RNS Number : 5487X
Nichols PLC
24 July 2024
 

24 July 2024


Nichols Plc (United Kingdom) Logo

(the "Company" or the "Group")

2024 INTERIM RESULTS

Strong first half profit performance and special dividend issued.
FY24 Adjusted PBT expected to be slightly ahead of expectations.

Nichols plc, the diversified soft drinks Group, is pleased to announce its unaudited Interim Results for the half year ended 30 June 2024 (the 'Period'), with trading during the Period continuing to progress strongly, reflecting the ongoing delivery of the Group's strategic priorities.

 

Key Financials

 


Half year ended

30 June 2024

Half year ended

30 June 2023

 

Movement

Group Revenue

£84.0m

£85.5m

-1.8%

Adjusted Operating Profit1

£13.1m

£11.5m

+14.1%

Adjusted Profit Before Tax (PBT)1

£14.5m

£12.3m

+18.0%

Operating Profit

£10.4m

£10.3m

+0.5%

Profit Before Tax (PBT)

£11.8m

£11.2m

+5.8%

Adjusted Operating Profit Margin1

15.6%

13.4%

+220bps

Adjusted PBT Margin1

17.3%

14.4%

+290bps

Operating Profit Margin

12.4%

12.1%

+30bps

PBT Margin

14.1%

13.0%

+110bps

Adjusted Earnings per Share (basic)1

29.87p

25.70p

+16.2%

Earnings per Share (basic)

24.29p

23.31p

+4.2%

Cash and Cash Equivalents

£70.3m

£56.1m

+25.2%

Free cash flow2

£9.0m

£5.4m

+65.4%

Adjusted Return on capital employed3

27.1%

25.9%

+120bps

Interim Dividend per share

14.9p

12.6p

+18.3%

Special Dividend per share

54.8p

-

-

 

Andrew Milne, Chief Executive Officer of Nichols, commented:

"I am pleased to report further strategic progress in the first half, resulting in strong double digit increases in adjusted profit before tax and adjusted earnings per share. As a result of our progress, the Board's high levels of confidence in the outlook and the strength of our balance sheet, we are pleased to announce a special dividend of 54.8p per share - which equates to a total of £20m - alongside an 18% increase in the interim dividend to 14.9p per share. This reflects a long history of strong cash flow generation and the Board's commitment to delivering attractive shareholder returns.

 

Positive trading momentum in our UK Packaged business reflected further market share gains in squash and carbonates, driven by increased marketing investment, growth from innovation, and distribution gains. Our biggest ever UK promotional campaign was launched towards the end of the Period, and we are confident this will support the continued growth of the Vimto brand over the summer.

 

Whilst mindful of continued pressure on consumer spending, despite levels of inflation stabilising, our diversified business model and the enduring strength of the Vimto brand have enabled us to deliver a strong performance. As a result, we now expect full-year profitability to be slightly ahead of current market expectations and we remain confident that Nichols is well placed to deliver its strategic growth ambitions."


Strategic highlights

 

UK Packaged

·   Strong market share growth in the UK driven by both squash and carbonate categories

·   The Vimto brand achieved its highest ever UK annual retail sales value of £109m4, reflecting increased marketing investment and growth from innovation and distribution gains

 

International Packaged

·   Strong in-market execution across the Middle East during the key Ramadan trading period

·   Commenced phased can production in Senegal, enabling us to better serve this key market in West Africa by bringing production closer to the end consumer, with benefits expected to be delivered in H2

 

Out of Home (OoH)

·   Implementation of the OoH strategic review was largely concluded in the Period, delivering significant improvements in profitability

 

 

 Financial highlights

 

·    UK Packaged revenues +5.3% to £45.4m (H1 2023: £43.1m)

-    Underpinned by volume growth of 4.9%, reflecting product innovation, distribution gains and increased marketing investment

 

·    International Packaged revenues -6.9% to £20.0m (H1 2023: £21.5m)

-    As expected, due to the timing of shipments into the Middle East and reduced volumes in Africa, given the impact of one-off launch volumes last year

-    Strong performance forecast in H2

 

·    OoH revenues -11.3% to £18.6m (H1 2023: £21.0m)

-    Reflecting the planned reduction in activity having exited several unprofitable accounts, identified as part of the OoH Strategic Review.

 

·    Group revenue declined by -1.8% to £84.0m (H1 2023: £85.5m)

 

·    Gross margin increased by +2.9ppt to 44.0% (H1 2023: 41.1%)

-    Absolute gross margin increased by £1.8m reflecting UK volume growth and pricing actions taken in FY23 to mitigate significant inflationary pressures over the last 18 months.

 

·    Adjusted profit before tax growth of +18.0% to £14.5m and adjusted operating profit growth of +14.1% to £13.1m

-    Improved gross margin together with a reduction in administrative costs as a result of implementing the OoH strategic plan.

 

·    Exceptional costs of £2.7m 

-    £2.7m charge relating to investment in the Group's new ERP system, which is progressing well.

-    £0.2m charge relating to the implementation of the OoH review, that will conclude in H2.

-    £0.2m credit relating to the recovery of costs relating to Group's historical incentive scheme.

 

·    Strong cash and cash equivalents at £70.3m (H1 2023: £56.1m, 31 December 2023: £67.0m)

-    Increased net interest receipts of £1.4m (H1 2023: £0.8m)

 

·    Interim dividend increased to 14.9p (H1 2023: 12.6p)

 

·    Special dividend of 54.8p per share equating to an aggregate of £20m to be paid with the interim dividend

 

 

Outlook

 

The Company has begun trading in Q3 positively and in line with management expectations. Reflecting the progress made in H1 and underpinned by the Group's ongoing focus on driving margin improvement, the Board now expects to report full year adjusted profit before tax slightly ahead of current market expectations.5

 

 


Notes

1  Excluding exceptional items

2 Free cash flow is the net increase in cash and cash equivalents before acquisition funding and dividends

3  Adjusted return on capital employed is the rolling 12 months' adjusted operating profit divided by the average period-end capital employed

4 Nielsen IQ RMS data for the Squash, Flavoured Carbonates, RTD Stills, Flavoured Water, and Energy categories YTD to 15.06.24 for the GB Total Coverage market  

5 FY24 expectations refers to Group compiled market consensus for FY24 adjusted PBT of £28.8m at 23 July 2024

 



Contacts:

Nichols plc

 

Andrew Milne, Chief Executive Officer

Richard Newman, Chief Financial Officer

 

Telephone: 0192 522 2222

Singer Capital Markets (NOMAD & Broker)

 

Steve Pearce / Jen Boorer

 

Telephone: 0207 496 3000

 

Website: www.singercm.com

Hudson Sandler (Financial PR)

 

Alex Brennan / Hattie Dreyfus / Harry Griffiths

 

Telephone: 0207 796 4133

 

Email: nichols@hudsonsandler.com

 

Notes to Editors:

Nichols plc is an international diversified soft drinks business with sales in over 60 countries. The Group is home to the iconic Vimto brand which is popular in the UK and around the world, particularly in the Middle East and Africa. Other brands in its portfolio include SLUSH PUPPiE, Starslush, ICEE, Levi Roots and Sunkist.

For more information about Nichols, visit: www.nicholsplc.co.uk

 

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the company's obligations under Article 17 of MAR.


 

 

 

Executive Review

 

Revenue

 

The Board is pleased to report an encouraging half year performance as Packaged revenues increased by 1.3% to £65.4m (H1 2023: £64.5m) while overall Group revenues declined by 1.8% to £84.0m (H1 2023: £85.5m), reflecting the expected rationalisation of the OoH business.

 

Encouragingly, UK Packaged revenues increased by 5.3% to £45.4m (H1 2023: £43.1m) underpinned by volume growth of 4.9% reflecting new product innovation, expanding distribution and increased marketing investment. Growth from innovation includes a strong performance from Vimto Energy, which launched in 2023, together with an expanded range of core Vimto products including flavour extensions and a new children's range of smaller format packs. Distribution gains have been achieved across a number of convenience format stores, for core products within the 'ready to drink' portfolio. The Group's biggest ever promotional campaign ('Love the Taste') was launched towards the end of the Period that will support growth of the Vimto brand over the summer months. 

 

International Packaged revenues declined by 6.9% to £20.0m (H1 2023: £21.5m). The significant growth seen within Africa in previous years reversed in the first half with revenues down 10.1% to £11.8m (H1 2023: £13.1m), due to the strong comparator as a result of significant launch volumes into Ivory Coast during the first half of 2023.  Production of canned products commenced in Senegal on a phased basis late in the Period, which will bring benefits in the second half of the year as the Group transfers increasing volumes to a local concentrate model rather than a finished product export model. As a result, revenues will reduce although margins will improve. 

 

Middle East revenues in the Period also declined by 29.3%, reflecting the timing of shipments related to Vimto's typically strong trading period of Ramadan which will see stronger volumes in Q4 as the date moves forward each year. The Group's Rest of World markets saw strong revenue growth of 37.1%, with the US and Europe continuing to perform well building on increased brand awareness and strong in-market execution.

 

OoH revenues declined by 11.3% to £18.6m (H1 2023: £21.0m), reflecting the planned reduction in activity having exited several unprofitable accounts and product offerings, identified as part of the OoH Strategic Review. As anticipated, the absolute profitability of the business has improved significantly as a consequence of reducing the cost base and focusing resources more efficiently within OoH.

  

The impact of movements in foreign exchange rates on revenue year-on-year was immaterial, at approximately -£0.2m adverse.

 

Gross Profit

 

Gross profit of £37.0m was £1.8m higher than H1 2023 (£35.2m) and 2.9 percentage points higher at 44.0%.

 

The cost of goods inflation experienced in 2022 and 2023 stabilised into the first half of the year, although underlying costs remain significantly higher than two years ago. The Group has been able to fully mitigate cumulative cost increases by working with its customers and suppliers across the whole of its supply chain, identifying the optimal balance of mitigating actions and price recovery. The impact of movements in foreign exchange rates on gross profit was -£0.1m adverse.

 

Distribution Expenses

 

Distribution expenses within the Group are those associated with the UK Packaged route to market, and for OoH are the distribution costs incurred from factory to depot. Final leg distribution costs within the OoH business are reported within administrative expenses.

 

Distribution expenses increased by 3.2% to £5.2m (H1 2023: £5.0m), largely reflecting increased volumes in the UK business. Inflationary pressures around increased fuel prices were reduced.


Administrative Expenses

 

Administration expenses, excluding exceptional items, totalled £18.7m (H1 2023: £18.7m). Additional costs incurred in the Period largely relate to payroll and staff related costs in response to cost-of-living pressures, alongside further investment in marketing spend to drive brand equity within the Packaged business. These additional expenses have been offset by a significant reduction in overhead costs related to the OoH business following implementation of the actions identified through the strategic review process.

  

Exceptional Costs

 

The Group incurred £2.7m of exceptional costs during the Period (H1 2023: £1.1m).

 

Business Change Programme and Systems Development

The Group has continued to build a new enterprise resource planning (ERP) system, focused on driving business transformation. The design phase of the project has concluded with the system architecture currently being built ahead of an extensive testing period during H2. The new system is expected to be operational in Q1 2025. Costs of £2.7m were incurred in the Period.

 

Out of Home Strategic Review and Restructuring

In 2022, the Group completed a strategic review into its OoH route to market, assessing customer and product mix as well as reviewing ways to enhance net margin and profitability going forward. The Group incurred £0.2m of costs in the Period, with most recommendations having been implemented.

 

Historic Incentive Scheme

During 2022, the Group settled with HMRC a £4.3m tax and interest charge relating to an historic incentive scheme and has now achieved a significant recovery of debts from current and previous employees who had indemnified the Company. Provisions relating to the recovery of these amounts have been reduced by £0.2m, with full cost recovery now expected by early 2025.

  

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

 

Finance Income

 

Net finance income of £1.4m (H1 2023: £0.8m) was significantly up on the prior year, as the Group ensured the best return for its increasing deposits given higher interest rate rises over the Period.

 

Adjusted Operating Profit and Operating Profit

 

Adjusted operating profit, excluding exceptional items, increased by 14.1% to £13.1m reflecting volume growth in the UK, improving margins and tight controls of the overall cost base whilst maintaining investment in our brands.

 

Adjusted Profit Before Tax, Profit Before Tax and Tax Rate

 

Adjusted profit before tax, excluding exceptional items, increased by 18.0% to £14.5m (H1 2023: £12.3m). The tax charge on adjusted profit before tax for the Period of £3.6m (H1 2023: £2.9m) represents an effective tax rate of 24.8% (H1 2023: 23.8%). The increase in the effective rate is consistent with published rates. Profit before tax was £11.8m, an improvement of 5.8% compared to the prior year (H1 2023: £11.2m) reflecting the increased operating profits and interest income, partially offset by the increased exceptional costs largely relating to investment in the Group's new enterprise resource planning (ERP) system.

 

Balance Sheet and Cash and Cash Equivalents

 

The continued strength of the Group's closing balance sheet reflects its diversified routes to market and asset light model. Cash and cash equivalents at the end of the Period remained strong at £70.3m (H1 2023: £56.1m, 31 December 2023: £67.0m).

 

The Group has seen its working capital marginally increase since the start of the year (+£0.1m), principally driven by debtors and strong Q2 sales. Capital expenditure in the Period was £0.1m (H1 2023: £0.1m) and was historically weighted towards our OoH business where a re-focus on capital allocation and spend has been actioned following the strategic review. The Group's current Return on Capital Employed is 27.1% (H1 2023: 25.9%).

 

Earnings per share

 

Adjusted basic EPS increased to 29.87 pence (H1 2023: 25.70p) with basic EPS at 24.29 pence (H1 2023: 23.31p). On an adjusted basis, diluted EPS was 29.86 pence (H1 2023: 25.68p).

 

Dividend and Capital Allocation

 

In line with the Group's dividend policy, dividend cover is broadly 2x the adjusted earnings of the Group. As a result, the interim dividend for 2024 will be 14.9p per share, to be paid on 6 September 2024 with a record date of 2 August 2024 and an ex-dividend date of 1 August 2024.

 

In the Group's preliminary results statement, the Board set out its approach to capital allocation and committed to identifying surplus cash reserves for distribution to shareholders. Having considered the investment needs and capital structure of the business, the Board has approved a special dividend of 54.8p per share equivalent to an aggregate distribution of £20m. This payment reflects a long history of strong cash flow generation by the Company and the Board's confidence in its future prospects. We will continue to keep our capital allocation policy under review ensuring we maintain sufficient resources to fund future growth opportunities, whilst balancing shareholder returns.  

 

Pensions

 

The Group operates two employee benefit plans, a defined benefit plan that provides benefits based on final salary, which is now closed to new members, and a defined contribution group personal plan. At 30 June 2024, the Group recognised a surplus on its UK defined benefit scheme of £3.7m (31 December 2023: surplus £4.0m).

 

Outlook

 

The Board is pleased with the Group's trading performance and strategic progress in the first half of 2024. Consumer spending is still under pressure despite levels of inflation stabilising. However, we exit the first half with strong momentum and we remain confident that the Group, underpinned by its diversified business model and the enduring strength of the Vimto brand, is well placed to achieve its long-term strategic ambitions and deliver strong returns for our shareholders. 

 

The Company has begun trading in Q3 positively and in line with management expectations. Reflecting the progress made in H1 and underpinned by the Group's ongoing focus on driving margin improvement the Board now expects to report full year Adjusted Profit Before Tax1 slightly ahead of current market expectations2.

 

Andrew Milne

Chief Executive Officer

 

Richard Newman

Chief Financial Officer

 

24 July 2024

 

1  Excluding exceptional items

FY24 expectations refers to Group compiled market consensus for FY24 adjusted PBT of £28.8m at 23 July 2024

 

 

 



CONSOLIDATED INCOME STATEMENT



 

 



Unaudited

Half year to

30 June

2024

£'000

Unaudited

Half year to

30 June

2023

£'000

Audited

Year ended

31 December 2023

£'000


 

 

 

Continuing operations

 

 

 

Revenue

83,976

85,546

170,741

Cost of sales

(47,021)

(50,356)

(98,565)

Gross profit

36,955

35,190

72,176

 

 



Distribution expenses

(5,171)

(5,009)

(9,567)

Administrative expenses

(21,402)

(19,846)

(40,323)

Operating profit

10,382

10,335

22,286

 

 



Finance income

1,458

866

2,095

Finance expenses

(37)

(48)

(123)

Profit before taxation

11,803

11,153

24,258

 

 



Taxation

(2,927)

(2,649)

(5,896)

Profit for the Period

8,876

8,504

18,362


 



Earnings per share (basic)

24.29p

23.31p

50.34p

Earnings per share (diluted)

24.28p

23.29p

50.32p

 

 



 

 



Adjusted for exceptional items

 



 

 



Operating profit

10,382

10,335

22,286

Exceptional items

2,713

1,144

2,907

Adjusted operating profit

13,095

11,479

25,193

 

 



Profit before taxation

11,803

11,153

24,258

Exceptional items

2,713

1,144

2,907

Adjusted profit before taxation

14,516

12,297

27,165

 

 



Adjusted earnings per share (basic)

29.87p

25.70p

56.41p

Adjusted earnings per share (diluted)

29.86p

25.68p

56.39p


 




 



           

 


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 



Unaudited Half year to 30 June

2024

£'000

Unaudited

Half year to

30 June

2023

£'000

Audited

Year ended
31 December

2023

£'000


 

 

 

Profit for the financial Period

8,876

8,504

18,362

 

 



Items that will not be classified subsequently to profit or loss:

 



 

 



Re-measurement of net defined benefit liability

(360)

69

(192)


 



Deferred taxation on pension obligations and employee benefits

90

(17)

48


 



Other comprehensive (expense)/income for the Period

(270)

52

(144)

 

 



Total comprehensive income for the Period

8,606

8,556

18,218



 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

 



Unaudited

30 June

2024

Unaudited

30 June

2023

Audited

31 December

2023

ASSETS


£'000

£'000

£'000

Non-current assets


 



Property, plant and equipment


8,773

10,247

9,457

Intangibles


215

297

256

Pension surplus


3,715

4,257

4,014



 



Total non-current assets


12,703

14,801

13,727



 



Current assets


 



Inventories


10,491

10,595

8,809

Trade and other receivables


42,205

42,001

41,393

Corporation tax receivable


-

986

-

Cash and cash equivalents


70,291

56,128

67,030



 



Total current assets


122,987

109,710

117,232

 


 



Total assets


135,690

124,511

130,959



 



LIABILITIES


 



Current liabilities


 



Trade and other payables


32,899

29,533

30,719

Corporation tax payable


74

-

318



 



Total current liabilities


32,973

29,533

31,037



 



Non-current liabilities

Other payables


1,801

2,378

 

1,865

Deferred tax liabilities


626

687

715

 


 



Total non-current liabilities

 

2,427

3,065

2,580

Total liabilities


35,400

32,598

33,617

 


 



Net assets


100,290

91,913

97,342

 


 



 

EQUITY


 



Share capital


3,697

3,697

3,697

Share premium reserve


3,255

3,255

3,255

Capital redemption reserve


1,209

1,209

1,209

Other reserves


2,151

1,481

1,845

Retained earnings


89,978

82,271

87,336



 



Total equity


100,290

91,913

97,342

 

 


 

CONSOLIDATED STATEMENT OF CASH FLOWS


Unaudited

Half year to

30 June

2024

Unaudited

Half year to

30 June

2023

Audited

Year ended

31 December

2023


£'000

£'000

£'000

£'000

£'000

£'000


 

 





Cash flows from operating activities

 

 






 

 





Profit for the financial Period

 

8,876


8,504


18,362


 

 





Adjustments for:

 

 





Depreciation and amortisation

975

 

1,193


2,343


Loss on sale of property, plant and equipment

56

 

74


67


Finance income

(1,458)

 

(866)


(2,095)


Finance expense

37

 

48


123


Tax expense recognised in the income statement

2,927

 

2,649



5,896


(Increase)/decrease in inventories

(1,682)

 

(163)


1,623


Increase in trade and other receivables

(405)

 

(2,096)


(1,549)


Increase/(decrease) in trade and other payables

1,971

 

(928)


 

384


Change in pension obligations

(61)

 

(63)


(81)


Fair value gain on derivative financial instruments

(30)

 

(344)


 

(285)



 

2,330


(496)


6,426


 

 



 


Cash generated from operating activities

 

11,206


8,008

 

24,788

 

Tax paid

 

(3,171)


(2,939)

 

(4,776)

 

Net cash generated from operating activities

 

8,035


5,069

 

20,012


 

 



 


Cash flows from investing activities

 

 



 


Finance income

1,458

 

866


2,095


Acquisition of property, plant and equipment

(146)

 

(138)


(479)


Proceeds from sale of property, plant and equipment

15

 

-


192


 

 

 





Net cash from investing activities

 

1,327


728


1,808


 

 





Cash flows from financing activities

Payment of lease liabilities

(409)

 

(385)



(909)


Dividends paid

(5,692)

 

(5,580)


(10,177)


Net cash used in financing activities

 

(6,101)


(5,965)


(11,086)


 

 





Net increase/ (decrease) in cash and cash equivalents

 

3,261


(168)


10,734

Cash and cash equivalents at start of Period

 

67,030


56,296


56,296

 

 

 





Cash and cash equivalents at end of Period

 

70,291


56,128


67,030









 

 


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

 

Called up share capital

£'000

Share premium reserve

£'000

Capital redemption reserve

£'000

Other reserves

 

£'000

Retained earnings

 

£'000

Total

equity

 

£'000

 

 

 

 

 

 

 

At 1 January 2023

3,697

3,255

1,209

1,280

79,295

88,736

Dividends

-

-

-

-

(5,580)

(5,580)

Movement in ESOT

-

-

-

(2)

-

(2)

Credit to equity for equity-settled share-based payments

-

-

-

203

-

203

Transactions with owners

-

-

-

201

(5,580)

(5,379)

Profit for the Period

-

-

-

-

8,504

8,504

Other comprehensive income

-

-

-

-

52

52

Total comprehensive income

-

-

-

-

8,556

8,556

At 30 June 2023

3,697

3,255

1,209

1,481

82,271

91,913

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Called up share capital

£'000

Share premium reserve

£'000

Capital redemption reserve

£'000

Other reserves

 

£'000

Retained earnings

 

£'000

Total

equity

 

£'000

At 1 January 2024

3,697

3,255

1,209

1,845

87,336

97,342

Dividends

-

-

-

-

(5,692)

(5,692)

Movement in ESOT

-

-

-

4

-

4

Share option exercise

-

-

-

-

(272)

(272)

Credit to equity for equity-settled share-based payments

-

-

-

302

-

302

Transactions with owners

-

-

-

306

(5,964)

(5,658)

Profit for the Period

-

-

-

-

8,876

8,876

Other comprehensive expense

-

-

-

-

(270)

(270)

Total comprehensive income

-

-

-

-

8,606

8,606

At 30 June 2024

3,697

3,255

1,209

2,151

89,978

100,290








 

Treasury shares used for share option exercises are held within retained earnings.

  


 

 

 

NOTES

           

 

1.   Basis of Preparation

 

The financial information set out in this Interim Report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2023, prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 have been filed with the Registrar of Companies. The Auditor's Report on those financial statements was unqualified and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

 

These condensed consolidated interim financial statements for the half year reporting period ended 30 June 2024 have been prepared in accordance with IAS 34 Interim financial reporting and also in accordance with the measurement and recognition principles of UK adopted international accounting standards. The Interim Report has not been audited or reviewed in accordance with the International Standard on Review Engagement 2410 issued by the Auditing Practices Board.

 

The interim financial statements were authorised for issue by the Board of Directors on 24 July 2024.

 

 

2.   Going Concern

 

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

 

Our modelling has sensitised the impacts of Russia's invasion of Ukraine and the conflict within Yemen, in particular their impact on global supply chains and macroeconomic inflationary factors. Alternative scenarios, including the potential impact of key principal risks from a financial and operational perspective, have been modelled with the resulting implications considered. In all cases, the business model remained robust. The Group's diversified business model and strong balance sheet provide resilience against these factors and the other principal risks that the Group is exposed to. At 30 June 2024 the Group had cash and cash equivalents of £70.3m with no external bank borrowings.

 

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

 

 

3.   Segmental Reporting

 

The Board, as the entity's chief operating decision maker, analyses the Group's internal reports to enable an assessment of performance and allocation of resources. The operating segments are based on these reports.

 

The accounting policies of the reportable segments are the same as the Group's accounting policies. Segment performance is evaluated based on adjusted operating profit (excluding exceptional items), finance income and exceptional items. This is the measure reported to the Board for the purpose of resource allocation and assessment of segment performance.

  

 

 

Half year to

Packaged

 

 

 

 

30 June 2024

UK

Middle East

Africa

Rest of World

Total Packaged

Out of Home

Total Segments

Central1

Total Group


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000


 

 

 

 

 

 

 

 

 

Revenue

45,386

3,466

11,754

4,752

65,358

18,618

83,976

-

83,976

Adjusted operating profit





2,964

21,743

(8,648)

13,095

Net finance income









1,421

Adjusted profit before tax









14,516

Exceptional items









(2,713)

Profit before tax









11,803

 

 

 

Half year to

Packaged

 

 

 

 

30 June 2023

UK

Middle East

Africa

Rest of World

Total Packaged

Out of Home

Total Segments

Central1

Total Group


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000


 

 

 

 

 

 

 

 

 

Revenue

43,097

4,905

13,081

3,466

64,549

20,997

85,546

-

85,546

Adjusted operating profit





1,352

19,340

(7,861)

11,479

Net finance income









818

Adjusted profit before tax









12,297

Exceptional items









(1,144)

Profit before tax









11,153

 

 

 

Year ended

Packaged

 

 

 

 

31 December 2023

UK

Middle East

Africa

Rest of World

Total Packaged

Out of Home

Total Segments

Central1

Total Group


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000


 

 

 

 

 

 

 

 

 

Revenue

83,914

12,963

22,184

8,122

127,183

43,558

170,741

-

170,741

Adjusted operating profit





5,063

41,380

(16,187)

25,193

Net finance income









1,972

Adjusted profit before tax









27,165

Exceptional items









(2,907)

Profit before tax









24,258

 

1 Central includes the Group's central and corporate costs, which relate to salaries and head office overheads such as rent and rates, insurance and IT maintenance as well as the costs associated with the Board and Executive Leadership Team, Governance and Listed Company costs.

 

 

A geographical split of revenue is provided below:

 



Half year to

30 June

2024

Half year to

30 June

2023

Year ended

31 December

2023

 

 

£'000

£'000

£'000

Geographical split of revenue

 



Middle East

3,466

4,905

12,963

Africa

11,754

13,081

22,184

Rest of World

4,852

3,301

8,518

Total exports

20,072

21,287

43,665

United Kingdom

63,904

64,259

127,076

Total revenue

83,976

85,546

170,741

 

 

4.   Exceptional items

 



Half year to

30 June 2024

Half year to

30 June

2023

Year ended

31 December

2023

 

£'000

£'000

£'000

 

 



Business Change Programme and Systems Development

2,733

519

1,722

Out of Home Strategic Review and Restructuring

179

569

1,784

Historic incentive scheme

(199)

56

(599)

 

2,713

1,144

2,907

 

 



 

The Group incurred £2.7m of exceptional costs during the Period (H1 2023: £1.1m).

 

Business Change Programme and Systems Development

The Group has continued to build a new enterprise resource planning (ERP) system, focused on driving business transformation. The design phase of the project has concluded with the system architecture currently being built ahead of an extensive testing period during H2. The new system is expected to be operational in Q1 2025. Costs of £2.7m were incurred in the Period.

 

Out of Home Strategic Review and Restructuring

In 2022 the Group completed a strategic review into its OoH route to market, assessing customer and product mix as well as reviewing ways to enhance net margin and profitability going forward. The Group incurred £0.2m of costs in the Period with most recommendations having been implemented.

 

Historic Incentive Scheme

During 2022, the Group settled with HMRC a £4.3m tax and interest charge relating to an historic incentive scheme and has now achieved a significant recovery of debts from current and previous employees who had indemnified the Company. Provisions relating to the recovery of these amounts have been reduced by £0.2m, with full cost recovery now expected by early 2025.

 

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


 

5.   Earnings per share

 

Basic earnings per share is calculated by dividing the profit after tax for the Period of the Group by the weighted average number of ordinary shares in issue during the Period. The weighted average number of ordinary shares is calculated by adjusting the shares in issue at the beginning of the Period by the number of shares bought back or issued during the Period multiplied by a time-weighting factor. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue assuming the conversion of all potentially dilutive ordinary shares.

 

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

 

 



 

Earnings

Weighted average number of shares

 

Earnings per share

 

£'000

 

 

30 June 2024

 



Basic earnings per share

8,876

36,544,818

24.29p

Dilutive effect of share options


6,448

 

Diluted earnings per share

8,876

36,551,266

24.28p




 

 

 

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

 

 



 

Earnings

Weighted average number of shares

 

Earnings per share

 

£'000

 

 

30 June 2024

 



Basic earnings per share

8,876

36,544,818

24.29p

Exceptional items after taxation

2,040


 

Adjusted basic earnings per share

10,916

36,544,818

29.87p

Diluted effect of share options


6,448

 

Adjusted diluted earnings per share

10,916

36,551,266

29.86p

 

  

6.   Non-current Assets

 



Property, Plant & Equipment

 

 

Intangibles

 

 

£'000

£'000

 

Cost

 



At 1 January 2024

31,674

9,998

 

Additions

321

-

 

Disposals

(2,966)

-

 

At 30 June 2024

29,029

9,998

 

 

 

Depreciation and Amortisation

 



At 1 January 2024

22,217

9,742

 

Charge for the Period

934

41

 

On disposals

(2,895)

-

 

At 30 June 2024

20,256

9,783

 

 

 

Net book value

 



At 1 January 2024

9,457

256

 

At 30 June 2024

8,773

215

 

 

 

 

7.   Defined Benefit Pension Scheme

 

The Group operates a defined benefit plan in the UK. A full actuarial valuation was carried out on 5 April 2023 and updated at 30 June 2024 by an independent qualified actuary.

 

A summary of the pension surplus position is provided below:

 

 

Pension surplus

£'000

At 1 January 2024

4,014

Current service cost

(6)

Scheme administrative expenses

(34)

Net interest income

89

Actuarial losses

(360)

Contributions by employer

12

At 30 June 2024

3,715

 

 

 

8.   Dividends

 

Dividend cover is broadly 2x adjusted earnings of the Group. As a result, the interim dividend for 2024 will be 14.9p per share to be paid on 6 September 2024 with a record date of 2 August 2024.

 

In the Group's preliminary results statement the Board set out its approach to capital allocation and committed to identifying surplus cash reserves for distribution to shareholders. Having considered the investment needs and capital structure of the business, the Board has approved a special dividend of 54.8p per share equivalent to an aggregate distribution of £20m. This payment reflects a long history of strong cash flow generation by the Company and the Board's confidence in its future prospects. We will continue to keep our capital allocation policy under review ensuring we maintain sufficient resources to fund future growth opportunities, whilst balancing shareholder returns. 

 

 

Cautionary Statement

 

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

 

-Ends-

 

 

 

 

 

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