NICHOLS PLC 2019 ANNUAL REPORT
1
2 0 1 9 N I C H O L S P L C A N N U A L R E P O R T
2 0 1 9 N I C H O L S P L C A N N U A L R E P O R T
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
3
2 0 1 9 N I C H O L S P L C A N N U A L R E P O R T
2 0 1 9 N I C H O L S P L C A N N U A L R E P O R T
A N O T E F R O M
M I L L A R D
C H I E F E X E C U T I V E
O F F I C E R
To all of our stakeholders,
As a 111-year-old business, over many decades we have
witnessed significant market changes, withstood challenging
conditions, and continued to thrive by innovating and staying
focused on creating great products that delight our customers.
As a business, we are rightly proud of our unique heritage.
However, as we enter a new decade in 2020, we are firmly
focused on the future. We recognise that to achieve another
successful 100 years, even more needs to be done to improve the
impact of the Group on the environment, society and our local
communities.
We have already made good progress delivering our
sustainability initiatives. In this report, we set out the details of
our sustainability strategy, “Happier Future”, which outlines our
initiatives and commitments to further advancing the Group’s
Environmental, Social and Governance objectives. You can read
this section after the introductory statement from our Chairman,
John Nichols. Later in the report, Andrew Milne, in his new
role as Chief Operating Officer, will provide more detail on our
performance during 2019 and the progress we made. This is
followed by the Financial Review.
On behalf of the Board, I would like to thank all my colleagues
at Nichols plc for their hard work in delivering success against
some challenging trading conditions during the year. In particular,
I would like to show my appreciation to Tim Croston, Chief
Financial Officer, for his significant contribution to Nichols plc
over his 15 years with the Group. As announced in October 2019,
Tim will step down from the Board by 30 June 2020 and we are
pleased to welcome David Rattigan as our new Chief Financial
Officer. We wish Tim every success in his future endeavours.
Marnie
Marnie Millard OBE - Chief Executive Officer
5
“I am very
pleased to
introduce our
“Happier Future”
strategy which
outlines our
initiatives and
commitments
to further
advancing
our Group’s
Environmental,
Social and
Governance
objectives.”
4
2 0 1 9 N I C H O L S P L C A N N U A L R E P O R T
2 0 1 9 N I C H O L S P L C A N N U A L R E P O R T
One
THE HIGHLIGHTS
STRATEGIC REPORT
CHAIRMAN’S STATEMENT
OUR BUSINESS MODEL
CHIEF EXECUTIVE OFFICER’S REPORT
CHIEF OPERATING OFFICER’S REPORT
FINANCIAL REVIEW
SECTION 172 STATEMENT
Two
GOVERNANCE
DIRECTORS’ REPORT
THE BOARD
CORPORATE GOVERNANCE STATEMENT
AUDIT COMMITTEE REPORT
REMUNERATION COMMITTEE 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
9
10
12
14
24
36
40
44
48
50
54
56
58
64
64
65
66
67
68
70
104
105
107
111
6
7
S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T
The
HIGHLIGHTS
VIMTO
BRAND
VALUE
IS NOW
£90.8M*
*Source: Nielsen Scantrack, Value Sales, Total Coverage, MAT 25.01.20
8
R E VENUE
P
U
GR O
T
A
I N G PROFIT
OPE R
2019
£147.0m
2018
£142.0m
2019
£32.4m
2018
£31.6m
+3. 5 %
+2. 5 %
B E FORE TA
X
PR O F I T
S I C)
A
EPS ( B
2019
£32.4m
2018
£31.8m
2019
72.81P
2018
69.23P
+2. 1 %
+5. 2 %
S H
A
NET C
2019
£40.9m
2018
£38.9m
+5. 1 %
9
S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T
C H A I R M A N ’ S
S T A T E M E N T
N I C H O L S
N O N - E X E C U T I V E C H A I R M A N
I am pleased to announce another strong performance
this performance reflects a return to normal levels of
OUTLOOK
from Nichols plc. During the year, the Group delivered
concentrate sales during the year. Within the region, we
further progress against its strategic objectives, successfully
achieved our best ever sales performance of the Vimto
increasing revenue, profit and earnings per share. This
brand during Ramadan 2019.
Further to our trading announcement on 23 December
2019 regarding the new Sweetened Beverage Excise
Tax in Saudi Arabia and the UAE, we anticipate being in
performance was delivered against challenging market
conditions as has been widely reported elsewhere.
TRADING
Total Group revenue increased by 3.5% to £147.0m (2018:
Elsewhere in our International regions, there was good
a position to update the market in our Interim Results
growth in the USA, which is primarily a Stills market
Announcement on 22 July 2020. At that point in time,
(+23.1% to £1.4m) and Europe which is primarily a
we will have the benefit of the data post the critical
Carbonate market (+5.2% to £3.3m).
Ramadan trading period.
£142.0m). Both our UK and International businesses
Group Profit Before Tax was £32.4m for the year, an
Elsewhere across the Group, we are confident that our
contributed to this positive performance.
increase of 2.1% compared to the prior year (2018:
diversified and profitable business model will support
UK sales grew by 2.5% to £117.5m (2018: £114.6m).
Within the UK business, Vimto brand sales performed
£31.8m).
DIVIDEND
well, increasing by 0.8% against very strong prior year
As a reflection of the Board’s confidence in the Group’s
comparatives (2018: +12.9%). This performance was
long-term financial position and the performance in the
primarily driven by the Still category where sales of Vimto
year, we are pleased to recommend a final dividend of
dilutes grew by 15% and continued to gain market share.
28.0 pence per share (2018: 26.8 pence).
the continued growth trend into 2020 and beyond.
Elsewhere in our UK business, Out of Home sales increased
If approved by our shareholders, the total dividend
by 8.0% to £45.5m (2018: £42.2m) and now contribute 31%
for 2019 will be 40.4 pence per share (2018: 38.1
John Nichols
of Group revenue. This increase was largely driven by the
acquisition of one of our post mix and coffee distributors
pence), an increase of 6.0% on the prior year. Subject
Non-Executive Chairman
to shareholder approval, the final dividend will be paid
25 February 2020
(Adrian Mecklenburgh Limited) and the growth of frozen
on 1 May 2020 to shareholders registered on 20 March
beverages into the cinema channel. The continued growth
2020; the ex-dividend date is 19 March 2020.
in Out of Home demonstrates our diversified strategy and
is a result of the significant investment in this part of our
business over recent years.
International sales grew by 7.5% to £29.5m (2018: £27.4m).
In our African markets, revenues were £13.0m compared to
£13.6m in the prior year.
SUMMARY
In summary, the Board is pleased with the Group’s
performance in 2019. Despite the market headwinds,
the business has once again delivered profitable sales
growth, maintained its strong cash generative model
and as a Board, we are proposing a final dividend of
Sales to the Middle East grew by 20.6% to £11.6m against
28.0 pence per share, resulting in a 6.0% increase in the
softer prior year comparatives (2018: £9.6m). As anticipated,
full year dividend.
1
1
1
0
S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T
OUR BUSINESS MODEL EXISTS TO
MAKE LIFE
BETTER
Customers
Ingredients
Like all great tastes - it all starts with
the best ingredients!
The ‘Vimto secret recipe’ is
testimony to this
Manufacture
Our much loved products are made
by the very best - ourselves or our
supplier partners
Consumers
It’s ultimately all about getting
our much loved brands into
people’s hands!
Retailers
Our retailers vary from some of the
biggest to some of the smallest in
the world
Transport
We use the most effective
distribution solutions to meet
customer needs, whether that be via
our own team or an expert partner
1
2
1
3
S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T
CHIEF
OFFICER’S REPORT
AN IN-DEPTH
LOOK AT OUR
HAPPIER FUTURE
Having launched our revised sustainability agenda to
with our partners and for our communities.
commitment to ensure our carbon footprint remains as
LEGISLATION
our colleagues in January 2020 we are delighted to
provide details of our commitments and objectives to
the Group’s stakeholders in this Annual Report.
Our goal remains to continue to grow our business by
doing the right things in the right way. Our “Happier
WITH OUR PARTNERS...
low as possible.
We continue to actively work with the British Soft
With our partners we are working together in five key
Every piece of packaging we use or supply is 100%
Drinks Association (BSDA) to support the introduction
areas:
SUSTAINABLE PACKAGING
recyclable and we continue to invest in the UK recycling
of a well-designed Deposit Return Scheme (DRS). By
infrastructure by purchasing UK only Packaging
developing a better infrastructure in the UK, which
Recovery Notes (PRN). We have replaced plastic cups
supports wider recycling and improves consumer
Future” strategy outlines the ways in which we are
We are committed to having a sustainable and
and straws with alternative materials to plastic, and
awareness for the need to recycle, we will be able to
working with our partners and for our communities so
achievable plan surrounding the use of plastic within
any plastic straws, cups and lids we do use are 100%
create better availability of RPET plastic for the whole
that “we make life taste better” for everyone.
every aspect of the organisation. We are working hard
recyclable. All of our cordial shrink film contains 50%
of our industry. We need a system that is UK wide and
As a growing, international business we understand our
responsibility to operate in a sustainable way and give
back to society. Our vision is to create a happier future
for our planet by doing the right things, in the right way,
with our suppliers to utilise more recycled PET plastic
within our packaged portfolio. Since the last annual
report, we have increased our use of RPET plastic from
31% to 51% within our cordial product range. All of our
RPET plastic is sourced from the UK, which is a clear
1
4
post-consumer recycled waste, which means material
is embraced by all parties within the supply chain from
that would otherwise have been directed to landfill is
national Government, local Government, soft drinks
diverted and used in the production of our shrink film.
manufacturers, retailers and consumers. As I reported
last year, this means better waste collection at a local
level, improved recycling systems nationally, and a drive
1
5
S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T
to make consumers more “recycling” aware about plastic
soft drinks industry. In the first half of the year, we will
• Within our own manufacturing operations at
33% in 2015. We will continue to ensure all our new
bottles.
install our first in-store refill station for our dilutes range
Ross-on-Wye, through a programme of improved
product development is No Added Sugar and all of our
We continue to work with Government to reform the
current Producer Responsibility Obligations Regulations
which is intended to help shoppers reduce, re-use and
measuring and monitoring of our energy usage, we
advertising features only our No Added Sugar ranges.
recycle packaging.
have reduced our annual CO2 output by 115 tonnes
Within dilutes, 2019 sales of No Added Sugar are now
in light of the Deposit Return Scheme and any
CARBON FOOTPRINT
associated taxes that are levied to the industry.
INNOVATION
Innovation will continue to be a key growth driver
We continually work with our manufacturing partners to
reduce our impact on the environment and improve our
carbon footprint. Some of our recent initiatives include:
equivalent (tCO2e), with a further 78 tCO2e saving
clearly ahead of original recipe, accounting for 59.1% of
from improving efficiencies in our offices.
total sales. This is a significant shift from 2014, when No
Our ongoing programme will identify further
Added Sugar sales accounted for 38.9% of total sales.
opportunities for greater efficiency and reduction in our
An area where we have made very good progress is in
carbon footprint through 2020 and beyond.
our Out Of Home business, where we have seen sugar
of our business as we evolve to meet ever changing
• The installation of a second reverse osmosis unit
consumer, customer and category needs. Underpinned
to reclaim up to 50,000 litres of water per day that
HEALTHIER FUTURE
in our products decrease by 46% since 2015.
by our category strategy, our product and packaging
otherwise would simply be water going to waste.
The Soft Drinks Industry Levy (SDIL) was introduced
innovation will focus on providing solutions which
address both the health and sustainability agenda. Our
objective is twofold, firstly to re-ignite growth in core
product segments, secondly to identify the new product
• Reducing the weight of our Aluminium 330ml cans by
1.8g, which means over the course of a year, we have
saved 54 tonnes of Aluminium.
segments of the future that will deliver both consumer
• Reducing the amount of PET plastic across our range,
and customer value growth.
Working in partnership with one of our largest
customers, we are really excited about our plans to
launch what we believe will be a first to market for the
1
6
with the overall effect being an annual saving of
90 tonnes of PET, with further initiatives stretching
into 2020, to remove a further 37 tonnes from our
bottles.
in April 2018. Our focus on reducing sugar has been
in place since 2012 and our work on reducing sugar
continues today, both in the UK and Internationally.
All our brands are exempt from SDIL in the UK and we
continue to reduce our sugar consumption as a whole
across the business. From 2015 to 2019, our sugar
usage has decreased by 1,491 tonnes while volume in
litres grew by 31%. Within Vimto, No Added Sugar now
accounts for 51% of our overall sales, which is up from
1
7
S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T
...FOR OUR COMMUNITIES
WAVES FOR CHANGE
SALFORD CITY FC
Our local communities are incredibly important to us
2019 was a fantastic year for Waves for Change (W4C)
For the past two years the Group’s Vimto brand has
on-going support we are looking forward to witnessing
and we undertake a number of community engagement
with more than 65 surf mentors delivering Surf Therapy
been a partner of Salford City FC and I’m delighted
the continued development of the players, Club and
initiatives.
to over 2,000 children per week across South Africa
with the number of successful initiatives to have come
Community.
WARRINGTON YOUTH CLUB
and Liberia. As the practice has been shared, so too
through the partnership.
has a new global initiative. The Wave Alliance provides
Throughout August we ran a number of Dragon’s Den
passionate people with the training, equipment and
workshops where the teams were challenged to come
the mentoring skills they need to bring the power of
up with a new innovative idea around healthy hydration.
evidence-based Surf Therapy to their home coastlines.
This culminated in a grand finale where the six groups
Surf Therapy now exists in Ghana, Liberia, Somalia,
of weekly winners came back to present their ideas
Trinidad, Peru, Costa Rica and Argentina.
Vimto supports the Academy 92, which recruits young
talented footballers from the Greater Manchester
region and gives them an opportunity to develop and
grow. As a business we are passionate about making
sure the youth around Salford’s community receives
the best opportunity to excel in their careers, whether
on 15 August 2019. The winning team, called Vim-Go,
presented an idea around on-the-go pods and straws.
A graduation ceremony (for all 300 students) was then
held on 19 September 2019 where we presented our
winning Dragons Den team with a cheque for £500,
which is used at the discretion of the youth club.
1
8
Nichols has continued to support W4C. From our offices
it is through football or the dedicated programme at
across the UK, boxes of new clothing were contributed
Trafford College, which all Academy players attend.
by employees and shipped to the children of the W4C
Academy 92 provides all recruits with life skills they
Liberia programme in Harper, landing just in time for
can use in the future in order to give the best possible
Christmas, with the support of our international freight
foundations to succeed.
forwarding partner, Bolloré. We are assisting The Wave
Alliance to expand into a new territory in Tanzania. We
will support a brand new specially designed TV advert,
which will be broadcast on Tanzanian national TV with
the support of our local bottling partner, with the aim
to encourage more local, not-for-profit organisations
to participate in the incredible work W4C achieve, by
improving vulnerable children’s mental wellbeing in
communities worldwide.
In 2019, as Salford City FC’s first team secure promotion
into the EFL League 2, Academy 92 players secured a
number of rewards. Five of the Under-18s were offered
professional contracts for the 2019-20 season, and
10 of the Under-16s who will be joining the Academy
as Under-17s in 2019-20. The Under-21s won the NW
Under-21 Development League this season, their first
season competing in the competition. Through our
1
9
S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T
OUR TEAM
We are keen to ensure all of our colleagues have the
In 2020, we are giving all of our colleagues “A day to
We care about the wellbeing of every single colleague
The following three measurements are a key indicator of
ability to make a positive impact on their own local
make a difference”, which we hope will effect a ripple of
and this was an area we included in our third employee
how the rest of our Vimto family is feeling:
communities. While Nichols plc is an international
kindness to our local communities to people of all ages.
business we understand the importance of remaining
Next year, I look forward to sharing examples of the
locally connected to our own communities wherever we
“ripples” I am sure we will make during 2020.
engagement survey at the beginning of 2019. 83%
of our colleagues responded to the survey and our
engagement score was very high, at 86%.
are in the UK.
Stirling
Newcastle
Leeds
Warrington
Haydock
Ross-on-Wye
Kent
95%
are proud to
WORK FOR VIMTO
95%
would like to
BE AT VIMTO IN
12 MONTHS TIME
90%
feel positive
ABOUT WORKING
FOR VIMTO
Following the survey we have three key areas we will strive to improve upon together:
improving
OUR VIMTO WAYS
OF WORKING
ensuring
OUR PEOPLE
REALISE THEIR
POTENTIAL
communicating
MORE EFFECTIVELY
OUR GROUP
STRATEGY
Swindon
Our policies with respect to human slavery, anti-bribery and whistleblowing can be found on our
website www.nicholsplc.co.uk.
We are a significant employer throughout the UK and
as the business continues to grow. Our people strategy
now have more than 350 colleagues working within the
is built around three very clear pillars – organisation,
organisation. We are passionate around developing our
people and structure – which uphold the values and the
own talent and during 2019, we made 22 promotions
culture we have nurtured for many years.
internally and made over 80 new people appointments
2
0
2
1
S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T
PROPORTION OF
males and females
WITHIN THE SENIOR
LEADERSHIP TEAM &
MANAGERS WITHIN THE
GROUP
69%
Hourly Pay
-13%
MEAN
MEDIAN
1%
Gender
PAY
GAP
REPORT
2019
Nichols plc
is pleased to
present its
gender pay
gap reporting
results as of 5
April 2019.
males and females
PROPORTION OF
IN EACH PAY QUARTILE
The proportion of males and females in
each pay quartile continues to reflect the
workforce with no substantial variances.
Investment in some of our group functions
created leadership opportunities, which has
contributed to the increase in the number
of females in management positions.
Opportunities for our employees to grow
and develop through the organisation is
improving following the implementation
of our talent framework, which is bringing
greater transparency and clarity to the
career pathways across the Group on both
a leadership and expertise axis. We will be
building on this in 2020.
employees
%
SPLIT BY GENDER
31%
Our Out of Home (OOH) technical, distribution and
manufacturing functions have continued to represent the
biggest growth - reflecting new customers secured in our OOH
channel in 2019. We continue to see a strong trend of males in
these roles reflective of the available talent pool in the market.
This will continue to be an area of focus going forward. During
2019, outside of these functions, two-thirds of roles recruited
were filled by females.
BOTTOM
66% 34%
THIRD
70% 30%
SECOND
72% 28%
TOP
68% 32%
60
50
40
30
20
10
0
SLT
Managers
Bonus
MEAN
-13%
MEDIAN
-2%
MALE
FEMALE
*Variance in male pay to female pay.
PROPORTION OF
males and females
RECEIVING A BONUS
Every employee has the potential to earn a bonus at Nichols
plc. For new employees, eligibility in their first year will be
based on their start date in the calendar year. Bonus is linked
to both Group performance and personal objectives. The
results opposite show those employees not eligible for a
bonus in 2019 due to their start date.
MALE
FEMALE
NOT
ELIGIBLE
18%
RECEIVED
82%
NOT
ELIGIBLE
17%
RECEIVED
83%
2
2
2
3
MALE
FEMALE
Marnie Millard OBE
Chief Executive Officer
25 February 2020
S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T
C H I E F O P E R A T I N G
O F F I C E R ’ S R E P O R T
M I L N E
C H I E F O P E R A T I N G O F F I C E R
2019 has again been a strong year for the whole Group with
both the UK and International regions contributing to the
growth of the business. This again highlights the strength
of our diversified business model, which gives us a strong
platform to drive success in the market place.
Total Group revenue grew by 3.5% to £147.0m. Sales of
our Still portfolio grew by 10.8% which was driven by the
excellent results in our Middle East region, reflecting an
exceptional sales performance during Ramadan 2019.
Carbonates declined by 2.6% as a result of the strong
comparatives in our UK business from the summer of 2018.
Our gross profit grew by 7.9%, ahead of revenue growth,
with gross margin improving to 47.6% from 45.7% in 2018.
This pleasing result demonstrates the continued success of
our “Value over Volume” strategy.
FINANCIAL HIGHLIGHTS
•
Revenue: +3.5% to £147.0m (2018: £142.0m)
•
Gross Profit: +7.9% to £70.0m (2018: £64.9m)
•
Profit Before Tax: +2.1% to £32.4m (2018: £31.8m)
“It filled me with immense
pride when The Grocer
awarded us ‘Soft Drinks
Supplier of the Year 2019’.
This is testament to the
exceptional people in our
business who continue
to deliver outstanding
results.”
UK SOFT DRINKS
(Statistics given below on the market are as measured
by Nielsen in the year to 28 December 2019.)
The soft drinks category remains intensely competitive
and promotionally driven, but we continue to add value
with our product innovation under the sub brand Remix,
growing at an impressive 30% and adding £3.2m to the
brand total year-on-year.
Vimto continues to outperform the market in Stills.
Vimto Squash achieved 8.7% growth versus a market
decline of 1.4%, whilst Vimto ready to drink has
outperformed the market by 5.1 percentage points.
All of our marketing campaigns in 2019 have been at
the core of driving the brand’s growth. Our ‘I see Vimto
in you’ campaign that was launched successfully in the
UK during 2018 was again used throughout 2019. The
In 2019, volumes in the £8.7bn UK soft drinks market
teams received external recognition from the industry
declined by 2.4%. However, value sales grew by 0.8%
for the success of the campaign by winning the Drum,
•
EPS (basic): +5.2% to 72.81p (2018: 69.23p)
against very strong comparatives in the prior year (2018:
Fab and Prolific North Awards. Our consumers continue
•
Strong balance sheet: £40.9m free cash (2018:
£38.9m)
•
Full year dividend: +6.0% to 40.4p (2018: 38.1p)
All of the partners we work with across our entire business
continue to play an important role in helping us to achieve
our success and I would like to thank them all for their
collaboration and support during 2019.
+7.8%).
Within the soft drinks market, value growth was seen
across Cola, Energy, Iced Coffee and Fruit Carbonate
categories. Fruit drinks, Plain and Flavoured Water and
Fruit Juice were all sectors in decline in 2019.
Vimto grew in line with the total market, adding £0.8m
to its brand value (Nielsen data) in the twelve month
period to a record £90.3m.
to love the brand, as demonstrated by us achieving our
highest ever household penetration in the UK at 6.7m
households (+500k households vs. 2018 as measured
by Kantar).
2
4
2
5
S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T
Within the UK packaged sector, the
We will continue to put our customers at the
exceptionally strong performance of our
heart of what we do to ensure we deliver
dilutes portfolio has been the key driving
long-term success together.
force of our success. We have achieved
sales revenue growth of 15% in 2019. This
UK ON-TRADE
has driven strong market share growth
(As measured by CGA Total Out of Home,
and has firmly consolidated our position
Licensed & Foodservice in the 12 months to
as the UK’s No.2 squash brand.
31 October 2019.)
Our continued focus on health has
Soft drinks remain a hugely important part
seen our ‘No Added Sugar’ portfolio
of Out of Home sales, particularly when
grow by 7% as consumer tastes and
we look at the Licensed sector total drinks
preferences continue to evolve.
sales mix. In Licensed outlets, soft drinks
Innovation has once again played
a crucial role in our success and
our Remix brand portfolio has
sales volume totals 750m litres annually,
representing a quarter share of total drinks
sales volume and nearly 15% of sales value.
delivered sales growth of 14%.
When we look at the trends in comparison
Offering new and exciting
to other categories in Licensed, the sales of
flavours is critical to bringing
soft drinks are in line with total drinks sales
new younger consumers into
and ahead of Beer, Cider & Wine. Soft drinks
the brand to ensure Vimto’s
sales are outperforming other categories,
longevity in the marketplace.
which have been greater impacted by
We continue to work in
collaboration with all of our
cautious consumer spending and a decline
in eating out visits compared to 2018.
customers across the UK
In the UK, sales of soft drinks in Licensed
grocery, foodservice, wholesale
& Foodservice combined saw a drop in
and discount channels. We
consumption during 2019 vs. 2018, as
were proud to have been
volume declined 2.2% to 1.8 billion litres for
awarded The Grocer’s ‘Soft
the year. This was driven by a 3.3% decline
Drinks Supplier of the Year
in Foodservice as well as the impact of the
Award’, voted by our customers
number of Licensed & Foodservice outlets in
who highlighted our strong
the UK declining 1.8%.
category management
approach, clear long-term
strategic focus and the high
quality of our sales people.
Sales by value are up 1.3% year-on-year at
£7.3bn for total Out of Home. Value over
volume sales have been driven through a
combination of premium sales in Licensed
and taxation from the Soft Drinks Industry
Levy.
The Out of Home channel has delivered
strong sales growth of 8% in 2019. A key
driver of this growth has been due to the
launch of our new ICEE Frozen Carbonated
range, with leading edge equipment, into
the cinema channel. We have delivered a
range of innovative flavours, supported by
a marketing campaign in venues and on
cinema screens.
Acquisitions have played a vital role in our
success within Out of Home in 2019. Having
acquired The Noisy Drink Company North
West Limited in 2018, we made a further acquisition
are pleased to have secured a new long-term
of one of our distributor partners, Adrian
partnership with Coca-Cola Europe Partners that
Mecklenburgh Limited (AML), in February 2019.
allows us to continue to offer our customers in the
AML sell both bag-in-box soft drinks and liquid
Out of Home channel bag-in-box Coca-Cola.
coffee via dispense equipment within the Kent
region and also has the rights to sell liquid coffee in
partnership with Douwe Egberts in both Kent and
Central London. This now gives us the opportunity
to enter the fast growing coffee market with a
strong branded partner in key UK geographies.
We have also opened a new state of the art
technical centre and showroom in Swindon allowing
our customers to see our world class equipment
and brands all under one roof. We have also
created a new technical apprenticeship scheme in
conjunction with local Governments, giving young
A key pillar of our long-term strategy is to offer
people the opportunity to learn new skills within
leading brands across all of our markets and we
our business.
2
6
2
7
S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T
VIMTO INTERNATIONAL
Despite the backdrop of difficult trading conditions in the
Middle East region, in 2019 we have delivered one of our
strongest ever Ramadan campaigns; a fully integrated
360-degree marketing campaign called ‘#Always Shining’,
coupled with outstanding in-store execution, delivered 8%
sales growth.
The ‘#Always Shining’ campaign focused on the evolving
role of Middle Eastern women in their diverse roles from a
warm, welcoming family home to the busy world of work.
Innovation has played a pivotal role in our success across
the region in 2019. One example of this is the launch of a
brand new blue raspberry flavour in still 250ml PET plastic
bottles and a 400ml carbonated range, which consumers
have reacted very positively to the flavour profile and the
products have made a significant contribution throughout
the campaign.
Against some challenging trading conditions in Africa,
we have again opened new markets within the continent
during the year. We have partnered with Bakhresa, who
are a well-established distributor within Tanzania and
launched a range of Vimto products across the various
trading channels. The products have been well received
by consumers during the season. Overall, sales within
our African region totalled £13.0m (2018: £13.6m), 3.8%
behind the prior year.
The momentum we have seen in the USA with our long-
standing partner, Ziyad, continues to progress well and
with a strong focus on in-store execution, double-digit
sales growth was delivered during the key summer trading
period.
Across our European markets, we have focused on driving
deeper distribution, which has resulted in new business
wins and strong revenue growth.
2
8
20 MILLION
BRAND LICENSING
OUR STRATEGY
Our brand licensing division ensure the iconic Vimto
We have continued to evolve our long-term strategy
flavour is enjoyed across a variety of ranges by our
during 2019 and have launched the ‘Vimto Home’ to
consumers and launched some exciting new products
ensure all of our people and partners have clarity on
during the year. A key highlight during 2019 was our
where we will prioritise our focus over the next few
Jelly Babies being awarded the ‘Grocer Best Product
years. Putting the customer right at the heart of our
Award 2019’.
strategic framework will be paramount to ensuring we
make long-term decisions with their objectives at the
front of our minds.
2
9
S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T
VIMTO
HOME
STRATEGIC GROWTH PILLARS
More from the Core
Core products, core customers,
core markets.
Whenever, Wherever
Right products, right place,
right time.
Thirst for New
Innovation and acquisition.
Happier Future
Let’s create one.
Our core brands continue to be loved by all of our
Through continuing to expand our portfolio of products,
Driving growth through innovation and acquisition will
A long-term plan built around sustainability is going to
consumers and customers and we will continue to
we have been able to enter brand new channels within
continue to be at the heart of our long-term growth
be vital in ensuring our business is successful for many
invest and drive growth in these key areas. 2019 has
the market place. 2019 has seen us enter the cinema
strategy. This pillar has delivered growth in the business
years to come. A full overview of our ‘Green House’ can
again shown how important our core products are,
channel in both the UK and Europe with our exciting
over many years and will continue to be a key area in
be viewed on page 14.
as demonstrated by the growth we have seen in our
ICEE brand. The consumer reaction has been very strong
which we will prioritise our efforts. Using consumer and
dilutes business in the UK and the cordial sales we have
and the approach of landing strong brands into new
market insights to understand the long-term trends will
delivered during Ramadan.
channels will be an important pillar of our long-term
be crucial in ensuring we carefully plan the evolution of
growth ambitions.
our business growth.
Summary
3
0
The economic and trading conditions continue to be challenging right across the globe. Having a clear, prioritised
strategy has always been at the heart of our business success and continuing to evolve our thinking is going to be
as important as ever. Our goal is to continue to grow our business doing the right things in the right way, to ensure
everyone connected to our brands and people have experiences that ‘Make Life Taste Better’.
3
1
S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T
MANAGEMENT
RISKS AND UNCERTAINTIES
The Group maintains a risk register which is reviewed
Management consider the following issues to be the
and managed by the senior leadership team on a
principal risks potentially affecting the business:
RISK
POTENTIAL IMPACT
MITIGATION
regular basis. As a result, the register is dynamic and
reflects the evolving business environment. The register
is also reviewed by the Group Audit Committee at each
meeting.
*New risk added to the Group risk register in 2019.
No risks have been removed from the prior year.
RISK
POTENTIAL IMPACT
MITIGATION
In common with many businesses we
Nichols operates a number of preventative
are highly dependent on the availability
systems and controls to reduce the risk.
of IT systems. Disruption to IT systems
In addition, we have a robust disaster
could limit availability of products and
recovery plan including the use of third
consequently reduce sales.
party professional providers to host our
systems and data.
The threat of cyber-attack is an ever
Nichols operates a number of preventative
present and indeed, ever growing risk
systems and controls to reduce the risk.
in today’s global business environment.
In addition, we have a robust disaster
Disruption to IT systems could limit
recovery plan including the use of third
availability of products and consequently
party professional providers to host our
reduce sales.
systems and data.
Loss of system
availability
Threat of
cyber-attack
Management consider there would be a
One of the key aims of our strategy is
risk to the Group’s growth ambitions if the
to invest and focus across our business
business was reliant on any one market or
activities to leverage the diversity of the
product category.
Our reliance on
Vimto as a brand
Group. The Group as a whole has again
delivered strong growth in the year,
further demonstrating the effectiveness of
this strategy.
Single source
supply of Vimto
concentrate
Introduction of
a Deposit Return
Scheme (DRS)
Unavailability of the Vimto compound
Working in partnership with our suppliers,
could significantly impact the Group’s
we have established production capability
revenue, therefore it is vital that we have
with dual suppliers at more than one
surety of supply of the compound.
location to ensure continuity of supply.
The UK Government is introducing various
As detailed in the Strategic Report on page
options to promote a reduction in the use
15, Nichols plc is working proactively with
of single use plastic and promote recycling.
the soft drinks industry via the British Soft
A DRS scheme is to be implemented in
Drinks Association and the Government to
Scotland from 2021, followed by the rest
find long-term solutions to this challenge.
of the UK in 2023. The Group will therefore
In the interim, we are implementing a
face legislative challenges that may
number of initiatives such as increasing
potentially increase complexity or cost.
the use of recycled plastic, sourcing paper
straws and encouraging our consumers to
recycle with on-pack messaging.
A health & safety incident, for example in a
The Group manages the health &
warehouse or on the road, could result in
safety regime via the Senior Leadership
serious injury or death or investigation by
Team supported by a cross business
the relevant authority.
Health & Safety
incident
Committee headed by our in-house
company solicitor. The Group will also
invest in a new Group H&S manager
during 2020, as part of putting additional
expertise and resource into this area.
The Committee oversees policy and
procedure and is developing a plan to
ensure appropriate risk assessments
and staff training are embedded across
the Group. The Committee also ensures
that the appropriate schedule of audits
are undertaken, which are resourced
externally where appropriate.
3
2
3
3
S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T
RISK
POTENTIAL IMPACT
MITIGATION
RISK
POTENTIAL IMPACT
MITIGATION
Following the UK’s exit from the European
The Group has considered a number
Union on 31 January 2020, the terms of an
of scenarios to manage the potential
as yet unspecified trading deal may impact
outcome of any Brexit deal achieved, to
upon the timeliness of imports of raw
ensure supply of products is maintained.
Impact of Brexit
materials and exports.
We are working closely with our supply
chain, warehouse and distribution
partners to secure additional capacity and
ensure that the supply of raw materials
and finished products is maintained. Whilst
the Group generates some sales in Europe,
the impact of any Brexit deal achieved is
not expected to have a material impact on
any future sales.
Failure to successfully complete identified
The Board review identified acquisition
acquisition opportunities could impact the
targets routinely, ensuring they align with
Group’s ability to implement strategy and
the Group’s strategy for growth. Full due
the intended pace of growth.
diligence is performed for all acquisitions,
using internal and external resources.
Failure to integrate completed acquisitions
The Group establishes project teams,
into the Group could impact the Group’s
consisting of cross functional key
ability to implement strategy and the
personnel, to oversee the integration of all
intended pace of growth.
acquisitions.
Failure to
successfully
complete identified
acquisition
opportunities *
Failure to integrate
completed
acquisitions *
Inconsistent quality or contamination
The business applies strict quality
of the Group’s products could reduce
controls for our manufacturers and seeks
demand for the Group’s products.
independent validation of these controls
by Global Food Safety Initiative (GFSI)
approved bodies such as the British Retail
Consortium (BRC).
Negative publicity affecting the brand
The business adheres to core values of
could reduce consumer demand for the
originality, authenticity and ethics which
Group’s products.
result in a strong brand.
Product quality
issues leading to
product recall
Loss of a major
customer account
or key partner
Loss of a major customer account or key
We are dedicated to maintaining long-term
partner could limit availability of products
relationships with all of our customers and
and consequently reduce sales.
key partners. However, the Group’s diverse
income stream across markets and regions
means we are not overly reliant on any
one customer or partner.
The introduction of new Government
The Group monitors its markets and any
legislation within either the UK or
potential changes in legislation. Where
overseas, could reduce demand for the
such changes are identified, the Group
Group’s products and significantly impact
considers a number of scenarios to
the Group’s revenue. In addition, new
manage the potential outcome, working
legislation could have an impact upon the
with our key partners as necessary. This
cost of production and limit availability of
can be evidenced by the introduction of
Introduction of
new Government
legislation *
our products.
the Sweetened Beverage Tax in the Middle
East, which came into effect in December
2019, where we have been working closely
with our long-standing partner in the
region to mitigate the potential impact to
the Group.
Negative publicity
affecting the
brand *
Andrew Milne
Chief Operating Officer
25 February 2020
3
4
3
5
S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T
REVIEW
Income Statement
Year ended
Year ended
31 December 2019
31 December 2018
Revenue
Gross Profit
GP%
Distribution expenses
Operating expenses excluding depreciation
and amortisation
EBITDA
Depreciation & amortisation excluding
impact of IFRS 16
Depreciation as a result of IFRS 16
Operating Profit
Operating profit margin
Finance income
Finance expense
Profit Before Tax
PBT %
Tax
Profit after tax
£m
147.0
70.0
47.6%
(7.4)
(25.6)
37.0
(3.5)
(1.0)
32.4
22.1%
0.2
(0.3)
32.4
22.1%
(5.6)
26.8
£m
142.0
64.9
45.7%
(7.2)
(23.8)
33.8
(2.2)
-
31.6
22.3%
0.2
(0.1)
31.8
22.4%
(6.2)
25.5
REVENUE
Group revenue for the year was £147.0m, an increase
which were 20.6% ahead of 2018, albeit against softer
of 3.5% compared to 2018. Excluding the acquisition of
prior year comparatives.
Adrian Mecklenburgh Limited (AML), like for like Group
revenue was £144.0m, an increase of 1.4% compared
to 2018.
The Carbonate category sales were £75.3m, 2.6% down
on the prior year (2018: £77.4m) which was indicative of
the industry wide slow-down in 2019 in comparison to
The year-on-year growth came entirely from the Still
2018, when we had the record summer weather.
category, where revenues increased by 10.8% to £71.7m
(2018: £64.7m). This growth was driven by the Vimto
dilutes category in the UK where sales were up 14.8%
and shipments of Vimto concentrate to the Middle East,
It is pleasing to report that both our UK and
International business delivered growth in the year,
which again demonstrates the value of our diversified
business model.
Revenue
UK
International
FY 2019
£m
117.5
29.5
FY 2018
£m
114.6
27.4
Movement
+2.5%
+7.5%
GROSS PROFIT
• £0.4m incremental uplift in wages & salaries
Gross Profit was £70.0m, an increase of 7.9% in
A credit of £1.0m has been recognised within operating
comparison to the prior year. The increase was relatively
expenses during the year, following a fair value
ahead of revenue performance due to the strong growth
assessment of the deferred consideration payable as
in the Middle East. As a result, Gross Margin improved to
part of the acquisition of AML.
47.6% from 45.7% in 2018.
DISTRIBUTION EXPENSES
Distribution expenses totalled £7.4m which was
a marginal (2.6%) increase on the prior year and
commensurate with UK revenue growth, which incurs
the majority of Nichols’ distributions costs.
Nichols plc adopted IFRS 16, Leases for the first time in
2019 (see note 24). The Group adopted IFRS 16 using
the modified retrospective approach, without the
restatement of comparative figures. This had the effect
of removing approximately £1.1m of lease charges
from operating expenses. However, the corresponding
increase in depreciation and finance charges negated
OPERATING EXPENSES EXCLUDING DEPRECIATION
any impact on Profit Before Tax.
AND AMORTISATION
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION
Operating expenses excluding depreciation and
AND AMORTISATION (EBITDA)
amortisation were £25.6m, an increase of £1.8m in
comparison to 2018.
The significant cost increases during the year were:
EBITDA for the year was £37.0m, an increase of 9.5%
(£3.2m) compared to the prior year.
As explained above, the adoption of IFRS 16 had the
• £1.3m incremental overheads from the acquisition
effect of inflating EBITDA by £1.1m due to the removal
of AML
• £1.0m net adverse forex cost in contrast to a gain
in 2018
of operating lease charges. EBITDA on a like for like
basis (i.e. excluding the impact of IFRS 16) would have
been £35.8m which would have been 5.9% ahead of the
3
6
3
7
S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T
prior year and still broadly in line with the Gross Profit
was 105% (2018: 91%). The cash conversion metric
EBITDA £37.0m (2018: £33.8m)
increase.
DEPRECIATION AND AMORTISATION
is calculated as ‘net cash generated from operating
activities’ as a percentage of ‘profit for the financial year’.
Like for like depreciation and amortisation has increased
to £3.5m from £2.2m in the prior year. The increase is
By exception, other points of note regarding the
Statement of Financial Position are as follows:
EBITDA is defined as profit before interest, tax,
depreciation and amortisation.
As mentioned above, Nichols has adopted IFRS16
during the year, which has a positive effect on EBITDA,
mainly caused by incremental depreciation of freezer
• There has been a significant increase in the value of
by adding back the expense previously referred to as
equipment, which supports the growth in our Out
property, plant and equipment during the year. The
operating lease charges. Therefore, the accounting
of Home business and additional amortisation of
NBV at the year end was £21.7m compared to £14.6m
change distorts the year on year comparison during
intangibles associated with recent acquisitions.
in 2018. Increased investment in freezer equipment
this year of transition. Without the IFRS 16 change, 2019
Additional depreciation as a result of adopting IFRS 16 is
approximately £1.0m for the year, which nets off against
a similar value of lease charges in prior years. Therefore,
there is no significant impact on Profit Before Tax from
to support the growth in our Out of Home business
EBITDA would have been £35.8m.
(£4.0m) and leased assets capitalised (£4.6m) due to
the adoption of IFRS 16, as mentioned elsewhere, are
the key contributors to this increase.
Tim Croston
Chief Financial Officer
25 February 2020
the adoption of IFRS 16 and no cash impact.
• The increase in goodwill of £4.1m is due to the
OPERATING PROFIT
acquisition of AML referred to above. The total
carrying value of goodwill at the year end was
Operating Profit for the year was £32.4m, an increase of
£38.6m (2018: £34.5m).
2.5% compared to 2018.
•
Inventories of £8.3m were held at the year end
The operating margin was 22.1% which was similar to
(2018: £7.2m), an increase of 16.7%. £0.3m of the
the prior year (2018: 22.3%).
increase is due to the inclusion of stocks owned by
FINANCE INCOME AND EXPENSE
Finance income of £0.2m (2018: £0.2m) relates to the
bank interest received during the year on the Group’s
cash deposits.
The finance expense of £0.3m (2018: £0.1m) is made up
of £0.2m relating to IFRS16 interest charges and a £0.1m
net interest charge for the defined contribution pension
scheme.
PROFIT BEFORE TAX (PBT)
Profit Before Tax was £32.4m for the year, an increase of
2.1% compared to the prior year (2018: £31.8m).
AML following the acquisition.
• Non-current liabilities – Trade and other payables.
The balance of £3.0m is largely the recognition of
lease liabilities as part of adopting IFRS 16 during
the year.
•
It is pleasing to see the pension obligation has
reduced to £0.3m (2018: £2.8m). The reduction in the
pension obligation is due to a significant increase in
the fair value of the scheme’s assets during the year.
KEY PERFORMANCE INDICATORS
The following Key Performance Indicators are used
by management to monitor the Group’s profit
The margin return on sales was 22.1% compared to
performance:
22.4% in the prior year.
TAXATION
Revenue Growth +3.5% (2018: +7.0%)
The increase in the current year’s revenue as a
The effective rate of Corporation Tax for Nichols plc in
percentage of the prior year’s value.
2019 was 17.2% (2018: 19.6%). This is lower than the
standard rate of 19%.
Gross Margin 47.6% (2018: 45.7%)
Nichols plc repatriates all worldwide profit to the United
Kingdom.
STATEMENT OF FINANCIAL POSITION
The Group cash balance at the end of 2019 was £40.9m
(2018: £38.9m).
Gross Profit as a percentage of revenue. This KPI is
monitored at segment (Still and Carbonate) and product
level.
Operating Profit Margin 22.1% (2018: 22.3%)
Group profit before financing income or expense as a
percentage of revenue. This is considered for the Group
Nichols plc’s business model continues to be very
as a whole rather than at product level.
cash generative, the operating profit cash conversion
3
8
3
9
S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T
172
STATEMENT
Under Section 172(1) of the Companies Act 2006,
The following disclosure describes how the Directors
a Director of a Company must act in the way he or
have had regard to the matters set out in Section 172(1)
STAKEHOLDER
GROUP
WHY WE ENGAGE
HOW WE ENGAGE
she considers, in good faith, would be most likely to
(a) to (f) and forms the Directors’ statement required
promote the success of the company for the benefit of
under section 414CZA of the Companies Act 2006.
its members as a whole, and in doing so have regard
(amongst other matters) to:
KEY STAKEHOLDERS
• the likely consequence of any decision in the
long-term
The Board considers its key stakeholders to be: its
employees, its customers, its suppliers, the community
in which it operates, the environment and its
• the interests of the Company’s employees
shareholders.
Customers
Communications and relationships with
The Nichols plc commercial teams have
our direct customers is a fundamental
continuous communications with our
ingredient to our success.
direct customers, through face-to-face
meetings, to understand their needs, seek
feedback, share our plans and nurture
collaborative working practice. We engage
with our end consumers through our on-
going promotional and advertising activity.
Given Nichols’ outsourced manufacturing
The Nichols plc supply chain team and
model, having long-term partnerships
senior management have regular review
with our suppliers and co-packers is
meetings with our supplier base.
essential. Our suppliers are fundamental
to the quality of our products and to
Suppliers
ensuring that as a business we meet the
high standards of conduct that we set
ourselves.
HOW THE GROUP ENGAGES WITH ITS KEY STAKEHOLDERS
STAKEHOLDER
GROUP
WHY WE ENGAGE
HOW WE ENGAGE
The Group’s long-term success is
Regular meetings take place with staff
The Group cares about its community
Nichols plc supports a number of local
and understands the importance of giving
charities including Warrington Youth Club
back to help and inspire others to achieve,
which provides facilities, opportunities and
developing positive relationships and
support to children in our community. In
maintaining a strong reputation within the
addition, the Group supports Salford City
predicated on the commitment of
groups to share Group strategy and seek
The Community
community.
Employees
our employees to our purpose and its
feedback. The Group also conducts a
demonstration of our values on a daily
biennial staff engagement survey with
basis. To maintain our competitive
current staff engagement measured at
advantage and meet the growing demands
86%.
FC and its Club Academy 92, to support
aspiring football stars, developing their
skills and education through a dedicated
partnership. In 2020, the Group is giving
all colleagues “A day to make a difference”,
which we hope will effect a ripple of
kindness to our local communities to
people of all ages.
• the need to foster the Company’s business
relationships with suppliers, customers and others
• the impact of the Company’s operations on the
community and the environment
• the desirability of the Company maintaining a
reputation for high standards of business conduct
• the need to act fairly between members of the
Company.
of the environment in which we operate,
we need a workforce which is adaptive
and whose skill base constantly evolves.
We also value workers with long-term
practical experiences. We engage with our
workforce to ensure that we are fostering
an environment that they are happy to
work in and that best supports their
well-being.
4
0
Nichols plc is aware of its environmental
In addition to the work we have already
responsibilities and whilst all its current
undertaken, we are looking at increasing
packaging is already recyclable, the Group
the proportions of recycled plastic which
is working with suppliers and customers to
is already at 51% in our cordial range. In
The Environment
reduce plastic waste as part of its “Happier
addition, Nichols plc is an active member
Future” strategy.
of the British Soft Drinks Association,
which has reducing plastic waste high on
its agenda.
4
1
S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T
STAKEHOLDER
GROUP
WHY WE ENGAGE
HOW WE ENGAGE
BOARD DECISION
CONSIDERATIONS
Continued access to capital is of vital
The Executive Directors meet our
The Board reviewed the results of an employee
Consideration of the feedback provided by employees
importance to the long-term success of
shareholders on a number of occasions
engagement plan and agreed a number of initiatives to
who completed the survey and taking appropriate
our business. Through our engagement
throughout the year and aim to have
be carried out by the senior leadership team.
actions is critical for employees to engage in the
Shareholders
in into our strategic objectives and how we
Investor roadshow meetings are
activities, we strive to obtain investor buy-
an open dialogue to receive feedback.
go about executing on them. We create
undertaken at least twice a year following
value for our shareholders by generating
the preliminary and interim results
strong and sustainable results that
announcements. We use our AGM, which is
translate into dividends. We are seeking to
held at our head office, as an opportunity
promote an investor base that is interested
for all Board members to interact with our
in a long-term holding in the Group.
shareholders on a one to one basis and
take questions as they arise. In addition,
our Executive Directors specifically
seek to meet retail investors at investor
conferences and events and are available
to meet shareholders on request and at
a number of ad-hoc meetings, which are
held during the year. Any shareholder
feedback we receive via our meetings or
otherwise is discussed at Board meetings.
Shareholders also have the opportunity to
field any questions that they may not want
to be asked directly of the Board to the
Non-Executive Directors.
process and for positive changes to be implemented.
When determining which actions would be
implemented, the Board considered the financial
consequences and the impact on long-term value and
growth for the shareholders.
The Board agreed to seek external company secretarial
The need to ensure that all governance requirements
support.
were covered, thus protecting shareholder interests
and increasing transparency.
The Board agreed to instigate a full external review of
The interests of all stakeholders, particularly
all health and safety provisions within the Group.
employees and the community and environment in
which the Group operates.
The Board determined the on-going dividend policy.
The Board considered the need to balance duties owed
to shareholders in short-term, whilst acknowledging
the need to foster the long-term success of the
business.
The Board held talks outside the usual Board meeting
The need for transparency and to ensure an accurate
cycle and discussed and agreed the need to inform
information flow to the market, particularly concerning
the market of the likely impact of Saudi Arabian and
expected future performance of the Group.
KEY BOARD DECISIONS DURING THE YEAR
The Board considers the following to be the key decisions and considerations it has made during the year to 31
December 2019:
UAE tax authorities’ implementation of an excise tax of
50%, to be levied on the retail price of non-carbonated
sweetened drinks. An announcement was made to the
market on 23 December 2019.
BOARD DECISION
CONSIDERATIONS
The Board considered and agreed the long-term IT
The need to put in place a comprehensive and
strategy for the business.
workable IT system that will serve the business in the
long-term. This impacts all stakeholders, particularly
employees, customers and suppliers. A robust IT
system is the foundation for maintaining the trust of all
our external stakeholders.
The Board agreed the final dividend for 2018 of 26.8p
The need to address the interests of shareholders
per share.
4
2
in the context of the long-term, whilst maintaining
appropriate levels of reserves to run the business
effectively.
The Board considered and agreed the appointment of
The need to recruit a talented individual who was
a new Chief Financial Officer.
the right fit and understood both the culture and
ethos of the business, as well as the requirements
of shareholders and the market. The need to also
consider long-term succession planning in terms of
future Board development.
Approved by the Board on 25 February 2020.
4
3
G O V E R N A N C E
G O V E R N A N C E
Directors'
REPORT
Nichols plc (the “Company”) is incorporated as a public
FINANCIAL RISK MANAGEMENT OBJECTIVES AND
SHARE OPTIONS
limited company and is registered in England with the
POLICIES
registered number 00238303. The Company’s registered
office is Laurel House, Woodlands Park, Ashton Road,
Newton-le-Willows, WA12 0HH.
Business risks and uncertainties are included within
scheme. In conjunction with this, it makes donations to
the Risk Management section on pages 32 to 35 and
an Employee Share Ownership Trust to enable shares
The Company operates a Save As You Earn share option
financial risks are set out in note 21 to the financial
to be bought in the market to satisfy the demand from
DIRECTORS’ RESPONSIBILITIES STATEMENT
The Directors present their report for the year ended 31
statements.
option holders.
December 2019, in accordance with section 415 of the
Companies Act 2006.
RESULTS AND DIVIDENDS
EMPLOYEES
RESEARCH AND DEVELOPMENT
report and the financial statements in accordance with
The Group’s policy is to recruit and promote on the
The Group undertakes research and development
applicable law and regulations.
basis of aptitude and ability without discrimination
activities in order to develop its range of new and
Company law requires the Directors to prepare financial
The Group’s Profit Before Taxation from continuing
of any kind. Applications for employment by disabled
existing products. Expenditure during the year on
statements for each financial year. Under that law
operations for the year ended 31 December 2019
people are always fully considered bearing in mind the
research and development amounted to £0.1m (2018:
the Directors have elected to prepare the Group and
amounted to £32.4m (2018: £31.8m). The Directors will
qualification and abilities of the applicants. In the event
£0.1m).
recommend a dividend of 28.0p at the forthcoming AGM
of employees becoming disabled, every effort is made to
GOING CONCERN
Company financial statements in accordance with
International Financial Reporting Standards (IFRSs) as
adopted by the European Union. Under company law
have taken as Directors in order to make
themselves aware of any relevant audit information
and to establish that the auditors are aware of that
information.
The Directors are responsible for preparing the annual
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
The Group’s business activities, together with the factors
the Directors must not approve the financial statements
likely to affect its future development, performance and
unless they are satisfied that they give a true and fair
position are set out in the Strategic Report on pages 9
view of the state of affairs of the Group and Company
to 43. The financial position of the Group is described in
and of the profit or loss of the Group for that period.
the Financial Review on pages 36 to 39.
The Directors are also required to prepare financial
The Company does not make any political donations and
After making the appropriate enquiries, the Directors
does not incur any political expenditure.
have concluded that the Group will be able to meet
statements in accordance with the rules of the London
Stock Exchange for companies trading securities on AIM.
SHARE CAPITAL
its financial obligations for the foreseeable future
In preparing these financial statements, the Directors
and therefore have a reasonable expectation that
are required to:
The resolutions concerning the ability of the Board
to purchase the Company’s own shares and to allot
the Company and the Group overall have adequate
resources to continue in operational existence for the
shares are again being proposed at the Annual General
foreseeable future (being at least one year following the
• select suitable accounting policies and then apply
them consistently;
Meeting.
date of approval of this annual report) and, accordingly,
• make judgements and accounting estimates that are
(2018: 26.8p).
DIRECTORS
The Directors who have held office during the year
ended 31 December 2019 and to date are as follows:
Non-Executive Directors
P J Nichols
J Gittins
H Keays
Executive Directors
M J Millard
T J Croston
A Milne
The roles and biographies of the Directors in office as at
the date of this report are set out on pages 48 to 49.
takes as its major criterion the effect of such purchases
AUDITORS
In exercising its authority in respect of the purchase
and cancellation of the Company’s shares, the Board
on future expected earnings per share. No purchase is
made if the effect is likely to be deterioration in future
MATTERS COVERED IN THE STRATEGIC REPORT
expected earnings per share growth. During the year,
The Company has chosen in accordance with section
the Company did not purchase any of its own shares.
414C of the Companies Act 2006 (Strategic Report and
The Board believes that being permitted to allot shares
Directors’ Report) Regulations 2013 to set out in the
within the limits set out in the resolution without the
consider it appropriate to adopt the going concern basis
reasonable and prudent;
in preparing the financial statements.
General Meeting that BDO LLP be re-appointed auditors.
• prepare the financial statements on the going
In accordance with Section 489 of the Companies
Act 2006, a resolution will be proposed at the Annual
Each of the Directors who are Directors at the time when
this Directors’ Report is approved have confirmed that:
• 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;
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
Company’s Strategic Report information required by
delay and expense of a general meeting gives the ability
• so far as each of the Directors is aware there is no
schedule 7 of the Large and Medium-sized Companies
to take advantage of circumstances that may arise
relevant audit information of which the Company’s
and Groups (Accounts and Reports) Regulations 2008.
during the year.
auditor is unaware; and
4
4
4
5
• the Directors have taken all steps that they ought to
of the Company and enable them to ensure that the
G O V E R N A N C E
G O V E R N A N C E
Summary of Directors’ Interests in the Company
(Number of Shares)
Opening shareholding
2019 movement
Closing shareholding
P J Nichols
M J Millard
T J Croston
A Milne
J Gittins
H Keays
2,000,000
10,442
17,324
1,665
1,280
0
0
0
(4,134)
(757)
0
0
2,000,000
10,442
13,190
908
1,280
0
financial statements comply with the requirements of
The Remuneration Committee have considered it
the respective schemes are shown in the Remuneration
the Companies Act 2006. They are also responsible for
appropriate to issue awards under Long-Term Incentive
Committee Report on pages 56 to 57.
safeguarding the assets of the Company and hence
Plans (LTIPs) relating to growth in profit before tax
for taking reasonable steps for the prevention and
before exceptional items. The LTIPs will be equity settled
detection of fraud and other irregularities.
and are being accounted for through other reserves.
WEBSITE PUBLICATION
Total bonuses paid to the three Executive Directors
The Directors are responsible for ensuring the Annual
during the year were £381,000. All bonuses were
Report and the financial statements are made available
accrued for at 31 December 2018.
on a website. Financial statements are published on
the Company’s website in accordance with legislation
There are currently three LTIPs in place. The first runs
in the United Kingdom governing the preparation
from 1 January 2017 to 31 December 2019, the second
and dissemination of financial statements, which
runs from 1 January 2018 to 31 December 2020 and the
may vary from legislation in other jurisdictions. The
third runs from 1 January 2019 to 31 December 2021.
maintenance and integrity of the Company’s website
The remuneration level at grant for all three LTIPs was
is the responsibility of the Directors. The Directors’
linked to a theoretical number of shares equivalent in
responsibility also extends to the ongoing integrity of
value to no more than twelve months salary for each
the financial statements contained therein.
year of the incentive scheme.
A summary of Directors’ interests in the Company are
shown in the table opposite.
All figures above relate to shares owned outright.
Tim Croston
Secretary
25 February 2020
Laurel House, Woodlands Park,
Ashton Road, Newton-le-Willows, WA12 0HH.
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.
The Group has provided for a potential bonus of
£522,000 under the first LTIP, £76,000 under the
second LTIP and £nil under the third LTIP through other
Registered in England and Wales No. 00238303.
reserves for the Executive Directors as at 31 December
2019. This is based on performance against Profit Before
DIRECTORS’ REMUNERATION
Tax growth targets.
Bonuses which are not guaranteed are accruing to
P J Nichols is a member of the final salary pension
the Executive Directors and certain senior executives
scheme and M J Millard, T J Croston and A Milne have a
based on pre-determined performance targets.
personal pension plan. The Company contributions to
4
6
4
7
G O V E R N A N C E
G O V E R N A N C E
BOARD
John
N I C H O L S
N O N - E X E C U T I V E
C H A I R M A N
Marnie
M I L L A R D O B E
C H I E F E X E C U T I V E
O F F I C E R
Tim
C R O S T O N
C H I E F F I N A N C I A L
O F F I C E R
Andrew
M I L N E
C H I E F O P E R AT I N G
O F F I C E R
John
G I T T I N S
I N D E P E N D E N T
N O N - E X E C U T I V E D I R E C T O R
Helen
K E AY S
I N D E P E N D E N T
N O N - E X E C U T I V E D I R E C T O R
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 as
well as being a non-executive director
with Finsbury Food Group and Chair
of UA92.
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 September 2017, Tim was appointed
Group Audit Chair and Non-Executive
Board member of The Riverside Group
Limited, 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.
Tim has fifteen years’ experience in
the soft drinks industry after originally
qualifying in practice as an ACCA
accountant in July 1993. Subsequently,
he has gained a broad experience
in a number of business sectors
working in both the UK and overseas.
In addition to the role of CFO, Tim
leads the Group’s Investor relations
and is responsible for the IT and Legal
functions.
In July 2019, Tim announced his
intention to step down from the
Board after a fifteen year career with
Nichols. In October 2019, the Company
announced that David Rattigan will
join the Group as Tim’s successor on
24 February 2020. Tim and David will
work together for a period of time to
ensure a smooth transition.
4
8
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
and promoted to the role of Group
Chief Operating Officer in July 2019.
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 (NED) 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
Appreciate 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 Non-Executive Director
at Dominos Pizza Group plc and a
member of their Remuneration, Audit
and Nomination Committees. She has
previously held NED roles at Majestic
Wines plc, Skin Clinics, Chrysalis plc
and Communisis 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.
4
9
G O V E R N A N C E
G O V E R N A N C E
Corporate
GOVERNANCE STATEMENT
CHAIRMAN’S INTRODUCTION
STRATEGY AND BUSINESS MODEL
shareholders (as detailed above), our employees, our
the organisation. The Group has a comprehensive risk
customers, our suppliers, our community and the
register which is maintained by the senior leadership
I have pleasure in introducing Nichols’ Corporate
Principle 1 of the Code requires that companies
Governance Statement. The Board continues to be
establish a strategy and business model which promote
environment.
committed to supporting high standards of corporate
long-term value for shareholders. Our strategy is set out
OUR EMPLOYEES
governance and in this section of the Annual Report,
in the Strategic Report on pages 30 to 31. The Annual
we set out our governance framework and describe
Report also contains a Section 172 statement which
the work we have done to ensure good corporate
shows how the Directors have fulfilled their duties
governance throughout Nichols plc and its subsidiaries
and obligations to ensure the long-term success of the
(‘the Group’).
Last year we opted to follow the Quoted Companies
Alliance Corporate Governance Code (the ‘Code’) and
we continue to feel that this is the most appropriate
Code for us, as an AIM listed company. The report
below is organised under headings which show how the
Company has complied with the ten broad principles of
the Code. We have included our Section 172 statement
within the Strategic Report on pages 40 to 43. A
business. The Group’s Executive Directors and senior
leadership team have a separate forum which meets
throughout the year to focus on the delivery of the
Group’s three year rolling strategic plan, which is set
by the Board. The progress in delivering the strategy is
reported up to the Board, which both challenges and
supports the senior leadership team. The strategy is
communicated to all staff members at corporate team
briefs and separate team meetings.
Section 172 statement is a new requirement under
SHAREHOLDER RELATIONS
The Companies (Miscellaneous Reporting) Regulations
2018, which came into effect on 1 January 2019 and
relates to the Directors’ duty to promote the success of
the Company, which is prescribed in Section 172 of the
Companies Act 2006.
Under Principle 2 of the Code, the Company must
seek to understand and meet shareholder needs and
expectations. In order to achieve this, the Executive
Directors meet our shareholders on a number of
occasions throughout the year and aim to have an
In the following sections, we have outlined how we
open dialogue to receive feedback. Investor roadshow
effect this code. Further detail on our approach to
meetings are undertaken at least twice a year following
corporate governance can be found at
the preliminary and interim results announcements.
www.nicholsplc.co.uk/Home/Aim26.
We use our AGM, which is held at our head office,
John Nichols
Non-Executive Chairman
as an opportunity for all Board members to interact
with our shareholders on a one to one basis and take
questions as they arise. In addition, our Executive
Directors specifically seek to meet retail investors at
investor conferences and events and are available to
meet shareholders on request and at a number of
ad-hoc meetings, which are held during the year. Any
shareholder feedback we receive via our meetings or
otherwise is discussed at Board meetings.
OUR STAKEHOLDERS
Principle 3 of the Code requires that the Company
takes into account wider stakeholder and social
responsibilities and their implications for long-term
success. We consider that our stakeholders are: our
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
Regular meetings take place with staff groups to share
Register is also a fixed item on the Audit Committee
Group strategy and seek feedback. The Company also
agenda and used as a reference source for the internal
conducts a biennial staff engagement survey with
audit plan. The risk focussed reviews are led by
current staff engagement measured at 86%.
individual teams within the Company. The significant
OUR CUSTOMERS
risks and related mitigation/ control are disclosed in the
Strategic Review on pages 32 to 35.
Communications with our customers is a fundamental
ingredient to our success. The Nichols plc team
THE BOARD
have continuous communications with customers to
Principle 5 of the Code requires the maintenance of the
understand their needs, share our plans and nurture
Board as a well-functioning, balanced team led by the
collaborative working practice.
Chair.
OUR SUPPLIERS
Given Nichols’ outsourced manufacturing model, having
long-term partnerships with our suppliers and co-
packers is essential. The Nichols plc supply chain team
and senior management have regular review meetings
with our supplier base.
OUR COMMUNITY
The Board is led by our Non-Executive Chairman, John
Nichols and includes two independent Non-Executive
Directors, John Gittins and Helen Keays, who both have
significant experience of plc directorships. The current
Board has good gender equality with two female and
four male members.
There are two Board Committees: the Audit Committee
and the Remuneration Committee, which are chaired by
The Group cares about its community, in particular
the two independent Non-Executive Directors. Details
Nichols plc supports Warrington Youth Club, which
of attendance at the two Board Committee meetings
provides facilities, opportunities and support to children
are disclosed in the Audit Committee Report and
in our community.
THE 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 at 51%
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.
RISK MANAGEMENT
The fourth principle of the Code requires that
the Company embed effective risk management,
considering both opportunities and threats, throughout
Remuneration Committee Report on pages 55 and 57
respectively.
There were six Board meetings held during the year.
The following table sets out individual attendance by
members:
DIRECTORS
P J Nichols
J Gittins
H Keays
M J Millard
T J Croston
A Milne
MEETINGS ATTENDED
6
6
5
5
6
6
5
0
5
1
G O V E R N A N C E
G O V E R N A N C E
CHAIR’S ROLE
DIRECTORS’ SKILLS AND CAPABILITIES
The Remuneration Committee evaluates Executive
and the Audit and Remuneration Committees meet at
Our Non-Executive Chairman is John Nichols who is the
Principle 6 of the Code requires that the Directors
grandson of our founder, John Noel Nichols.
ensure that between them they have the necessary up-
As Chair, Mr Nichols’ primary responsibility is to
to date experience, skills and capabilities.
effectively lead the Board and ensure that the Group’s
The current Nichols plc Board has significant sector,
corporate governance is appropriate, communicated
financial and plc experience and the Executive Directors
and adopted across the business activities. The
have many decades of broad experience in the soft
Director performance, alongside remuneration and
least two times a year. Nichols plc has robust internal
reward.
The Audit Committee engages with the Company’s
external auditors biannually and holds discussions
on the financial systems, procedures and efficacy of
management.
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
Chairman is also responsible for ensuring the Board
drinks industry.
A rigorous recruitment process is undertaken for new
business.
agenda concentrates on the key operational and
financial issues effecting the delivery of Nichols plc’s
strategy.
With the support of our NOMAD and our advisors, the
Directors prior to their proposal and election.
The plc website www.nicholsplc.co.uk describes the
Board training and development needs are met. The
For the recent appointment of David Rattigan as Group
roles and terms of reference for the Committees.
Company’s in house legal counsel presents to the Board
CFO, the Board appointed a market leading recruiter
Whilst Mr Nichols shareholding and long association
regularly on legal and regulatory topics and a written
to provide a shortlist of suitable candidates with the
with the business means that he is not regarded as an
report on governance developments is presented at
required experience and ability. From this shortlist,
SHAREHOLDER AND STAKEHOLDER
COMMUNICATIONS
independent Chairman, he is not involved in the day to
each Board meeting by the Prism Cosec, the Company’s
a series of interviews were performed between
Principle 10 of the Code requires communication
day operations of Nichols plc, those responsibilities are
corporate governance advisors.
candidates and members of the Board, after which,
on how the Company is governed and performing
managed by the Group’s CEO, Marnie Millard.
Biographies on all Directors giving details of their
NON-EXECUTIVE DIRECTOR’S ROLE
experience and roles on the Board are shown on pages
Nichols plc has two independent Non-Executive
48 to 49.
Directors (NED’s) John Gittins and Helen Keays. The
BOARD PERFORMANCE AND EVALUATIONS
NED role is to provide oversight and scrutiny of the
performance of the Executive Directors. John and
Helen chair the Audit and Remuneration Committees
respectively.
EXECUTIVE DIRECTORS
Principle 7 of the Code requires that the Board and
Committees evaluate their own performance based
on clear and relevant objectives and seek continuous
improvement.
The first formal Board performance evaluation was
There are three Executive Directors: Marnie Millard,
undertaken in December 2018 and reported to the
Andrew Milne and Tim Croston. The Executive Directors
February 2019 Board. The performance evaluation was
the Board finalised its decision on which candidate to
by maintaining a dialogue with shareholders and
appoint to the role.
Prior to the proposal for re-election at the AGM, the
performance of the Independent Non-Executive
Directors is reconsidered to ensure they remain effective
in their role and that they retain their independence.
other relevant stakeholders. Communications with
shareholders are explained in Principle 2 above. In
addition to the interim and full year investor roadshows,
regular meetings are held with analysts, retail investor
groups and perspective investors. The plc website
contains information about the business activities,
Re-election is considered by the shareholders at the
access to all RNS announcements and copies of the
AGM at which shareholders have the opportunity to
Report and Accounts (R&A). The plc website also
approve or otherwise Board membership.
includes historical announcements, as well as the R&A
Succession planning for the Board is an ongoing topic of
discussion.
for more than the minimum five years. The work of the
Audit and Remuneration Committees is described on
pages 54 to 57.
are responsible for managing the delivery of the
led by the Group’s People Director and took the form of
CORPORATE CULTURE
business plans within the strategy set by the Board.
a standard evaluation questionnaire completed by each
Non-Executive Directors communicate directly with
member of the Board.
Principle 8 of the Code requires that the Company
promote a corporate culture that is based on ethical
Executive Directors and senior management between
Further to the completion of the formal Board
values and behaviours.
formal Board meetings. The Board met five times in the
evaluation at the end of 2018 a number of actions
year. In addition, the Board held strategy days to review
were identified and have been progressed during 2019,
growth opportunities and priorities across the medium
including:
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
• Appointment of an independent Company Secretary
success of the Group for many years. Our culture is
to support the effectiveness of the Board annual cycle
reflected in our values and the overarching theme of our
Nichols plc is very proud of its warm and inclusive
culture. It is our people and how they go about their
business that has been fundamental to the sustained
values is ‘doing the right thing’. The Group conducted its
third employee engagement survey at the beginning of
2019, as detailed on page 21 of the Strategic Report.
affairs to enable them to fulfil their duties as Directors.
•
Increased the involvement of the senior leadership
In the event that Directors are unable to attend a
team in Board meetings to discuss progress against
meeting, their comments on papers to be considered
strategic priorities across the Group
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.
•
In line with the growth of the Group’s UK channels,
GOVERNANCE STRUCTURE
create opportunities for the Board to visit
Principle 9 of the Code requires that the Company
and experience our diverse operations across the UK.
maintain governance structures and processes that are
fit for purpose and support good decision making by
the Board. The Nichols plc Board meets five times a year
5
2
5
3
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
• reviewing the Group’s risk management process, key
INTERNAL CONTROL
ATTENDANCE AT AUDIT COMMITTEE MEETINGS
ROLE OF THE EXTERNAL AUDITOR
sound internal control systems to safeguard the
during the year. The following table sets out individual
The Board has overall responsibility for maintaining
There were three Audit Committee meetings held
the Audit Committee Report for the year ended 31
risk register and risk mitigations.
December 2019.
MEMBERS OF THE AUDIT COMMITTEE
The Audit Committee consists of all three Non-Executive
the external auditor, BDO LLP, to ensure that auditor
Directors and is chaired by myself, John Gittins. Helen
independence and objectivity are maintained. Noting
Keays and I are considered independent Directors. John
the tenure of BDO LLP (auditor since 2014), the
Nichols is not considered independent as a result of his
Committee will keep under review the need for external
The Audit Committee monitors the relationship with
investment of shareholders and the Group’s assets. The
attendance by members:
systems are reviewed by the Board and, when asked,
the Audit Committee and are designed to provide
AUDIT COMMITTEE
reasonable, but not absolute, assurance against material
NON-EXECUTIVE DIRECTORS
MEETINGS ATTENDED
misstatement or loss.
significant shareholding and previous executive role.
tender. The external auditor is not engaged to perform
The key features of the internal control systems are:
The Board is satisfied that I, as Chair of the Committee,
any non-audit services, in line with the Group’s policy. A
have recent and relevant financial experience. I am a
summary of remuneration paid to the external auditor is
chartered accountant and am currently chair of the
provided in note 4 of the financial statements. The Audit
• a Group organisational structure with clear lines of
responsibility;
audit committees of Appreciate Group plc and Hill
Committee also assesses the auditor’s performance.
• comprehensive business planning procedures,
Chair of the Audit Committee
Dickinson LLP.
The Audit Committee met three times during the year.
Having reviewed the auditor’s independence and
performance, the Audit Committee has concluded that
these are effective and recommends that BDO LLP be
The Audit Committee’s terms of reference are available
re-appointed as the Group’s auditor at the next AGM.
on the Group’s website. Its principal responsibilities
include monitoring the integrity of financial reporting,
AUDIT PROCESS
including annual preparation of detailed budgets for
25 February 2020
the year ahead and projections for future years;
• comprehensive monthly financial reporting system,
highlighting variances to budget and regularly
updated forecasts;
internal controls and the external audit process.
The auditor prepares an audit plan for the review of the
• targeted, risk lead, internal reviews by the finance
J Gittins
P J Nichols
H Keays
John Gittins
3
3
2
DUTIES
full year financial statements. The audit plan sets out
the scope of the audit, areas to be targeted and audit
During the year, the Audit Committee discharged its
timetable. This plan is reviewed and agreed in advance
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
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
matters. The Committee is comfortable that the policy is
regularly communicated.
INTERNAL AUDIT
operating effectively.
ANTI-BRIBERY
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
and interim results statements and reviewing the
At present, the Group does not have an internal audit
external auditor’s detailed reports thereon, including
function and the Committee believes that management
disposition of key audit matters and risks;
is able to derive assurance as to the adequacy and
effectiveness of internal controls and risk management
procedures without one.
• 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;
5
4
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.
5
5
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 2019
The remuneration policy for 2020 will operate as follows:
Salary
and fees
Benefits
in kind
Bonuses payable in
respect of 2019
Pension
contributions
Total
2019
Total
2018
£’000
£’000
£’000
£’000
£’000
£’000
101
356
251
241
40
40
1,029
1
5
5
19
-
-
30
-
216
149
113
-
-
478
-
10
10
10
-
-
102
587
415
383
40
40
102
502
371
344
40
40
30
1,567
1,399
P J Nichols
M J Millard
T J Croston
A Milne
J Gittins
H Keays
Total
Executive Directors
M J Millard
T J Croston*
D Rattigan
A Milne
Non-Executive Directors
P J Nichols
J Gittins
H Keays
Total
Basic salary/ fee
Maximum
£’000
355
40
210
268
101
40
40
1,054
bonus
110%
110%
75%
75%
-
-
-
Pension
£’000
10
10
10
10
-
-
-
40
*T J Croston will step down from the Board as Group CFO as of 2 March 2020.
I am pleased to present this remuneration report, which
between both fixed and performance-related elements.
The Executive Directors were eligible for an annual
Before Tax for the financial years in question. The
sets out the remuneration policy and the remuneration
Remuneration is reviewed each year in light of the
bonus relating to profit, strategic and personal metrics.
performance thresholds are not disclosed as they are
paid to the Directors for the year.
Group’s business objectives. It is the Remuneration
Achieving stretch targets would have given rise to a
considered to be commercially sensitive, but represent
MEMBERS OF THE REMUNERATION COMMITTEE
achievement of objectives aligned with shareholders’
in a bonus of 56% of base pay (2018: 69%).
Committee’s intention that remuneration should reward
bonus of 110% of base pay. Actual performance resulted
outperformance to current market consensus.
Remuneration consists of the following elements:
year are disclosed in the table above. In 2020, the bonus
The Remuneration Committee consists of all three
interests over the medium-term.
Non-Executive Directors and is chaired by myself, Helen
Keays.
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
• Basic salary;
• Benefits;
• Performance-related annual bonus;
• Long-Term Incentive Plan; and
• Pension contribution.
NON-EXECUTIVE DIRECTORS
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
The objective of the Group’s remuneration policy is
Board.
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
DIRECTORS’ REMUNERATION
The above table summarises the total gross
remuneration of the Directors who served during the
year to 31 December 2019.
5
6
Maximum bonus opportunities for the 2020 financial
MEETINGS
ATTENDANCE AT REMUNERATION COMMITTEE
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%
There were two Remuneration Committee meetings
held during the year. The following table sets out
individual attendance by members:
for a stretch performance. Challenging targets have
REMUNERATION COMMITTEE
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
NON-EXECUTIVE DIRECTORS
MEETINGS ATTENDED
J Gittins
P J Nichols
H Keays
2
2
2
Awards to Executive Directors under share-based
Helen Keays
Long-Term Incentive Plans are underpinned by financial
Chair of the Remuneration Committee
performance measures. The Group has three Long-Term
25 February 2020
Incentive Plans in place as at 31 December 2019. The
Non-Executive Directors are not part of the Long-Term
Incentive Plans.
The proportion of the total options vesting under
each plan is subject to testing against audited Profit
5
7
F I N A N C I A L S T A T E M E N T S
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
law. Our responsibilities under those standards are
OF NICHOLS PLC
OPINION
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
We have audited the financial statements of Nichols plc
company in accordance with the ethical requirements
(the ‘parent company’) and its subsidiaries (the ‘group’)
that are relevant to our audit of the financial statements
for the year ended 31 December 2019 which comprise
in the UK, including the FRC’s Ethical Standard as applied
the consolidated income statement, the consolidated
to listed entities, and we have fulfilled our other ethical
statement of comprehensive income, the group and
responsibilities in accordance with these requirements.
parent company statement of financial position, the
We believe that the audit evidence we have obtained
consolidated and parent company statement of cash
is sufficient and appropriate to provide a basis for our
flows, the group and parent company statement of
opinion.
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
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:
Standards (IFRSs) as adopted by the European
• the directors’ use of the going concern basis of
Union and, as regards the parent company financial
accounting in the preparation of the financial
statements, as applied in accordance with the provisions
statements is not appropriate; or
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 2019 and of the group’s
profit for the year then ended;
• 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.
• the group financial statements have been properly
prepared in accordance with IFRSs as adopted by the
KEY AUDIT MATTERS
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
Key audit matters are those matters that, in our
professional judgement, 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
• the financial statements have been prepared in
in the audit; and directing the efforts of the engagement
accordance with the requirements of the Companies
team. These matters were addressed in the context of
Act 2006.
BASIS FOR OPINION
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.
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
5
8
KEY AUDIT MATTER -
BRAND SUPPORT ARRANGEMENTS
HOW WE ADDRESSED THE KEY AUDIT MATTER
IN THE AUDIT
As disclosed in Note 2 (accounting policies) the group
We undertook the following audit procedures in
incurs significant costs in the support and develop-
relation to brand support arrangements:
ment 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 meas-
urement of the fair value of variable consideration in
revenue transactions as well as the group’s accounting
• We obtained an understanding of the related
controls and assessed the design and
implementation of controls over brand support
arrangements. As a consequence of our conclusions,
we performed a test of the operating effectiveness
of the relevant controls related to the approval of
brand support arrangement agreements before
inception and going live on the system;
for arrangements where cash consideration is given by
• We performed detailed testing over a sample of
the group to the customer.
brand support arrangements charged to revenue
Judgement is required in determining the period over
which these costs should be recognised for these
arrangements, requiring both a detailed understand-
ing of the contractual arrangements themselves as
well as complete and accurate source data to which
the arrangements apply. Further, whilst the majority
of costs incurred on these arrangements have been
settled at 31 December 2019, management judgement
is required in determining the level of closing accrual
required at the year-end for promotions and brand
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. During this detailed testing, we reviewed
the contractual terms within the brand support
agreements and 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;
support campaigns that either span two financial years
• To address the fraud risk, we performed detailed
or where the costs have not been fully settled by the
cut-off testing to verify that brand support
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
arrangements are recorded in the correct period
and reviewed manual journal postings to revenue
throughout the year for evidence of misstatement
or manipulation;
controls, we have presumed a risk of fraud within this
• We selected a sample of post year end credit notes
area. The fraud risk has been identified due to the fact
and checked that, where audit evidence
that management can potentially manipulate profits by
demonstrated that the credit note related to the
changing accounting estimates and judgements.
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.
Key observations:
Following the completion of our work, we are satisfied
that brand support arrangements have been calculated
appropriately and have been classified within the
financial statements in accordance with accounting
standards.
5
9
F I N A N C I A L S T A T E M E N T S
F I N A N C I A L S T A T E M E N T S
OUR APPLICATION OF MATERIALITY
We consider materiality to be the magnitude by which
account of the nature of identified misstatements, and
As a consequence of the audit scope determined, we
or the directors’ report.
misstatements, individually or in the aggregate, could
the particular circumstances of their occurrence, when
reasonably be expected to influence the economic
evaluating their effect on the financial statements as a
achieved coverage of approximately 97% (2018: 98%) of
revenue, 98% (2018: 99%) of profit before tax and 98%
decisions of the users of the financial statements. We
whole.
use materiality both in planning the scope of our audit
work and in evaluating the results of our work.
Based on our professional judgement, we determined
materiality for the financial statements as a whole as
Importantly, misstatements below these levels will not
follows:
necessarily be evaluated as immaterial as we also take
GROUP MATERIALITY
Basis for materiality
£1,500,000 (2018: £1,500,000)
3 year average basis utilising 5% of profit before tax.
Rationale for the benchmark adopted
Profit before tax 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
aggregate, considered to be material in terms of their
classes of transactions we apply a lower level of
absolute monetary value or on qualitative grounds.
materiality (performance materiality) in order
reduce to an appropriately low level the probability
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
that the aggregate of uncorrected and undetected
Our group audit was scoped by obtaining an
misstatements exceeds materiality. Performance
understanding of the group and its environment,
materiality was set at £1,125,000 (2018: £1,125,000),
including group-wide controls, and assessing the risks of
representing 75% of materiality.
material misstatement at the group level.
Materiality in respect of the audit of the parent company
The group manages its operations from two principal
has been set at £950,000 (2018: £950,000) using a
locations in the UK and has common financial systems,
benchmark of 5% of profit before tax on a 3 year
processes and controls covering all significant
average basis (2018: 5% of profit before tax on a 3 year
components. The audit of all significant components
average basis, after adjusting for exceptional items).
was performed by the group audit team.
Performance materiality for the parent company has
been set at £712,000 (2018: £712,000) which represents
75% of parent company materiality.
In assessing the risk of material misstatement to the
group financial statements, and to ensure we had
adequate quantitative coverage of significant accounts
Our audit work on each component was executed at
in the financial statements, of the four reporting
levels of materiality applicable to each individual entity
components of the group, we determined that two
which was lower than group materiality. Component
components represented the principal business units
materiality has been set at £450,000 to £900,000 (2018:
within the group, which included the parent company.
£400,000 to £825,000).
For these two components, we performed an audit of
We agreed with the audit committee that we would
the complete financial information. For the remaining
report to the committee all individual audit differences
two components, we performed audit procedures
identified during the course of our audit in excess of
on specific accounts within that component that we
£30,000 (2018: £30,000). We also agreed to report
considered had the potential for the greatest impact
differences below these thresholds that, in our view,
on the significant accounts in the group financial
warranted reporting on qualitative grounds.
statements, either because of the size of these accounts
There were no misstatements identified during
the course of our audit that were individually, or in
6
0
or their risk profile. All work was carried out by the
group auditor.
(2018: 99%) of net assets.
OTHER INFORMATION
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 directors are responsible for the other information.
the parent company, or returns adequate for our
The other information comprises the information
audit have not been received from branches not
included in the Annual report, other than the financial
visited by us; or
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
• the parent company financial statements are not in
agreement with the accounting records and
returns; or
form of assurance conclusion thereon.
• certain disclosures of directors’ remuneration
In connection with our audit of the financial statements,
specified by law are not made; or
our responsibility is to read the other information and,
• we have not received all the information and
in doing so, consider whether the other information is
explanations we require for our audit.
materially inconsistent with the financial statements
or our knowledge obtained in the audit or otherwise
RESPONSIBILITIES OF DIRECTORS
appears to be materially misstated. If we identify
As explained more fully in the directors’ responsibilities
such material inconsistencies or apparent material
statement set out on page 45 to 46, the directors
misstatements, we are required to determine whether
are responsible for the preparation of the financial
there is a material misstatement in the financial
statements and for being satisfied that they give a
statements or a material misstatement of the other
true and fair view, and for such internal control as
information. If, based on the work we have performed,
the directors determine is necessary to enable the
we conclude that there is a material misstatement of
preparation of financial statements that are free from
this other information, we are required to report that
material misstatement, whether due to fraud or error.
fact. We have nothing to report in this regard.
In preparing the financial statements, the directors are
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE
responsible for assessing the group’s and the parent
COMPANIES ACT 2006
In our opinion, based on the work undertaken in the
course of the audit:
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
• the information given in the strategic report and the
or the parent company or to cease operations, or have
directors’ report for the financial year for which the
no realistic alternative but to do so.
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.
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
MATTERS ON WHICH WE ARE REQUIRED TO REPORT
fraud or error, and to issue an auditor’s report that
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
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.
6
1
F I N A N C I A L S T A T E M E N T S
F I N A N C I A L S T A T E M E N T S
Our
ADVISORS
AUDITORS
BDO LLP,
3 Hardman Street,
Spinningfields,
Manchester,
M3 3AT.
BANKERS
The Royal Bank of Scotland PLC,
1 Spinningfields Square,
Manchester,
M3 3AP.
SOLICITORS
DLA Piper,
101 Barbirolli Square,
Manchester,
M2 3DL.
STOCKBROKERS & NOMINATED ADVISOR
N+1 Singer Advisory LLP,
West One Wellington Street,
Leeds,
LS1 1BA.
FINANCIAL ADVISORS
N M Rothschild & Sons Limited,
82 Kings Street,
Manchester,
M2 4WQ.
REGISTRARS
Link Asset Services,
34 Beckenham Road,
Beckenham,
Kent,
BR3 4TU.
REGISTERED OFFICE
Laurel House,
Woodlands Park,
Ashton Road,
Newton-le-Willows,
WA12 0HH.
REGISTERED NUMBER
00238303.
Misstatements can arise from fraud or error and are
considered material if, individually or in the 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 parent 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 parent
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 parent company and the parent 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
25 February 2020
BDO LLP is a limited liability partnership
registered in England and Wales (with registered
number OC305127).
6
2
6
3
CONSOLIDATED INC OME STATEMEN T-YEA R E ND E D 31 D E CE M B E R 2 0 1 9
ST AT EM ENT OF FINA NCI AL PO SIT IO N- YEA R EN DED 31 DEC EM BER 2 0 1 9
Revenue
Cost of sales
Gross profit
Distribution expenses
Administrative expenses
Operating profit
Finance income
Finance expense
Profit before taxation
Taxation
Profit for the year attributable to equity shareholders
Earnings per share attributable to the ordinary equity shareholders
Earnings per share (basic)
Earnings per share (diluted)
Notes
2019
£’000
2018
£’000
3
146,985
142,037
(77,027)
(77,170)
69,958
(7,423)
64,867
(7,236)
(30,096)
(25,993)
32,439
31,638
235
(252)
32,422
(5,587)
26,835
72.81p
72.77p
192
(77)
31,753
(6,238)
25,515
69.23p
69.19p
4
5
5
7
9
9
CON SOLIDATED STATEMENT OF COM P R E HE NS I V E I NC O M E -
YEA R ENDED 31 DECEMB ER 201 9
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 income/ (expense) for the year
2019
£’000
26,835
1,704
(297)
1,407
2018
£’000
25,515
(412)
(44)
(456)
Total comprehensive income attributable to equity shareholders
28,242
25,059
Group
2019
£’000
2018
£’000
Parent
2019
£’000
Notes
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
Other payables
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
10
11
12
13
14
15
16
20
17
17
17
26
14
17
26
14
18
2018
£’000
4,430
2,504
21,742
38,585
0
8,065
283
14,572
34,451
7,098
2,504
0
16,566
16,566
7,748
835
1,316
283
1,316
835
68,675
57,606
27,767
25,651
8,361
38,363
40,944
87,668
7,164
38,153
38,896
84,213
4,402
40,227
20,094
64,723
3,894
35,239
20,070
59,203
156,343
141,819
92,490
84,854
23,260
2,675
25,935
3,028
253
1,785
5,066
22,339
2,814
25,153
29,411
22,248
99
391
29,510
22,639
0
1,791
2,755
1,801
4,556
253
0
2,044
31,554
60,936
3,697
3,255
1,209
1,028
51,747
60,936
31,001
29,709
125,342
112,110
3,697
3,255
1,209
253
3,697
3,255
1,209
666
116,928
103,283
125,342
112,110
0
2,755
0
2,755
25,394
59,460
3,697
3,255
1,209
1,441
49,858
59,460
6
4
The Parent Company reported a profit for the year ended 31 December 2019 of £14,948,000 (2018: £15,193,000).
The financial statements on pages 64 to 103 were approved by the Board of Directors on 25 February 2020 and were
signed on its behalf by:
P J Nichols
Chairman
Registered number 00238303.
6
5
CONSOLIDATED STATEMENT OF CA SH F LO W S-
YEA R ENDED 31 DECEMB ER 201 9
PARENT C OM PA NY STA TEMENT O F C ASH FLOW S-
YEAR ENDED 3 1 DEC EMB ER 2 01 9
Notes
2019
£’000
2019
£’000
2018
£’000
2018
£’000
Notes
2019
£’000
2019
£’000
2018
£’000
2018
£’000
26,835
25,515
Profit for the financial year
14,947
15,193
Cash flows from operating activities
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
5
5
4,541
19
(235)
252
5,587
(925)
1,263
(2,463)
(798)
235
11
(5,910)
0
(4,893)
7,241
34,076
(5,887)
28,189
2,179
127
(192)
77
6,238
(2,274)
(3,347)
1,197
(578)
192
0
(3,857)
(143)
(3,814)
3,427
28,942
(5,679)
23,263
Net cash used in investing activities
(10,557)
(7,622)
Cash flows from financing activities
Payment of lease liabilities
Dividends paid
24
8
(1,118)
(14,466)
0
(12,803)
Net cash used in financing activities
(15,584)
(12,803)
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
20
2,048
38,896
40,944
2,838
36,058
38,896
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
1,333
0
(235)
193
3,476
(507)
(4,988)
5,765
(798)
359
19
(192)
59
3,629
(1,552)
(3,495)
7,766
(578)
4,239
19,186
(3,513)
15,673
6,015
21,208
(3,286)
17,922
235
(414)
192
(663)
Net cash used in investing activities
(179)
(471)
Cash flows from financing activities
Payment of lease liabilities
Dividends paid
24
8
(1,004)
(14,466)
0
(12,803)
Net cash used in financing activities
(15,470)
(12,803)
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
20
24
20,070
20,094
4,648
15,422
20,070
6
6
6
7
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 9
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 9
Group
Parent
Called up
share
capital
£’000
Share
premium
reserve
£’000
Capital
redemption
reserve
£’000
Other
reserves
£’000
Retained
earnings
£’000
Total
equity
£’000
Called up
share
capital
£’000
Share
premium
reserve
£’000
Capital
redemption
reserve
£’000
Other
reserves
£’000
Retained
earnings
£’000
Total
equity
£’000
134
0
23
509
91,027
99,322
(12,803)
(12,803)
0
0
23
509
532
(12,803)
(12,271)
0
0
0
666
0
(214)
(199)
25,515
25,515
(456)
(456)
25,059
25,059
103,283
112,110
(14,466)
(14,466)
0
0
(214)
(199)
At 1 January 2018
3,697
3,255
1,209
Dividends
Movement in ESOT
Credit to equity for equity-
settled share based payments
Total transactions
with owners
Profit for the year
Other comprehensive
expense
Total comprehensive
income
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
At 1 January 2019
3,697
3,255
1,209
Dividends
Movement in ESOT
Debit to equity for equity-
settled share based payments
Movement in deferred tax
Total transactions
with owners
Profit for the year
Other comprehensive income
Total comprehensive
income
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
At 1 January 2018
3,697
3,255
1,209
Dividends
Movement in ESOT
Credit to equity for equity-
settled share based payments
Total transactions
with owners
Profit for the year
Other comprehensive
expense
Total comprehensive
income
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
909
0
23
509
47,924
56,994
(12,803)
(12,803)
0
0
23
509
532
(12,803)
(12,271)
0
0
0
15,193
15,193
(456)
(456)
14,737
14,737
At 1 January 2019
3,697
3,255
1,209
1,441
49,858
59,460
Dividends
Movement in ESOT
Debit to equity for equity-
settled share based payments
(0)
(131)
(131)
Movement in deferred tax
(413)
(14,597)
(15,010)
0
0
0
26,835
26,835
1,407
1,407
28,242
28,242
Total transactions
with owners
Profit for the year
Other comprehensive income
Total comprehensive
income
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(14,466)
(14,466)
(214)
(199)
(0)
0
0
0
(214)
(199)
(0)
(413)
(14,466)
(14,879)
0
0
0
14,948
14,948
1,407
1,407
16,355
16,355
At 31 December 2019
3,697
3,255
1,209
253
116,928
125,342
At 31 December 2019
3,697
3,255
1,209
1,028
51,747
60,936
6
8
6
9
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 9
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 9
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 2019 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.
reassess whether a contract is, or contains a lease at
the date of initial application. Contracts entered into
before the transition date that were not identified as
leases under IAS 17 were not reassessed. The definition
of a lease under IFRS 16 was applied only to contracts
entered into or changed on or after 1 January 2019.
IFRS 16 provides for certain optional practical
expedients, including those related to the initial
adoption of the standard. The Group applied the
following practical expedients when applying IFRS
16 to leases previously classified as operating leases
under IAS 17:
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 16, Leases and IFRIC 23, Uncertainty over Income
Tax Treatments, from 1 January 2019 without restating
comparatives.
IFRS 16, LEASES
With effect from 1 January 2019, the Group has applied
IFRS 16, Leases. The Group decided not to early adopt
this standard. IFRS 16 Leases has replaced IAS 17 and
IFRIC 4 and introduces a single, on-balance sheet lease
accounting model for lessees. The adoption of IFRS 16
has resulted in the Group recognising right-of-use assets
and lease liabilities on the consolidated statement of
financial position for all contracts that are, or contain,
a lease. The new standard removes the distinction
between operating and finance leases, with all leases
now being accounted for by recognising a right-of-use
asset and a lease liability except for leases of low value
assets and leases with a term of 12 months or less
(“short term leases”).
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease
term, with the discount rate determined by reference to
the rate inherent in the lease unless (as is typically the
case) this is not readily determinable, in which case the
Group’s incremental borrowing rate on commencement
of the lease is used.
Subsequent to initial measurement, lease liabilities
increase as a result of interest charged at a constant
rate on the balance outstanding and are reduced
for lease payments made. Right-of-use assets are
depreciated on a straight-line basis over the remaining
term of the lease.
The Group adopted IFRS 16 using the modified
retrospective approach, with recognition of transitional
adjustments on the date of initial application (1 January
2019), without restatement of comparative figures. The
Group elected to apply the practical expedient to not
a) Apply a single discount rate to a portfolio of leases
with reasonably similar characteristics;
b) Exclude initial direct costs from the measurement of
right-of-use assets at the date of initial application for
leases where the right-of-use asset was determined
as if IFRS 16 had been applied since the
commencement date;
c) Reliance on previous assessments on whether leases
are onerous as opposed to preparing an impairment
review under IAS 36 as at the date of initial
application; and
d) Applied the exemption not to recognise right-of-
use assets and liabilities for leases with less
than 12 months of lease term remaining as
of the date of initial application.
As a lessee, the Group previously classified leases as
operating or finance leases based on its assessment of
whether the lease transferred substantially all of the
risks and rewards of ownership.
Under IFRS 16, the Group recognises right-of-use assets
and lease liabilities for most leases. However, the
Group has elected not to recognise right-of-use assets
and lease liabilities for some leases of low value assets
based on the value of the underlying asset when new
or for short-term leases with a lease term of 12 months
or less.
Further details presenting the impact on the Group of
adopting IFRS 16 from 1 January 2019 are shown in note
24.
IFRIC 23, UNCERTAINTY OVER INCOME TAX
TREATMENTS
IFRIC 23 provides guidance on the accounting for
current and deferred tax liabilities and assets in
circumstances in which there is uncertainty over income
tax treatments. The interpretation requires:
• The Group to determine whether uncertain tax
treatments should be considered separately, or
together as a group, based on which approach
provides better predictions of the resolution;
• The Group to determine if it is probable that the
tax authorities will accept the uncertain tax
treatment; and
• If it is not probable that the uncertain tax treatment
will be accepted, measure the tax uncertainty based
on the most likely amount or expected value,
depending on whichever method better predicts
the resolution of the uncertainty. This measurement
is required to be based on the assumption that each
of the tax authorities will examine amounts they have
a right to examine and have full knowledge of all
related information when making those
examinations.
The Group elected to apply IFRIC 23 retrospectively with
the cumulative effect recorded in retained earnings as
at the date of initial application, 1 January 2019. The
adoption of IFRIC 23 has had no material effect on
transition.
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 2019, 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 time frame. 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
announcements.
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 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 £38.6 million (2018: £34.5 million).
The carrying amount of brands with indefinite lives was
£3.9m (2018: £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
2019.
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 2019. 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
7
0
7
1
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 9
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 9
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 regard 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. The Group has not highlighted any
exceptional items in either the current or the prior year.
RESEARCH AND DEVELOPMENT
Research expenditure is recognised in the consolidated
income statement in the year in which it is incurred.
Internal development expenditure is capitalised only
if it meets the recognition criteria of IAS 38, Intangible
Assets. If the Group cannot distinguish the research
phase of an internal project to create an intangible
asset from the development phase, the entity treats
the expenditure for that project as if it were incurred
in the research phase only. Where recognition criteria
are met, Intangible assets are capitalised and amortised
on a straight-line basis over their useful economic lives.
All intangible assets are tested for impairment when
there are indications that the carrying value may not
be recoverable. Any impairment losses are recognised
immediately in the consolidated income statement.
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.
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
Share capital represents the nominal value of equity
shares.
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.
DEFERRED TAX
IMPAIRMENT
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 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 (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.
7
2
7
3
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 9
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 9
PROPERTY, PLANT AND EQUIPMENT
interest would be immaterial.
Items of property, plant and equipment are measured
at cost less accumulated depreciation and impairment
losses.
Cost includes expenditures that are directly attributable
to the acquisition of the asset.
The cost of replacing part of an item of 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
Amounts owed by group undertakings are stated after
any provision for expected credit loss in line with the
three stage model in IFRS 9.
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 and IFRS 16 lease liabilities. 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.
Material residual value estimates and useful economic
lives are updated at least annually.
CONTINGENT CONSIDERATION
Land is not depreciated.
INVENTORIES
Inventories are measured at the lower of cost and net
realisable value. The cost of inventories is based on
the first-in first-out principle and includes expenditure
incurred in acquiring the inventories and bringing them
to their existing location and condition. Net realisable
value is the estimated selling price in the ordinary
course of business, less the costs of completion and
selling expenses.
FINANCIAL ASSETS
The Group’s financial assets comprise primarily cash,
bank deposits and trade receivables that arise from its
business operations. 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.
Trade receivables are classified as ‘loans and
receivables’. Loans and receivables are measured at
amortised cost using the effective interest method, less
any expected credit losses using the simplified approach
contained within IFRS 9. Estimated irrecoverable
amounts are based on historical experience and forward
looking information, together with specific amounts that
are not expected to be recovered. Individual amounts
are written off when management deems them to be
irrecoverable. The amount of expected credit losses
are updated at each reporting date. Interest income is
recognised by applying the effective interest rate, except
for short-term receivables when the recognition of
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
All leases are accounted for by recognising a right-of-use
asset and a lease liability except for:
• Leases of low value assets; and
• Leases with a duration of 12 months or less.
IFRS 16 was adopted 1 January 2019 without
restatement of comparative figures. For an explanation
of the transitional requirements that were applied as at
1 January 2019, see note 24. The following policies apply
subsequent to the date of initial application, 1 January
2019.
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease
term, with the discount rate determined by reference to
the rate inherent in the lease unless (as is typically the
case) this is not readily determinable, in which case the
Group’s incremental borrowing rate on commencement
of the lease is used. Variable lease payments are only
included in the measurement of the lease liability if they
depend on an index or rate. In such cases, the initial
measurement of the lease liability assumes the variable
element will remain unchanged throughout the lease
term. Other variable lease payments are expensed in
the period to which they relate.
exposes the Group to excessive risk. Typically factors
considered in deciding to negotiate a break clause
include:
• the length of the lease term;
• the economic stability of the environment in which
the property is located; and
• whether the location represents a new area of
operations for the Group.
Subsequent to initial measurement lease liabilities
increase as a result of interest charged at a constant
rate on the balance outstanding and are reduced for
lease payments made. Right-of-use assets are amortised
on a straight-line basis over the remaining term of the
lease or over the remaining economic life of the asset
if, rarely, this is judged to be shorter than the lease term.
When the Group revises its estimate of the term of
any lease (because, for example, it re-assesses the
probability of a lessee extension or termination option
being exercised), it adjusts the carrying amount of the
lease liability to reflect the payments to make over the
revised term, which are discounted using a revised
discount rate. The carrying value of lease liabilities is
similarly revised when the variable element of future
lease payments dependent on a rate or index is revised,
except the discount rate remains unchanged. In both
cases an equivalent adjustment is made to the carrying
value of the right-of-use asset, with the revised carrying
amount being amortised over the remaining (revised)
lease term. If the carrying amount of the right-of-use
asset is adjusted to zero, any further reduction is
recognised in profit or loss.
When the Group renegotiates the contractual terms of
a lease with the lessor, the accounting depends on the
nature of the modification:
• if the renegotiation results in one or more additional
assets being leased for an amount commensurate
with the standalone price for the additional rights-
of-use obtained, the modification is accounted for as
a separate lease in accordance with the above policy
• in all other cases where the renegotiation increases
the scope of the lease (whether that is an extension
to the lease term, or one or more additional assets
being leased), the lease liability is remeasured using
the discount rate applicable on the modification date,
with the right-of-use asset being adjusted by
the same amount
• if the renegotiation results in a decrease in the scope
of the lease, both the carrying amount of the lease
liability and right-of-use asset are reduced by the
same proportion to reflect the partial or full
termination of the lease with any difference
recognised in profit or loss. The lease liability is
then further adjusted to ensure its carrying amount
reflects the amount of the renegotiated payments
over the renegotiated term, with the modified lease
payments discounted at the rate applicable on the
modification date. The right-of-use asset is adjusted
by the same amount.
The Group sometimes negotiates break clauses in its
property leases. On a case-by-case basis, the Group will
consider whether the absence of a break clause would
At 31 December 2019 the carrying amounts of lease
liabilities are not reduced by the amount of payments
that would be avoided from exercising break clauses
because on both dates it was considered reasonably
certain that the Group would not exercise its right
to exercise any right to break the lease. Total lease
payments of £1,543,000 (2018: £1,833,000) are
potentially avoidable were the Group to exercise break
clauses at the earliest opportunity.
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.
7
4
7
5
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 9
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 9
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 2019
for the year ending 31 December 2019.
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.
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):
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 transaction
costs, are managed by the ESOT, therefore there is no
impact on share capital and share premium when the
options are exercised.
• IAS 1 Presentation of Financial Statements and IAS 8
Accounting Policies, Changes in Accounting Estimates
and Errors (Amendment – Definition of Material)
• IFRS 3 Business Combinations (Amendment –
Definition of Business)
• Revised Conceptual Framework for Financial
Reporting
No further disclosures have been provided due to the
immateriality of the schemes above.
PROVISIONS AND CONTINGENT LIABILITIES
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 Group does not expect any other standards issued,
but not yet effective, to have a material impact on the
Group.
A provision is recognised if, as a result of a past event,
the Group has a present legal or constructive obligation
that can be estimated reliably and it is probable that an
outflow of economic benefits will be required to settle
the obligation. Provisions are determined by discounting
the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of
money and the risks specific to the liability.
A provision for 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
7
6
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
2019
£’000
71,661
75,324
2018
£’000
64,683
77,354
146,985
142,037
2019
£’000
42,712
27,246
69,958
2018
£’000
35,398
29,469
64,867
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
Total revenue
2019
£’000
10,445
3,855
2019
£’000
11,566
13,042
4,870
29,478
117,507
146,985
2018
£’000
3,857
1,654
2019
%
7.9
8.9
3.3
20.1
79.9
100.0
2018
£’000
9,590
13,557
4,271
27,418
114,619
142,037
2018
%
6.8
9.5
3.0
19.3
80.7
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 2019 or 2018.
7
7
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 9
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 9
Total assets
The assets of the Group at 31 December 2019 and 31 December 2018 are located within the United Kingdom and
Europe.
Capital expenditure
The capital expenditure of the Group for the years ended 31 December 2019 and 31 December 2018 was made
within the United Kingdom and Europe.
Depreciation
The Group’s depreciation charges for the years ended 31 December 2019 and 31 December 2018 are against
property, plant and equipment retained within the United Kingdom and Europe.
4. OPERATING PROFIT
Operating profit is stated after charging/ (crediting):
2019
£’000
2018
£’000
Inventory amounts charged to cost of sales
77,027
77,170
BDO LLP remuneration:
Audit services of the Company’s annual accounts
Depreciation of property, plant and equipment
Lease rental payments
Awards under Long-Term Incentive Plan - (credit)/ charge
Loss/ (gain) on foreign exchange differences
Loss on sale of property, plant and equipment
Amortisation of intangible assets
Release of deferred consideration on acquisition
67
3,855
432
(199)
485
19
686
(1,050)
In 2019, operating lease rental payments have been included within administrative expenses and represent
short-term lease expenses not included as part of the adoption of IFRS 16 in the year. See note 24.
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
IFRS 16 interest charge
Finance expense
7
8
Notes
26
26
24
2019
£’000
235
235
(696)
760
20
168
252
61
1,654
1,033
559
(523)
41
525
(102)
2018
£’000
192
192
(655)
714
18
0
77
6. DIRECTORS AND EMPLOYEES
a. Average number of persons employed during the year, including
Directors:
2019
Number
2018
Number
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 Long-Term 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 Long-Term Incentive Plan
319
265
2019
£’000
12,723
1,620
717
19
0
286
202
2018
£’000
11,431
1,540
463
44
509
15,079
13,987
2019
£’000
11,694
1,513
678
19
0
2018
£’000
10,781
1,463
455
44
509
13,904
13,252
A credit of £199,000 was recognised during the year in relation to benefits accuring under the Group’s Long-Term
Incentive Plans (2018: charge of £509,000) as disclosed in the Statement Of Changes In Equity.
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 44.
Wages and salaries
Pension costs
Accrued under Long-Term Incentive Plan
2019
£’000
1,537
30
0
1,567
2018
£’000
1,394
32
306
1,732
The highest paid Director has received £577,000 (2018: £492,000) excluding pension contributions.
Benefits are accruing to 3 Directors (2018: 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 Long-Term Incentive Plan is provided in the
Remuneration Committee Report on pages 56 to 57.
7
9
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 9
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 9
7. TAXATION
8. EQUITY DIVIDENDS
Interim dividend 12.40p (2018: 11.30p) paid 30 August 2019
Final dividend for 2018 26.80p (2017: 23.40p) paid 3 May 2019
2019
£’000
4,576
9,890
2018
£’000
4,170
8,633
14,466
12,803
The interim dividend for the prior year of £4,170,000 was paid on 31 August 2018.
The 2019 final proposed dividend of £10,351,000 (28.0p per share) has not been accrued as it had not been approved
by the year end. The 2018 final proposed dividend was £9,890,000 (26.80p per share).
9. EARNINGS PER SHARE
Earnings per share (basic)
Earnings per share (diluted)
Earnings per share
2019
2018
72.81p
72.77p
69.23p
69.19p
2019
Weighted
average
number
of shares
Earnings
£’000
Earnings
per share
Earnings
£’000
2018
Weighted
average
number
of shares
Earnings
per share
Basic earnings per share
26,835
36,857,224
72.81p
25,515
36,857,758
69.23p
Dilutive effect of share options
19,249
18,398
Diluted earnings per share
26,835
36,876,473
72.77p
25,515
36,876,156
69.19p
a. Analysis of expense recognised in the consolidated income statement
Current taxation:
UK Corporation Tax on income for the year
Adjustments in respect of prior years
Total current tax charge for the year
Deferred tax:
Origination and reversal of temporary differences
Adjustments in respect of prior years
Total deferred tax charge for the year
2019
£’000
5,743
25
5,768
158
(339)
(181)
2018
£’000
5,998
(31)
5,967
283
(12)
271
Total tax expense in the consolidated income statement
5,587
6,238
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% (2018: 19.00%)
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 (greater than)/ lower than capital allowances
Impact on deferred tax due to rate change
Amounts relating to other comprehensive income
2019
£’000
2018
£’000
32,422
31,753
6,160
6,033
47
33
(21)
(314)
(237)
(40)
(68)
27
151
124
(23)
48
(19)
51
(39)
(88)
Total tax expense in the consolidated income statement
5,587
6,238
The effective rate of tax for the year of 17.20% (2018: 19.60%) is lower than the standard rate of Corporation Tax in
the United Kingdom (19.00%).
c. The effective rate of tax on profit is 17.20% (2018: 19.60%).
d. Tax on items recognised in other comprehensive income/ (expense)
In addition to the amount charged to the consolidated income statement, a charge of £297,000 (2018: charge of
£44,000) has been recognised in other comprehensive income/ (expense), being the movement on deferred taxation
relating to retirement benefit obligations and employee benefits.
8
0
8
1
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 9
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 9
10. PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 January 2018
Additions
On acquisition of
subsidiary
Disposals
Land and
buildings
£’000
3,444
0
0
0
At 1 January 2019
3,444
Additions
On acquisition of
subsidiary
Disposals
0
0
0
At 31 December 2019
3,444
Plant, machinery
fixtures and
fittings
£’000
Right-of-use
assets
motor vehicles
(note 24)
£’000
Right-of-use
assets
property
(note 24)
£’000
15,320
3,857
759
(373)
19,563
5,910
611
(556)
25,528
0
0
0
0
0
0
0
0
0
0
Total
£’000
18,764
3,857
759
(373)
23,007
2,170
2,365
10,445
0
0
0
0
611
(556)
2,170
2,365
33,507
Land and
buildings
£’000
Plant, machinery
fixtures and
fittings
£’000
Right-of-use
assets
motor vehicles
(note 24)
£’000
Right-of-use
assets
property
(note 24)
£’000
Depreciation
At 1 January 2018
Charge for the year
On disposals
Impairment of assets on
prior acquisition
At 1 January 2019
Charge for the year
On disposals
At 31 December 2019
Net book value at
31 December 2019
Net book value at
31 December 2018
247
69
0
0
316
69
0
385
3,059
3,128
6,458
1,585
(246)
322
8,119
2,782
(525)
10,376
15,152
11,444
Total
£’000
6,705
1,654
(246)
322
8,435
3,855
(525)
Depreciation
At 1 January 2018
Charge for the year
On disposals
At 1 January 2019
Charge for the year
On disposals
At 31 December 2019
Net book value at
31 December 2019
Net book value at
31 December 2018
0
0
0
0
0
367
0
0
0
0
0
0
637
0
637
367
11,765
1,533
1,998
21,742
0
0
14,572
Parent
Cost
At 1 January 2018
Additions
Disposals
Land and
buildings
£’000
3,444
0
0
At 1 January 2019
3,444
Additions
Disposals
0
0
At 31 December 2019
3,444
Plant, machinery
fixtures and
fittings
£’000
Right-of-use
assets
motor vehicles
(note 24)
£’000
Right-of-use
assets
property
(note 24)
£’000
3,950
663
(57)
4,556
414
(88)
4,882
0
0
0
0
2,170
0
2,170
0
0
0
0
1,417
0
1,417
11,913
Land and
buildings
£’000
Plant, machinery
fixtures and
fittings
£’000
Right-of-use
assets
motor vehicles
(note 24)
£’000
Right-of-use
assets
property
(note 24)
£’000
247
69
0
316
69
0
385
3,059
3,128
3,002
290
(38)
3,254
365
(88)
3,531
1,351
1,302
0
0
0
0
637
0
637
0
0
0
0
262
0
262
1,533
1,155
7,098
0
0
4,430
Total
£’000
7,394
663
(57)
8,000
4,001
(88)
Total
£’000
3,249
359
(38)
3,570
1,333
(88)
4,815
8
2
8
3
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 9
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 9
11. GOODWILL
Group
Cost
At 1 January 2018
Re-statement of goodwill on prior acquisition
Acquisition
At 1 January 2019
Acquisitions (see note 19)
At 31 December 2019
Parent
Cost
At 1 January 2018, 1 January 2019 and 31 December 2019
£’000
30,666
322
3,463
34,451
4,134
38,585
£’000
2,504
The Group’s goodwill acquisitions for 2019 relate to the acquisition of 100% of the issued share capital of Adrian
Mecklenburgh Limited, completed on 1 February 2019. 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 the
acquisition are shown in note 19.
Goodwill within the Parent Company arose in 2005 on a trade and assets acquisition.
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.
2019
£’000
23,853
14,732
38,585
2018
£’000
21,786
12,665
34,451
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 2018 and 2019.
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 cash-generating unit is based on
its value in use. Value in use is the present value of the projected cash flows of the cash-generating unit. The key
assumptions regarding the value in use calculations were forecast growth in revenues and the discount rate applied.
Budgeted revenue growth is estimated based on actual performance over the past two years and expected market
changes.
The discount rate of 13% is a pre-tax rate and reflects the risks specific to the relevant cash-generating unit. 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.
12. INVESTMENTS: SHARES IN GROUP UNDERTAKINGS
Parent
Cost and net book amount
At 1 January 2018, 1 January 2019 and at 31 December 2019
£’000
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.
%
100
100
100
100
100
100
100
100
100
100
75
100
Ben Shaws Dispense Drinks Limited*
Dayla Liquid Packing Limited*
Vimto (Out of Home) Limited*
Adrian Mecklenburgh Limited **
Beacon Drinks Limited **
Cabana Soft Drinks Limited **
DJ Drink Solutions Limited **
Festival Drinks Limited **
Nichols Dispense (S.W.) Limited **
The Noisy Drinks Co. Limited **
The Noisy Drink Company North West Limited **
Dispense Solutions (Wales) Limited***
* Directly owned by Nichols plc.
** Directly owned by Vimto (Out of Home) Limited.
*** Directly owned by Nichols Dispense (S.W.) 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.
8
4
8
5
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 9
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 9
13. INTANGIBLES
Group
Cost
At 1 January 2018
Acquisitions
At 1 January 2019
Acquisitions (see note 19)
At 31 December 2019
Amortisation
At 1 January 2018
Charge in the year
At 1 January 2019
Charge in the year
At 31 December 2019
Carrying value at 31 December 2019
Carrying value at 31 December 2018
Parent
Contractual
Agreement
£’000
0
0
0
180
180
0
0
0
33
33
147
0
Total
£’000
8,307
280
8,587
1,003
9,590
314
525
839
686
Brand
name
£’000
3,889
0
3,889
0
3,889
Customer
list
£’000
4,418
280
4,698
823
5,521
0
0
0
0
0
314
525
839
653
1,492
1,525
3,889
3,889
4,029
3,859
8,065
7,748
Carrying value at 1 January 2018, 1 January 2019 and 31 December 2019
Brand name
£’000
1,316
8
6
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
Net
balance at
1 January
2019
£’000
Arising on
business
combination
£’000
Recognised
in income
£’000
Recognised
in other
comprehensive
income
£’000
Net
balance at
31 December
2019
£’000
(559)
(1,114)
685
22
(966)
0
(170)
0
0
(170)
(90)
232
(214)
3
(69)
0
0
(297)
0
(297)
(649)
(1,052)
174
25
(1,502)
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
43
(521)
0
(40)
0
0
(40)
(130)
(83)
(127)
(21)
(361)
0
0
(44)
0
(44)
(559)
(1,114)
685
22
(966)
Net
balance at
1 January
2019
£’000
Arising on
business
combination
£’000
Recognised
in income
£’000
Recognised
in other
comprehensive
income
£’000
Net
balance at
31 December
2019
£’000
(55)
183
685
22
835
0
0
0
0
0
(27)
(17)
(214)
3
(255)
0
0
(297)
0
(297)
(82)
166
174
25
283
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
Property, plant and equipment
Goodwill and intangibles
Employee benefits
Provisions
(33)
199
856
43
1,065
0
0
0
0
0
(22)
(16)
(127)
(21)
(186)
0
0
(44)
0
(44)
(55)
183
685
22
835
8
7
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 9
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 9
14. DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
16. TRADE AND OTHER RECEIVABLES
Group
Assets
Liabilities
Net
Trade receivables
Group
Parent
2019
£’000
2018
£’000
2019
£’000
2018
£’000
35,557
35,030
27,458
27,074
Property, plant and equipment
Goodwill and intangibles
Employee benefits
Provisions
Current
year
£’000
Prior
year
£’000
0
84
174
25
283
0
128
685
22
835
Current
year
£’000
(649)
Prior
year
£’000
(559)
Current
year
£’000
(649)
Prior
year
£’000
(559)
(1,136)
(1,242)
(1,052)
(1,114)
0
0
0
0
174
25
685
22
(1,785)
(1,801)
(1,502)
(966)
Parent
Assets
Liabilities
Net
Current
year
£’000
Prior
year
£’000
Current
year
£’000
Current
year
£’000
Prior
year
£’000
Property, plant and equipment
Goodwill and intangibles
Employee benefits
Provisions
0
166
174
25
365
0
183
685
22
890
(82)
0
0
0
(82)
(55)
(82)
166
174
25
283
Prior
year
£’000
(55)
0
0
0
15. INVENTORIES
Finished goods
Raw materials
Total inventories
Group
Parent
2019
£’000
7,494
867
8,361
2018
£’000
6,108
1,056
7,164
2019
£’000
4,308
94
4,402
In 2019, the Group write-down of inventories to net realisable value amounted to £191,000 (2018: £99,000).
(55)
183
685
22
835
2018
£’000
3,840
54
3,894
Less: provision for impairment of trade receivables
(577)
(748)
(475)
(717)
Trade receivables - net
34,980
34,282
26,983
26,357
Amounts owed by Group undertakings
Other receivables
Prepayments
0
2,220
1,163
0
10,704
7,209
1,938
1,933
1,744
796
801
872
38,363
38,153
40,227
35,239
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 £577,000 (2018: £748,000) 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
2019
£’000
Charge in
the year
£’000
Release in
the year
£’000
Expected credit loss provision
748
114
(252)
Utilised
£’000
(33)
At 31
December 2019
£’000
577
Group
At 1 January
2018
£’000
Charge in
the year
£’000
Release in
the year
£’000
Utilised
£’000
At 31
December 2018
£’000
Expected credit loss provision
2,102
113
(1,108)
(359)
748
Parent
At 1 January
2019
£’000
Charge in
the year
£’000
Release in
the year
£’000
Utilised
£’000
At 31
December 2019
£’000
Expected credit loss provision
717
0
(242)
0
475
Parent
At 1 January
2018
£’000
Charge in
the year
£’000
Release in
the year
£’000
Utilised
£’000
At 31
December 2018
£’000
Expected credit loss provision
2,070
90
(1,108)
(335)
717
The release of the expected credit loss provision in the year, as shown above, represents cash received against
previously provided for debts under the expected credit loss model.
8
8
8
9
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 9
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 9
17. TRADE AND OTHER PAYABLES AND CURRENT TAX LIABILITIES
Group
Parent
19. ACQUISITIONS
2019 ACQUISITIONS
Current liabilities
Trade payables
Amounts owed to Group undertakings
Other taxes and social security
Other payables
Accruals
IFRS 16 lease liabilities (note 24)
Current tax liabilities
Non-current liabilities
Other payables
IFRS 16 lease liabilities (note 24)
2019
£’000
7,595
0
1,474
2,224
10,949
1,018
23,260
2,675
25,935
2018
£’000
7,402
0
1,002
2,236
11,699
0
22,339
2,814
25,153
2019
£’000
5,733
12,885
511
41
9,320
921
29,411
99
29,510
Group
Parent
2019
£’000
462
2,566
3,028
2018
£’000
0
0
0
2019
£’000
0
1,791
1,791
2018
£’000
6,053
6,214
218
37
9,726
0
22,248
391
22,639
2018
£’000
0
0
0
The difference between the carrying value and fair value of all payables is not considered to be material.
18. SHARE CAPITAL
Allotted, issued and fully paid 36,968,772 (2018: 36,968,772) 10p ordinary shares
2019
£’000
3,697
2018
£’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 2019 and 31 December 2018.
9
0
On 1 February 2019, the Group acquired 100% of the issued share capital of Adrian Mecklenburgh Limited (AML) for
initial consideration of £4.7m. AML is 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 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
Contractual agreement
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)
611
271
408
1,068
(614)
(230)
1,514
822
180
(170)
832
611
271
408
1,068
(614)
(230)
822
180
(170)
2,346
Fair value
£’000
4,893
1,587
6,480
4,134
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 AML 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 £139,000 arose as a result of the transaction. These have been recognised within administrative
expenses.
The contingent cash consideration is payable in stages based on sales and profitability targets established with the
vendor. The first stage of contingent consideration is linked to growth in gross profit in the twelve months following
initial acquisition and is payable in February 2020. The second stage of contingent consideration is linked to growth
in coffee sales in the three year period following initial acquisition, payable in 2021 and 2022.
As at 31 December 2019, a fair value assessment of the first stage of contingent consideration was performed. Based
on actual performance in the twelve months following initial acquisition, it was determined that the performance
criteria had not been met. As a result, the £1,050,000 initially recognised at acquisition has been taken as a credit
within administrative expenses during the year. There has been no material movement on the second stage of
contingent consideration since initial recognition.
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 sales and profit are
volumes distributed to customers, maintenance of the gross profit margin and overheads.
Since the acquisition, AML has contributed £4.2m to revenue and £0.6m to net profit for the Group. Revenue of
£4.6m and gross profit £0.7m would have been achieved had the business combination occurred at the beginning of
the reporting period.
9
1
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 9
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 9
19. ACQUISITIONS (CONTINUED)
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 regard 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 resulted in the acquisition being accounted for in substance as though the Group had
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 consolidated
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
75
192
(127)
(832)
(78)
(11)
236
(40)
196
759
75
192
(127)
(832)
(78)
236
(40)
185
Fair value
£’000
1,549
2,000
3,549
3,364
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, 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. 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 £4.6m to revenue and £0.1m to net profit for the Group. Revenue of
£5.0m and gross profit of £0.1m would have been achieved to 31 December 2018 had the business combination
occurred at 1 January 2018.
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. This
acquisition further consolidated 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
44
44
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
80
63
143
99
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 was paid in full in July 2019 and was based on the performance of customer
accounts acquired in the 12 month period following acquisition.
20. CASH AND CASH EQUIVALENTS
Group
At 1 January
2019
£’000
Cash
flow
£’000
At 31 December
2019
£’000
Cash at bank and in hand
38,896
2,048
40,944
Parent
At 1 January
2019
£’000
Cash
flow
£’000
At 31 December
2019
£’000
Cash at bank and in hand
20,070
24
20,094
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.
Liquidity risk
The Group seeks to manage financial risk to ensure sufficient liquidity is available to meet foreseeable needs.
The Group does this through the use of rolling cash flow forecasts, which are reviewed periodically. 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.
9
2
9
3
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 9
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 9
21. FINANCIAL INSTRUMENTS (CONTINUED)
22. SUMMARY OF FINANCIAL ASSETS AND LIABILITIES BY CATEGORY
Credit risk
The Group has no significant concentrations of credit risk. The Group has implemented stringent policies that
ensure that credit evaluations are performed on all potential customers before sales commence. Credit risk is
managed by limiting the aggregate exposure to any one individual counterparty, taking into account its credit
rating. Such counterparty exposures are regularly reviewed and adjusted as necessary.
Accordingly, the possibility of material loss arising in the event of non-performance by counterparties is
considered to be unlikely. Cash at bank is held only with major UK banks with high quality external credit
ratings or government support.
Foreign currency risk
The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other
than the functional currency of the Group. The currencies giving rise to this risk are primarily US Dollars (USD)
and Euros (€). During 2019 the Group entered into foreign currency transactions that over the course of the year
resulted in the Group having a natural hedge. Despite this, the Group continually monitors the 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
2019
£’000
1,444
4,285
0
5,729
2018
£’000
3,158
5,851
61
9,070
Foreign currency sensitivity
Some of the Group’s transactions are carried out in US Dollars and Euros. As a result, management have undertaken
sensitivity analysis to consider the financial impact if Sterling had both strengthened and weakened against the US
Dollar and the Euro.
If Sterling had strengthened against the US Dollar and Euro by 5% (2018: 5%), then this would have had the following
impact:
Net result for the year
US Dollar
£’000
(110)
2019
Euro
£’000
(116)
Total
£’000
(226)
US Dollar
£’000
(261)
2018
Euro
£’000
(337)
Total
£’000
(598)
If Sterling had weakened against the US Dollar and Euro by 5% (2018: 5%), then this would have had the following
impact:
Net result for the year
US Dollar
£’000
30
2019
Euro
£’000
323
Total
£’000
353
US Dollar
£’000
43
2018
Euro
£’000
243
Total
£’000
286
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.
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 and other receivables
Cash and cash equivalents
Total financial assets
2019
£’000
2018
£’000
2019
£’000
2018
£’000
2019
£’000
2018
£’000
2019
£’000
2018
£’000
0
0
0
0
0
0
37,777
36,220
40,944
38,896
78,721
75,116
0
0
0
0
0
0
39,906
34,367
20,094
20,070
60,000
54,437
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
Financial liabilities
2019
£’000
2018
£’000
Trade and other payables
2,537
2,000
IFRS 16 lease liabilities
0
0
2019
£’000
7,744
3,584
2018
£’000
7,638
0
Total financial liabilities
2,537
2,000
11,328
7,638
2019
£’000
2018
£’000
2019
£’000
2018
£’000
0
0
0
0
0
0
18,618
12,267
2,712
0
21,330
12,267
The following table sets out the Group contractual maturities (representing undiscounted contractual cash-flows) of
financial liabilities:
At 31 December 2019
Trade and other payables
Total
At 31 December 2018
Trade and other payables
Total
Up to 3
months
£’000
9,819
9,819
Up to 3
months
£’000
7,638
7,638
Between
3 and 12
months
£’000
0
0
Between
3 and 12
months
£’000
Between 1
and 2 years
£’000
Between 2
and 5 years
£’000
Over 5 years
£’000
215
215
247
247
0
0
Between 1
and 2 years
£’000
Between 2
and 5 years
£’000
Over 5 years
£’000
0
0
2,000
2,000
0
0
0
0
The contractual maturities of IFRS 16 lease liabilities are disclosed in note 24.
9
4
9
5
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 9
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 9
23. CAPITAL MANAGEMENT POLICIES AND PROCEDURES
(a) The following table reconciles the minimum lease commitments disclosed in the Group’s 31 December 2018
annual financial statements to the amount of lease liabilities recognised on 1 January 2019:
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 2018.
At 31 December 2019, the Group had no debt and therefore the capital structure consists of equity only.
As the Group has no debt there is no exposure to interest rate risk.
24. LEASES
The Group has identified non-cancellable operating lease commitments totalling £3.6m as at 1 January 2019, relating
to property leases for operational sites and motor vehicles. The Group has applied 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, with no adjustment to opening reserves. The impact of adopting IFRS 16 on a modified
retrospective basis was therefore to recognise a right-of-use asset and a lease liability of £3.1m at 1 January 2019.
The right-of-use asset and lease liability were measured at the present value of the remaining lease payments,
discounted using the Group’s incremental borrowing rate as at 1 January 2019. The Group’s incremental borrowing
rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable
terms and conditions. On transition to IFRS 16 the weighted average incremental borrowing rate applied to lease
liabilities recognised under IFRS 16 was 4%.
The Group has presented right-of-use assets within property, plant and equipment, with the corresponding liabilities
presented within trade and other payables split between current and non-current liabilities on the consolidated
statement of financial position.
The Group has classified the principal portion of lease payments within financing activities and the interest portion
within operating activities on the consolidated statement of cash flows. Lease payments for short-term leases and
low-value assets not included in the measurement of the lease liability are classified as cash flows from operating
activities.
The following tables reconcile the Group right-of-use assets and lease liabilities to 31 December 2019:
Minimum operating lease commitment at 31 December 2018
Plus: effect of extension options reasonably certain to be exercised
Less: short-term leases not recognised under IFRS 16
Undiscounted lease payments
Less: effect of discounting using the incremental borrowing rate
Lease liabilities as at 1 January 2019
Group
£’000
2,958
1,360
(713)
3,605
(499)
3,106
The following tables reconcile the Group right-of-use assets and lease liabilities to 31 December 2019:
Group
Property
£'000
Motor
Vehicles
£'000
Total
£'000
Parent
Motor
Vehicles
£'000
Property
£'000
Right-of-use assets
At 1 January 2019
2,027
1,079
3,106
1,190
1,079
Parent
£’000
2,494
784
(713)
2,565
(296)
2,269
Total
£'000
2,269
Additions
338
1,091
1,429
227
1,091
1,318
Depreciation
(367)
(637)
(1,004)
(262)
(637)
(899)
At 31 December 2019
1,998
1,533
3,531
1,155
1,533
2,688
Group
Property
£'000
Motor
Vehicles
£'000
Total
£'000
Property
£'000
Parent
Motor
Vehicles
£'000
2,027
1,079
3,106
1,190
1,079
Total
£'000
2,269
338
81
1,090
1,428
87
168
228
42
1,090
1,318
87
129
Group
Parent
31 December
2018
As originally
presented
£’000
IFRS 16
£’000
1 January
2019
£’000
31 December
2018
As originally
presented
£’000
IFRS 16
£’000
1 January
2019
£’000
Lease liabilities
At 1 January 2019
Additions
Interest expense
Assets
Note
Right-of-use assets
Liabilities
Lease liabilities
(a)
0
0
3,106
3,106
0
2,269
2,269
Lease payments
(431)
(687)
(1,118)
(316)
(688)
(1,004)
At 31 December 2019
2,015
1,569
3,584
1,144
1,568
2,712
3,106
3,106
0
2,269
2,269
The following table sets out the Group maturities of IFRS 16 lease liabilities:
Group
At 31 December 2019
Lease liabilities
Parent
At 31 December 2019
Lease liabilities
Up to 3
months
£’000
321
Up to 3
months
£’000
282
Between
3 and 12
months
£’000
Between 1
and 2 years
£’000
Between 2
and 5 years
£’000
Over 5 years
£’000
843
839
1,291
768
Between
3 and 12
months
£’000
Between 1
and 2 years
£’000
Between 2
and 5 years
£’000
Over 5 years
£’000
750
715
911
370
9
6
9
7
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 9
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 9
24. LEASES
The following table reconciles the changes in IFRS 16 liabilities from financing activities during the year to 31
December 2019:
Group
Parent
Current
loans and
borrowings
£’000
(note 17)
Non-current
loans and
borrowings
£’000
(note 17)
Total
£'000
Current
loans and
borrowings
£’000
(note 17)
Non-current
loans and
borrowings
£’000
(note 17)
Total
£'000
At 1 January 2019
606
2,500
3,106
253
2,016
2,269
Cash Flows
(1,118)
0
(1,118)
(1,004)
0
(1,004)
Non-cash flows
- interest paid
- lease adjustments
At 31 December 2019
168
1,362
1,018
0
66
168
1,428
2,566
3,584
129
1,543
921
0
129
(225)
1,318
1,791
2,712
26. PENSION OBLIGATIONS AND EMPLOYEE BENEFITS
The Group operates two employee benefit plans, a defined benefit plan which provides benefits based on final salary
which is now closed to new members and a defined contribution group personal plan. The Group personal plan
consists of individual contracts with contributions from both the employer and employee. The charge for the year for
the Group personal plan was £695,000 (2018: £455,000).
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 2019 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 2019 are predominantly equity and debt instruments.
Lease payments incurred in 2019 for short-term leases not included in the measurement of lease liabilities under
IFRS 16 were as follows:
Longevity risk
Group
£’000
432
Parent
£’000
377
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.
Short-term lease expense
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
2019
£’000
1,606
2018
£’000
1,341
2019
£’000
(2,182)
2018
£’000
995
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 £213,000 (2018: £169,000). An accrued amount of £21,000 (2018: £37,000)
will be paid in the subsequent financial year.
A reconciliation of the pension obligation and plan assets to the amounts presented in the statement of financial
position for 2019 and 2018 is shown below.
Present value of funded obligations
Fair value of plan assets
Deficit in the plan
Related deferred tax asset
Net liability recognised
31 December 2019
£’000
31 December 2018
£’000
(28,942)
28,689
(253)
62
(191)
(28,286)
25,531
(2,755)
563
(2,192)
9
8
9
9
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 9
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 9
26. PENSION OBLIGATIONS AND EMPLOYEE BENEFITS (CONTINUED)
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 losses / (gains) 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 2019
£’000
31 December 2018
£’000
28,286
30,167
19
760
3
(408)
3,247
(687)
(2,279)
0
28,941
44
714
6
0
(1,801)
(197)
(847)
200
28,286
Plan assets
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 2019
£’000
31 December 2018
£’000
25,531
696
3,840
898
3
(2,279)
28,689
27,246
655
(2,441)
912
6
(847)
25,531
The actual return on plan assets was a gain of £4,536,000 (2018: loss of £1,786,000). 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 2019
£’000
31 December 2018
£’000
Equities
Gilts
Bonds
Liability driven investments
Diversified growth funds
Absolute return bonds
Equity-linked bonds
Other, including cash
Total fair value of assets
1
0
0
2,605
-
-
3,056
5,377
4,593
11,004
204
26,839
2,421
0
0
3,325
4,534
4,136
8,951
314
23,681
Assets included which do not have a quoted market value:
Property
Total
31 December 2019
£’000
31 December 2018
£’000
1,850
1,850
1,850
1,850
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:
31 December
2019
31 December
2018
Future salary increases
Rate of increase in (post 1997) pensions in payment (a)
Discount rate at 31 December
Expected rate of inflation - RPI
2.95%
3.20%
2.00%
2.95%
3.20%
3.30%
2.80%
3.20%
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 (2018:
88 years) and 89 years for women (2018: 89 years). For current pensioners life expectancies have been estimated as
87 years for men (2018: 87 years) and 89 years for women (2018: 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
31 December
2019
£’000
31 December
2018
£’000
19
64
0
83
44
59
200
303
1
0
1
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 9
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 9
26. PENSION OBLIGATIONS AND EMPLOYEE BENEFITS (CONTINUED)
27. AUDIT EXEMPTION STATEMENT
GMP equalisation
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.
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 income/ (expense) relating to the Group’s defined benefit plan are as
follows:
Remeasurements recognised in other comprehensive income/ (expense):
Actuarial gains/ (losses) on the assets
Experience adjustment
Actuarial (losses)/ gains from changes in financial assumptions
Changes in demographic assumptions
Other movements
Total gain/ (loss) recognised in other comprehensive income/ (expense)
31 December
2019
£’000
31 December
2018
£’000
3,840
408
(3,247)
687
16
1,704
(2,441)
0
1,801
197
31
(412)
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 00238303, guarantees all
outstanding liabilities to which the subsidiary company is subject at the end of the financial year (being the year
ended 31 December 2019 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.
Adrian Mecklenburgh Limited (period ended 31 December 2019)
Beacon Drinks Limited
Ben Shaws Dispense Drinks Limited
Cabana Soft Drinks Limited
Dayla Liquid Packing Limited
Dispense Solutions (Wales) Limited (year ended 30 September 2020)
DJ Drink Solutions Limited (year ended 31 May 2020)
Festival Drinks Limited
Nichols Dispense (S.W.) Limited
The Noisy Drink Company North West Limited (year ended 31 January 2020)
The Noisy Drinks Co. Limited
Vimto (Out of Home) Limited
Company Number
01481282
01732905
00231218
00938594
00603111
08671127
05787898
01256006
08766560
05024347
05905631
08795779
Other defined benefit plan information
Employees of the Group are required to contribute a fixed 6% of their pensionable salary.
28. CONTINGENT LIABILITY
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 2020.
The weighted average duration of the defined benefit obligation at 31 December 2019 is 20 years (2018: 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
2019
£’000
31 December
2019
%
31 December
2018
£'000
31 December
2018
%
Increase in discount rate by 0.5%
Increase in price inflation adjustment by 0.5%
1 year increase in life expectancy
(2,315)
579
1,158
-8.00
2.00
4.00
(2,263)
566
849
-8.00
2.00
3.00
The sensitivities may not be representative 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.
1
0
2
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.
1
0
3
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 9
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 2 0 2 0
(14,466)
(12,803)
(11,213)
(9,806)
(8,589)
4.
To re-elect P J Nichols, who retires by rotation, as
otherwise):
Revenue
146,985
142,037
132,789
117,349
109,279
Operating profit before exceptional items, IAS
19 and Long-Term Incentive Scheme charges
32,259
32,441
30,884
31,622
28,888
2019
£’000
2018
£’000
2017
£’000
2016
£’000
2015
£’000
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 (expense)/ income
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
0
(19)
0
199
0
(1,801)
(41)
0
(44)
(200)
(559)
0
(29)
0
0
(37)
0
(300)
(1,268)
(1,017)
32,439
31,638
28,742
30,325
27,834
(17)
0
32,422
(5,587)
26,835
115
0
(20)
0
1,167
0
12
190
31,753
28,722
31,492
28,036
(6,238)
(5,548)
(6,015)
(5,803)
25,515
23,174
25,477
22,233
12,369
72.81p
72.77p
72.81p
12,712
11,961
15,671
13,644
69.23p
62.88p
69.13p
60.33p
69.19p
62.81p
69.07p
60.25p
69.23p
67.76p
66.18p
60.33p
72.77p
69.19p
67.69p
66.12p
60.25p
Dividends paid per share
39.20p
34.70p
30.40p
26.60p
23.30p
1
0
4
Notice is hereby given that the twenty eighth Annual
This authority is in substitution for all existing
General Meeting of Nichols plc (“Company”) will be held
authorities under section 551 of the Act (which,
at Nichols plc, Laurel House, Woodlands Park, Ashton
to the extent unused at the date of this
Road, Newton-le-Willows, Merseyside, WA12 0HH on
resolution, are revoked with immediate effect).
Wednesday, 29 April 2020 at 11:00 a.m. for the following
To consider and, if thought fit, to pass the
purposes:
following resolutions as special resolutions:
To consider and, if thought fit, to pass the following
resolutions as ordinary resolutions:
1.
To receive the Company’s annual accounts,
strategic report and directors’ and auditors’
reports for the year ended 31 December 2019.
9.
That, subject to the passing of resolution 8 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
2.
To declare a final dividend for the year ended
granted by resolution 8 and to sell ordinary
31 December 2019 of 28.0 pence per ordinary
shares held by the Company as treasury shares
share of £0.10 in the capital of the Company,
for cash, as if section 561(1) of the Act did not
to be paid on 1 May 2020 to shareholders whose
apply to any such allotment or sale, provided that
names appear on the register of members at the
this power shall be limited to the allotment of
close of business on 20 March 2020.
equity securities or sale of treasury shares:
3.
To re-elect A Milne, who retires by rotation, as a
9.1
in connection with an offer of equity securities
Director of the Company.
(whether by way of a rights issue, open offer or
a Director of the Company.
9.1.1
to holders of ordinary shares in the capital of the
5.
To elect D Rattigan, who has been appointed by
the Board since the last Annual General Meeting,
as a Director of the Company.
6.
To reappoint BDO LLP as auditors of the
Company.
7.
To authorise the Directors to determine the
remuneration of the auditors.
8.
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 £1,233,913.40 (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
2021 (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.
Company in proportion (as nearly as practicable)
to the respective numbers of ordinary shares
held by them; and
9.1.2
to holders of other equity securities in the capital
of the Company, as required by the rights
of those securities or, subject to such rights, as
the Directors otherwise consider necessary,
but subject to such exclusions or other
arrangements as the Directors may deem
necessary or expedient in relation to treasury
shares, fractional entitlements, record
dates or any legal or practical problems under
the laws of any territory or the requirements of
any regulatory body or stock exchange; and
9.2
otherwise than pursuant to paragraph 9.1 of
this resolution, up to an aggregate nominal
amount of £185,087.01 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 2021
(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
1
0
5
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 2 0 2 0
G E N E R A L N O T E S
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).
10.
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:
10.1
the maximum aggregate number of Shares which
may be purchased is 3,701,740:
10.2
the minimum price (excluding expenses) which
may be paid for a Share is 10p; and
10.3
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 2021
(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.
By order of the Board
Tim Croston
Secretary
25 February 2020
Registered Office, Laurel House, Woodlands Park, Ashton Road, Newton-le-Willows,
WA12 0HH.
Registered in England and Wales No. 00238303.
1
0
6
1. To receive the Company’s annual accounts, strategic
6.
In order to reduce the Company’s environmental
report and directors’ and auditors’ reports for the
impact, our intention is to remove paper from
year ended 31 December 2019.
the voting process as far as possible. You are
2. Biographical details of all those Directors who are
therefore asked to vote in one of the following ways:
offering themselves for re-election at the meeting
• Register your vote on line through our registrar’s
are set out on pages 48 to 49 of the enclosed annual
portal – www.signalshares.com. You will need
report and accounts.
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,
27 April 2020 (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
your investor code which is printed on your
share certificate or may be obtained by
calling the Company’s registrar, Link, on 0371
664 0300. Calls are charged at the standard
geographic rate and will vary by provider. Calls
outside the United Kingdom will be charged at the
applicable international rate. Lines are open
between 09:00 - 17:30, Monday to
Friday excluding public holidays in England and
Wales.
at that time. Changes to entries in the register
• CREST members bay use the CREST electronic
of members after that time shall be disregarded
proxy appointment service as detailed in note 7
in determining the rights of any person to attend
below.
or vote (and the number of votes they may cast) at
the meeting.
If you prefer, you may request a hard copy form
from Link using the numbers shown above and
4. A member is entitled to appoint another person
return it to Link Asset Services, PXS, 34 Beckenham
as his or her proxy to exercise all or any of his
Road, Beckenham, Kent BR3 4TU.
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
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, 27 April 2020
(or, in the event that the meeting is adjourned, no l
ater than 48 hours (excluding any part of the
day that is not a working day) before the time of any
adjourned meeting).
Company’s registrar at: Link Asset Services, PXS, 34
7. CREST members who wish to appoint a proxy
Beckenham Road, Beckenham, Kent BR3 4TU no
or proxies for the meeting or any adjournment of it)
later than 48 hours before the time appointed for
through the CREST electronic proxy appointment
the meeting (excluding non-working days). You will
service may do so by using the procedures
need to state clearly the number of shares in
described in the CREST Manual. CREST personal
relation to which the proxy is appointed. A failure to
members or other CREST sponsored members, and
specify the number of shares each proxy
those CREST members who have appointed a voting
appointment relates to or specifying a number
service provider(s), should refer to their CREST
which when taken together with the number of
sponsor or voting service provider(s), who will be
shares set out in the other proxy appointments is in
able to take the appropriate action on their behalf.
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.
8.
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
5. The appointment of a proxy will not preclude a
specifications and must contain the information
member from attending and voting in person at the
required for such instructions, as described
meeting if he or she so wishes.
in the CREST Manual. The message, regardless of
whether it constitutes the appointment of a
proxy or is an amendment to the instruction given
1
0
7
to a previously appointed proxy, must,
11. As at 16 March 2020 (being the last practicable date
DIRECTIONS TO THE ANNUAL GENERAL MEETING
G E N E R A L N O T E S
G E N E R A L N O T E S
in order to be valid, be transmitted so as to be
before the publication of this notice), the Company’s
received by the Company’s Registrar, Link Registrars
issued share capital consists of 36,968,772 ordinary
(CREST ID RA10) no later than 11:00a.m. on Monday,
shares of 10 pence each, carrying one vote each. As
27 April 2020 (or, if the meeting is adjourned, no
the Company holds 48,112 ordinary shares in
later than 48 hours (excluding any part of the
treasury, in respect of which it cannot exercise any
day that is not a working day) before the time of
votes, the total voting rights in the Company as at
any adjourned meeting). For this purpose, the time
16 March 2020 are 36,920,660.
Car:
Leave the M6 at Junction 23 and take the A49 south towards Newton, Woodlands Park is on the left in approximately
0.3 miles. On entering the estate, Laurel House is accessed from the fourth exit of the roundabout.
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.
of receipt will be taken to be the time (as
determined by the timestamp applied to the
message by the CREST Applications Host) from
which 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.
PUBLIC 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.
1
0
8
1
0
9
N O T E S
N O T E S
F I N A N C I A L C A L E N D A R
PRELIMINARY RESULTS
ANNOUNCED
ANNUAL GENERAL
MEETING
26 February 2020
29 April 2020
INTERIM RESULTS
ANNOUNCED
22 July 2020
LAUREL HOUSE, WOODLANDS
PARK, ASHTON ROAD,
NEWTON-LE-WILLOWS,
WA12 0HH
01925 22 22 22
WWW.NICHOLSPLC.CO.UK
1
1
0
1
1
1
1
1
2