Welcome to the 2020 Nichols plc Annual Report.
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, ICEE, Levi Roots and Sunkist.
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2 0 2 0 N I C H O L S P L C A N N U A L R E P O R T
STRATEGIC REPORT
FINANCIAL HEADLINES
CHAIRMAN’S STATEMENT
OUR BUSINESS MODEL
CHIEF EXECUTIVE OFFICER’S REPORT
CHIEF FINANCIAL OFFICER’S REPORT
RISK MANAGEMENT
SECTION 172 REPORT
GENDER PAY GAP REPORT
GOVERNANCE
DIRECTORS’ REPORT
THE BOARD
CORPORATE GOVERNANCE STATEMENT
AUDIT COMMITTEE REPORT
REMUNERATION COMMITTEE REPORT
NOMINATION COMMITTEE REPORT
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
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STRATEGIC REPORT
FINANCIAL HEADLINES
CHAIRMAN’S STATEMENT
OUR BUSINESS MODEL
CHIEF EXECUTIVE OFFICER’S REPORT
CHIEF FINANCIAL OFFICER’S REPORT
RISK MANAGEMENT
SECTION 172 REPORT
GENDER PAY GAP REPORT
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S T R A T E G I C R E P O R T
Financial
HEADLINES
REVENUE (£M)
ADJUSTED* OPERATING PROFIT (£M)
2020
2019
2018
2017
2016
118.7
117.3
147.0
142.0
132.8
11.7
2020
2019
2018
2017
2016
32.4
31.6
30.5
30.3
-£28.3m
-19.3%
-£20.7m
-64.1%
OPERATING PROFIT (£M)
ADJUSTED* PROFIT BEFORE TAX (£M)
6.6
2020
2019
2018
2017
2016
32.4
31.6
28.7
30.3
11.6
2020
2019
2018
2017
2016
32.4
31.8
30.5
30.4
-£25.8m
-79.7%
-£20.8m
-64.2%
PROFIT BEFORE TAX (£M)
ADJUSTED* BASIC EARNINGS PER SHARE
(PENCE)
6.5
2020
2019
2018
2017
2016
32.4
31.8
28.7
31.5
25.56
2020
2019
2018
2017
2016
72.81
69.23
67.76
66.18
-£25.9m
-79.8%
-47.25p
-64.9%
BASIC EARNINGS PER SHARE (PENCE)
CASH AND CASH EQUIVALENTS (£M)
13.14
2020
2019
2018
2017
2016
72.81
69.23
62.88
69.13
2020
2019
2018
2017
2016
47.3
40.9
38.9
39.8
36.1
-59.67p
-82.0%
+£6.4m
+15.6%
* There were no adjusting items in financial years 2019 or 2018 and therefore the adjusted and reported measures were identical.
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VIMTO
brand
VALUE
IS NOW
£96.5M*
*Source Nielsen Total Coverage Year to Date 26 December 2020
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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
CHAIRMAN’S STATEMENT
from the Vimto brand in the UK, solid growth in Africa
performance of +2.5% (Nielsen to 26 December 2020),
to welcome Andrew as CEO and wish him every success
and a good performance in the Middle East despite the
reflecting further market share gains.
in leading the business during the next phase of its
impact of the recently introduced Sweetened Beverage
Tax (SBT) and Covid-19 restrictions.
Sales across our International markets were £27.0m
(2019: £29.5m). This represented a year on year
development, and I thank Marnie for her significant
contribution over the years.
Cash and cash equivalents at the end of the period
decrease of 8.3%. Despite Covid-19 restrictions in
We were also pleased to welcome David Rattigan to
amounted to £47.3m (2019: £40.9m), marginally ahead
the Middle East and the introduction of the SBT, the
our business as our new CFO during the year. David
of the half year position of £46.8m. Management took
Vimto brand was resilient throughout Ramadan and
became CFO with effect from 2 March 2020, replacing
prudent measures to conserve cash within the business
‘in-market’ sales were broadly in line with the prior
Tim Croston.
JOHN
NICHOLS
N O N - E X E C U T I V E C H A I R M A N
throughout the year, ensuring that Nichols is in the best
year. This performance, combined with African sales
possible place to ‘Build Back Better’ from the impact of
growth of 7.4% to £14.0m (2019: £13.0m) and rest of
the pandemic.
TRADING
world sales growth of 17.3% to £5.7m (2019: £4.9m),
demonstrates the continuing strength of the Vimto
brand internationally. The Group supported its local
Ahead of the pandemic, the Group was achieving good
partner with brand investment to mitigate the impact of
revenue growth with a 6.2% increase in Q1 versus the
the introduction of the SBT in the Middle East.
The Board entered into a Relationship Agreement
with the Nichols Family on 22 July 2020. The purpose
of the Relationship Agreement is to formalise Board
representation for the Nichols Family whilst also
ensuring that the Group conducts its business
independently at all times. As a result, James Nichols
joined the Board on the 22 July 2020 as a Non-Executive
prior year.
The arrival of the pandemic in our markets at the
end of Q1 was a watershed moment for the year. The
introduction of social distancing, the enforced closure
of the Group’s Out of Home (‘OoH’) customers and the
various lockdown measures introduced across the globe
materially impacted our business.
DIVIDEND
Director.
In March 2020, the Board made the decision to
OUTLOOK
withdraw the final dividend (28.0p) for 2019, due to
the uncertainties concerning the financial impact
of Covid-19. At the half year, the Board agreed the
rebalancing of dividend policy to consider the two
financial years 2019 and 2020 as a single review period
Whilst recognising the current and near-term impact
of the pandemic on the soft drinks market, the Board
continues to believe that Nichols, underpinned by the
strength of the Vimto brand, the Group’s diversified
business model and the skill and commitment of our
colleagues, remains well placed to deliver its long-term
strategic ambitions. Given the continued near-term
Q2-Q4 2020 revenues were 26.1% lower compared to
and paid 28.0p, as the Interim Dividend for 2020, in
the prior year. As a result, total Group revenue for the
September 2020.
period was 19.3% lower at £118.7m (2019: £147.0m).
In the second half year, the Board has agreed to evolve
uncertainty, 2021 guidance remains withdrawn.
The Covid-19 pandemic presented us with unequalled
challenges in 2020 and our first and most important
objective through this unprecedented period has
been the protection and wellbeing of our employees
and customers. Throughout these difficult times, our
colleagues have consistently demonstrated their values
and commitment to our business, and I would like to
wholeheartedly thank everyone for their efforts.
The Still and Carbonates product categories were
the dividend policy to reflect the balance of shareholder
impacted significantly by the pandemic, predominantly
needs and the clear opportunities for growth that will
as a result of the enforced closures of the Group’s OoH
exist in the soft drinks market post the pandemic.
customers. In addition, the introduction of the SBT
(reported against the revenue line) in the Middle East
impacted performance. As a result, revenue of Still
products decreased by 8.3% to £65.7m (2019: £71.7m).
Revenue from Carbonates was down 29.7% to £53.0m
Dividend cover going forward will move to broadly 2x.
Therefore, the final dividend proposed is 8.8p, which will
become ex-dividend on the 25 March and paid subject
to shareholder approval on 6 May 2021.
(2019: £75.3m) as outlets closed and impulse sales
BOARD CHANGES DURING THE YEAR
John Nichols
The strength of the Vimto brand, the Group’s robust
reduced.
balance sheet and our diversified business model has
ensured a resilient financial performance in the period
despite the challenging trading conditions across our
markets. We have achieved significant outperformance
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In the UK, revenue decreased by 22.0% to £91.6m
effect from 1 January 2021, replacing Marnie Millard
(2019: £117.5m) driven by a 61.4% reduction within the
OBE. Andrew has been with the Group for eight years
OoH sector. However, within this, the Vimto brand’s
and brings significant industry expertise and excellent
value increased by 6.7% against a soft drinks market
knowledge of our business to the role. I am delighted
Andrew Milne was appointed CEO of the Group with
Non-Executive Chairman
3 March 2021
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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
Ingredients
Like all great tastes - it all starts with
the best ingredients!
The ‘Vimto secret recipe’ is
testimony to this
Customers
Consumers
It’s ultimately all about getting
our much loved brands into
people’s hands!
Manufacture
Our much loved products are made
by the very best - ourselves or our
supplier partners
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
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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 Executive
OFFICER’S REPORT
I feel very privileged and immensely proud
to have been given the opportunity to lead
the business in 2021.
Andrew Milne - CEO
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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 Executive
OFFICER’S REPORT
The foundation of our
performance in 2020 has
been our unique Vimto brand,
which remains as relevant for
our consumers today as it was
when it was established
112 years ago.
We are a business that was founded in the North West
of England 112 years ago, and are home to a range of
branded soft drinks products that we sell in the UK and
Internationally.
ANDREW
MILNE
C H I E F E X E C U T I V E O F F I C E R
I am sure 2020 has proven to be one of the most
challenging in our 112 year history. From the outset of
the pandemic back in March our first priority was to
To enhance our portfolio we also work with a number of
protect the safety and well being of all of our people,
key strategic partners whose global brands complement
continue to serve our customers and support the local
our own ranges.
communities in which we work.
We employ almost 350 people right across the UK and
I wanted to start by saying an enormous thank you to
are proud of the unique culture we have in the business
each and every member of the Vimto team who have
that ensures our people feel engaged and connected
ensured we have delivered against these priorities every
to our business. This engagement with our people has
single day.
been the key ingredient to our achievements in 2020.
I feel very privileged and immensely proud to have been
I am delighted with the work we do to support
given the opportunity to lead the business into 2021 and
our communities and minimise the impact on our
beyond.
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environment.
The value of the Group’s diversification
UK Soft Drinks
across multiple geographies and routes to
market has once again been proven during
2020. The foundation of our performance
in 2020 has been our unique Vimto brand,
(Market statistics given below
are as measured by Nielsen in
the year to 26 December 2020)
which remains as relevant for our consumers
In 2020, volumes in the £8.9bn
today as it was when it was established 112
UK soft drinks market grew by
years ago.
In line with the market, trading conditions
3% whilst value sales grew by
2.5% versus the prior year.
in the UK on-trade have been extremely
Within the soft drinks
challenging due to closures across the
market, the strongest value
hospitality sector throughout the majority
growth was delivered across
of the year. However, the UK retail sector
Cola, Mixers, Dilutes and
has proved to be more resilient as people
Energy drinks. Plain water,
have consumed more products at home,
Flavoured water, Fruit drinks
bought from stores or via fast-growing online
and Sports drinks were all
platforms.
Operating across a range of International
sectors that suffered declines
versus 2019.
markets has also been beneficial during
The Vimto brand delivered
the year. Our Middle East markets have
strong value growth of 6.7%,
been impacted by the introduction of a
gaining significant market
sweetened beverage tax at 50%, but we have
share and adding £6m to its
achieved good growth across our African,
brand value (Nielsen data) in
American and European markets as a result
the twelve-month period to
of outstanding in-market execution. Across
a record £96.5m.
all our geographies we have focused on
driving strong in-market execution of our
commercial programmes, coupled with
focused new product launches to ensure
we have taken market share. We have also
continued to build long term partnerships
with all our key customers and distributors,
who I would like to thank for their
continued loyalty and support during
2020.
The soft drinks category
remains intensely
competitive and
promotionally
driven, but we
continue to focus
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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
on adding value through strong in-market execution,
The UK On-Trade
proud of the effort we have put in to support our
digit sales revenue growth supported by focusing our
product innovation and new distribution gains.
(As measured by CGA Total Out Of Home, Licensed &
partners during this challenging period.
commercial activity on key trading periods.
Within the UK packaged sector, our dilutes portfolio
Foodservice. Last 12 months to 30 November 2020)
Vimto International
Across our European territories we continued to focus
has been at the heart of our exceptionally strong
performance. We have delivered value sales growth of
24% versus the dilutes sub-category growth of 12.8%
growth. This has further consolidated our position as
the UK’s No.2 dilutes brand.
We have also continued to ensure all new product
innovation and marketing activity focuses heavily
on driving our ‘No Added Sugar’ ranges, promoting
healthier options to consumers as part of our
sustainability strategy to achieve a ‘Happier Future’. As a
result, we have once again delivered accelerated growth
on this part of our portfolio.
Innovation has again been central to our success in
2020. Although certain planned new product launches
were delayed due to the pandemic, we added an
exciting new flavour to our Remix range and released
a Vimto ‘Winter Warmer’ limited edition squash
proposition. Offering new flavours and concepts is
It has been the most challenging trading period in the
During 2020, the Covid-19 pandemic affected all our
on-trade sector for 80 years, but we believe consumer
International regions as lockdowns were put in place on
demand remains strong, with a clear willingness to re-
a global scale. In our Middle East region this has been
engage in hospitality once restrictions eventually ease.
coupled with VAT increases and the implementation of
Soft Drinks remain a hugely important part of Out of
Home sales, representing 1.1bn litres, worth £3.9bn
in the last 12 months. In Licensed outlets, soft drinks
a 50% excise tax on sweetened beverages. As a result,
trading conditions have been extremely challenging
throughout the year.
on delivering
new points of
distribution for
our core products
within our key
customers, which
has resulted
in the Group
volume is 348m litres, £2.2bn in the last year. This
We have taken the long term strategic decision in
making market
represents approximately a quarter share of total drinks
conjunction with our long standing partner of over 90
share gains
volume.
In comparison to other categories in Licensed, the sales
performance of soft drinks is in line with total drinks
sales and performing at a similar rate to Wine & Spirits.
The Eat Out to Help Out scheme and national heatwave
years, Aujan Coca-Cola Bottling Company (ACCBC) to
and delivering
invest in an enhanced marketing programme to protect
strong sales
our market share of Vimto in this key region, and I am
momentum.
pleased to report that, as a result, our market share in
the Middle East has not been impacted.
during Q3, combined with the temporary lifting of
Over the key Ramadan trading period, a
certain pandemic-related social restrictions, contributed
comprehensive digital campaign and outstanding
towards a lift in sales of soft drinks for a limited period.
in-store execution delivered one of the most
crucial to attracting new consumers to the Vimto brand
In the UK, sales of soft drinks in Licensed & Foodservice
successful campaigns in the brand’s history.
and ensuring we stay relevant to evolving consumer
combined saw a drop in consumption during 2020 vs.
We have accelerated our innovation pipeline
needs and tastes.
2019 as volume declined 41%, delivering 1.1bn litres in
on the Vimto brand across the region in recent
the year. This was driven by a 53% decline in Licensed
years, and in 2020 we launched new products
Core to the brand’s growth in 2020 has been our award
winning ‘I see Vimto in you’ marketing campaign. The
and a 36% decline in Foodservice.
campaign was first launched in 2018 and has played a
Category performance has retracted significantly due
vital role in underpinning our continued growth over the
to the impact of the coronavirus pandemic reflected
last three years. We have focused on delivering a social,
in the 40% decline in annual turnover in the overall UK
digital and influencer communications plan during 2020
hospitality sector over the past year.
and we have seen our brand penetration reach record
levels at 7.1m households (+407K households vs. 2019
as measured by Kantar).
As the pandemic took hold during 2020, 64% of UK
consumers ate and drank out less frequently than they
including a No Added Sugar cordial product,
an orange still ready-to-drink variant, and a
sour cherry carbonated drink. These new
products have increased the availability
and visibility of the brand across a
number of key customers. Adapting
the brand to changing consumer needs
has played a key role in ensuring our
usually would between July and October. That equates
continued success.
During 2020 we had planned to relaunch our Feel Good
to 88m fewer visits during a key trading period of the
brand into the marketplace. We repositioned the brand
year.
as a 100% natural product, targeted to go to market in
early April 2020. Due to the pandemic our launch plans
have been delayed until 2021.
Due to the challenges highlighted above our business
was severely affected by the closures from March
onwards. The first two months of the year proved
We continue to work in close collaboration with our
strong, despite the fact that traditionally they are the
customers across the UK grocery, foodservice, wholesale
quietest time of the trading year. During the first quarter
and discount channels. Ensuring the strength of these
we also launched our frozen carbonated range, ICEE,
During 2020 we again achieved strong
growth in our African region. We
delivered sales revenue of £14.0m,
representing 7.4% growth versus
2019. This was driven by our core red
can carbonated range, supported
by our strong integrated marketing
campaign and new distribution wins.
relationships has been more important than ever during
into the cinema chain Showcase, which we had been
We also successfully launched our Vimto
2020, and we will continue to keep our customers’ needs
successful in securing as incremental business for 2020.
Watermelon flavour within Algeria and
at the heart of what we do to ensure that consumers
can enjoy our products every day.
Throughout the remainder of 2020 our primary focus
was on supporting our customers and partners across
our Out of Home trading division. Making sure we
did everything possible to ensure that these valued
Mali in a bottled format. Local consumer
reaction has been extremely positive,
resulting in a strong sales performance.
We have achieved strong momentum within the USA
customers can survive in the long term as the hospitality
over recent years working alongside our partner, Ziyad.
sector re-opens was our team’s priority. I am extremely
2020 saw another excellent performance, with double
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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 Vimto Home
Our ‘Vimto Home’ has continued to encompass the
strategic direction for our business during 2020. Our
core purpose as a business is to ‘Make Life Taste Better’
which our people live and breathe everyday. We want
this purpose to inspire all of the partners we work with
and the consumers across the globe who enjoy our
brands on a daily basis.
OUR PURPOSE
OUR
GOAL
OUR
GROWTH
PILLARS
OUR
VALUES
OUR
FOUNDATIONS
CORE PRODUCTS, CORE CUSTOMERS,
CORE MARKETS.
Growth Pillars
Our core brands continue to be loved by all of our consumers and customers and we
will continue to invest and drive growth in these key areas. 2020 has again shown how
important our core products are, as demonstrated by the growth we have seen in our
dilutes business in the UK, our carbonated cans in Africa and the cordial sales we have
delivered during Ramadan.
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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
RIGHT PRODUCTS, RIGHT PLACE, RIGHT TIME.
INNOVATION AND ACQUISITION.
Through continuing to expand our portfolio of products, we have been able to enter brand
Driving growth through innovation and acquisition will continue to be at the heart of
new channels within the market place. 2020 has seen us with our exciting ICEE brand
continue to penetrate the cinema channel in the UK via Showcase. The consumer reaction
our long term growth strategy. This pillar has delivered growth in the business over
many years and will continue to be a key area in which we will prioritise our efforts.
has been very strong and the approach of landing strong brands into new channels will be
Using consumer and market insights to understand the long term trends will be crucial
an important pillar of our long-term growth ambitions.
in ensuring we carefully plan the evolution of our business growth. Even during the
pandemic we have launched numerous new products across the globe.
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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
Happier Future
We introduced you to our Happier Future Home in 2019,
and throughout 2020, despite the global pandemic, we
have continued to work hard on our ESG agenda.
With Our Partners
We are focusing on three key pillars of our Happier
Future strategy with our partners.
Carbon Footprint
Our focus has been and continues to be reducing our
These figures correspond to a 36% decrease in total
Scope 1 and 2 emissions. We are at the beginning of
energy consumption and a 31% decrease in gross
assessing Scope 3 impact with our partners. We are
emissions compared to 2019. Normalised gross
pleased to have delivered on two key initiatives with our
emissions increased from 0.1434 tCO2e/kL to 0. 2437
partners in 2020 that have reduced our environmental
tCO2e/kL drinks produced .
impact:
The business’ energy and carbon usage has been
• We have further reduced the weight of our
profoundly affected by the COVID-19 pandemic.
Aluminium 330ml cans by an additional 0.4g, saving
Production volume at our Ross-on-Wye factory has
21 tons of aluminium over the year; and we have
reduced by 59% from 12,430 kL in 2019 to 5,037 kL in
reduced the weights of the caps and bottles in our
2020. Total energy consumption has reduced as a result
squash range, saving 115 tonnes of plastic in total in
of this, but as our production facility has a significant
2020.
Environmental sustainability is a core priority for
Nichols, which we have embedded within our “Happier
baseload and the fuel demand of our logistics function
is not linearly related to drinks output, our normalised
emissions have been driven up by 70%.
Future” strategy, which outlines the ways the business
To continue reducing the business’ carbon impact,
is working with its partners and for its communities
in 2020 Nichols took the decision to procure green
to make life taste better for everyone. From the
electricity for the Ross-on-Wye factory and our Head
manufacture of our product range at our Ross-on-Wye
Office in Newton-le-Willows. The purchase of green
factory, through to all supporting areas of the business
electricity (backed by Renewable Energy Guarantees
we promote our vision for a sustainable business
of Origin certificates - REGOs) covered 22% of all
strategy.
In accordance with The Companies (Directors’ Report)
and Limited Liability Partnerships (Energy and Carbon
Report) Regulations 2018, we have prepared a
Streamlined Energy & Carbon Report (SECR) for the
financial year of 2020.
This measurement and reporting of environmental
performance will drive direct benefits for the business
such as lower energy and resource costs, improved
understanding of exposure to the risks of climate
change and by allowing the business to demonstrate
sustainable leadership within the soft drinks industry.
electricity consumed in 2020, resulting in a reduction
of net emissions of 74 tCO2e, or 6% of total emissions.
Therefore, the 4,785 MWh energy consumed resulted in
net carbon emissions of 1,153 tCO2e, corresponding to
a 35% reduction compared to the 2019 benchmark year.
Normalised net emissions increased from 0.1434 tCO2e/
kL to 0.2289 tCO2e/kL drinks produced.
Nichols have directed increasing focus on our
sustainability agenda in the last year. A number of
energy-saving measures have been implemented at
the Ross-on-Wye factory. We have made improvements
to lighting systems through replacing old units with
high-efficiency LED lighting, including where appropriate
We engaged Carbon Architecture via the BSDA in 2016,
motion sensors for greater total electricity savings.
and we have been working with them since to provide
Additionally, a boiler steam efficiency and reliability
independent analysis of our carbon footprint. Therefore,
report identified system improvements which have been
the following report has been prepared in conjunction
carried out by the equipment OEM. Furthermore, by
with Carbon Architecture. We have selected tCO2e/
replacing our aged server air conditioning unit with a
kL as our SECR ratio as we feel this is most aligned
new unit which utilises a lower global warming potential
to the activities of the Group. Nichols’ total energy
refrigerant gas and has a higher energy efficiency rating,
consumption for this financial year was 4,785 MWh,
we have reduced electricity consumption and the impact
resulting in gross carbon emissions of 1,227 tCO2e.
of unintentional f-gas leaks.
Nichols’ purpose is to ensure “We Make Life Taste Better”. To achieve our purpose, we believe we need to create a
happier future for our planet by doing the right things in the right way, with our partners and for our communities.
In order to achieve our goals, we are working closely with our partners to agree shared commitments on carbon
consumption, sustainable packaging, health and wellbeing and to give back to the local communities we operate in.
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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
Current
reporting year
01/01/20 - 31/12/20
Comparison
calendar year
01/01/19 - 31/12/19
638,415
876,145
3,270,397
4,784,957
1,101,269
1,069,003
5,275,955
7,446,227
Sustainable Packaging
Parameter
Natural gas consumed
Grid electricity consumed
Transport fuels consumed
Total energy consumption used to calculate
emissions
Emissions from combustion of gas (scope 1)
Emissions from transportation in vehicles
owned or controlled by reporting company
(scope 1)
Fugitive emissions from refrigeration plant
(scope 1)
Units
kWh
kWh
kWh
kWh
tCO2e
tCO2e
tCO2e
Emissions from purchased electricity (scope 2)
tCO2e
Emissions from business travel in vehicles
owned or operated by 3rd parties (scope 3)
Total gross carbon emissions
Carbon reduction through green electricity
tariff backed by REGOs
Total net carbon emissions
Intensity ratio: Total gross emissions / 1000
Litre product
Intensity ratio: Total net emissions / 1000
Litre product
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e/kL
tCO2e/kL
117
786
120
204
-
1,227
(74)
1,153
0.2437
0.2289
202
1,287
20
273
-
1,783
-
1,783
0.1434
0.1434
Methodology
This report has been prepared following the GHG Reporting Protocol – Corporate Standard
and using the guidance set out in Environmental Reporting Guidelines: Including streamlined
energy and carbon reporting guidance – HM Government (March 2019).
Energy consumption data has been sourced from utility supplier invoices, or where this is not
available calculated from site records and travel expense data.
As this is the first SECR reporting year, a comparison year is not mandatory but we have
included data from 2019 to act as a baseline.
Conversion from energy to emissions was completed by application of the relevant emissions
factor from UK Government GHG Conversion Factors for Company Reporting for the
appropriate year.
Energy Efficiency
Action
Throughout 2020, a number of light fittings have been replaced with LED lighting, including
sensor controls fitted on five. This has been calculated to save 1.4 MWh of electricity p.a.,
equating to 0.8 tCO2e.
In February 2020, a boiler steam efficiency and reliability report were conducted at the Ross-
on-Wye site, with system improvements subsequently enacted by the equipment OEM.
In June 2020, a new air conditioning unit was purchased for the server room. This new unit
utilised low global warming potential and high energy efficiency refrigerant gas R32, replacing
R410A gas which was used in the previous unit. R32 requires 20% less charge and is 3-5%
more efficient than R410A gas.
Prepared in line with guidance from: Environmental Reporting Guidelines: Including streamlined energy and carbon reporting guidance H M
Government, March 2019
26
100% OF OUR UK DRINKS
PACKAGING IS RECYCLABLE
WE USE RPET IN OVER 60% OF OUR
UK PACKAGED DRINKS RANGE
RPET SOURCED
FROM UK ONLY
Don ’ t
Don ’ t
fo r g e t
fo r g e t
FIRST EVER VIMTO
REFILL STATION
WE USE OPRL (ON PACK RECYCLING
LOGOS) ON ALL OF OUR UK PACKAGED
DRINKS RANGE
For Nichols, “Sustainable Packaging” is about
have been directed to landfill is diverted and used to
recyclability, considering the materials we use, and
produce our shrink film.
promoting responsible consumer behaviour. We are
committed to having a sustainable but achievable plan
surrounding the use of plastic within every aspect of
the organisation. We continue to work closely with our
suppliers to use more recycled PET into our packaged
portfolio. Our cordial range is made up of 51% rPET, all
of which is sourced from within the UK to ensure our
carbon footprint remains as low as possible.
In line with the recent plastic straw ban, we offer a
full range of consumables to our customers, including
paper straws and spoon straws. Our Slurper Scooper
‘Instant Win’ Frozen drink promotion, launched in 2020,
The Scottish Government has approved legislation for
a Deposit Return Scheme (DRS). We fully support the
introduction of a well-designed DRS, as this will ensure
we create a sustainable infrastructure in the UK. A key
component of the DRS is its support of wider recycling
initiatives, improving consumer awareness of the need
to recycle. This will increase availability of r-PET for the
entire industry. Nichols acknowledges the need for a
unified UK-wide system embraced by all parties within
the supply chain – from national and local governments,
to soft drinks manufacturers and retailers, and to end-
consumers.
Through the BSDA we continue to work with
Government to reform the current Producer
Responsibility Obligations Regulations related to the
DRS and any associated taxes that are levied to the
industry.
encouraged and incentivised consumer behavior change
In the second half of 2020, we installed our very first
from plastic cups to paper alternatives.
in-store refill station in Asda for our dilutes range, an
Every piece of packaging we use or supply on our
UK packaged products is 100% recyclable, and we
continue to invest in the UK’s recycling infrastructure by
purchasing UK only Packaging Recovery Notes (PRN).
All our cordial shrink film contains 50% post-consumer
recycled waste, meaning material that would otherwise
initiative intended to help shoppers reduce, re-use and
recycle packaging – making the lives of our customers
and their consumers taste better.
27
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
60.5% of
Vimto Cordial
sold in 2020
was No Added
Sugar
In the UK all our
products are exempt
from the Sugar Levy
52% of Vimto Products
sold in 2020 were No
Added Sugar
We have reduced our
use of sugar by 36% in
the last 5 years
(*based upon % per Litre)
All UK packaged
drinks innovation is
No Added Sugar
(in the past 5 years)
Healthier Future
Innovation is a key growth driver of our business as we
a greater share of our overall brand sales, having
evolve to meet ever-changing consumer, customer and
moved from 33% to 52%. Within dilutes, we have seen
category needs. Underpinned by our category strategy,
an equally positive and significant shift, with the share
our product and packaging innovation will centre on
of NAS products rising from 46.8% to 60.5% of sales**,
providing solutions that address both the health and
while average calories per litre have fallen by 22% over
sustainability agenda. Our objective is twofold: firstly,
the same period.
to re-ignite growth in core product segments, and
secondly, to identify the new product segments of the
future that will deliver both consumer and customer
value growth.
Our focus on consumer health extends to our
international business. We launched a new NAS cordial
in the Middle East. We’ve also reduced sugar levels in
our carbonated products in a number of markets across
The Soft Drinks Industry Levy (SDIL) was introduced in
Africa.
April 2018, and as previously reported, we are delighted
with the performance of the Vimto brand, which has
not been impacted by the introduction of the Levy.
We have been focused on reducing sugar since 2012
Finally, in our Out of Home route to market, we have
reduced sugar content* across our own postmix and
frozen brands, by over 5% year-on-year.
and this work continues today, both in the UK and
Our continued commitment to product innovation and
Internationally.
All our products in the UK are exempt from the SDIL.
Since 2015, our sugar usage* has reduced by 36%
providing consumers with healthier choices ensures we
are well placed as new regulations on the promotion of
HFSS*** products come into effect in the future.
despite our volume in litres growing by 34%, and on our
flagship Vimto brand, No Added Sugar (NAS) commands
*per litre of product
** 2020 vs 2015
*** high in fat, salt & sugar
29
28
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
CASE STUDIES
Asda Refill Station
In October 2020, the first ever Vimto Refill station was
launched at the Asda Middleton store as part of an
inaugural trial for Asda’s first sustainable store format.
Asda partnered with a number of popular household
brands for the trial, including Vimto. We installed new
equipment within the store to enable customers to bring
their own containers to fill with Vimto.
Asda are using the new-look store to test and learn
which elements appeal most to their customers that can
then be developed at scale in order to roll out to more
locations in 2021. The new store has 15 refill stations,
offering customers a selection of over 30 household
staples sold in refillable format.
Products at the refill station include a selection of
different Kellogg’s cereals, PG Tips tea bags, Quaker
Oats, Lavazza and Taylors of Harrogate coffee beans,
Vimto cordial and Asda’s own brand rice and pasta,
as well as popular brands of shampoo, conditioner,
detergent, handwash and shower gels sold in refillable
format – a retail first.
Asda want more suppliers to partner on Refill Solutions
by 2023 and this initiative is closely aligned with our
Happier Future strategy. So far, Vimto has proven to
be the most popular brand within the Refill Zone in
Middleton.
Roger Burnley, CEO of Asda, commented:
Vimto is already proving a hit
with Asda shoppers with it
being the most popular product on
the Refill Zone so far
30
31
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
equipped gym, recording studio, health and wellbeing
room, skate park, 3G Astroturf pitch, radio station,
climbing wall and dance studio.
What has been particularly impressive, is that young
people have been at the heart of the project throughout.
A Young People’s Development Group, made up of local
young people, has steered some of the major decisions,
including the Club’s new logo and branding, and the
interviewing of new staff. The Group has also taken part
in fundraising activities and promoted the Youth Zone
to other young people, and will continue to be involved
over the next 12 months.
The new facility is the culmination of all the hard work,
tenacity and dedication of the team over the past 12
years and it was a special moment to be part of at
the end of 2020, when we gathered at the site to see
construction begin.
Dave McNicholl, CEO of Warrington Youth Club,
commented:
We are indebted to Nichols for their generous support as one of our
Founder Patrons and it was wonderful to welcome Marnie to the site
and see the vision that they have invested into becoming a physical reality.
What Nichols plc are helping to create will transform and enhance the lives
of thousands of young people in Warrington.
Feel Good Drinks
Feel Good Drinks creates 100% natural drinks packed
in primary plastic free packaging. We seek to give
back to people and the planet by donating money
from every can sold through our 3% People & Planet
fund. In 2020 Feel Good supported ‘Every Can Counts’,
focusing on the circular economy and closing the
Out of Home recycling loop, ‘Only a Pavement Away’,
who support homeless people by providing support
and employment opportunities in the food and drink
sector and ‘FareShare’, where we delivered over 60,000
cans to vulnerable households across the UK through
FareShare’s network of food banks.
In 2021, the business continues to focus on giving back
and reducing the negative impact we have on the planet
starting with addressing one of the really important
impacts of our brand; carbon. We are currently working
on assessing our carbon footprint and developing a
carbon reduction strategy as we transition to circular
practices that limit the impact of our business on the
environment.
For Our Communities
Our communities have never been more important
programme for young people who struggled to go back
than in 2020. Our partnerships with Warrington Youth
to school in September after the first lockdown. The
Club, Waves for Change and Salford City FC have been
Club also waived its usual £5 annual membership fee,
different in 2020, but our commitment to doing good
and reduced capacity at the Youth Club and Gym to
has remained the same. As you can see across these
ensure the safety of young people.
partnerships, a key element to our Giving Back approach
is to support young people living in our communities in
particular.
Warrington Youth Club
When the Covid-19 pandemic hit in 2020, Warrington
Youth Club (WYC) needed to re-shape its offer to local
young people to ensure the club could continue to
provide access to activities and support, albeit in a
different format. Initiatives included Youth Zone @
The Club has been on an epic journey to become
Warrington Youth Zone, which first started 12 years
ago, and like many ambitious projects, has encountered
several obstacles over the years. However, the team
were delighted when construction started in November
2020 on a new facility that will transform services for
young people and become an iconic, state-of-the-
art, £6.9million building for all young people in the
Warrington area to enjoy.
Home; an online offer of digital activities to engage with
Membership numbers will swell to over 7,000 young
young people, a new childcare provision for children of
people aged 7 – 19, and the Youth Zone will be
NHS key workers over the summer, which was a first
developed in partnership with national charity OnSide
for the Club, a “Zone to Home” delivery service, for
Youth Zones. The team are aiming to officially open the
vulnerable families facing hardship during the pandemic
3,200sq metre Youth Zone in Spring 2022. The high-
and Education Mentors; a new mentoring
quality facilities will include a four-court sports hall, fully
32
33
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
Salford City FC
The Vimto and Salford City FC partnership has grown
first team, showing the progression and opportunity the
from strength to strength over the past three years.
Academy 92 players have access to in the Salford City
Whilst 2020 has thrown its challenges, Salford City FC
FC set-up.
has shown a great attitude and positive approach to
dealing with the limitations in fulfilling their day to day
passion for football.
We are proud to share that we have extended our
partnership with Salford City FC and the Academy 92.
It has been a pleasure to be a part of the club’s growth
Vimto has supported Academy 92 since 2018. Academy
over the past three years and we are even more excited
92 gives young talent within Greater Manchester the
to see what the future holds.
opportunity to develop and excel in their passion,
whether it is through football or the dedicated program
at Trafford College, attended by all Academy 92 players.
At Trafford College, players receive training in subjects
beyond football that will help individuals develop life
skills that they can use for the rest of their career.
As an Academy 92 partner, Vimto is very proud of the
Academy’s developments this year. The Under-18s
finished top of the EFL Youth Alliance North West
division in their debut season. Their success has led
to first team contracts being offered to three of the
Academy 92 players. Additionally, 14 players from the
development squad have all made appearances in the
35
REACH 2,000+
WAVES FOR CHANGE
Changing Lives One Wave At A Time
Waves for Change (W4C) began in 2009 as a small,
self” concept by independently mastering difficult new
informal weekend surf club for a handful of children
tasks such as surfing and meditation as well as teaching
from Masiphumelele (Cape Town, South Africa). Every
life skills, behaviours and community interaction. At the
weekend co-founders Tim Conibear (from the UK) and
heart of the programme are young people from the
Apish Tshetsha (a local Masiphumelele youth leader)
same or similar contexts to the participants, recruited
would take the children surfing at Muizenberg beach,
because of their values and commitment to being
a historically “whites” only beach with perfect beginner
change-makers in their community.
waves. Most of the children have never been in the
water but Tim, Apish and the team do more than simply
teach surfing.
Vimto has been a proud partner of W4C right from the
first formation of that wave 11 years ago. We support
the surf therapy mentors by investing in their skills
The charity takes South African children from
and understanding, and providing the resources such
disadvantaged backgrounds, often township
as transport, surf boards, wetsuits, and access to
environments, where they experience an average of
psychologists that allow this inclusive wellbeing service
eight traumatic events each year yet have no access to
to be delivered through the impactful surf therapy
much needed mental health services, to experience the
sessions.
thrill of surfing, and to feel safe, heard, and connected.
The children have often been exposed to gang culture,
drug and alcohol abuse and W4C offers respite from
the stress caused by the adversity they experience daily
through surf therapy. The sessions build on a “positive
WFC now has sites across South Africa, Liberia and
Sierra Leone with plans to extend into Kenya, Tanzania
and Senegal. 65 coaches reach 2,000+ children per
week. It is the proud Winner of 5 major awards,
including Laureus Sport for Good 2017.
34
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
#
m
a
k
e
y
o
u
r
s
e
l
f
a
t
h
o
m
e
We successfully donated over
120,000 soft drinks across the
country, to Key workers.
Day to Make A Difference
As part of our Giving Back to Local Communities Happier
Future Pillar, in 2020 we introduced “A Day to Make A
Difference,” in which employees were given time and
encouraged to volunteer in their local communities.
Despite some of the unexpected obstacles that
Covid-19 presented, many of our employees were able
to get involved in their local communities and make a
difference this year.
Our People
Throughout 2020 and in the midst of the global
pandemic, our priority has been to care for and protect
our Vimto family – both our employees, and those in our
local communities.
Our communities have never been more important than
in 2020. Our employees quickly responded with a call
to arms across the business to support the pressure
on charities, recognising the fantastic and selfless key
workers in communities they live in across the UK. A
multi-disciplined team of colleagues collaborated to
successfully ship over 120,000 soft drinks across the
country. Recipients included Food banks, London &
Regional Ambulance Services, the North West NHS
Hospital Trust, Calderdale & Huddersfield hospitals
and The Greater Manchester Mayor’s charity, with a
particular focus on helping the homeless.
Like many businesses, we had to quickly adapt and
many of our employees moved to working from home,
which was not a widely established way of working for
our business. Very quickly we were up and running
with new technologies and ways of working, and
what sometimes felt like welcoming work friends and
colleagues into our homes through our screens.
36
37
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 wellbeing of every single one of our colleagues
We organised training for many colleagues, regular
During 2020, we used employee surveys to listen
levels of confidence in the leadership response to the
was paramount to us. We created a programme
wellbeing check-ins and virtual social activities. As the
and respond to our colleagues’ feedback on their
pandemic including the effectiveness of communication.
which focused on wellbeing, supporting our people to
year progressed we needed our colleagues to quickly
experiences during the pandemic. This included new
Between May and October, we ran three surveys and an
work from home safely and to develop new tools and
and regularly adapt in what became a complex and ever-
working arrangements, sharing insights into their mental
average of 78% colleagues responded to each survey.
approaches to adapt to a new work environment. Our
changing context in the hospitality and leisure industry.
and physical wellbeing as well as seeking to understand
The key insights across the surveys were:
#makeyourselfathome series supported people to
They responded with flexibility, grace and commitment.
“Do What You Can,” recognising that colleagues were
juggling family life, home-schooling and shared work
and living spaces. “Free From Friday” encouraged people
to use Fridays to take a break from virtual meetings
to focus on other work and wellbeing. We created a
WellBeing Hub with a wealth of resources that provided
practical support on a broad range of wellbeing topics.
All of this was delivered via our internal communications
platform, which enabled our people to connect and
We recruited a new Health & Safety (H&S) Team to
ensure that, as the business grows, we retain and
develop the appropriate H&S policies and procedures,
and equip our people through training and best practice
doing the right things to keep themselves, colleagues
and customers safe. This was vitally important in
ensuring workplaces were Covid-secure and our
employees felt safe and confident.
collaborate, sharing experiences and creating much
Our people have carried us through these most unusual
needed fun in the working day.
times with all the passion and commitment we see every
Across our Out of Home (OOH) business, many of our
colleagues spent time on furlough during the year
given the impact on the hospitality and leisure industry.
We recognised the challenges this could bring to our
colleagues around purpose and wellbeing. Staying
connected with everyone at home was a priority.
day in every year. It is testament to our people and our
culture that engagement has remained high and been
sustained during the pandemic. More than ever, our
values have proven to be a key foundation to our home
and our Vimto family.
38
Average of 97%
felt Vimto cared about
their safety, health
& wellbeing
97% felt
communication
was open and honest.
96% felt
supported
by the business
Average of 69% had
no concerns about
returning to work
50% were finding it more
challenging working from
home compared to their
normal workplace
The insights the survey results gave us enabled us to
Summary:
quickly respond to immediate concerns or opportunities
to improve working arrangements and in 2021 we
are building our plan on how we will ‘Build Back
Better’ coming out of the pandemic, recognising the
opportunity to leverage some of the positive changes
that our colleagues have experienced with changes to
their working lives.
As we enter 2021 I have no doubt that we will continue
to operate in a challenging and changing environment
that will continue for a sustained period. Over many
years soft drinks has proven to be a highly resilient
category and even throughout 2020 during the global
pandemic we have seen value growth. I feel confident
that given our strong portfolio of brands, diverse
Our next full engagement survey will be during 2021,
business model and exceptional people we can continue
the results of which will be included in the 2021 annual
to deliver our long-term strategic objectives in 2021 and
report.
beyond.
The Senior Leadership Team have held a number of
workshops, including engaging with an external partner
to help us accelerate the development of our Diversity &
Inclusion Strategy.
Andrew Milne
Chief Executive Officer
3 March 2021
39
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 Financial
OFFICER’S REPORT
FINANCIAL HEADLINES
• Vimto Brand Value in the UK +6.7% versus soft drink
market of +2.5%1
Group Revenue
Adjusted Operating Profit5
Operating Profit
Adjusted Profit Before Tax (PBT)5
Profit Before Tax (PBT)
Adjusted PBT Margin5
PBT Margin
EBITDA6
Adjusted earnings per share (basic)
Earnings per share (basic)
Cash and cash equivalents
Proposed Final Dividend
Full year dividend
Year ended
31 December 2020
Year ended
31 December 2019
Movement
118.7
11.7
6.6
11.6
6.5
9.8%
5.5%
16.5
25.56p
13.14p
47.3
8.8p
36.8p
147.0
32.4
32.4
32.4
32.4
22.1%
22.1%
37.0
72.81p
72.81p
40.9
28.0p7
12.4p7
(19.3%)
(64.1%)
(79.7%)
(64.2%)
(79.8%)
(12.3ppts)
(16.6ppts)
(55.5%)
(64.9%)
(82.0%)
+15.6%
(68.6%)
+196.8%
1 Nielsen Total Coverage Year to Date 26 December 2020.
2 Free Cash Flow is the net increase in cash and cash equivalents before acquisition funding and dividends.
3 Cash Conversion is the Free Cash Flow/ Adjusted Profit After Tax.
4 Dividend cover is the adjusted basic earnings per share divided by the dividend per share.
5 Excluding Exceptional items; impairment charges of £3.8m, operational review and restructuring costs of £1.3m (2019: £nil).
6 EBITDA is the statutory profit before tax, interest, depreciation and amortisation.
7 2019 Final Dividend was cancelled on 31 March 2020 due to the effect of the Covid-19 pandemic.
DAVID
RATTIGAN
C H I E F F I N A N C I A L O F F I C E R
• Vimto Brand ‘in-market’ Middle East sales remained
REVENUE
resilient through Ramadan despite Sweetened
Beverage Tax (SBT) and Covid-19 restrictions
Group revenues were £118.7m, a decrease of 19.3%
compared to 2019, as Covid-19 restrictions significantly
year on year. In Africa, progress continued at pace with
revenues improving 7.4%. Elsewhere, sales into the US
performed particularly well.
• Vimto in Africa delivered strong revenue growth of
impacted the OoH sector (where revenues were down
The impact of movements in foreign exchange rates
+7.4%
61.4%), impacting both Still and Carbonate performance.
on revenue year on year was immaterial, at less than
• Vimto continues to progress across the rest of the
The Group’s packaged routes to market had an
£0.1m.
world, delivering revenue growth of +17.3%
excellent year, delivering growth in both the UK and
GROSS PROFIT
• Out of Home (OoH) significantly impacted by the
pandemic with revenues down 61.4% and fixed costs
weighing heavily on overall financial performance
• Strong cash performance in the period, Free Cash
Flow2 +£17.6m, Cash Conversion3 at 186%.
• Working capital focus with slower end of year 2020
due to Covid-19
• Exceptional charge of £5.1m
• Of which £3.8m, non-cash Impairment of Feel Good
Goodwill and Intangible Assets
• £1.3m operational review and restructuring
• Final dividend proposed of 8.8p reflecting 2x cover4
for combined 2019 and 2020 performance period
internationally in volume terms. Across the globe,
Vimto performed well and delivered solid progress.
Internationally, reported numbers were impacted in
value terms through the Group’s investment to offset
some of the pricing impact of the newly introduced
Middle East SBT.
UK packaged revenues improved by 2.7%, driven by
the performance of the Vimto brand, in particular
within Multiple and Discount Retailers, where revenues
increased by 9.5%. Revenues across Convenience,
Delivered Wholesale and Cash and Carry fell 10.9% as a
result of Covid-19 closures and restrictions.
Gross profit at £49.6m was £20.4m lower than 2019
(£70.0m) and 5.8 percentage points lower at 41.8%
(2019: 47.6%). Of this, £11.8m was the net volume effect
of the OoH route to market Covid-19 impact and the
growth seen across the UK packaged and International
markets.
The International route to market experienced a range
of gross margin pressures in the period. The Group
supported its local partner with brand investment to
mitigate the impact of the introduction of the SBT in
the Middle East and encouragingly ‘in market’ volumes
were flat in the year despite the impact of the SBT and
Internationally, Middle East volumes performed well
Covid-19 restrictions. Additionally, there was a £0.4m
through Ramadan, with ‘in market’ sales broadly flat
gross profit impact across the African business as supply
40
41
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
moved to imported cans from concentrate to support
EXCEPTIONAL COSTS
PROFIT BEFORE TAX AND TAX RATE
expects the Group’s debtors and inventories to return to
The Group has incurred £5.1m of exceptional costs
Reported profit before tax was £6.5m, a decrease of
local supply chains impacted by Covid-19 closures. A
further £0.3m of gross profit was invested to develop
the Group’s rest of world markets which performed
during the year (2019: £nil).
strongly during the year in volume terms.
Following a strategic review of the Group’s ‘Feel Good’
UK raw material cost increases in the year combined
with some positive one-offs in 2019, resulted in a further
negative gross profit impact of £2.3m when compared
with 2019.
Brand and its recognition as a separate Cash Generating
Unit (‘CGU’), the Group has incurred a non-cash
impairment to Goodwill and Intangible Assets of its ‘Feel
to the ‘Feel Good’ Brand, which has recently been
Within OoH under recovery of costs largely associated
relaunched in the UK. Further detail is provided in note
with the factory at Ross-on-Wye led to further gross
12 to the financial statements.
profit pressure of £1.1m as a result of Covid-19.
In addition, the Group supported OoH customers
supply chain in Q4, engaging third party consultants
with new for old stock following the re-opening from
and this is expected to conclude with implementation
lockdown 1 and provided for stock write offs as owned
through 2021. Costs incurred to date amount to £0.3m
stock became obsolete, impacting gross profit by a
with further costs expected in 2021.
further £1.0m.
79.8% compared to the prior year (2019: £32.4m).
Adjusted profit before tax reduced by 64.2% to £11.6m
(2019: £32.4m). The tax charge on adjusted profit before
tax for the period of £2.2m (2019: £5.6m) represents an
effective tax rate of 18.7% (2019: 17.2%).
Despite the impact of the pandemic on trading, cash
and cash equivalents at the end of the period remained
strong at £47.3m (2019: £40.9m), marginally ahead of
2019 levels over the medium term. As noted at the half
year, the Group benefitted from a prior year insurance
claim during the period, which provided £2.0m of
cash (there was no 2020 income statement impact
and this is reported within the movement in trade and
other receivables line in the Consolidated Cash Flow
statement).
EARNINGS PER SHARE
On an adjusted basis, diluted earnings per share (EPS)
was 25.54 pence (2019: 72.77p). Total adjusted EPS
decreased to 25.56 pence (2019: 72.81p) with basic EPS
at 13.14 pence (2019: 72.81p).
The Group focused significantly on cash management
throughout this unique year with particular emphasis
PENSIONS
on balancing the needs of its various stakeholders by
The Group operates two employee benefit plans, a
working flexibly with shareholders, staff, customers, and
defined benefit plan that provides benefits based on
Good’ Brand of £3.8m. The Group remains committed
BALANCE SHEET AND CASH AND CASH EQUIVALENTS
The Group commenced a review of its UK packaged
the half year position of £46.8m.
The Group completed a review of its operational and
the UK Government as events developed. At the same
final salary, which is now closed to new members,
DISTRIBUTION EXPENSES
leadership structures in Q4.
time, the Board has remained focused on ensuring the
and a defined contribution group personal plan. At 31
Distribution expenses totalled £8.0m (2019: £7.4m), an
Operational changes followed the integration of prior
increase of 7.5%. Distribution costs within the Group are
year acquisitions and the implementation of new
largely associated with the UK packaged route to market
systems into the OoH route to market. These changes
Group remains well positioned to deliver its long-term
December 2020, the Group recognised a surplus on
growth plans and exploit growth opportunities across
its UK defined benefit scheme of £0.3m (31 December
the business as the impact of the pandemic subsides.
2019: deficit £0.3m).
and the increase is largely due to the higher trading
were implemented in Q4, making a number of roles
Whilst the Group took mitigating actions to conserve
During the start of 2021, the Group has agreed with the
volumes reported in the period but also additional
redundant at the year-end incurring costs of £0.7m.
cash, including the rebalancing of its dividend policy
Trustees a de-risking future funding plan for the defined
disruption within our outbound supply chain as a result
of the Covid-19 pandemic.
The Group decided to move from three Executive
Directors to two at the year-end following a review
as described in the Chairman’s Statement, Nichols also
benefit scheme.
supported its stakeholders by:
BREXIT
ADMINISTRATION EXPENSES
of the Executive Board members portfolios. Early
• Topping up all furloughed staff’s pay to 100%
termination costs associated with these changes were
throughout the furlough period (£0.3m) having
Administration expenses, excluding exceptional items,
totalled £30.0m (2019: £30.1m), a decrease of 0.3%.
Management focused on reducing discretionary spend
and realigning marketing investment resulting in cost
reductions of £1.2m. No bonuses or LTIPs were accrued
during the year and labour costs were managed closely,
£0.3m.
Due to the one-off nature of these charges, the Board
is treating these items as exceptional costs and their
impact has been removed in all adjusted measures
throughout this report.
resulting in cost reductions of £1.1m.
OPERATING PROFIT
The Group incurred further bad debt provisioning
Adjusted Operating Profit was £11.7m was down
and asset write offs associated with the OoH business
£20.7m, a 64.1% decrease on prior year (2019: £32.4m).
totalling £1.9m versus 2019. As smaller customers in the
Operating Profit of £6.6m (2019: £32.4m) is after
hospitality sector failed to re-open following lockdowns,
charging exceptional items of £5.1m (2019: nil) during
the Group has made additional provisions for bad debt.
the period.
utilised the Government furlough scheme (£1.4m);
• Replacing old stock with new (£0.4m), free of charge
for its OoH customers following lockdown 1 as well as
providing enhanced credit terms; and
• Continued full payment of taxes and by not
participating in loan or payment deferral
opportunities.
In light of the EU–UK Trade and Cooperation Agreement
being signed on 30 December 2020, the Board continues
to monitor the impact of Brexit. A multi-functional
project steering committee has been working to identify
the impact of Brexit on the Group’s operations with a
comprehensive mitigation plan now in place.
The free trade agreement implemented between the EU
and UK has eliminated the risk of significant incremental
trade tariffs that a no deal Brexit would have posed to
The Group’s focus on working capital management,
the Group. The Group has experienced an increased
the restriction of non-essential capital expenditure,
administrative burden post Brexit although its exposure
and maintenance of customer relationships resulted in
to EU-UK trade is relatively low given our outsourced
lower debtor and inventory balances than the prior year.
manufacturing supply chain (UK and EU).
Creditor balances were broadly in line year on year. The
A detailed exercise been undertaken to trace and verify
assets held at customer outlets and as a result they have
been written off when determined to be obsolete, lost
or unlikely to deliver economic benefit.
The impact of movements in foreign exchange rates
strength of the Group’s closing balance sheet reflects
on operating profit year on year was highly immaterial,
its diversified routes to market, asset light model, and
amounting to less than £0.1m.
insourced OoH manufacturing.
The Board will continue to closely monitor the impact
of the agreement and the implications this has on the
movement of products into and from the EU.
The Group’s prior year investment in OoH, acquisitions
FINANCE COSTS
and machinery increased the Group’s depreciation
Net Finance costs of £nil (2019: £0.1m) were broadly in
charge by £0.4m year on year.
the line with the prior year.
The Group was pleased to generate Free Cash Flow of
£17.6m, with a cash conversion of 186%, recognising
the unwinding of 2019 working capital balances in 2020.
Whilst recognising the current and near-term impact
of the pandemic on the soft drinks market, the Board
David Rattigan
Chief Financial Officer
3 March 2021
42
43
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
MANAGEMENT
Risk score movement key
Increased Decreased No change
PRINCIPAL RISKS AND UNCERTAINTIES
The primary aim of the Group’s risk management
for office-based colleagues where possible and for
LOSS OF SYSTEM AVAILABILITY
process is to assist the business in meeting its strategic
office and operational locations which have remained
Impact
Mitigation
Development
and operational objectives.
open strict ‘Covid Secure’ measures have been in place.
The Board identifies the principal risks while operational
risks are identified via a bottom up approach and
managed via functional risk registers. Both current risks
and emerging risks are regularly reviewed using both
While the short-term effects of the pandemic have
been significant on the Group’s financial performance
our strategy has not changed. The Board continues to
closely monitor and respond to the situation.
In common with many other
Nichols operates several
Throughout the year the business
businesses we are highly dependent
preventative systems and controls
has successfully transitioned to a
on the availability of IT systems. The
to reduce the risk. In addition, we
diversified hosting platform which
supply chain function specifically
have a robust disaster recovery
will provide further prevention
is heavily reliant on technology,
plan including the use of third-party
against loss of availability.
this top down and bottom up approach. The Board has
The following set of risks are the principal risks the
therefore, disruption to IT systems
professional providers to host our
created a Risk Management Team (RMT) which regularly
Board identifies as currently being faced by the Group.
could limit availability of products
systems and data.
meets to discuss, monitor and oversee the risks and
As stated, there are other risks affecting the business
and consequently impact sales.
controls within the Group. Updates and progress from
but with a lower risk score and perceived to be less
the RMT are presented back to the Audit Committee
impactful. The Senior Leadership Team regularly review
regularly who review the effectiveness of the process.
the output from the RMT and the Board has confidence
In addition, the introduction of
business continuity ‘failover’ servers
help to significantly reduce the
impact if system availability were
an issue.
The outbreak of Covid-19 and the resultant nationwide
lockdown significantly impacted the Out of Home
route to market. The Board identified the risks arising
from the pandemic and highlighted the welfare of our
employees, suppliers and customers as paramount. The
Group quickly transitioned to being home based
Risk management key
Short term
Medium term
Long term
44
that the current risk management process highlights
any relevant changes in both current and emerging risks
that may be strategically important.
THREAT OF CYBER-ATTACK
Impact
Mitigation
Development
The threat of cyber attack is an ever
Nichols operates several
The Group have invested in further
present and indeed, ever growing
preventative systems and controls,
measures to reduce the risk from
risk in today’s global business
including regular penetration
cyber-attack, including enhanced
environment. Disruption to IT
testing, to reduce the risk. In
end user authorisation protocols,
systems could limit availability of
addition, we have a robust disaster
improved cyber prevention
products and consequently reduce
recovery plan including the use of
measures and continued investment
sales.
third-party professional providers to
in security training.
host our systems and data.
SINGLE SOURCE OF SUPPLY OF VIMTO CONCENTRATE
Impact
Mitigation
Development
The unique Vimto flavour is created
Working in partnership with our
There has been ongoing work with
across our supply base using the
suppliers, we have established
our strategic suppliers to review
Vimto compound. Unavailability of
alternate production capability at
business continuity plans.
the Vimto compound could impede
more than one location to ensure
our ability to produce and therefore
continuity of supply.
significantly impact the Group’s
revenue. As a result, it is vital that
we have surety of supply of the
compound.
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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
HEALTH & SAFETY INCIDENT
Impact
Mitigation
Development
The Group operates with multiple
The Group is supported by
The Group has appointed a Group
office locations, a large field-based
an effective Health & Safety
H&S Manager, bringing extensive
team and one manufacturing site.
Management system, comprising of
knowledge and experience from
A health and safety incident, for
suitable and sufficient policies and
across several industries. This
example in a warehouse or on the
procedures to support all functions.
knowledge and experience has
road, could result in serious injury
The review and delivery of the
been used to further develop and
or death or investigation by the
health and safety management
strengthen our existing health
relevant authority.
system is supported by a cross
and safety management system,
The evolving nature of the Covid-19
pandemic has presented further
concerns from a H&S point of view.
Management have monitored
closely the developing nature of the
pandemic including the increased
functional committee, chaired by
introduce new ways of working and
our new Group H&S Manager. One
reduce operational risk.
of the key roles for the committee
is to ensure the embedding and
effectiveness of our policies and
procedures across the Group.
A dedicated, cross functional
leadership team continue to
monitor and assess our Group
Covid-19 response, ensuring
rates of transmissibility connected
All operating functions within the
all applicable processes and
with new variants of the virus.
Nichols Group have been Covid-19
procedures remain suitable and
risk assessed, with each of our
sufficient and colleagues remain
locations maintaining a certified
appropriately informed of our Covid
‘Covid Secure’ status throughout the
management strategy.
pandemic, following government
guidelines. Covid awareness training
is provided to all colleagues along
with regular updates and briefing
on process and procedures via a
dedicated Covid Resources Hub.
FAILURE TO SUCCESSFULLY EVOLVE OUR BRAND AND PRODUCT PORTFOLIO
IN LINE WITH CHANGING CONSUMER NEEDS
Impact
Mitigation
Development
Consumer needs, preferences
We continually track and monitor
We have continued to innovate,
and behaviours in relation to soft
market and category trends and
extending our owned and licensed
drinks purchase and consumption
consumer attitudes and behaviours
brands into new flavours and
are constantly evolving. Failure to
to ensure our continued relevance
consumption occasions in the UK
anticipate and respond to these
to consumers. This insight is the
and Internationally.
changes and adapt our portfolio
foundation for our Portfolio, Brand
through renovation and innovation,
and Innovation Strategies.
An Innovation Steering Committee
has been put in place to ensure
may result in a loss of volume or
impede our ability to deliver growth.
We have a rolling 3-year pipeline of
appropriate governance &
Innovation and Renovation across
prioritisation of strategic product
both new and existing brands.
launches, aligned to market and
consumer requirements.
ADVERSE PUBLICITY IN RELATION TO THE SOFT DRINKS INDUSTRY, THE GROUP OR OUR BRANDS,
LEADING TO REPUTATIONAL DAMAGE OR ADVERSE CONSUMER OR TRADE PERCEPTIONS
Impact
Mitigation
Development
Negative publicity affecting the
The business adheres to core values
We have appointed a new trade
brand could reduce consumer
of originality, authenticity and ethics
communication agency and
demand for the Group’s products.
which result in a strong brand.
continue to use media monitoring
and social listening to track media
coverage and consumer sentiment.
PRODUCT QUALITY ISSUES
LOSS OF A MAJOR CUSTOMER ACCOUNT OR KEY PARTNER
Impact
Mitigation
Development
Impact
Mitigation
Development
Inconsistent quality or
The business demands strict quality
Throughout 2020 we very quickly
Loss of a major customer or key
We are dedicated to maintaining
We have been reviewing our key
contamination of any products
controls from all manufacturers
adapted to use virtual audits where
partner could limit availability of our
long-term relationships with all
partnerships to evolve contingency
across the Group’s portfolio reduce
and suppliers of our materials
physical auditing has not been
products and consequently impact
our customers and key partners.
plans and business continuity
demand within the market. This
and finished goods. We seek
possible.
sales.
However, the Group’s diverse
planning.
could have significant impact on the
independent validation of these
Group’s financial performance and
controls by Global Food Safety
cause reputational damage.
Initiative (GFSI) approved
bodies such as the British Retail
Consortium (BRC).
We adopt a comprehensive risk-
based monitoring approach to all
suppliers and manufacturers across
all routes to market, specifically
designed to mitigate quality risks.
In addition, we have implemented
an online supplier portal system
to increase our data gathering
capability and improve ongoing
supplier control.
income streams across markets
and regions mean we are not overly
reliant on any one customer or
partner. We do not have any one
customer that attributes more
than 10% of total revenues and
we are working to ensure that our
key supplier partnerships are not
limited to either one supplier or one
site where possible.
46
47
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
INTRODUCTION OF NEW GOVERNMENT LEGISLATION
Impact
Mitigation
Development
The introduction of new
The Group monitors its markets and
The Group is working closely
Government legislation within either
any potential changes in legislation.
with the British Soft Drinks
the UK or overseas, could reduce
Where such changes are identified,
Association (BSDA) working group to
demand for the Group’s products
the Group considers several
understand the potential impact of
and significantly impact the Group’s
scenarios to manage the potential
the DRS legislation and what can be
revenue. In addition, new legislation
outcome, working with our key
done to minimise the impact.
could have an impact upon the cost
partners as necessary.
of production and limit availability
of our products.
The introduction of the Deposit
Return Scheme (DRS) is an example
of a piece of Government legislation
which will likely pose risk to the
Group.
IMPACT OF BREXIT
Impact
Mitigation
Development
The trade deal or lack thereof
The Senior Leadership Team
Work remains ongoing by the
that would impact trade between
created both a Working Group and a
business’ Brexit Working Group,
the UK and the European Union
Steering Committee to prepare the
closing out the final elements of the
from the 1st January 2021 posed
business for the possible outcomes
project.
significant risk to the Group. These
of a trade deal or moving to World
risks included but were not limited
Trade Agreement guidelines in the
to, significant tariffs, timeliness of
absence of a deal.
raw material imports and increased
paperwork requirements.
The Working Group worked with
customers, suppliers and other third
Following the announcement of
parties to prepare the Group for
the deal the tariff risk was greatly
what may arise and by the time a
reduced. There has, however, been
deal was agreed that the business
an increase in paperwork burden
had plans in place.
and complexity moving goods and
materials internationally.
INCREASING FOCUS ON CLIMATE CHANGE, ENVIRONMENTAL AND SOCIAL ISSUES RESULTING
IN NEW GOVERNMENT LEGISLATION
Impact
Mitigation
Development
There is increasing focus on
The business has developed
As part of the ESG strategy a cross-
environmental and social issues
an Environmental, Social and
functional team has been created.
in Government. This may result in
Governance (ESG) strategy which
This team have developed a number
new legislation (eg. plastic tax &
is focused on creating a Happier
of initiatives with our partners
High in Fat, Sugar, Salt (HFSS) foods
Future for our planet by doing the
throughout 2020. As a result
legislation) being issued which may
right things in the right way.
we have reduced the weight of
in turn affect both customer and
consumer preferences and the
Group’s revenues.
The remit of this strategy includes
but is not limited to, carbon
consumption, sustainable packaging
aluminum in our cans and reduced
the weight of the caps and bottles in
our dilutes range.
and health and well-being.
In addition, we completed a trial in
Asda’s first sustainable store format
where we launched a packaging free
refill station as part of an initiative
designed to significantly reduce
packaging in the future.
David Rattigan
Chief Financial Officer
3 March 2021
48
49
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
Section
172 STATEMENT
PROMOTING THE SUCCESS OF THE COMPANY
ACTION:
Under Section 172(1) of the Companies Act 2006,
The Board is ultimately responsible for the direction,
a Director of a Company must act in the way he or
management, performance and long-term sustainable
she considers, in good faith, would be most likely to
success of the Company. It sets the Group’s strategy
promote the success of the Company for the benefit of
and objectives taking into account the interests of all its
its members as a whole, and in doing so have regard
stakeholders. A good understanding of the Company’s
(amongst other matters) to the following factors:
stakeholders enables the Board to factor the potential
• the likely consequences of any decision in the
long-term;
impact of strategic decisions on each stakeholder
group into Boardroom discussions. Consequently,
Board resolutions are determined with reference to
• the interests of the Company’s employees;
the Company’s key stakeholders: its employees, its
• 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
customers, its suppliers, the community in which it
operates, the environment and its shareholders.
The following section of this Annual Report serves as
an overview of how the Directors, with the support of
the wider business, engage with our stakeholders and
consider these range of factors in the course of their
reputation for high standards of business conduct;
s172 duties.
and
• the need to act fairly between members of the
Company.
During 2020, the key decisions of the Board, principally
related to the impact of, and the Company’s response
to, the Covid-19 pandemic. This section of the Report
includes a ‘Covid-19’ case study detailing the Board’s
response to the pandemic.
s172 “COVID-19 - A CASE STUDY”
Covid-19 underlined society’s expectations of business to combine
commercial priorities with wider social considerations.
BACKGROUND:
As the effects of the global pandemic hit in March 2020,
The Company expected the impact of the pandemic to
the temporary closure of all pubs, clubs, restaurants,
have a significant impact on the Group’s 2020 financial
cinemas and theme parks resulted in a marked
performance. However, during these unprecedented
slowdown in sales of the Group’s Out of Home business.
times the initial focus of the Board and, indeed its
In addition, the sales outlook for UK Packaged sales over
investors, was on the health, safety and well-being of its
the summer months was uncertain as retailers took
employees.
mitigating action themselves to protect their business,
including restricting planned promotional activity.
Many of the Group’s international markets were also
impacted with restrictions on movement of people
implemented across the Middle East, Africa, Europe and
the USA.
50
The Board and Senior Leadership Team planned for
A clear set of priorities was established, namely:
multiple scenarios, using a number of sensitivities and
explored various ways, to protect our people, manitain
• Safeguarding our people;
the Group’s strong balance sheet, and to mitigate
• Maintaining operational agility;
the impact of reduced demand on the business for
a potentially sustained period. These issues were
considered, updated and discussed in detail by the
• Supporting our communities (for further information
please see pages 32 and 36); and
Board on an ongoing basis throughout 2020.
• Retaining our financial strength
OUR DECISIONS AND CONSIDERATIONS:
SAFEGUARDING OUR PEOPLE
Date:
Decision:
March 2020
The health, safety and well-being of our colleagues were our primary concern. Our employees
began working from home during the week commencing 16 March 2020.
For our operational employees who were unable to work at home, comprehensive risk
assessments were undertaken and action plans implemented at all of our sites to ensure that
they were COVID-19 secure and that those employees who were unable to work from home
were able to work in a safe environment.
Our employees now come on site if it is operationally not possible to work at home or they have
mental wellbeing issues.
Further information on the initiatives instigated to protect our employees is provided on page 55
April 2020
The Board decided that in order to protect the safety and wellbeing of both its shareholders and
employees, the Company’s Annual General Meeting should be held as a ‘closed’ meeting and
shareholders would not be able to attend. Shareholders were invited to submit any questions in
writing prior to the AGM.
RETAINING OUR FINANCIAL STRENGTH
Date:
Decision:
March 2020
Withdrawal of 2019 Final Dividend: In order to protect the Group’s strong cash position, the
Board decided to withdraw the 2019 final dividend announced on 26 February 2020 of 28.0
pence per share (the ‘Recommended Final Dividend’). Subject to shareholder approval the
Recommended Final Dividend was expected to be paid on 1 May 2020, and would have
resulted in a cash payment of £10.4m.
The Board recognised that the cancellation of the 2019 final dividend would have a
negative impact on the Company’s shareholders who depend on the income received from
their investments. However, the Board considered that it was essential to focus on cash
management throughout H1 2020 and protecting cash flow over the critical spring and
summer trading periods, given the uncertainty surrounding COVID-19 restrictions. The Board
agreed to reconsider this matter following the completion of the critical trading period.
51
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 DECISIONS AND CONSIDERATIONS:
OTHER KEY BOARD DECISIONS DURING THE YEAR:
RETAINING OUR FINANCIAL STRENGTH AND MAINTING OPERATIONAL AGILITY
Date:
Decision:
March 2020
Focus on controlling overhead and operational cost of the business: The Board approved steps
to remove cost in the business, this included the re-evaluation of our marketing spend,
postponing non-essential recruitment and suspending non-critical capital expenditure from
the business.
March 2020
Decision to put employees on furlough: In March 2020, the Board agreed that, given a significant
proportion of the Company’s employees’ duties had ceased due to temporary restrictions
imposed by the Government on its UK customer base, management should consider the
Government Job Retention Scheme. At the peak in Q2 we had 220 employees furloughed.
The Company ‘topped-up’ payments to ensure that all of our furloughed employees received
full pay. The majority of our furloughed employees had returned to work by 22 July 2020.
July 2020
Payment of 2020 Interim Dividend: In July 2020, recognising the importance of the dividend
to our shareholders whilst acknowledging both performance to date and the uncertainty in
the financial outlook the Board deemed it appropriate to reinstate the Recommended Final
Dividend from 2019 of 28.0 pence per share as the interim dividend for 2020. The interim
dividend was paid to shareholders on 4 September 2020.
H2 2020
Controlling costs: During H2 2020, the Board considered the ongoing challenges in the Group’s
OoH sector. The Board placed a strong focus on controlling overhead and operational costs
of the business, to ensure that the business was able to ‘Build Back Better’ post the pandemic.
As part of its review of costs, and ensuring that the Group had the right structure in place
to deliver its long-term strategy, the Board took the difficult decision to propose, subject to
consultation, that a number of roles are removed from the Group.
This decision was announced to the Group’s employees on 18 November 2020, with the
expectation that, subject to consultation, a number of roles would be redundant by Q1 2021.
BOARD DECISION
CONSIDERATIONS
The Board considered and
The Board considered the purpose of the Relationship Agreement,
approved a Relationship Agreement
namely to formalise Board representation for the Nichols Family whilst
between the Company and the
also ensuring that the Company is capable of carrying on, at all times, its
Nichols Family. The Nichols Family
business independently. The Relationship Agreement provides certain
consist of certain members of the
rights for the Nichols Family to appoint a Non-Executive Director to the
immediate and extended family of
Board, providing that they maintain an interest between 20% and 29.99%
the Company’s founder John Noel
in the Company’s issued ordinary share capital. In addition, it provides the
Nichols. Members of the Nichols
Nichols Family an entitlement, but not an obligation, to appoint two Non-
Family hold in aggregate an interest
Executive Directors to the Board should their interest equal 30% or more in
of approximately 34.7% in the
the Company’s issued share capital.
Company’s issued share capital.
The Relationship Agreement contains provisions to protect our other
Following execution of the
shareholders, including preventing or obstructing the Board from managing
Relationship Agreement, the Board
the Company in the interests of the shareholders as a whole and ensuring
approved the appointment of
the independence of the Board and management. This ensures that the
James Nichols as a Non-Executive
Board can act in the interests of all shareholders, treating all members
Director of the Company.
fairly.
The Board noted that the Relationship Agreement adhered to good
corporate governance arrangements, was in accordance with the
recommendations of the Quoted Companies Alliance Corporate
Governance Code and would be in the interests of the Company and its
stakeholders.
The Board considered and
The Board considered the terms of the proposed SAYE Option Scheme
approved a grant under the
grant, noting that it would be open to all eligible employees.
Company’s Save-As-You Earn Share
Option Scheme (SAYE Option
Scheme).
HOW DID THE BOARD CONSIDER VARIOUS STAKEHOLDER GROUPS DURING ITS DELIBERATIONS?
By taking actions to retain the Group’s financial stability and operational agility the Board considers that is has
protected the business from the impact of reduced demand during 2020. The Board has adopted the principle to
‘Build Back Better.’ The Board remains confident in Nichols’ ability to emerge from this period well-placed to continue
to deliver the Group’s long-term strategic plans.
The Board decided that the Board
As announced on 22 July 2020, Marine Millard, Group Chief Executive Officer
should comprise of two Executive
resigned on 31 December 2020, having made a significant contribution
Directors. Prior to the resignation
in this role for 7 years. The Board decided that Andrew Milne, the Chief
of Marnie Millard on 31 December
Operating Officer should replace Marnie as CEO on 1 January 2021. In
2020, the Board had comprised the
addition, David Rattigan the Group’s Chief Financial Officer, serves as a
Chief Executive Officer, the Chief
Director.
The above actions were taken to protect the interests of a number of our key stakeholder groups. These included but
were not limited to: employees, shareholders, customers, the community and our supply chain partners.
Financial Officer and the Chief
Operating Officer.
Throughout the pandemic we have continuously engaged with our employees and we believe that the Company has
taken appropriate action to ensure the health, safety and well-being of the Group’s employees throughout these
unprecedented times. Our key responsibility remains the safety, health and well-being of our colleagues. Details of
how we have engaged with our employees and our other stakeholders during 2020 are provided as follows.
Following consideration, and after a review of the Directors’ portfolios, the
Board decided that the Board should consist of two Executive Directors
only. The Board now comprises the Chairman, two Executive Directors
(CEO and CFO), a nominee Director under the Relationship Agreement
with the Nichols Family and two Independent Non-Executive Directors. The
Board considers that this balance is appropriate and ensures that there is
sufficient independence on the Board, providing an appropriate level of
challenge to the Executive Directors.
The Company has a strong and experienced Senior Leadership Team, which
includes the CEO and CFO, and supports the Board.
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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
OTHER KEY BOARD DECISIONS DURING THE YEAR:
BOARD DECISION
CONSIDERATIONS
HOW THE GROUP ENGAGED WITH ITS KEY STAKEHOLDERS THROUGHOUT THE PANDEMIC
EMPLOYEES
The Board considered and
The Board considered and approved nil cost options over Nichols plc
approved an Executive matching
ordinary shares of 10 pence each (‘Ordinary Shares’) to Andrew Milne, Chief
Why we engage
How we engaged during 2020
award to the Chief Executive Officer
Executive Officer and David Rattigan, Chief Financial Officer (the ‘Awards’).
and Chief Financial Officer.
The Group’s long-term success is predicated
During the Covid-19 pandemic we instigated a number of
Awards, equal to 50% of their annual salaries at the date of award,
on the commitment of our employees to our
initiatives to engage with our employees, and to support their
were granted on 18 December 2020. The Awards will vest on the third
purpose and its demonstration of our values
well-being. Our initiatives included:
anniversary based on the number of Ordinary Shares purchased and
retained by the Directors over the vesting period of the Award. The Awards
will be matched on a 1:1 basis for every Ordinary Share purchased. No
other performance conditions apply.
The intention of the Awards is to assist the Directors to meet a newly
imposed shareholding guideline of 100% of salary as part of a revised
remuneration policy. The Directors have five years from the date of
appointment to meet this guideline.
The Chairman of the Remuneration Committee and the Committee’s
advisers consulted with some of the Company’s major shareholders prior
to the date of the Awards. Shareholders were supportive of these Awards
recognising the alignment of the interest of the Directors with shareholders.
It is proposed that Awards will be made to other members of senior
management following the announcement of the Company’s 2020 annual
results. These Awards will also act as a retention tool, mitigating against the
risk of senior and experienced personnel leaving the Group.
on a daily basis. To maintain our competitive
advantage and meet the growing demands 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
- A live webinar by our Senior Leadership Team to all employees
every 2 weeks to update them on key issues, including a ‘live’
hosted Q&A session;
- Developing physical and mental health initiatives to ensure
that the welfare of our people was maintained as they adapted to
different ways of working;
ensure that we are fostering an environment
- Ensuring a clear communication process to those individuals
that they are happy to work in and that best
who were put on furlough;
supports their well-being.
- The launch of a new well-being hub in August 2020, which has
received positive feedback from our employees;
- Where possible we have provided a safe working environment
to allow those individuals who wish to return to office working, to
return safely; and
- We have conducted two employee surveys during the
pandemic to understand how our colleagues are feeling. The
response rate for the second survey was 72% with 96% of
respondents feeling supported by the business during the
pandemic.
The feedback from our employees on how they have been treated
during 2020 has been very positive.
CUSTOMERS
Why we engage
How we engaged during 2020
Communications and relationships with our
The Nichols plc commercial teams have continuous
direct customers is a fundamental ingredient to
communications with our direct customers, through face-to-face
our success.
meetings – this year we have relied heavily on virtual meetings -
to understand their needs, share our plans, seek feedback, and
nurture collaborative working practices. We engage with our end
consumers through our on-going promotional and advertising
activity.
During 2020, we have worked hard to understand the concerns of
our customers and the impact of the Covid-19 pandemic on their
business. In OoH, we assisted some of our valued customers by
replacing out of date stock and extending credit terms. In turn, we
sought support from our partners to enable us to do this.
54
55
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
SUPPLIERS
Why we engage
How we engaged during 2020
SHAREHOLDERS
Why we engage
How we engaged during 2020
Given Nichols’ outsourced manufacturing
The Nichols plc supply chain team and senior management have
Continued access to capital is of vital
The Executive Directors meet our shareholders on a number of
model, having long-term strategic partnerships
regular review meetings with our supplier base.
importance to the long-term success of
occasions throughout the year and aim to have an open dialogue
with our suppliers and co-packers is essential.
Our suppliers are fundamental to the quality of
our products and to ensuring that as a business
we meet the high standards of conduct that we
set ourselves.
During 2020, we have worked hard to understand the concerns
and impact of the Covid-19 pandemic on our suppliers and the
impact on their business.
our business. Through our engagement
to receive feedback.
activities, we strive to obtain investor buy-in
into our strategic objectives and how we go
about executing on them. We create value
for our shareholders by generating strong
Investor roadshow meetings are undertaken at least twice a year
following the preliminary and interim results announcements.
During 2020, our AGM, was held as a ‘closed’ meeting in order to
and sustainable results that translate into
protect both our Shareholders and our employees.
THE COMMUNITY
Why we engage
How we engaged during 2020
The Group cares about its community and
Nichols plc supports a number of local charities including
understands the importance of giving back to
Warrington Youth Club which provides facilities, opportunities and
help and inspire others to achieve, developing
support to children in our community. The Group also supports
positive relationships and maintaining a strong
Salford City FC and its Club Academy 92, to support aspiring
reputation within the community.
football stars, developing their skills and education through a
dividends. We are seeking to promote an
investor base that is interested in a long-term
holding in the Group.
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.
dedicated partnership.
During 2020, Nichols plc also supported a number of additional
charities including the London Ambulance Service, NHS
Trust Manchester and Warrington Hospital recognising their
contribution to the community throughout the Covid-19
pandemic. In support and recognition of our NHS workers, the
Company provided a number of free vending machines.
THE ENVIRONMENT
Why we engage
How we engaged during 2020
Nichols plc is aware of its environmental
Nichols plc is an active member of the British Soft Drinks
responsibilities and whilst all its current
Association, which has reducing plastic waste high on its agenda.
packaging is already recyclable, the Group
is working with suppliers and customers to
reduce plastic waste as part of its “Happier
Future” strategy.
We are also signatories to the Soft Drinks Red Map. This scheme is
run in collaboration with Defra and WRAP (Waste Reduction action
plan) and sets out opportunities for business in the soft drinks
supply chain to enhance the sustainability of the sector and help
secure its future prosperity.
We also employ the services of Valpak, ensuing our compliance
with waste regulations and minimising the direct impact our
business activities have on the external environment.
56
57
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
Gender
PAY GAP REPORT
PROPORTION OF
males and females
IN EACH PAY QUARTILE
69%
The proportion of males and females in each pay quartile continues to reflect the workforce with no substantial
variances. We are developing our female talent through our talent framework with a focus on our management
and leadership succession. The proportion of females in the Senior Leadership Team is higher than the overall
population split by gender.
A key enabler to realising a greater proportion of females in each quartile is a more balanced gender split across our
workforce and focussing on our talent acquisition approach is key to achieving this.
2020
Nichols Plc is pleased to
present its gender pay gap
reporting results as of 5 April
2020
Employees
SPLIT BY GENDER
31%
This was a stable period of employment levels for
technical, distribution and manufacturing functions and
the business and with lower levels of recruitment,
males make up a significant proportion of these roles,
this constrained our ability to grow the female
reflecting the external talent pool for these roles in the
representation in the business. We have a large
market. This will continue to be an area of focus for the
employee group within our Out of Home (OOH)
business.
PROPORTION OF
males and females
WITHIN THE SENIOR
LEADERSHIP TEAM &
MANAGERS WITHIN THE
GROUP
HOURLY PAY*
2%
MEAN
MEDIAN
2%
60
50
40
30
20
10
0
SLT
Managers
MALE
FEMALE
58
BONUS*
MEAN
22%
MEDIAN
10%
Through a continued focus, we have seen a swing in the
variance of both the pay and bonus measures to females
since last year, most significantly in the Mean measure. One
contributory factor is that there is a higher proportion of
females represented in the top two pay quartiles of the female
population than within the male population distribution.
*Variance in male pay to female pay.
BOTTOM
69% 31%
SECOND
71% 29%
THIRD
65% 35%
TOP
71% 29%
2019
BOTTOM
66% 34%
SECOND
72% 28%
THIRD
70% 30%
TOP
68% 32%
MALE
FEMALE
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.
Data shows those employees not eligible for a
bonus in 2020 due to their start date.
MALE
FEMALE
NOT
ELIGIBLE
10%
RECEIVED
90%
NOT
ELIGIBLE
13%
RECEIVED
87%
The Strategic Report has been approved by the
Board on 3 March 2021.
59
02
GOVERNANCE
DIRECTORS’ REPORT
THE BOARD
CORPORATE GOVERNANCE STATEMENT
AUDIT COMMITTEE REPORT
REMUNERATION COMMITTEE REPORT
NOMINATION COMMITTEE REPORT
62
68
70
78
82
88
G
O
V
E
R
N
A
N
C
E
61
60
G O V E R A N C E
G O V E R A N C E
REPORTDirectors’
Nichols plc (the “Company”) is a public limited company,
DIRECTORS AND THEIR INTERESTS
registered in England and is listed on AIM of the London
Stock Exchange. The Directors present their report for
the year ended 31 December 2020, in accordance with
section 415 of the Companies Act 2006. The Corporate
The Directors who have held office during the year
ended 31 December 2020 and to the date of this report
are as follows:
Governance Statement set out on pages 70 to 77 forms
Executive Directors
part of this report.
As permitted by Paragraph 1A of Schedule 7 to the Large
and Medium-sized Companies and Groups (Accounts
and Reports) Regulations 2008 certain matters which
are required to be disclosed in the Directors’ Report
have been omitted as they are included in the Strategic
Report on pages 9 to 59. These matters relate to a full
review of the performance of the Company and its
Marnie Jane Millard1
Andrew Paul Milne
Timothy John Croston2
David Thomas Rattigan3
Non-Executive Directors
Peter John Nichols, Chairman
James Edward Nichols4
subsidiaries (together the “Group”) for the year, current
Helen Margaret Keays
trading and future outlook.
John Anthony Gittins
The statement by the Directors in performance of
their statutory duties in accordance with section 172(1)
Companies Act 2006 is provided on pages 50 to 57.
RESULTS AND DIVIDENDS
The Group’s Profit Before Taxation from continuing
operations for the year ended 31 December 2020
amounted to £6.5m (2019: £32.4m). The Directors will
1 Resigned as a Director and Chief Executive Officer on
31 December 2020
2 Resigned as a Director and Chief Financial Officer on 2
March 2020
3 Appointed as a Director and Chief Financial Officer on
2 March 2020
recommended a dividend of 8.8p at the 2021 annual
4 Appointed as a Director on 22 July 2020
general meeting to be held on 28 April 2021 (the ‘2021
AGM’).
The roles and biographies of the Directors in office as
at the date of this report are set out on pages 68 to
On 26 February 2020, the Board recommended a final
69. Details of their interests in ordinary shares of the
dividend of 28.0 pence per share, for shareholder
Company as at 31 December 2020 are shown in the
approval at the Company’s 2020 annual general meeting
table opposite.
(the ‘2019 Recommended Dividend’). On 31 March
2020 the Board made the decision to withdraw the
2019 Recommended Dividend due to uncertainties
concerning the financial impact of Covid-19.
As a result of the Company’s Adjusted Profit After Tax in
the six months ended 30 June 2020, and its strong cash
performance during this period, the Board reinstated
the value of the 2019 Recommended Dividend of 28.0
pence per share as the interim dividend for the six
months ended 30 June 2020 (the ‘Interim Dividend’)
(2019: 12.4 pence per share). The Interim Dividend was
paid to shareholders on 4 September 2020.
62
Summary of Director’s Interests in the Company
Director
P J Nichols
M J Millard
A P Milne
T J Croston1
D T Rattigan2
J A Gittins
H M Keays
J E Nichols3
Shares held as at
1 January 2020
or date of
Shares held as at
31 December 2020
2020
or date of
appointment if later
movement
departure if earlier
2,000,000
10,442
1,665
13,190
-
1,280
-
835,476
-
-
-
-
-
-
-
-
2,000,000
10,442
1,665
13,190
-
1,280
-
835,476
1 Mr T J Croston resigned as a Director and Chief
RELATIONSHIP AGREEMENT
Financial Officer on 2 March 2020.
On 22 July 2020, the Company entered into a
2 Mr D Rattigan was appointed as a Director and Chief
Relationship Agreement with the Nichols Family. The
Financial Officer on 2 March 2020.
Nichols Family consists of certain members of the
3 Mr J E Nichols was appointed as a Director on 22 July
2020. On 25 September 2020, Mr J E Nichols pledged
560,000 shares as security against a personal loan.
Details of Directors’ remuneration, including pension
arrangements, service agreements and Long-Term
Incentive Plan Awards are provided in the Directors’
Remuneration Report on pages 82 to 87.
immediate and extended family of the Company’s
founder John Noel Nichols. Members of the Nichols
Family hold in aggregate an interest of approximately
34.7% in the Company’s issued share capital.
The purpose of the Relationship Agreement is to
formalise Board representation for the Nichols Family
whilst also ensuring that the Company is capable of
carrying on, at all times, its business independently.
63
G O V E R A N C E
G O V E R A N C E
In accordance with the terms of the Relationship
POLITICAL DONATIONS
SHARE OPTIONS
Agreement, so long as the Nichols Family retain (i)
an aggregate interest of equal to or greater than 20
per cent in the issued ordinary share capital of the
to appoint one Non-Executive Director; and (ii) an
aggregate interest of equal to or greater than 30
per cent in the issued ordinary share capital of the
Company, they shall be entitled (but not required)
SHARE CAPITAL
The Company does not make any political donations and
The Company operates a Save As You Earn share option
does not incur any political expenditure.
scheme. In conjunction with this, it makes donations
to an Employee Share Ownership Trust (the ‘ESOT’) to
enable shares to be bought in the market to satisfy the
Full details of the issued share capital of the Company
demand from option holders. As at 31 December 2020,
are set out in note 19 to the Financial Statements.
the ESOT held 8,975 Nichols plc Ordinary 10 pence
Company, they shall be entitled (but not required) to
The resolutions concerning the ability of the Board to
shares (2019: 518).
appoint one further Non-Executive Director to the
purchase the Company’s own shares and to allot shares
On 18 December 2020, the Company made the following
Board.
are again being proposed at the Annual General Meeting
awards of nil cost options over Ordinary Shares of 10
In accordance with the terms of the Relationship
to be held on 28 April 2021.
Agreement John Nichols, the Chairman of the Company
In exercising its authority in respect of the purchase
and James Nichols, Non-Executive Director are the
and cancellation of the Company’s shares, the Board
Family Representative Directors.
COMPANY SECRETARY
takes as its major criterion the effect of such purchases
on future expected earnings per share. No purchase is
made if the effect is likely to be deterioration in future
Mr T J Croston resigned as Company Secretary and Mr
expected earnings per share growth. During the year,
D T Rattigan was appointed as Company Secretary on 2
the Company did not purchase any of its own shares.
March 2020.
The Board believes that being permitted to allot shares
FINANCIAL RISK MANAGEMENT OBJECTIVES AND
within the limits set out in the resolution without the
delay and expense of a general meeting gives the ability
to take advantage of circumstances that may arise
during the year
POLICIES
Business risks and uncertainties are included within
the Risk Management section on pages 44 to 49 and
financial risks are set out in note 22 to the financial
statements.
EMPLOYEES
Detail of how the Board has engaged with its employees
is included in the Section 172 Statement on pages 50 to
57.
The Group’s policy is to recruit and promote on the
basis of aptitude and ability without discrimination
of any kind. Applications for employment by disabled
people are always fully considered bearing in mind the
qualification and abilities of the applicants. In the event
of employees becoming disabled, every effort is made to
ensure their continued employment.
The management of the individual operating companies
consult with employees and keep them informed on
matters of current interest and concern to the business.
In assessing the appropriateness of adopting the going
concern basis in preparing the Annual Report and
financial statements, the Directors have considered the
current financial position of the Group, its principal risks
and uncertainties and the potential impact of further
COVID-19 restrictions. The review performed considers
severe but plausible downside scenarios that could
reasonably arise within the period.
The estimated impacts of COVID-19 restrictions are
primarily based around our Out of Home market and
the length of time that lockdown restrictions may be
in place for the hospitality industry. Our modelling has
sensitised trading within this market to reflect varying
degrees of lockdowns with the most severe scenario
assuming that some restrictions will persist throughout
the whole of 2021, with Out of Home performance only
beginning to return to pre COVID-19 levels during 2022.
pence each to Mr Andrew Milne, Chief Executive Officer
and Mr David Rattigan, Chief Financial Officer.
Number of
Ordinary
Shares
subject to
Award
Vesting
period
of Award
Andrew Milne
David Rattigan
9.668
7,734
Three years from
the date of Award
Three years from
the date of Award
In addition to the continued impact of COVID-19,
alternative scenarios, including the potential impact
of key principal risks from a financial and operational
perspective, have been modelled with the resulting
The Awards, equal to 50% of their annual salaries at
implications considered.
the date of award, will vest on the third anniversary
In all cases, the busines model remained robust. The
based on the number of Ordinary Shares purchased and
Group’s diversified business model and strong balance
retained by the Directors over the three-year vesting
sheet entering 2021, combined with its strong cash
period of the Award. The Awards will be matched on a
generation in 2020 all provide resilience against these
1:1 basis for every Ordinary Share purchased. No other
factors and the other principal risks that the Group is
performance conditions apply.
RESEARCH AND DEVELOPMENT
exposed to. At the 31 December 2020 the Group had
cash and cash equivalents of £47.3m with no external
bank borrowings. This equates to 95% of 2020 gross
The Group undertakes research and development
profit.
activities in order to develop its range of new and
existing products. Expenditure during the year on
research and development amounted to £0.1m (2019:
£0.1m).
GOING CONCERN
The Group’s business activities, together with the factors
likely to affect its future development, performance and
position are set out in the Strategic Report on pages 9
to 59. The financial position of the Group is described in
the Financial Review on pages 40 to 43.
On the basis of these reviews, the Directors consider
the Group has adequate resources to continue in
operational existence for the foreseeable future (being
at least one year following the date of approval of this
Annual Report) and, accordingly, consider it appropriate
to adopt the going concern basis in preparing the
financial statements.
64
65
G O V E R A N C E
G O V E R A N C E
INFORMATION TO THE INDEPENDENT AUDITORS
are also required to prepare financial statements in
Each of the Directors who are Directors at the time when
this Directors’ Report is approved have confirmed that:
• so far as each of the Directors is aware there is no
relevant audit information of which the Company’s
accordance with the rules of the London Stock Exchange
for companies trading securities on AIM.
In preparing these financial statements, the Directors
are required to:
the Company’s website in accordance with legislation
in the United Kingdom governing the preparation
and dissemination of financial statements, which
may vary from legislation in other jurisdictions. The
maintenance and integrity of the Company’s website
is the responsibility of the Directors. The Directors’
auditor is unaware; and
• select suitable accounting policies and then apply
responsibility also extends to the ongoing integrity of
• the Directors have taken all steps that they ought to
them consistently;
the financial statements contained therein.
have taken as Directors in order to make
• make judgements and accounting estimates that are
DIRECTORS’ INDEMNITY
themselves aware of any relevant audit information
reasonable and prudent;
and to establish that the auditors are aware of that
information.
• state whether they have been prepared accordance
third party claims which may be brought against them
with international accounting standards in conformity
and has in place an officers’ insurance policy.
The Group has agreed to indemnify its Directors against
RESOLUTION TO RE-APPOINT INDEPENDENT
with the requirements of the Companies Act 2006,
AUDITORS
In accordance with Section 489 of the Companies Act
subject to any material departures disclosed and
explained in the financial statements;
2006, a resolution will be proposed at the 2021 AGM
• prepare the financial statements on the going
that BDO LLP be re-appointed auditors.
concern basis unless it is inappropriate to presume
DIRECTORS’ RESPONSIBILITIES STATEMENT
The Directors are responsible for preparing the annual
report and the financial statements in accordance with
applicable law and regulations.
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 law requires the Directors to prepare financial
of the Company and enable them to ensure that the
statements for each financial year. Under that law
financial statements comply with the requirements of
the Directors have elected to prepare the Group and
the Companies Act 2006. They are also responsible for
Company financial statements in accordance with
safeguarding the assets of the Company and hence
international accounting standards in conformity with
for taking reasonable steps for the prevention and
the requirements of the Companies Act 2006. Under
detection of fraud and other irregularities.
Company law the Directors must not approve the
financial statements unless they are satisfied that they
WEBSITE PUBLICATION
give a true and fair view of the state of affairs of the
The Directors are responsible for ensuring the Annual
Group and Company and of the profit or loss of the
Report and the financial statements are made available
Group and Company for that period. The Directors
on a website. Financial statements are published on
David Rattigan
Secretary
3 March 2021
Laurel House, Woodlands Park,
Ashton Road, Newton-le-Willows, WA12 0HH.
Registered in England and Wales No. 00238303.
66
67
G O V E R N A N C E
BOARDThe
G O V E R N A N C E
JOHN
NICHOLS
N O N - E X E C U T I V E C H A I R M A N
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
and three grandchildren. John’s two
sons both work in the Company. John
enjoys spending time with his family
and using his spare time sailing,
playing golf and walking his dog on
the beach in Wales.
DAVID
RATTIGAN
C H I E F F I N A N C I A L O F F I C E R
David joined the Group as CFO at the
end of February 2020 from McBride
PLC where he had worked for the
previous 6 years. David has previously
held senior financial and general
management positions at Cheshire
Constabulary, Premier Foods PLC and
United Biscuits Limited having started
his career with ICI PLC.
David is married to Debbie and has
four sons. He enjoys football, sailing
and generally being in the great
outdoors as much as possible in his
spare time.
ANDREW
MILNE
C H I E F E X E C U T I V E O F F I C E R
Andrew joined Nichols as the
Commercial Director for Vimto Soft
Drinks in July 2013. He was appointed
to the plc Board on 1st January 2016.
Andrew also 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 is married to Debbie and
they have two children. Andrew is
a keen Manchester United fan and
spends what spare time he has either
watching or playing sport.
JAMES
NICHOLS
N O N - E X E C U T I V E D I R E C T O R
James is the great grandson of the
founder of the Company and inventor
of Vimto, John Noel Nichols; and son
of the non-executive chairman, John
Nichols. James has a commercial
background and has worked in the
business since 2005, undertaking a
wide variety of sales and marketing
roles.
James is married to Anna, with two
young children who take up much of
their free time. James and his family
enjoy travelling and spending time on,
in, or around the sea.
JOHN
GITTINS
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 a graduate of the London
School of Economics and a chartered
accountant. He was appointed to the
Board of Nichols as an Independent
Non-Executive Director in July
2015 and is a member of the Audit
Committee (which he chairs) as well
as the Remuneration and Nomination
Committees.
John is currently Audit Committee
Chair of AIM listed Appreciate Group
plc 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 previously an
Independent Non-Executive Director
and the Audit Committee chair of
Electricity North West Limited.
HELEN
KEAYS
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 was appointed to the Board
of Nichols as an Independent Non-
Executive Director in September 2017
and is a member of the Remuneration
Committee (which she chairs) as
well as the Audit and Nomination
Committees.
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 was previously Senior
Independent Director at Dominos
Pizza Group plc, chair of the
Remuneration Committee at
Communisis plc and has also
previously held NED roles at Majestic
Wines plc, Skin Clinics and Chrysalis
plc.
Helen is married with two teenage
children who keep her busy watching
their sports matches. In her spare
time she likes to play tennis. Helen is
also a Life Trustee of the Shakespeare
Birthplace Trust.
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G O V E R N A N C E
G O V E R N A N C E
Corporate
GOVERNANCE STATEMENT
STRATEGY AND BUSINESS MODEL
of Andrew Milne as Chief Executive Officer, following
Principle 1 of the Code requires that companies
establish a strategy and business model which promote
long-term value for shareholders. Our strategy, business
model and purpose are set out in the Strategic Report
on pages 9 to 59.
The Annual Report also contains a Section 172
statement, on pages 50 to 57, which shows how the
Directors have fulfilled their duties and obligations
to ensure the long-term success of the business. The
Group’s Executive Directors and Senior Leadership
Team (the ”SLT”) 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 SLT. The strategy is communicated to all
staff members at corporate team briefs and separate
In this section of the Annual Report, we set out our
governance framework and describe the work that we
have done during the year to ensure good corporate
team meetings.
Marnie’s decision to resign as CEO on 31 December
2020, the resilience of the Vimto brand and the
Company’s use of the UK Government’s Job Retention
Scheme.
In addition, Helen Keays, Chair of our Remuneration
Committee, consulted with certain shareholders in
December 2020 to obtain their feedback on a proposed
new Long-Term Incentive (the ‘LTIP’) arrangement for
the Executive Directors and certain members of the
Senior Leadership Team. The LTIP awards will assist
the Executive Directors to meet a recently announced
shareholding guideline of 100% of salary introduced
as part of the Company’s revised remuneration policy.
Directors will be given five years from the date of their
appointment to meet this guidance. Shareholders
were supportive of the new LTIP and the shareholding
guidelines, which will help align the interest of the
Executive Directors with our shareholders. We
welcomed their feedback and support. Following
this consultation, LTIP Awards were made to Andrew
Milne, Chief Executive Officer and David Rattigan, Chief
Financial Officer on 18 December 2020. Further details
of these awards are provided on pages 82 to 87 of this
Annual Report.
JOHN
NICHOLS
N O N - E X E C U T I V E C H A I R M A N
CHAIRMAN’S INTRODUCTION
I have pleasure in introducing Nichols’ Corporate
Governance Statement.
Due to the Covid-19 pandemic, 2020 has been an
extremely challenging year for the Company. However
our commitment to supporting high standards of
corporate governance and our strong governance
framework have enabled the Company to take
appropriate actions expediently. This included action to
John Nichols
ensure the welfare and safety of our employees, which
Non-Executive Chairman
was the Board’s priority, whilst protecting our business.
3 March 2021
This culminated in our ‘Build Back Better’ programme.
70
governance throughout Nichols plc and its subsidiaries
(‘the Group’).
During 2020, we continued to follow the Quoted
Companies Alliance Corporate Governance Code (the
‘Code’). As an AIM listed company the Board considers
that this is the most appropriate Code for the Company.
As in previous years, the report below is organised
under headings which show how the Company has
complied with the ten broad principles of the Code.
Our Section 172 statement is included within the
Strategic Report (the ‘s172 Statement’). The Section s172
Statement relates to the Directors’ duty to promote the
SHAREHOLDER RELATIONS
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 open
Due to the Covid-19 pandemic, and to protect the
dialogue to receive feedback. During 2020, we have
safety and wellbeing of both our shareholders and our
maintained a constant dialogue with our shareholders.
employees, the 2020 AGM was held as a closed meeting.
We have recognised the importance of ensuring that
However, shareholders were given the opportunity to
shareholders have been kept fully informed via public
send in questions prior to the AGM, a representative
announcements and, to the extent possible, we have
sample of these questions were answered on the
engaged with our shareholders either via socially
Company’s website after the AGM.
success of the Company, which is prescribed in Section
distanced meetings or via video conference.
172 of the Companies Act 2006.
In the following sections, we have outlined how we apply
Overall, feedback from our shareholders has been
supportive during this challenging year. Following
the Code. Further detail on our approach to corporate
the release of our interim results, our Chief Executive
governance can be found at www.nicholsplc.co.uk
Officer, Chief Operating Officer and Chief Financial
Officer attended investor meetings. These shareholders
expressed complete support of the decision to cancel
the 2019 final dividend, but were equally supportive
of the payment of the 2020 interim dividend. Other
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
shareholders (as detailed above), our employees, our
customers, our suppliers, our community and the
environment.
matters discussed included succession planning,
Information on how the Company engages with these
with shareholders pleased with the announcement
key stakeholders in provided on pages 50 to 57.
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G O V E R N A N C E
G O V E R N A N C E
OUR EMPLOYEES
and senior management have regular review meetings
Regular meetings take place with staff groups to share
with our supplier base.
Group strategy and seek feedback. The Company also
OUR COMMUNITY
conducts a biennial staff engagement survey with
current staff engagement measured at 72%. 96% of
respondents felt very well supported by the business
during the Covid-19.
Throughout the Covid-19 pandemic, the Senior
Leadership Team presented to all employees every
two weeks, and latterly every month, via a live webinar
to update them on key issues. This also included a
live ‘Question and Answer’ session. Feedback from
employees was extremely positive. The monthly
The Group cares about its community, in particular
Nichols plc supports Warrington Youth Club, which
provides facilities opportunities and support to children
in our community.
During the year, we made donations to a number of
charities including the London Ambulance Service, NHS
Trust Manchester and Warrington Hospital. In addition,
and in support of our NHS workers, the Company
provided a number of free vending machines.
presentation also included an outline of the Group’s
THE ENVIRONMENT
plans for 2021 and beyond.
Nichols plc is aware of its environmental responsibilities
We also launched a well-being hub for employees during
and whilst all its current packaging is already recyclable,
August 2020.
The Senior Leadership Team have held a number of
workshops, including engaging with an external partner
to help us accelerate the development of our Diversity &
Inclusion Strategy.
the Company is working with suppliers and customers
to reduce waste. As stated in our 2019 Annual Report we
have committed to increasing the proportion of recycled
plastic which is already at 51% in our cordial range.
Nichols plc is an active member of the British Soft Drinks
association which has reducing plastic waste high on its
The spirit and application of our people during this
agenda.
challenging year has been outstanding.
The Board recognises that a long-term plan built
Further details of how we engaged with our workforce
around sustainability is vital in ensuring our business is
throughout 2020, including how we regularly
successful for many years to come. Our Happier Future
communicated with our furloughed employees is
is an essential part of our strategy in this respect. Details
detailed in our section 172 Statement on page 55 of this
of this programme are on pages 24 to 39 of this Annual
report.
OUR CUSTOMERS
Report.
RISK MANAGEMENT
Communications with our customers is a fundamental
The fourth principle of the Code requires that
ingredient to our success. The Nichols plc team
the Company embed effective risk management,
have continuous communications with customers to
considering both opportunities and threats, throughout
understand their needs, share our plans and nurture
the organisation.
collaborative working practice.
During the year, and as part of our continuing
During the Covid-19 pandemic, we supported
commitment to enhance the Group’s internal control
customers across our Out of Home trading division by
processes and management of risk, the Company
replacing out of date stock and extending credit terms.
relaunched a new risk approach within the business.
In turn, we sought support from our partners to enable
This has evolved throughout the year. A Risk
us to do this.
OUR SUPPLIERS
Management Team (‘RMT’) was created comprising
members of the SLT, the Risk Controller and both a legal
and H&S representative. The RMT has met regularly
Given Nichols’ outsource manufacturing model, having
throughout 2020. The RMT reports to the SLT who will
long-term partnerships with our suppliers and co-
provide an update to the Audit Committee three times
packers is essential. The Nichols plc supply chain team
a year.
Considerable focus was given to certain areas during the
The Board also comprises of two Executive Directors,
year, including Brexit and cyber security. With regards
Andrew Milne and David Rattigan. Andrew was
to Brexit, our Working Group and Steering Committee
appointed as Chief Executive Officer on 1 January
have continued to evaluate the Brexit risk to the
2021, following the retirement of Marnie Mallard
business, ensuring that appropriate robust mitigation
on 31 December 2020. Andrew has been a Director
plans were prepared and were ready to implement.
of the Company since 1 January 2016, and until his
Cyber security remains a high risk and the Group has
appointment as Chief Executive Officer held the position
taken appropriate mitigating action. Other actions taken
of Chief Operating Officer.
during the year included the appointment of an HSE
Manager.
There are two Board Committees: the Audit Committee
and the Remuneration Committee, which are chaired
After consideration by the Audit Committee, the
by the two independent Non-Executive Directors.
Company has entered into a co-sourcing relationship
Details of attendance at meetings of these Committees
with EY for the provision of certain internal audit
are disclosed in the Audit Committee Report and
services from 2021. This will provide further assurance
Remuneration Committee Report on pages 78 and 87
to members of the Committee and additional specialist
respectively.
resource to our in-house teams. Further details are
included in the Audit Committee Report on pages 78 to
81.
A culture of challenge and continuous improvement
is encouraged to ensure that risk management and
controls evolve with the business.
The Group’s significant risks and related mitigation/
control are disclosed in the Strategic Review on pages
44 to 49.
THE BOARD
Principle 5 of the Code requires the maintenance of the
Board as a well-functioning, balanced team led by the
Chair.
There were 11 Board meetings held during the year.
The following table sets out individual attendance by
members:
DIRECTORS
P J Nichols
J A Gittins
H M Keays
J E Nichols
M J Millard
T J Croston
A P Milne
D T Rattigan
MEETINGS ATTENDED &
NUMBER OF MEETINGS ELIGIBLE
TO ATTEND
11/11
11/11
11/11
2/2
11/11
2/2
11/11
9/9
In addition, the Board held a Strategy Day at which all
The Board is led by our Non-Executive Chairman, John
Directors were present.
Nichols and includes two independent Non-Executive
Directors, John Gittins and Helen Keays, who both have
CHAIR’S ROLE
significant experience of plc directorships.
Our Non-Executive Chairman is John Nichols who is the
In addition James Nichols was appointed as a Non-
grandson of our founder, John Noel Nichols.
Executive Director on 22 July 2020. James also holds the
As Chair, Mr Nichols’ primary responsibility is to
position of Commercial Controller at Vimto Out of Home
effectively lead the Board and ensure that the Group’s
and has worked within the business for 16 years. James
corporate governance is appropriate, is communicated
was appointed as a representative of the Nichols Family
and is adopted across the business activities. The
pursuant to a Relationship Agreement dated 22 July
Chairman is also responsible for ensuring the Board
2020 between the Company and the Nichols Family. The
agenda concentrates on the key operational and
purpose of the Relationship Agreement is to formalise
financial issues effecting the delivery of Nichols plc’s
Board representation for the Nichols Family whilst
strategy.
ensuring that the Company is capable of carrying on, at
all times, its business independently. Further details of
the terms of the Relationship Agreement are provided
on page 63.
During 2020, Mr Nichols had a pivotal role in
ensuring the smooth running of the Board during
the Covid-19 lock-down, such that it was able to
make timely decisions during the pandemic including
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73
G O V E R N A N C E
G O V E R N A N C E
taking appropriate mitigating actions to protect the
EXECUTIVE DIRECTORS
With the support of our NOMAD and our advisors, the
decision making with the Group’s financial calendar.
Board training and development needs are met. The
A tender process was undertaken to appoint advisers
Company’s in-house legal counsel presents to the Board
to this Committee.
Company. The Chair was also cognisant of the risk to
both employees and the Company’s shareholders of
attending the 2020 annual general meeting to be held
on 29 April 2020 and agreed with the Board that this
should be held as a closed meeting.
Throughout 2020 the Company had three Executive
Directors: the Chief Executive Officer, the Chief Financial
Officer and the Chief Operating Officer. Following the
retirement of Marnie Millard on 31 December 2020 and
the appointment of Andrew Milne, formerly COO, as
Whilst Mr Nichols shareholding and long association
CEO, the Company now has two Executive Directors:
with the business means that he is not regarded as an
Andrew Milne and David Rattigan.
independent Chairman, he is not involved in the day to
day operations of Nichols plc. Those responsibilities are
managed by the Group’s CEO.
Non-Executive Directors communicate with Executive
Directors and senior management between formal
pages 68 to 69.
Board meetings. Due to the Covid-19 pandemic and
INDEPENDENT NON-EXECUTIVE DIRECTORS
the requirement for the Board to act swiftly on certain
regularly on legal and regulatory matters and a written
report on governance developments is presented at
each Board meeting by Prism Cosec, the Company’s
corporate governance advisor.
Biographies on all Directors giving details of their
experience and roles on the Board are shown on
matters, the Board met 11 times during 2020. In
Principle 7 of the Code requires that the Board and
addition, the Board held a strategy day in October 2020
Committees evaluate their own performance based
to review its medium term strategic plans.
on clear and relevant objectives and seek continuous
A rigorous recruitment process is undertaken for new
BOARD PERFORMANCE AND EVALUATIONS
external auditors biannually and holds discussions
• The importance of shareholder feedback was fully
recognised by the Board and it was agreed that this
should become a more formalised process.
The Remuneration Committee evaluates Executive
Director performance, alongside remuneration and
reward.
The Audit Committee engages with the Company’s
on the financial systems, procedures and efficacy of
management.
Directors prior to their proposal and election. Any
potential candidate for appointment as a Non-Executive
Director, will be required to disclosure their other
commitments before being appointed as a Director.
of the performance of the Executive Directors. John and
Directors are expected to attend all meetings of the
improvement.
Helen chair the Audit and Remuneration Committees
Board, and of the Committees on which they sit, and to
A formal Board performance evaluation was undertaken
Mr John Gittins and Ms Helen Keays are considered by
the Company as Independent Non-Executive Directors
(NED). The NED role is to provide oversight and scrutiny
respectively.
Our Non-Executive Directors are expected to devote
such time as is necessary for the proper performance
of their duties and normally expect to spend at least
12 days per annum on Company business, after the
induction phase, normally including attendance at six
board meetings, the AGM, committee meetings plus
other events as required, including meetings with
our employees and attendance at strategy meetings.
However, the INEDs and the Company recognise
that due to the nature of their role, it is impossible
and additional time commitment required when the
Company is undergoing a period of increased activity.
In accordance with their appointment letter, our INEDs
agree to commit sufficient time to perform their duties.
During 2020, and as detailed above, there were 11
Board meetings, at which all Directors were present.
Several additional meetings were convened principally
to consider issues relating to the impact of the
to be specific about the required time commitment,
DIRECTORS’ SKILLS AND CAPABILITIES
devote sufficient time to the Group’s affairs to enable
them to fulfil their duties as Directors. In the event
that Directors are unable to attend a meeting, their
in September 2020, the outcome of which has been
communicated to, and discussed by the Board. The
comments on papers to be considered at the meeting
People Director and took the form of a questionnaire
on 2 March 2020, the Board appointed a market leading
will be discussed in advance with the Chairman, so that
completed by each member of the Board. The
recruiter to provide a shortlist of suitable candidates
their contribution can be included as part of the wider
Board discussion. Due to the Covid-19 pandemic, and
as detailed above, the Company convened 11 Board
meetings during 2020 compared with five in 2019. All
questionnaire specifically included matters relating
with the required experience and ability. From this
to the effectiveness of the Board during the Covid-19
shortlist, a number of candidates were interviewed
pandemic, particularly during the lockdown periods and
by members of the Board, after which, the Board
the ability of the Board to be flexible and agile in these
determined that David’s significant experience, working
performance evaluation was led by the Group’s
For the appointment of David Rattigan as Group CFO
Directors attended every meeting which they were
challenging times.
eligible to attend.
The evaluation also focussed on (i) the composition
and effectiveness of the Board, (ii) the Board process
in senior financial positions in the consumer sector, and
his personal attributes made him an excellent candidate
for the role and the Company’s culture.
Principle 6 of the Code requires that the Directors
ensure that between them they have the necessary up-
to-date experience, skills and capabilities.
including whether agenda items were appropriate, (iii)
Succession planning for the Board is an ongoing topic
the quality of papers and appropriateness of meeting
of discussion. This is demonstrated by the recent
minutes (iv) formulation, review and consideration of
appointment of Andrew Milne as Chief Executive Officer
strategy and (v) the Group’s internal control process.
on 1 January 2021, following the retirement of Marnie
The current Nichols plc Board has significant sector,
The evaluation also considered progress against actions
Millard. The Board considers that Andrew is the right
financial and plc experience and the Executive Directors
arising from the 2019 Board evaluation.
candidate to lead the business during the next phase
have broad experience in the soft drinks industry and in
manufacturing.
Further to the Board’s consideration of the outcome of
the evaluation, a number of actions were agreed and are
of its development. In addition, the Executive Directors
and other members of the SLT attend talent calibration
meetings to ensure that the business has clear
development and succession plans in place.
Covid-19 pandemic on the Company and its business.
David Rattigan who was appointed as Chief Financial
being addressed. These include the following:
This ensured that appropriate mitigating action was
Officer on 2 March 2020, was also appointed as
considered and approved, protecting our colleagues and
Company Secretary on that date. Prism Cosec Limited
customers and mitigating against the financial impact
is engaged to provide certain company secretarial
of the pandemic on our business. Further details of
services to the Company to support David in this role.
decisions taken by the Board are on pages 50 to 57.
This includes the attendance at, and minuting of, Board
meetings to ensure that David is able to fully participate
• Subject to Covid-19 guidelines, a number of the 2021
Board meetings will be held at different locations
CORPORATE CULTURE
within the Group to enable the Board to visit and
Principle 8 of the Code requires that the Company
experience its diverse operations across the UK and
promote a corporate culture that is based on ethical
engage more fully with members of its workforce.
values and behaviours.
74
75
in these meetings as a Director and Chief Financial
• The role and responsibilities of the Remuneration
Nichols plc is very proud of its warm and inclusive
Officer.
Committee is being reviewed, to ensure that it has an
culture. It is our people and how they go about their
appropriately focussed approach, aligning its
business that has been fundamental to the sustained
G O V E R N A N C E
G O V E R N A N C E
success of the Group for many years. Our culture is
we were acutely aware of the mental well-being of our
reflected in our values and the overarching theme of our
employees and a number of initiatives were instigated
values is ‘doing the right thing’.
to help our colleagues cope. In April 2020, a start-up
Our Values:
plan was developed to assist in a phased return to work
with health and safety uppermost on our minds. We
• People: We value and respect our employees. Their
received very positive feedback from our employees as
enthusiasm, ideas and hard work are fundamental
to how they have been treated throughout lockdown -
to the success of our Company and we recognise
this is testament to the culture that we have cultivated.
that the education and development of our people
is important. We believe that developing our talent
at Nichols is essential to our success and we identify
the development needs of all our employees through
our appraisal programme. We support the
As detailed in ‘Our Community’ above, the Company also
made donations throughout the year in recognition of
our Key Workers and those charities who have provided
supported during Covid.
professional development of our employees.
GOVERNANCE STRUCTURE
The Board does not consider that the appointment
of a Senior Independent Director is required at this
time, although this will matter be kept under review.
Shareholders have access to our Independent Non-
Executive Directors, John Gittins, Chairman of the
Audit Committee and Helen Keays, Chairman of the
Remuneration Committee.
This culture of challenge and continuous improvement
is encouraged to ensure that controls evolve with the
business.
The Nichols plc website at www.nicholsplc.co.uk
describes the roles and terms of reference for the
• Sustainable Business: We value our commitment
Principle 9 of the Code requires that the Company
Committees.
to having a sustainable business. Our sustainable
maintain governance structures and processes that are
business strategy takes into account our wider
fit for purpose and support good decision making by the
corporate, environmental and social responsibilities.
Board.
Further details are included in pages 24 to 39 of the
Strategic Report.
2020 was an intense period for the Board due to the
Covid-19 pandemic. The Board met 11 times, rather
• Customers and Suppliers: We believe in building long-
than the five meetings held during 2019. This ensured
term partnerships with our customers and suppliers.
that the Board was kept fully informed and enabled
• Community: We actively encourage our employees to
give something back to the wider community.
the Board to react quickly during a period of global
uncertainty. The Board was able to take appropriate
mitigating actions to ensure that the business is able to
The Company has adopted a Slavery and Human
‘Build Back Better’ post the pandemic. The majority of
Trafficking Transparency Statement (the “Statement”)
these meetings were held remotely.
SHAREHOLDER AND STAKEHOLDER
COMMUNICATIONS
Principle 10 of the Code requires communication
on how the Company is governed and performing
by maintaining a dialogue with shareholders and
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 prospective investors. In addition the
Company issued several trading updates during 2020
to ensure that shareholders were kept fully informed of
and has an anti-bribery policy. These set out the ethical
behaviour expected of our employees, with our Human
Slavery Statement also including details of actions
In addition the Audit Committee and Remuneration
the impact of the Covid-19 pandemic on the Company’s
Committees met four and two times respectively.
operational and financial performance.
that we have taken to ensure that human slavery
Nichols plc has robust internal controls, delegated
The plc website contains information about the business
does not exist within Nichols or within our supply
authorities and authorisation processes. The controls
activities, access to all RNS announcements and copies
chain. We have a zero-tolerance approach for giving or
are subject to review, both internally by individual teams
of the Report and Accounts (R&A). The plc website also
receiving of bribes or corrupt payments in any form.
within the Company and external by the Company’s
includes historical announcements, as well as the R&A
In addition, to ensure that any of our employees can
external audit provider, BDO LLP. In addition, the
for more than the minimum five years. The work of the
raise any matters of genuine concern without fear of
Company has recently appointed EY, as its co-sourcing
Audit and Remuneration Committees is described on
any action being taken against them, we also operate a
partner to assist management in the development of
pages 78 to 87.
whistleblowing policy. Further detail of the anti-bribery
a 3-year internal audit strategy. Further detail of the
and whistleblowing policies, which are monitored by the
Group’s internal audit process is provided on page 80.
Audit Committee, is provided in the Committee’s Report
on page 81 of this Annual Report. In addition, these
policies and the Human Slavery Statement are available
on the Company’s website at www.nicholsplc.co.uk.
During 2020, and as part of the Board’s continuing
commitment to adhere to best corporate governance
practice, the Board constituted a Nomination
Committee. The Committee, constituted on 20 July 2020,
During the Covid-19 pandemic, the most important
comprises of John Nichols, as Committee Chair and
objective of the Board was to protect the health and
John Gittins and Helen Keays, both Independent Non-
wellbeing of the Company’s employees, customers and
Executive Directors. The Nomination Committee Report
suppliers. At the beginning of the first UK lockdown
is on page 88 of this Annual Report.
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G O V E R N A N C E
G O V E R N A N C E
Audit
COMMITTEE REPORT
JOHN
GITTINS
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
With both the Covid-19 pandemic and the Brexit
transition period due to end on 31 December 2020,
2020 was a particularly challenging year for the
Company. During this period, and on behalf of the
Board, the Committee continued to discharge its
duties, including a focus on continued development
of the Group’s internal controls and risk management
processes.
On behalf of the Committee, I am pleased to present
the Audit Committee Report for the year ended 31
December 2020 which includes actions taken by the
Committee in this respect.
MEMBERSHIP OF THE AUDIT COMMITTEE
consideration included a determination of the ‘Feel
The Committee comprises three Non-Executive
Directors: I continue to act as Committee Chair, with my
colleagues John Nichols and Helen Keays. Helen and I
are considered independent Directors. John Nichols is
not considered independent as a result of his significant
shareholding and previous executive role. The Board is
satisfied that I, as Chair of the Committee, have recent
and relevant financial experience. I am a chartered
accountant and currently chair of the audit committee of
Appreciate Group plc and previously of Electricity North
West Limited.
The Audit Committee met four times during 2020. The
following sets out individual attendance by members:
Good’ business as an independent cash generating
unit (CGU), an impairment review across the Group’s
CGU’s, expected credit loss provisions, it’s approach
to the HMRC investigation into prior year incentive
schemes and the presentation in the Group’s financial
statements of exceptional items. In each case, the
Committee reviewed accounting papers prepared by
management. In addition, notwithstanding
the Group’s strong cash balance, the Committee
reviewed the going concern assessment prepared
by management, given the impact of the Covid-19
pandemic.
• meeting the external auditor twice, without
management, to discuss matters relating to its remit
NON-EXECUTIVE DIRECTORS
MEETINGS ATTENDED
and any issues arising from its work;
J A Gittins
P J Nichols
H M Keays
4
4
4
The Audit Committee reviews its terms of reference
annually and recommends to the Board any changes
required as a result of these reviews. These terms of
reference are available on the Group’s website.
THE COMMITTEE’S FOCUS IN 2020
• reviewing the performance of the external auditor.
This assessment covered key areas including (i) the
audit partner and team (ii) the audit approach and
execution (iii) the Committee and Company
interactions with the external auditor and (iv) the
added value and insights that the external auditors
bring. The Committee’s findings were subsequently
discussed with the external auditor.
• approving the plan of targeted internal reviews
During the year, the Audit Committee discharged its
conducted by the finance team and other
responsibilities by:
• approving the external auditor’s plan for the audit
of the Group’s annual financial statements, including
professional advisors, monitoring the results
of these reviews and the timely follow up of
any control recommendations.
key audit matters, key risks, confirmation of auditor
• reviewing the Group’s risk management process, key
independence and terms of engagement, including
risk register and risk mitigations.
audit fees.
• receiving a presentation from management on
• reviewing the Group’s draft financial statements
the development of the Company’s internal
and interim results statements and reviewing
control framework, including the co-ordination of
the external auditor’s detailed reports thereon,
risk management and enhancement of the
including consideration of key audit matters and
Company’s internal audit activities. This is explained
risks. During 2020, key matters for the Committee’s
further in this report;
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G O V E R N A N C E
G O V E R N A N C E
• Engaging with the Financial Reporting Council (‘FRC’)
INTERNAL AUDIT
WHISTLEBLOWING
with regard to its review of the Group’s 2019 financial
statements. The Committee received a report from
management on matters raised by the FRC and
discussed these with management and the external
auditor. The Committee was pleased to note that
none were material in terms of the Group’s financial
statements or financial reporting. Following the
Group’s response, the FRC closed its enquiry. The
During 2020, audits were conducted by relevant
The Group has in place a whistleblowing policy which
in-house teams, in order to provide assurance to the
sets out the formal process by which an employee of
Committee on the adequacy and effectiveness of
the Group may, in confidence, raise concerns about
internal controls and risk management procedures.
possible improprieties in financial reporting or other
The Committee received an update on these reviews at
matters. The Committee is comfortable that the policy
each meeting. The Company did not have a dedicated
is operating effectively.
internal audit function during 2020.
FRC’s role is not to verify the information provided
The Committee considered a proposal from
but to consider compliance with reporting
management to enter into a co-sourcing relationship
requirements. The review therefore provides no
with a third-party provider for the provision of certain
assurance that the 2019 financial statements are
internal audit services from 2021. This will provide
correct in all material respects;
further assurance to the Committee and additional
• receiving a presentation from the Company’s legal
department, on a compliance review programme of
the Company’s policies and procedures in connection
specialist resource. Following a formal tender process,
EY has been selected by the Committee as its preferred
partner.
with a number of regulatory matters, including anti-
INTERNAL CONTROL
ANTI-BRIBERY
The Group has in place an anti-bribery and anti-
corruption policy which sets out its zero-tolerance
position and provides information and guidance to
those working for the Group on how to recognise and
deal with bribery and corruption issues. The Committee
is comfortable that the policy is operating effectively.
bribery and anti-money laundering.
The Board has overall responsibility for maintaining
John Gittins
EXTERNAL AUDIT
sound internal control systems to safeguard the
Chair of the Audit Committee
The Audit Committee monitors the relationship with
the external auditor, BDO, to ensure that auditor
independence and objectivity are maintained. The
external auditor is not engaged to perform any non-
audit services, in line with the Group’s policy. BDO have
investment of shareholders and the Group’s assets. The
3 March 2021
systems are reviewed by the Board and, when asked,
the Audit Committee, and are designed to provide
reasonable, but not absolute, assurance against material
misstatement or loss.
been the Company’s auditor for seven years and the
During the year the Company has taken action to further
Committee remains satisfied with their effectiveness
develop its internal control and risk management
and independence. The Committee has adopted a policy
environment. In addition to the development of
of tendering external audit services at least every ten
internal audit, detailed above, this has included
the establishment of a number of management
committees with remits over risk management,
treasury management and capital expenditure. These
committees will regularly report to future Audit
Committees.
years.
80
81
G O V E R N A N C E
G O V E R N A N C E
Remuneration
COMMITTEE REPORT
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 three times during
the year and plans to meet at least three times a year
going forward.
IMPACT OF COVID-19
As noted previously, the business has faced a number of
challenges over 2020, particularly arising from COVID-19.
Consequently, the Committee made the decision early
in the year that no bonuses should be paid to the
incumbent leadership team for this current financial
year’s performance. With the exception of the plan to
support Executives in reaching a new Shareholding
Guideline (see below), no long-term incentive awards
were granted in the year.
Executive Director changes over the year
As has been previously announced Tim Croston stepped
down as CFO from the Board in 2020 and was replaced
in role by David Rattigan. David joined the Group at
the end of February 2020 and joins with significant
experience, having worked in several senior financial
positions within the consumer sector.
Furthermore, Marnie Millard stepped down with effect
from 31 December 2020 and was replaced in role by
Andrew Milne from 1 January 2021. Andrew has been
with the Group for eight years and brings significant
industry expertise and excellent knowledge of our
business to the role. It has been agreed that Marnie
will continue to act as the Company’s representative
at the British Soft Drinks Association (BDSA) following
employment until July 2021.
REMUNERATION POLICY
The objective of the Group’s Remuneration Policy is
to attract, motivate and retain high quality individuals
who will contribute fully to the success of the Group. To
achieve this, the Group provides competitive salaries
and benefits to all employees.
HELEN
KEAYS
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
I am pleased to present this remuneration report,
which sets out our revised remuneration policy, the
remuneration paid to the Directors for the year and how
remuneration will operate in 2021.
MEMBERS OF THE REMUNERATION COMMITTEE
The Committee comprises the three Non-Executive
Directors: I continue to act as Committee Chair, with my
colleagues John Nichols and John Gittins. John Gittins
and I are considered independent Directors. John
Nichols is not considered independent as a result of his
significant shareholding and previous executive role.
PwC, our independent external consultants also attend
on a regular basis
82
Over the course of the year, the Committee undertook a
Guideline for Executive Directors of 100% of salary (to be
detailed review of the Remuneration Policy for Executive
built up over 5 years from appointment). The intention
Directors. Together with the management team, the
of this requirement is to enhance the alignment
Committee established the following principles for
between the Executive Directors and shareholders,
Executive Director remuneration at Nichols:
reflecting on feedback received from shareholders over
• Motivating
• Simple
• Aligned to Group strategy
• Flexible
• Transparent
• Fair
Building on these principles, the Committee intends
to implement a revised remuneration structure in
2021 onwards for Executive Directors and other senior
management. Specifically, the bonus and long-term
the past few years.
In order to support Executives reaching this new
shareholding policy guideline, the Committee
introduced a one-off nil cost option award in 2020 over
shares equating to 50% of salary. This award will vest
on the third anniversary of grant based on the number
of shares bought by the Executive Directors in the
intervening period matched on a 1:1 basis. As noted
above, there are no other LTIP awards that have been
made in 2020 to the Executive Directors.
incentive will be combined into a hybrid incentive plan
The Committee consulted with major shareholders as a
which will have value based on both short and long-term
part of the design process, to confirm that the proposal
performance in a combination of cash and deferred
aligns to shareholder expectations in relation to good
shares.
corporate governance.
Furthermore, as part of our review and reflecting on
The table below summarises the key elements of the
the appointment of Andrew Milne and David Rattigan,
revised remuneration policy for Executive Directors.
the Committee decided to introduce a Shareholding
Element and link
to strategy
Operation
Maximum potential
Value
Performance
conditions and
assessment
Nonapplicable, although
individual performance
is considered when
determining base salary
increases.
Increases to base salary are
determined annually by the
Committee considering:
• Individual performance.
• The scope of the role.
• Pay levels in comparable
organisations and
• Pay increases for other
employees.
Base salary
Supports the
recruitment
and retention of
Executive Directors,
reflecting their
role, skills, and
experience.
Pension
Supports
recruitment
and retention of
Executive Directors.
Base salary reflects
the size of the role and
responsibilities, individual
performance (assessed
annually) and the skills and
experience of the individual.
In setting appropriate
salary levels, the Committee
considers data for similar
positions in comparable
organisations. The
data is independently
commissioned, and
the Committee aims to
position Executive Directors
competitively within this
reference group.
Generally, the Company
contributes to a defined
contribution pension
scheme for the Executive
Directors. The contribution
can instead be paid in cash
(which is excluded from
incentive calculations) if the
Executive Director is likely
to be affected by the limits
for tax-approved pension
saving.
Up to 9% of base salary
Nonapplicable
83
G O V E R N A N C E
G O V E R N A N C E
Element and link
to strategy
Operation
Maximum potential
value
The value of such benefits is
not capped.
Performance
conditions and
assessment
Non-applicable.
NON-EXECUTIVE DIRECTORS
The Non-Executive Directors signed letters of
The Non-Executive Directors’ fees are determined by the
appointment with the Group for the provision of Non-
Board.
Executive Directors’ services, which may be terminated
by either party giving three months’ written notice.
Benefits
Supports
recruitment
and retention of
Executive Directors.
Executive Directors are
entitled to the following
benefits:
• Life assurance;
• Directors and Officers
Liability Insurance;
• Private medical insurance;
and
• Company car/car
allowance and fuel
The Committee may
determine that Executive
Directors should receive
additional reasonable
benefits if appropriate,
considering typical market
practice and practice
throughout the Company.
All-employee Share
Plan – Save As You
Earn (“SAYE”)
To encourage equity
ownership across
all employees and
create a culture of
ownership.
The Company offers a SAYE
scheme for all employees.
The operation of these plans
will be at the discretion
of the Committee, and
Executive Directors will be
eligible to participate on
the same basis as other
employees.
Hybrid Incentive
Plan
Supports the
recruitment
and retention of
Executive Directors.
Supports a high
performance
culture, rewards
performance in the
context of achieving
key goals, and
encourages
sustainable
performance
that supports the
achievement of
strategic goals.
A combination of financial
and non-financial measures
and targets are set annually.
Outcome levels will be
determined based on
performance against this
scorecard.
For Executive Directors, 60%
of awards will be deferred
into shares. The deferred
proportion of awards will
pay out 3 years from the
start of the performance
period. The Committee
retains discretion to adjust
the pay-out level of deferred
incentives based on
performance in the deferral
period.
The deferred element of the
award will attract dividend
equivalents for the period
between assessment and
pay-out.
84
Maximum permitted based
on HMRC limits from time
to time.
Non-applicable.
The maximum incentive
which may be earned in
any year under the Hybrid
Incentive Plan is 200% of
base salary.
For 2021 awards,
performance conditions will
be weighted 70% towards
financial performance and
30% towards Strategic
Goals.
The financial element of the
performance conditions will
act as an underpin on pay
outs from the remainder of
the award.
ANNUAL REPORT ON REMUNERATION IN 2020
The following table summarises the total gross remuneration of the Directors who served during the year to 31
December 2020.
Fixed remuneration
Performance related
Salary
and
fees
£’000
Benefits in
kind4
£’000
Pension
contributions
£’000
Bonuses
payable in
respect of 2020
£’000
LTIP
£’000
Total
2020
£’000
Total
20195
£’000
Executive Directors
M J Millard1
A P Milne
T J Croston2
D T Rattigan
Non-Executive
Directors
P J Nichols
J Nichols3
H M Keays
J A Gittins
353
267
39
179
101
9
40
40
18
15
7
12
1
-
-
-
4
4
-
14
-
-
-
-
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
475
286
46
205
745
487
524
-
1,012
1,756
102
102
9
40
40
-
40
40
191
182
1,203
1,938
1 MJ Millard stepped down from the Board as Group CEO as of 31 December 2020, in addition to the bonus illustrated above (paid in
recognition of her leadership throughout the COVID-19 pandemic) she received payments in relation to early termination amounting to
£223,000. These are not included in the above table.
2 TJ Croston stepped down from the Board as Group CFO as of 2 March 2020, and received payments in relation to early termination
from the Board amounting to £332,000. These are not included in the above table.
3 The fee disclosed above relating to J Nichols is that for his Non-Executive Director duties as a Representative Director pursuant to the
Relationship Agreement that exists between Nichols plc and the Nichols family. Separately, J Nichols is also a Commercial Controller
within the Vimto Out of Home business.
4 Benefits consist of the provision of a company car (or cash equivalent) and fuel, private healthcare.
5 The element of LTIP included within 2019 remuneration is valued at a share price of £15.77 as at 31 December 2019.
The Executive Directors were eligible for annual bonus relating to profit and personal performance metrics through
the year. Achieving stretch targets would have given rise to a bonus of circa 90% of base pay. The Committee
determined early in the year that no bonuses should be paid to the incumbent leadership team in respect of 2020.
(2019: 56% of base salary).
85
G O V E R N A N C E
G O V E R N A N C E
OUTSTANDING SHARE AWARDS
The table below sets out details of all outstanding share awards in respect of current Executive Directors:
Award
2016 SAYE
2018 SAYE
Grant date Vesting date
Recipient
12 April 2016
12 April 2021
Andrew Milne
11 April 2018
11 April 2021
Andrew Milne
2017 LTIP vesting1
6 June 2017
8 June 2020
Andrew Milne
2018 LTIP award
13 June 2018
13 June 2021
Andrew Milne
2019 LTIP award
1 May 2019
1 May 2022
Andrew Milne
2020 SAYE
15 April 2020
15 April 2023
Andrew Milne
15 April 2020
15 April 2023 David Rattigan
2020 shareholding
policy guideline -
matching award
18 December
2020
18 December
2020
Andrew Milne
David Rattigan
Exercise
price
£9.939
£12.25
£0
£0
£15.55
£0
£7.93
£7.93
£0
£0
Number of
shares out-
standing
Number
of shares
lapsed
603
587
6,609
13,578
1,9292
12,828
1,513
2,269
9,668
7,734
-
-
30,107
-
-
-
-
-
-
-
1 The 2017 LTIP vested in 2020 based on performance between 1 January 2017 and 31 December 2019. Based on performance against
the agreed targets, 18% of the award vested. No discretion was applied by the Committee in relation to these awards.
2 Options granted under the 2018 LTIP are linked to CSOP options which were granted together to allow, where possible, the option
holder to receive any gain on their LTIP option in a tax efficient manner. The holder will receive the same gross gain as they would have
received had they only been granted the LTIP option. At the time of exercise, to the extent that there is a gain on the CSOP option, the
option granted under the LTIP will be forfeited to the same value.
IMPLEMENTATION OF REMUNERATION POLICY IN
2021
The following table summarises Executive Director
salaries, pension levels and incentive opportunities for
the 2021 financial year. This table excludes benefits in
kind which are referenced in the table above.
Basic salary/
fee
£’000
Pension1
£’000
Maximum incentive
£’000
Cash element
Deferred element2
325
210
101
20
40
40
29
17
-
-
-
-
260
168
-
-
-
-
390
252
-
-
-
-
Executive Directors
A P Milne
D T Rattigan
Non-Executive Directors
P J Nichols
J E Nichols
H M Keays
J A Gittins
1 Pension may be paid as a cash sum in lieu of.
2 As per the policy, 60% of pay outs from the Hybrid Incentive Plan will be deferred into shares for a further 2 years.
In 2021, the hybrid incentive plan will be assessed against profit and Strategic Objectives. Threshold performance
under the profit target will act as an underpin on the remainder of the award. The bonus outcome will range from
zero at a threshold performance, up to 100% for a stretch performance.
The actual performance targets are not disclosed as they are considered to be commercially sensitive.
ATTENDANCE AT REMUNERATION COMMITTEE MEETINGS
There were three Remuneration Committee meetings held during the year. The following table sets out individual
attendance by members:
NON-EXECUTIVE DIRECTORS
MEETINGS ATTENDED
J A Gittins
P J Nichols
H M Keays
CONCLUSION
3
3
3
On behalf of the Committee, I hope this report gives you a clear view of how we have implemented the policy in
2020 and our plans for 2021. The Committee recommends that shareholders vote in favour of the 2020 Annual
Remuneration Report at the forthcoming AGM.
Helen Keays
Chair of the Remuneration Committee
3 March 2021
86
87
G O V E R N A N C E
G O V E R N A N C E
Nomination
COMMITTEE REPORT
as a result of my significant shareholding and previous
Executive role.
ROLE OF THE NOMINATION COMMITTEE
The Committee’s primary responsibilities are to:
• Keep under review the Board’s structure, size and
composition, including diversity and the balance
of independent and non-independent Non-Executive
Directors, and make recommendations to the Board
with regard to any changes required.
• Ensure plans are in place for orderly succession to
Board and senior management positions,
and oversee the development of a diverse pipeline
for succession.
• Keep under review the leadership needs of the
JOHN
NICHOLS
N O N - E X E C U T I V E C H A I R M A N
During the year, and as part of the Board’s continuing
organisation, both Executive and Non-Executive,
commitment to adhere to best corporate governance
with a view to ensuring the continued ability of the
practice, the Board constituted a Nomination
organisation to compete effectively in the
Committee.
marketplace.
On behalf of the Committee, I am pleased to present our
• Be responsible for identifying and nominating for the
first Nomination Committee Report.
approval of the Board, candidates to Board vacancies
MEMBERSHIP OF THE NOMINATION COMMITTEE
The Committee, which was constituted by the Board on
20 July 2020, comprises three Non-Executive Directors:
I act as Committee Chair, with my colleagues John
as and when they arise.
• Before any appointment is made by the Board,
evaluate the balance of skills, knowledge, experience
and diversity on the Board.
Gittins and Helen Keays. John and Helen are considered
• Review annually the time required from Non-
independent Directors. I am not considered independent
Executive Directors.
88
• Make recommendations to the Board on the
re-election by shareholders of Directors under the
annual re-election provisions of the QCA Code or
the retirement by rotation provisions in the
Company’s articles of association.
The Terms of Reference of the Nomination Committee,
which were adopted by the Board on 20 July 2020, are
available on the Company’s website.
SUCCESSION PLANNING
On 1 January 2021, Andrew Milne succeeded Marnie
Millard OBE as Chief Executive Officer. Andrew was
formerly our Chief Operating Officer, having held this
position since 1 January 2016. The transition from
Marnie to Andrew has gone smoothly and we thank
Marnie for her significant contribution to the Company.
One of the roles of the Committee is to consider
succession planning for the Board and senior
management and this will be an item for consideration
during 2021.
John Nichols
Chair of the Nomination Committee
3 March 2021
89
03 F
N
A
N
C
A
L
I
I
S
T
A
T
E
M
E
N
T
S
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
92
100
100
101
102
103
104
106
144
145
147
150
90
91
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
BASIS FOR OPINION
OF NICHOLS PLC
We conducted our audit in accordance with
OPINION ON THE FINANCIAL STATEMENTS
International Standards on Auditing (UK) (ISAs
In our opinion:
(UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s
• the financial statements give a true and fair view of
responsibilities for the audit of the financial statements
the state of the Group’s and of the Parent Company’s
section of our report. We believe that the audit evidence
affairs as at 31 December 2020 and of the Group’s
we have obtained is sufficient and appropriate to
profit for the year then ended;
provide a basis for our opinion.
• the Group financial statements have been properly
Independence
prepared in accordance with international accounting
standards in conformity with the requirements of the
Companies Act 2006
We remain independent of the Group and the Parent
Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements
• the Parent Company financial statements have been
in the UK, including the FRC’s Ethical Standard as applied
properly prepared in accordance with
to listed entities, and we have fulfilled our other ethical
international accounting standards in conformity
responsibilities in accordance with these requirements.
or conditions that, individually or collectively, may cast
Our responsibilities and the responsibilities of the
significant doubt on the Group’s ability to continue as
Directors with respect to going concern are described in
a going concern for a period of at least twelve months
the relevant sections of this report.
from when the financial statements are authorised for
issue.
OVERVIEW
Coverage
124% (2019: 98%) of Group profit before tax
98% (2019: 97%) of Group revenue
98% (2019: 97%) of Group total assets
Key audit matters
2020
2019
Brand Support Arrangements
Goodwill and Intangible Asset Impairment
Goodwill and intangible asset impairment is now considered to be a key audit matter
because of the uncertainty that the current macroeconomic environment presents to
forecasting on which the impairment assessment relies, this risk is greater in FY20.
with the requirements of the Companies Act 2006
and as applied in accordance with the provisions of
CONCLUSIONS RELATING TO GOING CONCERN
Materiality
Group financial statements as a whole
the Companies Act 2006; and
In auditing the financial statements, we have concluded
• the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
that the Directors’ use of the going concern basis
of accounting in the preparation of the financial
statements is appropriate. Our evaluation of the
Directors’ assessment of the Group and the Parent
We have audited the financial statements of Nichols plc
Company’s ability to continue to adopt the going
(the ‘Parent Company’) and its subsidiaries (the ‘Group’)
concern basis of accounting included:
for the year ended 31 December 2020 which comprise
the consolidated income statement, the consolidated
statement of comprehensive income, the group and
parent company statement of financial position, the
consolidated and parent company statement of cash
flows, the group and parent company statement of
• Obtaining management’s assessment of the going
concern status of the Group and the Parent Company
which included forecasts and stress-testing covering
a period of 12 months from the date of sign off of the
financial statements;
changes in equity and notes to the financial statements,
• Evaluating management’s method of assessing going
including a summary of significant accounting policies.
concern in light of market volatility and the current
The financial reporting framework that has been
uncertainties associated with COVID-19;
applied in their preparation is applicable law and
international accounting standards in conformity with
the requirements of the Companies Act 2006 and, as
regards the Parent Company financial statements,
• Considering the appropriateness and accuracy of
these forecasts and robustly challenging their inputs;
and
as applied in accordance with the provisions of the
• Challenging management’s assumptions and
Companies Act 2006.
judgements made with regards to stress-testing of
forecasts.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
£1,200,000 (2019: £1,500,000) based on 5% (2019: 5%) of the 3 year average of profit before
tax, after adjusting for exceptional items
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our Group audit was scoped by obtaining an
For these two components, we performed an audit
understanding of the Group and its environment,
of the complete financial information. For those
including the Group’s system of internal control, and
components, we performed audit procedures on specific
assessing the risks of material misstatement in the
balances within that component that we considered had
financial statements. We also addressed the risk of
the potential for the greatest impact on the significant
management override of internal controls, including
account balances and transactions in the group financial
assessing whether there was evidence of bias by the
statements, either because of the size of these balances
Directors that may have represented a risk of material
or their risk profile. All work was carried out by the
misstatement.
The Group manages its operations from two principal
locations in the UK and has common financial systems,
processes and controls covering all significant
components. The audit of all significant components
was performed by the group audit team.
In assessing the risk of material misstatement to the
group financial statements, and to ensure we had
adequate quantitative coverage of significant accounts
in the financial statements, of the four reporting
components of the group, we determined that two
components represented the principal business units
within the group, which included the parent company.
group auditor. For non-significant components, we
performed other procedures, including analytical review,
and specified audit procedures over specific accounts
within each component that we considered had the
potential for the greatest impact on the significant
accounts in the financial statements either because of
the size of these accounts or their risk profile.
As a consequence of the audit scope determined, we
achieved coverage of approximately 98% (2019: 97%) of
revenue, 124% (2019: 98%) of profit before tax and 98%
(2019: 97%) of total assets.
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93
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
KEY AUDIT MATTERS
Key audit matters are those matters that, in our
allocation of resources in the audit, and directing the
professional judgement, were of most significance in
efforts of the engagement team. These matters were
our audit of the financial statements of the current
addressed in the context of our audit of the financial
period and include the most significant assessed
statements as a whole, and in forming our opinion
risks of material misstatement (whether or not due to
thereon, and we do not provide a separate opinion on
fraud) that we identified, including those which had the
these matters.
greatest effect on: the overall audit strategy, the
KEY AUDIT MATTER
HOW WE ADDRESSED THE KEY AUDIT MATTER
IN THE AUDIT
Brand Support Arrangements (accounting policy in
We undertook the following audit procedures in
note 2)
relation to brand support arrangements:
Consistent with industry practice, the Group incurs
significant costs or rebates to customers in the support
and development of the Group’s brands. These include
promotional discounts, long term discounts, rebates
and account development funds. 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 and rebates are recognised
as a deduction to revenue we consider there to be a
significant risk concerning the appropriate application
of accounting standards, particularly in respect of the
Group’s measurement of the fair value of variable
consideration in revenue transactions as well as the
group’s accounting for arrangements where cash
consideration is given by the group to the customer.
As described in note 2, the estimation of the fair value
of variable consideration requires a level of estimation
and judgement to be applied by management.
Judgement is required in determining the period over
which these costs and rebates should be recognised
for these arrangements, requiring both a detailed
understanding of the contractual arrangements
themselves as well as complete and accurate source
data. Estimates are based on past history and the
level of recent sales made to each customer. Whilst
the majority of costs and rebates incurred on these
arrangements have been settled at 31 December 2020,
management judgement is required in determining
the level of closing accrual required at the year-end for
promotions and brand support campaigns that either
span two financial years or where the costs or rebates
have not been fully settled by the year end date. As
a result of the level of estimation and judgements
• We tested the operating effectiveness of the
relevant controls related to the approval of brand
support arrangement agreements before inception
and going live on the system;
• We performed detailed testing over a sample of
brand support arrangements charged to revenue
and to costs in the year through verification
to agreement and recalculation of the amounts
recognised as a cost or rebate 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
complied with IFRS, had been appropriately applied
and that the classification of charges in the income
statement was appropriate;
• to address the fraud risk, we performed
detailed cut-off testing to verify that brand support
arrangements were recorded in the correct period
and reviewed manual journal postings to revenue
throughout the year for evidence of misstatement
or manipulation;
• We selected a sample of post year end credit notes
and checked that, where audit evidence
demonstrated that the credit note related to the
audit period, that these credit notes were
appropriately provided for in the
financial statements; and
• We reviewed the year end liability for completeness
and accuracy by reviewing arrangements in
place for key customers and generating an
expectation as to the year end liability.
applied in this area, as well as management being
Key observations:
in a position to be able to override controls, we
consider there to be a risk of fraud within this area and
therefore consider brand support arrangements to be
a key audit matter. The fraud risk has been identified
due to the fact that management can potentially
manipulate profits by changing accounting estimates
Following the completion of our work, we consider the
estimates and judgements applied by management
in this area to be appropriate, and brand support
arrangements have been calculated appropriately and
classified in accordance with accounting standards.
and judgements.
94
KEY AUDIT MATTER
HOW WE ADDRESSED THE KEY AUDIT MATTER
IN THE AUDIT
Goodwill and Intangible Asset Impairment (note 12
We undertook the following audit procedures in
and accounting policy in note 2)
relation to goodwill and intangible asset impairment:
The Group has significant goodwill and other intangible
assets including brands with indefinite lives. There
is a risk that the underlying results of the separately
identified cash generating units (CGUs) do not support
the carrying value of indefinite life intangible assets
and goodwill.
• We assessed whether management’s identification
of cash generating units was in accordance
with accounting standards by comparing the
identified CGUs to internal management reporting
demonstrating how the cash flows are monitored;
• We agreed 2020 financial performance data used in
Given the uncertainty that the current macroeconomic
the models for each CGU to the audited
environment presents to forecasting on which the
consolidation system;
impairment assessment relies, this risk is greater in
• We reconciled the forecasts used in the CGU
FY20.
Our risk was focused on the most sensitive
CGUs being Vimto Out of Home and Feel Good Drinks.
An impairment of £3,820,000 was recognised in the
period relating to Feel Good Drinks relating to goodwill
of £2,504,000 and separately recognised intangibles of
£1,316,000.
impairment models for 2021 and beyond to the
scenario analysis prepared for use elsewhere in the
group – for example, the going concern review. We
checked that these forecasts were aligned to the
Board approved forecasts which include an
estimate of the continued impact of the COVID-19
pandemic;
• We have assessed the key assumptions in the
impairment analysis, identified as the discount
rates and long term growth rates, with the support
of valuation specialists to conclude on our
independent range of values for these assumptions;
• We have performed sensitivity analysis over key
assumptions to understand the impact of
reasonable changes in assumptions on the
impairment models and conclusions;
• We reviewed the disclosures in the financial
statements (note 12) for compliance with accounting
standards requirements.
Key observations:
Based on our procedures, we concur with
management’s assessment of the carrying value of the
goodwill and indefinite lived assets and the impairment
charge recognised in the period. The disclosures
prepared by management comply with accounting
standards.
95
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 apply the concept of materiality both in planning
Importantly, misstatements below these levels will not
OTHER INFORMATION
Matters on which we are required to report by
and performing our audit, and in evaluating the
necessarily be evaluated as immaterial as we also take
effect of misstatements. We consider materiality to
account of the nature of identified misstatements, and
be the magnitude by which misstatements, including
the particular circumstances of their occurrence, when
omissions, could influence the economic decisions of
evaluating their effect on the financial statements as a
reasonable users that are taken on the basis of the
whole.
financial statements.
Based on our professional judgement, we determined
In order to reduce to an appropriately low level the
materiality for the financial statements as a whole and
probability that any misstatements exceed materiality,
performance materiality as follows:
we use a lower materiality level, performance
materiality, to determine the extent of testing needed.
The Directors are responsible for the other information.
exception
The other information comprises the information
We have nothing to report in respect of the following
included in the annual report other than the financial
matters in relation to which the Companies Act 2006
statements and our auditor’s report thereon. Our
requires us to report to you if, in our opinion:
opinion on the financial statements does not cover
the other information and, except to the extent
otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
Our responsibility is to read the other information and,
• adequate accounting records have not been kept by
the Parent Company, or returns adequate for our
audit have not been received from branches
not visited by us; or
in doing so, consider whether the other information is
• the Parent Company financial statements are not in
materially inconsistent with the financial statements
agreement with the accounting records and returns;
Group financial statements
Parent Company financial statements
or our knowledge obtained in the course of the audit,
or
Materiality
£1,200,000
£1,500,000
£700,000
£950,000
2020
2019
2020
2019
Basis for determining
materiality
Rationale for the benchmark
applied
3 year average
basis utilising 5%
of profit before
tax, after adjusting
for exceptional
items.
Adjusted 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
for the users
of the financial
statements.
3 year average
basis utilising 5%
of profit before
tax.
Profit before tax
was determined
to be a stable
basis of assessing
business
performance and
is considered
to be the most
significant
determinant of
performance
for the users
of the financial
statements.
3 year average
basis utilising 5%
of profit before
tax, after adjusting
for exceptional
items.
Adjusted 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
for the users
of the financial
statements.
3 year average
basis utilising 5%
of profit before
tax.
Profit before tax
was determined
to be a stable
basis of assessing
business
performance and
is considered
to be the most
significant
determinant of
performance
for the users
of the financial
statements.
Performance materiality
£900,000
£1,125,000
£525,000
£712,000
or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent
material misstatements, we are required to determine
• certain disclosures of Directors’ remuneration
specified by law are not made; or
whether this gives rise to a material misstatement in the
• we have not received all the information and
financial statements themselves. If, based on the work
explanations we require for our audit.
we have performed, we conclude that there is a material
misstatement of this other information, we are required
RESPONSIBILITIES OF DIRECTORS
to report that fact. We have nothing to report in this
As explained more fully in the Directors’ responsibilities
regard.
OTHER COMPANIES ACT 2006 REPORTING
statement, the Directors are responsible for the
preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
Based on the responsibilities described below and our
internal control as the Directors determine is necessary
work performed during the course of the audit, we are
to enable the preparation of financial statements that
required by the Companies Act 2006 and ISAs (UK) to
are free from material misstatement, whether due to
report on certain opinions and matters as described
fraud or error.
below.
In preparing the financial statements, the Directors are
Strategic report and Directors’ report
responsible for assessing the Group’s and the Parent
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
Basis for determining
performance materiality
75% of materiality
75% of materiality
75% of materiality
75% of materiality
• the information given in the Strategic report and the
unless the Directors either intend to liquidate the Group
Directors’ report for the financial year for which the
or the Parent Company or to cease operations, or have
financial statements are prepared is consistent with
no realistic alternative but to do so.
Component materiality
Reporting threshold
the financial statements; and
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE
We set materiality for each component of the Group
We agreed with the Audit Committee that we would
• the Strategic report and the Directors’ report have
FINANCIAL STATEMENTS
based on a percentage of between 30% and 60% of
report to them all individual audit differences in excess
been prepared in accordance with applicable legal
Group materiality dependent on the size and our
of £24,000 (2019: £30,000). We also agreed to report
requirements.
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
assessment of the risk of material misstatement of
differences below this threshold that, in our view,
that component. Component materiality ranged from
warranted reporting on qualitative grounds.
£360,000 to £720,000. In the audit of each component,
we further applied performance materiality levels of
75% of the component materiality to our testing to
ensure that the risk of errors exceeding component
materiality was appropriately mitigated.
96
In the light of the knowledge and understanding of
are free from material misstatement, whether due
the Group and Parent Company and its environment
to fraud or error, and to issue an auditor’s report
obtained in the course of the audit, we have not
that includes our opinion. Reasonable assurance is
identified material misstatements in the strategic report
a high level of assurance, but is not a guarantee that
or the Directors’ report.
an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
97
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
considered material if, individually or in the aggregate,
programs and controls. Where the risk was
they could reasonably be expected to influence the
considered to be higher, we performed audit
economic decisions of users taken on the basis of these
procedures to address each identified fraud risk.
financial statements.
These procedures included testing manual journals
Extent to which the audit was capable of detecting
irregularities, including fraud
and challenging the assumptions made by
management in their significant accounting estimates
in particular in relation to estimation of brand
Irregularities, including fraud, are instances of non-
support arrangements, impairment of goodwill and
compliance with laws and regulations. We design
intangible assets and the recognition and
procedures in line with our responsibilities, outlined
measurement of litigation and contingent
above, to detect material misstatements in respect
liabilities. Our audit procedures were designed
of irregularities, including fraud. The extent to which
to provide reasonable assurance that the financial
our procedures are capable of detecting irregularities,
statements were free from fraud or error.
including fraud is detailed below:
• Based on this understanding we designed our audit
• We obtained an understanding of the legal and
procedures to identify non-compliance with such
regulatory frameworks that are applicable to the
laws and regulations identified in the paragraphs
group and determined that the most significant
above. Our procedures involved: journal entry
frameworks which are directly relevant to specific
testing, with a focus on manual journals and
assertions in the financial statements are those
journals indicating large or unusual transactions
that relate to the reporting framework (IFRS and the
based on our understanding of the business; review
Companies Act 2006) and the relevant tax compliance
of legal and professional expenditure and supporting
regulations.
•
In addition, we concluded that there are certain
significant laws and regulations which may have
an effect on the determination of the amounts and
disclosures in the financial statements being
invoices; enquiries of those responsible for legal
and compliance procedures, group management,
and divisional management; and focused testing on
laws and regulations that could give rise to a material
misstatement in the Group financial statements.
those laws and regulations relating to food safety,
Our audit procedures were designed to respond to risks
environmental, occupational health and safety and
of material misstatement in the financial statements,
data protection.
• We understood how the group is complying with
those frameworks by making enquiries of
management and those responsible for legal and
compliance procedures. We corroborated our
enquiries through our review of Board minutes,
papers provided to the Audit Committee and any
correspondence received from regulatory bodies.
recognising that the risk of not detecting a material
misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are
inherent limitations in the audit procedures performed
and the further removed non-compliance with laws and
regulations is from the events and transactions reflected
in the financial statements, the less likely we are to
• We assessed the susceptibility of the group’s financial
become aware of it.
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
2 March 2021
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
ADVISORSOur
REGISTRARS
Link Group,
10th Floor,
Central Square,
29 Wellington Street,
Leeds,
LS1 4DL.
REGISTERED OFFICE
Laurel House,
Woodlands Park,
Ashton Road,
Newton-le-Willows,
WA12 0HH.
REGISTERED NUMBER
00238303.
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,
statements to material misstatement, including how
fraud might occur by meeting with management to
understand where it considered there was
susceptibility to fraud. We also considered
performance targets and their influence on efforts
A further description of our responsibilities is available
on the Financial Reporting Council’s website at: www.frc.
101 Barbirolli Square,
org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Manchester,
M2 3DL.
made by management to manage earnings or
USE OF OUR REPORT
influence the perceptions of analysts. We
considered the programs and controls that the
group has established to address risks identified,
or that otherwise prevent, deter and detect fraud;
and how senior management monitors those
98
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
STOCKBROKERS & NOMINATED ADVISOR
N+1 Singer Advisory LLP,
West One Wellington Street,
Leeds,
LS1 1BA.
99
CONSOLIDATED INCOME STATEMENT-YEAR ENDED 31 DECEMBER 2020
STATEMENT OF FINANCIAL POSITION-YEAR ENDED 31 DECEMBER 2020
2020
2019
Before
exceptional
items
£’000
Exceptional
items
(note 4)
£’000
Notes
3
118,657
(69,021)
49,636
(7,979)
(30,003)
11,654
150
(190)
-
-
-
-
(5,074)
(5,074)
-
-
5
6
6
8
11,614
(5,074)
(2,174)
9,440
488
(1,686)
(4,586)
4,854
Total
£’000
118,657
(69,021)
49,636
(7,979)
Total
£’000
146,985
(77,027)
69,958
(7,423)
(35,077)
(30,096)
6,580
150
(190)
6,540
32,439
235
(252)
32,422
(5,587)
26,835
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)
10
10
25.56p
25.54p
13.14p
13.13p
72.81p
72.77p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - YEAR ENDED 31 DECEMBER 2020
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 15)
Other comprehensive (expense)/ income for the year
Total comprehensive income attributable to equity shareholders
2020
£’000
4,854
(155)
32
(123)
4,731
2019
£’000
26,835
1,704
(297)
1,407
28,242
Group
2020
£’000
2019
£’000
Parent
2020
£’000
Notes
Assets
Non-current assets
Property, plant and equipment
Goodwill
Investments
Intangibles
Deferred tax assets
Pension surplus
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
11
12
13
14
15
26
16
17
21
18
18
18
26
15
17
26
14
19
2019
£’000
7,098
2,504
16,566
1,316
283
-
20,126
36,244
-
21,742
38,585
7,344
-
-
16,566
6,206
8,065
-
347
283
-
156
145
347
62,923
68,675
24,558
27,767
5,921
29,814
47,294
83,029
8,361
38,363
40,944
87,668
145,952
156,343
3,526
38,397
30,629
72,552
97,110
4,402
40,227
20,094
64,723
92,490
21,669
-
21,669
2,922
-
1,485
4,407
23,260
2,675
25,935
3,028
253
1,785
5,066
26,076
31,001
119,876
125,342
3,697
3,255
1,209
394
3,697
3,255
1,209
253
111,321
116,928
119,876
125,342
39,876
29,411
-
99
39,876
29,510
2,040
1,791
-
-
2,040
41,916
55,194
3,697
3,255
1,209
1,169
45,864
55,194
253
-
2,044
31,554
60,936
3,697
3,255
1,209
1,028
51,747
60,936
100
101
The Parent Company reported a profit for the year ended 31 December 2020 of £4,578,000 (2019: £14,948,000).
The financial statements on pages 100 to 143 were approved by the Board of Directors on 3 March 2021 and were
signed on its behalf by:
P J Nichols
Chairman
Registered number 00238303.
CONSOLIDATED STATEMENT OF CASH FLOWS - YEAR ENDED 31 DECEMBER 2020
PARENT COMPANY STATEMENT OF CASH FLOWS - YEAR ENDED 31 DECEMBER 2020
Notes
2020
£’000
2020
£’000
2019
£’000
2019
£’000
Notes
2020
£’000
2020
£’000
2019
£’000
2019
£’000
4,854
26,835
Profit for the financial year
4,578
14,947
Cash flows from operating activities
Cash flows from operating activities
Profit for the financial year
Adjustments for:
Depreciation and amortisation
Impairment losses on goodwill and intangible assets
Impairment losses on property, plant and equipment
Loss on sale of property, plant and equipment
Finance income
Finance expense
Taxation expense recognised in the income statement
Decrease / (increase) in inventories
Decrease in trade and other receivables
Decrease 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
4
11
6
6
4,971
3,820
1,016
71
(150)
190
1,686
2,440
9,220
(838)
(755)
150
35
(2,701)
(170)
-
21,671
26,525
(5,017)
21,508
4,541
-
-
19
(235)
252
5,587
(925)
1,263
(2,463)
(798)
235
11
(5,910)
-
(4,893)
-
7,241
34,076
(5,887)
28,189
Adjustments for:
Depreciation and amortisation
Impairment losses on goodwill and intangible assets
Loss on sale of property, plant and equipment
Finance income
Finance expense
Taxation expense recognised in the income statement
Decrease / (increase) in inventories
Decrease / (increase) in trade and other receivables
Increase 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
Acquisition of intangible assets
Net cash used in investing activities
Cash flows from financing activities
Payment of lease liabilities
Dividends paid
1,558
3,820
12
(150)
154
1,767
876
2,572
10,597
(755)
150
(576)
(170)
20,451
25,029
(2,438)
22,591
1,333
-
-
(235)
193
3,476
(507)
(4,988)
5,765
(798)
235
(414)
-
4,239
19,186
(3,513)
15,673
(596)
(179)
24
9
(1,122)
(10,338)
(1,004)
(14,466)
Payment of contingent consideration
20
(880)
Net cash used in investing activities
(3,566)
(10,557)
Cash flows from financing activities
Payment of lease liabilities
Dividends paid
24
9
(1,254)
(10,338)
(1,118)
(14,466)
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Net cash used in financing activities
(11,592)
(15,584)
Cash and cash equivalents at 31 December
21
10,535
20,094
30,629
24
20,070
20,094
Net cash used in financing activities
(11,460)
(15,470)
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
21
6,350
40,944
47,294
2,048
38,896
40,944
102
103
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY-YEAR ENDED 31 DECEMBER 2020
STATEMENT OF CHANGES IN EQUITY-YEAR ENDED 31 DECEMBER 2020
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
At 1 January 2019
3,697
3,255
1,209
666
103,283
112,110
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
Movement in deferred tax
Total transactions
with owners
Profit for the year
Other comprehensive
expense
Total comprehensive
income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(14,466)
(14,466)
Dividends
(214)
(199)
-
-
-
(131)
(214)
(199)
(131)
(413)
(14,597)
(15,010)
-
-
-
26,835
26,835
1,407
1,407
28,242
28,242
Movement in ESOT
Debit to equity for equity-
settled share based payments
Total transactions
with owners
Profit for the year
Other comprehensive
expense
Total comprehensive
income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(14,466)
(14,466)
(214)
(199)
-
-
(214)
(199)
(413)
(14,466)
(14,879)
-
-
-
14,948
14,948
1,407
1,407
16,355
16,355
At 1 January 2020
3,697
3,255
1,209
1,028
51,747
60,936
At 1 January 2020
3,697
3,255
1,209
253
116,928
125,342
Dividends
(10,338)
(10,338)
Movement in ESOT
Dividends
Movement in ESOT
Credit to equity for equity-
settled share based payments
Total transactions
with owners
Profit for the year
Other comprehensive income
Total comprehensive
income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24
117
-
-
24
117
141
(10,338)
(10,197)
-
-
-
4,854
(123)
4,731
4,854
(123)
4,731
Credit to equity for equity-
settled share based payments
Total transactions
with owners
Profit for the year
Other comprehensive income
Total comprehensive
income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24
117
(10,338)
(10,338)
-
-
24
117
141
(10,338)
(10,197)
-
-
-
4,578
(123)
4,455
4,578
(123)
4,455
At 31 December 2020
3,697
3,255
1,209
1,169
45,864
55,194
At 31 December 2020
3,697
3,255
1,209
394
111,321
119,876
104
105
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
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
Expected credit loss provisions on the Group’s trade
receivables have been reviewed in light of potential
increased risk of bad debt, particularly in relation to
smaller independent customers.
Use of estimates and judgements
- Carrying value of brand support accruals
The preparation of financial statements requires
The Group incurs significant costs in the support and
management to make judgements, estimates and
development of the Group’s brands. The majority of
assumptions that affect the application of accounting
costs incurred on these arrangements have been settled
Company’s registered office is Laurel House, Woodlands
Reductions in sales, particularly in Out of Home (OoH),
policies and the reported amounts of assets, liabilities,
at 31 December 2020, however certain judgement is
Park, Ashton Road, Newton-le-Willows, WA12 0HH. The
have increased the amount of potentially out-of-date
income and expenses. However, the nature of
required in determining the level of closing accrual
consolidated financial statements of the Company as
and obsolete stock held by the Group. This has resulted
estimation means that actual outcomes may differ from
required at a year end for promotions and brand
at and for the year ended 31 December 2020 comprise
in an increase in stock provisions of £0.7m by 31
these estimates.
the Company and its subsidiaries (together referred to
December 2020. Following lockdown 1, within OoH the
as the “Group”). The Group is primarily engaged in the
business provided customers with new stock to replace
supply of soft drinks to the retail, wholesale, catering,
old out of date stock free of charge.
licensed and leisure industries.
The Group has accessed the funds made available
The following are the key assumptions concerning the
future and other key sources of estimation uncertainty
at the reporting date, that have the most significant
effect on the carrying amounts of assets and liabilities
2. ACCOUNTING POLICIES
by the Government under the Job Retention Scheme.
within the next financial year.
Basis of preparation
This was used to partially offset the payroll expense
incurred for employees who were furloughed. In Q2 a
- Intangible assets with indefinite lives
support campaigns that either span two financial years
or where the costs have not been fully settled by the
year end date.
Promotions and brand support campaigns comprise:
Long term discounts and rebates
• Fixed; a defined amount over a period of time.
• % of net revenue; a percentage of net revenue, which
The Consolidated and Parent Company financial
large proportion of the UK OoH team were furloughed,
In the opinion of the Directors, the industry in which
may have associated hurdle rates.
statements have been prepared in accordance with
largely returning to work in the early summer. Through
International Accounting Standards in conformity with
the fourth quarter of the year (Q4) increased customer
the requirements of the Companies Act 2006. The
outlet closures meant a return to furlough for a number
accounting policies have been applied consistently by
of our OoH team. The business has paid furloughed
the Group, with those adopted in the previous year.
employees at 100% of salary throughout the year
An income statement is not provided for the parent
and only furloughed employees where reductions
Company as permitted by Section 408 of the Companies
Act 2006.
in workload have been deemed temporary due to
Government restrictions. The financial contribution
Going concern
In assessing the appropriateness of adopting the going
concern basis in preparing the Annual Report and
financial statements, the Directors have considered the
current financial position of the Group, its principal risks
and uncertainties and the potential impact of further
COVID restrictions. The review performed considers
severe but plausible downside scenarios that could
made by the Government from the scheme to Nichols
was £1.4m during the year.
Our offices and depots have remained open in a
Covid-secure manner throughout the year for wellbeing
purposes or office critical activities, but the vast majority
of office-based employees have worked effectively
from home. High levels of service have continued to be
provided to all of our customers.
reasonably arise within the period.
Use of adjusted measures
On the basis of these reviews, the Directors consider
The performance of the Group is assessed using
the Group to have adequate resources to continue in
adjusted measures that are not defined under IFRS
operational existence for the foreseeable future and,
and are therefore deemed non-GAAP measures.
accordingly, consider it appropriate to adopt the going
These measures include adjusted operating profit and
concern basis in preparing the financial statements.
adjusted profit before tax, which both remove the
Impact of COVID-19 on financial statements at 31
December 2020
In light of the potential effects of COVID-19 and social
distancing measures on the Group’s business and
customers, the Directors have considered the impact
impact of exceptional items. The Group also reports
EBITDA which measures underlying performance having
removed the impact of interest, taxation, depreciation
and amortisation from profit after tax. The Group also
calculates an adjusted earnings per share, based on the
adjusted profit after tax which again removes the impact
on the accounting judgements and estimates within the
of exceptional items.
financial statements. All commercial and operational
impacts of Covid-19 have been treated within the
underlying results and no Covid-19 impact has been
treated as exceptional.
These adjusted measures are used to allow a better
understanding of the underlying trading performance
of the Group after taking account of items which
due to their nature and size do not reflect the
Group’s underlying performance. The measures are
not comparable to similar measures used by other
companies.
the Group operates is stable and there are relatively
high barriers to entry. The brands acquired are well
Short term promotional discounts
established in their respective sales channels and have
Promotional discounts consist of many individual
an important role to play in all of the Group’s routes to
rebates across numerous customers and represent the
market. The brands are also well positioned to mitigate
cost to the Group of short-term deal mechanics. The
against the impact of sugar levy announcements.
common deals typically include price reductions for
The Directors have therefore made a judgement
specific SKU’s during the promotional period.
that certain intangible assets relating to brands have
Amounts provided for these brand support accruals at
indefinite lives. It is expected that these brands will be
the end of a period requires estimation and historical
held and supported for an indefinite period of time and
data and accumulated experience is used to estimate
are expected to generate economic benefits. The Group
the related provision using the expected value
is committed to supporting its brands and invests in
amount method. In most instances the discount can
significant consumer marketing promotional spend.
be estimated using known facts with a high level of
Should management have judged the intangible assets
accuracy.
not to be of indefinite lives, an amortisation charge
would be made to the Consolidated Income Statement
- Defined benefit obligations
on an annual basis.
- Impairment of goodwill and intangible assets with
indefinite lives
Accounting for retirement benefit schemes under
IAS 19 requires an assessment of future benefits
payable in accordance with actuarial assumptions. The
assumptions include discount rate, inflation, pension
Determining whether goodwill and intangible assets
and salary increases, expected return on scheme assets,
with indefinite lives are impaired requires an estimation
mortality and other demographic assumptions (see
of the value in use of the cash-generating units to
note 26) which represent a key source of estimation
which the assets have been allocated. The value in use
uncertainty for the Group.
calculation requires management to estimate the future
cash flows expected to arise from the cash-generating
unit and a suitable discount rate in order to calculate
present value (see note 12).
The carrying amount of goodwill at the reporting date
was £36.2 million (2019: £38.6 million).
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 2020. Subsidiaries are
entities controlled by the Group. Control exists if all
three of the following elements are present: power over
The carrying amount of brands with indefinite lives was
the investee, exposure to variable returns from the
£2.6m (2019: £3.9m).
Customer list intangible assets have finite lives assigned.
Such assets are tested for impairment if an impairment
indicator exists. No impairment indicators were noted at
31 December 2020.
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
106
107
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.
Deferred tax assets and liabilities are offset where there
is a legally enforceable right to set off current tax assets
and liabilities and the deferred tax assets and liabilities
relate to income taxes levied by the same taxation
authority on the same taxable entity.
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
the consolidated financial statements from the date that
from the goods sold to the customer. Where the
at exchange rates at the date of transactions. Monetary
Deferred tax
control commences until the date that control ceases.
payments do not result in the receipt of a distinct
assets and liabilities denominated in foreign currencies
Intra-Group balances and any unrealised gains and
losses arising from intra-Group transactions are
eliminated in preparing the consolidated financial
statements.
good or service, they are treated as a deduction from
at the reporting date are retranslated to the functional
revenue. However when they do, they are recorded as
currency at the exchange rate at that date.
an expense and recognised in administrative expenses.
Any exchange differences arising on the settlement of
For discounts, rebates, promotional costs and brand
monetary items or on translating monetary items at
Acquisitions of subsidiaries are dealt with by the
support costs, accumulated experience is used to
acquisition method. The acquisition method involves
estimate and provide for these using the expected value
rates different from those at which they were initially
recorded are recognised in the consolidated income
the recognition at fair value of all identifiable assets and
method, and revenue is only recognised to the extent
statement in the period in which they arise.
liabilities at the acquisition date, regardless of whether
that it is highly probable that a significant reversal will
or not they were recorded in the financial statements of
the subsidiary prior to acquisition. On initial recognition,
not occur. The statement of financial position includes
accruals for claims yet to be received for discounts,
the assets and liabilities of the subsidiary are included
rebates and promotional costs.
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.
Accruals are made for each individual promotion or
rebate based on the specific terms and conditions of the
customer agreement. Management makes estimates
on an ongoing basis to assess customer performance
Goodwill is stated after separating out identifiable
and sales volume to calculate total amounts earned to
assets. Goodwill represents the excess of the fair value
be recorded as deductions from revenue and in most
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.
of the consideration transferred over the fair value of
instances the discount can be estimated using known
Research and Development
the Group’s share of the identifiable net assets of the
facts with a high level of accuracy.
acquired subsidiary at the date of acquisition.
Segmental reporting
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 has
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 delivered 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.
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.
With regard to discounts, rebates, promotional costs
Foreign currency transactions
and brand support costs, consideration is given as to
whether a distinct good or service has been received
Transactions in foreign currencies are translated into
the respective functional currencies of Group entities
108
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
Brands
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 consolidated 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 consolidated
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.
Brands acquired in a business combination are
recognised at fair value at the acquisition date. Brands
acquired separately through a business combination are
assessed at the date of acquisition as to whether they
have an indefinite life. The assessment includes whether
the brand name will continue to trade and the expected
lifetime of the brand. All brands acquired to date have
been assessed as having an indefinite life as they are
expected to continue to contribute to the long-term
future of the Group. The brands are reviewed annually
for impairment, being carried at cost less accumulated
impairment charges. The fair value of a brand at
the date of acquisition is based on the Relief from
Royalties method, which is a valuation model based on
discounted cash flows.
Customer lists
Customer lists acquired in a business combination are
recognised at fair value at the acquisition date. They are
amortised over the useful economic life identified at the
date of acquisition with amortisation charges included
within administrative expenses.
109
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
Reserves
Goodwill and intangible assets with indefinite lives are
IFRS 9. Estimated irrecoverable amounts are based on
Leased assets
Share capital represents the nominal value of equity
shares.
reviewed for impairment annually.
Property, plant and equipment
historical experience and forward looking information,
together with specific amounts that are not expected
to be recovered. Individual amounts are written off
All leases are accounted for by recognising a right-of-use
asset and a lease liability except for:
Share premium represents the excess over nominal
Items of property, plant and equipment are measured
when management deems them to be irrecoverable.
• Leases of low value assets; and
value of the fair value of the consideration received for
at cost less accumulated depreciation and impairment
The amount of expected credit losses are updated at
• Leases with a duration of 12 months or less.
equity shares.
losses.
each reporting date. Interest income is recognised by
Capital redemption reserve represents the reserve
Cost includes expenditures that are directly attributable
created upon redemption of shares.
to the acquisition of the asset.
Other reserves incorporate purchase of own shares,
The cost of replacing part of an item of property, plant
movements in the Group’s ESOT and equity settled
and equipment is recognised in the carrying amount
share-based payments in respect of Long-Term
of the item if it is probable that the future economic
Incentive Plans.
Retained earnings represents retained earnings.
Dividends
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.
Dividend distribution to the Company’s shareholders
Depreciation is calculated on a straight line basis to
is recognised as a liability in the Group’s financial
write down the cost less estimated residual value on
statements in the period in which the dividends are
property, plant and equipment over their estimated
approved by the Company’s shareholders. In respect of
useful lives.
interim dividends these are recognised once paid.
Impairment
The estimated useful lives for the current and
comparative periods are as follows:
The carrying values of the Group’s non-current assets
Plant, machinery, fixtures
3-10 years
are reviewed at each reporting date to determine
and fittings
whether there is any indication of impairment. All
property, plant and equipment is tested for impairment
Buildings
50 years
whenever events or changes in circumstances indicate
Material residual value estimates and useful economic
that the carrying amount may not be recoverable.
lives are updated at least annually.
For the purposes of assessing impairment, assets
Land is not depreciated.
are Grouped at the lowest levels for which there are
Inventories
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.
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 measured at amortised cost using
the effective interest method, less any expected credit
losses using the simplified approach contained within
110
applying the effective interest rate, except for short-
Lease liabilities are measured at the present value of the
term receivables when the recognition of interest would
contractual payments due to the lessor over the lease
be immaterial.
term, with the discount rate determined by reference to
Amounts owed by Group undertakings are stated after
the rate inherent in the lease unless (as is typically the
any provision for expected credit loss in line with the
three stage model in IFRS 9.
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
For the purpose of the consolidated statement of cash
included in the measurement of the lease liability if they
flows, cash and cash equivalents comprise deposits with
depend on an index or rate. In such cases, the initial
banks and bank and cash balances.
Cash equivalents are short-term, highly liquid
measurement of the lease liability assumes the variable
element will remain unchanged throughout the lease
term. Other variable lease payments are expensed in
investments that are readily convertible to known
the period to which they relate.
amounts of cash and which are subject to an
insignificant risk of changes in value.
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.
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 or over the remaining economic life of
the asset if, rarely, this is judged to be shorter than the
lease term.
Trade payables are initially measured at fair value and
When the Group revises its estimate of the term of
are subsequently measured at amortised cost, using the
any lease (because, for example, it re-assesses the
effective interest rate method.
Contingent consideration
Contingent consideration represents the Group’s best
estimate of the fair value of amounts payable based on
the likelihood of future events occurring.
Changes in fair value of contingent consideration
that qualify as measurement period adjustments
are adjusted retrospectively, with corresponding
adjustments against goodwill. Measurement period
adjustments are adjustments that arise from additional
information obtained during the measurement period
(which cannot exceed one year from the acquisition
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 depreciated 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.
date) about facts and circumstances that existed at the
When the Group renegotiates the contractual terms of
acquisition date. Changes in the amount of contingent
a lease with the lessor, the accounting depends on the
consideration payable that results from events after the
nature of the modification:
acquisition date, such as meeting a revenue or profit
target, are not measurement period adjustments and
are, therefore, recognised in profit or loss.
• 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
111
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
• in all other cases where the renegotiation increases
Defined benefit plan
The total amount to be expensed over the vesting
As at 31 December 2020, the ESOT holds 8,975 shares in
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
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.
• if the renegotiation results in a decrease in the scope
Plan assets may include assets specifically designated to
period is determined with reference to the fair value
the Company (2019: 518 shares).
of options granted, excluding the impact of any
non-market vesting conditions. Non-market vesting
Investments in subsidiaries
conditions are included in the assumptions about the
Investments in subsidiaries are shown in the Parent
number of options expected to vest. At each reporting
Company statement of financial position at cost less any
date the Group revises its estimate of the number of
provision for impairment.
options expected to vest.
Standards and interpretations in issue not yet
of the lease, both the carrying amount of the lease
a long-term benefit fund as well as qualifying insurance
It recognises the impact of revisions to original
adopted
liability and right-of-use asset are reduced by the
policies.
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
exposes the Group to excessive risk. Typically factors
considered in deciding to negotiate a break clause
include:
The asset recognised in the statement of financial
position for defined benefit plans is the fair value of plan
assets at the reporting date less the present value of the
defined benefit obligation (DBO).
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
income on the net defined benefit surplus is included
in finance income. Remeasurement of the DBO,
• the length of the lease term;
comprising actuarial gains and losses and the return on
• the economic stability of the environment in which
scheme assets (excluding interest), are recognised in the
the property is located; and
statement of other comprehensive income in the year in
• whether the location represents a new area of
which they arise.
operations for the Group.
Share-based payment transactions
At 31 December 2020 the carrying amounts of lease
The Group operates three equity-settled share-based
liabilities are not reduced by the amount of payments
payment schemes; a Save As You Earn scheme open to
that would be avoided from exercising break clauses
all employees, a Long-Term Incentive Plan for certain
because on both dates it was considered reasonably
directors and senior executives and an Executive
certain that the Group would not exercise its right
share award scheme for certain directors and senior
to exercise any right to break the lease. Total lease
executives. All schemes comprise the grant of options
payments of £1,746,000 (2019: £1,543,000) are
under the Group’s share option schemes.
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 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 2020
for the year ending 31 December 2020.
Those fair values are charged to the income statement
over the relevant vesting period adjusted to reflect
The Group pays fixed contributions into independent
actual and expected vesting levels. The Group calculates
entities in relation to plans and insurances for individual
the fair market value of the options as being based on
employees. The Group has no legal or constructive
the market value of a company’s shares at the date of
obligations to pay contributions in addition to its fixed
grant adjusted to reflect the fact that an employee is not
contributions, which are recognised as an expense in
entitled to receive dividends over the relevant holding
the period that relevant employee services are received.
period.
estimates, if any, in the income statement, with a
corresponding adjustment to equity. The proceeds
received, net of any directly attributable transactions
costs, are managed by the ESOT, therefore there is no
impact on share capital and share premium when the
options are exercised.
Further disclosures in relation to the schemes above are
provided in Note 29.
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 UK):
• Amendments to IAS 1 - Classification of Liabilities as
Current or Non-current
• Amendments to IFRS 3 - Reference to the Conceptual
Provisions and contingent liabilities
Framework
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.
Finance income
Finance income comprises interest income on funds
invested. Interest income is recognised as it accrues,
using the effective interest method.
Finance costs
• Annual Improvements 2018-2020
• Amendment to IFRS 16 Leases - Covid-19 Related
Rent Concessions
• Amendments to IFRS 3 - Definition of a Business
• Amendments to IAS 1 and IAS 8 - Definition of
Material
• Amendments to References to the Conceptual
Framework in IFRS Standards
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
Finance costs comprise of interest expenses on leases
Group.
and defined benefit pension obligations. Interest
expenses are recognised as they accrue, using the
effective interest method.
Government grants
Government grants are recognised in profit or loss on
a systematic basis over the periods in which the entity
recognises expenses for the related costs for which the
grants are intended to compensate.
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.
112
113
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
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
Revenue
Gross Profit
2020
£’000
65,688
52,969
2019
£’000
71,661
75,324
118,657
146,985
2020
£’000
32,817
16,819
49,636
2019
£’000
42,712
27,246
69,958
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 consolidated statement of financial position and the segment assets.
Capital Expenditure
IFRS 16 additions
Depreciation
Impairment losses on property, plant and equipment
Amortisation
Impairment losses on goodwill and intangible assets
b. Reporting by geographic area
Revenue by geographic destination
Middle East
Africa
Rest of the World
Total exports
United Kingdom
2020
£’000
7,309
14,010
5,712
27,031
91,626
2020
%
6.2
11.8
4.8
22.8
77.2
118,657
100.0
Revenue from continuing operations arose principally from the provision of goods.
2020
£’000
2,871
1,226
4,258
1,016
713
3,820
2019
£’000
11,566
13,042
4,870
29,478
117,507
146,985
2019
£’000
5,910
4,535
3,855
-
686
-
2019
%
7.9
8.9
3.3
20.1
79.9
100.0
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 2020 or 2019.
Total assets
The assets of the Group at 31 December 2020 and 31 December 2019 are located within the United Kingdom and
Europe.
Capital expenditure
The capital expenditure of the Group for the years ended 31 December 2020 and 31 December 2019 was made
within the United Kingdom and Europe.
IFRS 16 additions
The IFRS 16 additions of the Group for the years ended 31 December 2020 and 31 December 2019 were made within
the United Kingdom and Europe.
Depreciation
The Group’s depreciation charges for the years ended 31 December 2020 and 31 December 2019 are against
property, plant and equipment retained within the United Kingdom and Europe.
Amortisation
The Group’s amortisation charges for the years ended 31 December 2020 and 31 December 2019 are against
intangible assets retained within the United Kingdom and Europe.
4. EXCEPTIONAL ITEMS
In order to allow a better understanding of the underlying trading perofrmance of the Group, items which by virtue
of their nature and size do not reflect the Group’s underlying performance have been reported as exceptional items
within administrative expenses. These items are as follows:
Impairment of goodwill and intangible assets
Review of UK packaged supply chain
Redundancy costs
Restructuring costs
2020
£’000
3,820
277
723
254
5,074
2019
£’000
-
-
-
-
-
Following a strategic review of the Group’s ‘Feel Good’ Brand and its recognition as a separate Cash Generating Unit
(‘CGU’), the Group has incurred a non-cash impairment to Goodwill and Intangible Assets of its ‘Feel Good’ Brand
of £3.8m. The Group remains committed to the ‘Feel Good’ Brand, which has recently been relaunched in the UK.
Further detail is provided in note 12 to the financial statements.
The Group commenced a review of its UK packaged supply chain in Q4, engaging third party consultants and this is
expected to conclude with implementation through 2021. Costs incurred to date amount to £0.3m with further costs
expected in 2021.
The Group completed a review of its operational and leadership structures in Q4.
Operational changes followed the integration of prior year acquisitions and the implementation of new systems into
the OoH route to market. These changes were implemented in Q4, making a number of roles redundant at the year-
end incurring costs of £0.7m.
The Group decided to move from three Executive Directors to two at the year-end following a review of the Executive
Board members portfolios. Early termination costs associated with these changes were £0.3m.
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.
Due to the nature of these charges, the Board is treating these items as exceptional costs and their impact has been
removed in all adjusted measures throughout this report.
114
115
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
5. OPERATING PROFIT
7. DIRECTORS AND EMPLOYEES
Operating profit is stated after charging/ (crediting):
Inventory amounts charged to cost of sales
69,021
77,027
2020
£’000
2019
£’000
BDO LLP remuneration:
Audit services of the Company’s annual accounts
Depreciation of property, plant and equipment
Impairment of property, plant and equipment
Short-term lease rental payments
Charge / (credit) for equity settled share based payments
(Gain) / loss on foreign exchange differences
Loss on sale of property, plant and equipment
Amortisation of intangible assets
93
4,258
1,016
203
177
(162)
71
713
67
3,855
-
432
(199)
485
19
686
Release of contingent consideration on acquisition
(1,349)
(1,050)
Operating lease rental payments have been included within administrative expenses and represent short-term lease
expenses.
6. FINANCE INCOME AND EXPENSE
Finance income comprises:
Bank interest receivable
Net interest income on defined benefit pension scheme surplus
Finance expense comprises:
Net interest on defined benefit pension scheme liability
Bank interest payable
IFRS 16 interest charge
Notes
2020
£’000
2019
£’000
26
26
24
147
3
150
-
-
(190)
(190)
235
-
235
(64)
(20)
(168)
(252)
a. Average monthly number of persons employed during the year,
including Directors:
2020
Number
2019
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)
Equity settled share based payments charge
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)
Equity settled share based payments charge
352
268
2020
£’000
11,738
1,534
787
146
177
319
265
2019
£’000
12,723
1,620
717
19
-
14,382
15,079
2020
£’000
10,889
1,428
762
146
177
2019
£’000
11,694
1,513
678
19
-
13,402
13,904
A charge of £177,000 (2019: credit of £199,000) was recognised during the year in relation to benefits accruing under
the Group’s Long Term Incentive Plans and Save As You Earn schemes.
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 62.
Wages and salaries
Pension costs
2020
£’000
1,181
22
1,203
2019
£’000
1,537
30
1,567
The highest paid Director has received £471,000 (2019: £577,000) excluding pension contributions.
Benefits are accruing to 3 Directors (2019: 3 Directors) under a defined contribution scheme, the highest paid
Director has received contributions of £4,000 in the year.
Aggregate amounts for loss of office totalled £555,000 (2019: £nil).
Further information regarding Directors’ remuneration and the Incentive Plan is provided in the Remuneration
Committee Report on pages 82 to 87.
116
117
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
8. TAXATION
9. EQUITY DIVIDENDS
a. Analysis of expense recognised in the consolidated income statement
2020
£’000
2019
£’000
Current taxation:
UK Corporation Tax on income for the year
1,754
5,743
Interim dividend 28.00p (2019: 12.40p) paid 4 September 2020
Final dividend for 2019 is £nil (2018: 26.80p)
2020
£’000
10,338
-
2019
£’000
4,576
9,890
10,338
14,466
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
(83)
1,671
(82)
97
15
25
5,768
158
(339)
(181)
Total tax expense in the consolidated income statement
1,686
5,587
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% (2019: 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
2020
£’000
6,540
1,243
41
479
117
14
(256)
(15)
31
32
2019
£’000
32,422
6,160
47
33
(21)
(314)
(237)
(40)
(68)
27
Total tax expense in the consolidated income statement
1,686
5,587
c. The effective rate of tax on adjusted profit before tax is 18.7% (2019: 17.2%) which is lower than the
standard rate of Corporation Tax in the United Kingdom (19.00%). The effective rate of tax on profit before
tax is 25.8% (2019: 17.2%) which is higher than this rate.
d. Tax on items recognised in other comprehensive (expense) / income
In addition to the amount charged to the consolidated income statement, a credit of £32,000 (2019: charge of
£297,000) has been recognised in other comprehensive income / (expense), being the movement on deferred
taxation relating to retirement benefit obligations and equity settled share based payments.
The interim dividend for the prior year of £4,576,000 was paid on 30 August 2019.
The Board made the decision to withdraw the final dividend (28.0p) for 2019 on 31 March 2020 due to the effect of
the Covid-19 pandemic.
The 2020 final proposed dividend of 8.80p per share has not been accrued as it had not been approved by the year
end.
10. EARNINGS PER SHARE
Earnings per share (basic)
Earnings per share (diluted)
Adjusted earnings per share (basic) - before exceptional items
Adjusted earnings per share (diluted) - before exceptional items
2020
2019
13.14p
13.13p
25.56p
25.54p
72.81p
72.77p
72.81p
72.77p
Basic earnings per share is calculated by dividing the profit after tax for the year of the Group by the weighted
average number of ordinary shares in issue during the financial year. Diluted earnings per share is calculated by
adjusting the weighted average number of ordinary shares in issue assuming the conversion of all potentially dilutive
ordinary shares.
Earnings per share
2020
Weighted
average
number
of shares
Earnings
£’000
Earnings
per share
Earnings
£’000
2019
Weighted
average
number
of shares
Earnings
per share
Basic earnings per share
4,854
36,932,032
13.14p
26,835
36,857,224
72.81p
Dilutive effect of share options
26,551
19,249
Diluted earnings per share
4,854
36,958,583
13.13p
26,835
36,876,473
72.77p
Adjusted earnings per share before exceptional items has been presented in addition to the earnings per share as
defined in IAS 33, Earnings per share, since in the opinion of the Directors, this provides shareholders with a more
meaningful representation of the earnings derived from the Groups’ operations. It can be reconciled from the basic
earnings per share as follows:
2020
Weighted
average
number
of shares
Earnings
£’000
Earnings
per share
Earnings
£’000
2019
Weighted
average
number
of shares
Earnings
per share
Basic earnings per share
4,854
36,932,032
13.14p
26,835
36,857,224
72.81p
Exceptional items after taxtation
4,586
Adjusted earnings per share
(basic) - before exceptional items
9,440
36,932,032
25.56p
26,835
36,857,224
72.81p
Dilutive effect of share options
26,551
19,249
Adjusted earnings per share
(diluted) - before exceptional
items
9,440
36,958,583
25.54p
26,835
36,876,473
72.77p
118
119
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
11. PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 January 2019
Additions
On acquisition of
subsidiary
Disposals
Land and
buildings
£’000
3,444
-
-
-
At 1 January 2020
3,444
Additions
On acquisition of
subsidiary (Note 20)
Disposals
-
-
-
At 31 December 2020
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
Total
£’000
19,563
5,910
611
(556)
25,528
2,701
(163)
(1,339)
26,727
-
2,170
-
-
2,170
807
-
-
-
23,007
2,365
10,445
-
-
611
(556)
2,365
33,507
419
3,927
-
-
(163)
(1,339)
2,977
2,784
35,932
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
8,119
2,782
(525)
10,376
3,029
1,016
(1,233)
13,188
13,539
-
637
-
637
776
-
-
1,413
1,564
Total
£’000
8,435
3,855
(525)
11,765
4,258
1,016
(1,233)
-
367
-
367
384
-
-
751
15,806
2,033
20,126
15,152
1,533
1,998
21,742
Depreciation
At 1 January 2019
Charge for the year
Disposals
At 1 January 2020
Charge for the year
Impairment
Disposals
At 31 December 2020
Net book value at
31 December 2020
Net book value at
31 December 2019
316
69
-
385
69
-
-
454
2,990
3,059
Parent
Cost
At 1 January 2019
Additions
Disposals
Land and
buildings
£’000
3,444
-
-
At 1 January 2020
3,444
Additions
Disposals
-
-
At 31 December 2020
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
4,556
414
(88)
4,882
576
(42)
5,416
-
2,170
-
2,170
807
-
2,977
Total
£’000
8,000
4,001
(88)
-
1,417
-
1,417
11,913
419
-
1,802
(42)
1,836
13,673
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 2019
Charge for the year
Disposals
At 1 January 2020
Charge for the year
Disposals
At 31 December 2020
Net book value at
31 December 2020
Net book value at
31 December 2019
316
69
-
385
69
-
454
2,990
3,059
3,254
365
(88)
3,531
420
(30)
3,921
1,495
1,351
-
637
-
637
776
-
1,413
-
262
-
262
279
-
541
Total
£’000
3,570
1,333
(88)
4,815
1,544
(30)
6,329
1,564
1,295
7,344
1,533
1,155
7,098
Group impairment losses of £1,016,000 in the year (2019: £nil) within the Out of Home business. This is in relation to
machines situated in customer outlets that were deemed obsolete, lost or unlikely to deliver economic benefit.
120
121
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
12. GOODWILL
Goodwill acquired in a business combination is allocated, at acquisition, to the Group’s cash-generating units (CGUs)
that are expected to benefit from the business combination according to the level at which management monitor
that goodwill.
As a result of this review, an impairment of £3.8m has been recognised as an exceptional item in these financial
statements in relation to Goodwill and Intangible Assets from the ‘Feel Good’ CGU, the impairment loss belonging to
the Carbonate reporting segment. The impairment is not sensitive to the assumptions on growth and WACC.
Group
Cost
At 1 January 2019
Acquisitions (note 20)
At 1 January 2020
Impairment (see below)
Adjustment to acquisitions (note 20)
At 31 December 2020
Parent
Cost
At 1 January 2019 and 1 January 2020
Impairment (see below)
At 31 December 2020
£’000
34,451
4,134
38,585
(2,504)
163
36,244
£’000
2,504
(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. As part of finalising the purchase price accounting of Adrian Mecklenburgh Limited during the current year,
an adjustment of £163,000 was identified and has increased the goodwill balance accordingly.
Goodwill within the Parent Company arose in 2015 on a trade and assets acquisition of the ‘Feel Good’ business.
Change in cash-generating units
Due to a change in the operational structure of the Group, management has determined there to be an independent
CGU in relation the ‘Feel Good’ business. The ‘Feel Good’ business previously formed part of the Still Out of Home
CGU. The business has undergone a rebrand and now supplies sparkling water. Therefore, the independent Feel
Good CGU will now form part of the Carbonate segment.
All remaining goodwill relates to the Out of Home business which is considered by management to be two
independent Out of Home cash-generating units (CGUs) sitting below each of the Still and Carbonate operating
segments. The goodwill has been allocated to these CGUs and not to the named subsidiaries.
Still
Carbonate
Impairment review
2020
£’000
21,431
14,813
36,244
2019
£’000
23,853
14,732
38,585
Annual impairment reviews were performed on the remaining Goodwill and Intangible assets with indefinite lives,
all of which relate the Group’s Out of Home Business. The discount rate used of 8.2% 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.
When compiling the financial budgets and the annual growth projections for the five years and into perpetuity,
management have considered the current economic climate, including the impacts of COVID-19, along with future
growth rates reasonable to this market. The level of growth assumed in these forecasts fully takes into account the
time the hospitality industry is anticipated to take to recover from the impact of the pandemic.
Based on the review performed no impairment has been made in relation to the Out of Home business. As part
of forming this conclusion a sensitivity analysis has been performed which focused on the change required in key
assumptions (long-term growth and the pre-tax discount rate), both individually and collectively, to give rise to
an impairment. If the discount rate were to increase by 1.3 percentage points and the terminal growth rate were
to decrease by 1.7 percentage points, which whilst not management’s current expectation is considered to be
reasonably possible, this would lead to an impairment charge.
13. INVESTMENTS: SHARES IN GROUP UNDERTAKINGS
Parent
Cost and net book amount
At 1 January 2019, 1 January 2020 and 31 December 2020
£’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.
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 **
Dispense Solutions (Wales) Limited***
The Noisy Drink Company North West Limited ****
%
100
100
100
100
100
100
100
100
100
100
100
100
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, being the present value of the projected cash flows of the cash-generating unit. The key assumptions
regarding the value in use calculations are forecast growth in revenues and the discount rate applied. Budgeted
revenue growth is estimated based on actual performance and expected market changes.
The identification of Feel Good as an independent CGU and the associated future cash flow forecasts due to its
change in focus following rebranding, were recognised by management as a potential trigger of impairment during
the year. An impairment review has therefore been performed for the ‘Feel Good’ CGU which had a Goodwill carrying
value of £2.5m and Intangible Assets carrying value of £1.3m. The key assumptions used within the review were
forecasts for the next 3 years’ performance with 2% growth beyond the forecast period, and a discount rate based on
WACC of 8.2%.
122
* The Company directly owns Ben Shaws Dispense Drinks Limited, Dayla Liquid Packing Limited and Vimto (Out of
Home) Limited.
** Directly owned by Vimto (Out of Home) Limited.
*** Dispense Solutions (Wales) Limited is directly owned by Nichols Dispense (S.W.) Limited.
**** The shareholding in The Noisy Drink Company North West Limited is directly owned by Vimto (Out of Home)
Limited.
All Group undertakings are consolidated. The above companies and the Parent Company were all incorporated
and operate in the United Kingdom. Particulars of non-trading companies are filed with the annual confirmation
statement.
All companies in the Group are engaged in the supply of soft drinks and other beverages. The registered address of
each of the above is Laurel House, Woodlands Park, Ashton Road, Newton-le-Willows, WA12 0HH.
123
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
Contractual
agreement
£’000
Customer
list
£’000
-
180
180
-
180
-
33
33
36
-
69
111
147
14. INTANGIBLES
Group
Cost
At 1 January 2019
On acquisition of subsidiary
At 1 January 2020
Additions
At 31 December 2020
Amortisation
At 1 January 2019
Charge for the year
At 1 January 2020
Charge for the year
Impairment (see note 12)
At 31 December 2020
Net book value at
31 December 2020
Net book value at
31 December 2019
Parent
Cost
At 1 January 2019 and 1 January 2020
Additions
At 31 December 2020
Amortisation
At 1 January 2019 and 1 January 2020
Charge for the year
Impairment (see note 12)
At 31 December 2020
Net book value at 31 December 2020
Net book value at 31 December 2019
124
Brand
name
£’000
3,889
-
3,889
-
4,698
823
5,521
-
5,521
3,889
839
653
1,492
663
-
2,155
-
-
-
-
1,316
1,316
Computer
software
£’000
-
-
-
170
170
-
-
-
14
-
14
Total
£’000
8,587
1,003
9,590
170
9,760
839
686
1,525
713
1,316
3,554
3,366
2,573
156
6,206
4,029
3,889
-
8,065
Brand
name
£’000
1,316
-
1,316
-
-
1,316
1,316
-
1,316
Computer
software
£’000
-
170
170
-
14
-
14
156
-
Total
£’000
1,316
170
1,486
-
14
1,316
1,330
156
1,316
15. DEFERRED TAX ASSETS AND LIABILITIES
Movement in temporary differences during the year
The UK deferred tax balances are measured at 19% (2019: 17%).
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
2020
£’000
Arising on
business
combination
£’000
Recognised
in income
£’000
Recognised
in other
comprehensive
income
£’000
Net
balance at
31 December
2020
£’000
(649)
(1,052)
174
25
(1,502)
-
-
-
-
-
31
122
(168)
-
(15)
-
-
32
-
32
(618)
(930)
38
25
(1,485)
Net
balance at
1 January
2019
£’000
Arising on
business
combination
£’000
Recognised
in income
£’000
Recognised
in other
comprehensive
expense
£’000
Net
balance at
31 December
2019
£’000
(559)
(1,114)
685
22
(966)
-
(170)
-
-
(170)
(90)
232
(214)
3
(69)
-
-
(297)
-
(297)
(649)
(1,052)
174
25
(1,502)
Net
balance at
1 January
2020
£’000
Arising on
business
combination
£’000
Recognised
in income
£’000
Recognised
in other
comprehensive
income
£’000
Net
balance at
31 December
2020
£’000
(82)
166
174
25
283
-
-
-
-
-
(3)
1
(168)
-
(170)
-
-
32
-
32
(85)
167
38
25
145
Net
balance at
1 January
2019
£’000
Arising on
business
combination
£’000
Recognised
in income
£’000
Recognised
in other
comprehensive
expense
£’000
Net
balance at
31 December
2019
£’000
Property, plant and equipment
Goodwill and intangibles
Employee benefits
Provisions
(55)
183
685
22
835
-
-
-
-
-
(27)
(17)
(214)
3
(255)
-
-
(297)
-
(297)
(82)
166
174
25
283
125
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
15. DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
17. TRADE AND OTHER RECEIVABLES
Group
Assets
Liabilities
Net
Trade receivables
Group
Parent
2020
£’000
2019
£’000
2020
£’000
2019
£’000
28,646
35,557
26,270
27,458
Property, plant and equipment
Goodwill and intangibles
Employee benefits
Provisions
2020
£’000
2019
£’000
-
82
38
25
145
-
84
174
25
283
2020
£’000
(618)
2019
£’000
(649)
(1,012)
(1,136)
-
-
-
-
2020
£’000
(618)
(930)
38
25
2019
£’000
(649)
(1,052)
174
25
(1,630)
(1,785)
(1,485)
(1,502)
Less: provision for impairment of trade receivables
(767)
(577)
(269)
Trade receivables - net
27,879
34,980
26,001
Amounts owed by Group undertakings
Other receivables
Current tax recoverable
Prepayments
-
378
671
886
-
10,631
2,220
-
1,163
353
742
670
(475)
26,983
10,704
1,744
-
796
29,814
38,363
38,397
40,227
Parent
Assets
Liabilities
Net
Property, plant and equipment
Goodwill and intangibles
Employee benefits
Provisions
2020
£’000
2019
£’000
-
167
38
25
230
-
166
174
25
365
2020
£’000
(85)
-
-
-
2019
£’000
(82)
-
-
-
(85)
(82)
(85)
167
38
25
145
2020
£’000
2019
£’000
16. INVENTORIES
Finished goods
Raw materials
Total inventories
Group
Parent
2020
£’000
5,214
707
5,921
2019
£’000
7,494
867
8,361
2020
£’000
3,488
38
3,526
In 2020 the Group write-down of inventories to net realisable value amounted to £864,000 (2019: £191,000).
(82)
166
174
25
283
2019
£’000
4,308
94
4,402
All amounts above are short-term receivables and are generally non interest bearing. The difference between the
carrying value and fair value of all receivables is not considered to be material.
The large movement in other receivables is in relation to the receipt of a £2.0m insurance debtor during the year.
All trade and other receivables have been reviewed under the expected credit loss impairment model and a provision
of £767,000 (2019: £577,000) 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.
An impairment assessment of amounts owed by Group undertakings as at 31 December 2020 was undertaken using
the IFRS 9 simplified approach. The amounts owed by Group undertakings are readily repayable and therefore no
impairment is judged to be required (2019: £nil).
The Group’s expected credit loss provision was determined as follows:
31 December 2020
Expected loss rate
Gross carying amount
Credit loss allowance
31 December 2019
Expected loss rate
Gross carying amount
Credit loss allowance
Current
0.3%
25,037
(86)
Current
0.0%
28,426
-
Less than
30 days past
due
More than
30 days past
due
More than
60 days past
due
More than
90 days past
due
Total
16.0%
661
(106)
17.0%
675
(115)
10.8%
23.0%
526
(57)
1,747
28,646
(403)
(767)
Less than
30 days past
due
More than
30 days past
due
More than
60 days past
due
More than
90 days past
due
Total
0.0%
2,878
-
0.0%
837
-
0.0%
651
-
20.9%
2,765
35,557
(577)
(577)
126
127
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
17. TRADE AND OTHER RECEIVABLES (CONTINUED)
Movements in the expected credit loss allowance was as follows:
19. SHARE CAPITAL
Group
At 1 January
2020
£’000
Charge in
the year
£’000
Release in
the year
£’000
Expected credit loss provision
577
854
(210)
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
(454)
Utilised
£’000
(33)
At 31
December 2020
£’000
767
At 31
December 2019
£’000
577
Parent
At 1 January
2020
£’000
Charge in
the year
£’000
Release in
the year
£’000
Utilised
£’000
At 31
December 2020
£’000
Expected credit loss provision
475
288
(210)
(284)
269
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
-
(242)
-
475
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.
18. TRADE AND OTHER PAYABLES AND CURRENT TAX LIABILITIES
2020
£’000
3,697
2019
£’000
3,697
Allotted, issued and fully paid 36,968,772 (2019: 36,968,772) 10p ordinary shares
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 2020 and 31 December 2019.
20. ACQUISITIONS
2020 ACQUISITIONS
The Noisy Drink Company North West Limited
On 5 March 2020, the Group acquired the remaining 25% of the issued share capital of The Noisy Drink Company
North West Limited, following the initial 75% acquisition in 2018. Since a symmetrical call/put option was entered into
with regard to the remaining 25% of the issued share capital at the point of initial acquisition, the acquisition was
accounted for in substance as though the Group had acquired a 100% interest on the date of acquisition. Contingent
consideration of £915,000 (£805,000 of cash and £110,000 of overdrawn directors loans) was paid to acquire
the remaining shareholding. This amount was linked to growth in EBITDA in the two year period following initial
acquisition. Based on the actual performance in the two years following the initial acquisition the consideration was
less than the £2,000,000 initially recognised at acquisition, and therefore £1,085,000 has been taken as a credit within
administrative expenses during the year.
2019 ACQUISITIONS
Adrian Mecklenburgh Limited
Group
Parent
On 1 February 2019, the Group acquired 100% of the issued share capital of Adrian Mecklenburgh Limited.
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)
2020
£’000
7,831
-
430
56
12,330
1,022
21,669
-
21,669
2019
£’000
7,595
-
1,474
2,224
10,949
1,018
23,260
2,675
25,935
2020
£’000
7,143
2019
£’000
5,733
19,893
12,885
415
5
11,490
930
39,876
-
511
41
9,320
921
29,411
99
39,876
29,510
Group
Parent
2020
£’000
198
2,724
2,922
2019
£’000
462
2,566
3,028
2020
£’000
-
2,040
2,040
2019
£’000
-
1,791
1,791
The difference between the carrying value and fair value of all payables is not considered to be material. All payables
are generally not interest bearing. The movements in trade and other payables within the consolidated statement of
cash flows differs materially from the movements above, due to the settling of contingent consideration and IFRS 16
lease costs during the year. The significant movement in Group other payables is in relation to the settlement and
release of contingent consideration during the year.
128
The exercise to determine the fair value of acquired assets and liabilities was completed during the year and resulted
in a measurement period adjustment to property, plant and equipment of £163,000. Accordingly, the total goodwill
recognised has increased from £4,134,000 to £4,297,000.
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 12)
611
271
408
1,068
(614)
(230)
1,514
(163)
822
180
(170)
669
448
271
408
1,068
(614)
(230)
822
180
(170)
2,183
Fair value
£’000
4,893
1,587
6,480
4,297
129
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
20. ACQUISITIONS (CONTINUED)
Foreign currency sensitivity
During the year £75,000 was paid in relation to the first stage of contingent consideration.
As at 31 December 2020, a fair value assesment of the second stage of contingent consideration was performed.
Based on the projected growth in coffee sales in the three year period following acquisition, it was determined that
the initial forecasted growth in coffee sales will not be met. As a result, £264,000 of the £462,000 initially recognised
at acquisition has been taken as a credit within administrative expenses during the year.
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% (2019: 5%), then this would have had the following
impact:
21. CASH AND CASH EQUIVALENTS
Group
At 1 January
2020
£’000
Cash
flow
£’000
At 31 December
2020
£’000
Cash at bank and in hand
40,944
6,350
47,294
Parent
At 1 January
2020
£’000
Cash
flow
£’000
At 31 December
2020
£’000
Cash at bank and in hand
20,094
10,535
30,629
The Group did not have a bank overdraft during the current and previous year.
22. 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.
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 2020 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
130
2020
£’000
1,594
6,001
7,595
2019
£’000
1,444
4,285
5,729
Net result for the year
US Dollar
£’000
(76)
2020
Euro
£’000
(286)
Total
£’000
(362)
US Dollar
£’000
(110)
2019
Euro
£’000
(116)
Total
£’000
(226)
If Sterling had weakened against the US Dollar and Euro by 5% (2019: 5%), then this would have had the following
impact:
Net result for the year
US Dollar
£’000
84
2020
Euro
£’000
316
Total
£’000
400
US Dollar
£’000
30
2019
Euro
£’000
323
Total
£’000
353
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.
Capital management policies and procedures
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern
while maximising the return to stakeholders through the optimisation of the debt and equity balance. This strategy
remains unchanged from 2019.
At 31 December 2020, 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.
131
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
23. SUMMARY OF FINANCIAL ASSETS AND LIABILITIES BY CATEGORY
24. LEASES
The IFRS 9 categories of financial assets included in the Consolidated 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
2020
£’000
2019
£’000
2020
£’000
2019
£’000
2020
£’000
2019
£’000
2020
£’000
2019
£’000
-
-
-
-
-
-
28,257
37,777
47,294
40,944
75,551
78,721
-
-
-
-
-
-
36,985
39,906
30,629
20,094
67,614
60,000
Financial assets
Trade receivables and other
receivables
Cash and cash equivalents
The IFRS 9 categories of financial liabilities 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
2020
£’000
2019
£’000
Trade and other payables
198
2,537
IFRS 16 lease liabilities
-
-
2020
£’000
7,887
3,746
2019
£’000
7,744
3,584
198
2,537
11,633
11,328
2020
£’000
2019
£’000
2020
£’000
2019
£’000
-
-
-
-
-
-
27,041
18,618
2,970
2,712
30,011
21,330
The following table sets out the Group contractual maturities (representing undiscounted contractual cash-flows) of
financial liabilities:
At 31 December 2020
Trade and other payables
At 31 December 2019
Trade and other payables
Up to 3
months
£’000
7,887
7,887
Up to 3
months
£’000
9,819
9,819
Between
3 and 12
months
£’000
-
-
Between
3 and 12
months
£’000
-
-
Between 1
and 2 years
£’000
Between 2
and 5 years
£’000
Over 5 years
£’000
198
198
-
-
-
-
Between 1
and 2 years
£’000
Between 2
and 5 years
£’000
Over 5 years
£’000
215
215
247
247
-
-
The contractual maturities of IFRS 16 lease liabilities are disclosed in note 24.
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 and interest portions of lease payments within financing activities on
the Consolidated Statement of Cash Flows. Lease payments for short-term leases and low-value assets are not
included in the measurement of the lease liability. These are presented within administrative expenses within the
Consolidated Income Statement and are classified as cash flows from operating activities.
The following tables reconcile the Group right-of-use assets and lease liabilities to 31 December 2020:
Group
Motor
Vehicles
£'000
1,079
1,091
Total
£'000
3,106
1,429
(637)
(1,004)
1,533
807
3,531
1,226
(776)
(1,160)
1,564
3,597
Property
£'000
2,027
338
(367)
1,998
419
(384)
2,033
Group
Motor
Vehicles
£'000
1,079
1,090
87
Property
£'000
2,027
338
81
Total
£'000
3,106
1,428
168
Parent
Motor
Vehicles
£'000
1,079
1,091
(637)
Property
£'000
1,190
227
(262)
Total
£'000
2,269
1,318
(899)
1,155
1,533
2,688
419
(279)
1,295
807
1,226
(776)
(1,055)
1,564
2,859
Parent
Motor
Vehicles
£'000
1,079
1,090
87
Property
£'000
1,190
228
42
Total
£'000
2,269
1,318
129
(430)
(688)
(1,118)
(316)
(688)
(1,004)
Right-of-use assets
At 1 January 2019
Additions
Depreciation
At 1 January 2020
Additions
Depreciation
At 31 December 2020
Lease liabilities
At 1 January 2019
Additions
Interest expense
Lease payments
At 1 January 2020
2,016
1,568
3,584
1,144
1,568
2,712
Additions
Interest expense
Lease payments
419
93
807
97
1,226
190
419
57
807
97
1,226
154
(439)
(815)
(1,254)
(307)
(815)
(1,122)
At 31 December 2020
2,089
1,657
3,746
1,313
1,657
2,970
132
133
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
24. LEASES (CONTINUED)
The following table sets out the Group maturities of IFRS 16 lease liabilities:
The following table reconciles the changes in IFRS 16 liabilities from financing activities during the year to 31
December 2020:
Group
At 31 December 2020
Lease liabilities
Parent
At 31 December 2020
Lease liabilities
Group
At 31 December 2019
Lease liabilities
Parent
At 31 December 2019
Lease liabilities
Up to 3
months
£’000
313
Up to 3
months
£’000
282
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
847
961
1,377
728
Between
3 and 12
months
£’000
Between 1
and 2 years
£’000
Between 2
and 5 years
£’000
Over 5 years
£’000
754
837
987
462
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
Group
Parent
Current
loans and
borrowings
£’000
(note 18)
Non-current
loans and
borrowings
£’000
(note 18)
Total
£'000
Current
loans and
borrowings
£’000
(note 18)
Non-current
loans and
borrowings
£’000
(note 18)
Total
£'000
At 1 January 2019
Cash Flows
Non-cash flows
- interest
- lease additions
At 1 January 2020
Cash Flows
Non-cash flows
- interest
- lease additions
At 31 December 2020
606
(1,118)
168
1,362
1,018
(1,254)
190
1,068
1,022
2,500
3,106
-
(1,118)
-
66
168
1,428
2,566
3,584
253
(1,004)
129
1,543
921
2,016
2,269
-
(1,004)
-
129
(225)
1,318
1,791
2,712
-
(1,254)
(1,122)
-
(1,122)
-
190
158
1,226
2,724
3,746
154
977
930
-
154
249
1,226
2,040
2,970
Lease payments incurred for short-term leases not included in the measurement of lease liabilities under IFRS 16
were as follows:
2020
2019
Group
£’000
Parent
£’000
Group
£’000
Parent
£’000
Short-term lease expense
203
203
432
377
134
135
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
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
2020
£’000
959
2019
£’000
1,606
2020
£’000
2019
£’000
(9,262)
(2,182)
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 7, 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 £226,000 (2019: £213,000). An accrued amount of £nil (2019: £21,000) will be
paid in the subsequent financial year.
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 £787,000 (2019: £695,000).
The Company operates a defined benefit plan in the UK. A full actuarial valuation was carried out on 5 April 2020 and
updated to 31 December 2020 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 expectancies 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 2020 are predominantly equity linked bonds, diversified growth funds and other
debt instruments.
Longevity risk
The Group is required to provide benefits for life for the members of the defined benefit liability. Increases in the life
expectancy of the members will increase the defined benefit liability.
Inflation risk
A significant proportion of the defined benefit liability is linked to inflation. An increase in the inflation rate will
increase the Group’s liability. A portion of the plan assets are inflation-linked debt securities which will mitigate some
of the effects of inflation.
A reconciliation of the pension obligation and plan assets to the amounts presented in the Statement of Financial
Position for 2020 and 2019 is shown below.
Present value of funded obligations
Fair value of plan assets
Surplus in the plan
Related deferred tax asset
Net asset / (liability) recognised
31 December 2020
£’000
31 December 2019
£’000
(30,536)
30,883
347
9
356
(28,942)
28,689
(253)
62
(191)
136
137
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
26. PENSION OBLIGATIONS AND EMPLOYEE BENEFITS (CONTINUED)
Defined benefit obligation
The details of the Group’s defined benefit obligation are as follows:
31 December 2020
£’000
31 December 2019
£’000
Assets included which do not have a quoted market value:
28,941
28,286
Property
31 December 2020
£’000
31 December 2019
£’000
1,500
1,850
Opening defined benefit obligation
Current service cost (company only)
Past service cost
Interest cost
Actual contributions paid by plan participants
Experience adjustment
Actuarial losses from changes in financial assumptions
Actuarial gains from changes in demographic assumptions
Benefits paid - including insurance premiums
Closing defined benefit obligation
24
64
569
3
(1,169)
3,491
(385)
(1,002)
30,536
19
-
760
3
(408)
3,247
(687)
(2,279)
28,941
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
Expenses paid
Fair value of plan assets at end of accounting period
31 December 2020
£’000
31 December 2019
£’000
28,689
572
1,782
898
3
(1,002)
(59)
30,883
25,531
696
3,840
898
3
(2,279)
-
28,689
The actual return on plan assets was a gain of £2,353,000 (2019: £4,536,000).
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 2020
£’000
31 December 2019
£’000
Equities
Liability driven investments
Diversified growth funds
Absolute return bonds
Equity-linked bonds
Other, including cash
Total fair value of assets
138
2,752
3,372
5,951
4,902
12,184
222
29,383
2,605
3,056
5,377
4,593
11,004
204
26,839
The fair value of the property was revalued as at 31 December 2020, in-line with the standards of IFRS 13, by Jones
Lang LaSalle who are independent RICS valuers.
The significant actuarial assumptions used for the valuations
are as follows:
31 December
2020
31 December
2019
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%
3.30%
1.30%
2.95%
2.95%
3.20%
2.00%
2.95%
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 89 years for men (2019:
88 years) and 90 years for women (2019: 89 years). For pensioners currently aged 65, life expectancies have been
estimated as 87 years for men (2019: 87 years) and 89 years for women (2019: 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
consumer 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 37.1% 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 (on net defined benefit asset)
Past service cost
Scheme administration expenses
Total amount recognised in the Consolidated Income Statement
31 December
2020
£’000
31 December
2019
£’000
24
(3)
64
59
144
19
64
-
-
83
139
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
26. PENSION OBLIGATIONS AND EMPLOYEE BENEFITS (CONTINUED)
27. AUDIT EXEMPTION STATEMENT
GMP equalisation
On 20 November 2020 the High Court issued a supplementary ruling in the Lloyds bank GMP equalisation case
with respect to members that have transferred out of their scheme prior to the ruling. The results of this mean
that:
• Trustees are obliged to make transfer payments that reflect equalised benefits and are required to make top
up payments where this was not the case in the past;
• A DB scheme that received a transfer is concurrently obliged to provide equalised benefits in respect of the
transfer payments; and
• There were no exclusions on the grounds of discharge forms, CETV legislation, forfeiture provisions or the
Limitation Act 1980.
As a result of this ruling, an assesment of the increase in liabilities of the pension scheme has been made and a
resulting charge of £64,000 has been recognised as a past service cost in the year.
The current and past service cost is included in employee benefits expense and the net interest credit is included
within interest receivable.
Amounts recognised in other comprehensive (expense) / income relating to the Group’s defined benefit plan are as
follows:
Remeasurements recognised in other comprehensive (expense) / income
Actuarial gains on assets
Experience adjustment
Actuarial losses from changes in financial assumptions
Changes in demographic assumptions
Other movements
Total (loss) / gain recognised in other comprehensive (expense)/ income
31 December
2020
£’000
31 December
2019
£’000
1,782
1,169
(3,491)
385
-
(155)
3,840
408
(3,247)
687
16
1,704
Other defined benefit plan information
Employees of the Group are required to contribute a fixed 6% of their pensionable salary. The remaining
contribution is partly funded by the Group’s subsidiaries. The funding requirements are based on the pension
funds actuarial measurement framework as set out in the funding policies. Based on historical data, the Group
expects contributions of £881,000 to be paid in 2021. The weighted average duration of the defined benefit
obligation at 31 December 2020 is 17 years (2019: 20 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
2020
£’000
31 December
2020
%
31 December
2019
£'000
31 December
2019
%
Increase in discount rate by 0.5%
Increase in price inflation adjustment by 0.5%
1 year increase in life expectancy
(2,256)
478
1,696
-7.00%
2.00%
6.00%
(2,315)
579
1,158
-8.00%
2.00%
4.00%
The sensitivities may not be representitive of the actual change in the present value of the scheme obligation, as it is
unlikely that the change in assumptions would occur in isolation of each other, as the assumptions may be linked.
The method and assumptions used in this analysis have been reviewed and remain unchanged from the prior year.
Under section 479A of the Companies Act 2006 the Group is claiming exemption from audit for the subsidiary
companies listed below. The parent undertaking, Nichols plc, registered number 238303, guarantees all
outstanding liabilities to which the subsidiary company is subject at the end of the financial year (being the year
ended 31 December 2020 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
Beacon Drinks Limited
Ben Shaws Dispense Drinks Limited
Cabana Soft Drinks Limited
Dayla Liquid Packing Limited
Dispense Solutions (Wales) Limited (year ended 30 September 2021)
DJ Drink Solutions Limited (year ended 31 May 2021)
Festival Drinks Limited
Nichols Dispense (S.W.) Limited
The Noisy Drink Company North West Limited
The Noisy Drinks Co. Limited
Vimto (Out of Home) Limited
Company Number
1481282
1732905
231218
938594
603111
8671127
5787898
1256006
8766560
5024347
5905631
8795779
28. CONTINGENT LIABILITY
The Group 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
Group with their initial view that the arrangements should have been taxed as employment income which the
Group and its advisors dispute.
If HMRC pursues its current position and is successful in its argument, then the Group may have to pay up to
£3.4m (2019: £3.2m) in Income Tax and National Insurance. In addition, the Group may have to pay up to £0.7m
of interest to HMRC that hadn’t previously been included.
The employees who are party to the contracts have formally indemnified the Group in relation to income tax
and employees’ National Insurance and an amount of up to £2.6m (2019: £2.4m) can be requested from them.
The Directors have obtained external advice and on the basis of this do not believe that the Group has a liability
for any additional tax or National Insurance. The tribunal appeal is being heard through spring 2021. 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.
140
141
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2020
29. EMPLOYEE SHARE SCHEMES
The Group operates three equity-settled share-based payment schemes; a Save As You Earn (SAYE) scheme
open to all employees; and a Long-Term Incentive Plan (LTIP) for certain Directors and Senior Executives and an
Executive matching share award scheme for certain Directors and Senior Executives. All schemes comprise the
grant of options under the Group’s share option schemes.
LTIP
There are three LTIPs in place. Awards made under the LTIP vest provided the participant remains under
employment within the 3-year vesting period and based on the performance of the Group against Adjusted
Profit Before Tax growth targets. Awards made under the LTIP have a £nil exercise price. There were no LTIPs
granted during the year.
The weighted average fair value of LTIP awards at their grant date in previous years are set out below. The fair
value is calculated using the Black-Scholes valuation model.
2017 LTIP
2018 LTIP
2019 LTIP
Awards
156,295
32,063
47,245
Share price on
grant date
£
Expected
dividend yield
Risk free
rate
Volatility
17.14
15.60
17.67
1.92%
1.92%
1.92%
1.80%
1.80%
1.80%
17.70%
17.70%
17.70%
Fair value per
award
£
16.18
14.73
16.68
The movement of outstanding LTIP awards during the year is also set out below.
Awards
outstanding at
1 January 2020
156,295
32,063
47,245
Exercised
Lapsed
(7,459)
(128,162)
-
-
-
-
Awards
outstanding at 31
December 2020
20,674
32,063
47,245
2017 LTIP
2018 LTIP
2019 LTIP
Of the total number of options outstanding at 31 December 2020, 20,674 (2019: nil) had vested and were
exercisable.
The weighted average remaining life of LTIP awards at 31 December 2020 is 1.0 years.
The share price on the vesting date of the awards vested in the year was £13.40.
SAYE
The Group’s SAYE scheme is open to all employees. To participate in the scheme, the employees are required to
save an amount of their gross monthly salary, for a period of 36 or 60 months. At the end of the 36 or 60 month
period the employees are entitled to purchase shares using funds saved at a price of 20% below the market
price at grant date. Only employees that remain in service and save the required amount of their gross montly
salary for 36 or 60 consecutive months will become entitled to purchase the shares.
The weighted average fair value of SAYE options at their grant date in previous years are set out below. The fair
value is calculated using the Black-Scholes valuation model.
142
2015 5 year
2016 5 year
Options
5,767
2,955
2017 3 year
28,190
2017 5 year
7,359
2018 3 year
26,145
2018 5 year
4,035
2019 3 year
27,789
2019 5 year
6,304
2020 3 year
103,095
2020 5 year
15,014
Exercise
price per
option
£
Share
price on
grant
date
£
9.51
9.94
14.57
14.57
12.25
12.25
12.84
12.84
7.93
7.93
11.94
12.80
19.20
19.20
14.28
14.28
16.90
16.90
11.35
11.35
Expected
dividend
yield
Risk free
rate
Volatility
Fair value
per option
£
1.93%
2.27%
1.93%
1.93%
1.87%
1.87%
1.87%
1.87%
1.87%
1.87%
1.39%
0.97%
0.19%
0.51%
0.82%
1.12%
0.79%
0.91%
0.09%
0.09%
23.30%
22.80%
23.30%
21.50%
24.50%
23.40%
25.50%
25.40%
31.30%
31.30%
1.41
3.22
3.13
1.95
1.99
2.86
2.29
2.19
3.33
4.14
The movement of outstanding SAYE options during the year is also set out below.
Options outstanding
at 1 January
2020
Granted
Exercised
5,767
2,955
22,216
4,890
26,145
3,497
27,789
6,304
-
-
-
-
-
-
-
-
-
-
103,095
15,014
(2,553)
-
(11,066)
-
-
-
-
-
-
-
2015 5 year
2016 5 year
2017 3 year
2017 5 year
2018 3 year
2018 5 year
2019 3 year
2019 5 year
2020 3 year
2020 5 year
Options outstanding
at 31 December
2020
-
2,955
-
1,745
14,776
3,497
14,716
4,809
101,667
15,014
Lapsed
(3,214)
-
(11,150)
(3,145)
(11,369)
-
(13,073)
(1,495)
(1,428)
-
The weighted average remaining life of SAYE awards at 31 December 2020 is 2.4 years. Volatility has been
determined using statistical analysis of the Group share price over a 3 or 5 year period preceeding the grant
date. The share price on the vesting date of the awards vested in the year was £12.90.
The equity-settled share based payment charge recognised in the year is as follows:
LTIP
SAYE
Total charge / (credit)
Executive matching share awards
2020
£’000
(92)
269
177
2019
£’000
(199)
-
(199)
On 18 December 2020 the Group made awards of 17,402 share options to two Executive Directors. The awards,
equal to 50% of their annual salaries at the date of award, will vest on the third anniversary based on the
number of Ordinary Shares purchased and retained by the Directors over the vesting period of the award. The
awards will be matched on a 1:1 basis for every Ordinary Share purchased. No other performance conditions
apply.
143
UNAUDITED FIVE YEAR SUMMARY-YEAR ENDED 31 DECEMBER 2020
NOTICE OF ANNUAL GENERAL MEETING 2021
(17)
115
(20)
1,167
resolutions as ordinary resolutions:
72.77p
69.19p
62.81p
69.07p
appear on the register of members at the close
72.81p
69.23p
67.76p
66.18p
of business on 26 March 2021.
8.1
in connection with an offer of equity securities
(whether by way of a rights issue, open offer or
3.
To re-elect Helen Keays, who retires by rotation,
otherwise):
25.54p
72.77p
69.19p
67.69p
66.12p
as a Director of the Company.
8.1.1
to holders of ordinary shares in the capital of the
Revenue
Adjusted operating profit
Exceptional items
Operating profit
Net finance (expense) / income
Profit before taxation
Taxation
Profit after taxation
Dividends paid
Retained earnings movement
Earnings per share - (basic)
Earnings per share - (diluted)
Earnings per share - (basic) before exceptional
items
Earnings per share - (diluted) before
exceptional items
2020
£’000
2019
£’000
2018
£’000
2017
£’000
2016
£’000
118,657
146,985
142,037
132,789
117,349
32,439
31,638
-
-
30,543
(1,801)
30,325
-
32,439
31,638
28,742
30,325
(10,338)
(14,466)
(12,803)
(11,213)
32,422
31,753
28,722
31,492
(5,587)
26,835
(6,238)
25,515
(5,548)
23,174
(6,015)
25,477
(9,806)
12,189
12,712
11,961
15,671
72.81p
69.23p
62.88p
69.13p
11,654
(5,074)
6,580
(40)
6,540
(1,686)
4,854
(5,484)
13.14p
13.13p
25.56p
Dividends paid per share
28.00p
39.20p
34.70p
30.40p
26.60p
2021 ANNUAL GENERAL MEETING
Our preference had been to welcome shareholders
We would also encourage shareholders to ask questions
in person to our annual general meeting (the ‘AGM’),
that they would have raised at the AGM. Questions
particularly given the constraints we faced in 2020 due
should be submitted via AGM2021@nicholsplc.co.uk
to the COVID-19 pandemic. However, at present under
to be received no later than 11 a.m. on 26 April 2021.
UK Government guidelines, shareholders are unable to
Answers to questions will be published on our website
attend the AGM in person. We are therefore proposing
as soon as practicable following the AGM.
to hold the AGM with the minimum attendance required
to form a quorum.
The Board is closely monitoring developments in
relation to the COVID-19 pandemic and the related
Although shareholders will not be able to attend the
UK Government guidelines and will provide an update
AGM this year, shareholders’ views remain important
by an announcement via a Regulatory Information
to us. We would therefore like to take this opportunity
Service if any further changes are required to the AGM
to encourage all shareholders to exercise their votes by
arrangements.
appointing the Chair of the meeting to act as their proxy.
The deadline for receipt of proxies is 11 a.m. on 26
April 2021.
144
Notice is hereby given that the twenty ninth Annual
to the extent unused at the date of this
General Meeting (the ‘AGM’) of Nichols plc (the
resolution, are revoked with immediate effect).
‘Company’) will be held at Nichols plc, Laurel House,
To consider and, if thought fit, to pass the
Woodlands Park, Ashton Road, Newton-le-Willows,
following resolutions as special resolutions:
Merseyside, WA12 0HH on Wednesday, 28 April 2021 at
8.
That, subject to the passing of resolution 7 and
11 a.m. for the following purposes:
To consider and, if thought fit, to pass the following
1.
To receive the Company’s annual accounts,
strategic report and directors’ and auditors’
reports for the year ended 31 December 2020.
pursuant to sections 570 and 573 of the
Companies Act 2006 (“Act”), the Directors be and
are generally empowered to allot equity
securities (within the meaning of section 560
of the Act) for cash pursuant to the authority
granted by resolution 7 and to sell ordinary
shares held by the Company as treasury shares
2.
To declare a final dividend for the year ended 31
for cash, as if section 561(1) of the Act did not
December 2020 of 8.8 pence per ordinary share
apply to any such allotment or sale, provided that
of £0.10 in the capital of the Company, to be paid
this power shall be limited to the allotment of
on 6 May 2021 to shareholders whose names
equity securities or sale of treasury shares:
4.
To elect James Nichols, who has been appointed
Company in proportion (as nearly as practicable)
by the Board since the last AGM, as a Director of
to the respective numbers of ordinary shares
the Company.
held by them; and
5.
To reappoint BDO LLP as auditors of the
8.1.2
to holders of other equity securities in the capital
Company.
6.
To authorise the Directors to determine the
remuneration of the auditors.
7.
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 £1,232,292.40 (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 27 July
2022 (whichever is the earlier), save that the
Company may make an offer or agreement
before this authority expires which would or
might require shares to be allotted or rights to
subscribe for or to convert any security into
shares to be granted after this authority expires
and the Directors may allot shares or grant
such rights pursuant to any such offer or
agreement as if this authority had not expired.
This authority is in substitution for all existing
authorities under section 551 of the Act (which,
of the Company, as required by the rights
of those securities or, subject to such rights, as
the Directors otherwise consider necessary,
but subject to such exclusions or other
arrangements as the Directors may deem
necessary or expedient in relation to treasury
shares, fractional entitlements, record
dates or any legal or practical problems under
the laws of any territory or the requirements of
any regulatory body or stock exchange; and
8.2
otherwise than pursuant to paragraph 8.1 of
this resolution, up to an aggregate nominal
amount of £184,843.86 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 27 July 2022
(whichever is the earlier), save that the Company
may make an offer or agreement before this
power expires which would or might require
equity securities to be allotted or treasury
shares to be sold for cash after this power
expires and the Directors may allot equity
securities or sell treasury shares for cash
pursuant to any such offer or agreement as if
this power had not expired. This power is in
substitution for all existing powers under
sections 570 and 573 of the Act (which, to the
145
NOTICE OF ANNUAL GENERAL MEETING 2021
GENERAL NOTES
extent unused at the date of this resolution, are
revoked with immediate effect).
9.
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:
9.1
the maximum aggregate number of Shares which
may be purchased is 3,696,877:
9.2
the minimum price (excluding expenses) which
may be paid for a Share is 10p; and
9.3
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 27 July 2022
(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
David Rattigan
Secretary
3 March 2021
Registered Office, Laurel House, Woodlands Park, Ashton Road, Newton-le-Willows,
WA12 0HH.
Registered in England and Wales No. 00238303.
1. To receive the Company’s annual accounts, strategic
shares set out in the other proxy appointments is in
report and directors’ and auditors’ reports for
excess of those held by the member, may result in
the year ended 31 December 2020.
the proxy appointment being invalid. A proxy may
2. Biographical details of Ms Helen Keays and Mr
James Nichols, who are offering themselves for
re-election and election respectively, are set out on
only be appointed in accordance with the
procedures set out in notes 5 to 8 below and the
notes to the form of proxy.
pages 68 and 69 of this document.
5.
In normal circumstances, the appointment of a
3. Entitlement to attend and vote
In light of the UK Government’s guidance relating
to COVID-19, shareholders will not be permitted to
attend the AGM in person.
The right to vote at the meeting is deterred by
proxy would not preclude a member from attending
and voting in person at the meeting. However, as
noted above, members will not be permitted
to attend this AGM in person due to the ongoing
restrictions relating to the COVID-19 pandemic.
reference to the register of members. Only those
6.
In order to reduce the Company’s environmental
shareholders registered in the register of members
impact, our intention is to remove paper from the
of the Company as at close of business on Monday,
voting process as far as possible. You are therefore
26 April 2021 (or, if the meeting is adjourned,
asked to vote in one of the following ways:
close of business on the date which is two working
days before the date of the adjourned meeting)
shall be entitled to vote in respect of the number
of shares registered in their name at that time.
Changes to entries in the register of members after
that time shall be disregarded in determining the
rights of any person to vote.
4. Appointment of proxies
• Register your vote on line through our registrar’s
portal – www.signalshares.com. You will need your
investor code which is printed on your share
certificate or may be obtained by calling the
Company’s registrar, Link Group (‘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
A member is entitled to appoint another person
at the applicable international rate. Lines are open
as his or her proxy to exercise all or any of
between 09:00 – 17:30, Monday to Friday excluding
his rights to vote at the meeting. In light of the
public holidays in England and Wales.
UK Government’s current guidance on COVID-19
• CREST members may use the CREST electronic
restrictions, proxies other than the Chairman of the
proxy appointment service as detailed in note 7
AGM will not be admitted to the AGM in
below.
person while such measures prohibit their
attendance, therefore members appointing a proxy
are strongly recommended to appoint the Chairman
of the AGM to be their proxy in order that their vote
can be counted.
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
If you prefer, you may request a hard copy form
from Link using the numbers shown above and
return it to Link Group, PXS 1, Central
Square, 29 Wellington Street, Leeds, LS1 4DL.
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, 26 April 2021
(or, in the event that the meeting is adjourned, no
later than 48 hours (excluding any part of
the day that is not a working day) before the time of
any adjourned meeting).
Company’s registrars at: Link Group, PXS 1, Central
7. CREST members who wish to appoint a proxy or
Square, 29 Wellington Street, Leeds, LS1 4DL.
proxies for the meeting (or any adjournment of it)
no later than 48 hours before the time appointed
through the CREST electronic proxy appointment
for the meeting (excluding non-working days).
service may do so by using the procedures
You will need to state clearly the number of shares
described in the CREST Manual. CREST personal
in relation to which the proxy is appointed. A failure
members or other CREST sponsored members, and
to 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
146
147
GENERAL NOTES
NOTES
able to take appropriate action on their behalf.
10. A shareholder which is a corporation
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
specifications and must contain the information
required for such instructions, as described
in the CREST Manual. The message, regardless
of whether it constitutes the appointment of a
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.
proxy or is an amendment to the instruction given
11. As at 8 March 2021 (being the last practicable
to a previously appointed proxy, must, in order
date before the publication of this notice), the
to be valid, be transmitted so as to be received
Company’s issued share capital consists of
by the Company’s Registrars, Link Registrars
36,968,772 ordinary shares of 10 pence each,
(CREST ID RA10) no later than 11.00 a.m. on Monday
carrying one vote each. As the Company holds
26 April 2021) (or, if the meeting is adjourned, no
53,091 ordinary shares in treasury, in respect of
later than 48 hours (excluding any part of the
which it cannot exercise any votes, the total
day that is not a working day) before the time of
voting rights in the Company as at 8 March 2021
any adjourned meeting). For this purpose, the time
are 36,915,681.
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 members is a
CREST personal member or sponsored member or
has appointed a voting service provider(s) takes(s))
such action as shall be necessary to ensure that
a message is transmitted by means of the CREST
system by an 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.
148
149
NOTES
NOTES
FINANCIAL CALENDAR
ANNUAL GENERAL
MEETING
28 April 2021
INTERIM RESULTS
ANNOUNCED
21 July 2021
Laurel House, Woodlands Park,
Ashton Road, Newton-Le-Willows, WA12 0HH.
01925 22 22 22.
www.nicholsplc.co.uk
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151
Jen
Creative
Debbie
Category
Jon
Sales
Danny
Sales
Diane
IT
Allan
IT & PMO
Carol
International
Jamie
IT
Introducing some of the people behind Nichols plc.
Robert
International
Marnie
Senior Leadership Team
Chris
Operations
Gab
People Team
Lucy
Out of Home
Geoff
Out of Home
Neil
Out of Home
Helen
The Board
Sean G
Finance
Leah
Out of Home
Matt
International
Paul J
Out of Home
Becky U
Marketing
Mike
Out of Home
Leanne
Out of Home
Emma
Finance
Gavin
Out of Home
Anthony
Out of Home
Kelly
Out of Home
Harry
Out of Home
Craig P
Out of Home
Claire
Legal
Alistair
Out of Home
Mike
International
Lee
IT
Jo
Operations
Becky
Innovation R&D
Lisa
People Team
John
Creative
Adeline
Innovation R&D
Ste
Sales
Jess
Marketing
Nick
Technical
Andrew
CEO
Marcella
Operations
Ed
Venture Brands
Thorsten
Technical
Zac
Out of Home
Janette
Operations
Ange
Marketing
Gillian
International
Mark
Operations
Shiraz
Operations
Renee
Innovation R&D
Tristan
International
Nick O
Sales
Alex
Marketing
Kinj
Creative
Becky W
Marketing
Nigel
IT
Thomas
Health & Safety
Michael
International
Helen
Brand Licensing
Sean
Finance
James N
Out of Home
Nathan
IT
Mairi
Operations
Peter
Sales
Hannah
Creative
Gary
Finance
Mia
Sales
Tayla
Out of Home
Katy
International
Paul
Category
Simon
Sales
Rachel
Finance
Jon
Out of Home
Stephen
Out of Home
Jenni
Finance
Lisa
Out of Home
Richard
Innovation R&D
Sam
Marketing
Jason
International
Scott
Sales
Emma
Marketing
David
Marketing
Becky
Finance
Matt
Out of Home
Claire
Sales
Tim
Out of Home
Steph
Finance
Nick
Out of Home
Adam J
Operations
Huw
Out of Home
Gary
Sales
David
Finance
Craig
Out of Home
Chris
People Team
Trudy
Out of Home
Johnny
International
Charlotte
Marketing
Nick G
Sales
Mark
Finance
Sarah
Technical
Dan
Sales
Josh
Sales
Adam A
Operations
Claire
Out of Home
Paul
Finance
Hazel
Finance
Nick M
Out of Home
Sean
Sales
Helena
Finance
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