Nichols PLC Annual Report 2018

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FY2018 Annual Report · Nichols PLC

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Nichols plc is an international soft drinks

business with sales globally, selling products in

both the Still and Carbonate categories.

The Group is home to the iconic Vimto brand

which is popular in the UK and around the

world, particularly in the Middle East and Africa.

Other brands in its portfolio include Feel Good,

Starslush, FRYST, ICEE, Levi Roots & Sunkist.

2 0 1 8 N I C H O L S P L C A N N U A L R E P O R T

Welcome

TO
THE 2018 NICHOLS PLC
REPORT.

successful

2018 was the year of Vimto’s 110th birthday
and as you will see in the report, a very
one. I am very proud of our brand
and in particular its but it’s our
people who bring Vimto to life with passion
and ambition year after year. They really
have made

the world smile by being

heritage,

refreshingly different.

So on behalf of the Board I would like to say
a massive to all my colleagues
at Nichols.

thank you

Marnie.

MARNIE MILLARD OBE - CHIEF EXECUTIVE OFFICER

One

STRATEGIC REPORT

THE HIGHLIGHTS

CHAIRMAN'S STATEMENT

OUR BUSINESS MODEL

CHIEF EXECUTIVE OFFICER’S REPORT

OUR STRATEGY

FINANCIAL REVIEW

RISK MANAGEMENT

TwoGOVERNANCE

CORPORATE SOCIAL RESPONSIBILITY

THE BOARD

CORPORATE GOVERNANCE STATEMENT

AUDIT COMMITTEE REPORT

REMUNERATION COMMITTEE REPORT

DIRECTORS’ REPORT

GENDER PAY GAP REPORT

Three

FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CASH FLOWS

PARENT COMPANY STATEMENT OF CASH FLOWS

STATEMENT OF CHANGES IN EQUITY

NOTES TO THE FINANCIAL STATEMENTS

UNAUDITED FIVE YEAR SUMMARY

NOTICE OF ANNUAL GENERAL MEETING

GENERAL NOTES

FINANCIAL CALENDAR

101

S T R A T E G I C R E P O R T

The

HIGHLIGHTS

Vimto
BRAND VALUE
IS NOW
£87M,
highest
ITS
EVER VALUE.

worth

GROUP REVENUE

OPERATING PROFIT*

OPERATING PROFIT

2017

£132.8m

2018

£142.0m

+7.0%

2017

£30.5m

2018

£31.6m

+3.6%

2017

£28.7m

2018

£31.6m

+10.1%

PROFIT BEFORE TAX*

EPS (BASIC)*

NET CASH

2017

£30.5m

2017

62.88p

2018

£31.8m

2018

69.23p

+4.0%

+10.1%

2017

£36.1m

2018

£38.9m

+7.9%

*Pre-exceptional items. Exceptional items are explained in note 4 of the financial statements.

S T R A T E G I C R E P O R T

Chairman's

STATEMENT

John Nichols

NON-EXECUTIVE CHAIRMAN

2018 was a significant year for the Vimto brand,
marking 110 years since my grandfather invented
the drink that today is still enjoyed in the UK and
around the world.

I am pleased therefore, to announce another strong
performance from Nichols plc during this special
year. In 2018, Group revenue grew by 7.0%, Profit
Before Tax was up 4.0% and we are proposing a
14.5% increase in the final dividend.

GROUP REVENUE
INCREASED BY

7.0%

VIMTO BRAND
SALES GREW BY

12.9%

PROFIT BEFORE TAX
INCREASED BY

4.0%

S T R A T E G I C R E P O R T

maintain its positive performance driven
by the strength of the Vimto brand and
the increasing opportunities in the Out of
Home sector.

In our international business, we are
confident that the long term prospects in
the Middle East and Africa remain strong,
although the ongoing conflict in Yemen
continues to create uncertainty for 2019.

In Summary, the Board is pleased with
Nichols plc’s performance during 2018.
The Vimto brand marked its 110th year
with a 12.9% increase in sales, the Group
has delivered further profit growth and
the Board is proposing a 14.5% uplift in
the final dividend.

John Nichols
Non-Executive Chairman
26 February 2019

Trading

Group revenue in the year was £142.0m,
£9.2m ahead of 2017.

Total sales in the UK business increased
by 12.7% to £114.6m (2017: £101.7m).

In its 110th year, sales of the Vimto brand
grew by 12.9%, gaining market share
and significantly outperforming the UK
soft drinks category which grew at +7.8%
(Nielsen MAT 29 December 2018).

Elsewhere in the UK, sales in the Out
of Home channel increased by 15.2%
compared to the prior year. This strong
performance was driven by sales of both
our dispensed soft drinks and frozen
beverage products which reflects the
significant investment in this part of our
business over recent years.

In the international business, a strong
sales performance in Africa during the
second half of the year delivered full year
growth of 6.5% in this region.

As anticipated in our 2017 Preliminary
Results Statement (1 March 2018), sales
to the Middle East were down on the prior
year due to the ongoing conflict in Yemen
and the timing of shipments to Saudi
Arabia. As a result, sales to the Middle
East region totalled £9.6m (2017: £13.0m).
The Group’s total international sales were
£27.4m (2017: £31.0m).

Dividend

Reflecting the Board’s ongoing confidence
in the Group’s financial position, we are

pleased to recommend a final dividend of
26.8 pence per share (2017: 23.4 pence).

If accepted by our shareholders, the
total dividend for 2018 will be 38.1 pence
(2017: 33.5 pence), an increase of 13.7%
on the prior year. Subject to shareholder
approval, the final dividend will be paid on
3 May 2019 to shareholders registered on
22 March 2019; the ex-dividend date is 21
March 2019.

Post Balance Sheet Acquisition

Alongside the continued investment in
the Vimto brand, our strategy identifies
acquisition as a key driver of the
Group’s future growth plans. Therefore,
we are delighted to announce the
acquisition of 100% of the shares in
Adrian Mecklenburgh Limited (AML) on
1 February 2019. AML is currently one
of our Out of Home soft drinks dispense
distributors covering the Kent region. This
acquisition is consistent with a number of
recent successful investments in our Out
of Home business and consolidates the
route to market in the region.

Outlook

We are well positioned with a diversified
business model, a strong balance sheet
and remain highly profitable. We continue
to monitor the ongoing Brexit process,
taking all possible actions to reduce the
risk and we are confident that the Group
can maintain its forward momentum in
2019 and beyond.

In 2019, we expect our UK business to

S T R A T E G I C R E P O R T

Our
BRANDS

Our
PARTNERS

Our
DISTRIBUTION

Our
CUSTOMERS

Our
CONSUMERS

Outsourced Vimto production

In the UK, we outsource production of our Still
and Carbonate Vimto products across various
production partners. Internationally, we use a
combination of export and in-country
bottling partners.

In-house production

We produce bag-in-box syrups and juices for our
frozen and dispense drink brands at our
manufacturing facility in Ross-on-Wye.

Brand Licensing

We work with a variety of licensees to extend
the Vimto offering across a range of
confectionery products.

We use third party distributors
as well as our own fleet to
deliver products to customers,
as appropriate to each market.

Our customers are specific to
each distribution channel and
range from UK grocers to
wholesalers, leisure and
entertainment groups to
independent pubs, as well as
overseas distributors to
in-country bottlers.

We’ve been making our
consumers smile by being
refreshingly different
since 1908.

S T R A T E G I C R E P O R T

Chief

EXECUTIVE
OFFICER'S REPORT

Marnie Millard

CHIEF EXECUTIVE OFFICER

It is particularly pleasing to note the performance
of Nichols plc in 2018, the year when Vimto reached
its 110th anniversary. The Group delivered excellent
revenue growth of 7.0% to reach sales of £142.0m.
Sales of Carbonate products grew by 12.7% and the
Still portfolio increased by 0.8%. The Still category
performance was attributable to the reduced level
of trading within the Middle East.

The Group revenue was driven by our UK business
where sales increased by 12.7% to £114.6m, whilst
international sales declined in the year to £27.4m,
as we anticipated as we went into 2018. Despite
experiencing a decline within the Middle East, the
Group maintained its strong gross margin of 45.7%
and the growth in gross profit was consistent with
our revenue growth at 7.0%, as a result
of the continued success of our value over
volume strategy.

Financial Highlights

• Revenue
+7.0% to £142.0m (2017: £132.8m)

• Profit Before Tax*
+4.0% to £31.8m (2017: £30.5m)

• Gross profit
+7.0% to £64.9m (2017: £60.6m)

• EPS (basic)
+10.1% to 69.23p (2017: 62.88p)

• Strong balance sheet
£38.9m free cash (2017: £36.1m)

• Final dividend
+14.5% to 26.8p (2017: 23.4p)

* pre-exceptional items

These results were despite a challenging
global market place and the expected
reduced trading position within the
Middle East.

In April 2018, the UK government
implemented the Soft Drinks Industry
Levy on drinks containing sugar of
more than 4.9g per 100ml. We have
been working on our sugar reduction
programme for the last six years and as a
result, our total UK product portfolio was
sugar levy exempt as we went into 2018.

The impressive performance of the
Vimto brand in the UK indicates the
continued consumer love for Vimto and
the successful evolution of the brand.
We experienced a highly competitive
UK market place with lots of change
taking place in packaging, pricing and
promotional strategies along with
consolidation within the markets we
operate. However, we had one of the
finest summers for many years in the UK
and despite an industry wide shortage
of CO2, Vimto performed extremely well.
I would like to thank all of our supply
partners for their continued collaboration
and support.

The
UK Soft
Drinks Market

(As measured by Nielsen year to
date 29 December 2018)

In 2018, volumes in the UK soft
drinks market grew at 3.0%. Value
sales were higher showing growth of
7.8%, with the market size reaching
£8.4 billion. Within the total soft drinks
market, with the exception of fruit drinks
and breakfast drinks, all sectors delivered
value growth.

In the last twelve months, Vimto’s
brand value increased by an impressive
£10.6m (Nielsen data) and is now worth
£87m, an increase of 13.9%. This market
outperformance has resulted in Vimto
gaining market share in both the Still and
Carbonate categories.

In spite of the market remaining highly
competitive and promotionally driven,
we continue with our focus of adding
value to the category. Our product
innovation, under the sub brand Remix,
has added £9m to our Vimto retail sales
brand value in less than 4 years. The
addition of new flavours across the Remix
brand has driven incremental sales
through gaining increased distribution
and new customer listings.

The UK On-Trade

(As measured by CGA, Total Licensed,
Total Soft Drinks, last 12 months MAT 31
October 2018)

The UK on-trade soft drinks sector saw
an uplift in consumption as volume
increased by +0.3%. However, value
sales have grown at a faster rate, with an
increase of +3.8% year on year reflecting
the premium nature of the category. This

performance was achieved
against a head wind of outlet
closures in the trade and as a
result, soft drinks outlets are
down -2.1% year on year.

Draught sales in the UK
on-trade have seen a mixed
performance. Draught
Cola value sales grew
by +3.6% ahead of
volume at +1.7%
in the last 12
months. However,
draught flavoured
carbonates have
retracted in sales,
declining -26% in
value and -36%
in volume.

As consumers
have increased
their intake of soft
drinks, they do not
compromise on brand
choice. All categories,
including beers,
wines & spirits, are
experiencing the
premium effect with
value growth ahead
of volume.

S T R A T E G I C R E P O R T

Operational Review

Vimto UK

In 2018, Vimto delivered impressive sales revenue
growth of 12.9%, which was well ahead of the
overall market. It is encouraging that the fastest
area of growth has come again from our No Added
Sugar products (+22%). Within the UK, all of our
product areas are in growth and gaining market
share. UK Carbonates were up 14% and the Still
products increased overall by 11%.

We continue to work in collaboration with all of our
customers across the key UK trading channels and
by putting them at the heart of what we do, we have
delivered double digit growth within UK grocery, UK
wholesale, foodservice and the discounters. This
is despite a high level of customer consolidation
within the UK market, which we expect to continue
as we move into 2019.

In 2018, we launched our new UK marketing
campaign to focus on our core teen target audience
of 16-19 year olds. We launched the new ‘I see
Vimto in you’ creative programme across multiple
touchpoints in June, aimed at celebrating the
uniqueness of Vimto. It was a disruptive campaign,
which included personalised video on demand and
cinema advertising and as a result, the engagement
levels were more than double the industry standard
and brand advocacy grew by 9%.

DIGITAL DISPLAY
ENGAGEMENT

snapchaT lens share rATe
72% higher than INdustry average!

"THAT VIMTO AD IS
A LITTLE BIT GENIUS
AND FABULOUS."

"CLOSED MY EYES FOR
THE WHOLE VIMTO ADVERT

NOW I REGRET IT."

S T R A T E G I C R E P O R T

Vimto Out of Home

The Vimto Out of Home business has delivered a
third consecutive year of strong sales growth of
15.2% in 2018. A key driver of this performance was
our frozen drinks business that delivered double-
digit growth via both organic sales and innovation.
Our new Unicorn flavour proved extremely popular
with our consumers and provided incremental sales
growth during the key summer trading period.
We have also made a move into the adult frozen
cocktail category launching our new FRYST brand
in selected outlets and festivals, which has brought
excitement to consumers throughout the UK.

Our branded cola ranges have performed very
strongly in 2018 within the dispense sector as
we have seen the continued shift by consumers
to choose and drink lower sugar variants. Our
customers across our distributor network in this
area performed well once again and continued to
drive strong sales across the on-trade.

The Out of Home performance benefitted from
the annualised sales following the acquisition of DJ
Drink Solutions Limited (DJ) in June 2017, however
like for like sales were up 10.3%. During 2018, we
successfully integrated the DJ business into Vimto
Out of Home, which continues to win new customer
partnerships. The acquisition of The Noisy Drink
Company North West Limited in February 2018, one
of our Out of Home frozen soft drinks distributors
covering the North West region, has further
consolidated our route to market in the region and
contributed to this performance.

We have also continued to invest in the operational
effectiveness of our Out of Home business, opening
a state of the art showroom and new customer
service centre in Newton-le-Willows and a new
technical centre of excellence in Swindon. These
investments underpin our commitment to deliver
leading edge ranges, equipment and technical
expertise to all of our customers across the UK
and Europe.

Your local
post- mix
partner

We are a leading provider of soft drinks
solutions, boasting a portfolio with the
widest variety of post-mix beverages.

www.vimto.uk | 0800 066 2133

S T R A T E G I C R E P O R T

Vimto International

The African region continued to build on its strong
performance as we have seen in recent years and
delivered sales revenue growth for the full year of
6.5%. The second half year performance for this
part of the business was significantly stronger. In
addition to our focus on driving penetration of our
brands in our established markets, we also launched
into two new countries across East Africa. Kenya and
Tanzania are both key markets with well-established
soft drinks categories and provide us with a fabulous
opportunity to grow sales over the next few years.

Our relationship with our partner Aujan Coca-Cola
Beverages Company in the Middle East is over
93 years old and in 2018 they delivered another
outstanding 360-degree marketing campaign. It was
entitled “The Same One” and was on air as always
during Ramadan. The campaign focused on the
evolving role of women in Khaleeji society from the
1960’s to the current day and showed Vimto as a
constant feature of daily life throughout all those
years. Impressive results were delivered through
excellent in-store visibility and awareness; the TV
campaign drove 99% awareness and the digital
platforms achieved 290 million impressions.

Despite extremely challenging economic conditions
in the region, the in-market sales of cordial and the
250ml ready to drink products continued to deliver
sales growth, which demonstrates the strength of the
brand and the affection our consumers have for that
special Vimto taste.

Due to the political unrest in the region during 2018,
our long-standing partner in the Yemen continued to
suffer many operational difficulties and challenges.
This has made trading at times during the year
impossible and as a result, we have been unable to
ship as much concentrate as in previous years.

Overall, our sales to the Middle East region were
down by 26.4% due to the timing of shipments to
Aujan and the challenges with supply to the Yemen.

Last but certainly not least, we have continued
to build momentum in the USA with our long-
standing partner Ziyad. We have been encouraged
by the successes Ziyad have delivered in 2018,
which resulted in us gaining distribution of our
Vimto products in 100 Walmart stores in their
Mediterranean aisle.

S T R A T E G I C R E P O R T

Brand Licensing

Our brand licensing team launched some exciting
new partnerships during 2018 that has helped to
ensure the iconic Vimto flavour is enjoyed across
a range of categories. We agreed a new exciting
collaboration with Krispy Kreme that secured over
1,000 distribution points for two bespoke Vimto
branded doughnuts.

Vimto Millions were developed for both UK and
Europe with the product being available and selling
well in over 1,000 dispense units.

Marnie Millard OBE
Chief Executive Officer

26 February 2019

S T R A T E G I C R E P O R T

Our

STRATEGY

We have consistently applied our strategy over the last six years and our four strategic pillars have been fundamental to the continued
success of the Group. Our diversified business model allows us to make the right decisions for the long-term sustainable growth of the
Group and the brands, both home and away. Our strategy has four pillars as detailed below, along with some examples of our strategy in
play in 2018.

S T R A T E G I C R E P O R T

Innovation is key for any business but for a brand
established in 1908, it is essential to continue to excite
consumers along with the appropriate acquisitions to
grow sustainably.

In 2018 we launched a Watermelon, Strawberry and Peach
variant to add to our Remix stable and this, along with new
distribution gains on our current flavours, has helped to
deliver an impressive +56% growth across the total Remix
range. Our Vim2o flavoured water product continues to
build momentum and we have doubled value sales in 2018
on the back of new customer listings.

The development of the brand portfolio and the
business will ensure we remain fit for the future from
a consumer perspective and will include both
health and environmental changes.

The Soft Drinks Industry Levy was introduced into the UK in
April 2018. Our entire product portfolio within the UK was
sugar levy exempt including Vimto, Levi Roots, Feel Good
and our Starslush frozen beverage range.

Healthy Hydration is a key trend we will continue to meet
across our portfolio and it is good to see an increase in
Vimto No Added Sugar sales of 22%, which is a consistent
trend we have seen for many years as consumers make
new choices. All of our product development for the last six
years has been as a No Added Sugar offer.

We are engaged with the British Soft Drinks Association
in order to fully participate in providing a robust deposit
return system, to improve the return rates of plastic waste
in order to produce new bottles for our industry.

We will continue to build on the core strength
of the Vimto brand across the Globe.

Internationally, we saw good growth in a number of our
established core markets. Notably in Ghana, where the
strong relationship we have with our partner has delivered
accelerated growth and in Guinea where the sales of our
can products has been exceptional. We continue to invest
in Vimto across all of our African regions with strong
sales and marketing programmes to ensure our brand
awareness and relevance continues to be at the forefront
of our consumers’ minds.

Outlook

Geographic expansion, new routes and channels to
market is critical to ensure we continue to excite
consumers for decades to come.

We continue to expand our footprint nationally in the
Out of Home route to market and have delivered further
growth through distribution wins across a range of our
national account customers, such as Greene King and
Merlin. Our partnership with ICEE has opened up new
channels as the carbonated frozen ranges appeal to new
consumers within the leisure channel.

There remains significant challenge with the overall economic uncertainty as we move into 2019, however, the Vimto brand performance
remains strong and capable of dealing with market changes as they happen. Change in our market environment both in the UK and
internationally remains a consistent factor, as well as consumers continuing to make different choices. We believe our brands are strong,
our business is resilient and along with our committed people, we are well placed to deal with those challenges.

S T R A T E G I C R E P O R T

REVIEWFinancial

Income Statement

Revenue

Gross Profit

GP%

Distribution expenses

Operating expenses

EBITDA

Depreciation & Amortisation

Operating Profit

Operating profit margin

Finance income

Finance expense

Profit Before Tax

PBT %

Tax

Profit after tax

Year ended 2018

Year ended 2017

Pre-exceptional items

£m

142.0

64.9

45.7%

(7.2)

(26.0)

33.8

(2.2)

31.6

22.3%

0.2

(0.1)

31.8

22.4%

(6.2)

25.5

£m

132.8

60.6

45.7%

(5.9)

(24.1)

31.7

(1.2)

30.5

23.0%

0.1

(0.2)

30.5

23.0%

(5.5)

25.0

Revenue

Gross Profit

Operating Expenses

Group revenue for the year was £142.0m,
an increase of 7.0% compared to 2017.

Gross Profit increased commensurate to
revenue by 7.0% to £64.9m.

Sales of Carbonate products grew by 12.7%
in the year and income from the sales of
Still products increased by 0.8%. The Still
category was impacted by the reduced
level of trading with the Middle East.

The Group’s revenue performance was
driven by our UK business, where sales
increased by 12.7% to £114.6m, whilst
and as anticipated, international revenues
declined in the year to £27.4m.

It should be noted that the Gross Margin
of 45.7% was in line with the prior year
despite the decline in the higher margin
sales to the Middle East.

Distribution Expenses

Distribution expenses were £7.2m in 2018
(2017: £5.9m). The increase is reflective
of the higher stock holding, as referred to
below, and the sales mix during the year.
The revenue growth has been driven by the
UK business which incurs the majority of
our warehouse and distributions cost.

Operating expenses totalled £26.0m in
the year, an increase of 7.7% compared to
the prior year. The significant cause of the
increase was the full year incremental costs
associated with the acquisition of DJ Drink
Solutions Limited (purchased in June 2017)
and The Noisy Drink Company North West
Limited (purchased in February 2018). In
addition, £1.1m of bad debt provision
has been released in the year, following
cash received against previously provided
for debt.

S T R A T E G I C R E P O R T

Revenue Growth +7.0% (2017: +13.2%)

The increase in the current year revenue as
a percentage of the prior year value.

Gross Margin 45.7% (2017: 45.7%)

Gross Profit as a percentage of revenue.
This KPI is monitored at segment (Still and
Carbonate) and product level.

Operating Profit Margin 22.3% (2017:
23.0%)

Group profit before financing income or
expense as a percentage of revenue. This is
considered for the Group as a whole rather
than at product level.

EBITDA £33.8m (2017: £31.7m)

EBITDA is defined as profit before interest,
tax, depreciation and amortisation.

Tim Croston
Chief Financial Officer

26 February 2019

EBITDA

EBITDA grew by 6.6% to £33.8m.

The EBITDA growth was in-line with the
revenue performance.

Operating Profit

Operating Profit increased by 3.6% to
£31.6m.

The margin return on sales was 22.3%
compared to 23.0% in the prior year.

Finance Income and Expense

Finance income of £0.2m relates to the
bank interest received during the year on
the Group’s cash deposits.

The majority of the finance expense relates
to the net interest on the defined benefit
pension liability in line with the application
of IAS 19.

Profit Before Tax

Profit Before Tax was £31.8m for the year,
an increase of 4.0% compared to the prior
year (2017: £30.5m).

The margin return on sales was 22.4%
compared to 23.0% in the prior year.

Taxation

The effective rate of taxation is 19.6%
(2017: 19.3%). This is higher than the
standard rate of 19%.

Statement of Financial Position

Cash

The Group cash balance at the year end
was £38.9m (2017: £36.1m).

Nichols’ business model remains very cash
generative and due to favourable working
capital movements, operating profit/ cash
conversion has increased to 91% (2017:
77%). The cash conversion rate is based
on net cash generated from operating
activities as a percentage of the profit for
the financial year.

By exception, other points of note regard
the Statement of Financial Position are:

• Property, plant and equipment
increased by £2.5m to £14.6m

during the year. The majority of the

increase was the purchase of dispense
equipment supporting the growth of the
Out of Home business.

• The majority of the £3.8m increase in
Goodwill was associated with the
acquisition of The Noisy Drink Company
North West Limited in February 2018.

• The year end value of inventories was
£7.2m, £2.4m higher than the prior
year. There were a number of supply
chain developments affecting the year
on year stock increase, most notably,
as part of our Brexit strategic planning.
In addition, the prior year value was
relatively low when compared to normal
levels of stock holding.

• Trade and other receivables increased
by 9.8% during 2018, this was largely
due to the strong growth in trading
activity compared to the prior year.

Key Performance Indicators

The following Key Performance Indicators
(KPIs) are used by management to monitor
the Group’s profit performance:

S T R A T E G I C R E P O R T

Risk

MANAGEMENT

Risks and Uncertainties

The Group maintains a risk register which is reviewed and managed by the senior management team on a regular basis. As a result,
the register is dynamic and reflects the evolving business environment e.g. the Group successfully prepared for the Soft Drinks Industry
Levy introduced in April 2018 and subsequently this risk was removed from the register. The register is also reviewed by the Group Audit
Committee at each meeting.

Management consider the following issues to be the principal risks potentially affecting the business:

S T R A T E G I C R E P O R T

Risk

Mitigation

Risk

Mitigation

Management consider there would be a risk
to the Company’s growth ambitions if the
business was reliant on any one market or
product category.

One of the key aims of our strategy is to invest and focus across our business activities
to leverage the diversity of the Group. This benefit of the strategy was demonstrated
during 2018, when despite seeing a decline in our Middle East business (which was
expected and communicated), the Group as a whole has delivered strong growth in
the year.

In common with many businesses, we are
highly dependent on the availability of IT
systems.

Nichols plc operates a number of preventative systems and controls to reduce the
risk. In addition, we have a robust disaster recovery plan including the use of third
party professional providers to host our systems and data.

The threat of cyber-attack is an ever present
and indeed, ever growing risk in today’s
global business environment, which could
have a significant impact on our website and
systems.

Health & Safety incidents, for example in
a warehouse, resulting in serious injury
or death or investigation by the relevant
authority.

The Group manages the Health & Safety regime via a cross business Committee
headed by our in-house company solicitor. The committee oversees policy &
procedure, staff training, H&S risk assessments and undertakes a schedule of audits
(resourced externally where appropriate).

Unavailability of the Vimto compound. As the
Vimto brand accounts for the majority of the
Group’s revenue, it is vital that we have surety
of supply of the compound.

Working in partnership with our suppliers, we have established production capability
with dual suppliers at more than one location to ensure continuity of supply.

Loss of a major customer account.

Disruption to our supply chain or trading as
a result of the Brexit process, impacting costs
and our ability to source raw materials.

We are dedicated to maintaining long-term relationships with all of our customers,
but the Group’s diverse income stream across markets and regions means we are not
overly reliant on any one customer.

Like all companies, we are uncertain as to the outcome of the Brexit process and
therefore have considered a number of scenarios to manage.

In terms of supply chain, we are increasing the holding of raw material and finished
goods stock. We are also working with our warehouse and distribution partners to
secure additional capacity.

With regard to trading, only around 2% of Group sales are to the EU region.

In addition to supply chain and trading, we believe that a potential devaluation in
sterling is another risk of Brexit, as it will have an inflationary impact on our raw
material costs. We have therefore fixed our currency exposure where possible for the
year ahead through pricing agreements with suppliers.

Plastics – The UK government is considering
various options to promote a reduction in
the use of single use plastic and promote
recycling. As a result, the soft drinks industry
may face legislative challenges that potentially
increase complexity or cost.

Nichols plc is working proactively with the soft drinks industry via the British Soft
Drinks Association and the government to find long-term solutions to this challenge.

In the interim, we are implementing a number of initiatives, such as increasing the use
of recycled plastic, sourcing paper straws and encouraging our consumers to recycle
with on-pack messaging.

G O V E R N A N C E

Corporate

SOCIAL
RESPONSIBILITY

Our Partners and our Community

YOUTH CLUBWarrington

We have supported Warrington Youth Club since
2013 and have raised over £500k during that time.
Warrington Youth Club continues to “inspire young
people to achieve” and supports young people’s
development by offering opportunities to increase
and develop skills, self-awareness and confidence.

In the summer of 2018, Nichols took part in the
fifth Dragons Den challenge with the Youth Club,
as part of the National Citizen Service programme
(NCS). A voluntary personal and social development
programme, NCS helps 15-17-year olds build
essential professional and life skills, while increasing
their confidence and providing the opportunity to
meet new people.

This year’s challenge was to ‘create the next big
thing in soft drinks’. Working in teams, participants
had to consider everything needed to create an
impactful New Product Development launch,
from the brand look and feel, product flavour and
packaging design, to the target audience.

There were some amazing ideas including spicy
drinks, interactive and recyclable packaging and
infused tea bags, but this year team Springen came
out on top. Springen’s winning product was a range
of innovative dissolvable flavour pods, designed
for different functional needs throughout the day,
which came in a reusable, collapsible bottle.

Once again, the groups were highly engaged in
the process and approached the task with energy
and enthusiasm, and it was incredible to see them
building their presentation and teamwork skills. We
look forward to taking part again next year!

G O V E R N A N C E

Our main fundraising for 2018 was the annual
Nichols Golf Day and the Vimto Bike Ride.

For our 110th anniversary, 110 riders completed
110km around Cheshire with the aim of raising
£110k. In fact, the team raised a magnificent £114k.
We were supported by suppliers and friends, but
also welcomed Gary and Phil Neville along with
Ryan Giggs, who cycled the course and helped us
achieve some wonderful PR and support for the
Youth Club. Thank you to every single rider who
took part, it really brought to life our values and the
funds will make such a difference to those young
people we support.

In 2020, a new Youth Zone will be opening, which is
a joint venture between the national young people’s
charity OnSide and Warrington Borough Council.
It will be a purpose built facility that will raise
aspirations, enhance prospects and improve health
and wellbeing for young people, particularly those
from disadvantaged backgrounds in the area.

We here at Vimto are proud to be part of this
exciting development with the Youth Club and will
continue to work with the organisation to bring this
opportunity to life within Warrington.

Manchester 10km

In May 2018, another hardy bunch of Vimto runners
completed the Manchester 10km. Well done to all of
those who took part with such Vim and Vigour!

At Vimto, we have a lot of aspiring “Bake Off”
contestants and as a result, the array of cakes, buns
and all sorts of bakery we have on offer is quite
magnificent and raises vital funds for the Macmillan
Cancer Support charity. The Macmillan coffee
morning is a firm favourite event at Vimto, which
raises money for a charity that is close to the heart
of many of my Vimto colleagues.

G O V E R N A N C E

ACADEMYSalford

In 2018, Vimto collaborated with Salford City FC to
support the Club’s Academy 92.

Kicking off the three year initiative, Vimto has
worked closely with the Academy 92 Foundation
to support aspiring football stars, developing
their skills and education through a dedicated
partnership.

Academy 92 aims to give Salford’s aspiring
footballing talent the best future either in or out of
football. The academy’s slogan ‘Nurturing Football
Talent & Promoting Personal Excellence’ resonates
well with the values and culture we seek to instil at
Vimto, while providing a fantastic opportunity for us
to give back to the Salford community where Vimto
was first established in 1908.

The partnership allows us to interact with fans,
players and staff through match day activations and
our jersey sponsorship ensures standout visibility
for our home city’s much loved brand – a position
that we remain incredibly proud of.

FOR CHANGEWaves

Our partnership with Waves for Change (W4C)
started in 2010 in Cape Town and eight years later
W4C has grown, aided by the additional research
of two PHD’s into one of the worlds most respected
mental health charities.

Vimto’s support has been present at every step
of the way, ensuring that the children have the
equipment they need like wetsuits, surfboards and
transport to get in the water.

W4C combines the rush of surfing with evidence-
based mind/ body therapy to improve the mental
health of vulnerable and differently abled youths
living along some of the world's most unsafe
coastlines. W4C trains and equips local community
mentors to deliver this unique, child-friendly mental
health service providing a safe space where trust,
confidence and life-skills are developed.

In 2019, sixty five W4C mentors will provide surf
therapy to almost 2,000 children in South Africa and
Liberia. Newly trained mentors along 20 additional
vulnerable coastlines globally will increase the reach
of W4C over the next 18 months.

G O V E R N A N C E

Our

CONTINUED COMMITMENT
TO REDUCING SUGAR

The Soft Drinks Industry Levy (SDIL) was introduced in April 2018
and we are delighted with the performance of the Vimto brand
during 2018, which was not impacted by the introduction of the
Levy at all. The Vimto brand maintained the growth momentum
from 2017 into 2018 despite the challenges presented to the soft
drinks sector. All our own brands were exempt from the SDIL at
the point of its introduction, which was across both of our UK
routes to market.

We have reduced our sugar consumption in 2018 by another 1,104
tonnes of sugar, which represents a reduction of 27%.
Average calories per litre fell by 5.7% and our No Added Sugar
Vimto range was up 22% compared to the prior year. This has
been a continuous commitment by the Company for the last six
years to reduce sugar in our portfolio. Product development has
focused solely on No Added Sugar and all of our advertising has
featured only our No Added Sugar ranges.

Our

PLEDGE ON
PLASTICS

G O V E R N A N C E

We are committed to having a sustainable but achievable plan
surrounding the use of plastics within Nichols plc. We are working
with our suppliers to improve the use of recycled PET into our
packaged portfolio and currently have 31% RPET in our cordial
bottles. From bottles to tetra paks, cups to straws, every piece
of packaging we use or supply is 100% recyclable and we are
investing in the UK recycling infrastructure by purchasing UK only
Packaging Recovery Notes (PRN).

We are actively working with the British Soft Drinks Association
(BSDA) to support the government in finding long-term solutions
to the plastics challenge, by developing better infrastructure
to support wider recycling, increasing consumer awareness of
the need to recycle on the go and increasing the availability and
usage of RPET in our bottles. However, we do need a holistic and
system wide solution to the issue of single use plastics. In simple
terms, this means better waste collection and recycling systems,
awareness and education.

In summary, our work with the BSDA is on sector wide recommendations to address the concerns about plastic packaging which include:

Finding alternative solutions

to plastic for cups, lids and
straws

Reforming the

PRN scheme

Increased support for the

Support the consultation

improved infrastructure to
grow local and out of home
recycling

around a Deposit
Return Scheme

Input proactively into the

Increase support for

Communicate to internal

governments consultation

consumer behavioural

and external stakeholders

on the proposed future ban

change campaigns

of straws

G O V E R N A N C E

BOARDThe

From left-right: Tim Croston, John Gittins, Helen Keays, Andrew Milne, Marnie Millard OBE, John Nichols.

G O V E R N A N C E

John
NICHOLS

Marnie
MILLARD OBE

Tim
CROSTON

NON-EXECUTIVE CHAIRMAN

CHIEF EXECUTIVE OFFICER

CHIEF FINANCIAL OFFICER

John is the grandson of the founder of the
Company and inventor of Vimto, John Noel
Nichols. John joined Nichols plc in 1971 and
was appointed as director in 1975. In 1986
John became the Group Managing Director,
subsequently he became Executive Chairman
of the Group and in 2007 he moved to Non-
Executive Chairman.

John has three grown up children, two of whom
also work for the Company. John spends his
spare time sailing, playing golf and skiing.

Marnie joined Nichols in October 2012 as
Managing Director of Vimto Soft Drinks. In
May 2013 she was appointed Chief Executive
Officer. Marnie has vast experience in the soft
drinks industry having occupied senior roles
with Macaw Soft Drinks and Refresco Limited.
Marnie is Vice President of the British Soft
Drinks Association and holds a non-executive
directorship with Finsbury Food Group.

Marnie is married, has two children and is also
a proud grandmother to Freddie and Matilda.
Marnie enjoys attending concerts and relaxes
by walking on the moors near her home.

Tim joined the Group as Group Financial
Controller in 2005. He became Finance and
Operations Director of Vimto Soft Drinks in
2007 and was appointed to the plc Board as
Chief Financial Officer in January 2010.

In December 2015, Tim was appointed Group
Audit Chair and Non-Exec Board member
in September 2017, of Riverside Housing
Association, a leading provider of UK social
housing. Previously, Tim held financial
controller positions at Polyone Inc. and at
Smith and Nephew plc. Tim has two grown up
children with his wife Sue. Tim is an avid and
lifelong Manchester City fan and likes to attend
both home and away matches with his family.

Andrew
MILNE

John
GITTINS

Helen
KEAYS

GROUP COMMERCIAL DIRECTOR

INDEPENDENT NON-EXECUTIVE DIRECTOR

Andrew joined Nichols as the Commercial
Director for Vimto Soft Drinks in July 2013. He
was appointed to the plc Board on 1 January
2016. Andrew has extensive experience in the
soft drinks industry having previously worked
as Sales Director for the Northern region at
Coca-Cola Enterprises and prior to that, as
Trading Director at GlaxoSmithKline.

Andrew has two teenage children with his wife
Debbie. Andrew is a keen Manchester United
fan and spends what spare time he has either
watching or playing sport.

John is a graduate of the London School
of Economics and a chartered accountant.
He was appointed to the Board of Nichols
as an Independent Non-Executive Director
in July 2015 and is a member of both the
Audit Committee (which he chairs) and the
Remuneration Committee.

John is currently NED and Audit Committee
Chair of AIM listed Park Group plc and
Hill Dickinson LLP and has over 20 years
experience of CFO roles in companies such
as Begbies Traynor Group plc, Spring Group
plc and Vertex Data Science Limited. John was
also previously an Independent Non-Executive
Director and the Audit Committee chair of
Electricity North West Limited for six years.

Helen joined Nichols in September 2017.
After a career in Consumer Marketing at
organisations such as GE Capital, Sears and
Vodafone, Helen has developed significant
experience working as a Non-Executive
Director.

She is currently SID at Dominos Pizza Group plc
and the Chair of Remcom at Communisis plc.
She has previously held NED roles at Majestic
Wines plc, Skin Clinics and Chrysalis plc.

Helen is married with two teenage children
who keep her busy watching their sports
matches. In her spare time she likes to play
tennis. Helen is also a Life Trustee of the
Shakespeare Birthplace Trust.

G O V E R N A N C E

Corporate

GOVERNANCE
STATEMENT

Chairman’s introduction to governance

The Board has for many years recognised
its responsibility towards good corporate
goverance and I believe it contributes to
our ability to deliver long-term shareholder
value. During the year, the Financial
Reporting Council and the Quoted
Companies Alliance have both issued
guidance on governance and having
assessed these codes, we have aligned our
approach to the latter.

In the following sections, we have outlined
how we effect this code. Further detail on
our approach to corporate governance can
be found at www.nicholsplc.co.uk/Home/
Aim26.

John Nichols
Non-Executive Chairman

The Quoted Companies Alliance Code
(QCA code)

Last reviewed by the Board 26 February
2019.

Nichols plc has applied the Quoted
Companies Alliance Corporate Governance
Code (QCA code) to support our
governance framework. The Board feel that
the QCA code is appropriate for Nichols plc
and indeed, the code is referred to by over
half the companies listed on AIM.

Introduction

The QCA code states “good corporate
governance is fundamentally about
culture”.

Nichols plc is very proud of its warm and
inclusive culture, our team and how they
go about their business, which have been
fundamental to the sustained success of
the Group for many years. Our culture is
reflected in our values and the overarching
theme of our values is ‘doing the right
thing’. This statement documents our
approach to corporate governance and
explains how our stakeholders can have
the confidence that we are indeed: ‘doing
the right thing’.

Chair’s role

Our Non-Executive Chairman is John
Nichols who is the grandson of our
founder, John Noel Nichols.

As Chair, Mr Nichols’ primary responsibility

is to effectively lead the Board and ensure
that the Group’s corporate governance
is appropriate, communicated and
adopted across the business activities. The
Chairman is also responsible for ensuring
the Board agenda concentrates on the key
operational and financial issues effecting
the delivery of Nichols plc’s strategy.

Mr Nichols is not involved in the day
to day operations of Nichols plc, such
responsibilities are independently
managed by the Group’s CEO, Mrs Marnie
Millard OBE.

Non-Executive Director’s role

Nichols plc has two independent Non-
Executive Directors (NED’s). The NED role
is to provide oversight and scrutiny of the
performance of the Executive Directors.
The independent NED’s chair the Audit and
Remuneration Committees respectively.

Executive Directors

Nichols plc has three Executive Directors.
The Executive Directors are responsible
for managing the delivery of the business
plans within the strategy set by the Board.

Compliance with the QCA code

The QCA code is constructed around ten
broad principles, the following section
explains how Nichols plc complies with
each of the principles.

Principle

How does Nichols plc comply?

G O V E R N A N C E

1. Establish a strategy and
business model which promote
long- term value for shareholders.

2. Seek to understand and
meet shareholder needs and
expectations.

3. Take into account wider
stakeholder and social
responsibilities and their
implications for long-term
success.

•

The Group’s strategy is set out in the Strategic Report on pages 26 to 27.

The Group’s Executive Directors and senior management team have a separate forum which
meets throughout the year to focus on the Group’s three year rolling strategic plan.

The strategy is both challenged and endorsed by the Board.

The strategy is communicated to all staff members at corporate team briefs and separate
team meetings.

The Executive Directors meet our shareholders on a number of occasions throughout the
year and have open dialogue to receive feedback.

Investor roadshow meetings are undertaken at least twice a year following the preliminary
and interim announcements.

Shareholders are invited to the AGM held at our head office where all Board members
interact with our shareholders on a one to one basis and take questions as they arise.

Executive Directors specifically seek to meet retail investors at investor conferences and
events.

The Executive Directors are available to meet shareholders on request and a number of ad-
hoc meetings are held during the year.

Shareholder feedback is discussed at Board meetings.

Employees

•

Regular meetings take place with staff groups to share Group strategy and seek feedback.

The Company conducts a biennial staff engagement survey with current staff engagement
measured at 95%.

Customers

•

Communications with our customers is a fundamental ingredient to our success. The Nichols
plc team have continuous communications with customers to understand their needs, share
our plans and nurture collaborative working practice.

Suppliers

•

Given Nichols’ outsourced manufacturing model, having long-term partnerships with our
suppliers and co-packers is essential. The Nichols plc Supply Chain and senior management
have regular review meetings with our supplier base.

Our community

•

The Group cares about its community, in particular Nichols plc supports Warrington Youth
Club which provides facilities, opportunities and support to children in our community.

Environment

•

Nichols plc is aware of its environmental responsibilities and whilst all its current packaging
is already recyclable, the Company is working with suppliers and customers to reduce plastic
waste. This will include increasing the proportions of recycled plastic which is already more
than 30% in our cordial range.

In addition, Nichols plc is an active member of the British Soft Drinks Association which has
reducing plastic waste high on its agenda.

G O V E R N A N C E

Principle

How does Nichols plc comply?

Principle

How does Nichols plc comply?

4. Embed effective risk
management, considering both
opportunities and threats,
throughout the organisation.

5. Maintain the Board as a well-
functioning, balanced team led by
the Chair.

6. Ensure that between them
the Directors have the necessary
up-to date experience, skills and
capabilities.

•

The Group risk register is maintained by the senior management team.

Risk is a fixed item on the management team agenda and the register is subject to a further
annual review within the Strategy meeting calendar.

The Risk Register is also a fixed item on the Audit Committee agenda and used as a reference
source for the internal audit plan. The internal audit function is led by individual teams within
the Company.

The significant risks and related mitigation/ control are disclosed in the Strategic Review
within the R&A on pages 30 to 31.

The Board is led by our Non-Executive Chairman, Mr John Nichols.

The Board includes two independent Non-Executive Directors, Helen Keays and John Gittins,
who both have significant experience of plc directorships.

The current Board has good gender equality with 2 female and 4 male members.

The Board currently has two sub-committees: the Audit Committee and the Remuneration
Committee, which are chaired by the two Non-Executive Directors. Details of the number of
meetings held and attendance by Directors is noted in the Annual Report on pages 49 and
51.

Non-Executive Directors communicate directly with Executive Directors and senior
management between formal Board meetings. The Board met 5 times in the year. In
addition, the Board held strategy days to review growth opportunities and priorities across
the medium to longer term. Directors are expected to attend all meetings of the Board, and
of the Committees on which they sit, and to devote sufficient time to the Group’s affairs
to enable them to fulfill their duties as Directors. In the event that Directors are unable
to attend a meeting, their comments on papers to be considered at the meeting will be
discussed in advance with the Chairman, so that their contribution can be included as part of
the wider Board discussion.

The current Nichols plc Board has significant sector, financial and plc experience.

Between them, the Executive Directors have many decades of broad experience in the soft
drinks industry.

• With the support of our NOMAD and advisors, the Board training and development needs

are maintained e.g. the enhanced AIM rule 26 requirements introduced in 2018.

•

Biographies on all Directors giving details of their experience and roles on the Board are
shown on pages 42 to 43.

7. Evaluate Board performance
based on clear and relevant
objectives, seeking continuous
improvement.

• Whilst the Board performance is considered to be good, as demonstrated by the Group’s

sustained success and strong record over many years, historically there has not been a
formal evaluation of the Board.

•

Therefore, a formal Board performance evaluation has been undertaken in December 2018
and reported to the February Board.

In addition, the Remuneration Committee evaluates Executive Director performance
alongside remuneration and reward.

• With regards to financial performance, the auditors meet with the Audit Committee

(comprising the Non-Executive Directors) biannually and beyond the audit report, do
comment on the systems, procedures and efficacy of management.

•

A rigorous recruitment process is undertaken for new Directors prior to their proposal
and election. In terms of re-election, their performance is reconsidered prior to them
being proposed, to ensure they remain effective in their role and that they retain their
independence.

Re-election is considered by the shareholders at the AGM at which shareholders have the
opportunity to approve or otherwise Board membership. Succession planning for the Board
is an ongoing topic of discussion.

As referred to in the introduction, we are proud to have developed our values with significant
influence from our employees and the overarching theme is ’doing the right thing’.

Our values and culture are embodied in Nichols plc’s management behaviour, our
recruitment and staff development processes.

The Nichols plc Board meets five times a year and the Audit and Remuneration Committees
meet at least two times a year.

Nichols plc has robust internal controls, delegated authorities and authorisation processes.

The controls are subject to review, both internally by individual teams within the Company
and externally, by our external audit provider, BDO LLP.

A culture of challenge and continuous improvement is encouraged to ensure that controls
evolve with the business.

The plc website describes the roles and terms of reference for the Committees.

Communications with shareholders are explained in point (2) above.

In addition to the interim and full year investor roadshows, regular meetings are held with
analysts, retail investor groups and perspective investors.

In addition, the plc website contains information about the business activities, access to all
RNS announcements and copies of the Report and Accounts.

The work of the Audit and Remuneration Committees is described on pages 48 to 51.

The plc website includes historical announcements, as well as the R&A for more than the
minimum five years.

8. Promote a corporate culture
that is based on ethical values
and behaviours.

9. Maintain governance structures
and processes that are fit for
purpose and support good
decision making by the Board.

10. Communicate how the
Company is governed and
performing by maintaining a
dialogue with shareholders and
other relevant stakeholders.

G O V E R N A N C E

Audit

COMMITTEE
REPORT

G O V E R N A N C E

On behalf of the Board, I am pleased to
present the Audit Committee Report for
the year ended 31 December 2018.

Members of the Audit Committee

The Audit Committee consists of all
three Non-Executive Directors and is
chaired by myself, John Gittins. Helen
Keays and I are considered independent
Directors. John Nichols is not considered
independent as a result of his significant
shareholding and previous executive role.
The Board is satisfied that I, as Chair of
the Committee, have recent and relevant
financial experience. I am a chartered
accountant and am currently chair of the
audit committees of Park Group plc and
Hill Dickinson LLP.

The Audit Committee met three times
during the year.

The Audit Committee’s terms of reference
are available on the Group’s website.
Its principal responsibilities include
monitoring the integrity of financial
reporting, internal controls and the
external audit process.

Duties

During the year the Audit Committee
discharged its responsibilities by:

• Approving the external auditor’s plan
for the audit of the Group’s annual
financial statements, including key audit
matters, key risks, confirmation
of auditor independence and terms of

engagement, including audit fees;

• Reviewing the Group’s draft financial
statements and interim results
statements and reviewing the
external auditor’s detailed reports
thereon, including disposition of key

audit matters and risks;

• Meeting the external auditor twice,
without management, to discuss matters

relating to its remit and any issues

arising from its work;

• Reviewing the performance of the
external auditor;

• Approving the plan of targeted internal

reviews conducted by the Finance
team and other professional advisors,

monitoring the results of these

reviews and the timely follow up

of control recommendations;

• Reviewing the Group’s risk management
process, key risk register and risk
mitigations.

Role of the External Auditor

The Audit Committee monitors the
relationship with the external auditor, BDO
LLP, to ensure that auditor independence
and objectivity are maintained. Noting the
tenure of BDO LLP (auditor since 2014),
the Committee will keep under review the
need for external tender. The external
auditor is not engaged to perform any
non-audit services, in line with the Group’s
policy. A summary of remuneration paid

to the external auditor is provided in note
4 of the fi¬nancial statements. The Audit
Committee also assesses the auditor’s
performance. Having reviewed the
auditor’s independence and performance,
the Audit Committee has concluded that
these are effective and recommends that
BDO LLP be reappointed as the Group’s
auditor at the next AGM.

Audit Process

The auditor prepares an audit plan for the
review of the full year financial statements.
The audit plan sets out the scope of the
audit, areas to be targeted and audit
timetable. This plan is reviewed and
agreed in advance by the Audit Committee.
Following the audit, the auditor presented
its findings to the Audit Committee for
discussion. No major areas of concern
were highlighted by the auditor during
the year. However, areas of significant risk
and other matters of audit relevance are
regularly communicated.

Internal Audit

At present the Group does not have an
internal audit function and the Committee
believes that management is able to
derive assurance as to the adequacy and
effectiveness of internal controls and risk
management procedures without one.

Internal Control

The Board has overall responsibility
for maintaining sound internal control

systems to safeguard the investment of
shareholders and the Group’s assets. The
systems are reviewed by the Board and,
when asked, the Audit Committee and
are designed to provide reasonable, but
not absolute, assurance against material
misstatement or loss.

The key features of the internal control
systems are:

Anti-Bribery

The Group has in place an anti-bribery
and anti-corruption policy which sets out
its zero-tolerance position and provides
information and guidance to those working
for the Group on how to recognise and
deal with bribery and corruption issues.
The Committee is comfortable that the
policy is operating effectively.

• A Group organisational structure with
clear lines of responsibility;

Attendance at Audit Committee
Meetings

The following table sets out the number
of scheduled meetings of the Audit
Committee during the year and individual
attendance by members:

Audit Committee

Directors

John Gittins

John Nichols

Helen Keays

Meetings attended

John Gittins
Chair of the Audit Committee

26 February 2019

• Comprehensive business planning
procedures, including annual
preparation of detailed budgets for
the year ahead and projections for
future years;

• Comprehensive monthly financial
reporting system, highlighting
variances to budget and regularly
updated forecasts;

• Targeted, risk lead, internal reviews by

the Finance function and other

professional advisors.

Whistleblowing

The Group has in place a whistleblowing
policy which sets out the formal process by
which an employee of the Group may, in
confidence, raise concerns about possible
improprieties in financial reporting or other
matters. The Committee is comfortable
that the policy is operating effectively.

G O V E R N A N C E

Remuneration

COMMITTEE
REPORT

G O V E R N A N C E

Directors’ remuneration payable in year ended 31 December 2018

The remuneration policy for 2019 will operate as follows:

Salary
and fees

£’000

Benefits
in kind

£’000

Bonuses payable in
respect of 2018

Pension
contributions

£’000

P J Nichols

M J Millard

T J Croston

A Milne

J Gittins

H Keays

J Longworth
(Resigned 26 April 2017)

Total

101

325

227

212

945

162

114

105

381

Total
2018

£’000

102

502

371

344

Total
2017

£’000

102

420

286

270

1,399

1,128

I am pleased to present this remuneration
report, which sets out the remuneration
policy and the remuneration paid to the
Directors for the year.

Members of the Remuneration
Committee

The Remuneration Committee consists of
all three Non-Executive Directors and is
chaired by Helen Keays, an Independent
Non-Executive Director.

Duties

The Committee operates under the
Group’s agreed terms of reference and
is responsible for reviewing all senior
executive appointments and determining
the Group’s policy in respect of the terms
of employment, including remuneration
packages of Executive Directors. The
Remuneration Committee met two times
during the year and plans to meet at least
twice a year going forward.

Remuneration Policy

Non-Executive Directors

The objective of the Group’s remuneration
policy is to attract, motivate and retain high
quality individuals who will contribute fully
to the success of the Group. To achieve
this, the Group provides competitive
salaries and benefits to all employees.
Executive Directors’ remuneration is
set to create an appropriate balance
between both fixed and performance-
related elements. Remuneration is
reviewed each year in light of the Group’s
business objectives. It is the Remuneration
Committee’s intention that remuneration
should reward achievement of objectives
aligned with shareholders’ interests over
the medium-term.

Remuneration consists of the following
elements:
• Basic salary;
• Benefits;
• Performance-related annual bonus;
• Long-Term Incentive Plan; and
• Pension contribution.

The Non-Executive Directors signed letters
of appointment with the Group for the
provision of Non- Executive Directors’
services, which may be terminated by
either party giving three months’ written
notice. The Non-Executive Directors’ fees
are determined by the Board.

Directors’ Remuneration

The following table summarises the total
gross remuneration of the Directors who
served during the year to 31 December
2018.

The Executive Directors were eligible
for an annual bonus relating to profit,
strategic and personal metrics. Achieving
stretch targets would have given rise to
a maximum bonus of 110% of base pay.
Actual performance resulted in a bonus of
69% of base pay.

Executive Directors

Basic salary/ fee
£’000

Maximum
bonus

Pension
£’000

M J Millard

T J Croston

A Milne

Non-Executive Directors

P J Nichols

J Gittins

H Keays

Total

337

237

219

101

974

110%

75%

The proportion of the total options
vesting under each plan is subject to
testing against audited profit before tax
for the financial years in question. The
performance thresholds are not disclosed
as they are considered to be commercially
sensitive, but represent outperformance to
current market consensus.

Remuneration Committee

Directors

Helen Keays

John Nichols

John Gittins

Meetings attended

Attendance at Remuneration
Committee Meetings

Helen Keays
Chair of the Remuneration Committee

The following table sets out the number of
scheduled meetings of the Remuneration
Committee during the year and individual
attendance by members:

26 February 2019

Maximum bonus opportunities for the
2019 financial year are disclosed in the
table above. In 2019, the bonus will
continue to be assessed against profit,
strategic and personal targets. The
bonus outcome will range from zero at a
threshold performance, up to 110% for a
stretch performance. Challenging targets
have been set such that maximum award
would represent outperformance to
current market expectations.

The actual performance targets are not
disclosed as they are considered to be
commercially sensitive.

Long-Term Incentive Plans

Awards to Executive Directors under
share-based Long-Term Incentive Plans
are underpinned by financial performance
measures. The Group has two Long-Term
Incentive Plans in place as at 31 December
2018. The Non-Executive Directors are not
part of the Long-Term Incentive Plans.

G O V E R N A N C E

REPORTDirectors

G O V E R N A N C E

The Directors present their report and the
audited financial statements for the year
ended 31 December 2018.

Non-Executive Directors

P J Nichols

J Gittins

H Keays

All of the above are members of the Audit
and Remuneration Committees of the
Board.

Executive Directors

M J Millard

T J Croston

A Milne

Financial Risk Management Objectives
and Policies

Business risks and uncertainties are
included within the Risk Management
section on pages 30 to 31 and financial
risks are set out in note 21 to the financial
statements.

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.

Political Donations

There were no political donations in either
2018 or 2017.

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.

G O V E R N A N C E

Share Capital

to establish that the auditors are aware

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 did not purchase any of
its own shares.

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.

Auditors

In accordance with Section 489 of the
Companies Act 2006, a resolution will be
proposed at the Annual General Meeting
that BDO LLP be reappointed auditors.

Each of the Directors who are Directors
at the time when this Directors’ Report is
approved have confirmed that:

• so far as each of the Directors is aware
there is no relevant audit information

of which the Company’s auditor is
unaware; and

• the Directors have taken all steps that

they ought to have taken as Directors in

order to make themselves aware
of any relevant audit information and

of that information.

Directors’ Responsibilities Statement

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 the Group
and Company financial statements in
accordance with International Financial
Reporting Standards (IFRSs) as adopted
by the European Union. Under company
law the Directors must not approve the
financial statements unless they are
satisfied that they 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. The Directors
are also required to prepare financial
statements in accordance with the rules of
the London Stock Exchange for companies
trading securities on AIM.

In preparing these financial statements, the
Directors are required to:

• select suitable accounting policies and

then apply them consistently;

• make judgements and accounting
estimates that are reasonable
and prudent;

• 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
adequate accounting records that
are sufficient to show and explain the
Company’s transactions and 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 requirements
of 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.

Website Publication

The Directors are responsible for
ensuring the annual report and the
financial statements are made available
on a website. Financial statements are
published on the Company's website in
accordance with legislation in the United
Kingdom governing the preparation and
dissemination of financial statements,
which may vary from legislation in other
jurisdictions. The maintenance and
integrity of the Company's website is
the responsibility of the Directors. The
Directors' responsibility also extends
to the ongoing integrity of the financial
statements contained therein.

• state whether they have been prepared
in accordance with IFRSs as adopted

by the European Union, subject to
any material departures disclosed and
explained in the financial statements;

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.

Summary of Directors’ Interests in the Company

(Number of Shares)

Opening shareholding

2018 movement

Closing shareholding

P J Nichols

M J Millard

T J Croston

A Milne

J Gittins

H Keays

2,000,000

10,442

17,135

908

1,280

189

757

2,000,000

10,442

17,324

1,665

1,280

Directors’ Remuneration

Bonuses which are not guaranteed
are accruing to the Executive Directors
and certain senior executives based on
pre-determined performance targets.
The Remuneration Committee have
considered it appropriate to issue awards
under Long-Term Incentive Plans (LTIPs)
relating to growth in operating profit
before exceptional items. The LTIPs will be
equity settled and are being accounted for
through other reserves.

Total bonuses paid to the three Executive
Directors during the year were £147,000.
All bonuses were accrued for at 31
December 2017.

There are currently two LTIPs in place.
The first runs from 1 January 2017 to 31
December 2019 and the second runs from
1 January 2018 to 31 December 2020. The

remuneration level at grant for both LTIPs
was linked to a theoretical number of
shares equivalent in value to no more than
twelve months salary for each year of the
incentive scheme.

A summary of Directors’ interests in the
Company are shown in the table above.
All figures above relate to shares owned
outright.

By order of the board

The Group has provided for a potential
bonus of £489,891 under the first LTIP and
£52,187 under the second LTIP through
other reserves for the Executive Directors
as at 31 December 2018. This is based on
performance against Profit Before Tax
growth targets.

P J Nichols is a member of the final
salary pension scheme and M J Millard,
T J Croston and A Milne have a personal
pension plan. The Company contributions
to the respective schemes are shown in the
Remuneration Committee Report on pages
50 to 51.

Tim Croston
Secretary

26 February 2019

Laurel House, Woodlands Park,
Ashton Road, Newton-le-Willows, WA12 0HH.

Registered in England and Wales No. 238303.

G O V E R N A N C E

Gender
PAY GAP
REPORT
2018

NICHOLS PLC IS PLEASED

TO PRESENT ITS GENDER

PAY GAP REPORTING

RESULTS AS OF 5 APRIL

2018.

MALE

FEMALE

69%

31%

% EMPLOYEES SPLIT
BY GENDER

Our Out of Home technical, distribution and manufacturing functions

traditionally have attracted a higher % of male employees, however, we are

delighted to see females in our regional sales operatives’ roles.

BOTTOM
66% 34%

SECOND
69% 31%

THIRD
70% 30%

TOP
73% 27%

The review of the pay per quartile, based on hourly pay, is a reflection of the workforce. There has been significant growth in the
Out of Home area of the business during the year, which as previously recognised, has a traditionally larger proportion of male

employees. Our talent attraction strategies are designed to recruit the best individuals for roles providing equalilty of opportunity

for all.

PROPORTION OF
MALES & FEMALES
WITHIN SENIOR
MANAGEMENT
TEAM & MANAGERS
WITHIN THE
GROUP.

MALE

FEMALE

SMT

Managers

The structure of our Senior Management Team (SMT) remains consistent

with a 7:5 male:female ratio and our CEO is female. The split of male/ female

managers across the Group is indicative of the distribution and technical

aspect of our Out of Home route to market.

PROPORTION
OF MALES AND
FEMALES RECEIVING
A BONUS PAYMENT

Every employee has the

potential to earn a bonus,

which is linked to Group

performance and personal

objectives.

Employees in service with the

Group as at the end of the

calender year are eligible to

receive a bonus in the following

March.

DID NOT
RECEIVE
13%

RECEIVED
87%

DID NOT
RECEIVE
17%

RECEIVED
83%

G O V E R N A N C E

HOURLY PAY*
MEAN
0%

MEDIAN

BONUS*
MEAN
-4%

MEDIAN

-65%

MALE

FEMALE

*Variance in male pay to female pay.

F I N A N C I A L S T A T E M E N T S

Independent

AUDITOR'S
REPORT

Independent Auditor’s report to the
members of Nichols plc

Opinion

We have audited the financial statements
of Nichols plc (the ‘Parent Company’)
and its subsidiaries (the ‘Group’) for the
year ended 31 December 2018 which
comprise the consolidated income
statement, the consolidated statement of
comprehensive income, the Group and
Parent Company statement of financial
position, the consolidated and Parent
Company statement of cash flows, the
Group and Parent Company statement of
changes in equity and notes to the financial
statements, including a summary of
significant accounting policies.

The financial reporting framework that
has been applied in the preparation of
the financial statements 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.

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 2018 and of the Group’s profit

for the year then ended;

• the Group financial statements have
been properly prepared in accordance
with IFRSs as adopted by the European
Union;

• the Parent Company financial
statements have been properly
prepared in accordance with IFRSs 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.

Basis for opinion

We conducted our audit in accordance
with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards
are further described in the Auditor’s
responsibilities for the audit of the financial
statements section of our report. We are
independent of the Group and the Parent
Company in accordance with the ethical
requirements that are relevant to our
audit of the financial statements in the
UK, including the FRC’s Ethical Standard
as applied to listed entities, and we have
fulfilled our other ethical responsibilities in
accordance with these requirements. We
believe that the audit evidence we have
obtained is sufficient and appropriate to
provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the
following matters in relation to which the
ISAs (UK) require us to report to you where:

• the Directors’ use of the going concern
basis of accounting in the preparation
of the financial statements is not
appropriate; or

• the Directors have not disclosed in the
financial statements any identified
material uncertainties that may cast
significant doubt about the
Group’s or the Parent Company’s ability

to continue to adopt the going
concern basis of accounting for
a period of at least twelve months from
the date when the financial statements

are authorised for issue.

Key audit matters

Key audit matters are those matters
that, in our professional judgment, were
of most significance in our audit of the
financial statements of the current period
and include the most significant assessed
risks of material misstatement (whether or
not due to fraud) we identified, including
those which had the greatest effect on:
the overall audit strategy, the allocation of
resources in the audit; and directing the
efforts of the engagement team. These
matters were addressed in the context of
our audit of the financial statements as a
whole, and in forming our opinion thereon,
and we do not provide a separate opinion
on these matters.

F I N A N C I A L S T A T E M E N T S

Brand Support Arrangements

How We Addressed the Key Audit Matter in the Audit

As disclosed in Note 2 (accounting policies) the Group incurs
significant costs in the support and development of the Group’s
brands. The classification of these costs within the income
statement is dependent upon the type of arrangement with the
customer. As the majority of these costs are recognised as a
deduction to revenue we consider there to be a significant risk
concerning the appropriate application of accounting standards,
particularly in respect of the Group’s measurement of the fair
value of variable consideration in revenue transactions as
well as the Group’s accounting for arrangements where cash
consideration is given by the Group to the customer.

Further, whilst the majority of costs incurred on these
arrangements have been settled at 31 December 2018,
management judgement is required in determining the level of
closing accrual required at the year end for promotions and brand
support campaigns that either span two financial years or where
the costs have not been fully settled by the year end date.

In accordance with the auditing standards and in view of the
judgements involved above, as well as management being in a
position to be able to override controls, we have presumed a risk
of fraud within this area.

We undertook the following audit procedures in relation to brand
support arrangements:
• We tested the operating effectiveness of controls over the

calculation and application of brand support arrangements.

• We performed detailed testing over a sample of brand

support arrangements charged to revenue and to costs in
the year through verification to agreement and recalculation
of the amounts recognised as a cost and the value of liability
accrued;

• We assessed whether the accounting policy for brand

•

support arrangements complies with IFRS 15, has been
appropriately applied and that the classification of charges in
the income statement is appropriate;
To address the fraud risk, we performed detailed cut-off
testing to verify that brand support arrangements are
recorded in the correct period and reviewed manual journal
postings throughout the year;

• We selected a sample of post year end credit notes and

checked that, where audit evidence demonstrated that the
credit note related to the audit period, that these credit notes
were appropriately provided for in the financial statements;
and

• We reviewed the year end liability for completeness and
accuracy by reviewing arrangements in place for key
customers and generating an expectation as to the year end
liability. Our work included checking that the ageing of the
liabilities is correct.

F I N A N C I A L S T A T E M E N T S

Pension Scheme Assumptions

How We Addressed the Key Audit Matter in the Audit

We consider there to be a significant risk concerning the
appropriateness of the actuarial assumptions applied in
calculating the Group’s defined benefit pension scheme liability of
£2.8m (2017: £2.9m) as shown in Note 26.

The valuation of the Group’s pension scheme liability is
dependent on market conditions and key assumptions made, in
particular relating to investment markets, discount rate, inflation
expectations and life expectancy assumptions, as described in the
Group’s accounting policies.

In addition, on 26 October 2018 The High Court ruled that benefits
arising from Guaranteed Minimum Pensions (GMP) should be
equalised. The judgement sets out a clear obligation on trustees
to ensure that there is equality in the pension benefits provided to
men and women in a contracted out salary related occupational
pension scheme for service between 17 May 1990 and 5 April
1997. Management, in conjunction with their actuarial experts,
has exercised judgement in the assessment of the impact of this
ruling on the valuation of the Group’s defined benefit pension
scheme liability at the year end.

The setting of assumptions is complex and requires the exercise
of significant management judgement with the support of third
party actuaries. The relative sensitivities of any changes in
assumptions are disclosed in Note 26.

We have assessed the appropriateness of the assumptions
underpinning the valuation of the scheme liabilities, including the
effect of GMP equalisation.

Specifically we challenged the discount rate, inflation and
mortality assumptions applied in the calculation by using
our auditor engaged pension specialists to benchmark the
assumptions applied against comparable third party data and
assessed the appropriateness of the assumptions in the context
of the Group’s own position.

With regards to the effect of GMP equalisation, which individually
has not materially affected the valuation of the pension liability, in
conjunction with our pensions specialist we have:

•

considered the expert advice received by management,
comparing key assumptions and the calculation of the
additional liability to the work of our pensions specialist;
reviewed management’s approach in calculating the impact
of the ruling,
recalculated the potential impact based on the information
provided; and
performed a sensitivity analysis of the key assumptions.

We tested the membership data utilised in the valuation of
the schemes to source data to assess whether the basis of the
valuation was appropriate.

Furthermore, we assessed the disclosure of the pension scheme
assumptions in the financial statements against the requirements
of the accounting standards.

Our application of materiality

We consider materiality to be the
magnitude by which misstatements,
individually or in the aggregate, could
reasonably be expected to influence the
economic decisions of the users of the
financial statements. We use materiality

both in planning the scope of our audit
work and in evaluating the results of our
work.

and the particular circumstances of their
occurrence, when evaluating their effect on
the financial statements as a whole.

Importantly, misstatements below these
levels will not necessarily be evaluated
as immaterial as we also take account of
the nature of identified misstatements,

Based on our professional judgement, we
determined materiality for the financial
statements as a whole as follows:

Group materiality

Basis for materiality

£1,500,000 (2017: £1,400,000)

3 year average basis utilising 5% of Profit Before Tax.

Rationale for the benchmark adopted

Pre-tax profit is determined to be a stable basis of assessing business performance and is
considered to be the most significant determinant of performance used by shareholders.

In considering individual account balances
and classes of transactions we apply a
lower level of materiality (performance
materiality) in order reduce to an
appropriately low level the probability
that the aggregate of uncorrected and
undetected misstatements exceeds
materiality. Performance materiality was
set at £1,125,000 (2017: £1,050,000),
representing 75% of materiality.

Materiality in respect of the audit of the
Parent Company has been set at £950,000
(2017: £925,000) using a benchmark of 5%
of Profit Before Tax on a 3 year average
basis (2017: 5% of Profit Before Tax on
a 3 year average basis, after adjusting
for exceptional items). Performance
materiality for the Parent Company has
been set at £712,000 (2017: £690,000)
which represents 75% of Parent Company
materiality.

We agreed with the Audit Committee
that we would report to the Committee
all individual audit differences identified
during the course of our audit in excess of
£30,000 (2017: £28,000). We also agreed to
report differences below these thresholds
that, in our view, warranted reporting on
qualitative grounds.

There were no misstatements identified
during the course of our audit that were
individually, or in aggregate, considered
to be material in terms of their absolute
monetary value or on qualitative grounds.

An overview of the scope of our audit

Our Group audit was scoped by obtaining
an understanding of the Group and

its environment, including Group-wide
controls, and assessing the risks of material
misstatement at the Group level.

than Group materiality. Component
materiality ranged from £400,000 to
£900,000 (2017: £800,000 to £900,000).

The Group manages its operations from
two principal locations in the UK and has
common financial systems, processes
and controls covering all significant
components. The audit of all significant
components was performed by the same
audit team.

In assessing the risk of material
misstatement to the Group financial
statements, and to ensure we had
adequate quantitative coverage of
significant accounts in the financial
statements, of the four reporting
components of the Group, we determined
that two components represented the
principal business units within the Group.

For these two components, we
performed an audit of the complete
financial information. For the remaining
two components, we performed audit
procedures on specific accounts within
that component that we considered had
the potential for the greatest impact on the
significant accounts in the Group financial
statements, either because of the size of
these accounts or their risk profile.

As a consequence of the audit scope
determined, we achieved coverage of
approximately 98% (2017: 96%) of revenue,
99% (2017: 97%) of Profit Before Tax and
99% (2017: 99%) of net assets.

Our audit work on each component was
executed at levels of materiality applicable
to each individual entity which was lower

Other information

The Directors are responsible for the
other information. The other information
comprises the information included in the
annual report, other than the financial
statements and our auditor’s report
thereon. Our opinion on the financial
statements does not cover the other
information and, except to the extent
otherwise explicitly stated in our report,
we do not express any form of assurance
conclusion thereon.

In connection with our audit of the financial
statements, our responsibility is to read
the other information and, in doing so,
consider whether the other information is
materially inconsistent with the financial
statements or our knowledge obtained
in the audit or otherwise appears to be
materially misstated. If we identify such
material inconsistencies or apparent
material misstatements, we are required
to determine whether there is a material
misstatement in the financial statements
or a material misstatement of the other
information. If, based on the work we
have performed, we conclude that there
is a material misstatement of this other
information, we are required to report
that fact. We have nothing to report in this
regard.

F I N A N C I A L S T A T E M E N T S

Our

ADVISORS

Auditors

Stockbrokers & Nominated Advisor

Registered Office

BDO LLP,
3 Hardman Street,
Spinningfields,
Manchester,
M3 3EB.

N+1 Singer Advisory LLP,
West One Wellington Street,
Leeds,
LS1 1BA.

Laurel House,
Woodlands Park,
Ashton Road,
Newton-le-Willows,
WA12 0HH.

Bankers

Financial Advisors

Registered Number

The Royal Bank of Scotland PLC,
1 Spinningfields Square,
Manchester,
M3 3AP.

N M Rothschild & Sons Limited,
82 Kings Street,
Manchester,
M2 4WQ.

238303.

Solicitors

Registrars

DLA Piper,
101 Barbirolli Square,
Manchester,
M2 3DL.

Link Asset Services,
34 Beckenham Road,
Beckenham,
Kent,
BR3 4TU.

Opinions on other matters prescribed
by the Companies Act 2006

In our opinion, based on the work
undertaken in the course of the audit:

• the information given in the Strategic
Report and the Directors’ Report for

the financial year for which the financial

statements are prepared is consistent
with the financial statements; and

• the Strategic Report and the Directors’
Report have been prepared in
accordance with applicable legal

requirements.

Matters on which we are required to
report by exception

In the light of the knowledge and
understanding of the Group and the Parent
Company and its environment obtained
in the course of the audit, we have not
identified material misstatements in the
Strategic Report or the Directors’ Report.

We have nothing to report in respect of the
following matters in relation to which 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.

Responsibilities of Directors

As explained more fully in the Directors’
responsibilities statement set out on page
54, the Directors are responsible for the
preparation of the financial statements
and for being satisfied that they give a true
and fair view, and for such internal control
as the Directors determine is necessary
to enable the preparation of financial
statements that are free from material
misstatement, whether due to fraud or
error.

In preparing the financial statements, the
Directors are responsible for assessing the
Group’s and the Parent Company’s ability
to continue as a going concern, disclosing,
as applicable, matters related to going
concern and using the going concern basis
of accounting unless the Directors either
intend to liquidate the Group or the Parent
Company or to cease operations, or have
no realistic alternative but to do so.

Auditor’s responsibilities for the audit of
the financial statements

Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from
material misstatement, whether due to
fraud or error, and to issue an auditor’s
report that includes our opinion.
Reasonable assurance is a high level of
assurance, but is not a guarantee that
an audit conducted in accordance with
ISAs (UK) will always detect a material
misstatement when it exists.

Misstatements can arise from fraud or
error and are considered material if,
individually or in aggregate, they could
reasonably be expected to influence the
economic decisions of users taken on the
basis of these financial statements.

A further description of our responsibilities
for the audit of the financial statements

is located on the Financial Reporting
Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description
forms part of our auditor’s report.

Use of our report

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.

Julien Rye
(Senior Statutory Auditor)

For and on behalf of BDO LLP,
Statutory Auditor, Manchester, UK
26 February 2019

BDO LLP is a limited liability partnership
registered in England and Wales (with
registered number OC305127).

C O N S O L I D A T E D I N C O M E S T A T E M E N T - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

S T A T E M E N T O F F I N A N C I A L P O S I T I O N - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

2018
£’000

Before exceptional
items
£’000

Exceptional
items
£’000

Notes

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

Earnings per share (basic)

Earnings per share (diluted)

142,037

(77,170)

64,867

(7,236)

(25,993)

31,638

192

(77)

31,753

(6,238)

25,515

69.23p

69.19p

132,789

(72,166)

60,623

(5,938)

(24,142)

30,543

134

(154)

30,523

(5,548)

24,975

2017
£’000

132,789

(72,166)

60,623

(5,938)

(1,801)

(25,943)

(1,801)

28,742

(1,801)

134

(154)

28,722

(5,548)

23,174

62.88p

62.81p

C O N S O L I D A T E D S T A T E M E N T O F C O M P R E H E N S I V E I N C O M E - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

Profit for the financial year

Items that will not be reclassified subsequently to profit or loss

Remeasurement of net defined benefit liability (see note 26)

Deferred taxation on pension obligations and employee benefits (see note 14)

Other comprehensive (expense)/ income for the year

Total comprehensive income for the year

2018
£’000

25,515

(412)

(44)

(456)

2017
£’000

23,174

1,140

(113)

1,027

25,059

24,201

Assets

Non-current assets

Property, plant and equipment

Goodwill

Investments

Intangibles

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

Total current liabilities

Non-current liabilities

Pension obligations and employee benefits

Deferred tax liabilities

Total non-current liabilities

Total liabilities

Net assets

Equity

Share capital

Share premium reserve

Capital redemption reserve

Other reserves

Retained earnings

Total equity

Group

2018
£’000

Notes

2017
£’000

12,059

30,666

7,993

1,065

Parent

2018
£’000

4,430

2,504

2017
£’000

4,145

2,504

16,566

1,316

835

1,316

1,065

14,572

34,451

7,748

835

57,606

51,783

25,651

25,596

7,164

38,153

38,896

84,213

4,815

34,740

36,058

75,613

141,819

127,396

22,339

2,814

25,153

2,755

1,801

4,556

29,709

112,110

3,697

3,255

1,209

666

103,283

112,110

21,031

2,536

23,567

2,921

1,586

4,507

28,074

99,322

3,697

3,255

1,209

134

91,027

99,322

3,894

35,239

20,070

59,203

84,854

22,248

391

22,639

2,755

25,394

59,460

3,697

3,255

1,209

1,441

49,858

59,460

2,342

31,742

15,422

49,506

75,102

14,955

232

15,187

2,921

18,108

56,994

3,697

3,255

1,209

909

47,924

56,994

The Parent Company reported a profit for the year ended 31 December 2018 of £15,193,000 (2017: £14,080,000).

The financial statements on pages 64 to 96 were approved by the Board of Directors on 26 February 2019 and were signed on its behalf by:

P J Nichols
Chairman

Registered number 238303.

C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

P A R E N T C O M P A N Y S T A T E M E N T O F C A S H F L O W S - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

Cash flows from operating activities

Profit for the financial year

Adjustments for:

Depreciation and amortisation

Loss on sale of property, plant and equipment

Finance income

Finance expense

Tax expense recognised in the income statement

Change in inventories

Change in trade and other receivables

Change in trade and other payables

Change in pension obligations and employee benefits

Cash generated from operating activities

Tax paid

Net cash generated from operating activities

Cash flows from investing activities

Finance income

Proceeds from sale of property, plant and equipment

Acquisition of property, plant and equipment

Acquisition of trade and assets

Acquisition of subsidiary

Net cash used in investing activities

Cash flows from financing activities

Dividends paid

Net cash used in financing activities

Net increase/ (decrease) in cash and cash equivalents

Cash and cash equivalents at 1 January

Cash and cash equivalents at 31 December

Notes

2018
£’000

25,515

2017
£’000

23,174

2,179

127

(192)

6,238

(2,274)

(3,347)

1,197

(578)

192

(3,857)

(143)

(3,814)

3,427

28,942

(5,679)

23,263

1,175

(134)

154

5,548

1,878

(4,675)

(1,810)

(2,334)

134

(3,795)

(6,568)

(158)

23,016

(5,274)

17,742

(7,622)

(10,225)

(12,803)

(11,213)

(12,803)

2,838

36,058

38,896

(11,213)

(3,696)

39,754

36,058

Cash flows from operating activities

Profit for the financial year

Adjustments for:

Depreciation

Loss on sale of property, plant and equipment

Finance income

Finance expense

Tax expense recognised in the income statement

Change in inventories

Change in trade and other receivables

Change in trade and other payables

Change in pension obligations and employee benefits

Cash generated from operating activities

Tax paid

Net cash generated from operating activities

Cash flows from investing activities

Finance income

Acquisition of property, plant and equipment

Net cash used in investing activities

Cash flows from financing activities

Dividends paid

Net cash used in financing activities

Net increase/ (decrease) in cash and cash equivalents

Cash and cash equivalents at 1 January

Cash and cash equivalents at 31 December

Notes

2018
£’000

15,193

2017
£’000

14,080

359

(192)

3,629

(1,552)

(3,495)

7,766

(578)

347

(134)

154

3,407

1,571

(6,721)

(5,840)

(2,334)

6,015

21,208

(3,286)

17,922

(9,550)

4,530

(3,275)

1,255

192

(663)

134

(522)

(471)

(388)

(12,803)

(11,213)

(12,803)

4,648

15,422

20,070

(11,213)

(10,346)

25,768

15,422

S T A T E M E N T O F C H A N G E S I N E Q U I T Y - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

Group

At 1 January 2017

Dividends

Movement in ESOT

Credit to equity for equity-settled share based payments

Transactions with owners

Profit for the year

Other comprehensive income

Total comprehensive income

At 1 January 2018

Dividends

Movement in ESOT

Credit to equity for equity-settled share based payments

Transactions with owners

Profit for the year

Other comprehensive expense

Total comprehensive income

At 31 December 2018

Parent

At 1 January 2017

Dividends

Movement in ESOT

Credit to equity for equity-settled share based payments

Transactions with owners

Profit for the year

Other comprehensive income

Total comprehensive income

At 1 January 2018

Dividends

Movement in ESOT

Credit to equity for equity-settled share based payments

Transactions with owners

Profit for the year

Other comprehensive expense

Total comprehensive income

At 31 December 2018

Called up
share capital
£’000

Share premium
reserve
£’000

Capital redemption
reserve
£’000

Other
reserves
£’000

Retained
earnings
£’000

Total
equity
£’000

3,697

3,255

1,209

(358)

78,165

85,968

3,697

3,255

1,209

192

300

492

134

509

532

(11,213)

(126)

300

(11,339)

(10,847)

23,174

1,027

24,201

91,027

99,322

(12,803)

509

(12,803)

(12,271)

25,515

(456)

25,059

3,697

3,255

1,209

666

103,283

112,110

Called up
share capital
£’000

Share premium
reserve
£’000

Capital redemption
reserve
£’000

Other
reserves
£’000

Retained
earnings
£’000

Total
equity
£’000

3,697

3,255

1,209

3,697

3,255

1,209

417

192

300

492

909

509

532

44,156

52,734

(11,213)

(126)

300

(11,339)

(10,847)

14,080

1,027

15,107

47,924

56,994

(12,803)

509

(12,803)

(12,271)

15,193

(456)

14,737

3,697

3,255

1,209

1,441

49,858

59,460

1. Reporting entity

Nichols plc (the “Company”) is a company
incorporated and domiciled in the United
Kingdom, listed on the Alternative Investment
Market. 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 2018 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
(IFRSs) as adopted by the EU and the Companies
Act 2006 as applicable to companies reporting
under IFRS.

The accounting policies have been applied
consistently by the Group, with the exception of
the adoption of IFRS 15, Revenue from Contracts
with Customers and IFRS 9, Financial Instruments,
from 1 January 2018 without restating
comparatives.

With effect from 1 January 2018, the Group
has applied IFRS 15, Revenue from Contracts
with Customers. The Group decided not to early
adopt this standard. IFRS 15 replaces all existing
revenue requirements in IFRS and applies to all
revenue arising from contracts with customers
unless the contracts are within the scope of
other standards.

The cumulative effect method of adoption has
been used, with 2017 comparatives not being
restated. The adoption of IFRS 15 has had no
material effect on transition and is not expected
to materially alter revenue recognition patterns
going forward.

As a manufacturer and distributor, the Group
earns its revenues from the sale of goods rather
than services. The Group sells those goods to
specific orders. The Group recognises revenue
at a point in time, typically on despatch of the
goods to customers’ premises for UK sales or,
for International sales, upon loading the goods
onto the relevant carrier. On transition, there is
no material impact as the point at which control
of the goods passes has been determined to be

the same point risks and rewards passed under
IAS 18.

Although the majority of the Group’s contracts
with customers are not complex, with revenue
being fixed for a specific quantity of goods, the
Group has identified a number of contracts
in which customers are given volume rebates
and/or other promotional rebates based on
quantities purchased over a contractually
agreed period of time. Previously, under IAS
18, management made its best estimate of
any rebates it would have to give based on the
information available. Under IFRS 15, revenue
that varies due to rebates or brand support
costs is only recognised to the extent that it is
highly probable that a significant reversal of that
revenue will not occur at the end of the rebate
assessment period. In practice, the amounts of
revenue recognised under IAS 18 and IFRS 15 in
this respect are not materially different.

As disclosed in the ‘uses of estimates and
judgements’ accounting policy below, based on
the timing of the agreements entered into with
customers, the level of estimation in the year
end accrual is insignificant, and as such there is
not considered to have been a significant impact
on deductions to revenue under IFRS15 as a
result of rebate or brand support arrangements.

With effect from 1 January 2018, the Group
has applied IFRS 9, Financial Instruments. The
Group decided not to early adopt this standard
and there has been no requirement to restate
comparatives.

An income statement is not provided for the
Parent Company as permitted by Section 408 of
the Companies Act 2006.

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 are the key assumptions
concerning the future and other key sources of
estimation uncertainty at the reporting date,
that have a significant risk of causing a material
adjustment to the carrying amounts of assets
and liabilities within the next financial year.

Carrying value of brand support accruals

The Group incurs significant costs in the

support and development of the Group's
brands. The majority of costs incurred on
these arrangements have been settled at 31
December 2018, however certain judgement
is required in determining the level of closing
accrual required at a year end for promotions
and brand support campaigns that either span
two financial years or where the costs have not
been fully settled by the year end date. Brand
support costs include sales related discounts
which are included within revenue, as disclosed
in the revenue recognition policy below, as well
as cash consideration payable to customers.
Based on the timing of the agreements
entered into with customers in the year, the
level of estimation in the year end accrual is
insignificant.

In particular, promotion campaigns with
customers take place over short time frames,
with volume and sales forecasts during
the campaign benchmarked against prior
experience and reviewed with the customer
in advance of the promotion. During the
promotion the systems and processes within
the business allow the Directors to monitor
the level of the estimate against actual spend
during the promotion, such that any judgement
taken at the year end is not significant across
the promotional timeframe. In respect of brand
support campaigns, management has well
established joint business arrangements in
place with customers, and again the systems
and processes allow management to have
full visibility of activity levels on these plans,
allowing estimates to be made with a strong
degree of certainty at the year end. There has
not been any evidence of eventual settlements
of liabilities in respect of the above being
significantly different to that being accrued.

Intangible assets with indefinite lives

In the opinion of the Directors, the industry in
which the Group operates is stable and there
are relatively high barriers to entry. The brands
acquired are well established in their respective
sales channels and both have an important
role to play in all of the Group’s routes to
market. The brands are also well positioned to
mitigate against the impact of recent sugar levy
legislation introduced.

The Directors have therefore made a judgement
that certain intangible assets relating to brands
have indefinite lives. It is expected that these
brands will be held and supported for an
indefinite period of time and are expected

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

to generate economic benefits. The Group is
committed to supporting its brands and invests
in significant consumer marketing promotional
spend.

Impairment of goodwill and intangible assets
with indefinite lives

Determining whether goodwill and intangible
assets with indefinite lives are impaired requires
an estimation of the value in use of the cash-
generating units to which the assets have 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 11).

The carrying amount of goodwill at the reporting
date was £34.5 million (2017: £30.7 million).

The carrying amount of brands with indefinite
lives was £3.9m (2017: £3.9m).

Customer list intangible assets have finite lives
assigned. Such assets are tested for impairment
if an impairment indicator exists. No risks are
noted at 31 December 2018.

Defined benefit obligations

For the Group’s defined benefit plan, the main
assumptions used by the actuary are mortality
rates, the discount rate and the expected rate of
inflation (see note 26).

Basis of consolidation and goodwill

The Group financial statements consolidate
those of the Company and all of its subsidiary
undertakings drawn up to 31 December 2018.
Subsidiaries are entities controlled by the
Group. Control exists if all three of the following
elements are present: power over the investee,
exposure to variable returns from the investee,
and the ability of the investor to use its power
to affect those variable returns. Control is
reassessed whenever facts and circumstances
indicate that there may be a change in any
of these elements of control. The financial
statements of subsidiaries are included in the
consolidated financial statements from the
date that control commences until the date that
control ceases.

Intra-Group balances and any unrealised gains
and losses arising from intra-Group transactions
are eliminated in preparing the consolidated
financial statements.

Acquisitions of subsidiaries are dealt with

by the acquisition method. The acquisition
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
statement of financial position 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 the fair value of the consideration
transferred over the fair value of the Group’s
share of the identifiable net assets of the
acquired subsidiary at the date of acquisition.

In calculating goodwill, the fair value of
consideration has been calculated using the
cash consideration plus the Directors' best
estimate of contingent consideration at the
acquisition date.

Revenue recognition

Revenue from the sale of goods is based on the
price specified in the contract, being the invoice
price less any agreed discounts or rebates and
excluding VAT and after the deduction of certain
promotional and brand support costs invoiced
by customers.

Revenue is recognised when control of the
goods have been transferred to the buyer.
Payment terms vary by customer but never
exceed 12 months. The transaction price is
therefore not adjusted for the effects of a
significant financing component.

Transfer of control varies depending on the
individual term of the contract of sale. For
sales in the UK, transfer of control occurs when
the product is despatched to the customer.
However, for some international shipments,
transfer of control occurs either upon loading
the goods onto the relevant carrier or when the
goods have arrived in the overseas port. The
point of transfer for international shipments is
dictated by the terms of each sale.

With regards to discounts, rebates, promotional
costs and brand support costs, consideration is
given as to whether a distinct good or service
has been received from the goods sold to the
customer. Where the payments do not result in
the receipt of a distinct good or service, they are
treated as a deduction from revenue. However

when they do, they are recorded as an expense
and recognised in administrative expenses.

For discounts, rebates, promotional costs and
brand support costs, accumulated experience
is used to estimate and provide for these using
the expected value method, and revenue is
only recognised to the extent that it is highly
probable that a significant reversal will not
occur. The statement of financial position
includes accruals for claims yet to be received
for discounts, rebates and promotional costs.

Segmental reporting

An operating segment is a component of the
Group that engages in business activities from
which it may earn revenues and incur expenses,
including revenues and expenses that relate
to transactions with any of the Group’s other
components and for which discrete financial
information is available. In line with market
research and data made available by Nielsen,
which documents industry performance in
respect of Stills and Carbonates, management
identify both Stills and Carbonates as operating
segments where operating results are reviewed
regularly by the Board (as chief operating
decision maker) to make decisions about
resources to be allocated to the segment and
assess its performance.

Segment results that are reported to the Board
include items directly attributable to a segment
as well as those that can be allocated on a
reasonable basis. Segment reporting for the
Group is made to the gross profit level for the
operating segments but no segment reporting is
made for further expenditure or for the assets
and liabilities of the Group. The assets and
liabilities of the Group are reported as Group
totals and no reporting of these balances is
recorded at a segment level. As a result, all of
the Group’s assets and liabilities are unallocated
items and no reconciliation of segment assets to
the Group’s total assets is prepared.

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

The Group has adopted an accounting policy
that seeks to highlight significant exceptional
items of income and expense within Group
results for the year. Exceptional items are those
considered to be of such significance, by either
nature or scale, that separate disclosure is
required in the financial statements in order to
provide a better understanding of the Group’s
trading performance (see note 4).

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 in other
comprehensive income/ (expense), in which
case it is recognised in other comprehensive
income/ (expense).

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 liability 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.

Brands

Brands acquired in a business combination
are recognised at fair value at the acquisition
date. Brands acquired separately through a
business combination are assessed at the
date of acquisition as to whether they have
an indefinite life. The assessment includes
whether the brand name will continue to trade
and the expected lifetime of the brand. All
brands acquired to date have been assessed as
having an indefinite life as they are expected to
continue to contribute to the long-term future
of the Group. The brands are reviewed annually
for impairment, being carried at cost less
accumulated impairment charges. The fair value
of a brand at the date of acquisition is based
on the Relief from Royalties method, which is
a valuation model based on discounted cash
flows.

Customer lists

Customer lists acquired in a business
combination are recognised at fair value at the
acquisition date. They are amortised over the
useful economic life identified at the date of
acquisition with amortisation charges included
within administrative expenses.

Reserves

(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 cash-generating unit. 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.

Goodwill and intangible assets with indefinite
lives are reviewed for impairment annually.

Property, plant and equipment

Items of property, plant and equipment are
measured at cost less accumulated depreciation
and impairment losses.

Share capital represents the nominal value of
equity shares.

Cost includes expenditures that are directly
attributable to the acquisition of the asset.

Share premium represents the excess
over nominal value of the fair value of the
consideration received for equity shares.

Capital redemption reserve represents the
reserve created upon redemption of shares.

Other reserves incorporate purchase of own
shares, movements in the Group’s ESOT and
equity settled share-based payments in respect
of Long-Term Incentive Plans.

Retained earnings represents retained earnings.

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. All property, plant and equipment
is tested for impairment whenever events or
changes in circumstances indicate that the
carrying amount may not be recoverable.

For the purposes of assessing impairment,
assets are grouped at the lowest levels for which
there are separately identifiable cash flows

The cost of replacing part of an item of property,
plant 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:

Plant, machinery, fixtures
and fittings

3-10 years

Buildings

50 years

Material residual value estimates and useful
economic lives are updated at least annually.

Land is not depreciated.

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

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 instruments

IFRS 9 has impacted the way in which the
Group accounts for certain financial assets
and liabilities. The standard has introduced
an expected credit loss model when assessing
impairment of financial assets. The Group
has applied the simplified model to recognise
expected lifetime losses on its trade receivables.

Notwithstanding the high value of trade
receivables, the application of IFRS 9 and the
expected credit loss impairment model has not
had a material effect on the Group, due to the
fact that the Group’s customers are primarily
major supermarkets and bad debts within this
population are rare historically and no change
to this position is expected.

With respect to the classification and
measurement of financial assets, the number
of categories of financial assets under IFRS 9
has been reduced compared to IAS 39. Under
IFRS 9, the classification of financial assets is
based both on the business model within which
the asset is held and the contractual cash flow
characteristics of the asset. There are three
principal classification categories for financial
assets that are debt instruments: (i) amortised
cost, (ii) fair value through other comprehensive
income (FVTOCI) and (iii) fair value through
profit or loss (FVTPL). IFRS 9 has had no effect
on the classification of financial instruments
held by the Group.

Financial assets

The Group's financial assets comprise primarily
cash, bank deposits and trade receivables that
arise from its business operations. Financial
assets are a contractual right to receive cash or
another financial asset from another entity or to
exchange financial assets or financial liabilities
with another entity under conditions that are
potentially favourable to the entity.

A provision for impairment is calculated using
an expected credit loss impairment model.

Under this impairment model approach under
IFRS 9, it is not necessary for a credit event
to have occurred before credit losses are
recognised. Instead, an entity always accounts
for expected credit losses and changes in those
expected credit losses. The amount of expected
credit losses is updated at each reporting date.

Trade receivables are classified as 'loans
and receivables'. Loans and receivables are
measured at amortised cost using the effective
interest method, less any impairment. Interest
income is recognised by applying the effective
interest rate, except for short-term receivables
when the recognition of interest would be
immaterial.

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.

Financial liabilities

The Group’s financial liabilities comprise
trade and other 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.

Contingent consideration

Contingent consideration represents the
Group's best estimate of the fair value of
amounts payable based on the likelihood of
future events occurring.

Changes in fair value of contingent
consideration that qualify as measurement
period adjustments are adjusted retrospectively,
with corresponding adjustments against
goodwill. Measurement period adjustments
are adjustments that arise from additional
information obtained during the measurement
period (which cannot exceed one year from the
acquisition date) about facts and circumstances
that existed at the acquisition date. Contingent

consideration is remeasured to fair value at
subsequent reporting dates with changes in fair
value recorded in profit or loss.

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.

Post-employment benefit plans

The Group provides post-employment benefits
through various defined contribution and
defined benefit plans.

Defined contribution plan

The Group pays fixed contributions into
independent entities in relation to plans and
insurances for individual employees. The
Group has no legal or constructive obligations
to pay contributions in addition to its fixed
contributions, which are recognised as an
expense in the period that relevant employee
services are received.

Defined benefit plan

Under the Group’s defined benefit plan, the
amount of pension benefit that an employee will
receive on retirement is defined by reference
to the employee’s length of service and final
salary. The legal obligation for any benefits
remains with the Group, even if plan assets for
funding the defined benefit plan have been set
aside. Plan assets may include assets specifically
designated to a long-term benefit fund as well
as qualifying insurance policies.

The liability recognised in the statement of
financial position for defined benefit plans is the
present value of the defined benefit obligation
(DBO) at the reporting date less the fair value of
plan assets.

Management estimates the DBO annually with
the assistance of independent actuaries. This
is based on the standard rates of inflation,
salary growth and mortality. Discount factors
are determined close to each year end by
reference to high quality corporate bonds that
are denominated in the currency in which the
benefits will be paid and that have terms to
maturity approximating to the terms of the
related pension liability. Service cost on the net
defined benefit liability is included in employee
benefits expense. Net interest expense on

the net defined benefit liability is included in
finance costs. Remeasurement of the DBO,
comprising actuarial gains and losses and the
return on scheme assets (excluding interest),
are recognised in the statement of other
comprehensive income in the year in which they
arise.

Share-based payment transactions

The Group operates two equity settled share-
based payment schemes; a Save As You Earn
scheme open to all employees and a Long-Term
Incentive Plan for certain Directors and senior
executives. Both schemes comprise the grant
of options under the Group’s share option
schemes.

The Group recognises 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 2018 for the year ending 31
December 2018.

Those fair values are charged to the income
statement over the relevant vesting period
adjusted to reflect actual and expected vesting
levels. The Group calculates the fair market
value of the options as being based on the
market value of a company’s 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 reporting 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 managed by
the ESOT, therefore there is no impact on share
capital and share premium when the options
are exercised.

No further disclosures have been provided due
to the immateriality of the schemes above.

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 potential costs of a legal claim is
recognised when management have considered
the merits of the claim and taken appropriate
legal advice as to the outcome of the litigation.

Contingent assets

An asset is recognised where it is possible that,
as a result of a past event, the Group has a right
to an inflow of benefits, whose existence will be
confirmed by the occurrence or non-occurrence
of one or more uncertain future events not
wholly within the control of the Group.

Finance income

Finance income comprises interest income on
funds invested. Interest income is recognised as
it accrues, using the effective interest method.

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 statement of financial position
at cost less any provision for impairment.

Standards and interpretations in issue not
yet adopted

At the date of authorisation of these financial
statements, the following Standards and
Interpretations which have not been applied
in these financial statements were in issue but
not yet effective (and in some cases had not yet
been adopted by the EU).

IFRS 16, Leases

Provisions and contingent liabilities

A provision is recognised if, as a result of a

IFRIC 23 Uncertainty over Income Tax
Treatments

Amendments to IFRS 9: Prepayment Features
with Negative Compensation

Annual Improvements to IFRSs (2015-2017
Cycle)

Amendments to IAS 19: Plan Amendment,
Curtailment or Settlement

Amendments to References to the Conceptual
Framework in IFRS Standards

Amendments to IFRS 3 Business Combinations –
Definition of a Business

Definition of Material - Amendments to IAS 1
and IAS 8

The Directors are currently considering the
potential impact of adoption of these standards
and interpretations in future periods on the
consolidated financial statements of the Group.

The new IFRS 16 standard provides a single
lessee accounting model, requiring lessees to
recognise right of use assets and lease liabilities
on the balance sheet for all applicable leases,
with effect from 1 January 2019.

As at the reporting date, the Group has non-
cancellable operating lease commitments
of £3.0m (see note 24), the vast majority of
which relate to property leases for operational
sites. The Group intends to apply the modified
retrospective transition approach to its leases
with effect from 1 January 2019, whereby the
asset and liability values recognised are equal
to one another. The Group has assessed that
the impact of the standard on these leases
will materially affect the consolidated financial
statements through an increase in property,
plant and equipment with a corresponding
increase in liabilities, as all applicable leases
are brought onto the statement of financial
position. In addition, there will be an increase
in depreciation and finance costs offset by a
decrease in rental costs, resulting in no material
impact on Profit Before Tax.

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

3. Segmental information

a. Key operating segments

The Board analyses the Group’s internal reports to enable an assessment
of performance and allocation of resources. The operating segments are
based on these reports. The Board considers the business from a product
perspective and reviews the Group on the operating segments identified
below. There has been no change to the segments during the year. Based
on the nature of the products sold by the Group, the types of customers

and methods of distribution, management consider reporting operating
segments at the Still and Carbonate level to be reasonable, particularly in
light of market research and industry data made available by Nielsen. Gross
profit is the measure used to assess the performance of each operating
segment.

Still

Carbonate

Total

Revenue

Gross Profit

2018
£’000

64,683

77,354

2017
£’000

64,139

68,650

142,037

132,789

2018
£’000

35,398

29,469

64,867

2017
£’000

35,168

25,455

60,623

There are no sales between the two operating segments, and all revenue is earned from external customers.

The operating segments gross profit is reconciled to profit before taxation as per the consolidated income statement.

The Group’s overheads are managed centrally by the Board and consequently there is no reconciliation to profit before tax at a segmental level.

The Group’s assets are managed centrally by the Board and consequently there is no reconciliation between the Group’s assets per the statement of
financial position and the segment assets.

Capital Expenditure

Depreciation

b. Reporting by geographic area

Revenue by geographic destination

Middle East

Africa

Rest of the World

Total exports

United Kingdom

2018
£’000

3,857

1,654

2018
£’000

9,590

13,557

4,271

27,418

114,619

142,037

2017
£’000

3,940

1,018

2018
%

6.8

9.5

3.0

19.3

80.7

100.0

2017
£’000

13,035

12,724

5,290

31,049

101,740

132,789

2017
%

9.8

9.6

4.0

23.4

76.6

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 areas, area 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 2018 or 2017.

Total assets

The assets of the Group at 31 December 2018 and 31 December 2017 are
entirely located within the United Kingdom.

Capital expenditure

The capital expenditure of the Group for the years ended 31 December 2018
and 31 December 2017 was entirely made within the United Kingdom.

Depreciation

The Group’s depreciation charges for the years ended 31 December 2018 and
31 December 2017 are against property, plant and equipment all retained
within the United Kingdom.

4. Operating profit

Operating profit is stated after charging/ (crediting):

Inventory amounts charged to cost of sales

BDO LLP remuneration:

Audit services of the Company’s annual accounts

Depreciation of property, plant and equipment

Operating lease rentals payments

Awards under Incentive Plan

(Gain)/ loss on foreign exchange differences

Loss on sale of property, plant and equipment

Amortisation of intangible assets

2018
£’000

2017
£’000

77,170

72,166

1,654

1,033

559

(523)

525

1,018

713

300

405

157

The Group incurred a number of costs during 2017 which by their nature were non-recurring and were reported as exceptional items within administrative
expenses. These costs fell into three categories: merger and acquisition expenses (£0.3m), restructuring costs (£1.3m), which represented redundancies of £0.6m,
all of which were communicated to those employees impacted prior to the year end date, as well as costs incurred in respect of the exit from an operating site
in the Out of Home division – principally related to onerous lease costs of £0.6m and other costs of £0.1m. Further costs were incurred in preparation for the
introduction of the Soft Drinks Industry Levy (£0.2m).

5. Finance income and expense

Finance income comprises:

Bank interest receivable

Finance income

Finance expense comprises:

Net interest income on defined benefit pension scheme assets

Interest on defined benefit pension scheme obligations

Bank interest payable

Finance expense

Notes

2018
£’000

2017
£’000

192

(655)

714

134

(600)

754

154

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

6. Directors and employees

7. Taxation

a. Average number of persons employed during the year, including Directors:

2018
Number

2017
Number

a. Analysis of expense recognised in the consolidated income statement

Group

Parent Company

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 26)

Accrued under Incentive Plan

c. Parent Company employment costs were as follows:

Wages and salaries

Social security costs

Pension costs - defined contribution scheme

Pension costs - defined benefit scheme (see note 26)

Accrued under Incentive Plan

286

202

2018
£’000

11,431

1,540

463

509

242

197

2017
£’000

9,495

1,183

410

300

13,987

11,429

2018
£’000

10,781

1,463

455

509

2017
£’000

8,930

1,124

410

300

13,252

10,805

Group and Parent Company key management personnel compensation

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, including the
Directors of the Company listed on page 53.

Wages and salaries

Pension costs

Accrued under Incentive Plan

2018
£’000

1,394

306

1,732

2017
£’000

1,089

236

1,364

The highest paid Director has received £503,000 (2017: £406,000) excluding pension contributions.

Benefits are accruing to 3 Directors (2017: 3 Directors) under a defined contribution scheme, the highest paid Director has received contributions of £10,000 in the
year.

Further information regarding Directors’ remuneration and the Incentive Plan is provided in the Remuneration Committee Report on pages 50 to 51.

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 for the year

2018
£’000

5,998

(31)

5,967

283

(12)

271

2017
£’000

5,257

(29)

5,228

297

320

Total tax expense in the consolidated income statement

6,238

5,548

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 19.00% (2017: 19.25%)

Effect of:

Non-deductible expenses

Other tax adjustments, reliefs and transfers

Other timing differences

Adjustments to the tax charge in respect of prior years

Income not taxable for tax purposes

Depreciation for the year lower than capital allowances

Impact on deferred tax due to rate change

Amounts relating to other comprehensive income

2018
£’000

2017
£’000

31,753

28,722

6,033

5,529

151

124

(23)

(19)

(39)

(88)

161

(111)

(62)

(57)

Total tax expense in the consolidated income statement

6,238

5,548

The effective rate of tax for the year of 19.60% (2017: 19.30%) is higher than the standard rate of Corporation Tax in the United Kingdom (19.00%). The differences
are explained above.

c. The effective rate of tax on profit is 19.60% (2017: 19.30%).

d. Tax on items recognised in other comprehensive (expense)/ income

In addition to the amount charged to the consolidated income statement, a charge of £44,000 (2017: charge of £113,000) has been recognised in other
comprehensive (expense)/ income, being the movement on deferred taxation relating to retirement benefit obligations and employee benefits.

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

8. Equity dividends

10. Property, plant and equipment

Interim dividend 11.30p (2017: 10.10p) paid 31 August 2018

Final dividend for 2017 23.40p (2016: 20.30p) paid 4 May 2018

2018
£’000

4,170

8,633

2017
£’000

3,726

7,487

12,803

11,213

Group

Cost

Parent

Plant,
machinery
fixtures
and fittings
£’000

Land and
buildings
£’000

Total
£’000

Cost

At 1 January 2017

3,444

11,001

14,445

At 1 January 2017

The interim dividend for the prior year of £3,726,000 was paid on 25 August 2017.

The 2018 final proposed dividend of £9,908,000 (26.80p per share) has not been accrued as it had not been approved by the year end.

9. 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 - before exceptional items

2018

69.23p

69.19p

69.23p

69.19p

2017

62.88p

62.81p

67.76p

67.69p

Basic earnings per share

Dilutive effect of share options

Diluted earnings per share

2018
Weighted
average number
of shares

Earnings
£’000

Earnings
per share

Earnings
£’000

2017
Weighted
average number
of shares

Earnings
per share

25,515

36,857,758

69.23p

23,174

36,857,660

62.88p

18,398

36,997

25,515

36,876,156

69.19p

23,174

36,894,657

62.81p

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 Groups’ operations. It can be reconciled
from the basic earnings per share as follows;

2018
Weighted
average number
of shares

Earnings
£’000

Earnings
per share

Earnings
£’000

Basic earnings per share

Exceptional items

25,515

36,857,758

69.23p

Basic earnings per share before exceptional items

25,515

36,857,758

69.23p

Dilutive effect of share options

18,398

23,174

1,801

24,975

2017
Weighted
average number
of shares

Earnings
per share

36,857,660

62.88p

36,857,660

67.76p

36,997

Diluted earnings per share before exceptional items

25,515

36,876,156

69.19p

24,975

36,894,657

67.69p

Additions

On acquisition of subsidiary

Disposals

3,940

780

(401)

3,940

780

(401)

At 1 January 2018

3,444

15,320

18,764

Additions

On acquisition of subsidiary

Disposals

3,857

759

(373)

3,857

759

(373)

At 31 December 2018

3,444

19,563

23,007

Plant,
machinery
fixtures
and fittings
£’000

Land and
buildings
£’000

178

247

5,552

949

(357)

314

6,458

1,585

(246)

322

Total
£’000

5,730

1,018

(357)

314

6,705

1,654

(246)

322

Depreciation

At 1 January 2017

Charge for the year

On disposals

Impairment of assets on prior
acquisition

At 1 January 2018

Charge for the year

On disposals

Impairment of assets on prior
acquisition (note 11)

At 31 December 2018

316

8,119

8,435

Net book value at
31 December 2018

Net book value at
31 December 2017

3,128

11,444

14,572

3,197

8,862

12,059

Plant,
machinery
fixtures
and fittings
£’000

3,428

522

Total
£’000

6,872

522

3,950

7,394

663

(57)

663

(57)

Land and
buildings
£’000

3,444

Additions

At 1 January 2018

Additions

Disposals

At 31 December 2018

3,444

4,556

8,000

Depreciation

At 1 January 2017

Charge for the year

At 1 January 2018

Charge for the year

On disposals

At 31 December 2018

Plant,
machinery
fixtures
and fittings
£’000

2,724

278

Total
£’000

2,902

347

3,002

3,249

290

(38)

359

(38)

3,254

3,570

Land and
buildings
£’000

178

247

316

Net book value at
31 December 2018

Net book value at
31 December 2017

3,128

1,302

4,430

3,197

948

4,145

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

Parent

Cost

At 1 January 2017, 1 January 2018 and 31 December 2018

£’000

2,504

12. Investments: shares in Group undertakings

Parent

Cost and net book amount

£’000

At 1 January 2017, 1 January 2018 and at 31 December 2018

16,566

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.

11. Goodwill

Group

Cost

At 1 January 2017

Re-statement of goodwill on prior acquisition

Acquisition

At 1 January 2018

Re-statement of goodwill on prior acquisition

Acquisitions (see note 19)

At 31 December 2018

£’000

23,061

387

7,218

30,666

322

3,463

34,451

The Group's goodwill acquisitions for 2018 relate to the acquisition of 100% interest in The Noisy Drink Company North West Limited, completed on 15 February
2018 and the acquisition of the trade and assets of Fountain Drinks Limited, completed on 10 July 2018 (see note 19). The total goodwill is entirely attributable to
the Out of Home business. Details of the fair value of identifiable assets acquired, purchase consideration and goodwill for both acquisitions are shown in note 19.
The re-statement of goodwill on prior acquisition represents property, plant and equipment of £322k which had their fair value reassesed to £nil, in respect of the
acquisition of DJ Drink Solutions Limited in 2017. This adjustment was identified in the hindsight period post acquisition on 2 June 2017.

All goodwill relates to the Out of Home business which is considered by management to be two independent Out of Home cash-generating units (CGU’s) sitting
below each of the Still and Carbonate operating segments. The goodwill has been allocated to these CGU’s and not to the named subsidiaries.

2018
£’000

21,786

12,665

34,451

2017
£’000

14,602

8,846

23,448

Brand names with indefinite lives were recognised as part of the fair value
exercise on the acquisition of The Noisy Drinks Co. Limited in 2016 (£2.6m)
and the trade and assets of Feel Good Drinks in 2015 (£1.3m). Both have been
allocated to the Still Out of Home CGU above for impairment testing. In respect
of the Parent Company’s goodwill, the entire goodwill is allocated to the Still
Out of Home CGU in both 2017 and 2018.

Still

Carbonate

Impairment review

Goodwill and intangible assets with indefinite lives are tested at least annually for impairment and whenever there are indications that the assets might be
impaired. The recoverable amount of a CGU is based on its value in use. Value in use is the present value of the projected cash flows of the CGU. 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 of 15% is a pre-tax rate and reflects the risks specific to the relevant CGU. Out of Home business cash flow projections are based on the most
recent financial budgets approved by management. Management have applied an annual growth rate in projecting the cash flows for a period of five years in line
with these budgets. Further periods have been included in the impairment test based on growth into perpetuity of 2% per annum. Management consider the
annual growth projections for 5 years and into perpetuity to be reasonable in light of company growth in the current year and economic growth rates.

Management have considered the allocation of the excess of the fair value of the consideration transferred over the fair value of the Group’s share of the
identifiable assets acquired to other intangibles and are satisfied that is it correctly allocated to goodwill.

The headroom on the assessment is significant. Based on the headroom, management consider that no reasonably possible change in assumptions would give
rise to an impairment of goodwill or intangibles.

Beacon Drinks Limited *

Ben Shaws Dispense Drinks Limited

Cabana Soft Drinks Limited **

Dayla Liquid Packing Limited

Dispense Solutions (Wales) Limited *****

Festival Drinks Limited ***

Vimto (Out of Home) Limited

Nichols Dispense (S.W.) Limited ****

The Noisy Drinks Co. Limited ******

DJ Drink Solutions Limited *******

The Noisy Drink Company North West Limited ********

100

The Company directly owns Ben Shaws Dispense Drinks Limited, Dayla Liquid
Packing Limited and Vimto (Out of Home) Limited.

*Beacon Drinks Limited is directly owned by Vimto (Out of Home) Limited.

**Cabana Soft Drinks Limited is directly owned by Vimto (Out of Home)
Limited.

*** Festival Drinks Limited is directly owned by Vimto (Out of Home) Limited.

**** Nichols Dispense (S.W.) Limited is directly owned by Vimto (Out of Home)
Limited.

***** Dispense Solutions (Wales) Limited is directly owned by Nichols Dispense
(S.W.) Limited.

****** The Noisy Drinks Co. Limited is directly owned by Vimto (Out of Home)
Limited.

******* DJ Drink Solutions Limited is directly owned by Vimto (Out of Home)
Limited.

******** The shareholding in The Noisy Drink Company North West Limited is
directly owned by Vimto (Out of Home) 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 confirmation statement.

All companies in the Group are engaged in the supply of soft drinks and other
beverages.

The registered address of each of the above is Laurel House, Woodlands Park,
Ashton Road, Newton-le-Willows, WA12 0HH.

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13. Intangibles

Group

Cost

At 1 January 2017

Acquisitions

At 1 January 2018

Acquisitions (see note 19)

At 31 December 2018

Amortisation

At 1 January 2017

Charge in the year

At 1 January 2018

Charge in the year

At 31 December 2018

Brand
name
£’000

3,889

Customer
list
£’000

2,352

Total
£’000

6,241

2,066

4,418

8,307

280

4,698

8,587

157

314

525

839

157

314

525

839

Carrying value at 31 December 2018

Carrying value at 31 December 2017

3,889

3,859

4,104

7,748

7,993

Parent

At 1 January 2017, 1 January 2018 and 31 December 2018

1,316

Brand name
£’000

14. Deferred tax assets and liabilities

Movement in temporary differences during the year

Group

Property, plant and equipment

Goodwill and intangibles

Employee benefits

Provisions

Group

Property, plant and equipment

Goodwill and intangibles

Employee benefits

Provisions

Parent

Property, plant and equipment

Goodwill and intangibles

Employee benefits

Provisions

Parent

Property, plant and equipment

Goodwill and intangibles

Employee benefits

Provisions

Net balance at
1 January 2018
£’000

Arising on
business
combination
£’000

Recognised
in income
£’000

Recognised in other
comprehensive
expense
£’000

Net balance at
31 December 2018
£’000

(429)

(991)

856

(521)

(40)

(130)

(83)

(127)

(21)

(361)

(44)

(559)

(1,114)

685

(966)

Net balance at
1 January 2017
£’000

Arising on
business
combination
£’000

Recognised
in income
£’000

Recognised in other
comprehensive
income
£’000

Net balance at
31 December 2017
£’000

(199)

(670)

1,169

335

(360)

(230)

(200)

(383)

(113)

(429)

(991)

856

(521)

Net balance at
1 January 2018
£’000

Arising on
business
combination
£’000

Recognised
in income
£’000

Recognised in other
comprehensive
expense
£’000

Net balance at
31 December 2018
£’000

(33)

199

856

1,065

(22)

(16)

(127)

(21)

(186)

(44)

(55)

183

685

835

Net balance at
1 January 2017
£’000

Arising on
business
combination
£’000

Recognised
in income
£’000

Recognised in other
comprehensive
income
£’000

Net balance at
31 December 2017
£’000

216

1,169

1,436

(49)

(17)

(200)

(258)

(113)

(33)

199

856

1,065

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

14. Deferred tax assets and liabilities (continued)

Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

Group

Property, plant and equipment

Goodwill and intangibles

Employee benefits

Provisions

Assets

Liabilities

Net

Current
year
£’000

128

685

835

Prior
year
£’000

166

856

Current
year
£’000

(559)

(1,242)

Prior
year
£’000

(429)

(1,157)

1,065

(1,801)

(1,586)

Current
year
£’000

(559)

(1,114)

685

(966)

Parent

Assets

Liabilities

Net

Property, plant and equipment

Goodwill and intangibles

Employee benefits

Provisions

15. Inventories

Finished goods

Raw materials

Total inventories

Current
year
£’000

183

685

890

Prior
year
£’000

199

856

Current
year
£’000

(55)

Prior
year
£’000

(33)

1,098

(55)

(33)

Current
year
£’000

(55)

183

685

835

Group

Parent

2018
£’000

6,108

1,056

7,164

2017
£’000

3,990

825

4,815

2018
£’000

3,840

3,894

2017
£’000

2,342

In 2018, the Group write-down of inventories to net realisable value amounted to £99,000 (2017: £176,000).

Prior
year
£’000

(429)

(991)

856

(521)

Prior
year
£’000

(33)

199

856

1,065

16. Trade and other receivables

Trade receivables

Amounts owed by Group undertakings

Other receivables

Prepayments

Group

Parent

2018
£’000

34,282

1,938

1,933

2017
£’000

31,293

1,460

1,987

2018
£’000

26,357

7,209

801

872

2017
£’000

24,087

6,967

677

38,153

34,740

35,239

31,742

All amounts above are short-term receivables. 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 under the expected credit loss impairment model and a provision of £748,000 (2017: £2,102,000) has
been recorded accordingly.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade and other
receivables. The expected loss rates are based on the Group's historical credit losses experienced over the three year period to the year end. The historic
loss rates are then adjusted for current and forward looking information on macro economic factors affecting the Group's customers.

Credit risk for amounts owed by Group undertakings has not increased significantly since their initial recognition.

Group

At 1 January 2018
£’000

Charge in the year
£’000

Release in the year
£’000

Expected credit loss provision

2,102

113

(1,108)

Group

At 1 January 2017
£’000

Charge in the year
£’000

Release in the year
£’000

Expected credit loss provision

1,805

367

Parent

At 1 January 2018
£’000

Charge in the year
£’000

Release in the year
£’000

Expected credit loss provision

2,070

(1,108)

Parent

At 1 January 2017
£’000

Charge in the year
£’000

Release in the year
£’000

Expected credit loss provision

1,801

334

Utilised
£’000

(359)

Utilised
£’000

(70)

Utilised
£’000

(335)

Utilised
£’000

(65)

At 31 December 2018
£’000

748

At 31 December 2017
£’000

2,102

At 31 December 2018
£’000

717

At 31 December 2017
£’000

2,070

The release of the expected credit loss provision in the year, as shown above, represents cash received against previosuly provided for debts under the
expected credit loss model.

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

17. Trade and other payables and current tax liabilities

Trade payables

Amounts owed to Group undertakings

Other taxes and social security

Accruals

Current tax liabilities

Group

Parent

2018
£’000

7,402

1,002

13,935

22,339

2,814

25,153

2017
£’000

6,827

1,119

13,085

21,031

2,536

23,567

2018
£’000

6,053

6,214

218

9,763

22,248

391

22,639

2017
£’000

4,491

852

544

9,068

14,955

232

15,187

All amounts shown above are short-term. The carrying values are considered to be a reasonable approximation of fair value.

At 31 December 2018, liabilities have contractual maturities which are summarised below:

2018

2017

Within 6 months
£’000

Within 6 to 12 months
£’000

Within 6 months
£’000

Within 6 to 12 months
£’000

7,402

13,935

21,337

6,827

13,085

19,912

2018

2017

Within 6 months
£’000

Within 6 to 12 months
£’000

Within 6 months
£’000

Within 6 to 12 months
£’000

6,053

9,763

15,816

6,214

4,491

9,068

13,559

852

Group

Trade payables

Other short-term financial liabilities

Parent

Trade payables

Other short-term financial liabilities

18. Share capital

19. Acquisitions

2018 Acquisitions

On 15 February 2018, the Group acquired 75% of the issued share capital of The Noisy Drink Company North West Limited (NNW) for initial consideration of
£1.5m. On the same day, a symmetrical call/ put option was entered into with regards to the remaining 25% of the issued share capital. Based on the assessment
of the relative amounts payable in respect of each step of the acquisition, as well as assessment of the risk and reward retained by the non-controlling interest,
this has resulted in the acquisition being accounted for in substance as though the Group has acquired a 100% interest on the date of the acquisition.

As the written call/ put option is to be physically settled in cash, a gross obligation has been recognised at an amount equal to the present value of the amount
that could be required to be paid to the counterparty. Changes in the measurement of the gross obligation due to changes in the amount that the Group could be
required to pay are recognised in profit or loss. NNW is one of our Out of Home frozen soft drinks distributors covering the North West region and is an entirely
separate company with separate ownership to The Noisy Drinks Co. Limited previously acquired by the Group. This acquisition further consolidates our route to
market in the region and is consistent with our successful business model already operating in other regions in the UK.

Details of the fair value of identifiable assets acquired, purchase consideration and goodwill are as follows:

Book value
£’000

Adjustment
£’000

Fair value
£’000

Property, plant and equipment

Inventory

Trade and other receivables

Cash

Trade and other payables

Tax liabilities

Customer list

Deferred tax on acquired intangibles

Total assets acquired

Fair value of consideration

Cash paid

Contingent cash consideration (see below)

Total fair value of consideration

Goodwill arising on acquisition (note 11)

759

192

(127)

(832)

(78)

(11)

236

(40)

196

759

192

(127)

(832)

(78)

236

(40)

185

Fair value
£’000

1,549

2,000

3,549

3,364

Allotted, issued and fully paid 36,968,772 (2017: 36,968,772) 10p ordinary shares

2018
£’000

3,697

2017
£’000

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 2018 and 31
December 2017.

The goodwill recognised above includes certain intangible assets that cannot be separately identified and measured due to their nature. This includes control over
the acquired business, the opportunities for growth within the territory in which NNW operates, the skills and experience of the assembled workforce, and the
wider scale and future growth opportunities that it provides to the Group‘s operations. The goodwill recognised is not deductible for tax purposes.

Acquisition costs of £87,908 arose as a result of the transaction. These have been recognised within administrative expenses.

The contingent cash consideration is payable in February 2020, upon acquisition of the remaining 25% of the issued share capital. The amount is linked to growth
in EBITDA in the two year period following initial acquisition. There has been no material movement on the contingent consideration since initial recognition. In
addition, no reasonably possible change in any of the assumptions would lead to a material adjustment to the carrying value of the liability.

The fair value measurement of the contingent consideration represents a level 3 valuation due to unobservable inputs, which are not derived from market data.
The key assumptions within the forecast EBITDA are volumes distributed to customers, maintenance of the gross profit margin and overheads.

Since the acquisition, NNW has contributed £2.4m to revenue and £0.1m to net profit for the Group.

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

19. Acquisitions (continued)

On 10 July 2018, the Group acquired the trade and assets of Fountain Drinks Limited (Fountain) for initial consideration of £80,000. Fountain is one of our Out of
Home dispensed soft drinks distributors in Scotland. The acquisition further consolidates the Group's route to market in this region.

Details of the fair value of identifiable assets acquired, purchase consideration and goodwill are as follows:

Customer list

Total assets acquired

Fair value
£’000

Fair value of consideration

Cash paid

Contingent cash consideration (see below)

Total fair value of consideration

Goodwill arising on acquisition (note 11)

Fair value
£’000

143

The goodwill recognised above includes certain intangible assets that cannot be separately identified and measured due to their nature. This includes the
opportunities for growth within the territory in which Fountain operates and the wider scale and future growth opportunities that it provides to the Group‘s
operations. The goodwill recognised is not deductible for tax purposes.

The contingent cash consideration is payable in July 2019, based on the performance of customer accounts acquired in the 12 month period following acquisition.

2017 Acquisition

On 2 June 2017, the Group acquired 100% of the issued share capital of DJ Drink Solutions Limited (DJ), the largest of our Out of Home dispensed soft drinks
distributors covering the North West, North East and North Wales regions. This acquisition consolidates the Group’s route to market in the two regions and is
consistent with our successful business model already operating in other regions in the UK.

The goodwill recognised above includes certain intangible assets that cannot be separately identified and measured due to their nature. This includes control over
the acquired business, the opportunities for growth within the territory in which DJ operated, the skills and experience of the assembled workforce, and the wider
scale and future growth opportunities that it provides to the Group‘s operations. The goodwill recognised is not deductible for tax purposes.

Acquisition costs of £145,807 arose as a result of the transaction, recognised as an exceptional item within administrative expenses.

The contingent cash consideration was payable in June 2018 based on profitability targets established with the vendor. Total cash consideration of £2,265,000 was
paid in June 2018 based on actual growth achieved in the 12 month period following acquisition. The difference between the £2,367,000 initially recognised and
£2,265,000 paid has been taken as a credit within administrative expenses.

Since the acquisition, DJ has contributed £12.6m to revenue. It is not possible to determine the net profit impact as the business has been subsumed into the
trade of the Out of Home CGU.

20. Cash and cash equivalents

Group

At 1 January
2018
£’000

Cash at bank and in hand

36,058

Cash
flow
£’000

2,838

At 31 December
2018
£’000

Parent

At 1 January
2018
£’000

38,896

Cash at bank and in hand

15,422

Cash
flow
£’000

4,648

At 31 December
2018
£’000

20,070

21. Financial instruments

Exposure to treasury management, liquidity, credit and currency risks arise 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.

Details of the fair value of identifiable assets acquired, purchase consideration and goodwill are as follows:

Liquidity risk

Book value
£’000

Adjustment
£’000

Fair value
£’000

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 where required, short-term borrowing facilities.

Property, plant and equipment

Inventory

Trade and other receivables

Cash

Trade and other payables

Tax liabilities

Customer list

Deferred tax on acquired intangibles

Total assets acquired

Fair value of consideration

Cash paid

Contingent cash consideration (see below)

Total fair value of consideration

Goodwill arising on acquisition (note 11)

780

121

734

187

(1,585)

(226)

2,066

(360)

1,706

780

121

734

187

(1,585)

(226)

2,066

(360)

1,717

Fair value
£’000

6,568

2,367

8,935

7,218

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 and Euros. During 2018, the Group entered into foreign currency transactions that over the
course of the year resulted in the Group having a natural hedge. This then meant the Group did not need to enter into forward contracts to minimise the
impact of movements in foreign currency rates on the spot market.

Foreign currency assets:

US Dollar

Euro

Swiss Franc

2018
£’000

3,158

5,851

9,070

2017
£’000

3,686

3,864

7,611

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

21. Financial instruments (continued)

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.

23. 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 2017.

At 31 December 2018, the Group had no debt and therefore the capital structure consists of equity only.

If Sterling had strengthened against the US Dollar and Euro by 5% (2017: 5%), then this would have had the following impact:

24. Operating leases

Net result for the year

US Dollar
£’000

(261)

2018
Euro
£’000

(337)

Total
£’000

(598)

US Dollar
£’000

(175)

2017
Euro
£’000

(184)

Total
£’000

(359)

If Sterling had weakened against the US Dollar and Euro by 5% (2017: 5%), then this would have had the following impact:

Net result for the year

US Dollar
£’000

2018
Euro
£’000

243

Total
£’000

286

US Dollar
£’000

195

2017
Euro
£’000

204

Total
£’000

399

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.

22. Summary of financial assets and liabilities by category

The IFRS 9 categories of financial assets included in the statement of financial position and the headings in which they are included are as follows:

Group

Parent

Fair value through
profit or loss

Amortised
cost

Fair value through
profit or loss

Amortised
cost

Financial assets

Trade receivables and other receivables

Cash and cash equivalents

Total financial assets

2018
£’000

2017
£’000

2018
£’000

36,220

38,896

75,116

2017
£’000

32,753

36,058

68,811

2018
£’000

2017
£’000

2018
£’000

34,367

20,070

54,437

2017
£’000

31,065

15,422

46,487

The IFRS 9 categories of financial liability included in the statement of financial position and the headings in which they are included are as follows:

Group

Parent

Fair value through
profit or loss

Amortised
cost

Fair value through
profit or loss

Amortised
cost

2018
£’000

2,000

2017
£’000

2,367

2018
£’000

5,402

2017
£’000

4,460

2018
£’000

2017
£’000

2018
£’000

12,267

2017
£’000

5,343

Financial liabilities

Trade and other payables

Total financial liabilities

At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due
as follows:

Within one year

Between two and five years

More than five years

Group

Parent

2018
£’000

1,095

1,863

2,958

2017
£’000

1,023

2,042

705

3,770

2018
£’000

584

660

2017
£’000

534

743

1,244

1,277

The Group leases its operating depots under non-cancellable operating lease agreements and certain other plant and equipment under non-
cancellable operating lease agreements.

25. 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)

Transaction value
Year ended 31 December

Balance outstanding
as at 31 December

2018
£’000

1,341

2017
£’000

842

2018
£’000

995

2017
£’000

6,115

All sales noted above with the related parties are conducted in line with similar transactions with external parties.

Details of key management personnel compensation have been disclosed in note 6, no other transactions were entered into with key management personnel in
the year.

Two family members of the Non-Executive Chairman are employed in management roles within the business. The total remuneration paid in the year was
£169,000 (2017: £157,000). An accrued amount of £37,000 (2017: £20,000) will be paid in the subsequent financial year.

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

26. Pension obligations and employee benefits

Plan assets

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 £455,000
(2017: £410,000).

The Company operates a defined benefit plan in the UK. A full actuarial
valuation was carried out on 5 April 2018 and updated at 31 December 2018 by
an independent qualified actuary.

The assets of the defined benefit plan are managed by a pension fund that is
legally separated from the Group. Governance of the plan is the responsibility
of appointed trustees, acting on professional advice. The plan is exposed to a
number of risks, including changes to long-term UK interest rates and inflation
expectations, movements in global investment markets, changes in UK life
expectancy rates and regulatory risk from changes in UK pension legislation.

Interest rate risk

The present value of the defined benefit liability is calculated using a discount
rate determined by reference to market yields of high quality corporate bonds.
The estimated term of the bonds is consistent with the estimated term of the

defined benefit obligation and it is denominated in sterling. A decrease in
market yield on high quality corporate bonds will increase the Group’s defined
benefit liability, although it is expected that this would be offset partially by an
increase in the fair value of certain of the plan assets.

Investment risk

The plan assets at 31 December 2018 are predominantly equity and debt
instruments.

Longevity risk

The Group is required to provide benefits for life for the members of the
defined benefit liability. Increases in the life expectancy of the members,
where the pension payments are linked to CPI, will increase the defined benefit
liability.

Inflation risk

A significant proportion of the defined benefit liability is linked to inflation. An
increase in the inflation rate will increase the Group’s liability. A portion of the
plan assets are inflation-linked debt securities which will mitigate some of the
effects of inflation.

A reconciliation of the pension obligation and plan assets to the amounts presented in the statement of financial position for 2018 and 2017 is shown below.

Present value of funded obligations

Fair value of plan assets

Deficit in the plan

Related deferred tax asset

Net liability recognised

Defined benefit obligation

The details of the Group’s defined benefit obligation are as follows:

Opening defined benefit obligation

Current service cost (Company only)

Interest cost

Actual contributions paid by plan participants

Experience adjustment

Actuarial (gains)/ losses from changes in financial assumptions

Actuarial gains from changes in demographic assumptions

Benefits paid - including insurance premiums

Past service cost

Closing defined benefit obligation

31 December 2018
£’000

31 December 2017
£’000

(28,286)

25,531

(2,755)

563

(2,192)

(30,167)

27,246

(2,921)

654

(2,267)

31 December 2018
£’000

31 December 2017
£’000

30,167

30,380

714

(1,801)

(197)

(847)

200

28,286

754

362

646

(409)

(1,613)

30,167

The reconciliation of the balance of the assets held for the Group’s defined benefit plan is presented below:

Fair value of plan assets at start of accounting period

Interest income

Return on plan assets (excluding amounts included in net interest)

Contributions paid by the employer

Actual contributions paid by plan participants

Benefits paid

Fair value of plan assets at end of accounting period

31 December 2018
£’000

31 December 2017
£’000

27,246

655

(2,441)

912

(847)

25,531

23,985

600

1,714

2,554

(1,613)

27,246

The actual return on plan assets was a loss of £1,786,000 (2017: gain of £2,314,000). Plan assets do not comprise any of the Group’s own financial instruments or
any assets used by Group companies. Plan assets can be broken down into the following category of investments.

The major categories of plan assets, measured at fair value are:

31 December 2018
£’000

31 December 2017
£’000

Equities

Gilts

Bonds

Liability driven investments

Diversified growth funds

Absolute return bonds

Equity-linked bonds

Other, including cash

Total fair value of assets

2,421

3,325

4,534

4,136

8,951

314

23,681

19,006

1,616

2,429

2,327

25,378

Assets included which do not have a quoted market value:

Property

Total

31 December 2018
£’000

31 December 2017
£’000

1,850

1,868

The property was acquired following a special contribution made by Nichols plc on 21 December 2017.

The significant actuarial assumptions used for the valuations
are as follows:

Future salary increases

Rate of increase in (post 1997) pensions in payment (a)

Discount rate at 31 December

Expected rate of inflation - RPI

31 December 2018

31 December 2017

3.20%

3.30%

2.80%

3.20%

3.30%

2.40%

3.20%

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

26. Pension obligations and employee benefits (continued)

Other defined benefit plan information

Other actuarial assumptions were the rate of salary increases and mortality assumptions. In terms of future salary increases, the actuary is assuming salaries will
increase in line with the RPI inflation assumption.

Assumptions regarding future mortality experience are set based on the advice of actuaries and in accordance with published statistics. For members not
yet retired, life expectancies have been estimated as 88 years for men (2017: 89 years) and 89 years for women (2017: 90 years). For current pensioners life
expectancies have been estimated as 87 years for men (2017: 87 years) and 89 years for women (2017: 89 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 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.

Defined benefit plan expenses

Amounts recognised in profit or loss are:

Current service cost (Company)

Net interest cost (on net defined benefit liability)

Past service cost

Total amount recognised in the consolidated income statement

GMP Equalisation

31 December 2018
£’000

31 December 2017
£’000

200

303

154

195

Employees of the Group are required to contribute a fixed 6% of their pensionable salary.

The remaining contribution is partly funded by the Group’s subsidiaries. The funding requirements are based on the pension funds actuarial measurement
framework as set out in the funding policies.

Based on historical data, the Group expects contributions of £881,000 to be paid in 2019.

The weighted average duration of the defined benefit obligation at 31 December 2018 is 18 years (2017: 18 years).

The significant actuarial assumptions for the determination of the defined benefit obligation are the discount rate, the inflation assumption and life
expectancy.

The calculation of the net defined benefit liability is sensitive to these assumptions.

The table below summarises the sensitivity of a reasonably possible change to one significant actuarial assumption, holding all other assumptions constant,
on the obligation:

31 December 2018
£'000

31 December 2018
%

31 December 2017
£'000

31 December 2017
%

Increase in discount rate by 0.5%

Increase in price inflation adjustment by 0.5%

1 year increase in life expectancy

220

-8.00

2.00

3.00

204

-7.00

2.00

3.00

The sensitivities may not be representitive of the actual change in the present value of the scheme obligation, as it is unlikely that the change in assumptions
would occur in isolation of each other, as the assumptions may be linked.

The method and assumptions used in this analysis have been reviewed and remain unchanged from the prior year.

In 2017, a case was brought before the High Court to consider whether there is an obligation to equalise Guaranteed Minimum Pensions (GMPs) for male
and female pensioners in respect of defined benefit pension schemes. In October 2018, the court judged that there is an obligation to equalise benefits for
men and women, removing inequalities that arise from different GMPs. As a result of this ruling, an assessment of the increase in liabilities of the pension
scheme has been made and a resulting charge of £200,000 has been recognised as a past service cost in the year.

27. Audit exemption statement

The current and past service costs are included in the employee benefits expense and the net interest expense is included in finance costs.
Amounts recognised in other comprehensive (expense)/ income relating to the Group’s defined benefit plan are as follows:

Remeasurements recognised in other comprehensive (expense)/ income:

31 December 2018
£’000

31 December 2017
£’000

Actuarial (losses)/ gains on the assets

Experience adjustment

Actuarial gains/ (losses) from changes in financial assumptions

Changes in demographic assumptions

Other movements

Total (loss)/ gain recognised in other comprehensive (expense)/ income

(2,441)

1,801

197

(412)

1,714

(362)

(646)

409

1,140

Under section 479A of the Companies Act 2006 the Group is claiming exemption from audit for the subsidiary companies listed below. The parent
undertaking, Nichols plc, registered number 238303, guarantees all outstanding liabilities to which the subsidiary company is subject at the end of the
financial year (being the year ended 31 December 2018 for each company unless otherwise stated). The guarantee is enforceable against the parent
undertaking by any person to whom the subsidiary company is liable in respect of those liabilities.

Beacon Drinks Limited

Ben Shaws Dispense Drinks Limited

Cabana Soft Drinks Limited

Dayla Liquid Packing Limited

Festival Drinks Limited

Vimto (Out of Home) Limited

Nichols Dispense (S.W.) Limited

Dispense Solutions (Wales) Limited (year ended 30 September 2019)

The Noisy Drinks Co. Limited

The Noisy Drink Company North West Limited (year ended 31 January 2019)

DJ Drink Solutions Limited (year ended 31 May 2019)

Company Number

1732905

231218

938594

603111

1256006

8795779

8766560

8671127

5905631

5024347

5787898

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

U N A U D I T E D F I V E Y E A R S U M M A R Y - Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

28. Contingent liability

The Company had previously entered into contracts with some of its senior management relating to incentive schemes which were designed to motivate,
retain and engage those key employees. HMRC have written to the Company with their initial view that the arrangements should have been taxed as
employment income which the Company and its advisors dispute. If HMRC pursues its current position and is successful in its argument then the Company
may have to pay up to £3.2m in income tax and national insurance. The employees who are party to the contracts have formally indemnified the Company
in relation to income tax and employees’ national insurance and an amount of up to £2.4m can be requested from them. The Directors have obtained
external advice and on the basis of this do not believe that the Company has a liability for any additional tax or national insurance. In common with such
disputes with HMRC it may take some time to settle and the Directors are unable to assess how long this will take and the timing of any potential settlement
if required. As at the date of this report, there has been no significant progress in the case to note since this time last year.

29. Contingent asset

The Company has submitted an insurance claim under its business interruption policy, following a fire at one of its outsourced co-packers during 2018. This
incident has resulted in a loss of sales and additional costs from outsourcing production of some of its products. Confirmation of this being an insurable
event has been obtained however, as at the date of this report, the quantum of the claim relating to loss of sales remains unsubstantiated with insurers, as
the Company seeks to return to business as usual and establish the true value of the claim to be made.

30. Post balance sheet events

On 1 February 2019, the Group acquired 100% of the issued share capital of Adrian Mecklenburgh Limited (AML) for £4.2m. AML is currently one of our Out of
Home soft drinks dispense distributors covering the Kent region. This acquisition is consistent with a number of recent successful investments in our Out of Home
business and consolidates the route to market in the region.

Details of the book value of identifiable assets acquired are as follows:

Property, plant and equipment

Inventories

Receivables

Cash

Payables

Total

£’000

595

243

398

717

(362)

1,591

At the date of authorisation of these financial statements, a detailed assessment of the fair value of the identifiable net assets has not been completed.

Whilst fair value adjustments, and recognition of separable intangible assets (such as customer lists), will result in goodwill of less than £2.6m (being the
consideration paid less book value of identifiable assets acquired), it is expected that some goodwill will be recognised. The goodwill represents items, such as the
assembled workforce, which do not qualify for recognition as assets.

Revenue

Operating profit before exceptional items, IAS 19 and Long-Term Incentive
Scheme Charges

Exceptional items

IAS 19 operating profit charges

IAS 19 past service cost - GMP equalisation

Long-Term Incentive Scheme operating profit charges

Operating profit after exceptional items, IAS 19 and Long-Term Incentive Scheme
charges

Net finance income/ (expense)

Share of post-tax profits of equity accounted associate

Profit before taxation

Taxation

Profit after taxation

Dividends paid

Retained earnings

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

2018
£’000

142,037

32,441

(44)

(200)

(559)

31,638

115

31,753

(6,238)

25,515

2017
£’000

132,789

30,884

(1,801)

(41)

(300)

28,742

(20)

28,722

(5,548)

23,174

(12,803)

(11,213)

12,712

69.23p

69.19p

69.23p

69.19p

34.70p

11,961

62.88p

62.81p

67.76p

67.69p

30.40p

2016
£’000

117,349

31,622

2015
£’000

109,279

28,888

2014
£’000

109,205

26,464

(29)

(1,268)

30,325

1,167

31,492

(6,015)

25,477

(9,806)

15,671

69.13p

69.07p

66.18p

66.12p

26.60p

(37)

(1,017)

27,834

190

28,036

(5,803)

22,233

(8,589)

13,644

60.33p

60.25p

60.33p

60.25p

23.30p

(7,768)

(103)

(764)

17,829

17,922

(3,776)

14,146

(7,518)

6,628

38.39p

38.34p

55.03p

54.96p

20.40p

N O T I C E O F A N N U A L G E N E R A L M E E T I N G

G E N E R A L N O T E S

Notice is hereby given that the twenty seventh Annual General Meeting of
Nichols plc (“Company”) will be held at Nichols plc, Laurel House, Woodlands
Park, Ashton Road, Newton-le-Willows, Merseyside, WA12 0HH on Wednesday,
1 May 2019 at 11:00 a.m. for the following purposes:

To consider and, if thought fit, to pass the following resolutions as ordinary
resolutions:

8.2

To receive the Company’s annual accounts, strategic report and
directors’ and auditors’ reports for the year ended 31 December 2018.

To declare a final dividend for the year ended 31 December 2018 of
26.80 pence per ordinary share of £0.10 in the capital of the Company,
to be paid on 3 May 2019 to shareholders whose names appear on the
register of members at the close of business on 5 April 2019.

To re-elect M J Millard, who retires by rotation, as a Director of the
Company.

To re-elect J Gittins, who retires by rotation, as a Director of the
Company.

To reappoint BDO LLP as auditors of the Company.

To authorise the directors to determine the remuneration of the
auditors.

That, pursuant to section 551 of the Companies Act 2006 (“Act”), the
Directors be and are generally and unconditionally authorised 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 £1,228,135.90 (representing one third of the existing issued
ordinary share capital of the Company), 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 25 July 2020
(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 551 of the Act
(which, to the extent unused at the date of this resolution, are revoked
with immediate effect).

9.1

9.2

9.3

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

otherwise than pursuant to paragraph 8.1 of this resolution, up to an
aggregate nominal amount of £184,244, 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 25 July 2020 (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 sections 570 and
573 of the Act (which, to the extent unused at the date of this resolution,
are revoked with immediate effect).

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
3,684,882:

the minimum price (excluding expenses) which may be paid for a Share
is 10p; and

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 25 July 2020 (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.

To consider and, if thought fit, to pass the following resolutions as special
resolutions:

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,

By order of the Board

Tim Croston
Secretary

26 February 2019

Registered Office, Laurel House, Woodlands Park, Ashton Road, Newton-le-
Willows, WA12 0HH.

Registered in England and Wales No. 238303

1. To receive the Company’s annual accounts, strategic report and directors’

and auditors’ reports for the year ended 31 December 2018.

2. Biographical details of all those Directors who are offering themselves for
re-election at the meeting are set out on pages 42 to 43 of the enclosed
annual report and accounts.

All proxy appointments, whether electronic or hard copy, must be received by
the Company’s registrar no later than 11:00 a.m. on Monday, 29 April 2019 (or,
in the event that the meeting is adjourned, no later than 48 hours (excluding
any part of the day that is not a working day) before the time of any adjourned
meeting).

3. 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 close of business on Monday, 29 April 2019
(or, if the meeting is adjourned, close of business 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.

4. 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, each different
proxy instruction must be received by the Company’s registrar at: Link
Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU
no later than 48 hours before the time appointed for the meeting
(excluding non-working days). You will need to state clearly 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. A proxy may only be

appointed in accordance with the procedures set out in notes 5 to 8 below
and the notes to the form of proxy.

5. 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.

In order to reduce the Company’s environmental impact, our intention is
to remove paper from the voting process as far as possible. You are
therefore asked to vote in one of the following ways:

• Register your vote on line through our registrar’s portal –
www.signalshares.com. You will need your investor code which is printed
on your share certificate or may be obtained by calling the Company’s
registrar, Link, on 0871 664 0300. If you are outside the United Kingdom,
please call +44 (0) 371 664 0300 (Calls cost 12p per minute plus your
telephone company’s access charge. Calls outside the United Kingdom will
be charged at the applicable international rate).

• CREST members bay use the CREST electronic proxy appointment service
as detailed in note 7 below.

If you prefer, you may request a hard copy form from Link using the numbers
shown above and return it to Link Asset Services, PXS, 34 Beckenham Road,
Beckenham, Kent BR3 4TU.

7. CREST members who wish to appoint a proxy or proxies for the meeting or
any adjournment of it) 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.

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, Link Registrars (CREST ID
RA10) no later than 11:00 a.m. on Monday, 29 April 2019 (or, if the meeting
is adjourned, no later than 48 hours (excluding any part of the day that
is not a working day) 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 time stamp applied to the message by the CREST Applications Host)
from which Link 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.

9. 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.

10. A shareholder which is a corporation may authorise one or more persons

to act as its representative(s) at the meeting. Each such representative may
exercise (on behalf of the corporation) the same powers as the corporation
could exercise if it were an individual shareholder, provided that (where
there is more than one representative and the vote is otherwise than on a
show of hands) they do not do so in relation to the same shares.

G E N E R A L N O T E S

N O T E S

11. As at 15 March 2019 (being the last practicable date before the publication
of this notice), the Company’s issued share capital consists of 36,968,772
ordinary shares of 10 pence each, carrying one vote each. As the Company
holds 66,310 ordinary shares in treasury, in respect of which it cannot
exercise any votes, the total voting rights in the Company as at 15 March
2019 are 37,035,082.

12. You may not use any electronic address provided either in this notice of
general meeting or any related documents to communicate with the
Company for any purposes other than those expressly stated.

Directions to the Annual General Meeting

Car:

Leave the M6 at Junction 23 and take the A49 north 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.

Pubic Transport

Train:

Newton-le-Willows railway station is located 1.3 miles
away from Woodlands Park on Southworth Road, WA12
9SF.

Bus:

The nearest bus service to Woodlands Park is located on
Cobden Street, 0.8 miles from Woodlands Park, operating
the number 22 service into Newton-le-Willows.

100

F I N A N C I A L C A L E N D A R

Preliminary Results Announced

Annual General Meeting

Interim Results Announced

27 February 2019

1 May 2019

17 July 2019

101

Vimto is a soft drink that has it all. Way back in
Edwardian Manchester (1908 to be precise), John Noel
Nichols created the drink we all know and love.

Originally created as a herbal tonic, the special combination
of fruits, herbs and spices was first known as Vimtonic
and was created as a healthy pick me up tonic, giving
the consumer “vim” (energy, enthusiasm) and “vigour”
(strength and power). The new tonic was one of a number
of products Nichols would deliver to smaller outlets, cafés
and temperance bars. The distinct herbs and spices that
contribute to the secret recipe were sourced from around
the world and as Vimto’s popularity grew overseas, the
Nichols group began developing an export market.

We’ve left our herbalist trade origins behind, however
the Vimto brand, although born in a bygone era, has kept
itself young by adapting to changing consumer conditions
and tastes through its versatile product range, advertising
and packaging. The promotion of Vimto forms a continuous
narrative, from the founding of the company in 1908, right
through to the present day.

From drinking a hot Vimto as a health tonic in the aromatic
surroundings of the gaslit herbalist shop, to the shlurple
of a can at a garage forecourt, the brand image as a
funloving, quality, healthy and good value soft drink
remains the same.

John Noel Nichols would have been proud to see how far
his barrel of delicious elixir has rolled.

Vimto is created
Originally launched as a herbal
tonic that gave the drinker ‘Vim
& Vigour”, Vimtonic (as it was
known then) soon become
known simply as Vimto.

Vimto in India
Vimto concentrate
is sent out to India
which was then
part of the British
empire.

International travels
Vimto goes abroad

1883

1910

1919

1920

1924

John Noel Nichols
Is born on 28th December in
Blackburn, Lancashire.

Vimto gets fizzy!
Someone at Vimto had a
brainwave. They added
bubbles!

Salford
Vimto moves to
Salford

1930-
1940

Vimto’s cheeky ads
Vimto’s cheeky ads reflect the
young and glamorous. With
the outbreak of war, many of
the directors and staff joined
the forces. Some of the wives
continued to sell while their
husbands were away.

Vim2o & Icee
Vim2o water launched and ICEE, the worlds No.
1 frozen beverage brand, joins the family.

Vimtoad
Vimto’s back with a
new croaksperson.

2018

2017

2016

2015

2014

Present
2018 sees a new TV advertising campaign, I
see Vimto in You. Frozen cocktail brand ‘FRYST’
launched. Introduction of new remix flavour
Watermelon, Strawberry & Peach. Starslush
Unicorn slush flavour a huge summer hit.

Going cold
Acquisition of ‘Noisy Drinks’,
the UK’s No. 1 frozen beverage business, bringing
various frozen beverage brands to the portfolio.

Feel good factor
Acquisition of ‘The Feel Good
Drinks Company’ brand.
100% Natural products.

103

102

Laurel House, Woodlands Park,
Ashton Road, Newton-le-Willows,
WA12 0HH

01925 22 22 22 www.nicholsplc.co.uk

104

105

106