annual
report and
financial
statements
2009
TWO
The group
THREE
The group is a soft drinks business
comprising two divisions; Soft Drinks and
Dispense Operation.
Soft Drinks
Our brand portfolio in the main consists of;
Vimto, Panda and Sunkist.
In the UK, the division sells into major
retail, wholesale and cash and carry
customers.
Outside of the UK, Vimto is available in
over 65 countries. Our typical business
model is to work with local partners who
share our passion for building the Vimto
brand and providing consumers with the
Vimto flavour experience.
Dispense Operation
The Dispense Operation provides
consumers with a broad range of cold
soft drinks on draught and was previously
referred to as the Dispense Systems
Operation. Typically our products are
available to consumers via pubs, clubs,
restaurants and other leisure outlets.
The division comprises; Cabana, Cariel
and Beacon businesses. The group’s 50%
holding in Dayla Liquid Packing Limited,
acquired in December 2008 is also now
part of the division.
Contents
04
06
10
12
14
18
20
56
60
Chairman’s Statement
Chief Executives Review
Financial Review
Directors and Advisors
Directors Report
Independent Auditor’s Report
Financial Statements
Notice of Meeting
Appendix
FOUR
Chairman’s statement
I have great pleasure reporting an
exceptional performance for 2009.
Building on the momentum from the half
year, the group continued to outperform
the market in the second half year and in
overall terms delivered double digit growth
in volume, revenue, profit and earnings
per share.
This exceptional performance was
delivered against a UK soft drinks market
showing 2% growth in both volume and
value, a backdrop of global economic
recession and another disappointing
summer in the UK.
Revenue from our core Vimto brand grew
by 28% in the UK and by 33% overseas.
Our Dispense Operation increased revenues
by 36%, including the acquisition of 50%
of Dayla Liquid Packing Ltd (“Dayla”).
Excluding Dayla, acquired in December
2008, revenues increased by 5%, which
was very creditable in a difficult market.
On 21 January 2010 we announced the
strategic acquisition of the trade and assets
of the Ben Shaws Dispense business. This
acquisition firmly consolidates our position
as the number three player in the UK soft
drinks dispense market and provides a
platform to maintain the strong growth of
the last two years.
Results
Group turnover was up 29% at £72.4
million (2008: £56.2 million). Profit before
tax (pre-exceptional items) was £12.2
million (2008: £10.0 million) an increase of
22%. Earnings per share (pre-exceptional
items) was 23.44 pence (2008: 20.03
pence) an increase of 17%.
EPS growth was lower than profit growth
due to an increase in the effective rate of
tax, driven by timing differences.
In preparation for the integration of the
Ben Shaws business we have undertaken
a minor restructure of our Dispense
business resulting in a small exceptional
cost of £0.3m for 2009.
Net cash at 31 December 2009 was
£11.2million (2008: £6.0 million), with
positive net cash flow of £5.2million
during the year.
John Nichols
Non-Executive Chairman
23 March 2010
Chairman’s statement
FIVE
29%
growth in
group sales
Dividend
On 4 March 2010 we announced a second
interim dividend of 8.1 pence per share for
the year ended 31 December 2009, taking
the total dividend to 12.15 pence, an
increase of 9% (2008: 11.15 pence).
The increased dividend reflects the Board’s
confidence in the business and its future
growth prospects. The second interim
dividend will be paid on 31 March 2010 to
shareholders registered 12 March 2010;
the ex-dividend date was 10 March 2010.
The Board anticipates that future dividend
payments will be paid in line with our
normal dividend schedule.
People
An exceptional performance requires
exceptional people, on behalf of the
Board, I would like to thank all of our
employees for their hard work, passion
and dedication during the year.
I announced on 20 November 2009
the appointment of Tim Croston as
Group Finance Director. Tim has been
with the group for four and a half years,
most recently in the role of Finance and
Operations Director for our Soft Drinks
division and took up his position on the
Board from 1 January 2010.
For 2009, we again adopted Derian
House Hospice as our chosen charity
– an admirable organisation that provides
support to terminally ill children and their
families.
Outlook
We delivered an outstanding performance
in 2009, whilst at the same time
increasing our marketing investment
behind our core brands and maintaining
momentum in a very challenging
consumer market.
Although the general economic outlook
remains uncertain and the consumer
market is still highly competitive, we are
confident that our business will deliver
further growth in 2010 and beyond.
“we delivered an outstanding
performance in 2009... we are
confident that our business will
deliver further growth in 2010
and beyond”
SIX
Chief Executive’s review
The soft drinks on dispense market was
particularly affected by the performance
of the licensed trade which was again
significantly down in 2009 by circa 10%
year on year. Whilst the rate of pub
closures slowed during last year, the
market continued to contract.
In recent years we have re-focused our
Dispense Operation into other markets and
moved our product offering into growth
product categories such as energy and
juice drinks. Our acquisition of 50% of
Dayla in December 2008 built on this trend.
In January 2010 we acquired the number
four player in the dispense market, Ben
Shaws. This provides us with another
strong brand and consolidates our position
as the number three player in this sector.
We have now successfully scaled up our
Dispense Operation, which has again
outperformed the sector and significantly
improved its year on year financial
performance.
The Soft Drinks Market
The soft drinks sector proved to be
remarkably resilient in 2009 growing by
2.0% in value terms and 2.0% in volume
terms (AC Nielsen data to 26 December
2009). The main growth categories were
energy, dilute to taste and carbonated
drinks. Our business is mainly centred
upon the last two product categories.
The general economic uncertainty
continued throughout 2009 with consumers
continuing to look for good value as well
as quality. These trends, combined with
another poor summer, meant the market
remained extremely competitive throughout
the year. Despite this, our core brand Vimto
continued to outperform the market, both
here in the UK and internationally, in all of its
available versions.
Our strategy is to continue to grow our
business both organically and through
acquisition whilst pursuing a balanced
mix of volume and value growth. This
approach, combined with above average
marketing investment behind our core
brands, has enabled us to grow our
market share and increase group sales
by 29% year on year and profit before tax
(pre-exceptional items), by 22%. At the
same time we have managed to maintain
our operating margin.
“we achieved significant sales growth, profit
growth and earnings per share growth”
Brendan Hynes
Chief Executive
23 March 2010
Chief Executive’s review
SEVEN
33%
increase in
international
sales
net cash
‘09
‘08
£11.2m
£6.0m
£5.2m
ahead of last year
“in 2009 soft drinks sales increased by
27% to £55.1 million”
Group Financial Performance
During the course of 2009 we have
delivered another outstanding financial
performance despite the deteriorating
economic and consumer backdrop. In
summary we achieved significant:
• sales growth
• profit growth
• earnings per share growth
(pre and post exceptional)
• dividend growth
• cash generation
Cash generation during the year was
strong and we finished the year with
£11.2 million of cash in the bank having
invested a third more behind our brand
marketing in 2009.
The Soft Drinks Operation
The group’s Soft Drinks Operation
consists of the sales and marketing of the
Vimto brand throughout the world, where
it is available in over 65 countries, along
with the sale of the Panda and Sunkist
brands in the UK.
Sales in 2009 increased by 27% to
£55.1 million (2008: £43.5 million), with
operating profits increasing by 20%
to £11.2 million (2008: £9.6 million).
Increased distribution and marketing
of Vimto in the UK, combined with
new customer account wins in the
independent sector, helped grow our
business along with overseas growth,
particularly in the Middle East, Africa and
Northern Europe.
We invested heavily in marketing in
2009, with a new multimedia marketing
campaign built around the theme
“seriously mixed up fruit”. This highly
successful campaign helped drive market
penetration and bring nearly one million
new consumers into the Vimto brand
(TNS World Panel Data).
The soft drinks market remains highly
competitive but with the help of our new
marketing campaign, we continued to
win market share in all three categories of
dilutes, carbonates and ready to drink.
Internationally, we had another successful
year in 2009 with sales increasing by 33%
to £12.0 million.
In the Middle East sales grew by 40%
year on year with growth across both
cordial and carbonated products.
In Africa we increased the level of locally
manufactured product, invested more in
marketing and launched Vimto into South
Africa, which resulted in sales increasing
by 11% in this region.
In summary, growth in our existing core
markets combined with the new markets
developed in 2009, continues to drive our
presence globally. In total, consumption
of the Vimto brand outside the United
Kingdom reached a record 413 million
litres in the year.
EIGHT
36%
increase in
dispense sales
“Nichols is the strong number
three in the ‘soft drinks on draught
dispense’ market”
Brand Licensing
Dispense Operation
The selective expansion of the Vimto
brand franchise into new product
categories continues to meet with great
success. Revenues from licensing the
brand were again significantly up year on
year, with nearly 40 million individual (non-
drink) products now consumed.
Nichols is the strong number three in the
‘soft drinks on draught dispense’ market,
behind Coca Cola and Britvic (Pepsi).
In addition to signing up new accounts
during the year, our market position has
been strengthened further with bolt on
acquisitions over the last two years.
The Vimto brand is now available in a
number of new licensed product formats
including Vimto Candy Spray, Vimto Fruit
Numbers, Vimto Lollipops and Vimto Ice
Lollies, contributing to improving Vimto’s
overall brand awareness and market
penetration.
In 2008 we acquired a 50% share of
Dayla Liquid Packing Limited, with an
option to acquire the remaining 50%.
This gave us access to the premium juice
dispense market in Europe.
Sales in the Dispense Operation (including
Dayla) increased by 36% to £17.3 million
(2008: £12.7 million) with operating profits
increasing 91% to £1.7 million from £0.9
million in 2008.
At the beginning of 2010 we acquired the
trade, brand and assets of Ben Shaws’ UK
soft drinks dispense business. Ben Shaws
was the number four player in this sector
and this acquisition further strengthens our
number three market position.
NINE
Corporate Responsibility
Nichols plc has a sustainable business
strategy which takes into account
our environmental and wider social
responsibilities.
Sustainability and the Environment
We continue to actively work with the
British Soft Drinks Association (BSDA),
the Food and Drink Federation (FDF)
and our key suppliers on environmental
improvements, with four key areas
targeted. These are:
• climate change
• waste and packaging
• water
• transport
We have made good progress against
these targets in 2009, including a full
review of packaging and distribution
requirements for all our products which
has resulted in reductions in packaging
weights and distribution movements.
Examples include:
• 500ml still drinks cases per pallet
increased from 132 to 150, saving
13% distribution movements;
• 500ml carbonated drinks cases per
pallet increased from 120 to 132,
saving 10% distribution movements;
• pallet layer pads removed from Panda
Still and Spring products, saving 2.4Kg
cardboard per pallet;
• pouch boxes per pallet increased
from 112 to 119, reducing distribution
movements by 6%;
• 250ml glass bottle size number of
cases per pallet increased from 75 to
90, reducing distribution movements
by 20%;
• changed 500ml carbonated drink
sleeves from PVC to PET compatible
with closed-loop recycling.
These early achievements have also
laid the groundwork for further changes
in 2010 which will result in additional
reductions in both the number of
distribution movements and the quantity
of plastic packaging waste generated.
To underline our continued commitment
we have now also signed up to the
Courtauld Commitment (phase 2) and
look forward to working with Waste
Resources Action Programme (WRAP) to
achieve their aims.
Employees
We are proud of our unique and special
culture built around our core values of
customer service, quality, professionalism,
teamwork and mutual support. We
continue to have a strong emphasis on
learning, development and fun, whilst at
the same time delivering consistently high
results in everything we do, as evidenced
by our results for 2009.
This has again been recognised
externally with Nichols plc being awarded
Outstanding Accreditation status in the
2009 Best Companies survey.
Community
We are conscious that we are very much
part of the wider community and in 2009
our charity team once again worked hard
on behalf of our chosen charity Derian
House, holding a wide variety of events,
including the annual Nichols’ Charity
Golf Day, which involves our customers,
suppliers and advisors.
“we are proud of our unique and special
culture built around our core values of
customer service, quality, professionalism,
team work and mutual support”
TEN
Financial review
Income Statement
Revenue for the group grew by 29%
in 2009, totalling £72.4 million (2008:
£56.2 million). All divisions of the
business contributed to this exceptional
performance:
Soft Drinks revenue was up 27% to £55.1
million (2008: £43.5 million).
• UK revenue driven by distribution gains
was up 25% to £42.7 million
• International revenue increased by 33%
on the back of growth in the Middle
East and Africa to £12 million
• Revenue from brand licensing totalled
£0.4 million
Dispense Operation revenue increased by
36% to £17.3 million (2008: £12.7 million).
• Like for like revenue grew 5% to
£13.4 million
• Our 50% acquisition of Dayla Liquid
Packing Ltd in December 2008 added
a further £3.9 million revenue during
the year
Revenue
Revenue (£m)
80
70
60
50
40
30
20
10
0
2005
2006
2007
2008
2009
Revenue
2005 adjusted to show like for like revenue
(excluding £11.8m for Balmoral, sold January 2006)
Operating profit before exceptional items
was also up significantly at £12.5 million,
a 28% increase on 2008. Importantly and
despite the exceptional top line growth,
the operating margin was maintained at
17%, the same as 2008.
The net financing costs increased by
£0.51 million to £0.28 million (2008: net
income of £0.23 million), this was due to
reduced bank interest received and lower
expected return on the defined benefit
pension plan assets (per IAS19 disclosure
requirements).
Profit Before Tax and exceptional items
increased 22% to £12.2 million (2008:
£10.0 million).
Exceptional items totalling £0.29 million
relate to restructuring costs for our
Dispense Operation business.
The tax charge was £3.6 million, an
effective rate of 30% (2008: 28%), the
increase in effective rate is due to the
inclusion of prior year charges of £0.14
million.
Statement of Financial Position
(formerly Balance Sheet)
By exception, points of note are:
Inventories at the year-end were valued
at £2.7 million which despite the 29%
revenue growth this was 2% lower than
the prior year. This has been achieved
through improved demand forecasting
and better stock management resulting in
lower working capital and reduced risk of
write-offs.
The group generated £5.2 million of
positive cash flow, closing the year with a
cash balance of £11.2 million (2008: £6.0
million).
T J Croston
Group Finance Director
23 March 2010
Financial review
ELEVEN
Earnings Per Share
Audit Committee
Shareholders
Earnings Per Share (EPS) before
exceptional items was 23.44 pence, 17%
up on 2008. EPS has increased by 84%
since 2005.
EPS before exceptional share (pence per share)
25.00
20.00
15.00
10.00
5.00
0.00
2005
2006
2007
2008
2009
EPS before exceptional share
Dividend
On 31 March 2010 we paid a second
interim dividend for 2009 of 8.1 pence,
taking the total dividend for the year to
12.15 pence, an increase of 9% on the
prior year (2008:11.15 pence).
Internal Control
The Nichols group complies with the
principles of good corporate governance
and has an established process of control
and risk management.
Internal Financial Control
The Board is ultimately responsible
for maintaining sound internal control
systems to safeguard the investment of
shareholders and the company’s assets.
The systems are reviewed by the Board
and are designed to provide reasonable,
but not absolute, assurance against
material mis-statement or loss.
The Audit Committee consists of
P J Nichols, J B Diggines and J D Bee.
The terms of reference of the Committee
include keeping under review the scope
and results of the external audit. The
Committee ensures the independence
and objectivity of the external auditors,
including the nature and extent of
non-audit services supplied. Any further
services with a value over £25,000 would
require Nichols plc Board approval.
Risks and Uncertainties
The Soft Drinks division continues to be
fully dependent on third party suppliers
for all products. To manage this risk we
have appropriate and adequate audit
procedures and resource at our disposal
to ensure that the division sells product of
the highest quality.
Following the acquisition of 50% of the
shares in Dayla Liquid Packing Limited
(December 2008), the Dispense Operation
division has direct influence over product
supply.
A large proportion of our international
business is with the Middle East and
Africa. Any political instability in these
key regions could lead to volatility in our
trading patterns.
In common with many businesses we
are now also highly dependent on the
availability of IT systems to carry out many
trading activities.
We have robust business continuity plans
and stress test procedures in place to
minimise all risks and exposures that the
group faces.
We consider that both the FTSE AIM
index and FTSE Fledgling index serve well
as ongoing performance comparatives
against the Total Shareholder Return
(TSR) delivered by Nichols plc.
Nichols plc TSR vs AIM and Fledgling indices
180
160
140
120
100
80
60
40
20
0
5
0
.
2
1
.
1
3
6
0
.
2
1
.
1
3
7
0
.
2
1
.
1
3
8
0
.
2
1
.
1
3
9
0
.
2
1
.
1
3
TSR Nichols plc
AIM index
Fledgling index
Going Concern
After making enquiries, the directors
have formed a judgement, at the time
of approving the financial statements,
that there is a reasonable expectation
that the group has adequate resources
to continue in operational existence for
the foreseeable future. For this reason
the directors continue to adopt the going
concern basis in preparing the financial
statements.
TWELVE
Directors & advisors
John Nichols
Non-Executive Chairman
Brendan Hynes
Chief Executive
Tim Croston
Group Finance Director & Secretary
Jonathan Diggines
Senior Non-Executive Director
John Bee
Non-Executive Director
THIRTEEN
Auditors
Grant Thornton UK LLP
4 Hardman Square Spinningfields
Manchester M3 3EB
Bankers
The Royal Bank of Scotland plc
1 Spinningfields Square
Manchester M3 3AP
Solicitors
DLA Piper 101 Barbirolli Square
Manchester M2 3DL
Stockbrokers and Nominated Advisor
Brewin Dolphin Limited PO Box 512
National House 36 St Ann Street
Manchester M60 2EP
Financial Advisors
N M Rothschild & Sons Limited
82 King Street Manchester M2 4WQ
Registrars
Capita Registrars Limited Northern
House Woodsome Park Fenay Bridge
Huddersfield HD8 0GA
Registered Office
Laurel House Woodlands Park Ashton
Road Newton-le-Willows WA12 0HH
Registered Number
238303
FOURTEEN
Directors’ report
The directors present their report and the audited financial statements for the year ended 31 December 2009.
Principal activities and business review
The company and its principal operating subsidiaries are engaged in the supply of soft drinks to the retail, wholesale, catering, licensed
and leisure industries.
A review of the group’s trading during the year and its prospects are contained in the Chairman’s Statement on pages 4 and 5, the
Chief Executive’s Review on pages 6 to 9 and the Financial Review on pages 10 and 11.
Details of significant events since the balance sheet date are contained in the Chairman’s Statement and the Financial Review.
Reconciliation of profit for the financial year to retained
earnings movement
2009
2008
£’000
£’000
£’000
£’000
Profit for the financial year
8,354
2,957
Interim dividend 4.05p (2008: 3.75p) per share paid 2 September 2009
2008 final dividend 7.40p (2007: 6.90p) per share paid 21 May 2009
Other comprehensive income and movement on ESOT
(1,482)
(2,711)
(1,186)
(1,374)
(2,540)
(1,192)
Retained earnings movement
Non-executive Directors
(5,379)
2,975
(5,106)
(2,149)
J B Diggines (57) – senior non-executive director
Mr Diggines is Chief Executive of Enterprise Ventures Limited. He was appointed to the Board of Nichols plc in July 1995.
J D Bee (68)
Mr Bee has held a number of non-executive directorships with both public and private companies and is Chairman of the Manchester
Building Society. He was appointed to the Board of Nichols plc in January 2002.
P J Nichols (60)
Mr Nichols has been a director of the company since 1976. He was appointed Managing Director in 1986 and Chairman in 1999.
In November 2007, Mr Nichols moved to non-executive Chairman.
All of the above are members of the audit and remuneration committees of the Board.
Directors’ report
FIFTEEN
Executive Directors
B M Hynes (49)
Mr Hynes joined the company as Group Finance Director in 2002 and was appointed Chief Executive Officer in November 2007.
He has previously been Group Finance Director at William Baird plc and KPS plc.
T J Croston (46)
Mr Croston initially joined the company as Group Financial Controller in 2005 and moved to Finance and Operations Director for the
Soft Drinks Division in 2007. He was appointed Group Finance Director on 1 January 2010.
On 7 September 2009 T Purkis resigned as a director.
Financial risk management objectives and policies
Business risks and uncertainties are included within the Financial Review on pages 10 and 11 and financial risks are set out in note 22
to the financial statements.
Creditor payment policy
The group’s policy is to agree terms of payment at the start of business with all suppliers, to abide by these terms and to pay in
accordance with its contractual and other legal obligations. At 31 December 2009 there were 47 (2008: 48) creditor days outstanding.
Employees
The group’s policy is to recruit and promote on the basis of aptitude and ability without discrimination of any kind. Applications for
employment by disabled people are always fully considered bearing in mind the qualification and abilities of the applicants. In the event
of employees becoming disabled every effort is made to ensure their continued employment.
The management of the individual operating companies consult with employees and keep them informed on matters of current interest
and concern to the business.
Charitable and political donations
Charitable donations during the year amounted to £7,000 (2008: £11,000). There were no political donations in either 2009 or 2008.
Share options
The company operates a Save As You Earn share option scheme. In conjunction with this it makes donations to an Employee Share
Ownership Trust to enable shares to be bought in the market to satisfy the demand from option holders.
Share capital
The resolutions concerning the ability of the Board to purchase the company’s own shares and to allot shares are again being proposed
at the Annual General Meeting.
In exercising its authority in respect of the purchase and cancellation of the company’s shares the Board takes as its major criterion the
effect of such purchases on future expected earnings per share. No purchase is made if the effect is likely to be deterioration in future
expected earnings per share growth. During the year the company purchased 60,000 of its own shares for a value of £138,000.
The Board believes that being permitted to allot shares within the limits set out in the resolution without the delay and expense of a
general meeting gives the ability to take advantage of circumstances that may arise during the year.
SIXTEEN
Auditors
In accordance with Section 489 of the Companies Act 2006 a resolution will be proposed at the Annual General Meeting that Grant
Thornton UK LLP be re-appointed auditors.
Statement of Directors’ Responsibilities
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected
to prepare group and parent company financial statements in accordance with International Financial Reporting Standards (IFRS) as
adopted by the European Union. The financial statements are required by law to give a true and fair view of the state of affairs of the
group and company and of the profit or loss of the group for that period. In preparing these financial statements, the directors are
required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable International Financial Reporting Standards as adopted by the European Union have been followed, subject
to any material departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in
business.
The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial
position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
In so far as the directors are aware:
• there is no relevant audit information of which the company’s auditors are unaware; and
• the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to
establish that the auditors are aware of that information.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s
website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Directors’ Indemnity
The group has agreed to indemnify its directors against third party claims which may be brought against them and has in place an
officers’ insurance policy.
SEVENTEEN
Directors’ Remuneration
Salary and
fees
Benefits in
kind
Bonuses
Pension
contributions
Loss of office
Total 2009
Total 2008
£’000
£’000
£’000
£’000
£’000
£’000
£’000
P J Nichols
B M Hynes
T M Purkis
J B Diggines
J D Bee
Total
75
198
88
22
22
405
37
1
1
0
0
39
0
72
22
0
0
94
0
22
8
0
0
30
0
0
121
0
0
121
112
293
240
22
22
689
191
296
62
22
22
593
P J Nichols is a member of the final salary pension scheme; B M Hynes and T M Purkis have a personal pension plan. The company
contributions to the respective schemes are shown in the above table.
By order of the Board
T J Croston
Secretary
Laurel House
Woodlands Park
Ashton Road
Newton le Willows
WA12 0HH
23 March 2010
EIGHTEEN
Independent auditor’s report
to the members of Nichols plc
We have audited the financial statements of Nichols plc for the year ended 31 December 2009 which comprise the consolidated
income statement, the consolidated statement of comprehensive income, the group and parent company statements of financial
position, the consolidated and parent company statements of cash flow, the group and parent company statements of changes
in equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial
statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in
an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors’ Responsibilities set out on page 16, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial
statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to
comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/UKNP.
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December
2009 and of the group’s profit for the year then ended;
• the group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union;
• the parent company financial statements have been properly prepared in accordance with IFRS as adopted by the European Union
and as applied in accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Separate opinion in relation to IFRSs
As explained in Note 2 to the group financial statements, the group in addition to complying with its legal obligation to comply with IFRSs
as adopted by the European Union, has also complied with IFRSs as issued by the International Accounting Standards Board (IASB).
In our opinion the group financial statements comply with IFRSs as issued by the IASB.
Independent auditor’s report
to the members of Nichols plc
NINETEEN
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared is
consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received
from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Joanne Kearns
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Manchester
23 March 2010
TWENTY
Financial statements
Financial statements
TWENTY ONE
twenty two
Consolidated income statement
Year ended 31 December 2009
Revenue
Cost of sales
Gross profit
Distribution expenses
Administrative expenses
Operating profit
Finance income
Finance expense
Profit before taxation
taxation
Profit for the financial year attributable to
equity holders of the parent
earnings per share (basic)
earnings per share (diluted)
Dividends paid per share
Before
exceptional
items
2009
£’000
72,378
exceptional
items
2009
£’000
0
notes
3
Before
exceptional
items
2008
£’000
56,221
exceptional
items
2008
£’000
0
Total
2009
£’000
72,378
total
2008
£’000
56,221
(36,198)
36,180
(4,376)
(19,303)
0
0
(36,198)
36,180
(27,520)
28,701
0
0
(27,520)
28,701
0
(293)
(4,376)
(19,596)
(3,892)
(15,005)
0
(5,940)
(3,892)
(20,945)
12,501
(293)
12,208
9,804
(5,940)
3,864
78
(360)
0
0
78
(360)
288
(54)
0
0
288
(54)
12,219
(293)
11,926
10,038
(5,940)
4,098
(3,651)
79
(3,572)
(2,732)
1,591
(1,141)
8,568
(214)
8,354
7,306
(4,349)
2,957
22.86p
22.57p
11.45p
8.10p
8.10p
10.65p
5
4
6
6
8
10
10
9
the accompanying accounting policies and notes form an integral part of these financial statements.
All results relate to continuing operations.
Consolidated statement of comprehensive income
Year ended 31 December 2009
Profit for the financial year
Other comprehensive income:
Defined benefit plan actuarial loss (see note 27)
Deferred taxation on pension obligations and employee benefits (see note 14)
Other comprehensive income for the year
Total comprehensive income for the year
2009
£’000
8,354
(1,565)
396
(1,169)
7,185
2008
£’000
2,957
(1,286)
132
(1,154)
1,803
twenty thRee
Statement of financial position
Year ended 31 December 2009
ASSETS
Non-current assets
Property, plant and equipment
Goodwill
Investments
Deferred tax assets
Total non-current assets
Current assets
Inventories
trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
LIABILITIES
Current liabilities
trade and other payables
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Pension obligations
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Share premium
Capital redemption reserve
other reserves
Retained earnings
Total equity
Group
Parent
notes
2009
£’000
2008
£’000
2009
£’000
2008
£’000
11
12
13
14
15
16
21
17
17
18
27
14
19
1,573
9,891
0
2,829
14,293
2,694
14,730
11,215
28,639
2,006
9,521
0
2,705
14,232
2,758
13,575
6,048
22,381
280
0
12,371
2,829
15,480
1,414
10,976
9,830
22,220
372
0
12,001
2,697
15,070
1,287
11,009
4,458
16,754
42,932
36,613
37,700
31,824
11,789
1,587
255
13,631
4,744
99
4,843
10,136
1,308
181
11,625
3,567
155
3,722
11,072
1,096
112
12,280
4,744
0
4,744
8,525
894
0
9,419
3,567
0
3,567
18,474
15,347
17,024
12,986
24,458
21,266
20,676
18,838
3,697
3,255
1,209
(357)
16,654
24,458
3,697
3,255
1,209
(574)
13,679
21,266
3,697
3,255
1,209
418
12,097
20,676
3,697
3,255
1,209
201
10,476
18,838
the financial statements on pages 22 to 54 were approved by the Board of Directors on 23 March 2010 and were signed on its behalf by:
P J Nichols
non-executive Chairman
the accompanying accounting policies and notes form an integral part of these financial statements.
Registered number 238303
twenty FouR
Consolidated statement of cash flows
Year ended 31 December 2009
Profit for the financial year
Cash flows from operating activities
Adjustments for:
Depreciation
Loss on sale of property, plant and equipment
Impairment of goodwill and property, plant and equipment
equity-settled share-based payment transactions
Interest receivable
Interest payable
tax expense recognised in the income statement
Change in inventories
Change in trade and other receivables
Change in trade and other payables
Change in provisions
Change in pension obligations
Cash generated from operating activities
tax paid
Net cash generated from operating activities
Cash flows from investing activities
Interest received
Proceeds from sale of property, plant and equipment
Acquisition of property, plant and equipment
Acquisition of joint venture, net of cash acquired
Acquisition of joint venture’s net overdraft
Additional consideration in respect of a prior acquisition
Payment on settlement of pension obligations
Net cash used in investing activities
Cash flows from financing activities
Interest paid
Repurchase of own shares
Dividends paid
Net cash used in financing activities
notes
2009
£’000
2009
£’000
8,354
2008
£’000
2008
£’000
2,957
619
12
0
334
(78)
29
3,572
64
(1,144)
2,654
74
(388)
45
5
(202)
0
0
(1,370)
0
6
6
27
5,748
14,102
(3,076)
11,026
656
20
5,615
543
(288)
54
1,141
342
347
(1,032)
(353)
(588)
288
135
(220)
(2,908)
(131)
(480)
(809)
6,457
9,414
(2,595)
6,819
(1,522)
(4,125)
(6)
(138)
9
(4,193)
(11)
(535)
(3,914)
(4,337)
5,167
6,048
11,215
(4,460)
(1,766)
7,814
6,048
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
21
the accompanying accounting policies and notes form an integral part of these financial statements.
twenty FIve
Parent company statement of cash flows
Year ended 31 December 2009
Profit for the financial year
Cash flows from operating activities
Adjustments for:
Depreciation
Impairment of goodwill and property, plant and equipment
equity-settled share-based payment transactions
Interest receivable
Interest payable
tax expense recognised in the income statement
Change in inventories
Change in trade and other receivables
Change in trade and other payables
Change in provisions
Change in pension obligations
Cash generated from operating activities
tax paid
Net cash generated from operating activities
Cash flows from investing activities
Interest received
Acquisition of property, plant and equipment
Acquisition of joint venture
Additional consideration in respect of a prior acquisition
Payment on settlement of pension obligations
Net cash used in investing activities
Cash flows from financing activities
Interest paid
Repurchase of own shares
Dividends paid
Net cash used in financing activities
notes
2009
£’000
2009
£’000
7,000
2008
£’000
2008
£’000
2,230
165
0
334
(78)
2
3,111
(127)
43
3,551
112
(388)
6,725
13,725
(2,645)
11,080
68
(73)
0
(1,370)
0
27
234
5,615
543
(288)
53
806
259
190
(460)
(117)
(588)
288
(104)
(2,908)
(480)
(809)
6,247
8,477
(2,324)
6,153
(1,375)
(4,013)
(2)
(138)
9
(4,193)
(10)
(535)
(3,914)
(4,333)
5,372
4,458
9,830
(4,459)
(2,319)
6,777
4,458
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
21
the accompanying accounting policies and notes form an integral part of these financial statements.
twenty SIx
Statement of changes in equity
Year ended 31 December 2009
Group
At 1 January 2008
Dividends
Purchase of own shares
Movement in eSot
IFRS 2 “Share-based payment” charge
Transactions with owners
Profit for the year
other comprehensive income
At 1 January 2009
Dividends
Purchase of own shares
Movement in eSot
IFRS 2 “Share-based payment” charge
Transactions with owners
Profit for the year
other comprehensive income
At 31 December 2009
Parent
At 1 January 2008
Dividends
Purchase of own shares
Movement in eSot
IFRS 2 “Share-based payment” charge
Transactions with owners
Profit for the year
other comprehensive income
At 1 January 2009
Dividends
Purchase of own shares
Movement in eSot
IFRS 2 “Share-based payment” charge
Transactions with owners
Profit for the year
other comprehensive income
At 31 December 2009
Called up
share
capital
£’000
Share
premium
reserve
£’000
Capital
redemption
reserve
£’000
3,697
3,255
1,209
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
3,697
3,255
1,209
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
other
reserves
£’000
(492)
0
(535)
(90)
543
(82)
0
0
(574)
0
(138)
21
334
217
0
0
3,697
3,255
1,209
(357)
Called up
share
capital
£’000
Share
premium
reserve
£’000
Capital
redemption
reserve
£’000
3,697
3,255
1,209
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
3,697
3,255
1,209
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
3,697
3,255
1,209
other
reserves
£’000
283
0
(535)
(90)
543
(82)
0
0
201
0
(138)
21
334
217
0
0
418
Retained
earnings
£’000
15,828
(3,914)
0
(38)
0
(3,952)
2,957
(1,154)
13,679
(4,193)
0
(17)
0
total equity
£’000
23,497
(3,914)
(535)
(128)
543
(4,034)
2,957
(1,154)
21,266
(4,193)
(138)
4
334
(4,210)
(3,993)
8,354
(1,169)
16,654
8,354
(1,169)
24,458
Retained
earnings
£’000
13,352
(3,914)
0
(38)
0
total equity
£’000
21,796
(3,914)
(535)
(128)
543
(3,952)
(4,034)
2,230
(1,154)
10,476
(4,193)
0
(17)
0
2,230
(1,154)
18,838
(4,193)
(138)
4
334
(4,210)
(3,993)
7,000
(1,169)
12,097
7,000
(1,169)
20,676
twenty Seven
Notes to the financial statements
Year ended 31 December 2009
1. Reporting entity
nichols plc (the “company”) is a company domiciled in the united Kingdom. the address of the company’s registered office is Laurel house,
woodlands Park, Ashton Road, newton-le-willows, wA12 0hh. the consolidated financial statements of the company as at and for the year ended
31 December 2009 comprise the company and its subsidiaries (together referred to as the “group”). the group is primarily engaged in the supply of
soft drinks to the retail, wholesale, catering, licensed and leisure industries.
2. Accounting policies
Basis of preparation
the consolidated and parent company financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRS) as adopted by the eu.
the financial statements were approved by the Board of Directors on 23 March 2010.
the financial statements have been prepared on the historical cost basis.
the accounting policies have been applied consistently by the group.
A third balance sheet has not been prepared as required by IAS 1 (revised) as the information is unchanged from the previously published financial
statements.
An income statement is not provided for the parent company as permitted by Section 408 of the Companies Act 2006.
the profit dealt with in the financial statements of nichols plc was £7,000,000 (2008: £2,230,000).
Functional and presentation currency
these consolidated financial statements are presented in sterling, which is also the functional currency of the parent company.
Use of estimates and judgements
the preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
the following is the critical judgement, apart from those involving estimations (see below), that management have made in the process of applying
the group’s accounting policies that has the most significant effect on the amounts recognised in the financial statements.
Revenue recognition
In making their judgement, management have considered the detailed criteria for the recognition of revenue from the sale of goods as outlined in
IAS 18 “Revenue” and in particular where the group has transferred to the customer the significant risks and rewards of ownership of the goods.
Management are satisfied that recognition of all such revenue in the current year is appropriate and that the significant risks and rewards attached
to such sales have been transferred to the buyer.
the following are the key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been
allocated. the “value in use” calculation requires management to estimate the future cash flows expected to arise from the cash-generating unit
and a suitable discount rate in order to calculate present value (see note 12).
the carrying amount of goodwill at the balance sheet date was £9.9 million (2008: £9.5 million).
twenty eIGht
Notes to the financial statements
Year ended 31 December 2009
Share options
the assumptions on the expected life of share options, volatility of shares, risk free yield to maturity and expected dividend yield on shares are used
in the IFRS fair value calculation of the group’s share options outstanding at the balance sheet date (see note 20).
Defined benefit obligations
For the group’s defined benefit plan, the main assumptions used by the actuary are the rate of future salary increases, the rate of increase in
pensions in payment, the discount rate and the expected rate of inflation (see note 27).
useful lives of property, plant and equipment
As described within the property, plant and equipment paragraph below, the group reviews the estimated useful lives of property, plant and
equipment at least annually.
estimates and underlying assumptions are reviewed by management on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised and in any future periods affected.
Basis of consolidation
the group financial statements consolidate those of the company and all of its subsidiary undertakings drawn up to 31 December 2009.
Subsidiaries are entities controlled by the group. Control exists when the group has the power to govern the financial and operating policies of
an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are exercisable are taken into account. the
financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that
control ceases. entities whose economic activities are jointly controlled by the group and other ventures independent of the group are accounted
for using the proportionate consolidation method.
Intra-group balances and any unrealised gains and losses arising from intra-group transactions are eliminated in preparing the consolidated
financial statements. All group companies have coterminous year ends.
Acquisitions of subsidiaries are dealt with by the purchase method. the purchase method involves the recognition at fair value of all identifiable
assets and liabilities at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior
to acquisition. on initial recognition, the assets and liabilities of the subsidiary are included in the consolidated balance sheet at their fair values,
which are also used as the basis for subsequent measurement in accordance with group accounting policies. Goodwill is stated after separating
out identifiable assets. Goodwill represents the excess of acquisition costs over the fair value of the group’s share of the identifiable net assets of
the acquired subsidiary at the date of acquisition.
the group has elected not to apply IFRS 3 “Business combinations” retrospectively to business combinations established prior to 1 January 2006.
Accordingly, the classification of the combination (acquisition, reverse acquisition or merger) remains unchanged from that used under uK GAAP.
Assets and liabilities are recognised at the date of transition if they would be recognised under IFRS and are measured using their uK GAAP
carrying amount immediately post-acquisition as deemed cost under IFRS, unless IFRS requires fair value measurement. Deferred tax and minority
interest are adjusted for the impact of any consequential adjustments after taking advantage of the transitional provisions.
Revenue recognition
Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade
discounts, volume discounts and excluding vAt. Revenue is recognised when the significant risks and rewards of ownership have been transferred
to the buyer, the amount of revenue can be measured reliably, recovery of the consideration is probable, the associated costs and possible return
of goods can be estimated reliably and there is no continuing management involvement with the goods.
transfer of risks and rewards vary depending on the individual term of the contract of sale. For sales in the uK, transfer occurs when the product is
despatched to the customer. however, for some international shipments, transfer occurs either upon loading the goods onto the relevant carrier or
when the goods have arrived in the overseas port.
twenty nIne
Notes to the financial statements
Year ended 31 December 2009
Segmental reporting
this year the group adopted IFRS 8 “operating segments” which replaces IAS 14 “Segment reporting”. the standard is applied retrospectively.
the accounting policy for identifying segments is now based on internal management reporting information that is regularly reviewed by the chief
operating decision maker. In contrast, IAS 14 required the group to identify two sets of segments (business and geographical) based on risks and
rewards of the operating segments. this change in accounting standards has not had an impact on group segmental reporting.
In identifying its operating segments, management generally follows the group’s service lines which represent the main products and services
provided by the group.
the group operates two main business segments: Soft Drinks; Dispense operation. the Soft Drinks segment sells and markets the vimto brand
throughout the world together with the Panda and Sunkist brands in the uK. the Dispense operation provides consumers with a broad range
of cold soft drinks on draught. these operating segments are managed separately as they each require different resources as well as marketing
approaches.
Foreign currency transactions
transactions in foreign currencies are translated into the respective functional currencies of group entities at exchange rates at the date of
transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at
the exchange rate at that date.
Any exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they
were initially recorded are recognised in the consolidated income statement in the period in which they arise.
Exceptional items
exceptional items are material items which individually, or if of a similar type, in aggregate, need to be disclosed by virtue of their size or incidence in
order to assist in understanding the group’s financial performance (see note 5).
Taxation
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to the extent that it
relates to items recognised directly to equity, in which case it is recognised in other comprehensive income.
Current tax
Current tax is the expected tax payable on the taxable income for the year, using rates which are enacted or substantively enacted at the reporting
date and any adjustment to tax payable in respect of previous years.
Deferred tax
Deferred tax is recognised using the balance sheet method, with no discounting, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not provided on the
initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects
tax or accounting profit. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse,
provided they are enacted or substantively enacted at the reporting date.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences
can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related
tax benefit will be realised.
thIRty
Notes to the financial statements
Year ended 31 December 2009
Goodwill
Goodwill arises on the acquisition of subsidiaries, associates and joint ventures.
Goodwill representing the excess of the cost of acquisition over the fair value of the group’s share of the identifiable assets acquired, is capitalised
and reviewed annually for impairment. Goodwill is measured at cost less accumulated impairment losses.
As part of its transition to IFRS, the group elected to restate only those business combinations that occurred on or after 1 January 2006. In respect
of acquisitions prior to 1 January 2006, the net book value of goodwill at the date of transition is the deemed cost of goodwill to the group under
IFRS.
For acquisitions on or after 1 January 2006, goodwill represents the excess of the cost of the acquisition over the group’s interest in the net fair
value of the identifiable assets, liabilities and contingent liabilities of the acquiree. when the excess is negative, it is recognised immediately in the
group income statement.
Goodwill written off to reserves prior to the date of transition to IFRS remains in reserves. there is no re-instatement of goodwill previously
amortised on the transition to IFRS. Goodwill previously written off to reserves is not written back to the income statement on subsequent disposal.
Other reserves
other reserves incorporate purchase of own shares, movements in the group’s eSot and the IFRS 2 “Share-based payment” charge for the year.
Impairment
the carrying values of the group’s non-current assets are reviewed at each reporting date to determine whether there is any indication of
impairment. Goodwill is reviewed for impairment annually. All property, plant and equipment is tested for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable. If any such indication of impairment exists then the asset’s recoverable
amount is estimated.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-
generating units). As a result, some assets are tested individually for impairment and some are tested at a cash-generating unit level.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. the recoverable
amount is the higher of fair value, reflecting market conditions less costs to sell and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using the cost of capital that reflects the current market assessments of the time value of money
and the risks specific to the asset. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying
amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit on a pro rata basis. Impairment
losses are recognised in the income statement.
Property, plant and equipment
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset.
the cost of replacing part of an item of plant, property and equipment is recognised in the carrying amount of the item if it is probable that the
future economic benefits embodied within the part will flow to the group and its cost can be measured reliably. the costs of the day-to-day
servicing of property, plant and equipment are recognised in the income statement as incurred.
Depreciation is calculated on a straight line basis to write down the cost less estimated residual value on property, plant and equipment over their
estimated useful lives.
the estimated useful lives for the current and comparative periods are as follows:
Property, plant and equipment 3-10 years
Material residual value estimates and useful economic lives are updated at least annually.
thIRty one
Notes to the financial statements
Year ended 31 December 2009
Inventories
Inventories are measured at the lower of cost and net realisable value. the cost of inventories is based on the first-in first-out principle and includes
expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. net realisable value is the estimated
selling price in the ordinary course of business, less the costs of completion and selling expenses.
Financial assets
the group’s financial assets comprise primarily cash, bank deposits and trade receivables that arise from its business operations.
For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise deposits with banks and bank and cash
balances.
Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less
provisions for impairment. A provision for impairment of trade receivables is established when there is evidence that the group will not be able to
collect all amounts due according to the original terms of the receivable.
Financial liabilities
the group’s financial liabilities comprise trade payables. Financial liabilities are obligations to pay cash or other financial assets and are recognised
when the group becomes a party to the contractual provisions of the instruments. trade payables are initially measured at fair value and are
subsequently measured at amortised cost, using the effective interest rate method.
Leased assets
operating leases and the payments are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives
received are recognised as an integral part of the total lease expense, over the term of the lease.
Employee benefits
Defined contribution plan
obligations for contributions to the group’s defined contribution pension plan are recognised as an expense in the income statement when they are
due.
Defined benefit plan
the group’s net obligation in respect of its defined benefit pension plan is calculated by estimating the amount of future benefit that employees have
earned in return for their service in the current and prior periods. that benefit is discounted to determine its present value, and any unrecognised
past service costs and the fair value of any plan assets are deducted. the discount rate is the yield at the reporting date on AA credit-rated bonds
that have maturity dates approximating the terms of the group’s obligations. the calculation is performed by a qualified actuary using the projected
unit credit method. when the calculation results in a benefit to the group, the recognised asset is limited to the net total of any unrecognised past
service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan.
Actuarial gains and losses are recognised in the statement of comprehensive income. Interest expenses related to pension obligations are included
in “finance costs” in the group income statement. All other post employment benefits are included in administrative expenses in the group income
statement.
when the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised in the income
statement on a straight-line basis over the average period until the benefits become vested. to the extent that the benefits vest immediately, the
expense is recognised immediately in the income statement.
thIRty two
Notes to the financial statements
Year ended 31 December 2009
Share-based payment transactions
the group’s equity-settled share-based payments comprise the grant of options under the group’s share option schemes.
In accordance with IFRS 2 “Share-based payment”, the group has recognised an expense to the income statement representing the fair value
of outstanding equity-settled share-based payment awards to employees which have not vested as at 1 January 2009 for the year ending 31
December 2009.
those fair values were charged to the income statement over the relevant vesting period adjusted to reflect actual and expected vesting levels.
the group has calculated the fair market value of the nil cost options as being based on the market value of a company share at the date of grant
adjusted to reflect the fact that an employee is not entitled to receive dividends over the relevant holding period.
the total amount to be expensed over the vesting period is determined with reference to the fair value of options granted, excluding the impact
of any non market vesting conditions. non market vesting conditions are included in the assumptions about the number of options expected to
vest. At each balance sheet date the group revises its estimate of the number of options expected to vest. It recognises the impact of revisions
to original estimates, if any, in the income statement, with a corresponding adjustment to equity. the proceeds received, net of any directly
attributable transactions costs, are credited to share capital and share premium when the options are exercised.
Provisions and contingent liabilities
A provision is recognised if, as a result of a past event, the group has a present legal or constructive obligation that can be estimated reliably and
it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
A provision for restructuring is recognised when the group has approved a detailed and formal restructuring plan and the restructuring either has
commenced or has been announced publicly. Future operating costs are not provided for.
Finance income and expenses
Finance income comprises interest income on funds invested. Interest income is recognised as it accrues, using the effective interest method.
Dividend income is recognised on the date that the group’s right to receive payment is established.
Finance expenses comprise interest expense on borrowings and are recognised in the income statement.
Earnings per share
the group presents basic and diluted earnings per share (ePS) data for its ordinary shares. Basic ePS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the company by the weighted average number of ordinary shares outstanding during the period. Diluted
ePS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares
outstanding for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees.
Employee Share Ownership Trust
the assets and liabilities of the employee Share ownership trust (“eSot”) have been included in the consolidated financial statements.
the costs of purchasing own shares held by the eSot are shown as a deduction against equity. neither the purchase nor sale of own shares leads
to a gain or loss being recognised in the consolidated income statement.
Investments in subsidiaries
Investments in subsidiaries are shown in the parent company balance sheet at cost less any provision for impairment.
thIRty thRee
Notes to the financial statements
Year ended 31 December 2009
Standards and interpretations in issue not yet adopted
As of 31 December 2009, the following standards and interpretations are in issue but not yet adopted by the eu:
• IFRS 9 Financial Instruments (effective 1 January 2013)
• Prepayments of a Minimum Funding Requirement - Amendments to IFRIC 14 (effective 1 January 2011)
• IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments (effective 1 July 2010)
• Improvements to IFRSs (Issued 16 April 2009)
• Group Cash-settled Share-based Payment Transactions - Amendment to IFRS 2 (effective 1 January 2010)
• Amendment to IFRS 1 Additional Exemptions for First-time Adopters (effective 1 January 2010)
• IAS 24 (Revised 2009) Related Party Disclosures (effective 1 January 2011)
See below for further issues relating to various IFRICs:
• IFRIC 16 Hedges of a Net Investment in a Foreign Operation - was adopted by the EU and published in the Official Journal on 5 June 2009 with
a mandatory effective date in the endorsed version of financial years starting after 30 June 2009 rather than the effective date in the text itself of
periods commencing on or after 1 october 2008. however, the eu-adopted version still permits earlier application than the mandatory eu date.
• IFRIC 17 Distribution of Non-cash Assets to Owners - was adopted by the EU and published in the Official Journal on 27 November 2009 with a
mandatory effective date in the endorsed version of financial years starting after 31 october 2009 rather than the effective date in the text itself of
periods commencing on or after 1 July 2009. however, the eu-adopted version still permits earlier application than the mandatory eu date.
• IFRIC 18 Transfers of Assets from Customers - was adopted by the EU and published in the Official Journal on 1 December 2009 with a
mandatory effective date in the endorsed version of financial years starting after 31 october 2009 rather than the effective date in the text itself of
periods commencing on or after 1 July 2009. however, the eu-adopted version still permits earlier application than the mandatory eu date.
new standards and interpretations currently in issue but not effective for accounting periods commencing on 1 January 2009 are:
• IFRS 9 Financial Instruments (effective 1 January 2013)
• IAS 24 (Revised 2009) Related Party Disclosures (effective 1 January 2011)
• IAS 27 Consolidated and Separate Financial Statements (Revised 2008) (effective 1 July 2009)
• Amendment to IAS 39 Financial Instruments: Recognition and Measurement - Eligible Hedged Items (effective 1 July 2009)
• Group Cash-settled Share-based Payment Transactions - Amendment to IFRS 2 (effective 1 January 2010)
• Improvements to IFRSs 2009 (various effective dates, earliest of which is 1 July 2009, but mostly 2010)
• IFRS 3 Business Combinations (Revised 2008) (effective 1 July 2009)
• IFRIC 17 Distributions of Non-cash Assets to Owners (effective 1 July 2009)
• IFRIC 18 Transfers of Assets from Customers (effective prospectively for transfers on or after 1 July 2009)
• IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments (effective 1 July 2010)
• Prepayments of a Minimum Funding Requirement - Amendments to IFRIC 14 (effective 1 January 2011)
• Amendment to IFRS 1 Additional Exemptions for First-time Adopters (effective 1 January 2010)
• Amendment to IAS 32 Classification of Rights Issues (effective 1 February 2010)
thIRty FouR
Notes to the financial statements
Year ended 31 December 2009
3. Segmental information
a. Primary reporting format-by business segment
Soft Drinks
Dispense operation
IAS 19 “employee benefits” charge
IFRS 2 “Share-based payment” charge
operating profit before exceptional items and interest
exceptional items (see note 5) - Soft Drinks
exceptional items (see note 5) - Dispense operation
operating profit
Finance income - Soft Drinks
Finance expense - Soft Drinks
Profit before tax
taxation - Soft Drinks
taxation - Dispense operation
Profit after tax
Soft Drinks
Dispense operation
employee benefits obligations
Cash and cash equivalents - Soft Drinks
Cash and cash equivalents - Dispense operation
Revenue
(sales to third parties)
Operating
profit
2009
£’000
55,103
17,275
72,378
2008
£’000
43,479
12,742
56,221
2009
£’000
11,163
1,728
12,891
(56)
(334)
12,501
0
(293)
12,208
78
(360)
11,926
(3,111)
(461)
8,354
2008
£’000
9,526
905
10,431
(84)
(543)
9,804
(5,713)
(227)
3,864
288
(54)
4,098
(805)
(336)
2,957
Assets
Liabilities
Net assets
2009
£’000
15,256
16,461
31,717
0
9,830
1,385
2008
£’000
13,649
16,916
30,565
0
4,458
1,590
2009
£’000
(11,370)
(2,360)
(13,730)
(4,744)
0
0
2008
£’000
(8,614)
(3,166)
(11,780)
(3,567)
0
0
2009
£’000
3,886
14,101
17,987
(4,744)
9,830
1,385
42,932
36,613
(18,474)
(15,347)
24,458
2008
£’000
5,035
13,750
18,785
(3,567)
4,458
1,590
21,266
the group is managed according to two operating divisions: Soft Drinks and Dispense operation. these divisions are the basis on which the group
reports its primary segment information. Central costs are allocated to the operating subsidiaries and divisions. exceptional items include amounts
directly attributable to a segment, in addition to those costs that can be allocated on a reasonable basis.
Capital expenditure
Capital expenditure costs within Soft Drinks totalled £73,000 (2008:£103,000), and within Dispense operation totalled £129,000 (2008: £117,000).
Depreciation
Depreciation costs within Soft Drinks totalled £165,000 (2008: £234,000), and within Dispense operation totalled £454,000 (2008: £422,000).
thIRty FIve
Notes to the financial statements
Year ended 31 December 2009
3. Segmental information (continued)
b. Secondary reporting format-by geographic segment
Revenue by geographic destination
Middle east
Africa
Rest of the world
total exports
united Kingdom
2009
£’000
8,453
2,925
592
11,970
60,408
72,378
2009
%
11.7
4.0
0.8
16.5
83.5
100.0
2008
£’000
6,058
2,627
297
8,982
47,239
56,221
2008
%
10.8
4.7
0.5
16.0
84.0
100.0
Revenue from continuing operations arose principally from the provision of goods.
the group’s business segments operate in the Middle east, Africa, the Rest of the world and the united Kingdom. the group’s head office
operations are located in the united Kingdom. In presenting information on the basis of geographical segments, segment revenue is based on the
geographical location of customers and not on the legal entity in which the transaction occurred.
no individual customer accounts for 10% or more of the group’s revenue in either 2009 or 2008.
Total assets
the assets of the group at 31 December 2009 and 31 December 2008 are entirely located within the united Kingdom.
Capital expenditure
the capital expenditure of the group for the years ended 31 December 2009 and 31 December 2008 was entirely made within the united Kingdom.
Depreciation
the group’s depreciation charges for the years ended 31 December 2009 and 31 December 2008 are against fixed assets all retained within the
united Kingdom.
thIRty SIx
Notes to the financial statements
Year ended 31 December 2009
4. Operating profit
Operating profit is stated after charging/(crediting):
Inventory amounts charged to cost of sales
Auditors’ remuneration - audit of the company’s annual accounts
Fees payable to the auditors for other services:
Audit of the company’s subsidiaries
Depreciation of property, plant and equipment
operating lease rentals payments
equity-settled share-based payments
Loss/(gain) on foreign exchange differences
Loss on sale of property, plant and equipment
2009
£’000
2008
£’000
36,198
27,462
35
15
619
563
334
255
12
35
15
656
472
543
(672)
20
During 2008 depreciation of £30,000 has not been charged through the income statement as a provision was made for this cost at the end of 2007.
5. Exceptional items
Soft Drinks brands portfolio review
Dispense operation restructuring costs
total
the cash impact in 2009 of the exceptional items is £38,000 (2008: £104,000).
6. Finance income and expense
Finance income comprises:
Bank interest receivable
Finance expense comprises:
Bank interest payable
expected return on defined benefit pension scheme assets
Interest on defined benefit pension scheme obligations
Finance expense
2009
£’000
0
293
293
2008
£’000
5,713
227
5,940
2009
£’000
2008
£’000
78
288
29
(737)
1,068
360
11
(1,102)
1,145
54
Notes to the financial statements
Year ended 31 December 2009
7. Directors and employees
a. Average number of persons employed during the year, including directors:
Soft Drinks
Dispense operation
b. Group employment costs were as follows:
wages and salaries
Social security costs
Pension costs - defined contribution scheme
Pension costs - defined benefit scheme (see note 27)
equity-settled share-based payments
the employment costs for the parent company amounted to £5,324,000 (2008: £5,000,000).
Directors’ remuneration for the year, including pension costs
the highest paid director has received £292,881 (2008: £295,780) including pension contributions.
Benefits are accruing to 2 directors (2008: 2 directors) under a defined contribution scheme.
thIRty Seven
2009
Number
2008
number
62
59
121
2009
£’000
5,845
519
266
56
334
60
67
127
2008
£’000
5,678
514
227
84
543
7,020
7,046
2009
£’000
689
2008
£’000
593
equity-settled share-based payments in respect of directors, not included in the above figures, amounted to nil (2008: £302,000).
Further information regarding directors’ remuneration is provided in the directors’ report on pages 14 to 17.
c. Key management personnel are deemed to be the executive directors of the company and members of the Executive Committee.
the compensation payable to key management in the year is detailed below:
wages and salaries
Pension costs - defined contribution scheme
Pension costs - defined benefit scheme
equity-settled share-based payments
2009
£’000
1,058
52
16
315
1,441
2008
£’000
939
40
12
525
1,516
thIRty eIGht
Notes to the financial statements
Year ended 31 December 2009
8. Taxation
a. Analysis of expense recognised in the consolidated income statement
Current taxation:
uK corporation tax on income for the year
Adjustments in respect of prior years
total current tax charge for the year
Deferred tax:
origination and reversal of temporary differences
Adjustments in respect of prior years
total deferred tax charge/(credit) for the year
total tax expense in the consolidated income statement
the tax expense is wholly in respect of uK taxation.
b. Tax reconciliation
Profit before taxation
Profit before taxation multiplied by the standard rate of corporation tax in the united Kingdom of 28% (2008: 28.5%)
effect of:
expenses not deductible for tax purposes
tax exempt revenues
Adjustments to the tax charge in respect of prior years
Differences in tax rates
Reduction in tax rate to 28% in respect of deferred taxation
total tax expense in the consolidated income statement
2009
£’000
3,397
(41)
3,356
2008
£’000
2,539
229
2,768
35
181
216
(1,541)
(86)
(1,627)
3,572
1,141
2009
£’000
11,926
3,339
99
0
140
(6)
0
3,572
2008
£’000
4,098
1,168
38
(231)
143
(5)
28
1,141
the effective rate of tax for the year of 30.0% (2008: 27.8%) is higher than the standard rate of corporation tax in the united Kingdom (28%). the
differences are explained above.
c. The effective rate of tax on profit before exceptional items is 29.9% (2008: 27.2%).
d. Tax on items charged to equity
In addition to the amount credited to the consolidated income statement, £396,000 (2008: charge £132,000) has been charged directly to equity,
being the movement on deferred taxation relating to retirement benefit obligations and employee benefits.
9. Equity dividends
Interim dividend 4.05p (2008: 3.75p) paid 2 September 2009
Final dividend proposed in 2008 7.40p (2007: 6.90p) paid 21 May 2009
2009
£’000
1,482
2,711
4,193
2008
£’000
1,374
2,540
3,914
the interim dividend for the prior year of £1,374,000 was paid on 3 September 2008.
In accordance with IAS 10 “events after the balance sheet date”, the 2009 second interim dividend of £2,963,000 (8.1p per share) has not been
accrued as it had not been approved by the year end.
thIRty nIne
Notes to the financial statements
Year ended 31 December 2009
10. Earnings per share
earnings per share (basic)
earnings per share (diluted)
earnings per share (basic) - before exceptional items
earnings per share (diluted) - before exceptional items
Earnings per share - after exceptional items
2009
22.86p
22.57p
23.44p
23.15p
2008
8.10p
8.10p
20.03p
20.01p
Basic earnings per share
Dilutive effect of share options
Diluted earnings per share
2009
Weighted
average
number of
shares
Earnings
£’000
Earnings
per share
earnings
£’000
2008
weighted
average
number of
shares
earnings
per share
8,354 36,548,553
22.86p
2,957 36,480,421
8.10p
457,169
24,879
8,354
37,005,722
22.57p
2,957
36,505,300
8.10p
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 per share - before exceptional items
Basic earnings per share
exceptional items
taxation in respect of exceptional items
2009
Weighted
average
number
of shares
Earnings
£’000
Earnings
per share
earnings
£’000
2008
weighted
average
number
of shares
earnings
per share
8,354 36,548,553
22.86p
2,957 36,480,421
8.10p
293
(79)
5,940
(1,591)
Basic earnings per share before exceptional items
8,568 36,548,553
23.44p
7,306 36,480,421
20.03p
Dilutive effect of share options
457,169
24,879
Diluted earnings per share before exceptional items
8,568
37,005,722
23.15p
7,306
36,505,300
20.01p
FoRty
Notes to the financial statements
Year ended 31 December 2009
11. Property, plant and equipment
Group
Cost
At 1 January 2008
Acquisitions through business combinations
Additions
Impairment
Disposals
At 1 January 2009
Additions
Disposals
At 31 December 2009
Depreciation
At 1 January 2008
Charge for the year
Impairment
on disposals
At 1 January 2009
Charge for the year
on disposals
At 31 December 2009
Net book value at 31 December 2009
net book value at 31 December 2008
Parent
Cost
At 1 January 2008
Additions
Impairment
At 1 January 2009
Additions
At 31 December 2009
Depreciation
At 1 January 2008
Charge for the year
Impairment
At 1 January 2009
Charge for the year
At 31 December 2009
Net book value at 31 December 2009
net book value at 31 December 2008
Property, plant and
equipment
£’000
5,683
312
220
(300)
(568)
5,347
202
(134)
5,415
3,235
686
(165)
(415)
3,341
619
(118)
3,842
1,573
2,006
Property, plant and
equipment
£’000
1,780
103
(300)
1,583
73
1,656
1,142
234
(165)
1,211
165
1,376
280
372
Notes to the financial statements
Year ended 31 December 2009
12. Goodwill
Group
Cost
At 1 January 2008
Additions
Impairment
At 1 January 2009
Additions
At 31 December 2009
Parent
Cost
At 1 January 2008
Impairment
At 31 December 2008 and 31 December 2009
FoRty one
£’000
10,910
4,091
(5,480)
9,521
370
9,891
£’000
5,480
(5,480)
0
Goodwill relates to the Dispense operation which is considered by management to be one cash-generating unit.
Goodwill is tested at least annually for impairment and whenever there are indications that goodwill might be impaired. the recoverable amount of
a cash-generating unit is based on its value in use. value in use is the present value of the projected cash flows of the cash-generating unit. the
key assumptions regarding the value in use calculations were forecast growth in revenues and the discount rate applied. Budgeted revenue growth
is estimated based on actual performance over the past two years and expected market changes. the discount rate used is a pre-tax rate and
reflects the risks specific to the relevant cash-generating unit. Dispense operation cash flow projections are based on the most recent financial
budgets approved by management. Management have applied an annual growth rate of 6% in projecting the cash flows for a period of five years.
Cash flows beyond this period are extrapolated using a growth rate of 1.1%. the discount rate applied was 9%.
Goodwill additions for 2009 consist entirely of additional consideration for the acquisition of Beacon Drinks Limited in a prior year. the total goodwill
is entirely attributable to the Dispense operation.
13. Investments: shares in group undertakings
Parent
Cost and net book amount
At 1 January 2008
Additions
At 1 January 2009
Additions (see * below)
At 31 December 2009
£’000
7,696
4,305
12,001
370
12,371
*Parent company additions comprise £370,000 relating to Beacon Drinks Limited, a prior year acquisition, in respect of earn-out arrangements on
the shares acquired by the group.
FoRty two
Notes to the financial statements
Year ended 31 December 2009
13. Investments: shares in group undertakings (continued)
All non current investments relate to group undertakings. Listed below are the trading subsidiaries and the ownership of their ordinary share capital
by the group.
Beacon holdings Limited
Beacon Drinks Limited *
Cabana (holdings) Limited
Cabana Soft Drinks Limited **
Cariel Soft Drinks Limited
Dayla Liquid Packing Limited
%
100
100
100
100
100
50
the company directly owns Cabana (holdings) Limited, Beacon holdings Limited, Cariel Soft Drinks Limited and 50% of Dayla Liquid Packing
Limited.
*Beacon Drinks Limited is directly owned by Beacon holdings Limited.
**Cabana Soft Drinks Limited is directly owned by Cabana (holdings) Limited.
All group undertakings are consolidated.
the above companies and the parent company were all incorporated and operate in the united Kingdom.
Particulars of non-trading companies are filed with the annual return.
All companies in the group are engaged in the supply of soft drinks and other beverages.
FoRty thRee
Notes to the financial statements
Year ended 31 December 2009
14. Deferred tax assets and liabilities
Movement in temporary differences during the year
Group
Property, plant and equipment
Goodwill
employee benefits
Provisions
Group
Property, plant and equipment
Goodwill
employee benefits
Provisions
Parent
Property, plant and equipment
Goodwill
employee benefits
Provisions
Parent
Property, plant and equipment
Goodwill
employee benefits
Provisions
net balance at
1 January 2009
£’000
(21)
1,341
1,189
41
2,550
net balance at
1 January 2008
£’000
(59)
(192)
1,059
33
841
net balance at
1 January 2009
£’000
134
1,341
1,189
33
2,697
net balance at
1 January 2008
£’000
95
(192)
1,059
33
995
Recognised
in income
£’000
43
(64)
(157)
(38)
(216)
Recognised
in income
£’000
88
1,533
(2)
8
1,627
Recognised
in income
£’000
(13)
(64)
(157)
(30)
(264)
Recognised
in income
£’000
39
1,533
(2)
0
1,570
Recognised
in equity
£’000
0
0
396
0
396
Recognised
in equity
£’000
0
0
132
0
132
Recognised
in equity
£’000
0
0
396
0
396
Recognised
in equity
£’000
0
0
132
0
132
Deferred tax
acquired
£’000
0
0
0
0
0
Deferred tax
acquired
£’000
(50)
0
0
0
(50)
Deferred tax
acquired
£’000
0
0
0
0
0
Deferred tax
acquired
£’000
0
0
0
0
0
Net balance at
31 December 2009
£’000
22
1,277
1,428
3
2,730
Net balance at
31 December 2008
£’000
(21)
1,341
1,189
41
2,550
Net balance at
31 December 2009
£’000
121
1,277
1,428
3
2,829
Net balance at
31 December 2008
£’000
134
1,341
1,189
33
2,697
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets
Liabilities
Net
Group
Property, plant and equipment
Goodwill
employee benefits
Provisions
Parent
Property, plant and equipment
Goodwill
employee benefits
Provisions
Current year
£’000
121
1,277
1,428
3
2,829
Prior year
£’000
134
1,341
1,189
41
2,705
Current year
£’000
(99)
0
0
0
(99)
Prior year
£’000
(155)
0
0
0
(155)
Current year
£’000
22
1,277
1,428
3
2,730
Prior year
£’000
(21)
1,341
1,189
41
2,550
Assets
Liabilities
Net
Current year
£’000
121
1,277
1,428
3
2,829
Prior year
£’000
134
1,341
1,189
33
2,697
Current year
£’000
0
0
0
0
0
Prior year
£’000
0
0
0
0
0
Current year
£’000
121
1,277
1,428
3
2,829
Prior year
£’000
134
1,341
1,189
33
2,697
FoRty FouR
Notes to the financial statements
Year ended 31 December 2009
15. Inventories
Finished goods
Group
Parent
2009
£’000
2,694
2008
£’000
2,758
2009
£’000
1,414
2008
£’000
1,287
In 2009 the group write-down of inventories to net realisable value amounted to £88,000 (2008: £107,000).
16. Trade and other receivables
trade receivables
Amounts owed by group undertakings
other receivables
Prepayments and accrued income
Group
Parent
2009
£’000
13,517
0
896
317
2008
£’000
12,215
0
1,079
281
2009
£’000
10,364
243
127
242
2008
£’000
9,121
1,717
19
152
14,730
13,575
10,976
11,009
other receivables include an amount of £436,000 (2008: £327,000) due in more than one year. All other amounts above are short-term debt. the
difference between the carrying value and fair value of all receivables is not considered to be material.
All trade and other receivables have been reviewed for indicators of impairment and a provision of £919,000 (2008: £674,000) has been recorded
accordingly.
In addition, some of the unimpaired trade receivables are past due at the reporting date. the age of receivables past due but not impaired is as
follows:
Group
up to 30 days overdue
over 30 days and up to 60 days overdue
over 60 days and up to 90 days overdue
over 90 days overdue
Parent
up to 30 days overdue
over 30 days and up to 60 days overdue
over 60 days and up to 90 days overdue
over 90 days overdue
2009
£’000
2,140
587
203
0
2008
£’000
1,332
612
343
299
2,930
2,586
2009
£’000
1,605
500
227
0
2008
£’000
1,037
590
339
347
2,332
2,313
FoRty FIve
Notes to the financial statements
Year ended 31 December 2009
16. Trade and other receivables (continued)
Group
Bad debt provision
Group
Bad debt provision
Parent
Bad debt provision
Parent
Bad debt provision
At 1 January 2009
£’000
Charge in the year
£’000
utilised
£’000
At 31 December 2009
£’000
674
272
(27)
919
At 1 January 2008
£’000
Charge in the year
£’000
utilised
£’000
At 31 December 2008
£’000
544
159
(29)
674
At 1 January 2009
£’000
Charge in the year
£’000
utilised
£’000
At 31 December 2009
£’000
610
247
(11)
846
At 1 January 2008
£’000
Charge in the year
£’000
utilised
£’000
At 31 December 2008
£’000
481
131
(2)
610
17. Trade and other payables and current tax liabilities
Group
Parent
trade payables
Amounts owed to group undertakings
other taxes and social security
Accruals and deferred income
Current tax liabilities
2009
£’000
3,866
0
615
7,308
11,789
1,587
13,376
2008
£’000
2,264
0
778
7,094
10,136
1,308
11,444
2009
£’000
3,146
910
484
6,532
11,072
1,096
12,168
2008
£’000
1,026
805
645
6,049
8,525
894
9,419
All amounts shown above are short-term. the carrying values are considered to be a reasonable approximation of fair value.
At 31 December 2009, liabilities have contractual maturities which are summarised below:
Group
trade payables
other short term financial liabilities
Parent
trade payables
other short term financial liabilities
2009
2008
Within
6 months
Within 6 to 12
months
within
6 months
within 6 to 12
months
£’000
3,866
7,308
11,174
£’000
0
0
0
£’000
2,264
6,094
8,358
£’000
0
1,000
1,000
2009
2008
Within
6 months
Within 6 to 12
months
within
6 months
within 6 to 12
months
£’000
3,146
6,532
9,678
£’000
0
910
910
£’000
1,026
5,049
6,075
£’000
0
1,805
1,805
FoRty SIx
Notes to the financial statements
Year ended 31 December 2009
17. Trade and other payables and current tax liabilities (continued)
In addition to the above, the contractual maturity of the forward exchange contracts outstanding at 31 December was as follows:
Group and parent
Forward exchange contracts
18. Provisions
Group
exceptional cost provision
Parent
exceptional cost provision
2009
2008
Within
6 months
Within 6 to 12
months
£’000
0
£’000
0
within
6 months
£’000
582
within 6 to 12
months
£’000
0
At 1 January 2009
£’000
Charge in the year
£’000
utilised
£’000
At 31 December 2009
£’000
181
255
(181)
255
At 1 January 2009
£’000
Charge in the year
£’000
utilised
£’000
At 31 December 2009
£’000
0
112
0
112
An amount of £255,000 was charged against the provision in 2009 in respect of the costs committed but not incurred at the reporting date.
19. Share capital
Authorised 52,000,000 (2008: 52,000,000) 10p ordinary shares
Allotted, issued and fully paid 36,968,772 (2008: 36,968,772) 10p ordinary shares
2009
£’000
5,200
3,697
2008
£’000
5,200
3,697
the share capital of nichols plc consists only of ordinary 10p shares. All shares are equally eligible to receive dividends and the repayment of
capital and represent one vote at shareholders’ meetings.
there were no movements in the group’s authorised and allotted, issued and fully paid share capital for the financial years ending 31 December
2009 and 31 December 2008.
Purchase of own shares
During the year, the group purchased 60,000 of its own 10p ordinary shares. the shares acquired represent 0.2% of the group’s total called up
share capital. the purchase of own shares occurred because the group opted to hold a pre-determined number of its shares in treasury for a fixed
period of time.
FoRty Seven
Notes to the financial statements
Year ended 31 December 2009
20. Share options
the group operates a Long term Incentive Plan (LtIP) for senior managers which is based upon the achievement of performance targets over a three year
period. the group also operates a Save As you earn (SAye) scheme for all other employees. the estimated fair values of options which fall under the IFRS
2 “Share-based payment” accounting charge and inputs used in the Binomial model to calculate those fair values, are as follows:
Save As You Earn Scheme
number
granted
24,052
28,991
60,376
30,796
11,398
Share price
on grant
date
exercise
price
Fair values
on grant
date
vesting
period
expected
dividend
yield
£1.60
£2.05
£2.51
£2.45
£2.45
£1.26
£1.63
£1.92
£1.77
£1.77
£0.33
5.00 years
£0.40
£0.46
£0.66
£0.65
5.00 years
5.00 years
3.00 years
5.00 years
3.50%
3.50%
3.50%
4.35%
4.35%
Date of Grant
14 october 2004
26 September 2005
3 october 2006
1 September 2008
1 September 2008
Long Term Incentive Plan
Date of Grant
11 June 2008
11 June 2008
11 June 2008
number
granted
125,000
150,000
150,000
Share price
on grant
date
£2.43
£2.43
£2.43
exercise
price
£0.00
£0.00
£0.00
Fair values
on grant
date
vesting
period
£2.37
£2.28
0.56 years
1.56 years
£2.18
2.55 years
expected
dividend
yield
4.28%
4.28%
4.28%
Lapse
rate
5.00%
5.00%
5.00%
5.00%
5.00%
Lapse
rate
0.00%
0.00%
0.00%
Risk
free rate
4.50%
3.91%
4.38%
4.36%
4.37%
Risk
free rate
5.22%
5.26%
5.22%
volatility
24.08%
22.65%
21.13%
20.31%
20.31%
volatility
19.93%
19.93%
19.93%
Expected volatility
the volatility of the company’s share price on each date of grant was calculated as the average of annualised standard deviations of daily
continuously compounded returns on the company’s stock, calculated over five years back from the date of the grant, where applicable.
Risk-free rate
the risk-free rate is the yield to maturity on the date of grant of a uK Gilt Strip, with term to maturity equal to the life of the option.
Expected life
the expected life of a SAye option is equal to the vesting period plus a six month exercise period and for an LtIP share option is equal to the
vesting period.
FoRty eIGht
Notes to the financial statements
Year ended 31 December 2009
20. Share options (continued)
the following options for 10p ordinary shares under the SAye and LtIP schemes were outstanding at the year end:
Date of grant:
14 october 2004
26 September 2005
3 october 2006
11 June 2008
11 June 2008
11 June 2008
1 September 2008
At 1 January
2009
Granted
exercised
Lapsed
At 31
December
2009
exercise
price
per share
5,245
9,666
91,897
125,000
150,000
150,000
42,194
574,002
0
0
0
0
0
0
0
0
(2,622)
0
(41,754)
0
0
0
0
(44,376)
0
0
0
0
0
0
0
0
2,623
9,666
50,143
125,000
150,000
150,000
42,194
529,626
126p*
163p
192p
0p
0p
0p
177p
options are exercisable at the end of a three or five year savings contract commencing on the date of grant and for a period of six months thereafter.
the share price during 2009 varied between 189.5p and 310p and the weighted average price for the year was 257p.
At 31 December 2009, options over 104,626 shares were outstanding under employee Share option Plans.
*Indicates share options exercisable at 31 December 2009
the total number and value of the options outstanding under both of the company’s share option schemes are as follows:
outstanding on 1 January
Granted
exercised
Lapsed
outstanding on 31 December
21. Cash and cash equivalents
Group
Cash at bank and in hand
Parent
Cash at bank and in hand
2009
2008
Weighted
average
exercise price
in pence
141.71
0
188.10
0
137.82
Number
574,002
0
(44,376)
0
529,626
weighted
average
exercise price
in pence
116.59
177.00
126.81
191.38
141.71
number
452,702
467,194
(260,696)
(85,198)
574,002
At 1 January 2009
£’000
Cash flow
£’000
At 31 December 2009
£’000
6,048
5,167
11,215
At 1 January 2009
£’000
Cash flow
£’000
At 31 December 2009
£’000
4,458
5,372
9,830
FoRty nIne
Notes to the financial statements
Year ended 31 December 2009
22. Financial instruments
exposure to interest rate, credit and currency risks arises in the normal course of the group’s business.
Treasury management
the group’s treasury activities are targeted to provide suitable, flexible funding arrangements to satisfy the group’s requirements. Interest rate and
liquidity risk are managed at a group level. Foreign currency risk is managed, in consultation with group management, in subsidiaries which are
responsible for the majority of purchases. the group’s policy for investing any surplus cash balances is to place such amounts on deposit.
Liquidity risk
the group seeks to manage financial risk to ensure sufficient liquidity is available to meet foreseeable needs. the acquisition of companies and the
continuing investment in non-current assets will be achieved by a mix of operating cash and short term borrowing facilities. Short term flexibility is
achieved by bank overdraft.
Interest rate risk
the group finances its activities through a mixture of retained profits and borrowings. All borrowings are in sterling at floating rates of interest,
based upon the prevailing base rate or LIBoR. the group has reviewed the impact of sensitivity on interest rate fluctuations and has concluded
that there would be no impact on the income statement following the effects of such variances.
Credit risk
the group has no significant concentrations of credit risk. the group has implemented stringent policies that ensure that credit evaluations are
performed on all potential customers before sales commence. Credit risk is managed by limiting the aggregate exposure to any one individual
counterparty, taking into account its credit rating. Such counterparty exposures are regularly reviewed and adjusted as necessary. Accordingly,
the possibility of material loss arising in the event of non-performance by counterparties is considered to be unlikely. Cash at bank is held only with
major uK banks with high quality external credit ratings or government support.
Foreign currency risk
the group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the functional currency of the
group. the currencies giving rise to this risk are primarily uS Dollars (uSD) and euros (€). the group uses forward exchange contracts to hedge its foreign
currency risk. Forward purchase contracts in euros are made to cover at least the full year of projected purchases. the forward foreign currency purchase
contracts, which are a mixture of firm contracts and conditional options, mature in line with expected purchases throughout 2009. the directors have
reviewed the fair value of the forward contracts outstanding at the balance sheet date, and have concluded that this amount is not material.
Foreign currency assets
uS Dollar
euro
Cny
2009
£’000
1,502
590
13
2,105
2008
£’000
2,133
38
0
2,171
Foreign currency sensitivity
Some of the group’s transactions are carried out in uS Dollars and euros.
As a result, management have undertaken sensitivity analysis to consider the financial impact if Sterling had both strengthened and weakened
against the uS Dollar and the euro.
If Sterling had strengthened against the uS Dollar and euro by 5% (2008: 5%), then this would have had the following impact:
2008
£’000
2009
£’000
net result for the year
USD
(72)
Euro
(28)
CNY
(1)
Total
(101)
uSD
(102)
euro
(2)
Cny
0
total
(104)
If Sterling had weakened against the uS Dollar and euro by 5% (2008: 5%), then this would have had the following impact:
net result for the year
USD
79
Euro
31
CNY
0
Total
110
uSD
112
2009
£’000
2008
£’000
euro
2
Cny
0
total
114
exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. nonetheless, the analysis above is
considered to be representative of the group’s exposure to currency risk.
FIFty
Notes to the financial statements
Year ended 31 December 2009
23. Summary of financial assets and liabilities by category
the IAS 39 categories of financial assets included in the balance sheet and the headings in which they are included are as follows:
Current assets
trade receivables and other receivables
Cash and cash equivalents
total receivables
Group
Parent
2009
£’000
14,413
11,215
25,628
2008
£’000
13,294
6,048
19,342
2009
£’000
10,734
9,830
20,564
2008
£’000
10,857
4,458
15,315
the IAS 39 categories of financial liability included in the balance sheet and the headings in which they are included are as follows:
Current liabilities
Other financial liabilities at amortised cost
trade and other payables
Group
Parent
2009
£’000
3,866
2008
£’000
2,264
2009
£’000
3,146
2008
£’000
1,026
24. Capital management policies and procedures
the group manages its capital to ensure that entities in the group will be able to continue as a going concern while maximising the return to
stakeholders through the optimisation of the debt and equity balance. this strategy remains unchanged from 2008.
At 31 December 2009 the group had no debt, and therefore the capital structure consists of equity only.
the directors regularly monitor the level of net assets of the company in accordance with Section 656 of the Companies Act 2006 (Serious Loss of Capital).
25. Operating leases
non-cancellable operating lease rentals are payable as follows:
within one year
Between one and five years
More than five years
Group
Parent
2009
£’000
428
328
178
934
2008
£’000
533
443
213
1,189
2009
£’000
311
105
0
416
2008
£’000
390
144
0
534
the group leases its headquarters, Laurel house, under a non-cancellable operating lease agreement and also leases dispensing and certain other
plant and equipment under non-cancellable operating lease agreements which have varying terms, escalation clauses and renewal rights.
FIFty one
transaction value
year ended
31 December
Balance outstanding
as at
31 December
2009
£’000
2,220
2008
£’000
2,741
2009
£’000
174
2008
£’000
690
Notes to the financial statements
Year ended 31 December 2009
26. Related party transactions
Parent company
the parent company entered into the following transactions with subsidiaries during the year:
Sale of goods and services (including recharge of costs)
All balances with the related parties are on an arm’s length basis.
27. Employee benefits
the group operates two employee benefit plans, a defined benefit plan which provides benefits based on final salary which is now closed to new
members and a defined contribution group personal plan.
the group personal plan consists of individual contracts with contributions from both the employer and employee.
the charge for the year for the group personal plan was £266,000 (2008: £227,000).
the company operates a defined benefit plan in the uK. A full actuarial valuation was carried out on 5 April 2008 and updated at 31 December
2009 by an independent qualified actuary. the company paid an additional £0.7 million into the plan in the year (2008: £0.5 million) and will continue
to monitor the deficit.
the principal actuarial assumptions used by the actuary at the reporting date (expressed as weighted averages) were as follows:
Future salary increases
Rate of increase in (post 1997) pensions in payment (a)
Discount rate at 31 December
expected rate of inflation
overall expected return on plan assets
31 December
2009
31 December
2008
31 December
2007
4.50%
3.50%
5.70%
3.50%
6.20%
3.10%
2.60%
6.70%
2.60%
6.00%
3.90%
3.40%
5.80%
3.40%
5.80%
the expected return on plan assets is based on the the long term rates of return on the market values of equities, fixed interest assets, corporate
bonds and cash and other assets at 31 December.
other material actuarial assumptions were the rate of salary increases and mortality assumptions.
In terms of future salary increases, the actuary is recommending an assumption of approximately 1% in excess of inflation based on historic
differences between price inflation and salary inflation.
Assumptions regarding future mortality experience are set based on the advice of actuaries and in accordance with published statistics.
Life expectancies have been estimated as 92 years for men (2008: 92 years) and 92 years for women (2008: 92 years).
(a) Increases on pre-6 April 1997 pensions are fixed at 3% per annum. Post-6 April 1997 increases are in line with price inflation, subject to a
minimum of 3% and a maximum of 5%.
over the year the company contributed to the plan at the rate of 18.6% of salaries. the charge to the consolidated income statement was £56,000
(2008: £84,000). the company will continue to contribute at this rate pending the results of the next actuarial valuation. the plan is now closed to
new entrants. this means that the average age of the membership can be expected to rise which in turn means that the future service cost (as a
percentage of scheme members’ pensionable salaries) can be expected to rise.
FIFty two
Notes to the financial statements
Year ended 31 December 2009
27. Employee benefits (continued)
The assets of the group’s defined benefit plan and the expected rates of return on these assets are summarised as follows:
equity securities
Gilts
Government bonds
Cash and other
equity securities
Gilts
Government bonds
Cash and other
Long term rate of return expected at
31 December
2009
31 December
2008
31 December
2007
31 December
2006
31 December
2005
7.20%
4.20%
5.40%
0.50%
6.60%
3.60%
6.50%
1.50%
7.50%
4.50%
5.80%
5.50%
7.50%
4.50%
4.90%
4.80%
7.50%
4.50%
4.90%
4.50%
Market value of assets at
31 December
2009
£’000
31 December
2008
£’000
31 December
2007
£’000
31 December
2006
£’000
31 December
2005
£’000
11,004
1,772
1,800
963
15,539
8,826
1,610
1,502
602
12,540
12,009
2,094
2,042
425
16,570
11,771
1,852
1,849
456
15,928
10,659
1,722
1,721
0
14,102
the following amounts were measured in accordance with IAS 19 “employee benefits”.
The amounts recognised in the statement of financial position are determined as follows:
Fair value of plan assets
Present value of defined benefit obligations
Recognised liability for defined benefit obligations
31 December
2009
£’000
31 December
2008
£’000
31 December
2007
£’000
31 December
2006
£’000
31 December
2005
£’000
15,539
(20,283)
(4,744)
12,540
(16,107)
(3,567)
16,570
(20,205)
(3,635)
15,928
(22,432)
(6,504)
14,102
(21,110)
(7,008)
The expense is recognised in the following line items in the consolidated income statement :
Operating profit
Current service costs
Total operating charge
Finance expense
expected return on plan assets
Interest on obligation
Total finance expense
Total charge to the consolidated income statement
Group consolidated statement of comprehensive income
Actual return less expected return on plan assets
experience gains and losses arising on plan liabilities
Changes in the assumptions underlying the present value
of the plan liabilities
Actuarial movement in defined benefit plan
recognised in statement of comprehensive income
2009
£’000
(56)
(56)
737
(1,068)
(331)
(387)
1,901
120
(3,586)
2008
£’000
(84)
(84)
1,102
(1,145)
(43)
(127)
(4,782)
1,113
2,383
(1,565)
(1,286)
2007
£’000
(161)
(161)
1,085
(1,088)
(3)
(164)
(634)
(22)
3,178
2,522
2006
£’000
(158)
(158)
981
(1,007)
(26)
(184)
256
836
(1,001)
2005
£’000
(51)
(51)
755
(887)
(132)
(183)
1,004
(1,194)
(2,316)
91
(2,506)
FIFty thRee
Notes to the financial statements
Year ended 31 December 2009
27. Employee benefits (continued)
The movement during the year in the liability for defined benefit obligations was as follows:
Liability for defined benefit obligations at 1 January
Current service costs
Contributions paid into the plan
Gain on settlement of obligations
other finance costs
Actuarial (loss)/gain recognised in statement of
comprehensive income
2009
£’000
(3,567)
(56)
775
0
(331)
(1,565)
2008
£’000
(3,635)
(84)
672
809
(43)
(1,286)
2007
£’000
(6,504)
(161)
511
0
(3)
2,522
2006
£’000
(7,008)
(158)
597
0
(26)
91
2005
£’000
(5,319)
(51)
1,000
0
(132)
(2,506)
Liability for defined benefit obligations at 31 December
(4,744)
(3,567)
(3,635)
(6,504)
(7,008)
The movement during the year in the present value of the plan assets was as follows:
opening fair value of plan assets
expected return on plan assets
Actuarial gain/(loss)
Contributions by the group
Assets distributed on settlement of obligations
Closing fair value of plan assets
2009
£’000
12,540
737
1,901
361
0
15,539
2008
£’000
16,570
1,102
(4,782)
417
(767)
12,540
2007
£’000
15,928
1,085
(634)
191
0
2006
£’000
14,102
981
256
589
0
16,570
15,928
The movement during the year in the present value of defined benefit obligations was as follows:
opening defined benefit obligations
Current service costs
Contributions by participants
other finance costs
Actuarial loss/(gain)
Liabilities discharged on settlement
Closing defined benefit obligations
2009
£’000
16,107
56
(414)
1,068
3,466
0
20,283
Difference between expected and actual return on plan assets
Amount
Percentage of plan assets
Experience gains and losses on plan liabilities
Amount
Percentage of present value of plan liabilities
Gain and losses on changes in assumptions
Amount
Percentage of present value of plan liabilities
Total actuarial gains and losses
Amount
Percentage of present value of plan liabilities
2009
1,901
12.2%
120
0.6%
(3,586)
(17.7%)
(1,565)
(7.7%)
2008
£’000
20,205
84
(255)
1,145
(3,496)
(1,576)
16,107
2008
(4,782)
(38.1%)
1,113
6.9%
2,383
14.8%
(1,286)
(8.0%)
2007
£’000
22,432
161
(320)
1,088
(3,156)
0
20,205
2007
(634)
(3.8%)
(22)
(0.1%)
3,178
15.7%
2,522
12.5%
2006
£’000
21,110
158
(8)
1,007
165
0
22,432
2006
256
1.6%
836
3.7%
(1,001)
(4.5%)
91
0.5%
2005
£’000
11,447
755
1,004
896
0
14,102
2005
£’000
16,766
51
(104)
887
3,510
0
21,110
2005
1,004
7.1%
(1,194)
(5.7%)
(2,316)
(11.0%)
(2,506)
(11.9%)
FIFty FouR
Notes to the financial statements
Year ended 31 December 2009
28. Post balance sheet events
on 12 January 2010 the group acquired the trade, brand and assets of the Ben Shaws ‘soft drinks on draught’ business. Due to the timing of the
acquisition it is impracticable to disclose a description of the factors that contribute to a cost that resulted in goodwill.
Five year summary
Years ended 31 December
Revenue
operating profit before exceptional items, IAS 19 and IFRS 2 charges
exceptional items
IAS 19 operating profit charges
IFRS 2 operating profit charges
operating profit after exceptional items
Profit on disposal of business
net interest (payable)/receivable
Profit before tax
tax
Profit after tax
Dividends paid
Retained profit/(loss)
earnings per share - (basic)
earnings per share - (diluted)
earnings per share - (basic) before exceptional items
earnings per share - (diluted) before exceptional items
Dividends paid per share
2009
£’000
72,378
12,891
(293)
(56)
(334)
12,208
0
(282)
11,926
(3,572)
8,354
(4,193)
4,161
22.86p
22.57p
23.44p
23.15p
11.45p
IFRS
2008
£’000
56,221
10,431
(5,940)
(84)
(543)
3,864
0
234
4,098
(1,141)
2,957
(3,914)
(957)
8.10p
8.10p
20.03p
20.01p
10.65p
2007
£’000
55,276
9,098
(978)
(164)
(192)
7,764
0
284
8,048
(2,379)
5,669
(3,697)
1,972
15.49p
15.47p
17.36p
17.34p
10.00p
2006
£’000
52,296
8,181
(2,482)
(184)
(100)
5,415
2,038
58
7,511
(1,238)
6,273
(3,475)
2,798
17.10p
17.08p
15.43p
15.41p
9.40p
FIFty FIve
uK
GAAP
2005
£’000
63,336
7,756
(1,002)
(51)
(33)
6,670
0
(707)
5,963
(1,999)
3,964
(3,309)
655
10.82p
10.79p
12.74p
12.70p
8.95p
the above amounts for 2005 are presented under uK GAAP and have not been restated to comply with IFRS. the main adjustments required to
these amounts to comply with IFRS are as follows:
- reversal of goodwill amortisation charges
- corresponding deferred tax adjustments on reversal of amortisation charges
FIFty SIx
Notice of annual general meeting
notice is hereby given that the eightieth Annual General Meeting of nichols plc (“Company”) will be held
at its registered office at Laurel house, woodlands Park, Ashton Road, newton le willows wA12 0hh on
thursday, 20 May 2010 at 11.00 a.m. for the purpose of transacting the following business.
As ordinary business:
1.
2.
3.
4.
5.
6.
to receive the company’s annual accounts and directors’ and auditors’ reports for the year ended 31 December 2009.
to reappoint B M hynes, who retires by rotation, as a director of the company.
to reappoint J B Diggines, who retires by rotation, as a director of the company.
to reappoint t J Croston, who has been appointed by the board since the last
Annual General Meeting, as a director of the company.
to reappoint Grant thornton uK LLP as auditors of the company.
to authorise the directors to determine the remuneration of the auditors.
As special business:
to consider and if thought appropriate approve the following resolutions of which resolution 7 will be
proposed as an ordinary resolution and resolutions 8 to 10, will be proposed as special resolutions.
Ordinary resolution:
7.
that, pursuant to section 551 of the Companies Act 2006 (“Act”), the directors be and are generally and unconditionally
authorised to exercise all powers of the Company to allot shares in the Company or to grant rights to subscribe for
or to convert any security into shares in the Company up to an aggregate nominal amount of £184,843, provided
that (unless previously revoked, varied or renewed) this authority shall expire at the conclusion of the next annual
general meeting of the Company after the passing of this resolution or on 20 August 2011 (whichever is the earlier),
save that the Company may make an offer or agreement before this authority expires which would or might require
shares to be allotted or rights to subscribe for or to convert any security into shares to be granted after this authority
expires and the directors may allot shares or grant such rights pursuant to any such offer or agreement as if this
authority had not expired. this authority is in substitution for all existing authorities under section 80 of the Companies
Act 1985 (which, to the extent unused at the date of this resolution, are revoked with immediate effect).
Special resolutions:
8.
that, subject to the passing of resolution 7 and pursuant to sections 570 and 573 of the Companies Act 2006
(“Act”), the directors be and are generally empowered to allot equity securities (within the meaning of section
560 of the Act) for cash pursuant to the authority granted by resolution 7 and to sell ordinary shares held by the
Company as treasury shares for cash as if section 561(1) of the Act did not apply to any such allotment or sale,
provided that this power shall be limited to the allotment of equity securities or sale of treasury shares:
8.1
in connection with an offer of equity securities (whether by way of a rights issue, open offer or otherwise):
8.1.1 to holders of ordinary shares in the capital of the Company in proportion (as nearly as
practicable) to the respective numbers of ordinary shares held by them; and
8.1.2 to holders of other equity securities in the capital of the Company, as required by the rights of those
securities or, subject to such rights, as the directors otherwise consider necessary,
but subject to such exclusions or other arrangements as the directors may deem necessary or expedient
in relation to treasury shares, fractional entitlements, record dates or any legal or practical problems under
the laws of any territory or the requirements of any regulatory body or stock exchange; and
8.2 otherwise than pursuant to paragraph 8.1 of this resolution, up to an aggregate nominal amount of £184,843,
and (unless previously revoked, varied or renewed) this power shall expire at the conclusion of the next annual
general meeting of the Company after the passing of this resolution or on 20 August 2011 (whichever is the earlier),
save that the Company may make an offer or agreement before this power expires which would or might require
equity securities to be allotted or treasury shares to be sold for cash after this power expires and the directors
may allot equity securities or sell treasury shares for cash pursuant to any such offer or agreement as if this
power had not expired. this power is in substitution for all existing powers under section 95 of the Companies
Act 1985 (which, to the extent unused at the date of this resolution, are revoked with immediate effect).
FIFty Seven
9.
9.1
9.2
9.3
that, pursuant to section 701 of the Companies Act 2006 (“Act”), the Company be and is generally
and unconditionally authorised to make market purchases (within the meaning of section 693(4) of the
Act) of ordinary shares of 10p each in the capital of the Company (“Shares”), provided that:
the maximum aggregate number of Shares which may be purchased is 3,696,877;
the minimum price (excluding expenses) which may be paid for a Share is 10p;
the maximum price (excluding expenses) which may be paid for a Share is an amount equal to 105 per cent of the
average of the middle market quotations for a Share as derived from the Daily official List of the London Stock
exchange plc for the five business days immediately preceding the day on which the purchase is made,
and (unless previously revoked, varied or renewed) this authority shall expire at the conclusion of the next
annual general meeting of the Company after the passing of this resolution or on 20 August 2011 (whichever is
the earlier), save that the Company may enter into a contract to purchase Shares before this authority expires
under which such purchase will or may be completed or executed wholly or partly after this authority expires
and may make a purchase of Shares pursuant to any such contract as if this authority had not expired.
10. that:
10.1 the articles of association of the Company be amended by deleting all the provisions of the
Company’s memorandum of association which, by virtue of section 28 of the Companies Act
2006 are to be treated as provisions of the Company’s articles of association; and
10.2 the draft articles of association produced to the meeting and initialled by the Chairman of the meeting for
the purpose of identification be adopted as the articles of association of the Company in substitution for,
and to the exclusion of, the existing articles of association of the Company (see general note 8).
By order of the Board
T J Croston
Secretary
16 April 2010
Registered office
Laurel house
woodlands Park
Ashton Road
newton le willows
wA12 0hh
Registered in england and wales no. 238303
FIFty eIGht
General notes
1. Copies of the executive directors’ service agreements and non-executive directors letters of appointment will be
available for inspection at the registered office of the Company during normal business hours (excluding weekends
and public holidays) from the date of this notice until the conclusion of the Annual General Meeting.
2. the right to vote at the meeting is determined by reference to the register of members. only those shareholders
registered in the register of members of the Company as at 11.00 a.m. on tuesday, 18 May 2010 (or, if the
meeting is adjourned, 11.00 a.m. on the date which is two working days before the date of the adjourned meeting)
shall be entitled to attend and vote at the meeting in respect of the number of shares registered in their name
at that time. Changes to entries in the register of members after that time shall be disregarded in determining
the rights of any person to attend or vote (and the number of votes they may cast) at the meeting.
3. A member is entitled to appoint another person as his or her proxy to exercise all or any of his rights to attend, speak
and vote at the meeting. A proxy need not be a member of the Company. A member may appoint more than one
proxy in relation to the meeting provided that each proxy is appointed to exercise the rights attached to a different
share or shares held by him or her. to appoint more than one proxy, you will need to complete a separate proxy form
in relation to each appointment. Additional proxy forms may be obtained from the Company’s registrar on shareholder.
services@capitaregistrars.com or on 07811 664 0300 (calls cost 10p per minute plus networks own charges) or you
may photocopy the proxy form already in your possession. you will need to state clearly on each proxy form the
number of shares in relation to which the proxy is appointed. A failure to specify the number of shares each proxy
appointment relates to or specifying a number which when taken together with the number of shares set out in the other
proxy appointments is in excess of those held by the member, may result in the proxy appointment being invalid.
4. the appointment of a proxy will not preclude a member from attending and voting in person at the meeting if he or she so wishes.
5. A form of proxy is enclosed. to be valid, it must be completed, signed and sent to the offices of the Company’s registrars, Capita
Registrars, the Registry, 34 Beckenham Road, Beckenham, Kent BR3 4tu so as to arrive no later than 11.00 a.m. on tuesday
18 May 2010 (or, in the event that the meeting is adjourned, no later than 48 hours before the time of any adjoined meeting).
6. CReSt members who wish to appoint a proxy or proxies through the CReSt electronic proxy appointment service
may do so by using the procedures described in the CReSt Manual. CReSt personal members or other CReSt
sponsored members, and those CReSt members who have appointed a voting service provider(s), should refer to
their CReSt sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
7.
In order for a proxy appointment or instruction made using the CReSt service to be valid, the appropriate CReSt message
(a “CReSt Proxy Instruction”) must be properly authenticated in accordance with euroclear uK & Ireland Limited’s
specifications and must contain the information required for such instructions, as described in the CReSt Manual. the
message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to
a previously appointed proxy, must, in order to be valid, be transmitted so as to be received by the Company’s Registrar,
Capita Registrars (CReSt ID RA10) no later than 11.00 a.m. on tuesday 18th May 2010 (or, if the meeting is adjourned, no
later than 48 hours before the time of any adjourned meeting). For this purpose, the time of receipt will be taken to be the
time (as determined by the timestamp applied to the message by the CReSt Applications host) from which Capita Registrars
is able to retrieve the message by enquiry to CReSt in the manner prescribed by CReSt. After this time, any change of
instructions to proxies appointed through CReSt should be communicated to the appointee through other means.
CReSt members and, where applicable, their CReSt sponsors or voting service providers should note that euroclear uK &
Ireland Limited does not make available special procedures in CReSt for any particular messages. normal system timings
and limitations will therefore apply in relation to the input of CReSt Proxy Instructions. It is the responsibility of the CReSt
member concerned to take (or, if the CReSt member is a CReSt personal member or sponsored member or has appointed
a voting service provider(s), to procure that his or her CReSt sponsor or voting service provider(s) take(s)) such action as
shall be necessary to ensure that a message is transmitted by means of the CReSt system by any particular time. In this
connection, CReSt members and, where applicable, their CReSt sponsors or voting service providers are referred, in
particular, to those sections of the CReSt Manual concerning practical limitations of the CReSt system and timings.
the Company may treat a CReSt Proxy Instruction as invalid in the circumstances set out
in Regulation 35(5)(a) of the uncertificated Securities Regulations 2001.
8. the Company proposes to adopt new articles of association (“new Articles”). these incorporate amendments
to the Company’s current articles of association (“Current Articles”) to reflect, inter alia, the changes in company
law brought about by the Companies Act 2006 (“Act”). the principal changes introduced in the new Articles are
summarized in Appendix 1 which follows this notice. other changes, which are of a minor, technical or clarifying
nature and also some more minor changes which merely reflect changes made by the Act have not been noted
in the Appendix. the new Articles are available for inspection at the Company’s registered office.
FIFty nIne
Directions to the Annual General Meeting:
Leave the M6 at Junction 23 and take the A49 south towards newton. woodlands Park is on the left in approximately
0.3 miles. on entering the estate, Laurel house is accessed from the fourth exit of the roundabout.
SIxty
Appendix
Explanatory Notes of Principal Changes to the
Company’s Articles of Association
The material differences between the Current Articles and the New Articles are summarised below.
Changes of a minor, conforming or purely technical nature have not been mentioned specifically.
1. The Company’s objects
the provisions regulating the operations of the Company are currently set out in the Company’s memorandum
and articles of association. the Company’s memorandum contains, among other things, the objects
clause which sets out the wide scope of activities the Company is authorised to undertake.
the Act significantly reduces the constitutional significance of a company’s memorandum. the Act provides
that a memorandum will record only the names of subscribers and the number of shares each subscriber has
agreed to take in the company. under the Act the objects clause and all other provisions which are contained
in a company’s memorandum for existing companies at 1 october 2009 are deemed to be contained in the
company’s articles of association but the company can remove these provisions by special resolution.
Further, the Act states that unless a company’s articles provide otherwise, a company’s objects are unrestricted. this abolishes
the need for companies to have objects clauses. For this reason the Company is proposing to remove its objects clause together
with all other provisions of its memorandum which, by virtue of the Act, are treated as forming part of the Company’s articles
of association as of 1 october 2009. Resolution 10.1 confirms the removal of these provisions for the Company. As the effect
of this resolution will be to remove the statement currently in the Company’s memorandum of association regarding limited
liability, the new Articles also contain an express statement regarding the limited liability of the members of the Company.
2. Change of name
under the Companies Act 1985, a company could only change its name by special resolution. under the
Act a company can change its name by other means provided for by its articles. to take advantage of this
provision, the new Articles enable the directors to pass a resolution to change the Company’s name.
3. Authorised share capital and unissued shares
the Act abolishes the requirement for a company to have an authorised share capital and the new Articles
reflect this. Directors will still be limited as to the number of shares they can allot at any time because allotment
authority continues to be required under the Act, save in respect of employee share schemes.
4. Redeemable shares
under the Companies Act 1985, if a company wished to issue redeemable shares, it had to include in its
articles the terms and manner of redemption. the Act enables directors to determine such matters instead
provided they are so authorised by the articles. the new Articles contain such an authorisation.
5. Authority to purchase own shares, consolidate and sub-divide shares and reduce share capital
under the Companies Act 1985, a company required specific enabling provisions in its articles to purchase its own
shares, to consolidate or (subdivide) its shares and to reduce its share capital or other undistributable reserves as well as
shareholder authority to undertake the relevant action. the Current Articles include these enabling provisions. under the
Act a company will only require shareholder authority to do any of these things and it will no longer be necessary for articles
to contain enabling provisions. Accordingly the relevant enabling provisions have been removed in the new Articles.
6. Provision for employees on cessation of business
the Act provides that the powers of the directors of a company to make provision for a person employed or formerly employed
by the company or any of its subsidiaries in connection with the cessation or transfer to any person of the whole or part of
the undertaking of the company or that subsidiary may only be exercised by the directors if they are so authorised by the
company’s articles or by the company in general meeting. the new Articles provide that the directors may exercise this power.
7. Use of seals
the new Articles provide an alternative option for execution of documents (other than share certificates).
under the new Articles, when the seal is affixed to a document it may be signed by a director in the
presence of a witness, in addition to the current provisions for signature by either a director and the
secretary or two directors or such other person or persons as the directors may approve.
8. Vacation of office by directors
the Current Articles specify the circumstance in which a director must vacate office. the new Articles update these provisions.
SIxty one
9. Voting by proxies on a show of hands
the Act provides that each proxy appointed by a member has one vote on a show of hands unless the proxy
is appointed by more than one member, in which case the proxy has one vote for and one vote against if the
proxy has been instructed by one of more members to vote for the resolution and by one or more members to
vote against the resolution. the new Articles contain provisions which clarify these rights and also clarify how
the provisions giving a proxy a second vote on a show of hands should apply to discretionary powers.
10. Voting by corporate representatives
the Act allows a corporate shareholder to appoint more than one corporate representative to exercise its voting rights at
a general meeting. In addition, the Act allows multiple representatives appointed by the same corporate member to vote
in different ways on a show of hands and a poll. the new Articles contain provisions which reflect these amendments.
11. Electronic conduct of meetings
the Act now provides for the holding and conducting of electronic meetings.
the new Articles contain provisions which reflect this.
12. Chairman’s casting vote
the new Articles remove the provision giving the chairman a casting vote at
shareholder meetings in the event of an equality of votes.
13. Untraced shareholders
the new Articles contain provisions for the Company to sell the shares of any shareholder
who is untraced for a period of twelve years. the Company will however be indebted to the
former shareholder for an amount equal to the net proceeds of any such sale.
14. Scrip dividends and dividend reinvestment
the new Articles set out the powers of the Company to pay scrip dividends and put in place dividend reinvestment plans. these
provide flexibility to the Board should they consider the offering of such dividends or plans to be advantageous to the Company
in the future. the Board, however, does not have any present intention to offer shareholders the right to receive scrip dividends.
15. Conflicts of interest
the Act sets out directors’ general duties which largely codify the existing law but with some changes. A director must avoid
a situation where he has, or can have, a direct or indirect interest that conflicts or possibly may conflict with the company’s
interests. the Act allows directors of public companies to authorise conflicts and potential conflicts, where appropriate, where the
articles of association contain a provisions to this effect. the Act also allows the articles of association to contain other provisions
for dealing with directors’ conflicts of interest to avoid a breach of duty. the new Articles give the directors authority to approve
such situations and to include other provisions to allow conflicts of interest to be dealt with in a similar way to the current position.
16. Electronic and web communications
Provisions of the Act enable companies to communicate with members by electronic and/or website communications. the
new Articles allow communications to members in electronic form and, in addition, they also permit the Company to take
advantage of the new provisions relating to website communications. Before the Company can communicate with a member by
means of website communication, the relevant member must be asked individually by the Company to agree that the Company
may send or supply documents or information to him by means of a website and the Company must either have received a
positive response or have received no response within the period of 28 days beginning with the date on which the request
was sent. the Company will notify the member (either in writing or by other permitted means) when a relevant document or
information is placed on the website and a member can always request a hard copy version of the document or information.
17. Directors’ indemnities and loans to fund expenditure
the Act has widened the scope of the powers of a company to indemnify directors and to fund expenditure
incurred in connection with certain actions against directors. In addition, the existing exemption allowing
a company to provide money for the purpose of funding a director’s defence in court proceedings now
applies to associated companies. the new Articles contain provisions which reflect this.
18. General
Provisions in the Current Articles which replicate provisions contained in the Act are in the main removed in the new
Articles. this is in line with the approach advocated by the Government that statutory provisions should not be duplicated
in a company’s constitution. Certain examples of such provisions include provisions as to the form of resolutions, the
requirement to keep accounting records and provisions regarding the period of notice required to convene general
meetings. In addition, other miscellaneous non material changes have been made to reflect current law and practice.
SIxty two
SIxty thRee
Financial calendar
Preliminary results announced
24th March 2010
Annual general meeting
20th May 2010
Interim results announced
4th August 2010
Laurel house, woodlands Park,
Ashton Road, newton-le-willows,
Merseyside. wA12 0hh
tel 01925 222222
www.nicholsplc.co.uk