Nichols plc : 2012 Preliminary Results

nichols

""

Date: Embargoed until 07.00am, Thursday 7 March 2013

Contacts: John Nichols, Non-Executive Chairman Brendan Hynes, Group Chief Executive Tim Croston, Group Finance Director Nichols pie

Telephone: [phone]
Website:www.nicholsplc.co.uk
Alex Brennan/Nick Lyon Hudson Sandler Telephone:[phone]
Email : [e-mail]
Richard Lindley/Jonny Franklin-Adams N+1 Singer (Nominated Adviser) Telephone: [phone] 496
3000
Website: www.n1singer.com

Nichols pie PRELIMINARY RESULTS

Nichols pie ("Nichols" or "the Group"), the soft drinks group, announces its Preliminary results for the year ended 31 December 2012.
Nichols pie is a highly focused soft drinks business; the Group has a leading market position in both the "stili" and "carbonate" drinks categories. lts brand portfolio includes Vimto, which is sold in over 65 countries and Levi Roots, Weight Watchers, Sunkist
& Panda which are sold in the UK.

Highlights:

• Group sales up 9% to E107.8m (2011: E98.9m)
• Profit before tax up 13% to E20.5m (2011: E18.1m)
• Earnings per share up 14% to 41.4p (2011: 36.3p)
• Proposed final dividend of 11.?p, total dividend for the year up 13% to 17.3p
(2011:15.3p)
• Sales in the UK grew 9%, significantly ahead of the market growth rate
• lnternational sales up 8% year on year

Commenting John Nichols, Non-Executive Chairman, said:

"Nichols delivered a very good performance in 2012 against a backdrop of tough comparatives and a challenging UK consumer environment. Driven by the strength of our brands and continued international penetration, the Group once again delivered double digit growth in profit, earnings per share and cash.
2013 will remain challenging and pressures on UK consumer spending show little sign of moderating. We are confident that the Group will continue to deliver profitable growth in the current year and beyond through sustained investment in our brands, further
innovation and increasing market share." frrJ

/

Chairman's Statement

l am pleased to announce that 2012 was another very strong year for Nichols pie. Once again we have delivered double digit growth in profit, earnings per share and cash.
Group sales increased to f:107.8m, up 9% on 2011, an excellent performance against our own tough prior year comparatives and the challenging UK retail environment. Continued high levels of raw materia! inflation impacted our UK gross margins; however, the sales growth combined with strong cost contro! led to increased operating margins. Overall the Group delivered a 13% increase in profit, with profit before tax of f:20.5m, a f:2.4m increase on 2011. As a result, earnings per share increased 14% to
41.4p.

Results

	Yearended 31 Dee 2012	Yearended 31 Dee 2011	% Movement
	f:m	f:m
Group Revenue	107.8	98.9	+9%
O erating Profit	20.5	18.1	+13%
Operating Profit R.O.S.	19%	18%
Profit Before Tax	20.5	18.1	+13%
Net Cash	24.7	20.1	+23%
EPS _(basicl	41.4p	36.3p	+14%

Trading

Continuing the trend of recent years, sales growth has been delivered from both our domestic and export businesses.
Our UK sales grew 9% in 2012 to f:85m, outperforming the UK soft drinks market which grew 3% (A C Nielsen 52 week data to 5 Jan 2013). The growth was driven by a strong performance from our core Vimto brand and our innovative new products such as Levi Roots and the recently launched Weight Watchers range of soft drinks.
Export sales totalled f:22.?m in the year, up 8% against the prior year's tough comparatives (2011 +31%). Within the regions, the momentum in Africa continued with sales up 22% (2011 +28%) and sales into mainland Europe also increased by 24%. Sales into the Middle East region were broadly flat on last year partly due to the timing of shipments at the end of 2012 as well as the strong comparatives from the prior year (2011 +24%).

Dividend

Following another strong performance and reflecting confidence in the outlook, the Board is pleased to recommend a final dividend of 11.7 pence per share. This takes the total 2012 dividend to 17.32 pence (2011: 15.30 pence}, an increase of 13%. lf approved, the final dividend will be paid on 3 May 2013 to shareholders registered on 2
Aprii 2013; the ex-dividend date is 27 March 2013.

Succession announcement

We have today announced that after ten successful years with the Group, Brendan Hynes, Chief Executive Officer, has informed the Board of his intention to step down at the AGM on 1 May 2013, in order to pursue a non-executive portfolio career. He will hand over the leadership of the business to Marnie Millard from the date of the AGM. Marnie is currently Managing Director of our UK Soft Drinks business. To ensure a seamless transition, Brendan will be available to assist with the handover through to the end of 2013.
The Board would like to thank Brendan for his contribution, which has helped to ensure that the business has made consistently strong progress during the last ten years.

Outlook

2012 was extremely challenging for the UK soft drinks market and the broader grocery market as consumer spending was restrained by the economie environment. The industry also had to deal with the effects of the second wettest summer on record, further dampening demand for soft drinks. Against this backdrop, the Group again outperformed the market, delivering EPS growth of 14%, profit growth of 13% and increasing its cash reserves.
Although we anticipate the UK retail environment will be just as challenging in 2013, we are confident that the Group will again outperform the market with continued investment behind our brands, launching innovative new products and further growth in our international markets.
In summary, the Board is confident that the Group is in a strong position to deliver further profitable growth in 2013 and beyond.

John Nichols

Non-Executive Chairman

7 March 2013

Chief Executive's Review

Nichols pie is a growing international business with an enviable stable of brands, selling to over 65 countries worldwide. We have leading market positions in both the Stili and Carbonate drinks categories and continuously seek to bring new and innovative products to the soft drinks market both in the UK and internationally.

In 2012, Nichols pie was delighted to be awarded the prestigious Queen's Award for lnternational Trade. This award is made annually to businesses achieving substantial overseas growth fora sustainable period by Her Majesty the Queen.

The UK 5oft Drinks Market

In overall terms the UK soft drinks market, excluding the "on trade", grew by 3.0% in value terms but declined 1.0 % in volume terms (AC Nielsen 52 week data to 5 Jan

2013). Economie and consumer conditions continued to provide a big challenge,

particularly in the UK. This, combined with significant raw materia! cost inflation and continued high levels of price promotion from the competition, led to an extremely competitive marketplace throughout the whole of 2012.

Despite this, we have once again been successful in growing our share of both the UK and international markets and, as a result, Group sales increased by 9% year on year and operating margins were maintained.

We have also continued to invest in our core brands, which has helped to increase our market share both in the UK and overseas, in the stili and carbonate categories.

Group Financial Performance

In 2012 the Group delivered another strong financial performance, which was again ahead of both internai and external expectations.

To summarise our financial performance in 2012 we delivered:

• 9% sales growth,

• 13% profit growth

• 14% earnings per share growth (basic).

• 13% dividend growth

In addition cash conversion was aIso strong and we ended the year with f:24.?m of cash in the bank.

Trading Highlights

Sales in the UK increased by 9% to f:85.0m (2011: f:77.8m) driven by increased market share for Vimto, together with new product and brand extensions such as Weight Watchers and Levi Roots. We invested heavily in marketing in 2012, and again increased household penetration bringing new consumers into the Vimto brand.

lnternationally, 2012 was another successful year with sales increasing by 8% to f:22.7m. This was helped by Vimto again increasing its market share, particularly in key markets such as Africa and Europe. We sell to more than 28 countries in Africa and in

2012 increased sales by 22% in this region, in spite of very strong sales comparatives

from last year.

In summary, growth from our existing core markets, both in the UK and overseas, combined with innovative new product developments and further new brand launches, has enabled the Group to deliver strong top and bottom line growth in 2012.

Corporate Responsibility

Nichols pie prides itself on having a sustainable business strategy which takes into account our wider corporate, environmental and social responsibilities.

Sustainability and the Environment

We continue to make good progress on each of the four key areas targeted, being climate change, waste and packaging, water and transport.

We continue to work actively with the British Soft Drinks Association (BSDA), the Food and Drink Federation (FDF) and our key suppliers on environmental improvements. We are also signatories to the Courtauld Commitment and the Department of Health's Public Health Responsibility Deal.

Our high standards in health and safety continued in 2012 and we are an active

member of Valpak, ensuring our compliance with waste regulations, and minimising the direct impact our business activities have on the external environment.

Community

Our commitment to the wider community continued in 2012 as we actively look to give something back in return far the support we enjoy. In 2012 our charity team once again worked hard on behalf of our chosen charity Derian House, including a 1O kilometre run, fund raising golf day and a wide variety of events involving our customers, suppliers and advisors.

Employees

As a team our core values emphasise the importance of customer service, quality, professionalism, teamwork and mutuai support. We have a strong people orientated culture that is a key priority far our business and criticai to our continuing success.

Our overriding objective is to consistently deliver high results in everything we do and this has once again been recognised externally with Nichols pie being shortlisted far the AlM company of the year in 2012, far the second year in succession.

Brendan Hynes

Chief Executive Officer

Consolidated income statement

Year ended 31 December 2012

Total Total

2012 2011

['000 f:'OOO

Revenue 107,788 98,912

Cost of sales (59,661) (52,683)

Gross profit 48,127 46,229

Distribution expenses (6,569) (5,862) Administrative expenses (21,041) (22,218)

Operating profit 20,517 18,149

Finance income 324 72

Finance expense (331) (116)

Profit before taxation 20,510 18,105

Taxation (5,252) (4,779)

Profit for the financial year 15,258 13,326 attributable to equity holders of

the parent

Earnings per share (basic) 41.43p 36.28p

Earnings per share (diluted) 41.38p 36.25p

Consolidated statement of comprehensive income

Year ended 31 December 2012

2012 2011

E'OOO E'ODO

Profit for the financial year 15,258 13,326

Other comprehensive expense

Defined benefit pian actuarial loss (773) (2,926)

Deferred taxation on pension obligations and 78 842 employee benefits

Other comprehensive expense for the

year (695) {2,084)

Total comprehensive income for the year 14,563 11,242

Statement of financial position Year ended 31 December 2012
		Group		Parent
	2012	2011	2012	2011
ASSETS	['000	f:'OOO	['000	f:'OOO
Non-current assets
Property, plant and equipment	1,275	1,374	398	461
Goodwill	15,973	13,658	o	o
lnvestments	o	o	16,566	16,566

Deferred tax assets 2,148 2,579 2,082 2,512

Total non-current assets	19,396	17,611	19,046	19,539
Current assets
lnventories	5,331	5,790	2,769	4,056
Trade and other receivables	23,741	21,118	20,446	16,510

Cash and cash equivalents 24,745 20,111 21,948 17,871

Total current assets 53,817 47,019 45,163 38,437

Total assets 73,213 64,630 64,209 57, 976

LIABILITIES
Current liabilities
Trade and other payables	19,377	20,073	20,427	21,154
Current tax liabilities	2,191	1,752	1,368	1,138

Provisions 47 139 47 99

Total current liabilities 21,615 21,964 21,842 22,391

Non-current liabilities

Pension obligations 6,556 6,313 6,556 6,313

Deferred tax liabilities 47 51 o o

Total non-current liabilities 6,603 6,364 6,556 6,313

Total liabilities 28,218 28,328 28,398 28,704

Net assets 44,995 36,302 35,811 29,272

EQUITY

Share capitai 3,697 3,697 3,697 3,697

Share premium reserve 3,255 3,255 3,255 3,255

Capitai redemption reserve 1,209 1,209 1,209 1,209

Other reserves (474} (546) 301 229

Retained earnings 37,308 28,687 27,349 20,882

Total eguity 44,995 36,302 35,811 29,272

Consolidated statement of cash flows

Year ended 31 December 2012

2012 2012 2011 2011

['000 ['000 f'OOO f'OOO

Profit for the financial year 15,258 13,326

Cash flows from operating activities

Adjustments far:

Depreciatian 460 467

Lass an sale af praperty, plant and equipment 2 26

Finance incarne (324) (72) Tax expense recagnised in the incame staternent 5,252 4,779

Change in inventaries 611 (1,674) Change in trade and ather receivables (2,297) (4,069) Change in trade and other payables (1,071) 4,794

Change in pravisians (92) (226)

Change in ensian abligations {530l (748}

2,011 3,277

Cash generated from operating activities 17,269 16,603

Tax paid (4,545) (3,794}

Net cash generated from operating activities 12,724 12,809

Cash flows from investing activities

Finance incarne 324 72

Praceeds fram sale af praperty, plant and equiprnent 7 1

Acquisitian af praperty, plant and equipment (297) (302) Acquisitian af subsidiary, net af cash acquired (2,254) (2,300)

Acquisitianaf subsidiary'snet averdraft o (24)

Net cash used in investing activities (2,220) (2,553)

Cash flows from financing activities

(Acquisitian)/dispasal af awn shares (4) 83

Dividends aid (5,866l (5,195)

Net cash used in financing activities (5,870) (5,112)

Net increase in cash and cash equivalents 4,634 5,144

Cash and cash equivalents at 1 January 20,111 14,967

Cash and cash equivalents at 31 December 24,745 20,111

Consolidated statement of changes in equity

Year ended 31 December 2012

Called Share Capitai Other Retained Total up share premium redemption reserves earnings Equity

capitai reserve reserve

r·ooo f'OOO f'OOO r·ooo r·ooo f'OOO

At 1 January 2011 3,697 3,255 1,209 (629) 22,644 30,176

Dividends o o o o (5,195) (5,195) Movement in ESOT o o o 83 {4} 79

Transactions with owners o o o 83 (5,199} {5,116}

Profit for the year o o o o 13,326 13,326

Other com rehensive ex ense o o o o (2,084} (2,084}

Total com rehensive income o o o o 11,242 11,242

At 1 January 2012 3,697 3,255 1,209 (546) 28,687 36,302

Dividends o o o o (5,866) (5,866)

Movement in ESOT o o o 72 (76} (4}

Transactions with owners o o o 72 {5,942) (5,870}

Profit for the year o o o o 15,258 15,258

Other com rehensive ex ense o o o o (695) (695)

Total com rehensive income o o o o 14,563 14,563

At 31 December 2012 3,697 3,255 1,209 {474) 37,308 44,995

Nichols pie

NOTES TO THE PRELIMINARY FINANCIAL INFORMATION

Basis of Preparation

The preliminary financial information does not constitute statutory accounts for the financial years ended 31 December 2012 and 31 December 2011, but has been derived from those accounts. Statutory accounts for 2011 have been delivered to the Registrar of Companies and those for the financial year ended 31 December 2012 will be delivered following the Company's annual generai meeting. The auditors have reported on those accounts and their reports were unqualified and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

Earnings per Share

The calculation of basic earnings per share is based on earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. Shares held in the Employee Share Ownership Trust and Employee Benefit Trust are treated as cancelled for the purposes of this calculation.
The calculation of diluted earnings per share is based on the basic earnings per share adjusted to allow for the assumed conversion of ali dilutive options.
Basic earnings per share is 41.43 pence (2011: 36.28 pence).

Annual Report

The annual report will be mailed to shareholders on or around 2 April2013. Copies will be available after that date from: The Secretary, Nichols pie, Laurei House, Woodlands Park, Ashton Road, Newton le Willows, WA12 OHH.

Annual Generai Meeting

The annual generai meeting will be held at the Registered Office, Laurei House, Woodlands Park, Ashton Road, Newton le Willows, WA12 OHH on 1 May 2013 at
11.00am.
Copies of the announcement can be found on the lnvestors Relations section of the company's website: www.nicholsplc.co . uk .