website: www.nicholsplc.co.uk 
 
 Alex Brennan / Elfie Kent          Steve Pearce / Rachel Hayes 
 Hudson Sandler                     Singer Capital Markets (Nominated 
                                     Adviser) 
 Telephone: 0207 796 4133           Telephone: 0207 496 3000 
 Email: nichols@hudsonsandler.com   Website: www.singercm.com 
 

Notes to Editors:

Nichols plc is an international diversified soft drinks business with sales in over 73 countries, selling products in both the Still and Carbonate categories. The Group is home to the iconic Vimto brand which is popular in the UK and around the world, particularly in the Middle East and Africa. Other brands in its portfolio include SLUSH PUPPiE, Feel Good, Starslush, ICEE, Levi Roots and Sunkist.

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

Executive Review

Revenue

Despite exceptionally tough trading conditions, particularly in the OoH route to market, and against very strong comparatives in packaged routes to market, the Board is pleased to report a strong half year performance with Group revenues of GBP67.4m, an increase of 13.8% compared to the prior year (H1 2020: GBP59.2m), and encouragingly with growth achieved across each of our reporting segments.

The Still and Carbonate product segments achieved revenue growth of 9.8% (to GBP35.6m) and 18.6% (to GBP31.8m) respectively, driven by both strong UK and International Packaged performance.

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

Driven by continued progress within the UK packaged route to market, UK revenue increased by 5.5% to GBP48.4m (H1 2020: GBP45.9m). UK packaged revenues improved by 5.0%, underpinned by the strong performance of the Vimto brand, particularly within Dilutes, where the brand's squash products significantly outperformed the market(1) . Despite the strong H1 2020 comparative (which included a very warm Spring and significant increases in consumer buying as the UK entered its first lockdown), the Group saw revenues increase 5.0% within UK retailers. Revenues within Convenience, Delivered Wholesale and Cash and Carry channels were broadly flat year on year, with both current and prior year periods significantly subdued due to the impact of outlet closures.

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

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

Sales across our international markets were up 42.3% at GBP19.0m (H1 2020: GBP13.3m), with double digit growth in all markets. Despite the ongoing pandemic, Middle East volumes performed resiliently through Ramadan, and 'in market' volumes across the Middle East are expected to be broadly flat through 2021. The Group, alongside its local partner, continues to invest in offsetting some of the pricing impact of the Sweetened Beverage Tax ("SBT"). In Africa, the strong growth seen in the prior year (7.4%) has continued at the start of this year with revenues improving by 22.8% to GBP10.2m (H1 2020: GBP8.3m). Rest of World revenues (largely Europe and the US) experienced growth of 49.3% to GBP3.7m (H1 2020: GBP2.5m).

The impact of movements in foreign exchange rates on revenue year on year was GBP0.2m adverse as Sterling strengthened against the Euro and US Dollar.

Gross Profit

Gross profit at GBP29.9m was GBP5.4m higher than H1 2020 (GBP24.6m) and 2.9 percentage points higher at 44.4% (H1 2020: 41.5%) with progress seen in both the Still and Carbonate segments.

Of the GBP5.4m improvement, approximately GBP2.7m is due to the volume effect of increased revenues from our Packaged routes to markets. Significant OoH stock write offs in H1 2020 provided an additional GBP0.7m of gross profit year on year whilst the balancing GBP2.0m is a net price/mix effect of improved contribution from revenues into the Middle East and Africa supported by a positive SBT comparison.

1 Nielsen Total Coverage Year to Date 19 June 2021

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

Distribution Expenses

Distribution expenses totalled GBP4.2m (H1 2020: GBP3.8m), an increase of 11.5% versus the same period last year.

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

Administration Expenses

Administration expenses, excluding exceptional items, totalled GBP16.7m (H1 2020: GBP14.0m), an increase of GBP2.7m or 19.3%.

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

The Group recommenced its investment in marketing spend with the TV and social media campaign 'Vimto, Find Your Different', increasing comparative costs by GBP1.2m year on year.

In both 2019 and 2020 the Group had administrative credits of GBP1.1m and GBP1.3m respectively following the release of unrealised deferred consideration initially recognised at the acquisition of both Adrian Mecklenburgh and Noisy North West. There have been no adjustments in 2021. Of the GBP1.3m from 2020, GBP1.1m was released in Q1 2020, therefore increasing comparative costs by a further GBP1.1m.

The Group incurred a foreign exchange loss in the first half year of GBP0.5m as a result of the strengthening of Sterling against both the Euro and the US Dollar. This compares with a GBP0.4m gain in H1 2020.

Throughout the pandemic the Group has placed a strong focus on controlling overhead costs whilst ensuring the business is able to 'Build Back Better' as restrictions ease. This focus on reducing discretionary spend remained in place at the start of this year whilst recognising the changing environment and the increasing easing of restrictions across the UK, resulting in net comparative savings of GBP0.5m. This year on year saving largely relates to the organisational changes implemented in H2 2020.

Exceptional Costs

As noted in the 2020 Annual Report and Accounts, during Q4 2020 the Group commenced a review of its UK packaged supply chain in order to ensure continued agility and growth given future prospects . This review has continued during the first half year resulting in GBP0.3m of exceptional costs (project and contract development costs) during the period with further costs expected during the second half of 2021.

Exceptional costs in the first half of 2020 were GBP3.8m and related to the non-cash impairment of the Group's goodwill and intangible assets of its 'Feel Good" brand.

Due to the one-off nature of these charges, the Board is treating these items as exceptional costs and their impact has been removed in all adjusted measures throughout this report.

Operating Profit

Adjusted Operating Profit of GBP9.0m was up GBP2.2m, a 32.9% increase on the prior year (H1 2020: GBP6.8m). Operating profit of GBP8.8m (H1 2020: GBP3.0m) is after charging exceptional items during the period.

The strengthening of Sterling against the Euro and the US Dollar during the period resulted in an overall foreign exchange loss to operating profit in the year of GBP0.5m (2020 H1: GBP0.4m gain).

Finance Costs

Net Finance costs of GBP0.1m (H1 2020: GBPnil) were broadly in the line with the prior year.

Profit before tax and tax rate

Adjusted profit before tax increased by 31.6% to GBP8.9m (H1 2020: GBP6.8m). The tax charge on adjusted profit before tax for the period of GBP1.7m (H1 2020: GBP1.2m) represents an effective tax rate of 19% (H1 2020: 18%). Reported profit before tax was GBP8.6m, an increase of 193.4% compared to the prior year (H1 2020: GBP2.9m).

Balance Sheet and Cash and Cash Equivalents

Despite the impact of the pandemic on trading, cash and cash equivalents at the end of the period remained strong at GBP47.4m (H1 2020: GBP46.8m), broadly in line with the 2020 year end position (GBP47.3m).

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

-- Replacing old stock with new (GBP0.3m), free of charge for its OoH customers following the second

lockdown as well as   providing enhanced credit terms; 
   --      Continued full payment of taxes; and 
   --      Not participating in Government loan or payment deferral opportunities. 

As expected, following the gradual re-opening of outlets in the Q2, the Group has begun to see a re-investment into working capital as the Group's debtors and inventories begin to return to 2019 levels. The Group's debtors and inventories are GBP8.4m higher than at the year end, offset by an increase of GBP4.5m in creditors as volumes have increased. The Group continues to focus on working capital management and has seen very low capital expenditure in the period of GBP0.6m (H1 2020: GBP1.9m). Increased investment is expected during the second half as OoH re-opens fully.

Despite this working capital outflow, the Group was pleased to generate Free Cash Flow of GBP3.4m (H1 2020: GBP6.7m).

Earnings per share

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

Dividend

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

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

Pensions

The Group operates two employee benefit plans, a defined benefit plan that provides benefits based on final salary, which is now closed to new members, and a defined contribution group personal plan. At 30 June 2021, the Group recognised a surplus on its UK defined benefit scheme of GBP3.9m (31 December 2020: surplus GBP0.3m).

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

Outlook

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

Andrew Milne

Chief Executive Officer

David Rattigan

Chief Financial Officer

21 July 2021

CONSOLIDATED INCOME STATEMENT

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

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 
                                                             Unaudited 
                                                Unaudited    Half year        Audited 
                                                Half year           to     Year ended 
                                               to 30 June      30 June    31 December 
                                                     2021         2020           2020 
                                                  GBP'000      GBP'000        GBP'000 
 
 Profit for the financial period                    6,990        1,697          4,854 
 
 Items that will not be classified 
  subsequently to profit or loss: 
 
 Re-measurement of net defined 
  benefit liability                                 3,176      (2,347)          (155) 
 Deferred taxation on pension obligations 
 and employee benefits                              (603)          295             32 
 
 Other comprehensive income/(expense) 
  for the period                                    2,573      (2,052)          (123) 
 
 Total comprehensive income/(expense) 
  for the period                                    9,563        (355)          4,731 
-------------------------------------------  ------------  -----------  ------------- 
 
   CONSOLIDATED   STATEMENT OF FINANCIAL POSITION 
 
 
                                      Unaudited   Unaudited        Audited 
                                        30 June     30 June    31 December 
                                           2021        2020           2020 
 ASSETS                                 GBP'000     GBP'000        GBP'000 
 Non-current assets 
 Property, plant and equipment           18,706      22,002         20,126 
 Goodwill                                36,244      36,081         36,244 
 Intangibles                              5,866       6,470          6,206 
 Deferred tax assets                          -         578              - 
 Pension surplus                          3,925           -            347 
-----------------------------------  ----------  ----------  ------------- 
 
 Total non-current assets                64,741      65,131         62,923 
 
 Current assets 
 Inventories                              6,563       6,787          5,921 
 Trade and other receivables             37,979      33,745         29,814 
 Cash and cash equivalents               47,427      46,781         47,294 
-----------------------------------  ----------  ----------  ------------- 
 
 Total current assets                    91,969      87,313         83,029 
-----------------------------------  ----------  ----------  ------------- 
 
 Total assets                           156,710     152,444        145,952 
-----------------------------------  ----------  ----------  ------------- 
 
 LIABILITIES 
 Current liabilities 
 Trade and other payables                25,860      20,746         21,669 
 
 Total current liabilities               25,860      20,746         21,669 
 
 Non-current liabilities 
  Other payables                          2,724       3,073          2,922 
 Pension obligations and employee 
  benefits                                    -       1,880              - 
 Deferred tax liabilities                 2,024       1,701          1,485 
                                     ----------  ----------  ------------- 
 
 Total non-current liabilities            4,748       6,654          4,407 
-----------------------------------  ----------  ----------  ------------- 
 Total liabilities                       30,608      27,400         26,076 
-----------------------------------  ----------  ----------  ------------- 
 
 Net assets                             126,102     125,044        119,876 
-----------------------------------  ----------  ----------  ------------- 
 
 
   EQUITY 
 Share capital                            3,697       3,697          3,697 
 Share premium reserve                    3,255       3,255          3,255 
 Capital redemption reserve               1,209       1,209          1,209 
 Other reserves                             306         310            394 
 Retained earnings                      117,635     116,573        111,321 
 
 Total equity                           126,102     125,044        119,876 
-----------------------------------  ----------  ----------  ------------- 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

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

CONSOLIDATED STATEMENT OF CASH FLOWS

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

NOTES

   1.    Basis of Preparation 

The financial information set out in this Interim Report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2020, prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

These condensed consolidated interim financial statements for the half year reporting period ended 30 June 2021 have been prepared in accordance with IAS 34 'Interim financial reporting' and also in accordance with the measurement and recognition principles of UK adopted international accounting standards. The Interim Report has not been audited or reviewed in accordance with the International Standard on Review Engagement 2410 issued by the Auditing Practices Board.

The interim financial statements were authorised for issue by the Board of Directors on 21 July 2021.

   2.    Going Concern 

In assessing the appropriateness of adopting the going concern basis in preparing the Interim Report and financial statements, the Directors have considered the current financial position of the Group, its principal risks and uncertainties and the potential impact of further COVID-19 restrictions. The review performed considers severe but plausible downside scenarios that could reasonably arise within the period.

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

In addition to the continued impact of COVID-19, alternative scenarios, including the potential impact of key principal risks from a financial and operational perspective, have been modelled with the resulting implications considered. In all cases, the business model remained robust. The Group's diversified business model and strong balance sheet, combined with its strong cash generation all provide resilience against these factors and the other principal risks that the Group is exposed to. At the 30 June 2021 the Group had cash and cash equivalents of GBP47.4m with no external bank borrowings.

On the basis of these reviews, the Directors consider the Group has adequate resources to continue in operational existence for the foreseeable future (being at least one year following the date of approval of this Interim Report and financial statements) and, accordingly, consider it appropriate to adopt the going concern basis in preparing the financial statements.

   3.    Impact of Covid-19 on Financial Statements 

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

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

The Group has accessed the funds made available by the Government under the Job Retention Scheme. This was used to partially offset the payroll expense incurred for employees who were furloughed. Through the first quarter of the year (Q1) continued customer outlet closures meant that a number of our OoH team were furloughed, all returning to work by the half year end. The business has paid furloughed employees at 100% of salary throughout the period and only furloughed employees where reductions in workload have been deemed temporary due to Government restrictions. The financial contribution made by the Government from the scheme to Nichols was GBP0.7m during the period.

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

   4.    Segmental Reporting 

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

 
 
                                 Still     Carbonate     Group 
                               GBP'000       GBP'000   GBP'000 
 Half year to 30 June 2021 
 Revenue                        35,558        31,834    67,392 
 Gross Profit                   18,572        11,372    29,944 
 
 
 Half year to 30 June 2020 
 Revenue                      32,381   26,832   59,213 
 Gross Profit                 16,391    8,181   24,572 
 
 
 Year ended 31 December 2020 
 Revenue                        65,688   52,969   118,657 
 Gross Profit                   32,817   16,819    49,636 
 

A geographical split of revenue is provided below:

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

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

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

As noted in the 2020 Annual Report and Accounts, during Q4 2020 the Group commenced a review of its UK packaged supply chain in order to ensure continued agility and growth given future prospects . This review has continued during the first half year resulting in GBP0.3m of exceptional costs (project and contract development costs) during the period, with further costs expected during the second half of 2021.

For the prior period ended 30 June 2020, the Group recognised GBP3.8m of exceptional costs in relation to the non-cash impairment of the Group's goodwill and intangible assets of its 'Feel Good" brand.

   6.    Earnings Per Share 

Basic earnings per share is calculated by dividing the profit after tax for the period of the Group by the weighted average number of ordinary shares in issue during the period. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue assuming the conversion of all potentially dilutive ordinary shares.

The earnings per share calculations for the period are set out in the table below:

 
                                      Earnings    Weighted average   Earnings per 
                                                  number of shares          share 
                                       GBP'000 
 30 June 2021 
 Basic earnings per share                6,990          36,916,403         18.93p 
 Dilutive effect of share options                           48,035 
 Diluted earnings per share              6,990          36,964,438         18.91p 
 
 

Adjusted earnings per share before exceptional items has been presented in addition to the earnings per share as defined in IAS 33 Earnings per share, since in the opinion of the Directors, this provides shareholders with a more meaningful representation of the earnings derived from the Groups' operations. It can be reconciled from the basic earnings per share as follows:

 
                                      Earnings    Weighted average   Earnings per 
                                                  number of shares          share 
                                       GBP'000 
 30 June 2021 
 Basic earnings per share                6,990          36,916,403         18.93p 
 Exceptional items after taxation          216 
 Adjusted basic earnings per 
  share                                  7,206          36,916,403         19.52p 
 Diluted effect of share options                            48,035 
 Adjusted diluted earnings per 
  share                                  7,206          36,964,438         19.49p 
 
   7.    Non-current Assets 
 
                          Property,   Goodwill   Intangibles 
                              Plant 
                        & Equipment 
                            GBP'000    GBP'000       GBP'000 
 Cost 
 At 1 January 2021           35,932     36,244         9,760 
 Additions                      712          -             - 
 Disposals                    (123)          -             - 
 At 30 June 2021             36,521     36,244         9,760 
                      -------------  ---------  ------------ 
 
 
 Depreciation and Amortisation 
 At 1 January 2021                15,806   -   3,554 
 Charge for the period             2,124   -     340 
 On disposals                      (115)   -       - 
 At 30 June 2021                  17,815   -   3,894 
                                 -------      ------ 
 
 
 Net book value 
 At 1 January 2021    20,126   36,244   6,206 
 At 30 June 2021      18,706   36,244   5,866 
                     -------  -------  ------ 
 
   8.    Defined Benefit Pension Scheme 

The Group operates a defined benefit plan in the UK. A full actuarial valuation was carried out on 5 April 2020 and updated at 30 June 2021 by an independent qualified actuary.

A summary of the pension surplus position is provided below:

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

Within the Statement of Cash Flows there is a GBP0.1m (H1 2020: GBP0.9m) cash outflow in the period in relation to the payment of contingent consideration. These payments relate to contingent consideration paid for acquisitions made in previous financial years.

10. Contingent Liability

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

If HMRC pursues its current position and is successful in its argument, then the Group may have to pay up to GBP3.4m (H1 2020: GBP3.4m) in Income Tax and National Insurance. In addition, the Group may have to pay up to GBP0.7m of interest to HMRC.

The employees who are party to the contracts have formally indemnified the Group in relation to income tax and employees' National Insurance and an amount of up to GBP2.6m (H1 2020: GBP2.6m) can be requested from them.

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

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

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

11. Dividends

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

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

Cautionary Statement

This Interim Report has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The Interim Report should not be relied on by any other party or for any other purpose.

-Ends-

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END

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