RNS Number:2015J
Nichols PLC
26 March 2003
Date: Embargoed until 07.00am, Wednesday 26 March 2003
Contacts: John Nichols, Chairman
Gary Unsworth, Chief Executive
Brendan Hynes, Group Finance Director
Nichols plc Telephone: 01925 222222
Alistair Mackinnon-Musson
Philip Dennis
Hudson Sandler Telephone: 020 7796 4133
Email: nichols@hspr.co.uk
Nichols plc
PRELIMINARY RESULTS
Nichols plc, the soft drinks, food and foodservice group, announces its
preliminary results for the year to 31 December 2002.
The group has three principal operations: Soft Drinks (primarily involved in the
manufacture and sale of soft drinks, including Vimto, throughout the world and
Sunkist in the UK), Food Products and Beverage Systems (including Nichols Foods,
the manufacturer and supplier to the vending, foodservice and retail markets;
Balmoral, supplier of hot beverage systems and Cabana, soft drinks on draught)
and Co-packing (which includes Stockpack, the group's contract food packing
operation).
The key points are:
* Turnover marginally ahead
* Pre-tax profit before exceptional items in line with market expectations
* Positive cash inflow before financing of #3.8m (2001: outflow #2.0m)
* A maintained dividend for the year is proposed
* Impact of the Strategic Review estimated to be greater than #2.0m per
annum; mostly benefiting from 2004 and beyond
John Nichols, Chairman, commented:
"A year ago I commented on how exceptionally challenging the previous financial
year had been. Looking back, the year to 31 December 2002 was no different,
however, the steps we had taken during 2001 paid dividends in limiting the
effect of the difficult market conditions."
"In a difficult trading year, with no let up in competition and the inevitable
pressure on margins, I feel that we can be pleased with these results, which are
in line with market expectations."
"It is my belief that as a result of the significant changes outlined in our
Strategic Review, the group will end 2003 more focussed and efficient and will
be strongly positioned to grow future profits."
Please find attached:
Chairman's Statement
Tables of figures
Notes to Editors
Chairman's Statement
A year ago I commented on how exceptionally challenging the previous financial
year had been. Looking back, the year to 31 December 2002 was no different,
however, the steps we had taken during 2001 paid dividends in limiting the
effect of the difficult market conditions.
On turnover marginally ahead at #96.2 million (2001: #94.1 million), we have
delivered pre-tax profit before exceptional items of #5.6 million (2001: #6.0
million) and, due to tight controls on capital expenditure and working capital
throughout the year, achieved positive cash inflow before financing of #3.8
million (2001: outflow #2.0 million).
In the Soft Drinks Operation, despite fierce competition, Vimto cordial
continued to perform well both at home and overseas. In Food Products and
Beverage Systems, sales growth was achieved in foodservice and retail hot
beverages, and Cabana continued to strengthen its position in the leisure and
catering markets, winning a number of significant new national accounts during
the year. In a difficult trading year, with no let up in competition and the
inevitable pressure on margins, I feel that we can be pleased with these
results, which are in line with market expectations.
The directors recommend paying a final dividend of 5.80 pence per share, (2001:
5.80 pence) maintaining the total dividend for the year at 8.80 pence. This will
be paid on 19 May 2003 to shareholders registered on 4 April 2003. The
ex-dividend date is 2 April 2003.
On 6 March 2003 we announced the first results of a Strategic Review, which I
flagged in my statement last year. The review is intended to improve operating
efficiencies and significantly reduce our cost base through the rationalisation
of the group's manufacturing facilities.
In summary, we gave notice the quality business undertaken for blue chip clients
by Stockpack, our contract packing operation currently based in Stockport, would
be re-located to the Nichols Foods site at Haydock. With the closure of the
Stockport factory, the group's headcount would reduce by approximately 130
employees.
In order to reduce the group's cost base still further, the manufacturing of
soft drinks, including the Vimto, Indigo and Sunkist brands, is to be outsourced
resulting in the closure of the Golborne factory, with an additional headcount
reduction of around 60 employees. Nichols plc will retain direct control of the
sales, marketing and distribution activities relating to all of its soft drinks
brands.
The estimated total cost of the restructuring will be around #14.9 million, of
which #6.1 million relates to fixed asset write downs of a non-cash nature, and
#4.9 million of Goodwill associated with the acquisition of Balmoral. Both
these items, together with a further #0.2 million relating to other costs, have
been taken as an exceptional charge in 2002, totalling #11.2 million.
There will be a further exceptional charge in 2003, currently expected to be
around #3.7 million, which are cash items and comprise mainly redundancy and
relocation costs. These figures do not take into account any proceeds arising
from the disposal of the freehold properties at Stockport and Golborne which,
the board has been advised, have a current market value of around #8.0 million,
in line with book value.
2003 will be another transitional year as the restructuring continues. The
annual benefit to the group of the proposals outlined above, is estimated to be
in excess of #2 million at the operating profit level and whilst we will see
some benefit this year the full effects are not expected to be realised until
2004 and beyond.
The competitive trading conditions and the implementation of the strategic
review will make it another challenging year for our employees, and on your
behalf I would like to thank all our people for their continued hard work and
support.
It is my belief that as a result of the significant changes outlined above, the
group will end 2003 more focussed and efficient and will be strongly positioned
to grow future profits.
John Nichols
Chairman
26 March 2003
Consolidated profit and loss account
year ended 31 December 2002
Before Exceptional Total Restated
Exceptional Items
items
2002 2002 2002 2001
#'000 #'000 #'000 #'000
Turnover - continuing activities 96,229 -- 96,229 94,139
Cost of sales 61,403 -- 61,403 60,092
Gross profit 34,826 -- 34,826 34,047
Net operating expenses 28,250 11,180 39,430 26, 900
Operating (loss)/profit- continuing 6,576 (11,180) (4,604) 7,147
activities
Net interest payable 940 -- 940 1,116
(Loss)/profit on ordinary activities before 5,636 (11,180) (5,544) 6,031
taxation
Tax on (loss)/profit on ordinary activities 1,948 (1,830) 118 1,962
(Loss)/profit for the financial year 3,688 (9,350) (5,662) 4,069
Equity dividends 3,253 -- 3,253 3,253
Retained (loss)/profit for the year 435 (9,350) (8,915) 816
(Loss)/earnings per share (basic) (15.57p) 11.19p
Earnings per share (diluted) -- 11.17p
Earnings per share (basic) before 10.15p 11.19p
exceptional items
Earnings per share (diluted) before 10.12p 11.17p
exceptional items
Dividends per share 8.80p 8.80p
There were no recognised gains or losses in 2002 or 2001 other than the (loss)/
profit for the year.
Balance sheets
at 31 December 2002
Group Parent
2002 2001 2002 2001
#'000 #'000 #'000 #'000
Fixed assets
Intangible assets 1,721 6,999 -- --
Tangible assets 28,083 36,573 13,357 19,080
Investments: shares in group undertakings -- -- 11,453 17,460
Investments: own shares 643 670 643 670
30,447 44,242 25,453 37,210
Current assets
Stocks 9,068 8,441 1,064 1,163
Debtors 20,372 21,145 8,747 9,778
Cash at bank and in hand 1,743 635 7,418 9,182
31,183 30,221 17,229 20,123
Creditors
Amounts falling due within one year 24,758 24,591 15,041 15,653
Net current assets 6,425 5,630 2,188 4,470
Total assets less current liabilities 36,872 49,872 27,641 41,680
Creditors
Amounts falling due after one year 8,939 11,065 8,939 11,065
27,933 38,807 18,702 30,615
Provisions for liabilities and charges 863 2,822 141 1,444
27,070 35,985 18,561 29,171
Share capital and reserves
Called up share capital 3,697 3,697 3,697 3,697
Share premium account 3,255 3,255 3,255 3,255
Capital redemption reserve 1,209 1,209 1,209 1,209
Merger reserve -- -- 775 775
Profit and loss account 18,909 27,824 9,625 20,235
Shareholders' funds 27,070 35,985 18,561 29,171
Consolidated cash flow statement
year ended 31 December 2002
2002 2001
#'000 #'000 #'000 #'000
Cash inflow from operating activities 12,753 10,880
Returns on investments and servicing of finance
Interest receivable 12 6
Interest payable (952) (1,122)
Net cash outflow from returns on investments and
servicing of finance (940) (1,116)
Taxation (1,604) (2,059)
Capital expenditure and financial investment
Purchase of tangible fixed assets (3,760) (6,370)
Proceeds of sales of tangible fixed assets 573 54
Proceeds of sale of own shares 2 (7)
Net cash outflow from capital expenditure
and financial investment (3,185) (6,323)
Acquisitions and disposals
Acquisition of subsidiary undertakings -- (78)
Net borrowings acquired with subsidiaries -- (77)
Net cash outflow from acquisitions and disposals -- (155)
Equity dividends paid (3,253) (3,253)
Cash inflow/(outflow) before financing 3,771 (2,026)
Financing
(Decrease)/increase in borrowings (2,663) 7,144
Net cash (outflow)/inflow from financing (2,663) 7,144
Increase in cash in the year 1,108 5,118
Nichols plc
NOTES TO THE PRELIMINARY FINANCIAL INFORMATION
Basis of Preparation
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2002 or 2001, but is derived
from those accounts. Statutory accounts for 2001 have been delivered to the
Registrar of Companies and those for 2002 will be delivered following the
company's Annual General meeting. The Auditors have reported on these accounts;
their reports were unqualified and did not contain statements under s.237(2) or
(3) of the Companies Act 1985.
Earnings per Share
The calculation of basic earnings per share is based on earnings attributable to
ordinary shareholders divided by the weighted average number of shares in issue
during the year. Shares held in the Employee Share Ownership Trust and Employee
Benefit Trust are treated as cancelled for the purposes of this calculation.
The calculation of diluted earnings per share is based on the basic earnings per
share adjusted to allow for the assumed conversion of all dilutive options.
Dividends
The proposed final dividend of 5.80 pence per share (2001 : 5.80 pence), if
approved, will be paid on 19 May 2003 to shareholders registered on 4 April
2003. In addition, an interim dividend of 3.00 pence was paid on 23 October
2002.
Annual Report
The annual report will be mailed to shareholders on or around 11 April 2003.
Copies will be available after that date from: The Secretary, Nichols plc,
Laurel House, 3 Woodlands Park, Ashton Road, Newton-le-Willows, WA12 0HH.
Annual General Meeting
The Annual General Meeting will be held at the registered office, Laurel House,
3 Woodlands Park, Ashton Road, Newton-le-Willows, WA12 0HH on Wednesday 14 May
at 11.00 a.m.
Copies of the announcement can be found on the Investors Relations section of
the company's website: www.nicholsplc.co.uk
NOTES TO EDITORS:
Nichols plc has three principal operations:
1) Soft Drinks (primarily involved in the manufacture and sale of soft drinks,
including Vimto, throughout the world and Sunkist in the UK)
2) Food Products and Beverage Systems (including Nichols Foods, the manufacturer
and supplier to the vending, foodservice and retail markets; Balmoral, supplier
of hot beverage systems and Cabana, soft drinks on draught) and
3) Co-packing (which includes Stockpack, the group's contract food packing
operation).
- Ends -
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