TIDMNWF
RNS Number : 6268N
NWF Group PLC
02 February 2021
For release 7.00am Tuesday 2 February 2021
NWF Group plc
NWF Group plc: Half Year results for the period ended 30
November 2020
NWF Group plc ('NWF' or 'the Group'), the specialist distributor
of fuel, food and feed across the UK, today announces its half year
results for the period ended 30 November 2020.
H1 2020 H1 2019 %
----------------------------------------------- --------- --------- ------
Financial highlights
Revenue GBP309.4m GBP348.9m -11.3%
Headline operating profit1 GBP3.0m GBP3.5m -14.3%
Headline profit before taxation1 GBP2.5m GBP3.0m -16.7%
Fully diluted headline earnings per share1 4.3p 5.1p -15.7%
Interim dividend per share 1.0p 1.0p -
Net debt (excluding IFRS 16 lease liabilities) GBP16.5m GBP14.9m +10.7%
Net debt to headline EBITDA2 0.9x 1.0x
----------------------------------------------- --------- --------- ------
Statutory results
Operating profit GBP2.7m GBP3.1m -12.9%
Profit before taxation GBP2.0m GBP2.4m -16.7%
Fully diluted earnings per share 3.3p 4.0p -17.5%
Net debt (including IFRS 16 lease liabilities) GBP42.2m GBP33.5m +26.0%
----------------------------------------------- --------- --------- ------
1 Headline operating profit excludes exceptional items (see note
4) and amortisation of acquired intangibles. Headline profit before
taxation excludes exceptional items, amortisation of acquired
intangibles and the net finance cost in respect of the Group's
defined benefit pension scheme. Diluted headline earnings per share
also take into account the taxation effect thereon.
2 Net debt to headline EBITDA is calculated based on net debt
excluding IFRS 16 lease liabilities. The headline EBITDA
calculation excludes the impact of IFRS 16 depreciation.
Group highlights
-- Overall trading performance in the first half in line with
the Board's expectations and expectations for the full year
unchanged.
-- Results behind prior year, as anticipated, with the
resilience of the Group demonstrated by consistent trading despite
Brexit uncertainty and the ongoing challenge of Covid-19.
-- The Group's financial position remains very strong, with
leverage at <1.0x which provides capacity for continued
investment in support of strategic initiatives, the pursuit of
further acquisition opportunities in the Fuels division and a
maintained interim dividend.
-- The Group is pleased to confirm that the cyber incident at
the end of October has been successfully contained and has not
materially impacted the trading or commercial performance of the
business.
-- All divisions fully operational in current lockdown,
employees designated as key workers and no significant change in
demand levels.
Divisional highlights
Fuels - headline operating profit of GBP1.9 million (H1 2019:
GBP1.4 million). Positive trading across the network, with
increased underlying sales of gas oil offsetting lower underlying
demand for heating oil and diesel, alongside a positive
contribution from acquisitions.
Food - headline operating profit of GBP0.5 million (H1 2019:
GBP1.4 million). Increased activity with the new Crewe warehouse
fully operational and performing as planned. Significant demand
volatility due to the Covid-19 lockdowns and Brexit created
inefficient working in the short term and a changed business mix
with a lower proportion of high value foodservice volumes.
Feeds - headline operating profit of GBP0.6 million (H1 2019:
GBP0.7 million). Stable performance with lower feed volumes offset
by a focus on cost control and commodity purchasing in highly
volatile commodity markets.
Richard Whiting, Chief Executive, NWF Group plc, commented:
"We had a solid first half with trading in line with our
expectations and those for the full year remain unchanged. This
performance is a further demonstration of the resilience of the
Group, which given the challenges of keeping our people safe,
managing demand volatility and responding to a cyber incident have
demonstrated our teams' strong capabilities. We remain confident in
our growth potential and our strong financial position gives us the
flexibility and capacity to continue to target development
opportunities . "
A virtual meeting is being held today for analysts at 9.30am.
For login details please contact
ailsa.prestige@mhpc.com at MHP Communications or call 020 3128 8734.
Information for investors, including analyst consensus
forecasts, can be found on the Group's website at www.nwf.co.uk
Richard Whiting, Chief Reg Hoare / Mike Bell /
Executive James Bavister / Ed Allsopp
Chris Belsham, Group Ailsa Prestige Peel Hunt LLP (Nominated advisor)
Finance Director MHP Communications Tel: 020 7418 8900
NWF Group plc Tel: 020 3128 8734
Tel: 01829 260 260
Chair's statement
NWF has delivered a solid performance in the first half with
overall results in line with the Board's expectations. The Group
has now recommenced development activity, particularly targeting
further acquisitions in the highly fragmented Fuels market. Fuels
delivered ahead of expectations with improved gas oil sales and a
positive contribution from the businesses acquired last year. In
Food, the new Crewe warehouse is performing as planned and sets a
benchmark in operating efficiency. The business has been negatively
impacted by the unprecedented volatility in demand patterns,
largely as a result of Covid-19 uncertainty for consumers and
retailers, as well as a weaker business mix with less higher value
food service work undertaken. Feeds has delivered in line with
expectations with volumes lower most significantly as a result of
less demand from other UK compounders in the first half.
With the ongoing challenge of Covid-19 we continue to prioritise
the safety of our employees with safe methods of working across the
Group and home working where practical. I am also pleased to
confirm that NWF has not utilised any form of Government support,
furloughed any employees or delayed payments.
Results
Revenue for the half year ended 30 November 2020 was 11.3% lower
at GBP309.4 million (H1 2019: GBP348.9 million) as a result of the
lower price of oil and lower volumes in Feeds. Headline operating
profit[1] was lower at GBP3.0 million (H1 2019: GBP3.5 million),
with Fuels' outperformance not sufficient to offset the reduction
in Food in the half year. Headline profit before taxation[1] was
down 16.7% to GBP2.5 million (H1 2019: GBP3.0 million).
Headline basic earnings per share[1] was 4.3p (H1 2019: 5.1p)
and headline diluted earnings per share[1] was 4.3p (H1 2019:
5.1p).
Net cash generated by operations for the period amounted to
GBP4.0 million (H1 2019: GBP8.6 million). Cash generation was lower
as a result of working capital outflows driven by the changing mix
in Fuels and the increase in commodity prices in Fuels and Feeds
during the half year.
Net capital expenditure in the period was GBP1.8 million (H1
2019: GBP2.3 million), lower than planned as we retained a cautious
approach to investment against an uncertain backdrop. During the
period, the final balance of GBP1.1 million was paid for the
acquisition of Ron Darch & Sons Co Limited, following
finalisation of completion accounts. Net consideration on
acquisitions in the prior period was GBP3.2 million.
Net debt at the period end, excluding the impact of IFRS 16, was
GBP16.5 million (H1 2019: GBP14.9 million) with net debt to
headline EBITDA slightly lower at 0.9x (H1 2019: 1.0x). The Group's
banking facilities of GBP65.0 million are committed to October 2023
and NWF continues to operate with substantial headroom. Net debt
including the impact of IFRS 16 was GBP42.2 million (H1 2019:
GBP33.5 million) with the increase largely as a result of the Crewe
development in Food.
Net assets at 30 November 2020 increased to GBP52.9 million (30
November 2019: GBP48.8 million). The IAS 19R defined benefits
pension scheme valuation deficit has reduced from GBP21.0 million
as at 31 May 2020 to GBP18.7 million at the half year, driven by
increased asset value and changes in mortality assumptions.
[1] Headline operating profit excludes exceptional items (see
note 4) and amortisation of acquired intangibles. Headline profit
before taxation excludes exceptional items, amortisation of
acquired intangibles and the net finance cost in respect of the
Group's defined benefit pension scheme. Diluted headline earnings
per share also takes into account the taxation effect thereon.
Dividend
The Board has approved an interim dividend per share of 1.0p (H1
2019: 1.0p). This will be paid on 5 May 2021 to shareholders on the
register as at 19 March 2021. The shares will trade ex-dividend on
18 March 2021. The Group has a progressive dividend policy and has
increased the annual dividend by approximately 5% in each of the
last five years.
Operations
Fuels
Revenue decreased by 16.3% to GBP205.7 million (H1 2019:
GBP245.9 million) as a result of lower oil prices more than
offsetting the increase in volumes sold in the period. Headline
operating profit was GBP1.9 million (H1 2019: GBP1.4 million)
benefitting from higher volumes, improved product mix and prior
period acquisitions.
Volumes increased by 4.8% to 329 million litres (H1 2019: 314
million litres) with underlying volumes stable, but with an
increase in gas oil offsetting lower sales of heating oil and
diesel. Brent Crude, whilst significantly lower than the same
period in the prior year, broadly increased during the first half
to an average of $42.71 per barrel (H1 2019: $61.87 per barrel) and
ended the reporting period at $47.59 per barrel.
Whilst there was a pause in acquisition activity following the
emergence of Covid-19, the Group has now recommenced acquisition
plans for the division. The UK fuels distribution market is highly
fragmented, and the Board believes the opportunity for NWF to
expand its depot network, broadening the customer base and
leveraging scale efficiencies is significant. The Group has a
strong and established acquisition and integration track record and
is actively exploring several opportunities.
Food
Revenue increased by 12.7% to GBP27.5 million (H1 2019: GBP24.4
million). Headline operating profit was GBP0.5 million (H1 2019:
GBP1.4 million).
Storage volumes increased to an average of 121,000 pallet spaces
(H1 2019: 106,000), with total capacity now standing at 135,000.
The significant increase has been as a result of the new Crewe
35,000 pallet space warehouse coming on stream and the exit from
third party overflow storage which was utilised in the prior year.
The growth has been supported by new long-term contracts with
customers and an effective measure of throughput is pallets
shipped, which were 19% higher than prior year.
The reduction in operating profit was largely as a result of
significant unplanned demand volatility across the period, bringing
the new Crewe warehouse on stream and building customer stock
levels. With concerns around Covid-19 and Brexit there have been
periods of significant demand ahead of capacity and then periods
when demand has dropped as excess stock is utilised by both
consumers and retailers. In addition, with restrictions on
hospitality in place for much of the period demand from higher
value cash and carry and food service customers has been depressed,
albeit offset in activity terms by increased supermarket
demand.
Palletline and the packing operation have performed as planned
and there continues to be rapid expansion of e-fulfilment although
contribution from this business stream has been reinvested to
support the growth.
Feeds
Revenue decreased by 3.1% to GBP76.2 million (H1 2019: GBP78.6
million) as a result of lower volumes more than offsetting the
increase in feed prices. Headline operating profit was GBP0.6
million (H1 2019: GBP0.7 million).
Volumes were 11.8% lower at 262,000 tonnes (H1 2019: 297,000
tonnes) as a consequence of the planned reduction in sales volumes
to lower value customers including compounders in the UK. There has
been a continued focus on retail business direct to farm which
incorporates nutritional advice. DEFRA data suggests the ruminant
feed market increased by 6.9% in comparison to the prior year.
The market experienced inflationary pressures during the first
half, with a basket of tracked commodities 21% higher than the same
period in the prior year and these commodity prices were largely
passed through to farmers. Average milk prices increased by over 3p
per litre over the period which offset the impact of higher feed
prices. Average milk prices at the end of November were 30.5p per
litre (November 2019: 29.9p per litre).
Our operational platform, with key mills close to customers in
the North, Central and Southern regions, delivered the expected
efficiencies and provides an effective base for future development.
Investment has continued into NWF's training academy to train our
future nutritionists.
Cyber incident
As set out in the announcement of 2 November 2020, upon becoming
aware of unauthorised access to its IT systems, the Group acted
promptly to instigate its cyber response plan, backed by a bespoke
cyber insurance policy, which provided specialist support to
contain and manage the incident.
Following extensive investigations, supported by cyber security
experts, the Group is satisfied that the incident has been
contained and additional security measures have been applied to all
the Group's IT systems to provide further resilience moving
forward. The Group confirmed that no information material to the
running of the business was irretrievably lost as a result of the
incident.
The one-off costs associated with the response to the incident,
net of recoveries under the Group's existing cyber insurance, are
not expected to be material.
Outlook and future prospects
Following the solid first half, the Group has continued to
perform as planned since the period end. In Fuels, demand for
heating oil increased as expected as we move into the critical
winter trading period, with acquisition activity now back underway.
In Food, volatility has continued with activity levels reflective
of the unusual Christmas trading period this year and Brexit stock
taken on to support customer requirements which will be utilised in
the coming months. In Feeds, volumes have increased as we move into
the key winter months and there have been further increases in
commodity prices since the period end.
Our financial position is strong and we continue to focus on
development opportunities, both organic and through targeted
acquisitions.
Overall, we remain confident about the Group's growth potential
and future prospects and continue to trade in line with the Board's
expectations for the full financial year. I look forward to
updating shareholders later this year.
Philip Acton
Chair
2 February 2021
Condensed consolidated income statement
for the half year ended 30 November 2020 (unaudited)
Half year Half year Year
ended ended ended
30 November 30 November 31 May
2020 2019 2020
Note GBPm GBPm GBPm
------------------------------------------ ---- ------------ ------------ -------
Revenue 3 309.4 348.9 687.5
Cost of sales and administrative expenses (306.7) (345.8) (674.0)
------------------------------------------ ---- ------------ ------------ -------
Headline operating profit1 3.0 3.5 14.3
Exceptional items 4 (0.2) (0.3) (0.5)
Amortisation of acquired intangibles (0.1) (0.1) (0.3)
------------------------------------------ ---- ------------ ------------ -------
Operating profit 3 2.7 3.1 13.5
Finance costs 5 (0.7) (0.7) (1.5)
------------------------------------------ ---- ------------ ------------ -------
Headline profit before taxation1 2.5 3.0 13.2
Exceptional items 4 (0.2) (0.3) (0.5)
Amortisation of acquired intangibles (0.1) (0.1) (0.3)
Net finance cost in respect of the
defined benefit pension scheme (0.2) (0.2) (0.4)
------------------------------------------ ---- ------------ ------------ -------
Profit before taxation 2.0 2.4 12.0
Income tax expense2 6 (0.4) (0.5) (3.1)
------------------------------------------ ---- ------------ ------------ -------
Profit for the period attributable
to equity shareholders 1.6 1.9 8.9
------------------------------------------ ---- ------------ ------------ -------
Earnings per share (pence)
Basic 7 3.3 4.0 18.2
Diluted 7 3.3 4.0 18.1
------------------------------------------ ---- ------------ ------------ -------
Headline earnings per share (pence)
1
Basic 7 4.3 5.1 20.5
Diluted 7 4.3 5.1 20.3
------------------------------------------ ---- ------------ ------------ -------
1 Headline operating profit is statutory operating profit of
GBP2.7 million (H1 2019: GBP3.1 million) before exceptional items
of GBP0.2 million (H1 2019: GBP0.3 million) and amortisation of
acquired intangibles of GBP0.1 million (H1 2019: GBP0.1 million).
Headline profit before taxation is statutory profit before taxation
of GBP2.0 million (H1 2019: GBP2.4 million), after adding back the
net finance cost in respect of the Group's defined benefit pension
scheme of GBP0.2 million (H1 2019: GBP0.2 million), the exceptional
items and the amortisation of acquired intangibles. Headline
earnings per share also takes into account the taxation effect
thereon.
2 Taxation on exceptional items in the current period has
reduced the charge by GBPNil (H1 2019: GBPNil).
Condensed consolidated statement of comprehensive income
for the half year ended 30 November 2020 (unaudited)
Half year Half year Year
ended ended ended
30 November 30 November 31 May
2020 2019 2020
GBPm GBPm GBPm
--------------------------------------------- ------------ ------------ -------
Profit for the period attributable to equity
shareholders 1.6 1.9 8.9
Items that will never be reclassified to
profit or loss:
Re-measurement gain/(loss) on the defined
benefit pension scheme 1.0 (0.3) (4.0)
Tax on items that will never be reclassified
to profit or loss (0.3) 0.1 1.1
--------------------------------------------- ------------ ------------ -------
Total comprehensive income for the period 2.3 1.7 6.0
--------------------------------------------- ------------ ------------ -------
The notes form an integral part of this condensed consolidated
Half Year Report.
Condensed consolidated balance sheet
as at 30 November 2020 (unaudited)
30 November 30 November 31 May
2020 2019 2020
Note GBPm GBPm GBPm
--------------------------------- ---- ----------- ----------- -------
Non-current assets
Property, plant and equipment 48.1 45.9 48.5
Right of use assets 26.2 19.5 27.3
Intangible assets 31.2 28.3 31.4
Deferred income tax assets 4.1 2.9 4.4
--------------------------------- ---- ----------- ----------- -------
109.6 96.6 111.6
--------------------------------- ---- ----------- ----------- -------
Current assets
Inventories 6.5 5.7 4.7
Trade and other receivables 73.7 79.4 56.7
Current income tax asset 0.1 0.2 -
Cash and cash equivalents 3.8 1.8 5.3
Derivative financial instruments 8 0.1 0.2 0.1
--------------------------------- ---- ----------- ----------- -------
84.2 87.3 66.8
--------------------------------- ---- ----------- ----------- -------
Total assets 193.8 183.9 178.4
--------------------------------- ---- ----------- ----------- -------
Current liabilities
Trade and other payables (71.3) (79.2) (56.6)
Current income tax liabilities - - (0.9)
Borrowings 8 (10.0) - (7.2)
Lease liabilities 8 (7.0) (3.0) (6.4)
--------------------------------- ---- ----------- ----------- -------
(88.3) (82.2) (71.1)
--------------------------------- ---- ----------- ----------- -------
Non-current liabilities
Borrowings 8 (10.0) (16.2) (10.0)
Lease liabilities 8 (19.0) (16.1) (20.3)
Deferred income tax liabilities (4.9) (3.6) (4.9)
Retirement benefit obligations (18.7) (17.0) (21.0)
--------------------------------- ---- ----------- ----------- -------
(52.6) (52.9) (56.2)
--------------------------------- ---- ----------- ----------- -------
Total liabilities (140.9) (135.1) (127.3)
--------------------------------- ---- ----------- ----------- -------
Net assets 52.9 48.8 51.1
--------------------------------- ---- ----------- ----------- -------
Equity
Share capital 9 12.3 12.2 12.2
Share premium 0.9 0.9 0.9
Retained earnings 39.7 35.7 38.0
--------------------------------- ---- ----------- ----------- -------
Total equity 52.9 48.8 51.1
--------------------------------- ---- ----------- ----------- -------
The notes form an integral part of this condensed consolidated
Half Year Report.
Condensed consolidated statement of changes in equity
for the half year ended 30 November 2020 (unaudited)
Share Share Retained Total
capital premium earnings equity
GBPm GBPm GBPm GBPm
-------------------------------------- -------- -------- --------- -------
Balance at 1 June 2019 12.2 0.9 34.0 47.1
-------------------------------------- -------- -------- --------- -------
Profit for the period - - 1.9 1.9
Items that will never be reclassified
to profit or loss:
Re-measurement loss on the defined
benefit pension scheme - - (0.3) (0.3)
Tax on items that will never be
reclassified to profit or loss - - 0.1 0.1
-------------------------------------- -------- -------- --------- -------
Total comprehensive income for the
period - - 1.7 1.7
-------------------------------------- -------- -------- --------- -------
Balance at 30 November 2019 12.2 0.9 35.7 48.8
-------------------------------------- -------- -------- --------- -------
Profit for the period - - 7.0 7.0
Items that will never be reclassified
to profit or loss:
Re-measurement loss on the defined
benefit pension scheme - - (3.7) (3.7)
Tax on items that will never be
reclassified to profit or loss - - 1.0 1.0
-------------------------------------- -------- -------- --------- -------
Total comprehensive income for the
period - - 4.3 4.3
-------------------------------------- -------- -------- --------- -------
Transactions with owners:
Dividend paid - - (3.2) (3.2)
Issue of shares - - - -
Credit to equity for equity-settled
share-based payments - - 1.2 1.2
-------------------------------------- -------- -------- --------- -------
- - (2.0) (2.0)
-------------------------------------- -------- -------- --------- -------
Balance at 31 May 2020 12.2 0.9 38.0 51.1
-------------------------------------- -------- -------- --------- -------
Profit for the period - - 1.6 1.6
Items that will never be reclassified
to profit or loss:
Re-measurement gain on the defined
benefit pension scheme - - 1.0 1.0
Tax on items that will never be
reclassified to profit or loss - - (0.3) (0.3)
-------------------------------------- -------- -------- --------- -------
Total comprehensive income for the
period - - 2.3 2.3
-------------------------------------- -------- -------- --------- -------
Transactions with owners:
Issue of shares 0.1 - (0.1) -
Value of employee services - - (0.5) (0.5)
-------------------------------------- -------- -------- --------- -------
0.1 - (0.6) (0.5)
-------------------------------------- -------- -------- --------- -------
Balance at 30 November 2020 12.3 0.9 39.7 52.9
-------------------------------------- -------- -------- --------- -------
The notes form an integral part of this condensed consolidated
Half Year Report.
Condensed consolidated cash flow statement
for the half year ended 30 November 2020 (unaudited)
Half year Half year Year
ended ended ended
30 November 30 November 31 May
2020 2019 2020
GBPm GBPm GBPm
-------------------------------------------------- ------------ ------------ ---------------------
Cash flows from operating activities
Operating profit 2.7 3.1 13.5
Adjustments for:
Depreciation and amortisation 6.4 4.6 10.5
Contributions to pension scheme not recognised
in income statement (1.5) (0.8) (1.3)
Share-based payment expense - - 1.2
Other (0.5) - (0.1)
-------------------------------------------------- ------------ ------------ ---------------------
Operating cash flows before movements in working
capital 7.1 6.9 23.8
Movements in working capital:
(Increase)/decrease in inventories (1.8) 0.3 1.9
(Increase)/decrease in receivables (17.0) (4.8) 20.2
Increase/(decrease) in payables 15.7 6.2 (20.4)
-------------------------------------------------- ------------ ------------ ---------------------
Net cash generated from operations 4.0 8.6 25.5
Interest paid (0.5) (0.5) (1.1)
Income tax paid (1.4) (1.7) (2.7)
-------------------------------------------------- ------------ ------------ ---------------------
Net cash generated from operating activities 2.1 6.4 21.7
-------------------------------------------------- ------------ ------------ ---------------------
Cash flows from investing activities
Purchase of intangible assets (0.1) (0.2) (0.4)
Purchase of property, plant and equipment (1.8) (2.3) (5.7)
Acquisition of subsidiaries - cash paid (net
of cash acquired) (1.1) (3.2) (6.0)
Capitalised legal costs associated with acquired
leases - - (0.3)
Proceeds on sale of property, plant and equipment 0.1 0.2 0.4
-------------------------------------------------- ------------ ------------ ---------------------
Net cash absorbed by investing activities (2.9) (5.5) (12.0)
-------------------------------------------------- ------------ ------------ ---------------------
Cash flows from financing activities
Increase in bank borrowings 2.7 0.6 1.6
Capital element of leases (3.4) (2.5) (5.6)
Dividends paid - - (3.2)
-------------------------------------------------- ------------ ------------ ---------------------
Net cash absorbed by financing activities (0.7) (1.9) (7.2)
-------------------------------------------------- ------------ ------------ ---------------------
Net movement in cash and cash equivalents (1.5) (1.0) 2.5
Cash and cash equivalents at beginning of
period 5.3 2.8 2.8
-------------------------------------------------- ------------ ------------ ---------------------
Cash and cash equivalents at end of period 3.8 1.8 5.3
-------------------------------------------------- ------------ ------------ ---------------------
The notes form an integral part of this condensed consolidated
Half Year Report.
Notes to the condensed consolidated half year report
for the half year ended 30 November 2020 (unaudited)
1. General information
NWF Group plc ('the Company') is a public limited company
incorporated and domiciled in England, United Kingdom, under the
Companies Act 2006. The address of its registered office is NWF
Group plc, Wardle, Nantwich, Cheshire CW5 6BP.
The Company has its primary listing on AIM, part of the London
Stock Exchange.
These condensed consolidated interim financial statements
('interim financial statements') were approved by the Board for
issue on 2 February 2021.
These interim financial statements do not constitute statutory
accounts within the meaning of Section 434 of the Companies Act
2006. The interim financial statements for the half years ended 30
November 2020 and 30 November 2019 are neither audited nor reviewed
by the Company's auditors. Statutory accounts for the year ended 31
May 2020 were approved by the Board of Directors on 4 August 2020
and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement
under Section 498 of the Companies Act 2006.
2. Basis of preparation and accounting policies
Except as described below, these interim financial statements
have been prepared in accordance with the principal accounting
policies used in the Group's consolidated financial statements for
the year ended 31 May 2020. These interim financial statements
should be read in conjunction with those consolidated financial
statements, which have been prepared in accordance with
International Financial Reporting Standards ('IFRS') as endorsed by
the European Union.
These interim financial statements do not fully comply with IAS
34 'Interim Financial Reporting', as is currently permissible under
the rules of AIM.
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total annual
earnings.
The triennial actuarial valuation of the Group's defined benefit
pension scheme was completed during the half year ended 30 November
2020, with a deficit of GBP16.2 million at the valuation date of 31
December 2019. In these interim financial statements, this
liability has been updated in order to derive the IAS 19R valuation
as of 30 November 2020. The triennial valuation resulted in Group
contributions of GBP2.1 million per annum, including recovery plan
payments of GBP1.8 million per annum for financial years ending 31
May 2021 and 31 May 2022. From 1 June 2022 to 31 December 2027
recovery plan payments of GBP2.1 million per annum will be paid. In
addition, from 1 January 2022 a percentage increase based on total
dividend growth over GBP3.1 million will be paid.
The Directors consider that headline operating profit, headline
profit before taxation, headline earnings per share and headline
EBITDA measures, referred to in these interim financial statements,
provide useful information for shareholders on underlying trends
and performance.
Headline operating profit is reported operating profit after
adding back exceptional items and amortisation of acquired
intangibles. Headline profit before taxation is reported profit
before taxation, after adding back the net finance cost in respect
of the Group's defined benefit pension scheme, amortisation of
acquired intangibles, exceptional items and the taxation effect
thereon where relevant. Headline EBITDA refers to reported
operating profit after adding back exceptional items and
amortisation of acquired intangibles. The headline EBITDA
calculation excludes the impact of IFRS 16 depreciation.
The calculations of basic and diluted headline earnings per
share are shown in note 7 of these interim financial
statements.
The Group's income statement separately identifies exceptional
items. Such items are those that, in the Directors' judgement, are
one-off in nature or non-operating and need to be disclosed
separately by virtue of their size or incidence and may include,
but are not limited to, restructuring costs, acquisition-related
costs, costs of implementing new systems and income from legal
settlements. In determining whether an item should be disclosed as
an exceptional item, the Directors consider qualitative as well as
quantitative factors such as the frequency, predictability of
occurrence and significance. This is consistent with the way
financial performance is measured by management and reported to the
Board. Disclosing exceptional items separately provides additional
understanding of the performance of the Group.
Certain statements in these interim financial statements are
forward looking. The terms 'expect', 'anticipate', 'should be',
'will be' and similar expressions identify forward looking
statements. Although the Board of Directors believes that the
expectations reflected in these forward-looking statements are
reasonable, such statements are subject to a number of risks and
uncertainties and actual results and events could differ materially
from those expressed or implied by these forward-looking
statements.
Based on financial performance to date and forecasts along with
the available banking facilities, there is a reasonable expectation
that the Group has adequate resources to continue in operational
existence for the foreseeable future. The Group therefore continues
to adopt the going concern basis of accounting in preparing the
annual financial statements.
The Board has prepared cash flow forecasts for the period to 31
May 2022. Under this base case scenario, the Group is expected to
continue to have very significant headroom relative to the funding
available to it and to comply with its banking covenants.
The Board has also considered various other severe downside
scenarios, including the possibility of further lockdowns as a
result of Covid-19. These downside scenarios excluded any
mitigating actions that the Board would be able to take to reduce
costs. Under these scenarios, the Group would still expect to have
sufficient headroom in its financing facilities.
Accordingly, the Directors, having made suitable enquiries, and
based on financial performance to date and forecasts along with the
available banking facilities, have a reasonable expectation that
the Group has adequate resources to continue in operational
existence for the foreseeable future. The Group therefore continues
to adopt the going concern basis of accounting in preparing the
annual financial statements.
3. Segment information
The chief operating decision-maker has been identified as the
Board of Directors ('the Board'). The Board reviews the Group's
internal reporting in order to assess performance and allocate
resources. The Board has determined that the operating segments,
based on these reports, are Fuels, Food and Feeds.
The Board considers the business from a product/services
perspective. In the Board's opinion, all of the Group's operations
are carried out in the same geographical segment, namely the
UK.
The nature of the products/services provided by the operating
segments are summarised below:
Fuels - sale and distribution of domestic heating, industrial and road fuels
Food - warehousing and distribution of clients' ambient grocery
and other products to supermarket and other retail
distribution centres
Feeds - manufacture and sale of animal feeds and other agricultural products
Segment information about the above businesses is presented
below.
The Board assesses the performance of the operating segments
based on a measure of headline operating profit. Finance income and
costs are not included in the segment results which are assessed by
the Board. Other information provided to the Board is measured in a
manner consistent with that in the financial statements.
Inter-segment transactions are entered into under the normal
commercial terms and conditions that would also be available to
unrelated third parties.
Segment assets exclude deferred income tax assets and cash and
cash equivalents. Segment liabilities exclude taxation, contingent
deferred consideration, borrowings and retirement benefit
obligations. Excluded items are part of the reconciliation to
consolidated total assets and liabilities.
Fuels Food Feeds Group
Half year ended 30 November 2020 Note GBPm GBPm GBPm GBPm
------------------------------------- ---- ----- ----- ----- -----
Revenue
Total revenue 208.3 27.6 76.2 312.1
Inter-segment revenue (2.6) (0.1) - (2.7)
------------------------------------- ---- ----- ----- ----- -----
Revenue 205.7 27.5 76.2 309.4
------------------------------------- ---- ----- ----- ----- -----
Result
Headline operating profit 1.9 0.5 0.6 3.0
Segment exceptional item 4 (0.1) - - (0.1)
Group exceptional item 4 (0.1)
Amortisation of acquired intangibles (0.1) - - (0.1)
-----
Operating profit as reported 2.7
Finance costs 5 (0.7)
-----
Profit before taxation 2.0
Income tax expense 6 (0.4)
------------------------------------- ---- ----- ----- ----- -----
Profit for the period 1.6
------------------------------------- ---- ----- ----- ----- -----
Other information
Depreciation and amortisation 2.0 2.9 1.5 6.4
Fixed asset additions 0.7 0.8 0.3 1.8
------------------------------------- ---- ----- ----- ----- -----
Fuels Food Feeds Group
As at 30 November 2020 GBPm GBPm GBPm GBPm
-------------------------------- ------ ------ ------ -------
Balance sheet
Assets
Segment assets 79.7 48.3 57.8 185.8
-------------------------------- ------ ------ ------
Deferred income tax assets 4.1
Current income tax assets 0.1
Cash and cash equivalents 3.8
-------------------------------- ------ ------ ------ -------
Consolidated total assets 193.8
-------------------------------- ------ ------ ------ -------
Liabilities
Segment liabilities (58.6) (20.5) (18.2) (97.3)
-------------------------------- ------ ------ ------
Deferred income tax liabilities (4.9)
Borrowings (20.0)
Retirement benefit obligations (18.7)
-------------------------------- ------ ------ ------ -------
Consolidated total liabilities (140.9)
-------------------------------- ------ ------ ------ -------
Half year ended 30 November Fuels Food Feeds Group
2019 Note GBPm GBPm GBPm GBPm
-------------------------------- ----------------------- ------ ------ ------- -------
Revenue
Total revenue 248.8 24.6 82.2 355.6
Inter-segment revenue (2.9) (0.2) (3.6) (6.7)
-------------------------------- ----------------------- ------ ------ ------- -------
Revenue 245.9 24.4 78.6 348.9
-------------------------------- ----------------------- ------ ------ ------- -------
Result
Headline operating profit 1.4 1.4 0.7 3.5
Segment exceptional item 4 (0.3) - - (0.3)
Amortisation of acquired
intangibles (0.1) - - (0.1)
-------
Operating profit as reported 3.1
Finance costs 5 (0.7)
-------
Profit before taxation 2.4
Income tax expense 6 (0.5)
-------------------------------- ----------------------- ------ ------ ------- -------
Profit for the period 1.9
-------------------------------- ----------------------- ------ ------ ------- -------
Other information
Depreciation and amortisation 1.3 1.9 1.4 4.6
Fixed asset additions 0.4 0.9 1.0 2.3
-------------------------------- ----------------------- ------ ------ ------- -------
Fuels Food Feeds Group
As at 30 November 2019 GBPm GBPm GBPm GBPm
-------------------------------- ----------------------- ------ ------ -------
Balance sheet
Assets
Segment assets 83.4 39.6 56.0 179.0
-------------------------------- ----------------------- ------ ------
Deferred income tax assets 2.9
Current income tax assets 0.2
Cash and cash equivalents 1.8
-------------------------------- ----------------------- ------ ------ -------
Consolidated total assets 183.9
-------------------------------- ----------------------- ------ ------ -------
Liabilities
Segment liabilities (65.9) (13.4) (18.5) (97.8)
-------------------------------- ----------------------- ------ ------
Deferred income tax liabilities (3.6)
Borrowings (16.7)
Retirement benefit obligations (17.0)
-------------------------------- ----------------------- ------ ------ -------
Consolidated total liabilities (135.1)
-------------------------------- ----------------------- ------ ------ -------
Fuels Food Feeds Group
Year ended 31 May 2020 Note GBPm GBPm GBPm GBPm
-------------------------------- ----------------------- ------ ------ ------- -----
Revenue
Total revenue 476.0 48.7 169.0 693.7
Inter-segment revenue (5.8) (0.4) - (6.2)
-------------------------------- ----------------------- ------ ------ ------- -----
Revenue 470.2 48.3 169.0 687.5
-------------------------------- ----------------------- ------ ------ ------- -----
Result
Headline operating profit 11.0 1.4 1.9 14.3
-------------------------------- ----------------------- ------ ------ -------
Segment exceptional item 4 (0.5) - - (0.5)
Amortisation of acquired
intangibles (0.3) - - (0.3)
-----
Operating profit as reported 13.5
Finance costs 5 (1.5)
-----
Profit before taxation 12.0
Income tax expense 6 (3.1)
-------------------------------- ----------------------- ------ ------ ------- -----
Profit for the year 8.9
-------------------------------- ----------------------- ------ ------ ------- -----
Other information
Depreciation and amortisation 3.4 4.2 2.9 10.5
Fixed asset additions 0.8 3.1 1.8 5.7
-------------------------------- ----------------------- ------ ------ ------- -----
Fuels Food Feeds Group
As at 31 May 2020 GBPm GBPm GBPm GBPm
-------------------------------- ------ ------ ------ -------
Balance sheet
Assets
Segment assets 66.2 48.2 54.3 168.7
-------------------------------- ------ ------ ------
Deferred income tax assets 4.4
Cash at bank and in hand 5.3
-------------------------------- ------ ------ ------ -------
Consolidated total assets 178.4
-------------------------------- ------ ------ ------ -------
Liabilities
Segment liabilities (45.4) (19.3) (18.6) (83.3)
-------------------------------- ------ ------ ------
Current income tax liabilities (0.9)
Deferred income tax liabilities (4.9)
Borrowings (17.2)
Retirement benefit obligations (21.0)
-------------------------------- ------ ------ ------ -------
Consolidated total liabilities (127.3)
-------------------------------- ------ ------ ------ -------
4. Profit before taxation - exceptional items
Half year Half year Year
ended ended ended
30 November 30 November 31 May
2020 2019 2020
GBPm GBPm GBPm
-------------------------- ------------ ------------ -------
Acquisition-related costs 0.1 0.3 0.5
Cyber-related costs 0.1 - -
-------------------------- ------------ ------------ -------
Exceptional costs 0.2 0.3 0.5
-------------------------- ------------ ------------ -------
Acquisition-related costs - The acquisition-related costs for
the half year ended 30 November 2020 comprise professional fees and
other costs in relation to the integration and hive-up of
acquisitions made during the year ended 31 May 2020.
Cyber-related costs - The cyber-related costs for the half year
ended 30 November 2020 comprise certain insurance excesses on the
Group's cyber insurance policy which have been incurred as a result
of the cyber incident announced on 2 November 2020.
5. Finance costs
Half year Half year Year
ended ended ended
30 November 30 November 31 May
2020 2019 2020
GBPm GBPm GBPm
-------------------------------------------- ------------ ------------ -------
Interest on bank loans and overdrafts 0.3 0.3 0.7
Finance costs on lease liabilities relating
to IFRS 16 0.2 0.2 0.4
Net finance cost in respect of the defined
benefit pension scheme 0.2 0.2 0.4
-------------------------------------------- ------------ ------------ -------
Total finance costs 0.7 0.7 1.5
-------------------------------------------- ------------ ------------ -------
6. Income tax expense
The income tax expense for the half year ended 30 November 2020
is based upon management's best estimate of the weighted average
annual tax rate expected for the full financial year ending 31 May
2021 of 21.0% (H1 2019: 21.0%).
7. Earnings per share
The calculation of basic and diluted earnings per share is based
on the following data:
Half year Half year Year
ended ended ended
30 November 30 November 31 May
2020 2019 2020
GBPm GBPm GBPm
------------------------------------------------- ------------ ------------ -------
Earnings
Earnings for the purposes of basic and diluted
earnings per share, being profit for the period
attributable to equity shareholders 1.6 1.9 8.9
------------------------------------------------- ------------ ------------ -------
Half year Half year Year
ended ended ended
30 November 30 November 31 May
2020 2019 2020
000s 000s 000s
------------------------------------------------ ------------ ------------ -------
Number of shares
Weighted average number of shares for the
purposes of basic earnings per share 48,914 48,750 48,750
Weighted average dilutive effect of conditional
share awards (note 9) 90 - 478
------------------------------------------------ ------------ ------------ -------
Weighted average number of shares for the
purposes of diluted earnings per share 49,004 48,750 49,228
------------------------------------------------ ------------ ------------ -------
The calculation of basic and diluted headline earnings per share
is based on the following data:
Half year Half year Year
ended ended ended
30 November 30 November 31 May
2020 2019 2020
GBPm GBPm GBPm
--------------------------------------------- ------------ ------------ -------
Profit for the period attributable to equity
shareholders 1.6 1.9 8.9
Add back:
Net finance cost in respect of the defined
benefit pension scheme 0.2 0.2 0.4
Exceptional items 0.2 0.3 0.5
Amortisation of acquired intangibles 0.1 0.1 0.3
Tax effect of the above - - (0.1)
--------------------------------------------- ------------ ------------ -------
Headline earnings 2.1 2.5 10.0
--------------------------------------------- ------------ ------------ -------
8. Financial instruments
The Group's financial instruments comprise cash, bank
overdrafts, invoice discounting advances, obligations under hire
purchase agreements, commodity derivatives and various items such
as receivables and payables, which arise from its operations. All
financial instruments in 2020 and 2019 were denominated in
Sterling. There is no significant foreign exchange risk in respect
of these instruments.
The carrying amounts of all of the Group's financial instruments
are measured at amortised cost in the financial statements, with
the exception of derivative financial instruments being forward
supply contracts. Derivative financial instruments are measured at
fair value subsequent to initial recognition.
IFRS 13 (amended) 'Financial Instruments: Disclosures' requires
disclosure of financial instruments measured at fair value, grouped
into Levels 1 to 3 below, based on the degree to which the fair
value is observable:
-- Level 1 fair value measurements are those derived from
unadjusted quoted prices in active markets for identical assets or
liabilities;
-- Level 2 fair value measurements are those derived from
inputs, other than quoted prices included within Level 1 above,
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
All of the Group's derivative financial instruments were
classified as Level 2 in the current and prior periods. There were
no transfers between levels in both the current and prior
periods.
The book and fair values of financial assets at 30 November 2020
are as follows:
30 November 30 November 31 May
2020 2019 2020
Total book and fair value GBPm GBPm GBPm
---------------------------------------------------- ----------- ----------- ------
Trade and other receivables 73.7 79.4 56.7
Financial assets carried at amortised cost:
cash and cash equivalents 3.8 1.8 5.3
Financial assets carried at fair value: derivatives 0.1 0.2 0.1
---------------------------------------------------- ----------- ----------- ------
Financial assets 77.6 81.4 62.1
---------------------------------------------------- ----------- ----------- ------
The book and fair values of financial liabilities at 30 November
2020 are as follows:
30 November 30 November 31 May
2020 2019 2020
Total book and fair value GBPm GBPm GBPm
-------------------------------------------- ----------- ----------- ------
Trade and other payables 71.3 79.2 56.6
Lease liabilities repayable within one year 7.0 3.0 6.4
Financial liabilities carried at amortised
cost:
Floating rate invoice discounting advances 10.0 13.2 7.2
-------------------------------------------- ----------- ----------- ------
88.3 95.4 70.2
-------------------------------------------- ----------- ----------- ------
Revolving credit facility 10.0 3.0 10.0
Lease liabilities repayable after one year 19.0 16.1 20.3
-------------------------------------------- ----------- ----------- ------
29.0 19.1 30.3
-------------------------------------------- ----------- ----------- ------
Financial liabilities 117.3 114.5 100.5
-------------------------------------------- ----------- ----------- ------
9. Share capital
Number
of shares Total
000s GBPm
----------------------------------------------------- ---------- -----
Allotted and fully paid: ordinary shares of 25p each
Balance at 31 May 2019 48,750 12.2
Issue of shares (see below) - -
----------------------------------------------------- ---------- -----
Balance at 30 November 2019 48,750 12.2
Issue of shares - -
----------------------------------------------------- ---------- -----
Balance at 31 May 2020 48,750 12.2
Issue of shares (see below) 254 0.1
----------------------------------------------------- ---------- -----
Balance at 30 November 2020 49,004 12.3
----------------------------------------------------- ---------- -----
During the half year ended 30 November 2020, 253,524 shares (H1
2019: Nil) with an aggregate nominal value of GBP63,381 (H1 2019:
GBPNil) were issued under the Company's conditional Performance
Share Plan.
The maximum total number of ordinary shares that may vest in the
future in respect of conditional Performance Share Plan awards
outstanding at 30 November 2020 amounted to 1,400,421 (H1 2019:
1,441,604) shares. These shares will only be issued subject to
satisfying certain performance criteria.
10. Business combinations
On 2 December 2019, the Group acquired 100% of the share capital
of Ron Darch & Sons Co Limited, a 35 million litre fuel and
coal distributor based in Somerset.
Following finalisation of the acquisition accounting,
adjustments have been made to the value attributable to deferred
tax liabilities:
Initial Adjustments Fair value
fair value GBPm of assets
of assets acquired
acquired GBPm
GBPm
------------------------------------------- ----------- ------------ -----------
Intangible assets - goodwill 2.2 0.1 2.3
Intangible assets - brand 0.2 - 0.2
Intangible assets - customer relationships 0.8 - 0.8
Property, plant and equipment 1.4 - 1.4
Stock 0.6 - 0.6
Trade and other receivables 1.5 - 1.5
Cash 4.5 - 4.5
Trade and other payables (2.6) - (2.6)
Corporation tax liability (0.1) - (0.1)
Deferred tax liability (0.1) (0.1) (0.2)
------------------------------------------- ----------- ------------ -----------
8.4 - 8.4
------------------------------------------- ----------- ------------ -----------
11. Half year report
Copies of this Half Year Report are due to be sent to
shareholders on 11 February 2021. Further copies may be obtained
from the Company Secretary at NWF Group plc, Wardle, Nantwich,
Cheshire CW5 6BP, or from the Company's website at
www.nwf.co.uk.
12. Contingent assets and liabilities
On 2 November 2020, the Group announced that it had experienced
an unauthorised access to the IT systems in two of its divisions
(Feeds and Fuels) and at Group level. The Group acted promptly to
instigate precautionary measures and engaged specialist external
support to contain and manage the incident. On 12 November 2020,
the Group announced that following extensive investigations,
supported by cyber security experts, the Group was satisfied that
the incident had been contained and additional security measures
had been applied to all of the Group's IT systems. The Group
confirmed no information material to the running of the business
was irretrievably lost as a result of the incident and confirmed
that the Board did not expect the incident to result in any
material impact on underlying trading.
Investigations into the incident are ongoing and, as more
information becomes available, the Group will continue to assess
its legal obligations in connection with the incident.
The Group identifies a contingent liability in respect of the
unsettled costs of reinstating IT systems and other costs
associated with the cyber incident. Whilst it is probable that an
outflow of resources will be required to settle these obligations,
the amount of the obligation cannot be measured with sufficient
reliability to warrant recognition as a provision.
The Group also identifies a contingent asset in respect of the
reimbursement of these unsettled costs from its insurer. Whilst it
is probable that an inflow of economic benefits will be received,
at the time of this report the amount of any reimbursement is not
virtually certain, nor can be measured with sufficient reliability
to warrant recognition as a reimbursement asset.
The one-off costs associated with the Group's response to the
incident, net of recoveries under the Group's existing cyber
insurance, are not expected to be material.
2021 financial calendar
Interim dividend paid 5 May 2021
Financial year end 31 May 2021
Full year results announcement Early August 2021
Publication of Annual Report and Accounts Late August 2021
Annual General Meeting 30 September 2021
Final dividend paid Early December 2021
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END
IR TBMRTMTAMBMB
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