TIDMNICL
RNS Number : 7075Q
Nichols PLC
02 March 2016
Date: Embargoed until 0700 Wednesday 2 March
2016
Contacts: John Nichols, Non-Executive Chairman
Marnie Millard, Group Chief Executive Officer
Tim Croston, Group Chief Finance Officer
Nichols plc
Telephone: 01925 222222
Website:www.nicholsplc.co.uk
Alex Brennan Richard Lindley
Hudson Sandler N+1 Singer (Nominated Adviser)
Telephone:020 7796 Telephone: 0207 496 3000
4133
Email: nichols@hspr.com
Nichols plc
PRELIMINARY RESULTS
Nichols plc ('Nichols' or the 'Group'), the soft drinks Group,
announces its Preliminary results for the year ended 31 December
2015 (the 'period').
Nichols plc is a highly focused soft drinks business. Its brand
portfolio includes Vimto, which is sold in over 70 countries and
Levi Roots, Feel Good, Sunkist and Panda which are sold in the UK.
The Group operates in both the "Still" and "Carbonate" drinks
categories.
Highlights:
Year ended Year ended % movement
31 Dec 2015 31 Dec 2014
----------------------- ------------- ------------- -----------
All references GBPm GBPm
below and throughout
the report are
pre-exceptional
items recognised
in 2014
----------------------- ------------- ------------- -----------
Group Revenue 109.3 109.2 +0.1%
----------------------- ------------- ------------- -----------
Operating Profit 27.8 25.6 +8.6%
----------------------- ------------- ------------- -----------
Operating Profit
margin 25% 23%
----------------------- ------------- ------------- -----------
Profit Before
Tax 28.0 25.7 +8.9%
----------------------- ------------- ------------- -----------
Cash and cash
equivalents 35.4 34.5
----------------------- ------------- ------------- -----------
EPS (basic) 60.33p 55.03p +9.6%
----------------------- ------------- ------------- -----------
John Nichols, Non-Executive Chairman, said:
"I am pleased to report another strong performance in 2015
reflecting the strength of our brands and diversified business
model. Our financial performance remained strong with international
sales up 3.9% on a constant currency basis and Group profit before
tax up by 8.9%.
Complementing our organic growth we were delighted to complete
the two important strategic acquisitions during the year of the
Feel Good brand and Noisy Drinks. These provide exciting extensions
to Nichols' brand portfolio and distribution and will have a
positive impact on revenue in 2016.
Underpinned by the strengths of our brands, people and business
model the Board looks forward with confidence to the year
ahead."
Chairman's Statement
I am pleased to report that the Group delivered another strong
performance in 2015. Our international sales were up 3.9% year on
year (on a constant currency basis), Group profit before tax pre
exceptional items increased by 8.9% and we successfully completed
two acquisitions.
Trading
Total Group revenue was GBP109.3m and profit before tax
increased 8.9% to GBP28.0m (2014: GBP25.7m pre exceptional items).
Whilst the headline sales performance was marginally ahead of the
prior year, it is important to note that our profit growth was
driven by trading activities which delivered a gross profit
increase of 5.6% (GBP2.8m).
In the UK markets, sales totalled GBP84.8m, slightly below
(-0.3%) the prior year's value of GBP85.1m but ahead of the total
UK soft drinks market performance which declined by 0.6% (Nielsen
year to 2 Jan 2016). Continuing our strategy of value over volume
has once again delivered margin growth. This has been achieved by
focusing on the growth of our still products and limiting our
participation in deep promotional activity, particularly in
carbonates. Also, and with a view to our future growth, we acquired
the Feel Good brand in July 2015, which is an established range of
premium still and sparkling juice drinks containing no added sugar
and 100% natural ingredients. We are putting increased investment
behind Feel Good and plan to re-launch in the summer of 2016.
The ongoing challenges in the UK grocery market have been widely
reported and emphasise the importance of maintaining a diverse
business which is not overly reliant on one market. I am therefore
delighted to report that our international sales increased by 3.9%
to GBP25.2m (constant currency basis - calculated by translating
prior year non-sterling sales at this year's average exchange rate)
during the year (1.5% on a reported basis). This performance was
delivered from both of our core export markets being the Middle
East and Africa. Trading in the Middle East was particularly
encouraging given the difficulties in shipping to the Yemen due to
the civil unrest in that region.
Full acquisition
Having taken an initial 49% share in The Noisy Drinks Company
Limited (Noisy) in March 2015, which is equity accounted as an
associate investment at the year-end, we are pleased to announce
that the remaining shares were purchased on 8 January 2016. This
additional investment is a key step in our strategy to enhance our
Out of Home proposition. As a result we can now offer our customers
a unique portfolio of still and carbonate products including
dispensed soft drinks, packaged soft drinks and frozen drinks.
Noisy is the UK's leading frozen drinks business, supplying the
Starslush brand to a number of prestigious customers in both the UK
and mainland Europe. In addition to enhancing our product
portfolio, the acquisition of Noisy strengthens our supply chain
capabilities as the business has an established UK network
facilitating direct access to customers on a national basis.
Dividend
The Group has delivered another strong performance in 2015 and
as a reflection of the Board's continued confidence in the outlook,
I am pleased to recommend a final dividend of 17.6 pence per share
(2014: 15.3 pence). If accepted by our shareholders, the total
dividend for 2015 will be 25.6 pence (2014: 22.4 pence), an
increase of 14.3% on the prior year.
Subject to shareholder approval, the final dividend will be paid
on 3 May 2016 to shareholders registered on 1 April 2016; the
ex-dividend date is 31 March 2016.
Outlook
During 2016 we will continue to implement our growth strategy
which includes further investment in our brands, across the still
and carbonate product range, to support distribution growth both in
the UK and our export markets. We will also complete the
integration of Noisy (acquired in full in January 2016) and the
Feel Good brand into the business both of which will have a
positive impact on revenue during the year.
In summary, the Board is pleased with the 2015 performance and
is confident that the Group is well placed to continue the trend in
to 2016.
John Nichols
Non-Executive Chairman
2 March 2016
CHIEF EXECUTIVE OFFICER'S REPORT
Nichols continued to make good progress during the year despite
some challenging market conditions, particularly in the UK. Before
exceptional items, the Group delivered 8.9% profit before tax
growth, 9.6% earnings per share growth and retains its robust
financial position with GBP35.4m cash in the bank.
Acquisition formed a large piece of activity for the Group
during the year which underpins future growth for the business. The
diversification of the organisation remains our core strength,
which ensures we are not reliant on one customer, one route to
market or one geographical region. The addition of the Feel Good
brand strengthens the Brand Portfolio and the integration of Noisy
Drinks brings new customers and products into our Vimto Out of Home
business.
The Vimto brand heritage remains strong. Created in 1908, it is
as relevant in today's global market as it was 108 years ago.
Distributed to over 70 markets, Vimto is loved from Manchester to
Mali.
The UK Soft Drinks Market
In 2015, volumes in the UK soft drinks market increased by 0.6%
(Nielsen year to 2 January 2016). The total value of the UK soft
drinks market, excluding the "on trade" channel, decreased by 0.6%
to a total value of GBP7.6bn.
The market saw the dilutes sector decrease in value by 7.4%
while in contrast Vimto dilutes grew 1%. This growth was achieved
whilst maintaining our focus of delivering value over volume.
The Vimto brand is unusual in the context of the soft drinks
market as it is present in both the Still and Carbonate sector. The
brand saw a pleasing performance in its ready to drink range which
again significantly outperformed the market to deliver growth of
15%.
Operational review
Vimto UK
Our strategic focus on Still products continued in 2015 and as a
result significant distribution gains were made on the Vimto ready
to drink range, particularly in the prominent front of store
chiller space.
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The Vimtoad featured in our "above the line" campaign again in
2015 and has been successful in broadening our target audience by
encompassing parents and their teenagers. In addition to the
national TV campaign we targeted the Midlands area with a regional
up weighted communications campaign and a supporting van sales
drive. The activity took place over the peak spring/summer period
and included TV, radio, outdoor and digital advertising,
culminating with the headline sponsorship of the Fusion Festival in
Birmingham. The festival appealed to teens and their families with
50,000 people attending the three day event and featured performers
such as Ed Sheeran and McBusted. The amplification of the festival
sponsorship included radio advertising, sampling and social media.
Van sales were designed to increase distribution with independent
retailers and secured over 16,000 new listings. As a result of this
combined strategy to drive both awareness and trial the Vimto brand
sales have grown 9 times faster in the Midlands compared to its
national performance. Vimto is now bought by an additional 15,000
households and resulted in the brand being enjoyed in 1 out of 4
households in the Midlands.
Vimto International
Our international business performed strongly during 2015
delivering growth of 3.9% (on a constant currency basis) despite
challenges throughout the year of delivering concentrate to the
Yemen as a result of conflict in this region.
In-country performance from our partner, Aujan Coca Cola, was
very strong with growth of in-market volume of 9% as they executed
another outstanding fully integrated marketing campaign during the
Ramadan period. The theme focused on "emotional separation" and how
the issue resonates in different ways with the Middle Eastern
consumer. Through diary style real life stories, Vimto was once
again highlighted as central to that special time when their
families come together. Digital and social media communication
remained key with material viewed online over 17 million times.
A high profile marketing initiative took place in the popular
store of Bloomingdales in Dubai. Consumers were able to purchase a
bottle of Vimto cordial and have their name personalised on the
label.
As well as our business in the Middle East we have a long
established trading history in the African region. In the latter
half of 2015, six new bottlers were appointed in Africa which
creates a platform for concentrate growth in 2016.
A new product launch also took place in 2015 with the launch of
Vimto Malt. Dark malt and Vimto provides a great taste combination
which meets the local needs of the African consumer and adds a new
Vimto product to the International portfolio. This product will be
launched via the ethnic channel into Europe as well as the USA in
2016.
For the first time in our history we completed the production of
a pan-African TV commercial which will be aired in the region
during 2016.
Vimto Out of Home
2015 saw the continued development of our Vimto Out of Home
business with the rationalisation of the independent distributors
now completed. In order to communicate our position as a one stop
shop to the independent on-trade, this part of the organisation has
been rebranded as Vimto Out of Home with the strap line "Refreshing
Soft Drinks Solutions".
Acquisitions
Two important acquisitions were made during 2015; The Noisy
Drinks Company Limited being a 49% associate investment, and the
Feel Good brand (trade and assets acquisition).
Noisy was established in 2002 and employs 45 people nationally
with its headquarters in Thurrock, Essex. Noisy has a strong track
record of delivering high quality service through its UK network.
Its product portfolio centres on frozen drinks and includes the
Starslush and Slurp brands. With an enviable customer portfolio
which ranges from Merlin theme parks such as Legoland, Alton Towers
and Chessington to Compass Catering supplying schools, Noisy is a
great addition to the Vimto Out of Home business.
Noisy provides a strong platform for product innovation. A new
launch in 2015 saw the introduction of a new frozen carbonated
product under the Burrst brand, which has particular relevance to
the cinema sector. Vimto and Levi Roots Caribbean Crush have both
been introduced into the Starslush and Burrst flavour portfolio and
will achieve extended distribution in 2016.
The Feel Good brand was founded in 2001. Feel Good drinks is a
premium range of 100% natural still and sparkling drinks for adults
and kids. The range is available in over 20,000 outlets across 15
different countries. Feel Good is a core element of our future
growth strategy which allows us to enter the premium health soft
drinks sector. It also has an important part to play in all our
routes to market. Whilst it is firmly established in the UK grocery
packaged market, the brand has a growing presence in the out of
home sector and an international business which we can build on.
Feel Good sparkling will be relaunched in summer 2016 with exciting
new flavours and new product ranges will be added to the brand
ready for launch in early 2017.
Our proposition to the consumer for the brand is to "drink good"
and "feel good", using only natural ingredients with uplifting
flavours. Our brand values will ensure we always deliver integrity
and honesty to our customers which, in turn, will ensure they have
trust in the product we make.
Financial review
The Group has delivered sales of GBP109.3m (2014: GBP109.2m) in
a challenging global market. The focus has been maintained on our
value over volume strategy and the Group's diversification has
ensured we have outperformed the markets we operate in.
In summary in 2015 we achieved:
-- Group revenue GBP109.3m (2014: GBP109.2m)
-- International growth (constant currency
basis) 3.9% (2014: 4.3%)
-- Profit before tax GBP28.0m (2014: GBP25.7m
pre exceptional items explained in note
4 of the financial statements)
-- Earnings Per Share 60.33 pence (2014:
55.03 pence pre exceptional items)
-- 14.3% full year dividend growth
Cash flow remained positive in 2015 and as a result we finished
the year with GBP35.4m cash in the bank.
Corporate Responsibility
2015 has been another challenging year for the soft drinks
industry with many claims for urgent and significant action
required by the industry on the issue of obesity. However, it is
really important to highlight the progress we have made
collectively as producers. Between January 2012 and January 2016
soft drinks volume grew by 2.5% while calories and sugars declined
by 13.4% and 13.6%, respectively (BSDA and Kantar Worldpanel Soft
Drinks Nutritional Review, 24 November 2015).
We take our responsibility towards the issue of obesity and
sugar consumption very seriously. Our marketing strategy has
revolved around promoting no added sugar choices in order to
achieve our aims of overall sugar reduction across our range of
products. As a result we have continued to reduce our total sugar
usage from 8,202 tonnes in 2014 to 7,488 tonnes in 2015, which is
an 8% reduction year on year. Since 2012 we have reduced the sugar
content of our product portfolio by 1,118 tonnes.
Our No Added Sugar products in our dilute range now account for
46% of all purchases and 41% of our Vimto still range in the UK,
with Vimto Minis and Squeezy products only available as no added
sugar.
We are committed to looking for healthier alternatives and a
good example of this is our acquisition of the Feel Good brand,
which contains no added sugars and 100% natural ingredients.
Our recent launch of Vimto Remix contains no added sugar and we
have recently launched a
5 litre catering pack of Vimto squash which is no added sugar
only. This year we introduced front of pack labelling in order to
better communicate to the consumer the nutritional content of our
products.
Our Community
We are delighted to continue our work with Warrington Youth
Club. To support the charity last year over 40 colleagues attempted
to climb the Three Peaks during June. They had to combat extremely
poor weather, which included snow at the top of Ben Nevis, but
defeated the odds to raise over GBP55,000 for the charity.
Our Team
We conducted a staff survey in 2015 and were delighted to
receive the following feedback:
-- 99% are proud to work at Nichols
-- 96% still expect to be working at Nichols
in 12 months time
-- 94% find Nichols a positive place to
work
-- 98% share the same values as the company
People remain absolutely core to the continued success of
Nichols plc. Working as one team ensures we preserve our culture
and its values. I would like to say a huge thank you to the amazing
effort and passion my colleagues continue to show the business.
Our Vision
Our five year rolling strategy centres on our Group commercial
activities in both the UK and overseas. To support those
initiatives we work to ensure we have well established operations
and partners to support our business growth and development.
In the UK we will focus on the geographical expansion of the
Vimto brand. Feel Good will concentrate on its position as a
healthy natural soft drink and will have innovation as the core of
its growth. With the newly acquired Noisy Drinks business we will
have a unique product portfolio for the out of home sector along
with a population of new customers and consumers.
Internationally we will continue to develop and expand our large
presence in the Middle East region. There also remain potential new
territories in Africa which we will continue to evaluate and
introduce new partners to realise further success. In addition we
continue to develop opportunities in new export markets to add to
our successful international business.
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As a truly diversified business, acquisition remains a key
feature in our growth strategy. Any further acquisition either in
the UK or overseas would be incorporated into our current business
model characterised by outsourcing production and using third party
distribution partners in the export markets.
Marnie Millard
Chief Executive Officer
2 March 2016
Consolidated income statement
Year ended 31 December 2015
2015 2014
Total Before Exceptional Total
exceptional items
items
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 109,279 109,205 - 109,205
Cost of sales (56,296) (59,035) - (59,035)
--------------------- ------------------ ------------- ------------ ---------
Gross profit 52,983 50,170 - 50,170
Distribution
expenses (5,483) (5,271) - (5,271)
Administrative
expenses (19,666) (19,302) (7,768) (27,070)
--------------------- ------------------ ------------- ------------ ---------
Operating profit 27,834 25,597 (7,768) 17,829
Finance income 213 257 - 257
Finance expense (201) (164) - (164)
Share of income 190 - - -
from associate
Profit before
taxation 28,036 25,690 (7,768) 17,922
Taxation (5,803) (5,413) 1,637 (3,776)
--------------------- ------------------ ------------- ------------ ---------
Profit for the
financial year
attributable
to equity holders
of the parent 22,233 20,277 (6,131) 14,146
Earnings per
share (basic) 60.33p 38.39p
Earnings per
share (diluted) 60.25p 38.34p
All results relate to continuing operations.
Consolidated statement of comprehensive income
Year ended 31 December 2015
2015 2014
GBP'000 GBP'000
Profit for the financial
year 22,233 14,146
Other comprehensive income/(expense)
that will not be reclassified
to profit or loss
Re-measurement of net
defined benefit liability 1,632 (2,796)
Deferred taxation on pension
obligations and employee
benefits (274) 436
Other comprehensive income/(expense)
for the year 1,358 (2,360)
Total comprehensive income
for the year 23,591 11,786
Statement of financial position
Year ended 31 December 2015
Group Parent
2015 2014 2015 2014
ASSETS GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 6,061 4,817 3,928 3,759
Goodwill 19,108 16,447 2,504 -
Investments - - 16,566 16,566
Investment in equity-accounted 2,970 - - -
associate
Intangibles 1,316 - 1,316 -
Deferred tax assets 1,098 1,699 1,098 1,699
--------------------------------- -------- -------- -------- --------
Total non-current assets 30,553 22,963 25,412 22,024
Current assets
Inventories 3,945 4,712 2,430 2,634
Trade and other receivables 27,860 23,525 20,765 21,120
Cash and cash equivalents 35,438 34,483 22,907 19,124
--------------------------------- -------- -------- -------- --------
Total current assets 67,243 62,720 46,102 42,878
--------------------------------- -------- -------- -------- --------
Total assets 97,796 85,683 71,514 64,902
--------------------------------- -------- -------- -------- --------
LIABILITIES
Current liabilities
Trade and other payables 18,127 19,486 16,981 17,210
Current tax liabilities 2,679 1,859 1,160 1,090
Provisions - - - -
Total current liabilities 20,806 21,345 18,141 18,300
Non-current liabilities
Pension obligations 3,893 6,190 3,893 6,190
Deferred tax liabilities 86 70 - -
Total non-current liabilities 3,979 6,260 3,893 6,190
Total liabilities 24,785 27,605 22,034 24,490
--------------------------------- -------- -------- -------- --------
Net assets 73,011 58,078 49,480 40,412
--------------------------------- -------- -------- -------- --------
EQUITY
Share capital 3,697 3,697 3,697 3,697
Share premium reserve 3,255 3,255 3,255 3,255
Capital redemption reserve 1,209 1,209 1,209 1,209
Other reserves (547) (560) 228 215
Retained earnings 65,397 50,477 41,091 32,036
Total equity 73,011 58,078 49,480 40,412
--------------------------------- -------- -------- -------- --------
Consolidated statement of cash flows
Year ended 31 December 2015
2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Profit for the financial
year 22,233 14,146
Adjustments for:
Depreciation 502 480
Loss/(profit) on sale of
property, plant and equipment 16 (80)
Finance income (213) (257)
Tax expense recognised in
the income statement 5,803 3,776
Change in inventories 767 (568)
Change in trade and other
receivables (4,335) (787)
Change in trade and other
payables (1,359) 1,324
Change in provisions - (2,018)
Change in pension obligations (665) (653)
516 1,217
Cash generated from operating
activities 22,749 15,363
Tax paid (4,639) (3,465)
-------- --------
Net cash generated from operating
activities 18,110 11,898
Cash flows from investing
activities
Finance income 213 239
Proceeds from sale of property,
plant and equipment 5 124
Acquisition of property,
plant and equipment (1,768) (4,034)
Acquisition of subsidiary,
net of cash acquired (157) (85)
Acquisition of trade and
assets (3,820) (305)
Acquisition of associate (2,970) -
investment
Net cash used in investing
activities (8,497) (4,061)
Cash flows from financing
activities
Acquisition of own shares (69) (129)
Dividends paid (8,589) (7,518)
----------------------------------- -------- -------- -------- --------
Net cash used in financing
activities (8,658) (7,647)
Net increase in cash and
cash equivalents 955 190
Cash and cash equivalents
at 1 January 34,483 34,293
----------------------------------- -------- -------- -------- --------
Cash and cash equivalents
at 31 December 35,438 34,483
----------------------------------- -------- -------- -------- --------
Consolidated statement of changes in equity
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