TIDMNWF
RNS Number : 8132H
NWF Group PLC
01 August 2023
For release 07.00 am Tuesday 1 August 2023
NWF Group plc
NWF Group plc: Final results for the year ended 31 May 2023
"A very strong set of results, significantly ahead of market
expectations at the start of the financial year, with all divisions
performing strongly, successful acquisitions in line with our
growth strategy and refinancing to support continued
development."
NWF Group plc ('NWF' or 'the Group'), the specialist distributor
of fuel, food and feed across the UK, today announces its audited
final results for the year ended 31 May 2023.
2023 2022 %
----------------------------------------------- ----------- --------- ------
Financial highlights
Revenue GBP1,053.9m GBP878.6m +20.0%
Headline operating profit1 GBP21.0m GBP21.8m -3.7%
Headline profit before taxation1 GBP19.6m GBP20.9m -6.2%
Diluted headline earnings per share1 31.3p 34.8p -9.8%
Total dividend per share 7.8p 7.5p +4.0%
Headline EBITDA(1) GBP25.8m GBP26.6m -3.0%
Net cash (excluding IFRS 16 lease liabilities) GBP16.3m GBP9.0m +81.1%
----------------------------------------------- ----------- --------- ------
Statutory results
Operating profit GBP20.6m GBP13.2m +56.1%
Profit before taxation GBP18.9m GBP12.0m +57.5%
Diluted earnings per share 30.1p 17.0p +77.6%
Net debt (including IFRS 16 lease liabilities) GBP13.5m GBP19.2m -27.6%
----------------------------------------------- ----------- --------- ------
1 Headline operating profit and EBITDA excludes exceptional
items 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.
Highlights:
-- Very strong results for the Group in spite of inflationary and cost-of-living challenges.
-- Record revenues, with robust levels of profitability, against
tough comparatives which benefitted from significant one-off
gains.
-- Resilient performance from Fuels as a result of providing
excellent service to customers amidst supply constraints and
volatile oil prices.
-- Two fuel acquisitions completed in line with the strategy to
consolidate the market, adding 39 million litres per annum.
-- Strong performance improvement in Food with increased
outbound activity and backloads along with warehouses at an
effective operating capacity throughout the year, whilst continuing
to win new business.
-- Outstanding performance in Feeds, supporting ruminant farming
customers who benefited from record high milk prices.
-- The balance sheet remains strong with a healthy cash balance
at the year-end providing significant flexibility to support
investment driven growth.
-- Continued increase in shareholder returns; proposed increase
in the total dividend of 4.0% to 7.8p per share, reflecting the
strong performance and the Board's confidence in the prospects of
the business.
-- Performance to date in the current financial year has been in
line with the Board's expectations.
Divisional highlights:
Fuels - headline operating profit of GBP12.9 million (2022:
GBP17.2 million). Resilient performance across the year in spite of
the cost-of-living crisis and a mild winter impacting demand for
heating oil. Localised supply shortages were overcome by national
supply agreements and trunking fuel across the country to meet the
needs of our customers across the depot network. Two acquisitions
completed in the last twelve months.
Food - headline operating profit of GBP4.2 million (2022: GBP2.8
million). Continued successful development with an increase in
outloads and backloads supported by a fully utilised warehouse
operation with improved operating efficiencies. New business wins
have continued in the year.
Feeds - headline operating profit of GBP3.9 million (2022:
GBP1.8 million). Outstanding performance as a result of a resilient
farming customer base, a record milk price and a desire to optimise
yields through nutritional advice. The performance also benefited
from significant commodity price gains in the summer months of
2022.
Richard Whiting, Chief Executive, NWF Group plc, commented:
"NWF has delivered another great result, significantly ahead of
the market expectations at the start of our financial year. The
three divisions have performed ahead of expectations in the year in
spite of inflationary and cost-of-living challenges. Strategic
growth has been delivered with the completion of two fuel
acquisitions. With a strong positive cash position at year end and
long-term banking facilities in place, the Group is well positioned
to continue its successful development."
It has been my privilege to lead NWF for the last 15 years and
in retiring from the role next year I am delighted that Chris
Belsham will be my successor."
A virtual meeting will be held for analysts today at 09.30a.m.
Please contact MHP for further details at nwf@mhpgroup.com .
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/Catherine
Executive Chapman Mike Bell/Ed Allsopp
Chris Belsham, Chief Executive
Designate
NWF Group plc MHP Group Peel Hunt LLP
(Nominated Advisor
and Broker)
Tel: 01829 260 260 Tel: 020 3128 8339 Tel: 020 7418 8900
Chair's statement
Overview
I am pleased to report another year of significant progress for
the Group, exceeding the market expectations that were established
at the start of the financial year. In a year with significant
challenges from inflationary pressures and the cost-of-living
crisis, it has been particularly positive to deliver strong
performances from all three divisions.
As a consequence of the continued progress achieved, the Group's
strong cash generation and the growing confidence in the Group's
future prospects, the Board is recommending a final dividend of
6.8p per share, to be paid to shareholders on 8 December 2023
(2022: 6.5p), giving a total dividend of 7.8p per share (2022:
7.5p), which represents a 4.0% increase on the prior year. This is
the twelfth year that the Group has increased the dividend,
highlighting continual sustained improvements in performance.
Our business
NWF is a specialist distributor delivering fuel, food and feed
across the UK. Each of our trading divisions has scale and good
market position and is profitable and cash generative. Each
division trades under different brands with their own brand
architecture as follows:
Fuels NWF Fuels (including a number of local sub-brands)
Food Boughey
Feeds NWF Agriculture, SC Feeds, New Breed and Jim Peet
Key areas of focus for the Board in 2023 were:
Responding proactively to market conditions
The Group has responded well to challenging market conditions
throughout the year. Inflation has been one of the most significant
challenges and as a specialist distributor it is critical that we
operate efficiently, provide a high level of service and
effectively pass through inflationary costs, which all divisions
have achieved. The UK experienced localised shortages for fuel
supplies, particularly in the autumn and winter months. We have
been able to mitigate this through our national supply agreements
and the ability to move fuel around the country, demonstrating the
value of our depot network, to ensure we maintained service to our
customers. The cost-of-living crisis impacted consumers and we
expect some of the volume decline in heating oil was a result of
consumers trying to use less energy, albeit the majority of the
volume reduction was a consequence of the mild winter. Volume in
Food and Feeds was not impacted by the market conditions as the
demand for ambient groceries was robust as was the case for milk
and dairy products, which are basic necessities.
Delivering on strategy
The Group has a clearly articulated strategy which has a focus
on expanding the Fuels depot network through acquisitions,
consolidating a fragmented market. Two acquisitions have been
completed in the last twelve months and there is a strong and
active pipeline of opportunities. In Food, following the successful
expansion with the Crewe warehouse, we continue to evaluate the
opportunities to further expand our business with additional
warehousing space backed by customer contracts. In Feeds we are
focused on developing nutritionists through the NWF Academy who can
increase volumes and utilise our national operations platform.
Cash generation
Cash generation remains a focus for the Group and it is good to
report a strong year-end net cash balance of GBP16.3 million
(excluding lease liabilities), which highlights both the cash
generative nature of our business and the capability and
flexibility to finance growth investment opportunities.
Rewarding good service
The consistent focus on excellence in customer service has been
critical across the Group to win new business and ensure we can
pass on inflationary cost increases as a specialist
distributor.
ESG framework
The Board recognises the importance and value of ESG. We have
established a target of net zero by 2040 and continued the focus on
our four sustainability pillars across the Group. An executive
steering committee meets regularly, reviewing detailed performance
measures. A key development in the year has been the completion of
our first TCFD disclosures, in compliance with The Companies
(Strategic Report) (Climate-related Financial Disclosure)
Regulations 2022, Sections 414C, 414CA and 414CB of the Companies
Act 2006, to place requirements on certain publicly quoted
companies and large private companies to incorporate TCFD-aligned
climate disclosures in their annual reports.
We continue to adopt the Quoted Companies Alliance Corporate
Governance Code ('the QCA Code') which we believe has been
constructed in a simple, practical and effective style and that
meaningful compliance with its ten main principles should provide
shareholders with confidence in how the Group operates.
Employees
The Group continues to employ more than 1,300 people across our
three divisions and Head Office. I would like to offer my personal
thanks to all our employees for their outstanding efforts and
commitment to the Group over the last year.
Board changes
Richard Whiting, CEO, has informed the Board of his plan to
retire from NWF in March 2024 after leading the Group successfully
for the last 15 years. We are pleased to announce Chris Belsham,
will succeed Richard as CEO from March 2024 as part of a managed
succession plan and will, from today, become Chief Executive
Designate. Katie Shortland, currently Finance & Transformation
Director at Midland Expressway Ltd, will join the Board as Chief
Financial Officer in October 2023. I will continue to lead the
Group as Chair through this important transitionary period until
the AGM of 2024.
I look forward to updating shareholders on the Group's
continuing progress at the time of the Annual General Meeting on 28
September 2023.
Philip Acton
Chair
1 August 2023
Business and financial review
NWF has delivered another great result, significantly ahead of
the market expectations at the start of our financial year. The
three divisions have performed ahead of expectations in the year in
spite of inflationary and cost-of-living challenges. Strategic
growth has been delivered with the completion of two fuel
acquisitions.
The continued focus on cash and very strong profit performance
has increased the year end net cash position (excluding lease
liabilities), which both demonstrates the ongoing cash-generative
nature of our business and the ability to fund acquisitions and
development. In line with our established progressive dividend
policy, we are proposing an increased dividend as part of our
continuing focus on driving shareholder returns.
Fuels delivered a significant performance in the year in spite
of lower demand for heating oil as a consequence of a mild winter
and consumers looking to minimise expenditure on energy, given
higher prices. During the autumn and winter there were localised
supply issues which were to our benefit as we have national supply
agreements and are able to move fuel effectively across the
country, demonstrating the value of our depot network, to meet our
customers' needs. This delivered higher than normal returns in the
financial year and reflects the flexibility and strong operating
model of the business.
The Food division delivered another year of strong performance
improvement, ahead of our expectations. The result was delivered
through an increased number of outloads of our customers' products
and ancillary backloads, along with fully utilising the warehouse
infrastructure with improved operating efficiencies. New business
has been won and we are currently utilising overflow warehousing to
manage this higher level of storage demand.
Feeds has delivered an outstanding year as a result of a number
of positive factors. The record high milk price for our dairy
farmers has driven an increased focus on nutritional advice to
deliver additional volumes for our customers. This has required the
use of higher value and added value products which supported
performance. In addition, in the summer months of 2022, gains were
made on higher feed prices, having purchased commodities earlier in
the year at lower prices before the Ukraine conflict started.
The Group delivered headline operating profit of GBP21.0 million
(2022: GBP21.8 million) and headline profit before tax of GBP19.6
million (2022: GBP20.9 million). Operating profit was GBP20.6
million (2022: GBP13.2 million). Diluted headline earnings per
share was 31.4p (2022: 34.8p).
Cash management remains strong with net cash of GBP16.3 million
(2022: net cash of GBP9.0 million) excluding lease liabilities,
after GBP2.1 million of net capital expenditure (2022: GBP3.2
million).
Fuels
Fuels' resilient performance was delivered by meeting customers'
needs through a period of continued significant price volatility
and some localised shortages of fuels, particularly during the
autumn and winter period as the UK moved away from using oil from
Russia. We were able to maintain a good service level across all 27
fuel depots as a result of national agreements across a number of
refineries and fuels terminals and the ability to move fuel across
the country to areas of shortages which drove higher returns. The
relatively mild winter reduced demand for heating oil along with
the cost-of-living crisis leading consumers to try and use less to
offset higher prices. Heating oil remained a lower cost source of
home heating in comparison to natural gas, the price of which was
capped during the period.
Volumes declined by 4.1% to 636 million litres (2022: 663
million litres). Revenue increased by 21.9% to GBP757.2 million
(2022: GBP621.1 million) as a consequence of higher oil prices, an
increased diesel mix of fuel as a result of the mild winter and
duty changes to gas oil implemented in April 2022. The average
Brent Crude oil price in the year was $90 per barrel compared to
$87 per barrel in the prior year. The volatility during the year
was significant with a high of $124 per barrel in June 2022 and a
low of $74 per barrel in May 2023.
Headline operating profit was GBP12.9 million (2022: GBP17.2
million) as a consequence of higher returns arising from supply
concerns and pricing volatility which results in a net profit of
2.0 pence per litre, higher than expected. The prior year had
one-off gains as a result of shortages and volatility from the
start of the Ukraine conflict which was reported on last year.
Two acquisitions have been completed in the last twelve months.
Sweetfuels (Oxfordshire) was acquired in December 2022 for GBP10.0
million (on a cash free/debt free basis with a normal level of
working capital) and Geoff Boorman Fuels (Kent) for GBP2.6 million
in July 2023. These accretive acquisitions add 39 million litres of
fuel to our business in a full year. The acquisition pipeline of
opportunities is healthy and this remains a focus for our
development activity. We have a proven post-acquisition integration
plan, retaining the local brand and customer facing parts of the
business and centralising finance, IT, procurement and credit
control.
The Fuels division operates on a decentralised model with depot
management teams focused on optimising performance for the specific
conditions of their local markets. This model supported our ability
to respond swiftly and effectively to the increased consumer demand
and significant commodity price volatility. We continue to believe
that our model is the most effective way to maximise performance,
given the industry structure, but we also believe there are
opportunities to leverage benefits from the breadth of our growing
network. As such, we continue to invest in enhancing systems and
capabilities for the Fuels division which we believe will improve
efficiencies and provide a strong platform for continued
growth.
With over 100,000 customers (2022: 109,000) being supplied
across 27 fuel depots in the year (2022: 25), Fuels operates in
large and robust markets and, as a business, it has consistently
proved it can effectively manage the impact of volatility in oil
prices. The industry remains highly fragmented, with many small
operators, which provides NWF with further opportunities to
consolidate the market and increase its market share.
Food
Food delivered a strong performance improvement as a result of
increased outloads and associated backhaul work, fully utilised
warehouses throughout the year and improved efficiency levels.
Delivering a high level of service and operating efficiently has
supported the division in both passing through inflationary cost
increases and winning additional business from existing and new
customers in the year. Labour turnover has reduced and we are fully
resourced for both drivers and warehouse staff. A focus of the team
has been on non-financial initiatives including healthcare and
wellbeing to improve retention levels.
Revenue increased by 13.3% to GBP70.9 million (2022: GBP62.6
million). Storage overall was at an average of 122,000 pallets
(2022: 118,000 pallets), with warehouses effectively utilised
across the year. Demand for our customers' products increased in
spite of the cost-of-living crisis. Retailers have reported stable
demand for ambient grocery and demand has particularly increased
from the discounters winning business from the higher priced
retailers. Outloads were 7% higher than prior year whilst storage
levels were up 3%, highlighting a positive overall increase in the
stock turn of our customers' products.
New business has been gained from existing and new accounts to
the extent that overflow warehousing is being utilised over the
summer peak period. We continue to evaluate opportunities to
further expand the warehouse base backed by customer contracts.
Headline operating profit was GBP4.2 million (2022: GBP2.8
million). Whilst the packing room increased activity strongly in
the year and e-fulfilment was stable, it was not sufficient to
offset a reduction in Palletline contribution which suffered as
hauliers used their own vehicles more as a result of lower overall
economic activity and reduced network throughput.
Demand for our customers' products continues to be stable and
the outlook for most product categories handled by the business is
resilient. The business operates in a competitive supply chain and
needs to continually demonstrate the value and service that it
provides to food manufacturers and importers. We have a leading
position in consolidating ambient grocery products in the North
West, with high service levels, industry leading systems and a
consistent operating performance being the key components of its
customer proposition.
Feeds
Feeds is focused on providing nutritional advice and on-time
deliveries of animal feed to farmers across the country. Total feed
volume decreased by 2.7% to 514,000 tonnes (2022: 528,000 tonnes).
This reduction was marginally lower than the overall market and
resulted from a mild autumn and a later transition to indoor
housing for dairy herds.
Commodity prices were extremely volatile during the year. In
comparison to prior year, a basket of commodities was 5% higher
overall, but from the start of the year to the end in May 2023 they
fell 27%. This volatility has in part been driven by uncertainty
around the Ukraine conflict and its material impact on agricultural
commodity markets.
Revenue was higher at GBP225.8 million (2022: GBP194.9 million)
reflecting the higher feed prices more than offsetting lower
volumes in the year. Headline operating profit was GBP3.9 million
(2022: GBP1.8 million). The outstanding performance improvement has
been driven by farmers utilising nutritional advice to optimise
diets and added value products to benefit from a record high milk
price. In addition, the division benefitted from commodities
purchased prior to the Ukraine conflict being utilised over the
summer period when feed prices had increased.
We have continued investment in the NWF Academy in which new
trainees engage on an 18-month structured training programme to
become future NWF nutritionists. The Academy has recruited a fourth
group to the programme, which has been well received across the
industry. Graduates of the programme are now developing as
successful nutritionists in our national sales team.
Milk prices in the UK increased to a record of 51.6 pence per
litre in December 2022, supporting farming customers' higher feed,
energy and labour costs. The average price for the year of 46.5p
per litre compared to an average in the prior year of 34.4p per
litre. At the end of the financial year the milk price had fallen
to below 40p per litre. Milk production was 0.8% higher at 12.4
billion litres (2022: 12.3 billion litres).
Feeds has a very broad customer base, working with over 4,000
farmers across the UK. This base, and the underlying robust demand
for milk and dairy products, results in a reasonably stable overall
demand for our feed in most market conditions.
Outlook
In Fuels, we have a proven depot-based operating model and a
clear growth strategy to consolidate a fragmented fuels
distribution market. With a strong pipeline, acquisitions are being
actively pursued and the opportunity for growth remains
significant.
In Food, we are targeting additional business to support our
ambition to expand our warehouse and transport operations and
leverage our team's capability.
In Feeds, with commodity prices remaining volatile but farmers
supported by a good milk price, demand is anticipated to remain
solid and we are seeking volume growth on the back of our Academy,
additions to the sales team and utilising an effective national
operations platform.
The Group has again demonstrated its capability to deliver a
very strong performance and has great resilience. With a positive
cash position, long term funding in place and the cash-generative
capability of the Group we will continue to consider acquisition
opportunities, building on our successful track record of acquiring
and integrating businesses, as well as investment in organic
development.
Performance to date in the current financial year has been in
line with the Board's expectations. Overall, the Board continues to
remain confident about the Group's prospects.
Group results
For the year ended 31 May 2023
2023 2022
GBPm GBPm
------------------------------------------------------- --------- -------
Revenue 1,053.9 878.6
Cost of sales and administrative expenses (1,032.9) (865.4)
------------------------------------------------------- --------- -------
Headline operating profit(1) 21.0 21.8
Exceptional items - (8.3)
Amortisation of acquired intangibles (0.4) (0.3)
------------------------------------------------------- --------- -------
Operating profit 20.6 13.2
Financing costs (1.7) (1.2)
------------------------------------------------------- --------- -------
Headline profit before tax(1) 19.6 20.9
Exceptional items - (8.3)
Amortisation of acquired intangibles (0.4) (0.3)
Net finance cost in respect of defined benefit pension
scheme (0.3) (0.3)
------------------------------------------------------- --------- -------
Profit before taxation 18.9 12.0
Income tax expense (4.0) (3.6)
------------------------------------------------------- --------- -------
Profit for the year 14.9 8.4
------------------------------------------------------- --------- -------
Headline EPS(1) 31.4 35.0p
------------------------------------------------------- --------- -------
Diluted headline EPS(1) 31.3 34.8p
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Dividend per share 7.8 7.5p
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Headline dividend cover (1) 4.0 4.6
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Headline interest cover 26.3 54.5
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1 Headline operating profit is statutory operating profit of
GBP20.6 million (2022: GBP13.2 million) before exceptional items of
GBPNil (2022: GBP8.3 million) and amortisation of acquired
intangibles of GBP0.4 million (2022: GBP0.3 million). Headline
profit before taxation is statutory profit before taxation of
GBP18.9 million (2022: GBP12.0 million) after adding back the net
finance cost in respect of the Group's defined benefit pension
scheme of GBP0.3 million (2022: GBP0.3 million), the exceptional
items and amortisation of acquired intangibles. Headline EPS also
takes into account the taxation effect thereon. Headline dividend
cover is calculated using diluted headline EPS.
Group revenue increased by 20.0% to GBP1,053.9 million (2022:
GBP878.6 million) with revenue growth from higher commodity prices
in Fuels and Feeds and an increase in activity levels in Food.
Headline operating profit was GBP21.0 million, a decrease of 3.7%
(2022: GBP21.8 million). Operating profit increased 56.1% to
GBP20.6 million (2022: GBP13.2 million).
Financing costs increased by GBP0.5 million to GBP1.7 million
reflecting the increase in interest rates. This included the
interest on bank debt of GBP0.8 million (2022: GBP0.4 million) and
headline interest cover was 26.3x (excluding IAS 19 net pension
finance costs and IFRS 16 lease interest) (2022: 54.5x).
Headline profit before taxation decreased by 6.2% to GBP19.6
million (2022: GBP20.9 million). Profit before taxation increased
by GBP6.9 million to GBP18.9 million (2022: GBP12.0 million). There
were no exceptional items in the year (2022: GBP8.3 million).
The tax charge for the year was GBP4.0 million (2022: GBP3.6
million). The effective tax rate for the year was 21.2% (2022:
30.0%). The post-tax profit for the year was GBP14.9 million (2022:
GBP8.4 million).
The headline earnings per share of 31.4p represented a decrease
of 10.3% (2022: 35.0p); diluted headline earnings per share
decreased by 9.8% to 31.4p (2022: 34.8p). The proposed full-year
dividend per share increased by 4.0% to 7.8p which reflects the
strong performance and the Board's confidence in the prospects of
the business. The proposed dividend equates to a dividend cover
ratio of 4.0x.
The finance costs in respect of the defined benefit pension
scheme were GBP0.3 million (2022: GBP0.3 million).
Balance sheet summary
As at 31 May 2023
2023 2022
GBPm GBPm
----------------------------------------------- ------ ------
Tangible and intangible fixed assets 75.5 68.1
Right of use assets 29.1 27.5
Net working capital 2.3 5.4
Reimbursement assets 1.7 2.8
Derivative financial instruments 0.1 0.2
Net cash (excluding IFRS 16 lease liabilities) 16.3 9.0
Lease liabilities (29.8) (28.2)
Provision for liabilities (2.7) (3.8)
Current income tax liabilities (0.8) (0.4)
Deferred income tax liabilities (4.2) (3.2)
Retirement benefit obligations (9.6) (9.3)
----------------------------------------------- ------ ------
Net assets 77.9 68.1
----------------------------------------------- ------ ------
The Group increased net assets by GBP9.8 million to GBP77.9
million (2022: GBP68.1 million) reflecting a profit for the year of
GBP14.9 million (2022: GBP8.4 million), strong cash conversion and
a positive movement in working capital.
Tangible and intangible fixed assets increased by GBP7.4 million
to GBP75.5 million as at 31 May 2023 (2022: GBP68.1 million) as a
result of the acquisition of Sweetfuels Limited in Fuels. The
depreciation (excluding IFRS 16 depreciation on right of use
assets) and amortisation charges for the year to 31 May 2023 were
GBP4.8 million and GBP0.6 million respectively (2022: GBP4.6
million and GBP0.5 million respectively).
Group level ROCE (based on headline operating profit) was 28.6%
as at 31 May 2023 (2022: 30.3%).
Net working capital decreased by GBP3.1 million in the year with
all three divisions experiencing a reduction. The Group's
inventories decreased by GBP2.4 million to GBP7.4 million (2022:
GBP9.8 million) with trade and other receivables decreasing to
GBP87.4 million (2022: GBP96.2 million) and a decrease in trade and
other payables to GBP92.5 million (2022: GBP100.6 million) as oil
and commodity prices reduced.
Net cash (excluding lease liabilities) increased by GBP7.3
million to GBP16.3 million (2022: net cash GBP9.0 million), as a
result of ongoing disciplined cash management, a strong trading
performance and some short-term working capital benefits due to the
timing of the year end.
The deficit of the Group's defined benefit pension scheme
increased by GBP0.3 million to GBP9.6 million (2022: GBP9.3
million). The value of pension scheme assets decreased by GBP10.1
million to GBP29.6 million (2022: GBP39.7 million) as a result of
lower asset values. The value of the scheme liabilities decreased
by GBP9.8 million to GBP39.2 million (2022: GBP49.0 million) driven
by a significant increase in the discount rate used to calculate
the present value of the future obligations (2023: 5.35%; 2022:
3.45%). The discount rate is based on the yield available on AA
rated corporate bonds, which have increased during the year.
Cash flow and banking facilities
For the year ended 31 May 2023
2023 2022
GBPm GBPm
--------------------------------------------------------------- ------ ------
Operating cash flows before movements in working capital
and provisions 32.9 34.4
Working capital movements 4.1 (0.7)
Interest paid (1.4) (0.9)
Tax paid (3.1) (2.7)
--------------------------------------------------------------- ------ ------
Net cash generated from operating activities 32.5 30.1
--------------------------------------------------------------- ------ ------
Capital expenditure (net of receipts from disposals) (2.2) (3.2)
Acquisition of subsidiaries - cash paid (net of cash acquired) (9.5) -
Net cash used in investing activities (11.7) (3.2)
--------------------------------------------------------------- ------ ------
Net decrease in bank borrowings - (9.5)
Repayment of capital element of leases (9.9) (8.8)
Dividends paid (3.7) (3.5)
--------------------------------------------------------------- ------ ------
Net cash used in financing activities (13.6) (21.8)
--------------------------------------------------------------- ------ ------
Net increase in cash and cash equivalents 7.2 5.1
Cash and cash equivalents at beginning of year 9.1 4.0
--------------------------------------------------------------- ------ ------
Cash and cash equivalents at end of year 16.3 9.1
--------------------------------------------------------------- ------ ------
The closing net cash (excluding IFRS 16 lease liabilities) was
GBP16.3 million (2022: net cash GBP9.1 million).
The cash impact of working capital movements was a cash inflow
of GBP4.1 million. Net cash generated from operating activities and
after IFRS 16 lease payments was GBP22.6 million (2022: GBP21.3
million) representing a cash conversion ratio of 107.6% of headline
operating profit (2022: 97.7%).
Net capital expenditure in the year at GBP2.1 million (2022:
GBP3.2 million) was lower than the annual depreciation charge,
excluding IFRS 16 depreciation, of GBP4.8 million (2022: GBP4.6
million).
The Group's banking facilities, totalling GBP61.0 million, were
renewed in May 2023 and are committed through to 31 May 2026 with
the exception of the bank overdraft facility of GBP1.0 million
which is renewed annually. There remains substantial facility
headroom available to support the development of the Group. Within
the total facility of GBP61.0 million, the Group has an invoice
discounting facility, the availability of which depends on the
level of trade receivables available for refinancing and which is
subject to a maximum drawdown of GBP50.0 million. In addition, the
Group has agreed an accordion of GBP10.0 million on each of the
invoice discounting facility and the revolving credit facility. The
banking facilities are provided subject to ongoing compliance with
conventional banking covenants against which the Group has
substantial levels of headroom.
Principal risks and uncertainties
As with all businesses, the Group is affected by a number of
risks and uncertainties, some of which are beyond our control. The
principal risks and uncertainties which could have a material
adverse impact on the Group are:
-- Commodity prices and volatility in raw material prices - The
Group's Feeds and Fuels divisions operate in sectors which are
vulnerable to volatile commodity prices both for fuel and for raw
materials.
-- Transitional risks of climate change - The long-term
profitability of our current businesses is more likely to be
impacted by Government strategy and policy in relation to the
decarbonisation of the economy, rather than as a direct impact of
climate change. The view of the Board is that the main risk to the
Group is a transitional risk as the Government introduces policies
which could negatively impact the Group. There are also potential
additional costs to the Group, arising from the need to redesign
and replace infrastructure as the UK economy seeks to
decarbonise.
-- Pension scheme volatility - Increases in the ongoing deficit
associated with the Group's defined benefit pension scheme would
adversely impact on the strength of the Group's balance sheet and
could lead to an increase in cash contributions payable by the
Group.
-- Recruitment, retention and development of key people -
Recruiting and retaining the right people is crucial for the
success of the Group and its development. Furthermore, the Group is
entering a stage of transition at the Board and Senior Executive
level as a consequence of planned retirements. There is a risk
around a limited number of key Executives across the Group.
-- Infrastructure and IT systems - IT system failures or
business interruption events (such as cyber incidents) could have a
material impact on the Group's ability to operate effectively.
-- Non-compliance with legislation and regulations - The Group
operates in diverse markets and each sector has its own regulatory
and compliance frameworks which require ongoing monitoring to
ensure that the Group maintains full compliance with all
legislative and regulatory requirements. Any incident of major
injury or fatality or which results in significant environmental
damage could result in reputational or financial damage to the
Group.
-- Impact of weather on earnings volatility - The demand for
both the Fuels and Feeds divisions is impacted by weather
conditions and the severity of winter conditions, which directly
affect the short-term demand for heating oil and animal feeds. The
inherent uncertainty regarding weather conditions represents a risk
of volatility in the profitability of the Fuels and Feeds
divisions.
-- Strategic growth and change management - Significant
development of the Group is only achievable via a significant
acquisition or several smaller transactions. The current strategic
plan is focused on Fuel acquisitions, which tend to be smaller and
therefore do not represent a significant risk on an individual
basis.
Further information on the Group's mitigating actions against
risks and uncertainties will be detailed in the Annual Report.
Going concern
The Group's banking facilities, provided by NatWest Group, were
renewed on 31 May 2023 and are committed until 31 May 2026, which
provides a credit facility of GBP61.0m and includes a GBP1.0m
overdraft that is renewed annually. The Group is profitable, cash
generative, has a strong balance sheet position and a good
relationship with its lender. As at 31 May 2023 the Group had
available funds of GBP77.3 million (based on cash balances, invoice
discounting availability, RCF and overdraft facilities), against
which the Group was not utilised.
The Board has prepared cash flow forecasts for the period to 31
May 2025. Under this base case scenario, the Group is expected to
continue to have significant headroom relative to the funding
available to it and to comply with its banking covenants.
The Board has also considered a severe downside scenario based
on a significant and sustained reduction in Fuels' profitability
alongside underperformance in Food and Feeds. This downside
scenario excludes any mitigating actions that the Board would be
able to take to reduce costs. Under this scenario, 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.
Share price
The market price per share of the Company's shares at 31 May
2023 was 259.5p (31 May 2022: 220.0p) and the range of market
prices during the year was between 220.0p and 286.0p.
Richard Whiting Chris Belsham
Chief Executive Chief Executive Designate
Consolidated income statement
for the year ended 31 May 2023
2023 2022
Note GBPm GBPm
-------------------------------------------------------- ---- ------- -------
Revenue 4 1,053.9 878.6
Cost of sales (999.8) (823.3)
-------------------------------------------------------- ---- ------- -------
Gross profit 54.1 55.3
Administrative expenses (33.5) (42.1)
-------------------------------------------------------- ---- ------- -------
Headline operating profit(1) 21.0 21.8
Exceptional items 5 - (8.3)
Amortisation of acquired intangibles (0.4) (0.3)
-------------------------------------------------------- ---- ------- -------
Operating profit 4 20.6 13.2
Finance costs 6 (1.7) (1.2)
-------------------------------------------------------- ---- ------- -------
Headline profit before taxation(1) 19.6 20.9
Net finance cost in respect of the defined benefit
pension scheme (0.3) (0.3)
Exceptional items 5 - (8.3)
Amortisation of acquired intangibles (0.4) (0.3)
-------------------------------------------------------- ---- ------- -------
Profit before taxation 18.9 12.0
Income tax expense 7 (4.0) (3.6)
-------------------------------------------------------- ---- ------- -------
Profit for the year attributable to equity shareholders 14.9 8.4
-------------------------------------------------------- ---- ------- -------
Earnings per share (pence)
Basic 8 30.2 17.1
Diluted 8 30.1 17.0
-------------------------------------------------------- ---- ------- -------
Headline earnings per share (pence)(1)
Basic 8 31.4 35.0
Diluted 8 31.3 34.8
-------------------------------------------------------- ---- ------- -------
1 Headline operating profit is statutory operating profit of
GBP21.0 million (2022: GBP13.2 million) before exceptional items of
GBPNil (2022: GBP8.3 million) and amortisation of acquired
intangibles of GBP0.4 million (2022: GBP0.3 million). Headline
profit before taxation is statutory profit before taxation of
GBP18.9 million (2022: GBP12.0 million) after adding back the net
finance cost in respect of the Group's defined benefit pension
scheme of GBP0.3 million (2022: GBP0.3 million), the exceptional
items and amortisation of acquired intangibles. Headline earnings
per share also takes into account the taxation effect thereon.
The results relate to continuing operations.
Consolidated statement of comprehensive income
for the year ended 31 May 2023
2023 2022
GBPm GBPm
-------------------------------------------------------- ----- -----
Profit for the year attributable to equity shareholders 14.9 8.4
--------------------------------------------------------- ----- -----
Items that will never be reclassified to income
statement:
Remeasurement (loss)/gain on defined benefit pension
scheme (2.3) 4.0
Tax on items that will never be reclassified to
income statement 1.0 (1.0)
--------------------------------------------------------- ----- -----
Total other comprehensive (expense)/income (1.3) 3.0
--------------------------------------------------------- ----- -----
Total comprehensive income for the year 13.6 11.4
--------------------------------------------------------- ----- -----
Consolidated balance sheet
as at 31 May 2023
2023 2022
Note GBPm GBPm
--------------------------------- ---- ------- -------
Non-current assets
Property, plant and equipment 43.7 45.4
Right of use assets 29.1 27.5
Intangible assets 31.8 22.7
104.6 95.6
--------------------------------- ---- ------- -------
Current assets
Inventories 7.4 9.8
Trade and other receivables 87.4 96.2
Reimbursement assets 1.7 2.8
Cash and cash equivalents 12 16.3 9.1
Derivative financial instruments 0.2 0.4
--------------------------------- ---- ------- -------
113.0 118.3
--------------------------------- ---- ------- -------
Total assets 217.6 213.9
--------------------------------- ---- ------- -------
Current liabilities
Trade and other payables (92.5) (100.6)
Current income tax liabilities (0.8) (0.4)
Lease liabilities (9.8) (8.6)
Provisions for liabilities (1.9) (3.1)
Derivative financial instruments (0.1) (0.2)
--------------------------------- ---- ------- -------
(105.1) (112.9)
--------------------------------- ---- ------- -------
Non-current liabilities
--------------------------------- ---- ------- -------
Lease liabilities (20.0) (19.7)
Provisions for liabilities (0.8) (0.7)
Deferred income tax liabilities (4.2) (3.2)
Retirement benefit obligations 13 (9.6) (9.3)
--------------------------------- ---- ------- -------
(34.6) (32.9)
--------------------------------- ---- ------- -------
Total liabilities (139.7) (145.8)
--------------------------------- ---- ------- -------
Net assets 77.9 68.1
--------------------------------- ---- ------- -------
Equity
Share capital 10 12.4 12.3
Share premium 0.9 0.9
Retained earnings 64.6 54.9
--------------------------------- ---- ------- -------
Total equity 77.9 68.1
--------------------------------- ---- ------- -------
Consolidated statement of changes in equity
for the year ended 31 May 2023
Share Share Retained Total
capital premium earnings equity
GBPm GBPm GBPm GBPm
------------------------------------------------- ------- ------- -------- ------
Balance at 1 June 2021 12.3 0.9 46.3 59.5
------------------------------------------------- ------- ------- -------- ------
Profit for the year - - 8.4 8.4
------------------------------------------------- ------- ------- -------- ------
Items that will never be reclassified to income
statement:
Actuarial gain on defined benefit pension scheme
(note 13) - - 4.0 4.0
Tax on items that will never be reclassified
to income statement - - (1.0) (1.0)
------------------------------------------------- ------- ------- -------- ------
Total other comprehensive income - - 3.0 3.0
------------------------------------------------- ------- ------- -------- ------
Total comprehensive income for the year - - 11.4 11.4
------------------------------------------------- ------- ------- -------- ------
Transactions with owners:
Issue of shares - - - -
Dividends paid (note 9) - - (3.5) (3.5)
Value of employee services - - (0.1) (0.1)
Credit to equity for equity-settled share-based
payments - - 0.8 0.8
------------------------------------------------- ------- ------- -------- ------
Total transactions with owners - - (2.8) (2.8)
------------------------------------------------- ------- ------- -------- ------
Balance at 31 May 2022 12.3 0.9 54.9 68.1
------------------------------------------------- ------- ------- -------- ------
Profit for the year - - 14.9 14.9
------------------------------------------------- ------- ------- -------- ------
Items that will never be reclassified to income
statement:
Actuarial loss on defined benefit pension scheme
(note 13) - - (2.3) (2.3)
Tax on items that will never be reclassified
to income statement - - 1.0 1.0
------------------------------------------------- ------- ------- -------- ------
Total other comprehensive expense - - (1.3) (1.3)
------------------------------------------------- ------- ------- -------- ------
Total comprehensive income for the year - - 13.6 13.2
------------------------------------------------- ------- ------- -------- ------
Transactions with owners:
Issue of shares 0.1 - (0.1) -
Dividends paid (note 9) - - (3.7) (3.7)
Value of employee services - - (0.6) (0.6)
Credit to equity for equity-settled share-based
payments - - 0.5 0.5
------------------------------------------------- ------- ------- -------- ------
Total transactions with owners 0.1 - (3.9) (3.8)
------------------------------------------------- ------- ------- -------- ------
Balance at 31 May 2023 12.4 0.9 64.6 77.9
------------------------------------------------- ------- ------- -------- ------
Consolidated cash flow statement
for the year ended 31 May 2023
2023 2022
GBPm GBPm
--------------------------------------------------- ------ ------
Cash flows from operating activities
Profit before tax 18.9 12.0
Adjustments for:
Depreciation and amortisation 15.3 14.0
(Profit)/loss on disposal of property, plant and
equipment (0.5) -
Impairment of assets - 8.4
Finance costs 1.7 1.2
Share-based payment expense 0.5 0.8
Value of employee services (0.7) (0.1)
Fair value loss/(profit) on financial derivatives 0.1 (0.1)
Contribution to pension scheme not recognised in
income statement (2.2) (1.8)
---------------------------------------------------- ------ ------
Operating cash flows before movements in working
capital and provisions 33.1 34.4
Movements in working capital:
Decrease/(increase) in inventories 2.4 (3.2)
Decrease/(increase) in trade and other receivables 8.7 (23.9)
(Decrease)/increase in trade and other payables (7.0) 26.4
---------------------------------------------------- ------ ------
Net cash generated from operations 37.0 33.7
Interest paid (1.4) (0.9)
Income tax paid (3.1) (2.7)
---------------------------------------------------- ------ ------
Net cash generated from operating activities 32.5 30.1
---------------------------------------------------- ------ ------
Cash flows used in investing activities
Purchase of intangible assets (0.1) (0.2)
Purchase of property, plant and equipment (3.1) (3.4)
Acquisition of subsidiaries - cash paid (net of
cash acquired) (9.5) -
Proceeds on sale of property, plant and equipment 1.0 0.4
---------------------------------------------------- ------ ------
Net cash used in investing activities (11.7) (3.2)
---------------------------------------------------- ------ ------
Cash flows used in financing activities
Decrease in bank borrowings - (9.5)
Capital element of finance leases (9.9) (8.8)
Dividends paid (3.7) (3.5)
---------------------------------------------------- ------ ------
Net cash used in financing activities (13.6) (21.8)
---------------------------------------------------- ------ ------
Net increase in cash and cash equivalents 7.2 5.1
Cash and cash equivalents at beginning of year 9.1 4.0
---------------------------------------------------- ------ ------
Cash and cash equivalents at end of year 16.3 9.1
---------------------------------------------------- ------ ------
Notes to the Group financial statements
for the year ended 31 May 2023
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 principal activities of NWF Group plc and
its subsidiaries (together 'the Group') are the sale and
distribution of fuel oils, the warehousing and distribution of
ambient groceries and the manufacture and sale of animal feeds.
Further information on the nature of the Group's operations and
principal activities is set out in the Group financial
statements.
The address of the Company's 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.
2. Significant accounting policies
The Group's principal accounting policies are set out below.
Basis of preparation
On 31 December 2020, IFRS as adopted by the European Union at
that date were brought into UK law and became UK-adopted
International Accounting Standards, with future changes being
subject to endorsement by the UK endorsement Board. The Group
transitioned to the UK-adopted International Accounting Standards
in the Group financial statements on 1 June 2021. This change
constitutes a change in accounting framework. However, there is no
impact recognition, measurement or disclosure in the period
reported as a result of the change in framework. The Group
financial statements have been prepared in accordance with
UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 applicable to companies
reporting under those standards. The Group financial statements
have been prepared on the going concern basis and on the historical
cost convention modified for the revaluation of certain financial
instruments.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates, which
are outlined in note 14 below. It also requires management to
exercise its judgement in the process of applying the Group's
accounting policies. The accounting policies have been applied
consistently throughout the period, other than where new policies
have been adopted.
Going concern
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 2025. Under this base case scenario, the Group is expected to
continue to have significant headroom relative to the funding
available to it and to comply with its banking covenants.
The Board has also considered a severe downside scenario based
on a significant and sustained reduction in Fuels' profitability
alongside underperformance in Food and Feeds. This downside
scenario excludes any mitigating actions that the Board would be
able to take to reduce costs. Under this scenario, the Group would
still expect to have sufficient headroom in its financing
facilities.
The Group's banking facilities, provided by NatWest Group, were
renewed on 31 May 2023 and are committed until 31 May 2026, which
provides a credit facility of GBP61.0m and includes a GBP1.0m
overdraft that is renewed annually. The Group is profitable, cash
generative, has a strong balance sheet position and a good
relationship with its lender. As at 31 May 2023 the Group had
available funds of GBP77.3 million (based on cash balances, invoice
discounting availability, RCF and overdraft facilities), against
which the Group was not utilised.
The Group therefore continues to adopt the going concern basis
of accounting in preparing the annual financial statements.
Alternative performance measures ('APMs')
The Directors consider that headline operating profit, headline
profit before taxation, headline EBITDA, headline ROCE and headline
earnings per share measures, referred to in these Group 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, exceptional items and
amortisation of acquired intangibles, to show the underlying
performance of the Group.
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.
Headline ROCE refers to the return on capital employed
calculated as headline operating profit as a proportion of year end
net assets.
The calculation of headline earnings includes any exceptional
impact of remeasuring deferred tax balances. The calculations of
basic and diluted headline earnings per share are shown in note
8.
Exceptional items
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, cyber-related costs,
impairment of assets and income from legal or insurance
settlements. In determining whether an item should be disclosed as
an exceptional item, the Directors consider quantitative as well as
qualitative 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.
Forward-looking statements
Certain statements in this results announcement 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
events could differ materially from those expressed or implied by
these forward-looking statements.
Adoption of new and revised standards
The following new standards, amendments to standards or
interpretations are mandatory for the first time for the financial
year beginning 1 June 2022.
The Company has adopted the following new standards, amendments
and interpretations now applicable. None of these standards and
interpretations have had any material effect on the Company's
results or net assets.
Applicable for
financial year
Standard or interpretation Content beginning on
-------------------------- ------------------- ---------------
IFRS 4 Insurance Contracts 1 June 2022
-------------------------- ------------------- ---------------
The following standards, amendments and interpretations are not
yet effective and have not been adopted early by the Company:
Applicable for
financial year
Standard or interpretation Content beginning on
-------------------------- ------------------------------------ ---------------
Amendments to IAS
1 Presentation of Financial Statements 1 June 2023
Amendments to IAS
8 Accounting Policies 1 June 2023
Amendments to IAS
12 Income Taxes 1 June 2023
Amendments to IFRS
17 Insurance Contracts 1 June 2023
IFRS Practice Statement
2 Making Materiality Judgements 1 June 2023
Amendments to IFRS
16 Leases on sale and leaseback 1 June 2024
-------------------------- ------------------------------------ ---------------
These standards are not expected to have a material impact on
the Company in the current or future reporting periods and on
foreseeable future transactions.
3. Group Annual Report and statutory accounts
The financial information set out above does not constitute the
Group's statutory accounts for the years ended 31 May 2023 or 31
May 2022, but is derived from those accounts.
Statutory accounts for 2022 have been delivered to the Registrar
of Companies. The auditors, PricewaterhouseCoopers LLP, have
reported on the 2022 accounts; the report (i) was unqualified, (ii)
did not include a reference to any matters to which the auditors
drew attention by way of emphasis without qualifying their report,
and (iii) did not contain a statement under Section 498(2) or (3)
of the Companies Act 2006.
The statutory accounts for 2023 will be delivered to the
Registrar of Companies following the Annual General Meeting. The
auditors, PricewaterhouseCoopers LLP, have reported on these
accounts and their report is unqualified, does not include a
reference to any matters to which the auditors drew attention by
way of emphasis without qualifying their report and does not
include a statement under either Section 498(2) or (3) of the
Companies Act 2006.
The Annual Report and full financial statements will be posted
to shareholders during the week commencing 14 August 2023. Further
copies will be available to the public, free of charge, from the
Company's Registered Office at NWF Group plc, Wardle, Cheshire CW5
6BP, or can be viewed on the Company's website: www.nwf.co.uk.
4. 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 products/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 is 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 operating profit ('headline operating
profit'). Finance income and costs are not included in the segment
result that is 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 at
bank and in hand. Segment liabilities exclude taxation, borrowings
and retirement benefit obligations. Excluded items are part of the
reconciliation to consolidated total assets and liabilities.
Fuels Food Feeds Group
2023 GBPm GBPm GBPm GBPm
---------------------------------------------- ----- ---- ----- ------
Revenue
Total revenue 765.0 70.9 225.8 1061.7
Inter-segment revenue (7.8) - - (7.8)
---------------------------------------------- ----- ---- ----- ------
Revenue 757.2 70.9 225.8 1053.9
---------------------------------------------- ----- ---- ----- ------
Result
Headline operating profit 12.9 4.2 3.9 21.0
---------------------------------------------- ----- ---- -----
Amortisation of acquired intangibles (0.4) - - (0.4)
------
Operating profit as reported 20.6
Finance costs (note 7) (1.7)
------
Profit before taxation 18.9
Income tax expense (note 8) (4.0)
---------------------------------------------- ----- ---- ----- ------
Profit for the year 14.9
---------------------------------------------- ----- ---- ----- ------
Other information
Depreciation and amortisation 6.0 6.3 3.0 15.3
Property, plant and equipment additions (note
12) 0.7 1.1 1.3 3.1
---------------------------------------------- ----- ---- ----- ------
Fuels Food Feeds Group
2023 GBPm GBPm GBPm GBPm
------------------------------------------ ------ ------ ------ -------
Balance sheet
Assets
Segment assets 101.9 50.0 49.4 201.3
------------------------------------------ ------ ------ ------
Cash and cash equivalents (note 18) 16.3
------------------------------------------ ------ ------ ------ -------
Consolidated total assets 217.6
------------------------------------------ ------ ------ ------ -------
Liabilities
Segment liabilities (78.0) (23.2) (24.9) (125.1)
------------------------------------------ ------ ------ ------
Deferred income tax liabilities (note 24) (4.2)
Current income tax liabilities (0.8)
Retirement benefit obligations (note 26) (9.6)
------------------------------------------ ------ ------ ------ -------
Consolidated total liabilities (139.7)
------------------------------------------ ------ ------ ------ -------
Fuels Food Feeds Group
2022 GBPm GBPm GBPm GBPm
---------------------------------------- ----- ----- ----- -----
Revenue
Total revenue 628.9 62.7 194.9 886.5
Inter-segment revenue (7.8) (0.1) - (7.9)
---------------------------------------- ----- ----- ----- -----
Revenue 621.1 62.6 194.9 878.6
---------------------------------------- ----- ----- ----- -----
Result
Headline operating profit 17.2 2.8 1.8 21.8
---------------------------------------- ----- ----- ----- -----
Segment exceptional item (note 5) - - (8.4) (8.4)
Group exceptional item (note 5) 0.1
Amortisation of acquired intangibles (0.3) - - (0.3)
-----
Operating profit as reported 13.2
Finance costs (note 6) (1.2)
-----
Profit before taxation 12.0
Income tax expense (note 7) (3.6)
---------------------------------------- ----- ----- ----- -----
Profit for the year 8.4
---------------------------------------- ----- ----- ----- -----
Other information
Depreciation and amortisation 5.2 5.9 2.9 14.0
Property, plant and equipment additions 0.9 1.1 1.4 3.4
---------------------------------------- ----- ----- ----- -----
Fuels Food Feeds Group
2022 GBPm GBPm GBPm GBPm
----------------------------------------- ------ ------ ------ -------
Balance sheet
Assets
Segment assets 106.5 48.3 50.0 204.8
----------------------------------------- ------ ------ ------ -------
Cash and cash equivalents 9.1
Consolidated total assets 213.9
----------------------------------------- ------ ------ ------ -------
Liabilities
Segment liabilities (88.7) (20.1) (24.1) (132.9)
----------------------------------------- ------ ------ ------ -------
Deferred income tax liabilities (3.2)
Current income tax liabilities (0.4)
Retirement benefit obligations (note 13) (9.3)
----------------------------------------- ------ ------ ------ -------
Consolidated total liabilities (145.8)
----------------------------------------- ------ ------ ------ -------
5. Profit before taxation - exceptional items
A net exceptional cost of GBPNil (2022: GBP8.3 million) is
included in administrative expenses. Exceptional items by type are
as follows:
2023 2022
GBPm GBPm
--------------------------------------------------- ---- -----
Impairment of goodwill and other intangible assets - 7.9
Impairment of property, plant and equipment - 0.5
Insurance reclaim credit - (0.1)
--------------------------------------------------- ---- -----
Net exceptional cost - 8.3
--------------------------------------------------- ---- -----
6. Finance costs
2023 2022
GBPm GBPm
------------------------------------------------------- ---- ----
Interest on bank loans and overdrafts 0.8 0.4
Finance costs on lease liabilities relating to IFRS 16 0.6 0.5
------------------------------------------------------- ---- ----
Total interest expense 1.4 0.9
Net finance cost in respect of defined benefit pension
schemes (note 13) 0.3 0.3
------------------------------------------------------- ---- ----
Total finance costs 1.7 1.2
------------------------------------------------------- ---- ----
7. Income tax expense
2023 2022
GBPm GBPm
-------------------------------------------------- ----- -----
Current tax
UK corporation tax on profits for the year 3.8 3.8
Adjustments in respect of prior years - (0.1)
-------------------------------------------------- ----- -----
Current tax expense 3.8 3.7
-------------------------------------------------- ----- -----
Deferred tax
Origination and reversal of temporary differences 0.4 (0.1)
Adjustments in respect of prior years (0.3) -
Effect of increased tax rate on opening balances 0.1 -
-------------------------------------------------- ----- -----
Deferred tax expense 0.2 (0.1)
-------------------------------------------------- ----- -----
Total income tax expense 4.0 3.6
-------------------------------------------------- ----- -----
During the year ended 31 May 2023, corporation tax has been
calculated at 20% of estimated assessable profits for the year
(2022: 19%).
The tax charge for the year can be reconciled to the profit per
the income statement as follows:
2023 2022
GBPm GBPm
------------------------------------------------------- ----- -----
Profit before taxation 18.9 12.0
------------------------------------------------------- ----- -----
Profit before taxation multiplied by the standard rate
of UK corporation tax of 20% (2022: 19%) 3.8 2.3
Effects of:
- expenses not deductible for tax purposes 0.4 1.7
- super-deduction allowance (0.1) (0.1)
- impact of share-based payments 0.1 (0.2)
- impact of increased tax rate on opening balances 0.1 -
- adjustments in respect of prior years (0.3) (0.1)
------------------------------------------------------- ----- -----
Total income tax expense 4.0 3.6
------------------------------------------------------- ----- -----
A net GBP0.5 million has been recognised in Other Comprehensive
Income, relating to a GBP0.1 million debit to equity arising on the
movement within the deferred tax provision (2022: GBP1.4 million)
offset with a movement in current tax of a credit of GBP0.4 million
(2022: GBP0.4 million).
The tax charge in the current year is higher than the standard
tax charge as a result of the level of the Group's disallowable
expenses, which are largely related to acquisition expenses.
8. Earnings per share
The calculation of basic and diluted earnings per share is based
on the following data:
2023 2022
------------------------------------------------------------ ------ ------
Earnings (GBPm)
Earnings for the purposes of basic and diluted earnings
per share being profit for the year attributable to equity
shareholders 14.9 8.4
------------------------------------------------------------ ------ ------
Number of shares ('000)
Weighted average number of shares for the purposes of
basic earnings per share 49,355 49,109
Weighted average dilutive effect of conditional share
awards 196 299
------------------------------------------------------------ ------ ------
Weighted average number of shares for the purposes of
diluted earnings per share 49,551 49,408
------------------------------------------------------------ ------ ------
Earnings per ordinary share (pence)
Basic earnings per ordinary share 30.2 17.1
Diluted earnings per ordinary share 30.1 17.0
------------------------------------------------------------ ------ ------
Headline earnings per ordinary share (pence)
Basic headline earnings per ordinary share 31.4 35.0
Diluted headline earnings per ordinary share 31.3 34.8
------------------------------------------------------------ ------ ------
The calculation of basic and diluted headline earnings per share
is based on the following data:
2023 2022
GBPm GBPm
-------------------------------------------------------- ----- -----
Profit for the year attributable to equity shareholders 14.9 8.4
Add back/(deduct):
Net finance cost in respect of defined benefit pension
scheme 0.3 0.3
Exceptional items - 8.3
Amortisation of acquired intangibles 0.4 0.3
Tax effect of the above (0.1) (0.1)
-------------------------------------------------------- ----- -----
Headline earnings 15.5 17.2
-------------------------------------------------------- ----- -----
9. Dividends paid
2023 2022
GBPm GBPm
----------------------------------------------------------- ---- ----
Final dividend for the year ended 31 May 2022 of 6.5p
(2021: 6.2p) per share 3.2 3.0
Interim dividend for the year ended 31 May 2023 of 1.0p
(2022: 1.0p) per share 0.5 0.5
----------------------------------------------------------- ---- ----
Amounts recognised as distributions to equity shareholders
in the year 3.7 3.5
----------------------------------------------------------- ---- ----
Proposed final dividend for the year ended 31 May 2023
of 6.8p (2022: 6.5p) per share 3.4 3.2
----------------------------------------------------------- ---- ----
The proposed final dividend is subject to approval at the AGM on
28 September 2023 and has not been included as a liability in these
Group financial statements.
10. Share capital
Number
of shares Total
'000 GBPm
----------------------------------------------------- --------- -----
Allotted and fully paid: ordinary shares of 25p each
Balance at 1 June 2021 49,004 12.3
Issue of shares (see below) 130 -
----------------------------------------------------- --------- -----
Balance at 31 May 2022 49,134 12.3
Issue of shares (see below) 274 0.1
----------------------------------------------------- --------- -----
Balance at 31 May 2023 49,408 12.4
----------------------------------------------------- --------- -----
During the year ended 31 May 2023, 273,800 shares (2022: 130,198
shares) with an aggregate nominal value of GBP68,450 (2022:
GBP32,550) were issued under the Group's conditional Performance
Share Plan.
The maximum total number of ordinary shares, which may vest in
the future in respect of conditional Performance Share Plan awards
outstanding at 31 May 2023, amounted to 1,202,049 (31 May 2022:
1,386,289). These shares will only be issued subject to satisfying
certain performance criteria.
11. Business combinations
On 21 December 2022, the Group acquired 100% of the share
capital of Sweetfuels Limited, a 20 million litre fuel distributor
based in Faringdon in Oxfordshire. The headline purchase price for
the acquisition was GBP10.0 million on a cash and debt free basis
and before excess cash and acquisition costs. The total
consideration paid was GBP14.3 million, after adjusting the
purchase price for cash acquired and the normalisation of working
capital. The net consideration paid was GBP10.2 million after
adjusting for cash acquired and acquisition expenses.
Details of the total consideration and the provisional fair
values of the assets and liabilities acquired are shown below:
Fair
value
of assets
acquired
GBPm
------------------------------------------- ----------
Intangible assets - Goodwill 6.5
Intangible assets - Brand 0.8
Intangible assets - Customer relationships 2.3
Property, plant and equipment 0.5
Stock 0.2
Trade and other receivables 2.5
Cash 4.8
Trade and other payables (1.8)
Current income tax liability (0.6)
Deferred tax liability (0.9)
-------------------------------------------- ----------
14.3
------------------------------------------- ----------
Provisional goodwill of GBP6.5 million arises from the
acquisition and is attributable to the acquired business and the
expected economies of scale from combining the operations of the
Group and the acquisition. None of the goodwill is expected to be
deductible for income tax purposes.
As the acquisition was made in the year, the above amounts are
provisional and subject to adjustment.
Net cash outflow arising on the acquisition:
2023
GBPm
-------------------------------------------------- ------
Total gross consideration (14.3)
Excess cash acquired 4.8
--------------------------------------------------- ------
Net cash flow arising on completion (9.5)
Additional debt like items acquired at completion (0.5)
--------------------------------------------------- ------
Headline purchase price (10.0)
Acquisition-related costs (0.2)
--------------------------------------------------- ------
Net consideration paid (10.2)
--------------------------------------------------- ------
Acquisition-related costs of GBP0.2 million have been charged to
the income statement in the year ended 31 May 2023.
The following amounts have been recognised within the
consolidated income statement in respect of the acquisition made in
the year: revenue - GBP7.2 million, profit - GBP0.4 million.
Had the acquisition taken place at the start of the financial
year, the consolidated income statement would show: revenue -
GBP14.9 million, profit - GBP1.1 million.
In its last financial year to 31 July 2022 Sweetfuels Limited
made an operating profit of GBP1.8 million.
12. Analysis of cash and cash equivalents and reconciliation to
net debt
Other
1 June Cash non-cash 31 May
2022 flow movements 2023
GBPm GBPm GBPm GBPm
------------------------------------------- ------ ---- --------- ------
Cash and cash equivalents 9.1 7.2 - 16.3
Borrowings - - - -
Hire purchase obligations(1) (0.1) 0.1 - -
------------------------------------------- ------ ---- --------- ------
Total Group (excluding lease liabilities) 9.0 7.3 - 16.3
------------------------------------------- ------ ---- --------- ------
Lease liabilities (excluding hire purchase
obligations transferred) (28.2) 10.5 (12.1) (29.8)
------------------------------------------- ------ ---- --------- ------
Total Group (including lease liabilities) (19.2) 17.8 (12.1) (13.5)
------------------------------------------- ------ ---- --------- ------
(1) Following the adoption of IFRS 16 'Leases', hire purchase
obligations are now recognised within lease liabilities, shown here
for comparative purposes only.
13. Retirement benefit obligations
The Group operates a defined benefit pension scheme providing
benefits based on final pensionable earnings, which is closed to
future accrual.
NWF Group Benefits Scheme
The scheme is administered by a fund that is legally separated
from the Group. The trustees of the pension fund are required by
law to act in the interest of the fund and of all relevant
stakeholders in the scheme. The trustees are responsible for the
investment policy with regard to the assets of the fund.
The scheme was closed to new members during the year ended 31
May 2002 and closed to future accrual with effect from April
2016.
The triennial actuarial valuation of this scheme was completed
in the year ended 31 May 2021, with a deficit of GBP16.8 million at
the valuation date of 31 December 2019. The present value of the
defined benefit obligation and the related current service cost
were measured using the Projected Unit Credit Method. In these
financial statements this liability has been updated in order to
derive the IAS 19R valuation as of 31 May 2022. The next full
triennial valuation will be completed in the year ending 31 May
2024.
The triennial valuation resulted in Group contributions of
GBP2.1 million per annum, including recovery plan payments of
GBP1.8 million 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 amounts recognised in the balance sheet in respect of the
defined benefit scheme are as follows:
2023 2022
GBPm GBPm
------------------------------------------------------- ------ ------
Present value of defined benefit obligations (39.2) (49.0)
Fair value of scheme assets 29.6 39.7
------------------------------------------------------- ------ ------
Deficit in the scheme recognised as a liability in the
balance sheet (9.6) (9.3)
Related deferred tax asset 2.4 2.3
------------------------------------------------------- ------ ------
Net pension liability (7.2) (7.0)
------------------------------------------------------- ------ ------
Changes in the present value of the defined benefit obligation
are as follows:
2023 2022
GBPm GBPm
---------------------------------------------------------------- ------ ------
At 1 June 49.0 60.0
Interest cost 1.7 1.2
Remeasurement (gains)/losses:
- actuarial gains arising from changes in financial assumptions (11.5) (10.2)
- actuarial losses/(gains) arising from changes in demographic
assumptions 0.3 (0.6)
- actuarial losses on experience assumptions 1.6 0.4
Benefits paid (1.9) (1.8)
---------------------------------------------------------------- ------ ------
At 31 May 39.2 49.0
---------------------------------------------------------------- ------ ------
Changes in the fair value of scheme assets are as follows:
2023 2022
GBPm GBPm
---------------------------------- ------ -----
At 1 June 39.7 45.1
Interest income 1.5 0.9
Remeasurement losses:
- actuarial losses on plan assets (11.9) (6.4)
Contributions by employer 2.6 2.2
Expenses (0.4) (0.3)
Benefits paid (1.9) (1.8)
---------------------------------- ------ -----
At 31 May 29.6 39.7
---------------------------------- ------ -----
14. Critical accounting estimates and judgements
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The assumptions that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are discussed below.
Defined benefit pension scheme - valuation assumptions
The balance sheet carrying values of defined benefit pension
scheme surpluses or deficits are calculated using independently
commissioned actuarial valuations. These valuations are based on a
number of assumptions, including the most appropriate mortality
rates to apply to the profile of scheme members and the financial
assumptions regarding discount rates and inflation. All of these
are estimates of future events and are therefore uncertain.
Significant actuarial assumptions for the determination of the
defined benefit liability are discount rate, price inflation and
mortality. The sensitivity analyses shown below have been
determined based on reasonably possible changes of the respective
assumptions occurring at the balance sheet dates, while holding all
other assumptions constant.
Increase Decrease
Impact on defined benefit obligation GBPm GBPm
------------------------------------------------- -------- --------
0.25% change in discount rate (1.3) 1.3
0.25% change in RPI inflation 0.9 (0.9)
One-year change in the life expectancy at age 65 1.5 (1.5)
------------------------------------------------- -------- --------
Assessment of impairment
The Group tests annually for impairment of goodwill and fixed
asset balances, which involves using key judgements including
estimates of future business performance and cash generation,
discount rates and long-term growth rates.
The recoverable amounts of CGUs are determined using value in
use calculations. The value in use calculations use post-tax cash
flow projections based on the Board-approved budget for the year
ending 31 May 2024 and four years of divisional strategic plans
thereafter. Subsequent cash flows are extrapolated using an
estimated growth rate of 2%.
These value in use calculations are subject to a series of
sensitivity analyses using reasonable assumptions concerning the
future performance of the CGUs and assessing the impact of a 1%
increase in the discount rate.
Carrying value of trade receivables
The Group holds material trade receivable balances, and the
calculations of provisions for impairment are estimates of future
events and therefore uncertain. IFRS 9 requires the Group to
consider forward-looking information and the probability of default
when calculating expected credit losses. The Group considers
reasonable and supportable customer-specific and market information
about past events, current conditions and forecasts of future
economic conditions when measuring expected credit losses.
From a completeness perspective, the Directors are not aware of
any other critical judgements within the Group that give rise to a
significant risk of material adjustment within the next financial
year.
15. Directors' responsibilities statement
The Directors are responsible for preparing the Annual Report in
accordance with applicable laws and regulations and consider that
the Annual Report, taken as a whole, is fair, balanced and
understandable and that it provides the information necessary for
shareholders to assess the Company's performance, business model
and strategy.
The Company's Annual Report for the year ended 31 May 2023,
which will be posted to shareholders on or before 16 August 2023,
contains the following statement regarding responsibility for the
Strategic Report, the Directors' Report (including the Corporate
Governance Report), the Board Report on Remuneration and the
financial statements included within the Annual Report:
Each of the Directors confirms that to the best of their
knowledge:
-- the Group financial statements, which have been prepared in
accordance with UK-adopted International Accounting Standards,
comprising FRS101 and with the requirements of the Companies Act
2006 applicable to companies reporting under those standards, give
a true and fair view of the assets, liabilities, financial position
and results of the Group;
-- the Strategic Report includes a fair review of the
development and performance of the business and the position of the
Group, together with a description of the principal risks and
uncertainties that it faces;
-- there is no relevant audit information of which the Group's
and Company's auditors are unaware; and
-- each Director has taken all the steps that they ought to have
taken as a Director to make themselves aware of any relevant audit
information and to establish that the Company's auditors are aware
of that information.
16. Post balance sheet events
On 7 July 2023, the Group acquired 100% of the trade and assets
of Geoff Boorman Fuels LLP, a 19 million litre fuel distributor
based in Edenbridge in Kent, supplying mainly domestic customers
across the South-West to the borders of Kent, Sussex and Surrey.
The net cash consideration of GBP2.6 million on a debt and cash
free basis was settled at completion.
17. Financial calendar
Annual General Meeting 28 September 2023
Dividend:
- Ex-dividend date 2 November 2023
- Record date 3 November 2023
- Payment date 8 December 2023
Announcement of half-year results Early February 2024
Publication of Interim Report Early February 2024
Interim dividend paid May 2024
Financial year end 31 May 2024
Announcement of full-year results Early August 2024
Publication of Annual Report and Accounts Late August 2024
----------------------------------------- -------------------
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END
FR BIGDRSDXDGXB
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August 01, 2023 02:00 ET (06:00 GMT)
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