2021 ANNUAL REPORT
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Welcome to the 2021 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, SLUSH PUPPiE, Levi Roots and Sunkist.
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OUR PORTFOLIO.
At Nichols we are proud to offer a leading portfolio of distinctive and iconic brands,
which meet a variety of consumer needs and occasions in a range of product formats
– packaged, frozen, post mix and coffee.
PACKAGED.
Vimto, the iconic refreshingly different soft
water and frozen. With a choice of unique
drink that has it all. Created in Manchester in
flavours and Original and No Added Sugar
1908 by John Noel Nichols, Vimto was originally
options, there are lots of ways to enjoy
designed as a herbal tonic to give its drinkers
Vimto. This also includes our extensive
‘Vim and Vigour’. For over 100 years, we have
range of licensed products – from pancake
been mixing our secret recipe – a blend of
mixes and home baking kits, to desserts and
fruits, herbs and spices – to produce a unique
confectionery.
and irresistible range of drinks.
Today, we’re the 9th most chosen beverage
brand in the UK*, and enjoy a Global footprint
consumed by consumers in 73 countries
around the world. Our Vimto range includes
squash, carbonates, still drinks, flavoured
*Kantar – British Brand Footprint 2021
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Levi Roots is one of the UK’s best loved
and most successful entrepreneurs. In
2010, we were proud to gain the licence
to create Levi’s range of carbonated soft
drinks – a mouth-watering taste of the
Caribbean. These delicious, tropical fruit
flavours each put a little “music in your
glass”.
Experience the taste of California with
Sunkist, which has been making waves
since 1978. Our Sunkist products reflect
the brand’s Californian roots of sun,
sand and surf and make Sunkist a firm
favourite across the UK. Available in six
refreshing low sugar flavours.
Feel Good is a naturally flavoured range
of fruitful sparkling waters available in
three unique flavours. Feel Good has a
mission to ‘make the world feel better
one sip at a time’ and through the ‘3%
for People and Planet Fund’ the brand
donates 3% of gross to initiatives that
support people and planetary wellbeing
and we have a commitment to be net
zero by 2030.
OUT OF HOME.
We’re a one stop shop for the UK’s hospitality and leisure industry with the widest
range of soft drinks brands, for post mix, frozen, and coffee occasions.
FROZEN.
We are the UK’s leading frozen beverage supplier with a range of enviable category
leading brands.
Frozen, fizzy and full of flavour, there’s no other slush like
the world’s No.1 brand - ICEE. A favourite in the USA and
around the globe since 1967, ICEE is the Swizzle Fizzle
Freshy Freeze frozen drink. Our ICEE range can be found
chilling in some of the UK’s largest cinema chains and
premium leisure venues.
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Starslush is the UK’s favourite frozen drink, available in
over 5,500 outlets across the UK. The brand has a full
range of fabulous flavours. It’s vegan friendly, sugar
free and contains vitamins A, C and E. So you can feel
good about quenching your thirst and tingling your
taste buds with Starslush, the perfect addition to any
day out.
SLUSH PUPPiE, the original iconic frozen drink that
has been putting a smile on families faces for over
50 years across the world. Available in a range of
four delicious fruit flavours. It’s vegan friendly, sugar
free and contains Vitamins A, C and E. The perfect
combination of frozen, healthy fun for all to enjoy.
We have the widest and unrivalled range of
owned and licensed post mix brands across
the marketplace.
• Vimto
• Coca cola
• Coke zero
• Diet Coke
• Pepsi
• Irn-Bru
• Ocean Spray
• Sunkist
• V Range
Working in partnership with Jacobs Douwe
Egberts – one of the largest coffee roasters
in the world, we supply high quality coffee
blends including Douwe Egberts, L’OR, Kenco,
Tassimo and the unique liquid coffee concept
Cafitesse.
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CONTENTS
2 0 2 1 N I C H O L S P L C A N N U A L R E P O R T
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
KEY PERFORMANCE INDICATORS
CHAIRMAN’S STATEMENT
OUR BUSINESS MODEL
CHIEF EXECUTIVE OFFICER’S REPORT
HAPPIER FUTURE REPORT
CHIEF FINANCIAL OFFICER’S REPORT
RISK MANAGEMENT
SECTION 172 REPORT
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THE BOARD
CORPORATE GOVERNANCE
STATEMENT
AUDIT COMMITTEE REPORT
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INDEPENDENT AUDITOR’S REPORT
CONSOLIDATED INCOME STATEMENT
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
REMUNERATION COMMITTEE REPORT
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STATEMENT OF FINANCIAL POSITION
NOMINATION COMMITTEE REPORT
DIRECTORS’ REPORT
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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
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KEY PERFORMANCE INDICATORS
CHAIRMAN’S STATEMENT
OUR BUSINESS MODEL
CHIEF EXECUTIVE OFFICER’S REPORT
OUR HAPPIER FUTURE REPORT
CHIEF FINANCIAL OFFICER’S REPORT
RISK MANAGEMENT
SECTION 172 REPORT
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KEY
PERFORMANCE
INDICATORS
REVENUE (£M)
147.0
142.0
144.3
132.8
118.7
S T R A T E G I C R E P O R T
ADJUSTED* OPERATING
PROFIT (£M)
OPERATING PROFIT (£M)
30.5
31.6
32.4
28.7
31.6
32.4
21.9
11.7
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
+£25.6m
+22%
+£10.2m
+88%
6.6
(17.6)
2017
2018
2019
2020
2021
(£24.2m)
(367%)
ADJUSTED* PROFIT BEFORE
TAX (£M)
PROFIT BEFORE TAX (£M)
ADJUSTED* BASIC EARNINGS PER
SHARE (PENCE)
32.4
31.8
30.5
72.81
69.23
67.76
21.8
31.8
32.4
28.7
11.6
2017
2018
2019
2020
2021
+£10.2m
+88%
46.15
25.56
6.5
2017
2018
2019
2020
2021
+£20.59p
+81%
(17.7)
2017
2018
2019
2020
2021
(£24.2m)
(370%)
BASIC EARNINGS PER
SHARE (PENCE)
CASH AND CASH
EQUIVALENTS (£M)
62.88 69.23 72.81
56.7
36.1
38.9
47.3
40.9
13.14
2017
2018
2019
2020
2021
+£9.4m
+20%
(60.04)
2017
2018
2019
2020
2021
(£73.18p)
(557%)
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*Source: Nielsen, Total coverage 12 months to 1 January 2022.
*Excluding exceptional items set out within note 4 of the financial statements
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THE
CHAIRMAN’S
STATEMENT
with Vimto Squash outperforming the dilutes market by
dividend for 2021 of 23.1p. The ex-dividend date will
+10.4%.
Sales across our International markets were £32.7m,
an increase of 21.0% (underlying +9.8% adjusting for
be 24 March 2022 and payment will be made on 5 May
2022 subject to shareholder approval at the Group’s
AGM on the 27 April 2022.
the impact of the completion of the Group’s marketing
OUTLOOK
investment in the Middle East) versus the prior year
(2020: £27.0m). Performance in Africa at +17.1% was
particularly pleasing given the long-term opportunity
presented by these markets.
The Group enters 2022 with excellent momentum and
in a strong financial position. The Group’s Adjusted PBT2
expectations for the year FY223 are unchanged, whilst
we remain mindful of the well-publicised inflationary
SHARE BUY BACK
pressures which are now being realised.
On December 14, 2021, the Group announced its
In the medium term for 2023 we expect continued
intention to conduct on-market purchases under
revenue growth as well as inflationary and legislation
a share buyback programme to repurchase up to
cost pressure. We expect to see, high single digit growth
453,486 ordinary shares of 10p each in the capital of
in Group Adjusted PBT versus FY22.
the Group (the “Ordinary Shares”), representing up
to approximately 1.2 per cent of the Group’s issued
share capital, pursuant to the authority obtained at the
Group’s most recent annual general meeting, held on 28
April 2021 (the “Buyback”).
The purpose of the Buyback is to meet future
obligations under the Group’s SAYE Option Scheme
and/or Long-Term Incentive Plan. The Buyback will
be funded from the Group’s existing cash resources
and all Ordinary Shares repurchased will be held in
treasury. Repurchases may be made up to and including
23 August 2022. Any repurchases made following the
Group’s 2022 annual general meeting will be conditional
on further shareholders’ approval being obtained.
During December 2021, the Group repurchased 68,000
Ordinary shares under this authority, with a nominal
value of £6,800.
DIVIDEND
In 2020 the Board advised a dividend policy of broadly
2x cover, which balances shareholder distributions with
the investment needs and growth opportunities of the
business post-pandemic.
The Board therefore propose a final dividend of 13.3p,
which together with the interim, results in a full year
The Board believes the Group is well positioned to
deliver against its long-term growth plans.
1 Nielsen Total Coverage 12 months to 1 January 2022
2 Excluding exceptional items
3 FY22 expectations refers to a Group compiled market consensus of adjusted
PBT £25.2m
John Nichols
Non-Executive Chairman
1 March 2022
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The continued strengthening of the Vimto
TRADING
brand, both in the UK and internationally,
combined with the benefits of our diversified
business model, has ensured another resilient
financial performance in the period. We have
Total Group revenues for the period were £144.3m, an
increase of 21.6% compared to 2020 and importantly,
broadly in line with pre-Covid 2019 levels.
achieved significant outperformance of the Vimto
Both the Still and Carbonates product categories
brand in dilutes in the UK, and we delivered solid
have recovered strongly in the period. Revenue of
growth internationally, particularly in Africa where
Still products increased by 10.2% to £72.4m (2020:
we continue to grow, and critically delivered a robust
£65.7m), now ahead of 2019 (£71.7m), driven by
performance in the Middle East. In this, my 50th year
the strong performance of the Vimto Squash
with the Group, I would like to wholeheartedly thank
brand in the UK. Revenue from Carbonated
everyone for their efforts.
The Coronavirus pandemic has continued to present
significant challenges for us all throughout 2021. Our first
and most important objective continued to be the protection
and wellbeing of our employees and customers. Throughout
products increased 35.8% to £71.9m (2020:
53.0m; 2019: £75.3m), driven largely by the
gradual recovery of the Group’s OoH route
to market as outlets reopened, and by
strong growth in Africa.
these difficult times, I have been delighted to witness how our
In the UK, revenue increased by
colleagues have pulled together and consistently demonstrated
21.8% versus last year to £111.6m
their values and commitment to our business.
As Out of Home (OoH) recovers from the impact of the pandemic,
management focus has ensured a strengthening of our balance sheet
in the period, with cash and cash equivalents at the end of the period at
£56.7m (2020: £47.3m). We are now well positioned to deliver our long-
term growth plans as the impact of the pandemic subsides.
(2020: £91.6m) as the OoH route to
market recovered and the Vimto
brand progressed. For the first
time, Vimto brand’s value in
the UK has exceeded £100m,
and increased by +6.3%
according to Nielson1,
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EXISTS
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BETTER
S T R A T E G I C R E P O R T
Ingredients
Like all great tastes - it
all starts with the best
ingredients!
The ‘Vimto secret recipe’ is
testimony to this.
Manufacture
Our much loved products
are made by the very best
- ourselves or our supplier
partners.
Transport
We use the most effective distribution
solutions to meet customer needs,
whether that be via our own team or an
expert partner.
Consumers
It’s ultimately all about
getting our much loved
brands into people’s
hands!
Retailers
Our retailers vary from
some of the biggest to
some of the smallest in
the world.
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CHIEF
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MILNE
One of the key challenges during
the year has been maintaining
the availability of our products in
our customers’ outlets. Globally,
we have seen a number of shortages
on key ingredients, logistical challenges
I would like to say
an enormous thankyou
to every single member
of the Vimto team who have
worked tirelessly to ensure
we have delivered against
these priorities in often
difficult and demanding
circumstances.
We continue to build long-term
partnerships with several key
customers and distributors both
in the UK and abroad who I would
like to thank for their continued
loyalty and support.
I am extremely proud of what we have achieved during
2021 which has once again proved to be a very
challenging year against a backdrop of issues for our
industry and society. Our priority in 2021 as it was in
2020 when the Covid-19 pandemic started has been
to protect the safety and wellbeing of our people,
continue to serve our customers and support the
local communities in which we work.
I would like to say an enormous thankyou to
every single member of the Vimto team who
have worked tirelessly to ensure we have
delivered against these priorities in often
difficult and demanding circumstances.
The value of the Group’s diversification
across both the UK and internationally
has once again in 2021 proved to be
pivotal to the success the business
has achieved. The Vimto brand has
been the driving force of growth
both at home and abroad, and
its unique flavour and taste
continues to be loved by
consumers around the
globe.
and insufficient labour availability in certain
markets. I am pleased we have shown extremely
strong resilience to maintain excellent service levels
UK Soft Drinks
and ensure our consumers can still enjoy our brands
every day through our enhanced focus on operational
excellence.
The soft drinks market in the UK has proved to be
extremely resilient during 2021. Growth in the UK
on-trade sector has been strong as we observed fewer
restrictions and closures across the hospitality sector
versus 2020. Within the UK retail sector, the momentum
that was built in 2020, as more people consumed
products at home, has continued into 2021 with robust
(Statistics given below are as measured by Nielsen for
the 12 months to 1 January 2022.)
In 2021, volumes in the £9.6bn UK soft drinks market
grew by +2.3%, whilst value sales grew by +8.5% versus
the prior year. Within the soft drinks market, the
strongest value growth was delivered across the Energy,
Water and Flavoured Carbonates sub-categories, whilst
Mixers, Dilutes and Lemonade all suffered declines
versus 2020.
growth being delivered both in stores and via growing
The soft drinks category remains intensely competitive
online platforms.
All the international geographies we operate in have
suffered a number of challenges similar to those felt in
and promotionally driven. However, we continue to
add value by focusing on strong in-market execution,
product innovation and new distribution gains.
the UK, but our brands have shown to be very resilient
For the first time in its 113 year history, the Vimto
and demonstrated their strength. Our continued focus
brand achieved value sales worth in excess of £100m, a
on driving growth across a range of global markets
significant milestone and an achievement that all of our
throughout the year has proved beneficial. We have
people should be extremely proud of.
delivered excellent in-market execution across the
Middle East, Africa, Europe and the USA. As a result, we
have driven growth and market share gains in all these
markets.
Within the UK packaged sector, our dilutes portfolio
delivered very strong growth. It significantly
outperformed the market and gained share versus our
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No brainer – Vimto Fizzy
Raspberry, Orange and
Passionfruit (in a can!)
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S T R A T E G I C R E P O R T
competitors. As a result of this out performance, we
portfolio with the addition of Vitamin C and D and
have firmly consolidated our position as the No.2 brand
brought to market a brand new look to our packaging.
in the dilutes market.
Our still Ready-to-Drink portfolio delivered double digit
growth in the UK marketplace, with our 500ml range
Launching new flavours and concepts are crucial to
ensuring we attract new consumers to the Vimto brand
and stay relevant to their changing needs and tastes.
being the standout performer across all the sectors it
Core to the brand’s growth in 2021 has been the
operates in.
It is also pleasing that our carbonates range delivered
+8.8% growth, driven by our performance across our
cans portfolio.
introduction of our new marketing campaign Find Your
Different, which first aired in the spring. It was launched
with two through the line executions – one focused on a
masterbrand campaign to drive top of mind awareness
and a dilutes vitamin D campaign to target parents and
Delivering strong growth across all three sub-categories
families. It was a fully integrated campaign across TV,
we operate in has been encouraging against the tough
Video on Demand, Digital, Outdoor and Social. We also
market conditions we faced during 2021.
ensured we supported the activity in store across our
key national accounts.
We have also continued to ensure that all of our new
product innovation and marketing activity heavily
focuses on driving our ‘No Added Sugar’ ranges as part
of our healthier future strategic commitments and, as a
result, we have made strong progress across the year.
In 2021, innovation has again been at the core of our
growth. We have launched two new flavours across
the range and moved our broader flavours range into
a 2L dilutes format. We have also fortified our dilutes
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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 Levi Roots brand had another successful year in 2021.
Strong growth of +24.7% was achieved, with the core flavours
and pack formats delivering this uplift. The key focus has
been on new distribution gains and strong in-market
execution.
We continue to work in partnership with all our
customers across the UK grocery, foodservice,
wholesale and discount channels. It has been more
important than ever during 2021 to have these
strong relationships in place, and we will continue
to put our customers’ needs at the heart of what
we do to ensure all our consumers can enjoy
our products every day.
OUR FEEL GOOD RANGE
During 2021, we relaunched our Feel Good brand into the
marketplace. We have repositioned the brand as a 100%
natural product with a strong set of ESG commitments.
We have successfully started to build distribution both in
single and multipack formats across the retail, foodservice
and convenience channels in the UK.
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the levi roots team at the
barcode festival
S T R A T E G I C R E P O R T
During the year, we continued to ensure we invested in
exciting marketing campaigns across the sector, which
included in-outlet and digital campaigns.
Finally, we secured a long-term agreement to be
the exclusive partner to distribute the global No.1
uncarbonated frozen brand - SLUSH PUPPiE.
However, the OoH drinks market has been significantly
impacted by the pandemic with the prolonged closure
of many outlets. Whilst recognising the hospitality
trade has shown growth and is beginning to return to
pre-Covid-19 levels, it is doing so at a pace slower than
THE UK ON-TRADE
Following an extremely tough
previously forecast and the margin progression after
year in 2020 for the UK On-
overheads anticipated previously is now not likely to
Trade, we have seen the sector
be achieved without transformational change, in terms
recover strongly in 2021 as outlets
of how the Group services the trade and its wider
reopened. However, the industry
customer base. Therefore, a full strategic review into the
has had to face challenges with
Group’s OoH route to market has commenced.
some restrictions still in place impacting footfall, as well
as staff shortages and logistics issues.
Throughout 2021 we continued to focus on supporting
our customers and partners across our entire OoH
New trends have emerged across the sector due to the
channel. Ensuring that our valued customers received
pandemic, with consumers now much more positive
the right service to guarantee product availability during
about “al fresco” dining and visiting outdoor hospitality
the various challenges the industry encountered has
venues, a boom in the suburbs as people are shifting
demonstrated the resilience of our supply chains and
away from visits to city centres and consumers adopting
delivery model. I am extremely proud of the team’s
focus and commitment to support our partners during
this challenging period and throughout the ongoing
recovery from the impact of the pandemic.
a “live for the moment” mindset.
I am pleased with our progress across our Out of Home
(OoH) business, as we have delivered +77.4% sales
growth versus 2020. However, versus 2019, the channel
is still down -31.4% due to some restrictions remaining
in place.
Encouragingly, year-on-year growth has been delivered
across all the channels we operate in within OoH.
A key driver of this has been due to the support we
have provided to our customers throughout the last
two years, which has enabled them to reopen their
businesses as restrictions have eased. As a result, we
have also retained a number of key contracts with
important customers.
Innovation remained important during 2021, and we
launched ICEE and Starslush ZERO (no sugar) products
to complement our current ranges. These launches
support our ambition to offer consumers balanced and
healthier choices. Consumer feedback to date has been
extremely positive regarding the new additions.
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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
VIMTO
INTERNATIONAL
During 2021 the
challenges presented
by the Covid 19
pandemic and supply
chain restrictions in the UK
have been echoed across
all our International markets.
Considering these challenges,
I feel extremely proud that the
teams have delivered +21.0% sales
growth versus 2020. It is particularly
pleasing that this growth has been
delivered across all our key markets through
strong execution, innovation, new and exciting
The Sweet Togetherness campaign
marketing campaigns and new distribution wins.
Our partner in the Yemen faced many operational
Our growth across the African continent in
2021 has been extremely strong, delivering sales
growth of +17.1% versus last year. This has been
challenges due to the ongoing hostilities in the country,
but still delivered a robust performance on the back of
strong in-market execution and distribution gains.
delivered through a combination of our integrated
2021 has again seen us deliver another strong
marketing campaigns, new flavours, extending our pack
performance across the USA with our long-standing
partners, the Ziyad brothers. Through excellent in-
market execution and strong marketing campaigns, we
delivered +21.6% sales growth versus the previous year.
Across all of our European territories, we again focused
on expanding new points of distribution for our core
products within key customers, which resulted in
us delivering market share gains and positive sales
momentum.
formats and a strong focus on market execution in a
number of our core markets. In Algeria, we launched
a new 2L pack format across our carbonates range.
This was aimed at capturing the take home/multi-serve
opportunity in the market and has been well received
by our customers and consumers across the country. In
Sudan, we launched a range of still products to extend
our portfolio in this market. We have invested in strong
marketing campaigns to drive consumer awareness and
the resulting sales performance has been positive.
The Middle East market has once again proved
extremely resilient, delivering +33.6% sales growth
versus 2020. This has been against tough market
conditions due to rising taxes and conflicts taking place
across the region.
Our long-standing (over 90 years) partner, Aujan Coca-
Cola Bottling Company (ACCBC), delivered another
outstanding marketing campaign during Ramadan. The
“Sweet Togetherness” campaign – which promoted the
introduction of a No Added Sugar product alongside
themes of togetherness, health, cooking and value for
money – was heavily focused on driving awareness via
online channels. The campaign was extremely popular
and reached 2.5 billion views on TikTok and 2.5m views
on YouTube.
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First International
Production with the new
branding- 30cl Vimto Original
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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 STRATEGIC FRAMEWORK
Our core purpose as a business is to ‘Make Life Taste
Better’ which our people live and breathe every day. We
want this purpose to inspire all the partners we work
with and the consumers across the globe who enjoy our
brands on a daily basis.
STRATEGY IN ACTION - GROWTH PILLARS
CORE PRODUCTS, CORE CUSTOMERS, CORE MARKETS.
Our core brands continue to be
loved by all our consumers and
customers and we will continue
to invest and drive growth in
these key areas. 2021 has again
shown how important our core
products are across our core
markets as demonstrated by the
strong growth delivered via our
excellent marketing campaigns
and in market execution.
RIGHT PRODUCTS, RIGHT PLACE, RIGHT TIME.
As we continue to expand our range of products and
portfolios, we have focused on driving new points of
distribution within new channels and new geographies. We
have also through our enhanced operational excellence
programme focused on ensuring we drive strong customer
service and product availability to ensure our consumers
can enjoy our products whenever they desire one.
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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
INNOVATION AND ACQUISITION.
MAKING LIFE TASTE BETTER FOR EVERYONE.
I am very proud that this year we are also publishing our first standalone Happier Future Report visit
www.nicholsplc.co.uk/happier-future which outlines the Nichols vision for a Happier Future.
Core to our vision is a long held belief that Everyone Matters, with a focus on the wellbeing of our people and our
communities, particularly supporting the people in those communities who need it most.
Fundamental to creating our Happier Future is to have Products that we are Proud of – from helping our consumers
to make healthier hydration choices, to having sustainable packaging solutions and ensuring that we source our
ingredients and materials responsibly.
All businesses have an important responsibility to tackle the global climate crisis and at Nichols, we are serious about
Owning Our Climate Impact and are taking the right actions to reduce our own direct emissions and working closely
with the partners across our UK in the first instance, to reduce our impact throughout our supply chain.
Summary:
As we focus on 2022, I have no doubt that we will continue to operate in a challenging and changing environment
that will continue for a sustained period. Inflationary headwinds are going to be a key threat which we will aim
to mitigate through savings realised as part of our operational change programme and the implementation of
appropriate pricing strategies.
Over many years, soft drinks has proven to be a highly resilient category which has again been evident in 2021.
I feel confident that given our high brand equity, diverse business model, strengthened balance sheet, clear ESG
commitments and exceptional people, we can continue to achieve our long-term strategic objectives and deliver
Driving growth through innovation and acquisition will continue to be at the heart of our long-term growth strategy.
continued profitable growth.
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. Using consumer and market insights to understand the long-term trends, will be crucial in
ensuring we carefully plan the evolution of our business growth.
Andrew Milne
Chief Executive Officer
1 March 2022
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OUR HAPPIER
FUTURE REPORT
EVERYONE
MATTERS
INTRODUCTION
Consumers don’t just buy our drinks, they buy our
We’ve evolved our Happier Future strategy to focus on
At Nichols, we want to ensure everyone is looked after, from our colleagues to those in our local communities. Our
approach is led by our core values, with a focus on putting our people first and giving back to our communities.
values. Our Happier Future framework sets out our
three core pillars, which we report against to measure
“Everyone Matters” is core to our Happier Future strategy and fundamental to our values at Nichols; we want to
approach to doing business in the right way, for our
our progress each year:
consumers, customers, partners, teams and the world
around us.
• Everyone Matters
• Products we’re Proud of
• Owning our Climate Impact
“make life taste better” for everyone. The primary consumers of our products are young people, and we want to
support them with more than just refreshment. We are committed to improving the lives of those young people who
need it most – through raising aspirations by providing opportunities to develop their skills and careers.
The pandemic continues to have a significant impact on our business and our ways of working. In 2021 the health
and safety of our people, partners and communities has remained a priority for the business.
HIGHLIGHTS THIS YEAR INCLUDE:
Putting our People first
Giving back to our Communities
• Focus on wellbeing – resilience training offered to all
• Day to Make A Difference – our employees
members of staff
volunteered in their local communities across the UK
• Regular Covid Wellbeing check-ins for employees held
• £20,000 invested in Waves for Change’s accelerator
over the year
programme to expand surf therapy to more children
• Launch of our first Inclusion and Diversity policy in
across Africa
September 2021
• Long-term supporter of Warrington Youth Club (WYC)
• #ThisIsMe – employees from across the business
• Sponsorship of Salford City FC Development Teams
volunteered to share their stories, celebrating the
diversity and difference we have in our business
FOCUS FOR THE FUTURE:
Putting our People first
Giving back to our Communities
• Our employee engagement survey in 2022 provides
• Pledge to improve the future of over 100 young
another opportunity to listen to our people and take
people in our local communities by 2025 by raising
action where appropriate to ensure life continues to
aspirations through skills development and by
taste great working at Nichols
providing career development opportunities
• Develop our three Inclusion & Diversity priorities,
• Continue to support further rollout of the Wave
including establishing two communities, Female
Accelerator Project and surf therapy internationally
Leaders Network and LGBTQ Resource Group, to
inform and drive an inclusive culture
• Using data and insights from employee engagement
to shape strategic approach to Inclusion & Diversity
• Embedding Day to Make a Difference into annual
employee volunteering programme
This year, we’ve also published our first standalone
deliver a Happier Future for all stakeholders. To read
Happier Future report, which goes into greater detail
our Happier Future Report, visit
about our business principles and commitments to
www.nicholsplc.co.uk/happier-future
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OUR PEOPLE
Our people are the foundation of our business, and it’s
thanks to their continued motivation to find a better way
facilities and training. Our manufacturing operation at
Ross-on-Wye continues to demonstrate its strong safety
culture, evidenced through the annual audit processes.
that we have had a successful year.
For office-based employees we know that remote
2021 has been another year of continued and sustained
challenges presented by the ongoing pandemic. The
uncertainty around coronavirus throughout the year
and various lockdowns, isolation periods and sickness,
working over the pandemic has been challenging. In line
with government guidance, we have been encouraging
people to return to their normal workplace to increase
productivity, collaboration and wellbeing.
have all been draining experiences for many of our
Our focus on our people’s mental wellbeing continued
employees. We fully recognise that these challenges
in 2021 through regular one-to-one discussions and
have extended well beyond the workplace, such as
our performance & development process. In addition,
S T R A T E G I C R E P O R T
INCLUSION & DIVERSITY
We are committed to being an inclusive employer and are learning what this means
every day.
Whilst our people tell us that Nichols plc is a great place to work, we know we can do
more. We’ve been around long enough to know that we cannot create value without
people feeling valued, and that’s why we are committed to ensuring every employee
feels included and can bring their whole self to work and feel positive about their
remote working, home schooling and a reduction in
we offered our employees and people managers the
contributions.
ability to collaborate, all of which have had an impact on
opportunity to attend resilience training.
We recognise that there are many facets that make up who we are such as thinking
our people’s resilience over time.
Our internal Wellbeing Hub is a holistic access point
and processing styles, nationality, ethnicity, gender, sexuality and life experiences.
Therefore, finding new ways to bring our people
for the various wellbeing resources that we provide.
together has been an important part of how we have
We offer 24/7 helplines for counselling, medical
operated this year.
STAR AWARDS
appointments and legal, financial and support, as well
as 24-hour access to GP services and specific helplines
for supporting managers with their roles. Through the
We strongly believe in encouraging recognition for
My Healthy Advantage Wellbeing App, employees have
the fantastic work our employees do, and our local
access to a range of personalised wellbeing tools.
Star Awards are designed to share and celebrate our
people’s successes. During the year these are nominated
EMPLOYEE SURVEY
by peers within each function of our business, and in
Our latest wellbeing check in survey took place in July
February 2021 we held an annual awards ceremony to
2021.
celebrate the exceptional contributions, achievements
and commitments of our employees. There were 42
winners of the Local Star Awards from across our
business and 5 ultimate winners of the Annual Star
Awards.
The highlights of the survey demonstrate the
consistency of how our employees have felt throughout
the pandemic in terms of how the business has
communicated with them, prioritised their own and
their families’ wellbeing and taken all steps to protect
Nomination categories included:
their health, safety and wellbeing:
A priority is to build more diverse teams to more accurately reflect our
consumers, customers and partners, increasing wider representation
within our workforce.
Developing our talent and providing all our employees with opportunities
for growth is essential to our success. We know that we are at our best
when we bring together our different life experiences, ways of thinking
and individuality, and by empowering our people to bring their whole
self to work, we unlock the valuable diversity of thought, backgrounds,
experiences and identities. This has been a focus for us through
our talent acquisition strategy and while some progress has been
made, we recognise that to make a substantive change, we need
to adopt an approach that focuses on emerging talent.
Given the above, in 2021 we continued to build towards an
Inclusion and Diversity Strategy, which will be formalised
during 2022.
Our first Inclusion and Diversity policy was approved by
• Bleeds Vimto Award for always demonstrating Vimto
• 97% of employees felt the business cared about their
the Board in September 2021.
values
health, safety and wellbeing
• Unsung Hero Award for delivering great things,
• 94% felt supported and respected by their colleagues
despite challenges and without seeking recognition
and managers
• Smashes it Out of the Park Award for significant
• 96% felt the business has put employee health and
achievement
wellbeing first in making decisions about the risk of
• Team of the Year Award as recognised by the Senior
COVID-19
Leadership Team
• 98% felt that communication from the business has
• 1908 Award for individual outstanding contribution
been open and honest
and impact as recognised by the Senior Leadership
• 65% felt confident about working from their ‘normal’
Team
WELLBEING
We are committed to providing 360° support to our
employees to protect their mental, physical and financial
wellbeing across all our different working environments.
In 2021 our dedicated health and safety team continued
to work across all workplaces to ensure physical
workplace, which is an overall increase from previous
surveys
• A consideration that is top of mind for the business
is how the pandemic has generated an increase in
work for many employees. This was reflected in
the 64% of employees who felt their workload was
reasonable
safety in the workplace, and a focus on continuous
Our next full engagement survey will be held in 2022,
improvement across our Out of Home Depots in both
and the results included in the 2022 Annual Report.
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#ThisIsMe
#ThisIsMe is a new initiative from 2021 aimed
at bringing to life the brilliant individuality and
difference that makes up Nichols. We are proud
of the diversity that exists within our business,
and we wanted to find out more about what
makes us, us!
This year, through #ThisIsMe we
encouraged employees to “find their
different” and share their different
experiences and perspectives on life,
love, family, faith… and everything in
between. Our employees jumped
in and shared their stories with
the rest of the team.
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GENDER PAY
GAP REPORT
NICHOLS PLC IS PLEASED TO PRESENT ITS GENDER
PAY GAP REPORTING RESULTS AS OF 5 APRIL 2021
EMPLOYEES
SPLIT BY GENDER
The 2021 split remains consistent with 2020 levels.
During the pandemic and in line with the general market,
talent acquisition across has proven challenging in some
functions in terms of the external talent pools available
for certain skills. We are pleased that we achieved close
to an equal split of new hires during 2021.
This continues to be a key area of focus for the business
and we are seeking to identify new ways to bring in
more female talent in order to make a substantive
change to this split over the coming years. We have a
large employee group within our Out of Home (OoH)
30%
operations function, with males making up a significant
proportion.
This reflects the external talent pool for these roles in the
market.
70%
2021 DATA FOR
PROPORTION
OF MALES
AND FEMALES
WITHIN THE SLT
& MANAGERS
MALE
FEMALE
50
40
30
20
10
0
SLT
Managers
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.
Therefore, data shows those employees not eligible
for a bonus in 2021 due to their start date.
MALE
FEMALE
97%
ELIGIBLE
PROPORTION OF MALES & FEMALES IN EACH PAY
QUARTILE & WITHIN SLT AND MANAGERS
92%
ELIGIBLE
MEAN/MEDIAN PAY GAP
VARIANCE IN MALE PAY TO
FEMALE PAY
BONUS*
MEAN
15%
MEDIAN
0%
2021
BOTTOM
30% 70%
SECOND
22% 78%
THIRD
36% 64%
TOP
29% 71%
2021 saw parity in the median bonus for males and
females for the first time since reporting. The mean
bonus saw a significant swing towards males, explained
by the succession changes in the Executive structure and
the changes to LTIP rewards at the Senior Leadership
Team (SLT) level. For these same reasons we saw a
swing towards males on mean pay, whilst median pay
remained higher for females and saw a further swing
from 2020, in part attributed to a continued higher
proportion of female representation in the top two pay
quartiles than within the male population.
MALE
FEMALE
*Variance in male pay to female pay.
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HOURLY PAY*
7%
MEAN
MEDIAN
10%
2020
BOTTOM
31% 69%
SECOND
29% 71%
THIRD
35% 65%
TOP
29% 71%
E
L
A
M
E
F
E
L
A
M
The proportion of males and females in each pay
proportions in each quartile as described above.
quartile continues to reflect the workforce and remains
Changes in personnel and Executive structure has
consistent with 2020.
Good progress has been made in developing our female
talent particularly in our leadership pipeline, with a
longer term plan to realise a more balanced gender split
across our workforce to see a substantive change to the
resulted in a small shift in the gender balance towards
males. Encouragingly, in our management structure
there has been an increase in the number of female
managers.
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COMMUNITIES
We believe that every young person matters, and yet in
today’s society access to opportunities is not equal. We
want to offer a leg up to those who need it most in our
local communities. These values are at the heart of our
Everyone Matters strategy.
We are committed to providing support to those who
need it most to help them achieve their full potential,
and to foster social mobility in our local communities. In
2021, we continued to support Warrington Youth Club
with our patronage and to support Salford City FC’s
Development Teams.
Going forward, we pledge to improve the future of over
100 young people in our local communities by 2025,
raising aspirations through skills development and by
providing career development opportunities.
people build protective relationships, identify their
emotions, learn to self soothe and help them build a
positive vision of their future. The programme supports
approximately 1800 children participants, at-risk
children referred to W4C’s ten-month mental health
programme.
We support W4C’s mentors by providing essential
resources for the programme such as transport, surfing
equipment and access to psychiatric support. During
the pandemic, Waves for Change adapted to become an
online service, providing tablets and smartphones, and
distributing food parcels and vouchers.
In 2021 we continued to support The Wave Alliance,
an accelerator-type project through which W4C’s surf
therapy is achieving global scale and impact. W4C
provide training and support to partner organisations
who open their own surf therapy programmes in their
For our local communities in the UK, during 2021, we
respective countries. W4C equip as many partners with
conducted a research project in collaboration with Social
the knowledge and essential equipment they need to
Mobility Pledge to enable us to better understand where
carry out their surf therapy. This includes coordinating
the specific social mobility challenges lie in our local
research, programme design, and staff training. The
communities in the UK. We are now using this research
aim is for these local partners to then grow their own
to devise a comprehensive three-year plan to deliver
evidence-based surf therapy programmes across Africa
on our pledge and ensure we are delivering the right
and globally.
support, where it is needed most.
WAVES FOR CHANGE
Our commitment to providing opportunities for young
people extends to our international business with our
on-going support for the Waves for Change (W4C)
Initiative.
In 2021 we contributed a total of £20,000 to supporting
the growth of the Wave Alliance, programme setup and
training. In addition, rash vests were shipped out to the
different Wave Alliance Programmes along with branded
Cape, South Africa, and take them to the surf therapy
Since 2009, we have supported W4C, a non-profit
programmes.
organisation that offers Surf Therapy programmes to
children from disadvantaged backgrounds, working in
DAY TO MAKE A DIFFERENCE
South Africa, Liberia and Sierra Leone, with a total of 24
We are proud of the impact that our employees have
partners across ten different countries.
Surf Therapy combines the positive benefits of surfing
and physical activity with activities that help young
on their communities, and through our Day to Make a
Difference programme we offer our employees time to
volunteer locally or with our charitable partners. In 2021
surf boards, and Nichols funded the re-branding of the
• Over £1000 raised supporting MacMillan
transport used to collect children from towns in Western
Coffee Mornings
our employees again volunteered across the UK, taking the
time to give back to their local communities.
Examples included:
• 96 bags of rubbish collected and a total of 150 miles
walked during beach clean-up projects in Formby, Ty
Mawr, Tynemouth and Weston-Super-Mare
• Gardening project in Shotton to create an outdoor
education centre to provide health and wellbeing
activities to members of the community
• Volunteering and fence building with young
people from Warrington Youth Club at
Children’s Adventure Farm Trust
• Building a Community Garden for
Manchester Urban Diggers
• Charity shop sorting at
Willowbrook Hospice
• Painting the Community
Centre at St Helen’s YMCA
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PRODUCTS
WE’RE PROUD OF
We’re passionate about making products consumers love - it’s at the heart of what we do. We recognise that
consumer needs are evolving, not least the importance they place on buying products from responsible businesses.
What this means for us is developing products that allow consumers to make healthier choices and continuing to
challenge ourselves to find sustainable solutions to our packaging use.
HIGHLIGHTS THIS YEAR INCLUDE:
Healthier Hydration
Sustainable Packaging
• Our sugar reduction strategy saw us remove 597
• Continued commitment to improving UK waste
tonnes of sugar from our UKP products, an
collection and recycling with all Packaging Recovery
8% decrease since 2020
Notes directed to the UK
brand sales and 62% of squash sales. Calories per litre in squash have reduced by 25%
compared to 2015. Even with increased volume, this has led to an annual saving of
350 tonnes of sugar in squash versus 2020.
In Carbonates, strong progress has been made on a 5-year basis, with NAS now
accounting for 33.6% of sales versus 20.3% in 2015. Whilst in 2021, sugar usage
fell by 281 tonnes, due to the impact of the COVID pandemic, coupled with
availability of products being limited due to CO2 shortages, we saw a yoy
• Vimto squash relaunched in the UK with vitamin
• Focus on packaging innovation in 2021, with recycled
decline in % NAS sales (from 44% in 2020).
fortification to provide greater health benefits
polyethylene tetraphyte (rPET) trialled in all SKUs and
trials completed on low density polyethylene (LDPE)
case shrinks and pallet wraps to incorporate a
minimum of 30% Post-consumer Waste (PCW)
FOCUS FOR THE FUTURE:
Healthier Hydration
Sustainable Packaging
• We will be 100% HFSS Compliant on our owned
•
Implementing our roadmap to achieve our
portfolio ahead of the introduction of legislation in
commitment of 100% rPET in the UK packaged
October 2022
portfolio by 2025, moving to 51% rPET in 2022
• All UK frozen slush products will be No Added Sugar
from 2022
• We plan to continue our strategy to better meet
emerging consumer needs in healthier hydration
through renovation and innovation
HEALTHIER HYDRATION
Sugar Reduction
Providing our consumers with products that enable
In 2021 we continued to reduce the sugar content across
them to make heathier choices is part of our DNA. Our
our product portfolio both in the UK and Internationally.
continued commitment here has been to evolve our
All our products in the UK remain exempt from the Soft
existing product ranges and develop new products to
Drinks Industry Levy (SDIL), with 99% of our UK ranges
better meet evolving consumer needs. In 2021 we are
now low or no added sugar (NAS). All products in our
delighted to share the following achievements:
innovation pipeline for both UK Packaged and OoH will
be low or NAS.
In 2021 sugar usage* across our UK Packaged portfolio
fell by 597 tonnes, with a saving of 9,346m calories.
Since 2015, our sugar usage has reduced by 36%, while
our volume in litres has grown by 30%. No Added Sugar
(NAS) variants now account for 49% of total Vimto
In our Out of Home route to market, we are pleased to have reduced
sugar content* across our own postmix and frozen brands by 16%
versus 2020. From 2022, all UK Frozen slush products will be NAS.
This focus extends to our international business, where we continue
to work closely with international partners to explore ways to
accelerate their uptake of lower sugar recipes. We’ve reduced
sugar levels in our carbonated products in a number of markets
across Africa, including a 20% sugar reduction in products
locally produced in Algeria. In addition, our longstanding
partner in the Middle East, Aujan Coca-Cola (ACCBC)
launched their first NAS Vimto Cordial and Still product and
featured the NAS cordial in the celebrated 2021 Ramadan
campaign.
*Per litre of product
Added Nutrients
2021 saw a fantastic achievement as we fortified
our range with added Vitamins C&D**, bringing
additional health benefits to our consumers.
Fortification was introduced across 100%
of our core Vimto squash range and
represented 45% of our total UK Packaged
portfolio. We plan to continue our
strategy to better meet emerging
consumer needs in healthier hydration
through innovation.
**Vitamin C&D is in the following Vimto squash
products: Vimto Original, Vimto No Added
Sugar, Vimto Orange, Strawberry & Lime,
Vimto Mango, Strawberry & Pineapple
and Winter Warmer. All flavours contain
Vitamin D
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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
SUSTAINABLE PACKAGING
Packaging strategy
OoH
We take a responsible and practical approach to how
As the UK leader for frozen drinks, we have an
packaging is used throughout our organisation and are
opportunity to define a sustainable future for the sector.
committed to working with our partners and the wider
We embrace this opportunity and are actively exploring
industry to promote sustainable options and encourage
options that will deliver long-term sustainability by
responsible consumer behaviour.
minimising both waste and emissions.
UK Packaged
We challenge the use of packaging across our
operations and remove as much as we can wherever
possible. Since 2019, across our UK Packaged portfolio
The packaging strategy for our OoH business has
continued to focus on two core areas: the cups in which
we serve our frozen drinks and the materials we use to
protect our post-mix products for delivery.
we have successfully removed over 120 tonnes of
Our frozen business uses 100% recyclable plastic cups
plastic, a 9.2% reduction, as well as 17 tonnes of
and paper cups which unfortunately due to their plastic
aluminium, a 23.6% reduction. This was largely driven
lining aren’t currently widely recyclable, largely due to
by reducing the material usage of our bottles and cans,
the availability of commercialised technology. Beyond
with zero compromise to the integrity of our packaging
our cups, we have made a full transition to paper straws.
quality. In 2021 we focused on trialling rPET in all Nichols
SKUs. In addition, trials have been completed on the
LDPE case shrinks and pallet wraps to incorporate at
least 30% PCW.
We’re now focused on developing fully recyclable Bag
in Box (BiB) solutions with our suppliers, as well as
removing the plastic shrink from our BiB formats as
we’ve already successfully done so with our Juice and
Throughout 2021 we made further progress on
Frozen Slush ranges.
increasing the use of recycled PET in our packaging.
We have set out a roadmap to achieving 100% rPET
RESPONSIBLY SOURCED
in our UK packaged portfolio by 2025, with 51% rPET
The unique flavour of our products begins with quality
by the end of 2022. To achieve this, we are committed
ingredients sourced from trusted and responsible
to sourcing rPET from the UK or Europe, as opposed
suppliers. We source ingredients and materials primarily
to high emission imports from Asia or further afield.
from suppliers across Europe, many of whom we have
Although this means we’re on a slower journey to reach
been working with for decades. As a result of these
our target, we’re confident this is the most responsible
longstanding partnerships, we have transparency of
option.
product quality, labour protections and environmental
During the year we continued to guarantee all packaging
practices.
used or supplied on our UK packaged products is 100%
We are developing a comprehensive strategy to ensure
recyclable, and the shrink film wrap used on our cordials
partner compliance with sustainable practices and
contains 50% post-consumer recycled waste, which
ethical standards throughout our supply chains.
would otherwise have ended up in landfill.
Ensuring we have the right infrastructure in place
to recycle and re-use plastic will increase availability
of recyclable content in the country and is the most
sustainable solution going forward. It requires
collaboration with manufacturers, retailers, government
bodies and end consumers. With the recent
confirmation that the Deposit Return Scheme (DRS)
Scotland will go ahead in 2023, we are fully involved in
supporting its implementation, working closely with the
British Soft Drinks Association (BSDA). This places the
industry in a strong position for the expected rollout of
the DRS across the rest of the UK.
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our starslush trailer at
thorpe park
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OWNING OUR
CLIMATE IMPACT
The climate crisis is the greatest issue facing society today, and as a responsible business we have an important role
to play in owning our impact. By taking science-based actions to reduce our total emissions and by understanding
and reviewing our operational footprint and supply chain, we are able to ensure we are conducting our business in
the most sustainable way.
HIGHLIGHTS THIS YEAR INCLUDE:
• 43% decrease in normalised gross emissions (tCO2e/
• Collaborated with UK co-packers to calculate
KL intensity ratio) in UK Group operations versus
emissions data and identify opportunities for
2020. On a like-for-like operational basis and with
improvement
consideration to normalised production volumes,
2021 net emissions across UK Group operations are
20% lower versus 2019
• Switch to green energy tariffs at our sites, backed
by Renewable Energy Guarantees of Origin
certificates, resulting in a reduction in net emissions
of 199 tCO2e
FOCUS FOR THE FUTURE:
•
Implemented strategic projects that will lead to
further reductions of both gross and net carbon
emissions
• Develop the full roadmap to net zero for Scope
• Working with our partners, to understand our Scope
1 and 2
3 impact
• Continue with our implementation plan to deliver
• Develop our Water Strategy focusing on water use
on our commitment to reduce our absolute Scope 1
and reduction in our end products, manufacturing
& Scope 2 GHG emissions by 25% by 2025 including
processes and ingredient growing
the decarbonisation of our OoH fleet
LAUREL HOUSE HEAD OFFICE
and carbon, but a significantly increased production
the retirement of Renewable Gas Guarantees of
output, normalised gross emissions decreased by
Origin certificates. The result of these green tariffs is
43% from 244 tCO2e/kL to 138 tCO2e/kL drinks
a reduction of net emissions of 199 tCO2e, or 17% of
produced. On a like-for-like operational basis and with
the gross emissions. Therefore, the 4,745 MWh energy
consideration to normalised production volumes,
consumed resulted in net carbon emissions of 1,002
2021 net emissions are 20% lower versus 2019,
tCO2e, corresponding to a 50% reduction in normalised
demonstrating the positive progress we’re making on
net emissions in UK Group operations when compared
our journey to Net Zero.
to 2020, reducing from 229 tCO2e/ML to 115 tCO2e/ML.
Due to our outsourced business model, most of the
Nichols has further increased our focus on energy-
emissions from the manufacture and delivery of our
saving measures in the last year. At our Ross-on-Wye
products are not created by our business directly but
factory, we have continued to make improvements
through our partners across our supply chain. The
to lighting systems through replacing old units
first step to collaboratively reducing these emissions
with high-efficiency LED lighting. Additionally, we
is measuring them, so we are implementing clauses in
have removed a high energy consuming plastic film
our contracts for key members of our supply chain that
wrapping machine from use to further optimise our
require them to report annually on their emissions,
electricity consumption. At our Laurel House Head
present a credible path to net zero by 2050, and
Office, we have recently installed solar panels and an
demonstrate annual reductions in greenhouse gases.
air source heat pump to produce hot water, removing
We have already calculated the carbon emissions of our
the need for a gas boiler. Furthermore, during 2021
UK co-packers and from 2022 we will focus on sourcing
employee engagement topics included increasing the
the necessary information from our partners to get full
understanding of our carbon footprint at work and
clarity of our Scope 3 emissions.
encouraging simple steps to reduce our footprint.
DECARBONISING OUR SUPPLY CHAIN AND
Therefore, the following report has been prepared in
Many of our international partners need to build the
EMISSIONS REDUCTION
conjunction with Carbon Architecture who we have been
capacity to measure emissions, and we will be working
We have commenced the work to replace our OoH
transport fleet with electric vehicles.
Nichols has a strong track record of carbon reduction –
20% reduction achieved from 2019 to 2021 and we are
developing our plan to ensure our transition to net zero
for Scope 1&2 emissions. As part of our science-based
working with since 2016 to provide independent analysis
with them to support this. Nichols will continue to
of our carbon footprint across our UK Group operations.
assess climate-related risks going forward and adjust
We have selected tCO2e/ kL as our SECR ratio as we feel
our strategy as the studies we are undertaking into our
this is most aligned to the activities of the Group.
supply chain emissions yield a greater understanding of
approach, we are keen to ensure the validation of our
Our business operations were significantly impacted
potential exposure.
plans.
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
2021 financial year. This measurement and reporting
of environmental performance will drive direct benefits
for the business such as lower energy 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.
48
in 2020 by the Covid-19 pandemic, which resulted
in a 59% decrease in production volumes at our
In 2021, Nichols produced 100% green electricity for
our Ross-on-Wye factory and Laurel House Head
Ross-on-Wye factory compared to 2019. This in turn
Office. At least 76% green electricity was consumed
reduced our energy usage and carbon emission rates.
at our depots. The purchase of green electricity
In 2021, Nichols’ production rebounded with a 73%
through tariffs backed by Renewable Energy
increase in production volume. Nichols’ total Scope 1
& Scope 2 energy consumption 2021 was 4,745 MWh,
resulting in gross carbon emissions of 1,201 tCO2e.
This excludes Scope 3 emissions of our partners. These
figures correspond to a 1% decrease in total energy
consumption and a 2% decrease in gross emissions
compared to 2020. Due to the minimal change in energy
Guarantees of Origin certificates
covered 97% of all electricity
consumed in 2021. Additionally, at
two of our depots, Swindon and
Newcastle, 90% of the natural
gas consumed is purchased via
a green tariff, which involves
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
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)
Emissions from purchased electricity (scope 2)
Emissions from business travel in vehicles owned
or operated by 3rd parties (scope 3)
Total gross carbon emissions
Carbon reduction through green electricity tariff
Carbon reduction through green natural gas tariff
Total net carbon emissions
Units
kWh
kWh
kWh
kWh
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
Intensity ratio: Total gross emissions per 1m
litres of product
Intensity ratio: Total net emissions per 1m
litres of product
tCO2e/ML
tCO2e/ML
Current
reporting year
01/01/21 - 31/12/21
Comparison
reporting year
01/01/20 - 31/12/20
451,700
957,010
3,336,348
4,745,058
638,415
876,145
3,270,397
4,784,957
83
789
126
203
-
1,201
(196)
(3)
1,002
138
115
117
786
120
204
-
1,227
(74)
-
1,153
244
229
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-based records and travel expense data.
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
A program to install high-efficiency LED lighting, including proximity sensors where
appropriate, has continued within our Ross-on-Wye factory. This results in the optimisation of
our electricity use for lighting throughout the factory.
Secondly, a plastic film wrapping machine has been removed from production due to its high
energy intensity. The removal of this machine has reduced the consumption of electricity
associated with packaging our products.
Solar panels and an air source heat pump have been installed at our Laurel House head
office, reducing the consumption of natural gas for providing hot water for the office staff.
Finally, Nichols has continued a program of staff engagement which involves suggesting
practical ways in which they can reduce their carbon footprint at work, including simple
actions like turning off lights and equipment when not in use.
WATER
At Nichols we are all about maximising healthy
hydration, whilst respecting water use throughout our
product lifecycle. A large proportion of our products are
concentrates – from cordials to our postmix bag-in-box.
By concentrating our drinks, we reduce pressure on
local water resources at manufacturing sites, as well as
being an efficient logistics operation. Less trucks on the
road and ships at sea is one of the ways we can drive
lower emissions within our supply chain.
We recognise that, with both the need to keep reducing
emissions from water transport and the risk of
increased water scarcity in some of our markets, it is
more important than ever to ensure sustainable water
use. That’s why we will be developing our water strategy,
which will drive further efficiencies within our products,
manufacturing processes, and through our upwards
supply chain including sourcing of ingredients.
here are the purple
carrots that go into the
colouring we use
50
51
CASE
STUDIES
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
HEALTHIER HYDRATION
VIMTO: SHAKING UP THE SQUASH CATEGORY WITH VITAMIN FORTIFICATION
In April 2021, we were proud to relaunch the core Vimto squash range with added
nutrients, bringing additional health benefits to our consumers. The full range was
FEEL GOOD DRINKS IS A PURPOSE DRIVEN BRAND ON A
MISSION TO LEAD CHANGE FROM WITHIN THE DRINKS
INDUSTRY
fortified with vitamin D, with both vitamin C & D added to some products*, all without
Feel Good Drinks produce a sustainable, purpose-led
compromising the unmistakeable great taste of Vimto. At the same time, a brand
new Vimto flavour – Blackberry, Raspberry and Blueberry – was released.
As the No.2 Squash brand in the UK**, part of Vimto’s ambition is to reframe
range of fruitful sparkling waters made with 100% natural
ingredients; created using no artificial flavours, added sugar
or sweeteners and containing 15% real fruit juice.
the squash category celebrating both flavour and functional health benefits,
Feel Good drinks has a long term commitment to
providing consumers with additional reasons to shop the category and driving
sustainable incremental long-term growth.
The recent shift towards at home occasions and an increase in tap water
consumption, combined with guidance from Public Health England
endorsing a daily supplement of vitamin D***, particularly for children,
meant there was a genuine gap in the market for a new, healthier
squash option. Developed closely in-line with consumer research,
the new Blackberry, Raspberry and Blueberry variant performed
extremely well during consumer testing and taps into two key
sustainability and becoming a regenerative brand. In 2021
we completed the measurement of our carbon footprint
through scopes 1 – 3, working with an independent expert
we identified the brand emitted 203 tons of carbon in 2020*.
Following our findings we offset 487 tons of carbon; more
than twice our base line and we published our findings in the
‘Mission Possible’ report; whilst signing up to Net Zero target
of 2030 with a 16 point carbon mitigation plan aligned to UN
SDGs.
flavour trends – Blackberry and Blueberry, both with super fruit
Feel Good continues to give back through our 3% people and
credentials.
* Vitamin C&D is in the following Vimto squash products: Vimto Original, Vimto No
Added Sugar, Vimto Orange, Strawberry & Lime, Vimto Mango, Strawberry &
Pineapple and Winter Warmer. All flavours contain Vitamin D.
**Nielsen Value Sales, Total Coverage, 12 months to 1 January 2022
***Gov.co.uk - Nov 2020
planet fund and in 2021 we established a partnership with
the charity Project Seagrass. Project Seagrass focuses on
the active restoration of seagrass meadows across the UK
and works with partners globally to conserve and protect
these coastal marine ecosystems. In 2022 the relationship
with Project Seagrass will be accelerating through the
#youbuyweplant program; for every case of Feel Good we
sell we will be planting a seagrass seed; supporting Project
Seagrass’s work during the UN Decade of Ecosystem
Restoration to which they are a supporting partner.
Whilst we have a strong focus on the climate, we continue
to support community programs and we were excited
in 2021 to announce our partnership with The Wave in
Bristol. Feel Good is a supporting partner for the Waves
of change program; where we help young people realise
the benefits of the water and blue health. This program
will grow in 2022 and we are aiming to run courses
across 12 weeks throughout the year.
The Feel Good brand continues to encourage our
consumers to recycle and we will continue to work
with Every Can Counts at our events.
*scope 3 measured carbon up to the point of manufacture and excludes
warehousing and logistics
52
52
53
CHIEF
FINANCIAL
OFFICER’S
REPORT
Group Revenue
Adjusted Operating Profit7
Operating (Loss)/Profit
Adjusted Profit Before Tax (PBT)7
(Loss)/Profit Before Tax (PBT)
Adjusted PBT Margin7
PBT Margin
EBITDA8
Adjusted earnings per share (basic)7
(Loss)/Earnings Per Share (basic)
Cash and Cash Equivalents
Proposed Final Dividend
Full Year Dividend
Year ended
31 December 2021
£m
Year ended
31 December 2020
£m
144.3
21.9
(17.6)
21.8
(17.7)
15.1%
(12.2%)
23.7
46.15p
(60.04p)
56.7
13.3p
23.1p
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
Movement
+21.6%
+88.1%
(366.8%)
+87.9%
(370.0%)
+5.3ppts
(17.7ppts)
+44.1%
+80.6%
(556.9%)
+19.8%
+51.1%
(37.2%)
1 Source: Nielsen, Total Coverage 12 months to 1 January 2022
2 Source: Nielsen, Total Coverage 12 months to 1 January 2022 vs. 12 months to 4 January 2020
3 Excluding the impact of the Group’s marketing investment in the Middle East
4 Free Cash Flow is the net increase in cash and cash equivalents before acquisition funding and dividends
5 Cash Conversion is the Free Cash Flow/ Adjusted Profit After Tax
6 Dividend cover is adjusted basic earnings per share divided by the dividend per share
7 Excluding Exceptional items
8 EBITDA is the statutory profit before tax, interest, depreciation, and amortisation
55
R
E
F I C
F
L O
C I A
N
A
F F I N
H I E
C
RATTIGAN
FINANCIAL HEADLINES
• Vimto Brand value in the UK +6.3%1
• Continued strong cash performance, Free Cash Flow4
• Vimto squash outperformed the dilutes
+£17.5m (2020: £17.6m)
market by +10.4%1
• Cash Conversion5 at 103% (2020: 186%)
• OoH impairment review completed and strategic
review commenced
• Exceptional charge of £39.5m
• £36.2m of this attributable to non-cash
impairment of OoH Goodwill
• £0.6m operational review and
restructuring (cumulative £0.9m)
• £2.6m net liability relating to tax
and interest on historic
incentive schemes
• Final dividend of 13.3p
proposed, reflecting 2x cover6
• Vimto Brand value +13.2%2 since 2019
versus the wider soft drinks market of
+11.0%2
• Vimto Brand continues to progress internationally,
with revenue +21.0% (underlying3 +9.8%)
• Africa and Rest of World significantly ahead
• Underlying3 Middle East venues broadly flat (-2.0%)
• Out of Home (OoH) continues to recover from the
pandemic with revenues +77.4%
• Revenues -31.4% versus 2019, with Q4 improving run rates
versus pre-Omicron
• Fixed costs still weighing heavily on overall financial
performance
• Gross margin improvement to 45.2% (2020: 41.8%)
• Completion of Middle East marketing investment
• Significant volume recovery in OoH
54
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
REVENUE
77.4% versus 2020, when the OoH route to market was
costs associated with stock write off and under recovery
In 2021 the Group ran its highly successful ‘Find Your
Group revenues were £144.3m, an increase of 21.6%
compared to 2020 and, encouragingly, broadly in line
with 2019 levels.
severely impacted by closures due to the pandemic
seen in the previous year were not repeated (2021:
Different’ marketing campaign, investing an additional
and subsequent lockdowns. Revenues remain down by
£0.4m cost, 2020: £2.1m cost) and benefited margin
£1.9m. The campaign increased Vimto’s awareness with
31.4% versus 2019. We are encouraged that trade within
by £1.7m versus the prior year. The Group continued
new consumers, helping fuel the distribution expansion
the hospitality industry has begun to show growth and
to support its OoH customers with new for old stock
seen in the year and which is planned to continue into
Both the Still and Carbonates product categories have
return towards pre-Covid-19 levels, with Q4 in particular
following the reopening of outlets post the Q1 2021
2022.
recovered strongly in the period. Revenue of Still
seeing improving run rates pre the emergence of the
lockdown.
products increased by 10.2% to £72.4m (2020: £65.7m),
Omicron variant. However, the long-term impact of
now ahead of 2019 (£71.7m). Revenue from Carbonated
Covid-19 on the hospitality industry remains uncertain.
products increased 35.8% to £71.9m (2020: 53.0m; 2019:
As a result, and as previously announced, due to the
£75.3m).
The Group’s packaged routes to market delivered
another year of strong growth both in the UK and
internationally.
ongoing challenges in the OoH market, the Board has
carried out an impairment review into its OoH route
to market and will recognise an impairment charge of
£36.2m in the current year. In addition, the Board has
DISTRIBUTION EXPENSES
commenced a strategic review of the Group’s OoH route
During the year, the Group was prepared for and able
led to an additional £2.3m charge in the year.
Reinstatement of the Group’s Bonus and LTIP schemes
to mitigate a large proportion of raw material and
contract manufacturing inflation. However, in Q4 2021
significant inflationary pressures were experienced and
are expected to continue through 2022.
Restructuring through 2020 meant costs reduced by
£1.2m in the period; this was partly offset by an increase
in staff related travel and entertainment costs of £0.5m.
The detailed exercise, commenced in 2020, to trace and
verify assets held at the Group’s OoH customer outlets
Distribution expenses within the Group are those
completed in the period and fully utilised the provision
associated with the UK packaged route to market and
established in the prior period (£1.1m), resulting in a
The impact of movements in foreign exchange rates on
for OoH the distribution costs incurred from factory
positive year on year comparison. Strict OoH capital
revenue year-on-year was immaterial, at approximately
to depot. Final leg distribution costs within OoH are
allocation through 2020 and 2021 has meant the
£0.6m adverse.
reported within Administration costs.
Group’s depreciation charge has now peaked and is
UK packaged revenues improved by 8.5%, driven by
to market.
the performance of the Vimto & Levi Roots brands.
There was a particularly strong performance within
the Multiple and Discount Retailers, where revenues
increased by 7.0% (2020: increase of 9.5%), as
distribution points increased significantly over the
GROSS PROFIT
Distribution expenses totalled £9.1m (2020: £8.0m),
level in 2021 versus 2020.
pandemic period (2020 and 2021) and consumers
increasingly chose Vimto. Revenues across Convenience,
Delivered Wholesale and Cash and Carry recovered in
2021 following the severity of 2020’s lockdowns and
increased by 11.3% (2020: decrease of 10.9%).
Gross profit at £65.2m was £15.6m higher than 2020
(£49.6m) and 3.4 percentage points higher at 45.2%
(2020: 41.8%). Of this increase, £9.4m resulted from the
additional volumes delivered across all of the Group’s
routes to market in the period. The current gross margin
International revenues improved by 21.0%.
percentage is more aligned to the years immediately
Africa revenues improved 17.1% (2020: increase of
7.4%) with significant progress achieved across our
preceding the pandemic (2019: 47.6%, 2018: 45.7%,
2017: 45.7%).
African markets. Middle East revenues increased by
As noted previously the Group’s Middle East marketing
33.6% (2020: decrease of 36.8%) with in-market volumes
investment (reported as part of the Group’s revenue
performing resiliently through Ramadan despite
line) was, in agreement with our local partner,
the challenges posed from the introduction of the
completed during the year. £2.7m (2021: £0.8m
investment in the region (reported as part of the Group’s
improvement in gross profit was due to this change.
revenue line) was, in agreement with our local partner,
Customer price and mix has further contributed £1.8m
completed during the year. Underlying revenues were
to gross profit largely due to a return of revenues from
broadly flat, decreasing by 2.0% versus 2020. Our rest
the Group’s In-house and National OoH customers,
of world markets continued the momentum of the prior
effectively rebalancing the Group margins.
period with revenue growth of 14.2% (2020: increase of
17.3%), with the US and Europe continuing to perform
well, building on increased brand awareness generated
within the Middle East and Africa.
The Group was better placed in 2021 to plan for
Covid-19 disruption, following the restructuring at our
manufacturing site in Ross at the end of 2020 to more
effectively align labour and volumes, combined with a
Our OoH route to market continues to recover from
consistent approach from the UK Government in terms
the impact of the pandemic, with revenues up by
of the easing of lockdown restrictions. Consequently, the
Sweetened Beverage Tax in 2020. The Group’s marketing
investment, 2020: £3.5m investment) of the year-on-year
13.7%.
an increase of 14.4%, due to a combination of higher
Revaluation of working capital balances across the year
trading volumes across both of our UK routes to market
resulted in foreign exchange losses. In comparison with
and significant inflationary pressure experienced since
prior year, the year on year impact is £0.4m adverse
Q2 2021. In both routes to market, significant disruption
(2021: net loss £0.2m, 2020: net gain £0.2m).
was experienced through the summer and autumn
months due to driver shortages. The Group entered
EXCEPTIONAL COSTS
into a new 5-year distribution arrangement in H2 2021
The Group has incurred £39.5m of exceptional costs
that both builds significant additional capacity, given the
during the year (2020: £5.1m), £38.9m of which is non-
Group’s growth plans, and improves efficiency.
cash.
ADMINISTRATION EXPENSES
The impact of Covid-19 has resulted in a difficult period
Administration expenses, excluding exceptional items,
totalled £34.1m (2020: £30.0m), an increase of £4.1m or
of trade for OoH with many outlets being closed for
a prolonged period of time. Whilst trade within the
hospitality industry has begun to show growth and
return towards pre-Covid-19 levels, it is doing so at
Through the early pandemic, in 2020, management
a slower pace than previously forecast and is only
focused on reducing discretionary spend and realigning
forecast to fully return to pre-pandemic levels through
marketing investment. This resulted in significant cost
2022. Growth projections beyond 2022 are expected
reductions; no bonuses or LTIPs were accrued and
to be lower than previously estimated given that a
labour costs (recruitment etc.) were managed closely.
number of outlets are expected not to re-open and
The Group also benefited in 2020 from deferred
footfall is expected to be restricted for a prolonged
consideration credits of £1.3m following completion
period as staffing shortages and local restrictions/social
of the Noisy Drink Company North West Limited and
distancing is either mandated or occurs naturally, as was
Adrian Mecklenburgh Limited acquisitions.
experienced through 2021.
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
Whilst cost pressure is expected to be fully recovered
of the final outcome, including the Group’s additional
The Group invested £3.8m into Inventories during
December 2021, the Group recognised a surplus on
within OoH, the gross margin progression anticipated
tax liability, interest costs and amounts expected to be
the year to ensure security of customer service given
its UK defined benefit scheme of £5.3m (2020: surplus
previously is now not likely to be achieved without
recovered.
the volatility experienced in UK supply chains and to
£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
protect stock levels, given changes planned through
H1 2022 to the Group’s Dilutes contract manufacturing
arrangements.
With the agreement of Trustees, assets were transferred
from equities to reduce the overall value at risk (£10m
to £5m) during the year, securing the gains achieved
throughout this report.
The unwind of working capital experienced in 2020, that
over the last 2 years. Funding, assets versus liabilities, is
base, given the complexities of the current business
OPERATING LOSS/ADJUSTED OPERATING PROFIT
led to a cash conversion of 186% in that year, has largely
now at 108% versus 83% at the time of the last valuation
been protected. Cash conversion for the period was
(April 2020).
Adjusted operating profit at £21.9m was up £10.2m,
103%. The increase in Trade and other Receivables by
an 88.1% increase on prior year (2020: £11.7m). An
£7.0m (2020: decrease of £8.6m versus 2019) was more
operating loss of £17.6m (2020: £6.6m profit) is after
than offset by the Group’s increase in Trade and other
transformational change in terms of how the Group
services the trade and its wider customer base.
Overhead cost estimates have been reviewed and
increased to reflect both inflationary pressures and
the cost estimates required to serve the customer
environment and model. As a result, and in response
to this challenging climate, during 2022 the Board has
commenced a full strategic review into its OoH route to
market in terms of customer and product mix, as well
as ways to ensure appropriate margin and profitability
going forward.
operational supply chains. The project has progressed
LOSS BEFORE TAX/ADJUSTED PROFIT BEFORE TAX
senior management.
charging exceptional items of £39.5m (2020: £5.1m
charge) during the period. For reference adjusted
operating profit in 2019 was £32.4m.
As a result of the impairment review, management
have recognised an impairment charge of £36.2m in the
FINANCE COSTS
current year, impairing the entire Goodwill held.
Net finance costs of £0.1m (2020: £nil) were broadly in
In Q4 2020 the Group commenced a review of its UK
the line with the prior year.
steadily with significant change already implemented,
AND TAX RATE
including entering into new 5-year contract
manufacturing and distribution arrangements that both
build significant additional capacity, given the Group’s
growth plans, and improve efficiency. These specific
projects are expected to be completed through 2022,
with further foundation work progressing. As a result
of this work, the Group has incurred a further £0.6m
of costs (2020: £0.3m) in the year, with additional costs
expected in 2022.
Reported loss before tax was £17.7m (2020: £6.5m
profit). Adjusted profit before tax increased by 87.9%
to £21.8m (2020: £11.6m). The tax charge on adjusted
profit before tax for the period of £4.8m (2020: £2.2m)
represents an effective tax rate of 21.9% (2020: 18.7%).
The increase in effective tax rate is largely due to
deferred tax balances as at 31 December 2021 being
recognised at 25%, following an amendment to the UK
Corporation Tax rate being enacted during the year to
In previous annual reports, the Group reported a
increase the rate of tax from 19% to 25% with effect
contingent liability in respect of historic contracts with
from 1 April 2023.
some of its senior management relating to incentive
schemes which were designed to motivate, retain and
For reference profit before tax in 2019 was £32.4m.
engage those key employees. HMRC were of the view
BALANCE SHEET AND CASH AND CASH EQUIVALENTS
Payables, up by £7.1m (2020: decrease of £1.6m versus
2019) and Provisions increase of £4.2m.
The Group recorded a net £2.6m liability (recorded
within both Other Receivables and Provisions),
David Rattigan
representing the additional tax liability and interest
Chief Financial Officer
costs arising from the HMRC ruling into the treatment
1 March 2022
of the Group’s historic incentive schemes for some of its
The Group again delivered a strong Free Cash Flow of
£17.5m (2020: £17.6m). Cash and cash equivalents at
the end of the year were £56.7m (2020: £47.3m).
The Group has focused significantly on cash
management throughout the pandemic years of 2020
and 2021, with particular emphasis on balancing the
needs of its various stakeholders by working flexibly
with shareholders, staff, customers, and the UK
Government as events developed. At the same time,
the Board has remained focused on ensuring the Group
remains well positioned to deliver our long-term growth
plans.
EARNINGS PER SHARE
On an adjusted basis, diluted earnings per share (EPS)
that the arrangements should have been taxed as
employment income, which the Group and its advisors
had previously disputed. During the period a tribunal
The Group has continued to focus on the strength of its
was 46.09 pence (2020: 25.54p). Total adjusted EPS
balance sheet during the period.
increased to 46.15p pence (2020: 25.56p) with basic EPS
was convened to consider the dispute of the Group’s
As noted above, management have recognised an
at -60.04 pence (2020: 13.14p).
scheme as well as similar schemes operated by other
impairment charge of £36.2m during the period,
PENSIONS
companies. Subsequent to the year end, the tribunal
impairing the entire Goodwill held for the Group.
found that the arrangements should have been taxed
as employment income. Accordingly, as at 31 December
2021, the Group has recognised a net liability of £2.6m
in relation to this ruling, being a reasonable estimate
Strict OoH capital allocation through 2020 and 2021 has
meant that the Group’s investment in property, plant
and equipment reduced by £3.0m.
The Group operates two employee benefit plans, a
defined benefit plan that provides benefits based on
final salary, which is now closed to new members,
and a defined contribution group personal plan. At 31
58
59
RISK
MANAGEMENT
S T R A T E G I C R E P O R T
Risk score movement key
Increased Decreased No change
PRINCIPAL RISKS AND UNCERTAINTIES
The primary aim of the Group’s risk management
working environment of both home and office based
LOSS OF SYSTEM AVAILABILITY
process is to assist the business in meeting its strategic
working in order to limit interaction where possible, in
Impact
Mitigation
Development
and operational objectives.
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
line with government guidelines. Whilst the effects of
the pandemic on the Group’s financial results are still
ongoing, they are still not believed to be long-term and
the Group’s strategy has remained unchanged.
In common with many other
Nichols operates several
2021 has seen the introduction of
businesses, we are highly
preventative systems and controls
a new Data Centre via an external
dependent on the availability of IT
to reduce the risk. In addition, we
partner. This data centre is hosted
systems. The supply chain function
have a robust disaster recovery
offsite, in addition to what we
and emerging risks are regularly reviewed using both
The following represents the principal risks identified
specifically is heavily reliant on
plan, including the use of third-party
already host on premise. The
this top down and bottom up approach. The Board has
by the Board. As previously stated, there are other risks
technology. Accordingly, disruption
professional providers to host our
offsite environment hosts our
created a Risk Management Team (RMT) which regularly
affecting the business, but with a lower risk score and
to IT systems could limit availability
systems and data.
meets to discuss, monitor and oversee the risks and
impact. The Senior Leadership Team regularly reviews
controls within the Group. Updates and progress from
the output from the RMT and the Board has confidence
the RMT are presented back to the Audit Committee
that the current risk management process highlights
regularly which monitors the effectiveness of the
any relevant changes in both current and emerging risks
process.
that may be strategically important.
of products and consequently
impact sales.
THREAT OF CYBER-ATTACK
business critical applications in a
dual mirrored set-up, which would
restore systems within 2 hours in
the event of a major outage.
The effects of Covid-19 continued to impact the Out of
Home route to market as we started the year in another
lockdown. The key risks highlighted by the Board and
the resultant measures put in place have continued
throughout 2021. The Group has operated a hybrid
Risk management key
Short term
Medium term
Long term
60
Impact
Mitigation
Development
The threat of cyber attack is an ever
Nichols operates several
The Group has launched multiple
present and indeed, ever growing
preventative systems and controls,
upgrades to its cyber security
risk in today’s global business
including regular penetration
throughout 2021. These include
environment. Disruption to IT
testing, to reduce the risk. In
but are not limited to encryption
systems could limit availability of
addition, we have a robust disaster
developments, multifactor
products and consequently reduce
recovery plan including the use of
authentication and a default
sales.
third-party professional providers to
deployment strategy of security
host our systems and data.
measures.
The Group has also initiated a
relationship with a third-party
supplier providing 24/7 monitoring
and reporting of all security events.
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.
61
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
Good progress and positive steps
office locations, a large field-based
an effective Health & Safety
have been made in 2021, with a
team and one manufacturing site. A
Management system, comprising
clear shift in our health and safety
health and safety (H&S) incident, for
policies and procedures to
environment towards a proactive
example in a warehouse or on the
support all functions. The review
safety culture.
road, could result in serious injury
and delivery of the health and
or death or investigation by the
safety management system is
relevant authority.
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
supported by a cross functional
committee, chaired by our Group
H&S Manager. One of the key roles
for the committee is to ensure the
embedding and effectiveness of our
policies and procedures across the
Group.
rates of transmissibility connected
All operating functions within the
with new variants of the virus.
Nichols Group have been Covid-19
The Health & Safety team has
continued to grow and as a result
new Institution of Occupational
Safety and Health (IOSH) ‘Managing
safely’ leadership training is being
rolled out across the business to
all managers, which will continue
throughout 2022.
risk assessed, with each of our
locations maintaining a certified
‘Covid Secure’ status throughout the
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
The Group has continued to
and behaviours in relation to the
market and category trends and
innovate, extending our owned and
purchase and consumption of soft
consumer attitudes and behaviours
licensed brands into new flavours
drinks are constantly evolving.
to ensure our continued relevance
and consumption occasions in the
Failure to anticipate and respond
to consumers. This insight is the
UK and Internationally.
to these changes and adapt our
foundation for our Portfolio, Brand
portfolio through renovation and
and Innovation Strategies.
The Innovation Steering Committee
has continued to govern and
innovation, may result in a loss of
volume or impede our ability to
deliver growth.
We have a rolling 3-year pipeline of
oversee these key strategic projects
Innovation and Renovation across
including the addition of Slush
both new and existing brands.
Puppie to our brand and product
portfolio.
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
The Group continues to regularly
brand could reduce consumer
of originality, authenticity and ethics
monitor and track media coverage
demand for the Group’s products.
which result in a strong brand.
relating to the Group and its Brands.
In addition, the update of the
Incident Management Process has
reviewed and refined the actions
we would take in the event of any
adverse publicity.
PRODUCT QUALITY ISSUES
Impact
Mitigation
Development
Inconsistent quality or
The business demands strict quality
The Group’s Incident Management
contamination of any products
controls from all manufacturers
Process has been reviewed and
LOSS OF A MAJOR CUSTOMER ACCOUNT OR KEY PARTNER
Impact
Mitigation
Development
across the Group’s portfolio reduce
and suppliers of our materials
refined throughout 2021. In
Loss of a major customer or key
We are dedicated to maintaining
We have been reviewing our key
demand within the market. This
and finished goods. We seek
addition, an unannounced product
partner could limit availability of our
long-term relationships with all
partnerships to evolve contingency
could have significant impact on the
independent validation of these
recall test was completed which
products and consequently impact
our customers and key partners.
plans and business continuity
Group’s financial performance and
controls via Global Food Safety
was deemed a real success and
sales.
However, the Group’s diverse
planning.
cause reputational damage.
Initiative (GFSI) approved
also used to further refine existing
bodies such as the British Retail
protocols.
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.
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.
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63
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
A working group has been created
Government legislation within either
any potential changes in legislation.
to develop a strategy to deal with
the UK or overseas, could reduce
Where such changes are identified,
the implementation of the Scottish
demand for the Group’s products
the Group considers several
DRS scheme in 2023. This team will
and significantly impact the Group’s
scenarios to manage the potential
also monitor guidance regarding
revenue. In addition, new legislation
outcome, working with our key
and prepare for the implementation
could have an impact upon the cost
partners as necessary.
of an English scheme.
of production and limit availability
of our products.
The introduction of the Deposit
Return Scheme (DRS) is an example
of Government legislation which will
likely pose risk to the Group.
FAILURE TO PROTECT THE GROUP’S INTELLECTUAL PROPERTY RIGHTS
Impact
Mitigation
Development
A failure to protect the Group’s
The Group’s legal team employ a
Monitoring of all trademark activity
intellectual property rights across
specialist legal firm to monitor and
continues with the support of a
the globe could negatively impact
litigate in response to all trademark
third party provider.
the perception of the brand and
infringements to protect its
therefore revenues as a result.
Intellectual property and Brands.
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
The ongoing work within the ESG
environmental and social issues in
an Environmental, Social and
‘Happier Future’ strategy has seen
Government. This may result in new
Governance (ESG) strategy which
597 tonnes of sugar removed from
legislation (eg. plastic packaging
is focused on creating a Happier
our products versus 2020 as the
tax & High in Fat, Sugar, Salt (HFSS)
Future for our planet by doing the
Group works towards being HFSS
foods legislation) being issued which
right things in the right way.
compliant in 2022.
may 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
and health and well-being.
David Rattigan
Chief Financial Officer
1 March 2022
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65
SECTION 172
STATEMENT
S T R A T E G I C R E P O R T
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
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
• the desirability of the Company maintaining a
consider these range of factors in the course of their
reputation for high standards of business conduct
s172 duties.
• the need to act fairly between members of the
Company
OOH IMPAIRMENT REVIEW – CASE STUDY
BACKGROUND:
The impact of COVID-19 has resulted in a difficult period
slower pace than previously forecast and is only
of trade for OoH with many outlets being closed for
forecast to fully return to pre-pandemic levels through
a prolonged period of time. Whilst trade within the
2022.
hospitality industry has begun to show growth and
return towards pre-COVID-19 levels, it is doing so at a
The Board identified the need for a detailed analysis into
this route to market.
OUTCOME:
Growth projections beyond 2022 are expected to be
services the trade and its wider customer base.
lower than previously estimated given that a number
Overhead cost estimates have been reviewed and
of outlets are expected not to reopen and footfall
increased to reflect both inflationary pressures and
is expected to be restricted for a prolonged period
the cost estimates required to serve the customer
as staffing shortages and local restrictions/social
base, given the complexities of the current business
distancing is either mandated or occurs naturally, as was
environment and model.
experienced through 2021.
As a result the annual impairment review undertaken,
Whilst cost pressure is expected to be fully recovered
showed an impairment charge of £36.2m was required
within OoH, the gross margin progression anticipated
in the current year, the entire Goodwill held. This has
previously is now not likely to be achieved without
been reported in the 2021 financial statements.
transformational change in terms of how the Group
CONSIDERATION OF STAKEHOLDERS:
The commencement of review into OoH is an affirmative
The impairment gives visibility to the Group’s
step by the Board into addressing the challenging
shareholders around the ongoing future challenges
conditions within the route to market, particularly driven
within this route to market and ensures that the Group
by the continuation of Covid-19.
balance sheet is correctly reported.
Goodwill and intangible assets with indefinite lives are
Management have provided the Board with regular
required to be tested at least annually for impairment
updates throughout the year.
FUTURE ACTIONS:
or when there are indications that the assets might
be impaired. For the Group, all of the Goodwill and
Intangible assets reside within the OoH route to market
(also the Cash Generating Unit “CGU” for testing
purposes)
As part of the assessment, management are required
to determine the present value of the projected
cashflows for the CGU, ensuring all key assumptions and
estimates are reasonably updated and reflect expected
performance and market changes.
As a result and in response to this challenging climate,
terms of customer and product mix as well as ways to
during FY22 management has commenced a full
ensure appropriate margin and appropriate profitability
strategic review into its Out of Home route to market in
going forward.
KEY BOARD DECISIONS DURING THE YEAR
The Board considers the following to be the principal
for the Company and its stakeholders – to distinguish
decisions and considerations it has made during
these from the normal, ordinary course decision-making
the year to 31 December 2021. The Board considers
processes that the Board engages in.
‘Principal Decisions’ to be those decisions which entail
significant long-term implications and consequences
66
67
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
KEY MATTERS:
KEY MATTERS (CONTINUED):
BOARD DECISION
CONSIDERATIONS
BOARD DECISION
CONSIDERATIONS
The Board considered the Dividend
When considering the Final Dividend for the year ended 31 December 2021,
As the COVID-19 pandemic
The health, safety and well-being of our colleagues has continued to be our
Policy in respect of the Final
the Board reviewed the current Dividend Policy and its aims to reflect the
continued throughout 2021, the
primary concern in 2021.
Dividend for the year ended 31
balance of shareholder needs and clear opportunities for growth that will
December 2021.
exist in the soft drinks market post the COVID-19 pandemic.
As disclosed in the Nichols plc
The move to broadly 2x brings the policy in line with historical averages
2020 Annual Report and Accounts,
and was only established following discussions with a broad range of
Board received regular updates
on health and safety, in particular
employee working arrangements
and wellbeing.
During the year, the Board has considered how our working arrangements
have needed to adapt to the changing COVID-19 related restrictions in the
UK.
The Senior Leadership Team engaged with all employees throughout the
pandemic both formally and informally via regular online team briefs and
gathered feedback from employees regarding working arrangements
and wellbeing through regular employee surveys. This feedback provided
intelligence that enabled suitable adjustments to employee working
arrangements to be implemented.
The Board continually reviewed and discussed the approach to employee
engagement in relation to COVID-19 safe practices. Consideration was given
to effective employee communication on accountability and responsibility.
the Board has adopted a dividend
shareholders.
policy with dividend cover at
broadly 2x the adjusted earnings of
the Group.
In Q4 2020 the Group commenced
In order to reach conclusion the Group ran a full tender process and scored
a review of its UK operational
responses according to a variety of criteria including the suppliers approach
supply chains. The project has
to business continuity.
Post decision, all employees have been kept fully informed via team
briefings.
progressed steadily with significant
change already implemented. The
Board agreed entering into new
5-year contract manufacturing and
distribution arrangements that
both build significant additional
capacity, given the Group’s growth
plans, and improve efficiency.
HOW THE GROUP ENGAGED WITH ITS KEY STAKEHOLDERS THROUGHOUT THE PANDEMIC
EMPLOYEES
The Board agreed that the
The Board considered the authority obtained at the Company’s 2021 Annual
Why we engage
How we engaged during 2021
Company should conduct on-
General Meeting (AGM) and agreed to conduct the share buybacks within
market purchases under a share
the limitations of the shareholder authority granted at the AGM.
The Group’s long-term success is predicated
During 2021, we have continued to engage with employees
on the commitment of our employees to our
through the COVID-19 initiatives implemented in 2020, to
The Board discussed the proposed repurchase with a broad range of
purpose and its demonstration of our values
encourage a safe and healthy working environment and to
shareholders prior to implementation.
on a daily basis. To maintain our competitive
support their well-being. Engagement initiatives during the year
buyback programme to repurchase
up to 453,486 ordinary shares
of 10p each in the capital of the
Company.
The Board has taken all steps during the buyback process to avoid
The purpose of the Buyback is to
meet future obligations under the
Company’s SAYE Option Scheme
and/or Long Term Incentive Plan.
market abuse under Article 5(1) of Regulation (EU) No 596/2014, by way
of appointing an independent external party to execute and manage the
purchases in addition to limiting the number of trades on any one day to
6,000 shares.
advantage and meet the growing demands of
included:
the environment in which we operate, we need
a workforce which is adaptive and whose skill
base constantly evolves.
• Ensuring a clear communication process to those individuals
who continued to be on furlough during the first half of the
year;
• Through our well-being hub we provide employees with access
We also value workers with long-term practical
to a number of resources ranging from the Group Employee
The Board considered and
The Board considered the terms of the proposed SAYE Option Scheme
experiences. We engage with our workforce to
Assistance Programme (EAP), mental health and financial
approved a grant under the
grant, noting that it would be open to all eligible employees.
ensure that we are fostering an environment
support
Company’s Save-As-You-Earn
that they are happy to work in and that best
Share Option Scheme (SAYE Option
The Board carried out a communication process with all employees to
supports their well-being.
Scheme)
ensure they both understood the scheme and that it was accessible to all.
The Board re-evaluated and
The Board balanced the need to continue focussing on overhead costs in
approved the reinvestment back
light of ongoing COVID-19 impacts with the wider Group need for increasing
into marketing spend, following
customer awareness by way of delayed marketing campaigns.
the previous year of tight overhead
control in response to the global
The Board considered the gradual liftings of restrictions, opening of outlets
pandemic.
within OoH and improved financial performance of the Group when
assessing the level of appropriate re-investment.
68
• Providing a safe working environment to allow those
individuals who wish, or were able, to return to office working,
to return safely; and
• We have conducted 2 employee surveys to understand how
our colleagues are feeling. The response rate for the second
survey was 55% with 94% of respondents feeling supported by
the business.
The feedback from our employees on how they have been treated
during 2021 has been very positive.
69
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
CUSTOMERS
Why we engage
How we engaged during 2021
Why we engage
How we engaged during 2021
THE ENVIRONMENT
Communications and relationships with our
The Nichols plc commercial teams have continuous
Nichols plc is aware of its environmental
Nichols plc is an active member of the British Soft Drinks
direct customers is a fundamental ingredient to
communications with our direct customers, through face-to-face
responsibilities and whilst all its current
Association, which has reducing plastic waste high on its agenda.
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
packaging is already recyclable, the Group
is working with suppliers and customers to
reduce plastic waste as part of its “Happier
consumers through our on-going promotional and advertising
Future” strategy.
activity.
During 2021, we have continued to work 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.
We are also signatories to the Soft Drinks Road 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.
SUPPLIERS
Why we engage
How we engaged during 2021
SHAREHOLDERS
Why we engage
How we engaged during 2021
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 2021, we have worked hard to understand the concerns
and impact of the Covid-19 pandemic on our suppliers and the
impact on their business.
THE COMMUNITY
Why we engage
How we engaged during 2021
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.
positive relationships and maintaining a strong
reputation within the community.
The Group also supports Salford City FC and its Club Academy
92, to support aspiring football stars, developing their skills and
education through a dedicated partnership.
The Group’s commitment to providing opportunities for young
people extends to our international business with our on-going
support for the Waves For Change Initiative.
During 2021 employees participated in the Group’s ‘Day to make
a difference’ programme in which employees volunteered time
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
and sustainable results that translate into
dividends. We are seeking to promote an
Investor roadshow meetings are undertaken at least twice a year
following the preliminary and interim results announcements.
During 2021, our AGM, was held as a ‘closed’ meeting in order
to protect both our Shareholders and our employees. We hope
that in 2022 we will again be able to invite our shareholders to
investor base that is interested in a long-term
participate in our AGM. This provides an opportunity for all Board
holding in the Group.
members to interact with our shareholders on a one to one basis
and take questions as they arise.
In addition, our Executive Directors specifically seek to meet retail
investors at investor conferences and events and are available
to meet shareholders on request and at a number of ad-hoc
meetings, which are held during the year.
Any shareholder feedback we receive via our meetings or
otherwise is discussed at Board meetings. 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.
to give back to their local community. Examples of activities
The Stratagic Report has been approved by the Board on 1 March 2022.
undertaken include beach clean-ups, building community
gardens, raising money through coffee mornings and decorating
local community centres.
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71
GOVERNANCE
REPORT
S
T
R
A
T
E
G
I
C
R
E
P
O
R
T
73
THE BOARD
CORPORATE GOVERNANCE STATEMENT
AUDIT COMMITTEE REPORT
REMUNERATION COMMITTEE REPORT
NOMINATION COMMITTEE REPORT
DIRECTORS’ REPORT
74
76
84
88
96
98
02
72
OUR
BOARD
JAMES
NICHOLS
N O N - E X E C U T I V E D I R E C T O R
MY BEVERAGE OF CHOICE
“ NAS cordial.
Original obviously! “
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
MY BEVERAGE OF CHOICE
“ Must be Vimto Original,
oldest but still the best.“
JOHN
NICHOLS
N O N - E X E C U T I V E C H A I R M A N
MY BEVERAGE OF CHOICE
“Original Vimto is
my favourite.“
ANDREW
MILNE
C H I E F E X E C U T I V E O F F I C E R
MY BEVERAGE OF CHOICE
“ No brainer – Vimto
Fizzy Raspberry, Orange and
Passionfruit (in a can!)“
DAVID
RATTIGAN
C H I E F F I N A N C I A L O F F I C E R
MY BEVERAGE OF CHOICE
“ Chilled Vimto Fizzy, Zero.
No hesitation! “
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
MY BEVERAGE OF CHOICE
“ Vimto Cherry, Raspberry and
Blackcurrant squash for me. Retains
the original but a bit different too! “
G O V E R A N C E
Helen Keays 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 2 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.
John Nichols 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
was appointed 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.
Andrew Milne 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.
David Rattigan 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 4 sons. He enjoys
Football, Sailing and generally being in the great outdoors as
much as possible in his spare time.
James Nichols 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 2 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 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.
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75
CORPORATE
GOVERNANCE
STATEMENT
STRATEGY AND BUSINESS MODEL
shareholders either via socially distanced meetings or
Principle 1 of the Code requires that companies
via video conference.
establish a strategy and business model which promote
Overall, feedback from our shareholders has continued
long-term value for shareholders. The Board has
to be very supportive during ,what was at the
collective responsibility for setting the strategic aims
outset, another uncertain year in terms of financial
and objectives of the Group and our strategy, business
performance due to Covid-19 restrictions. At the time
model and purpose are set out in the Strategic Report
of our 2020 Preliminary results presentation in March
on pages 16 to 71. In the course of implementing our
and our Interim results presentation in July, the Chief
strategy, the Board takes into account the expectations
Executive Officer and Chief Financial Officer attended
of the Company’s stakeholders and wider social and
investor meetings with a full range of shareholders.
environmental responsibilities.
Shareholders expressed understanding and support
Our Section 172 statement, on pages 66 to 71, sets
out 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 have a separate forum which meets
throughout the year to focus on the delivery of the
Group’s three year rolling strategic plan, which is set
by the Board. The progress in delivering the strategy is
reported up to the Board, which both challenges and
supports the senior leadership team. The strategy is
communicated to all staff members at corporate team
briefs and separate team meetings.
SHAREHOLDER RELATIONS
Under Principle 2 of the Code, the Company must
seek to understand and meet shareholder needs and
expectations. The Group maintains communication
for the developed dividend policy of broadly 50% of
adjusted after tax earnings and encouraged further
development of the strategic agenda to ensure
the Group realised the growth opportunities, both
organically and through acquisition, within the soft
drinks market, whilst recognising the need to ensure
shareholder value. Shareholders expressed support
for the Group’s approach to Environmental and Social
matters and welcomed the increased disclosure
included in the 2020 Preliminary results presentation,
2020 annual report and Q3 trading update (2020,
repeated in 2021). The Group discussed in detail the
impact of Covid-19 on it’s Out of Home route to market
and sought to understand more clearly how the Group
would manage the period post the pandemic. The
Group’s focus on balance sheet management was
appreciated.
with institutional shareholders through individual
The Company had hoped to be able to welcome
meetings with Executive Directors, particularly following
shareholders in person to the 2021 AGM but due to the
publication of the Group’s interim and full year results,
UK Government guidelines in place at the time of the
enabling the Executive Directors to have an open
meeting, shareholders were unable to attend and the
dialogue and receive feedback. In normal circumstances,
AGM was held with the minimum attendance required
we encourage our shareholders to attend our Annual
to form a quorum. Shareholders were given the
General Meetings (“AGMs”) and we give them the
opportunity to send in questions prior to the AGM. We
opportunity to pose questions to our Directors. The
hope that we will be able to welcome all shareholders to
Non-Executive Directors are also available to discuss any
our 2022 AGM.
matter stakeholders might wish to raise.
OUR STAKEHOLDERS
During 2021, we have maintained a regular dialogue
with our shareholders. We have recognised the
importance of ensuring that shareholders have been
kept fully informed via public announcements and,
to the extent possible, we have engaged with our
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
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CHAIRMAN’S INTRODUCTION
practices and disclosures in order to ensure that they
I have pleasure in introducing Nichols’
Corporate Governance Statement.
support the strategic progress of the Group and the
effective application of the principles going forward.
Our governance structure provides a framework of
Due to the ongoing Covid-19 pandemic, 2021 has
clearly established roles, policies and procedures
been another challenging year for the Company.
designed to support our compliance with the QCA
However, our commitment to supporting high
Code, the AIM Rules and other legal, regulatory
standards of corporate governance and our strong
and compliance requirements which apply to
governance framework have enabled the Board to act
the Group. Further details of our corporate
quickly and support the management team in making
governance structure and activities are set out
decisions and taking appropriate actions.
on pages 76 to 83.
In this section of the Annual Report, we set out our
Further detail on our approach to
governance framework and describe the work that we have
corporate governance can also be found
done during the year to ensure good corporate governance
at www.nicholsplc.co.uk/Home/Aim26.
throughout Nichols plc and its subsidiaries (‘the Group’).
During 2021, we continued to follow the Quoted Companies
Alliance Corporate Governance Code (the ‘QCA Code’). As an
AIM listed company the Board considers that this is the most
appropriate Code for the Company.
COMPLIANCE WITH THE QCA CODE
John Nichols
The Board believes that it applies the ten principles of the QCA
Non-Executive Chairman
Code. We recognise the need to continue to develop our governance
1 March 2022
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G O V E R N A N C E
customers, our suppliers, our community and the
OUR SUPPLIERS
The Board has ultimate responsibility for the systems
significant experience of plc directorships.
environment. The Board recognises the importance of
maintaining regular dialogue with our stakeholders to
ensure, and receive and consider, their views.
Given Nichols’ outsource manufacturing model, having
long-term partnerships with our suppliers and co-
packers is essential. The Nichols plc supply chain team
of internal control and risk management. The Audit
Committee reviews the Group’s internal controls and
risk management processes on the Board’s behalf.
In addition, James Nichols is a Non-Executive Director.
James also holds the position of Commercial Controller
at Vimto Out of Home and has worked within the
Information on how the Company engages with its key
and senior management have regular review meetings
The Company’s Risk Management Team (‘RMT’) which
business for 17 years. James was appointed as a
stakeholders in provided on pages 66 to 71.
with our supplier base.
OUR EMPLOYEES
OUR COMMUNITY
was created in 2020, comprises members of the Senor
representative of the Nichols Family pursuant to a
Leadership Team (the ‘SLT’), the Risk Controller and
Relationship Agreement dated 22 July 2020 between
both a legal and H&S representative. The RMT has met
the Company and the Nichols Family. The purpose
Regular meetings take place with staff groups to share
The Group cares about its community. In particular,
regularly throughout 2021. The RMT reports to the SLT
of the Relationship Agreement is to formalise Board
Group strategy and seek feedback. The Company also
Nichols plc supports Warrington Youth Club which
who will provide an update to the Audit Committee
representation for the Nichols Family whilst ensuring
conducts a biennial staff engagement survey with
provides facility opportunities and support to children
three times a year.
during the year.
activities undertaken include beach clean-ups, building
with its strategic suppliers during the year in order to
current staff engagement measured at 55%. 94% of
in our community. The Group also supports Salford
respondents felt very well supported by the business.
City FC and its Club Academy 92, to support aspiring
(2020: 96%)
Throughout the Covid-19 pandemic, the Senior
Leadership Team presented quarterly to all employees
via a live webinar to update them on key issues.
Feedback from employees was extremely positive.
football stars, developing their skills and education
through a dedicated partnership. Our commitment to
providing opportunities for young people extends to our
international business, with our on-going support for
the Waves For Change Initiative.
Through its health and safety arrangements, the
During the year employees participated in the
Company has ensured it can provide a safe working
Group’s ‘Day to make a difference’ programme, in
environment to allow those individuals who wish, or
which employees volunteered time to give back to
were able, to return to office working, to do so safely
their local community and charities. Examples of
The well-being hub, which was launched in August 2020,
provides employees with access to the Group Employee
community gardens, raising money through coffee
mornings and decorating local community centres.
Assistance Programme (EAP), wellbeing news, mental
THE ENVIRONMENT
health resources and financial wellbeing support.
Nichols plc is aware of its environmental responsibilities
The year has proved again to be a challenging time but
and whilst all its current packaging is already recyclable,
the continued sprit and application of our people has
the Company is working with suppliers and customers
been outstanding.
Further details of how we engaged with our workforce
throughout 2021, including how we regularly
communicated with our furloughed employees, is
detailed in our section 172 Statement on page 69 of this
report.
OUR CUSTOMERS
to reduce waste. As stated in our 2020 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
Considerable focus was given to certain areas during the
year, including cyber security and the financial impact
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 99.
of producer fees associated with the introduction of the
The Board also comprises of two Executive Directors,
Deposit Return Scheme (DRS). Cyber security continues
Andrew Milne and David Rattigan.
to be a high risk and the Group has taken appropriate
mitigating action. The introduction of the DRS poses a
risk to the Group and as a result a dedicated working
group has been established in order to prepare the
Group for the initial roll out in Scotland during 2023.
To mitigate against the risk of a single source supply of
Vimto concentrate, the Group has been working closely
establish multi-production capability.
2021 was the first full year of the co-sourcing
relationship with EY for the provision of certain internal
audit services. The Company’s management team
has worked with EY to develop the Internal Audit Plan
and agree areas of focus and review in 2021. The
relationship provides further assurance to members of
the Audit Committee and additional specialist resource
to our in-house teams. Further details are included in
the Audit Committee Report on page 87.
The Board has delegated specific responsibilities to
its three Board Committees: the Audit Committee,
the Remuneration Committee and the Nomination
Committee. The Audit Committee and Remuneration
Committee are chaired by the two independent Non-
Executive Directors. John Nichols chairs the Nomination
Committee. Details of the operation of the Board
Committees are set out in their respective reports.
There were six Board meetings during the year. Details
of Board and Committee meeting attendance of
Directors during the year is set out below:
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DIRECTORS
P J Nichols
J A Gittins
H M Keays
J E Nichols
A P Milne
D T Rattigan
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6/6
6/6
6/6
6/6
6/6
Drinks association which has reducing plastic waste high
A culture of challenge and continuous improvement
on its agenda.
The Board recognises that a long-term plan built
is encouraged to ensure that risk management and
controls evolve with the business.
around sustainability is vital in ensuring our business is
The Group’s significant risks and related mitigation/
Communications with our customers is a fundamental
successful for many years to come. Our Happier Future
control are disclosed in the Strategic Review on pages
ingredient to our success. The Nichols plc team
is an essential part of our strategy in this respect. Details
have continuous communications with customers to
of this programme are on pages 36 to 53 of this Annual
understand their needs, share our plans and nurture
Report.
collaborative working practices.
RISK MANAGEMENT
60 to 65.
THE BOARD
Principle 5 of the Code requires the maintenance of the
Board as a well-functioning, balanced team led by the
In addition, the Board held a Strategy Day in November
2021, to review its medium term strategic plans, at
which all Directors were present.
During the Covid-19 pandemic, we supported customers
across our Out of Home trading division by replacing
out of date stock and extending credit terms. In turn,
we sought support from our partners to enable us to
do this.
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The fourth principle of the Code requires that the
Company embeds effective risk management,
considering both opportunities and threats, throughout
the organisation.
Chair.
CHAIR’S ROLE
The Board is led by our Non-Executive Chairman, John
Our Non-Executive Chairman is John Nichols who is the
Nichols and includes two independent Non-Executive
grandson of our founder, John Noel Nichols.
Directors, John Gittins and Helen Keays, who both have
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G O V E R N A N C E
G O V E R N A N C E
As Chair, Mr Nichols’ primary responsibility is to
will be discussed in advance with the Chairman, so that
Group’s People and Sustainability Director and took the
purpose and culture. The review concluded that, during
effectively guide, develop and lead the Board and ensure
their contribution can be included as part of the wider
form of a questionnaire completed by each member
the year, the Board and its Committees had performed
that the Group’s corporate governance framework is
Board discussion. All Directors attended every meeting
of the Board. The questionnaire specifically included
effectively. There were consistent improvements in
appropriate, is communicated and is adopted across
which they were eligible to attend
matters relating to purpose and culture, ESG, Board and
several areas, in particular the effectiveness of the
the business activities. The Chairman is also responsible
for ensuring the Board agenda concentrates on the key
DIRECTORS’ SKILLS AND CAPABILITIES
operational and financial issues affecting the delivery of
Principle 6 of the Code requires that the Directors
Nichols plc’s strategy.
ensure that between them they have the necessary up-
Whilst Mr Nichols’ shareholding and long association
to-date experience, skills and capabilities.
with the business means that he is not regarded as an
The current Nichols plc Board has significant sector,
Committee composition and stakeholder engagement.
Board and Board and Group Performance.
The evaluation also focussed on (i) the effectiveness of
Progress was found to have been made on the actions
the Board, (ii) the Board process including professional
suggested in the 2020 review, as summarised in the
development, (iii) strategy and leadership (iv)
table below:
stakeholders (v) Board and Group performance and (vi)
independent Chairman, he is not involved in the day to
financial and plc experience and the Executive Directors
2020 Performance Evaluation focus area Progress against action
day operations of Nichols plc. Those responsibilities are
have broad experience in the soft drinks industry and in
managed by the Group’s CEO.
manufacturing.
INDEPENDENT NON-EXECUTIVE DIRECTORS
David Rattigan who was appointed as Group Chief
Mr John Gittins and Ms Helen Keays are considered by
the Company as Independent Non-Executive Directors
(NEDs). The NED role is to provide oversight and scrutiny
of the performance of the Executive Directors. John and
Helen chair the Audit and Remuneration Committees
respectively.
Financial Officer in 2020, was also appointed as
Company Secretary on that date. Prism Cosec Limited
is engaged to provide certain company secretarial
services to the Company to support David in this role.
This includes the attendance at, and minuting of, Board
meetings to ensure that David is able to fully participate
in these meetings as a Director and Group Chief
Our NEDs are expected to devote such time as is
Financial Officer.
necessary for the proper performance of their duties
and normally expect to spend a minimum of 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 NEDs
and the Company recognise that due to the nature
With the support of our NOMAD and our advisors, the
Board training and development needs are met. The
Company’s in-house legal counsel presents to the Board
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.
of their role, it is impossible to be specific about
During 2021, the Nomination Committee undertook
the required time commitment, and additional time
an exercise to understand and identify the core skills,
commitment required when the Company is undergoing
experience and knowledge of the Directors. The
a period of increased activity. In accordance with their
exercise will assist the Board with its process for new
appointment letter, our NEDs agree to commit sufficient
appointments and with succession planning. More
time to perform their duties.
information can be found on page 97 of the Nomination
EXECUTIVE DIRECTORS
Committee Report.
The Company has two Executive Directors: Andrew
Milne and David Rattigan. The Executive Directors are
charged with the delivery of the business model within
Biographies on all Directors giving details of their
experience and roles on the Board are shown on pages
74 to 75.
Subject to Covid-19 guidelines, a number of the 2021
Due to UK Government guidelines and the uncertainty
Board meetings will be held at different locations within
relating to new Covid-19 variants, the Board was
the Group to enable the Board to visit and experience
unable to hold any of its meetings at different locations
its diverse operations across the UK and engage more
during the year. The Board has agreed that, subject
fully with members of its workforce.
to restrictions, it will hold two meetings at different
locations within the Group every year.
The role and responsibilities of the Remuneration
The role and responsibilities of the Remuneration
Committee are being reviewed, to ensure that it has an
Committee were developed during the year, to include
appropriately focussed approach, aligning its decision
alignment with the Group’s financial calendar. The
making with the Group’s financial calendar. A tender
Committee considered the performance of its incentive
process was undertaken to appoint advisers to this
scheme at an appropriate time during the year. An
Committee.
advisor was appointed.
The importance of shareholder feedback was fully
Shareholder feedback is collected after each roadshow
recognised by the Board and it was agreed that this
and shared with the Board.
should become a more formalised process.
The table below illustrates the key areas of focus that resulted from the 2021 review and the actions that are
proposed for 2022:
2021 Performance Evaluation focus area Proposed action
Consideration of the composition of the Board in
Current coverage of skills on the Board was reviewed.
respect of diversity and skill set for future appointments.
The Committee point of view was that the skills and
experience were appropriate but would be reviewed
further in 2022.
Review of arrangements for the 2022 AGM, taking into
AGM arrangements were reviewed, and appropriate
the strategy set by the Board.
BOARD PERFORMANCE AND EVALUATIONS
account the effects of Covid-19 on meeting format and
plans put into effect for April 2022.
NEDs communicate with Executive Directors and senior
Principle 7 of the Code requires that the Board and
management between formal Board meetings.
Committees evaluate their own performance based
Directors are expected to attend all meetings of the
Board, and of the Committees on which they sit, and to
on clear and relevant objectives and seek continuous
improvement.
devote sufficient time to the Group’s affairs to enable
A formal Board and Committee performance evaluation
them to fulfil their duties as Directors. In the event
was undertaken in November 2021, the outcome of
that Directors are unable to attend a meeting, their
which has been communicated to, and discussed by
comments on papers to be considered at the meeting
the Board. The performance evaluation was led by the
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stakeholder engagement.
Incorporation of more feedback on individual
The appropriate process will be considered further in
performance into the annual cycle and Board evaluation
2022.
process.
Raising awareness of ESG matters amongst employees,
Individual ESG objectives will be in place for all
ensuring alignment with purpose and culture.
employees in 2022.
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G O V E R N A N C E
The Remuneration Committee evaluates Executive
business strategy takes into account our wider
Director performance, alongside remuneration and
corporate, environmental and social responsibilities.
reward.
Further details are included in pages 36 to 53 of the
The Audit Committee engages with the Company’s
Strategic Report.
external auditors biannually and holds discussions
• Customers and Suppliers: We believe in building long-
on the financial systems, procedures and efficacy of
term partnerships with our customers and suppliers.
management.
• Community: We actively encourage our employees to
A rigorous recruitment process is undertaken for new
give something back to the wider community.
candidates with the required experience and ability.
The Company has adopted a Slavery and Human
Any potential candidate for appointment as a Non-
Trafficking Transparency Statement (the “Statement”)
Executive Director will be required to disclose their other
and has an anti-bribery policy. These set out the ethical
commitments before being appointed as a Director.
behaviour expected of our employees, with our Human
Slavery Statement also including details of actions
that we have taken to ensure that human slavery
does not exist within Nichols or within our supply
chain. We have a zero-tolerance approach for giving
activities and format of Board meetings, during the year.
The Board adapted to the changing UK Government
guidelines to ensure meetings went ahead as smoothly
as possible. The Board met six times during the year and
was able to hold three meetings face to face.
Nichols plc has robust internal controls, delegated
authorities and authorisation processes. The controls
are subject to review, both internally by individual teams
within the Company and externally by the Company’s
Company has appointed EY, as its co-sourcing partner
to assist management in the development of a 3-year
internal audit strategy. Further detail of the Group’s
internal audit process is provided on page 87.
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
Directors prior to their proposal and election. When
making new appointments, the Company will engage a
market leading recruiter to provide a shortlist of suitable
• Community: We actively encourage our employees to
external audit provider, BDO LLP. In addition, the
give something back to the wider community.
or receiving of bribes or corrupt payments in any form.
Audit Committee and Helen Keays, Chairman of the
In addition, to ensure that any of our employees can
raise any matters of genuine concern without fear of
any action being taken against them, we also operate a
whistleblowing policy. Further detail of the anti-bribery
and whistleblowing policies, which are monitored by the
Audit Committee, is provided in the Committee’s Report
on page 87 of this Annual Report. In addition, these
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
policies and the Human Slavery Statement are available
Committees.
Succession planning for the Board is an ongoing topic
of discussion and more information is provided on
the Company’s approach to succession planning in
the Nomination Committee Report on page 97. 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.
CORPORATE CULTURE
Principle 8 of the Code requires that the Company
promotes a corporate culture that is based on ethical
values and behaviours.
Nichols plc is very proud of its warm and inclusive
culture. It is our people and how they go about their
business that has been fundamental to the sustained
success of the Group for many years. Our culture is
reflected in our values and the overarching theme of our
values is ‘doing the right thing’.
Our Values:
• People: We value and respect our employees. Their
enthusiasm, ideas and hard work are fundamental
on the Company’s website at www.nicholsplc.co.uk.
As the Covid-19 pandemic continued in 2021, the
most important objective of the Board was to
protect the health and wellbeing of the Company’s
employees, customers and suppliers. The Board has
continued to ensure that the measures implemented
at the start of the Covid-19 pandemic continue to be
effective, ensuring a safe and healthy environment for
employees. The Health and Safety Manager ensures that
management is kept informed of arrangements in place.
to the success of our Company and we recognise
GOVERNANCE STRUCTURE
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
Principle 9 of the Code requires that the Company
maintains governance structures and processes that are
fit for purpose and support good decision making by the
Board.
professional development of our employees.
The challenges presented by the Covid-19 pandemic,
• Sustainable Business: We value our commitment to
having a sustainable business. Our sustainable
including travel restrictions, social distancing and Covid-
safe working environments has impacted the Board’s
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.
The plc website contains information about the
business activities, access to all RNS announcements
and copies of the Annual Report and Accounts. The
plc website also includes historical announcements,
as well as the Annual Report and Accounts for more
than the minimum five years. The work of the Audit,
Remuneration and Nomination Committees is described
on pages 84 to 99.
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GITTINS
The ongoing Covid-19 pandemic has continued to create a
challenging environment for the Company during 2021.
have recent and relevant financial experience. I am
AREAS OF FOCUS IN THE REPORTING PERIOD
a chartered accountant and currently chair the audit
committee of Appreciate Group plc and previously of
Electricity North West Limited.
The Audit Committee met four times during 2021 and all
Committee members were present at every meeting.
DUTIES
During the year, the Audit Committee discharged its
responsibilities by:
• approving the external auditor’s plan for the audit
of the Group’s annual financial statements, including
key audit matters, key risks, confirmation of auditor
independence and terms of engagement, including
The main duties of the Committee are set out in
audit fees.
its Terms of Reference which are available on the
• reviewing the Group’s draft financial statements
Company’s website (www.nicholsplc.co.uk/investors/
and interim results statements and reviewing the
aim-rule-26/) and include the following:
external auditor’s detailed reports thereon, including
• To monitor the integrity of the financial statements
of the Group, including its annual and half-yearly
reports and accounts, announcements of preliminary
results and any other formal announcement
relating to its financial performance;
consideration of key audit matters and risks. 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
• To review the adequacy and effectiveness of the
impact of the ongoing Covid-19 pandemic.
Group’s internal financial controls and internal
control and risk management systems;
• meeting the external auditor twice, without
management, to discuss matters relating to its remit
Nevertheless the Committee, on behalf of the Board,
• To consider and make recommendations to the
and any issues arising from its work.
continued to discharge its duties, including a focus on
Board, to be put to shareholders for approval at the
further development of the Group’s internal controls
AGM, in relation to the appointment, re-appointment
and risk management processes.
or removal of the Company’s external auditor;
• reviewing the performance of the external auditor.
This assessment covered key areas including (i) the
audit partner and team (ii) the audit approach and
On behalf of the Committee, I am pleased to
• To oversee the relationship with the external auditor
execution (iii) the Committee and Company
present the Audit Committee Report for the year
including recommendations on their remuneration,
interactions with the external auditor and (iv) the
ended 31 December 2021, which includes actions
approving their terms of engagement, assessing
added value and insights that the external auditors
taken by the Committee in this respect.
annually their independence and objectivity and
bring. The Committee’s findings were subsequently
MEMBERSHIP OF THE AUDIT COMMITTEE
assessing annually the qualifications, expertise and
discussed with the external auditor.
resources of the external auditor and the
The Committee comprises three Non-
effectiveness of the audit process; and
• approving the plan of targeted internal reviews
conducted by the finance team and, for the first time,
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,
• To develop and implement a policy on the supply
the internal audit plan proposed by EY, monitoring
of non-audit services by the external auditor including
the results of these reviews and the timely follow up
prior approval of non-audit services by the committee
of any control recommendations. These activities are
and taking into account any relevant ethical guidance
further explained in the Internal Audit section below.
on the matter and thorough consideration of all
appropriate matters.
The Committee reviews its Terms of Reference annually
and the Board approved the current Terms of Reference
on 28 April 2021.
• reviewing the Group’s risk management process, key
risk register, risk dashboard and risk mitigations.
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G O V E R N A N C E
• receiving a presentation from management on
FIXED ASSET VERIFICATION
INTERNAL AUDIT
ANTI-BRIBERY
the development of the Company’s internal
control framework, including the co-ordination of risk
management through the Risk Management Team.
• receiving a presentation from the Company’s legal
department, providing an update on a compliance
During the year management concluded on a Group
In 2020, the Committee considered a proposal from
The Group has in place an anti-bribery and anti-
wide fixed asset verification process with the Committee
management to enter into a co-sourcing relationship
corruption policy which sets out its zero-tolerance
regularly reviewing the work undertaken.
with a third-party provider for the provision of certain
position and provides information and guidance to
NET LIABILITY FOR HISTORIC INCENTIVE SCHEMES
internal audit services from 2021. This provides further
those working for the Group on how to recognise and
assurance to the Committee and additional specialist
deal with bribery and corruption issues. The Committee
review programme of the Company’s policies and
The Committee has reviewed the findings of the HMRC
resource. Following a formal tender process, EY were
is satisfied that the policy is operating effectively.
procedures in connection with a number of
investigation into prior year incentive schemes and
selected by the Committee as the preferred partner and
regulatory matters, including anti-bribery and anti-
believe that the net liability recorded within the financial
appointed to carry out the role.
and reported to the Board. The significant matters
and discussed with the Committee, together with the
EY attended three Committee meetings during the year.
considered by the Committee in respect of the year
Group’s external auditors.
money laundering.
SIGNIFICANT ISSUES CONSIDERED IN RELATION TO
statements represents a reasonable outcome for the
Group’s additional tax liability and interest costs.
THE FINANCIAL STATEMENTS
GOING CONCERN STATUS
As part of the monitoring of the integrity of the
Reviews of the Group’s going concern status were
financial statements, significant matters and accounting
carried out by management at both the half and
judgments identified by the finance team and the
full-year period ends. Detailed papers setting out the
external auditor are reviewed by the Committee
relevant considerations were tabled by management
ended 31 December 2021 are set out below:
EXCEPTIONAL ITEMS
The Committee reviewed the accounting treatment
of the items listed in note 4 and concurred with
management’s view that they are exceptional in size and
nature in relation to the Group.
IMPAIRMENT REVIEW
The Committee reviewed accounting papers prepared
by management in connection with annual impairment
reviews.
The Committee noted that severe but plausible risk
scenarios had been identified; a robust risk assessment
had been carried out; and the Group’s going concern
statements remained appropriate when stress tested.
Taking into account the Company’s balance sheet
position, the Committee concurred with management’s
view that the Group has adequate resources to continue
in operational existence for the foreseeable future
this Annual Report).
EXTERNAL AUDIT
Out of Home, the Group’s only cash generating
The Committee monitors the relationship with
unit (CGU) with Goodwill and Intangible assets, has
the external auditor, BDO, to ensure that auditor
been significantly impacted by Covid-19, resulting in
independence and objectivity are maintained. The
a difficult period of trade with many outlets being
external auditor is not engaged to perform any non-
closed for a prolonged period of time. Based on this
audit services, in line with the Group’s policy. Having
John Gittins
During the year, management have worked with EY to
Chair of the Audit Committee
develop an internal audit plan. This process included
1 March 2022
consideration of the Company’s principal risks, alongside
sector specific risks and historical finance function
internal review coverage. Areas of focus included supply
and operational planning, employment and payroll
controls and health and safety procedures.
INTERNAL CONTROL
The Board has overall responsibility for maintaining
sound internal control systems to safeguard the
investment of shareholders and the Group’s assets. The
systems are reviewed by the Board and, when asked,
the Audit Committee, and are designed to provide
reasonable, but not absolute, assurance against material
misstatement or loss.
develop its internal control and risk management
environment. In addition to the development of internal
audit as explained above, management committees with
remits over risk management, treasury management
and capital expenditure, which were established in 2020,
now regularly report to the Committee. In addition,
an internal controls self-assessment exercise was also
carried out throughout the organisation for the first
(being at least one year following the date of approval of
During the year the Company has taken action to further
trading performance and the CGU’s future prospects,
reviewed and assessed the auditor’s independence
time in 2021.
management assessed the need for a goodwill
and performance, the Committee recommended to the
impairment of £36.2m, with which the Committee
Board that a resolution to reappoint BDO as the Group’s
WHISTLEBLOWING
concurred.
external auditor be proposed at the forthcoming AGM.
The Group has in place a whistleblowing policy which
Details of the impairment reviews performed are
outlined in note 12 to the financial statements.
BDO have been the Company’s external auditor for eight
sets out the formal process by which an employee of the
years. The Committee has adopted a policy of tendering
Group may, in confidence, raise concerns about possible
external audit services at least every ten years.
improprieties in financial reporting or other matters.
The Committee is satisfied that the policy is operating
effectively.
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REMUNERATION
COMMITTEE
REPORT
R
O
T
C
E
E D I R
T I V
U
C
E
X
E
-
N
O
KEAYS
T N
N
E
D
N
E
P
E
D
I N
On behalf of the Remuneration Committee, I am pleased to
present the Remuneration report for the year ended 31
December 2021.
Executive Directors. The Remuneration Committee met
No discretion was applied in determining the outcomes
four times during the year and plans to meet at least
of the Hybrid Incentive Plan and the LTIP, but the
three times a year going forward.
Committee noted that the performance conditions
2021 REMUNERATION OUTCOMES
for the LTIP were set prior to the pandemic under
significantly different market conditions to the point at
This was the first year in which we operated our new
which the conditions for the Hybrid Incentive Plan were
Hybrid Incentive Plan. In the context of very strong
set at the start of 2021. The Committee will continue to
financial and personal performance during the year,
set stretching targets for the Hybrid Incentive Plan in the
the Committee determined that it was appropriate
context of business plan and consensus forecasts.
for awards to pay out at 99% of maximum overall.
This incorporates maximum achievement against the
REMUNERATION POLICY
Group Strategic Objectives and 99% pay out against the
The objective of the Group’s Remuneration Policy is
Adjusted Profit Before Tax objective. Full details of the
to attract, motivate and retain high quality individuals
performance assessment against both the financial and
who will contribute fully to the success of the Group. To
key business objectives can be found on page 93.
achieve this, the Group provides competitive salaries
MEMBERS OF THE REMUNERATION COMMITTEE
The Committee is comfortable that the outcome is
and benefits to all employees.
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.
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
in line with underlying corporate performance and
The Committee has the following principles it follows
shareholder experience over the year, with 10% growth
when establishing Executive Director remuneration at
in share price and a total dividend of 23.1p for the year.
Nichols:
The outturn is also in line with the experience of the
wider workforce with maximum bonus being awarded.
• Motivating
• Simple
In line with the Policy approved at the 2021 AGM,
• Aligned to group strategy
60% of the award will be deferred into shares and the
• Flexible
remainder will be paid in cash. This deferred element of
• Transparent
the award, which is intended to align Executive Directors’
• Fair
remuneration with shareholder value in the longer term,
vests 3 years after the start of the performance period
(i.e. 2 years after the pay-out of the cash element).
To ensure alignment with these principles, the Group
operates a hybrid incentive plan which combines the
previous individual bonus and long-term incentive plans
In relation to the LTIP awards granted to Andrew
into a single plan. This hybrid incentive plan assesses
Milne in 2018, the Committee reviewed the earnings-
both short and long-term performance in a combination
related performance conditions after the year end and
of cash and deferred shares.
determined that performance for these awards was
below the threshold levels. The awards have, therefore,
lapsed.
The table below summarises the key elements of the
revised remuneration policy for Executive Directors.
88
88
89
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
Performance
conditions and
assessment
Element and link to
strategy
Operation
Maximum potential
Value
Performance
conditions and
assessment
BASE SALARY
Supports the
recruitment and
Base salary reflects the size of the
Increases to base salary are
Not applicable,
role and responsibilities, individual
determined annually by the
although individual
performance (assessed annually)
Committee considering:
performance is
retention of Executive
and the skills and experience of the
Directors, reflecting
individual.
their role, skills, and
experience
In setting appropriate salary levels,
•
Individual performance.
considered when
determining base
• The scope of the role.
salary increases.
the Committee considers data for
• Pay levels in comparable
similar positions in comparable
organisations; and
organisations. The data is
independently commissioned, and
the Committee aims to position
Executive Directors competitively
within this reference group
• Pay increases for other
employees
ALL-EMPLOYEE SHARE
PLAN – SAVE AS YOU
EARN (“SAYE”)
The Company offers a SAYE
Maximum permitted based
Not applicable
scheme for all employees.
on HMRC limits from time
The operation of these plans will be
to time.
To encourage equity
at the discretion of the Committee,
ownership across all
and Executive Directors will be
employees and create
eligible to participate on the same
a culture of ownership.
basis as other employees.
HYBRID INCENTIVE
PLAN
Supports the
recruitment and
retention of Executive
A combination of financial and non-
The maximum incentive
For 2022 awards,
financial measures and targets are
which may be earned in
performance
set annually. Outcome levels will be
any year under the Hybrid
conditions will be
determined based on performance
Incentive Plan is 200% of
weighted 70% towards
against this scorecard.
base salary.
financial performance
PENSION
Generally, the Company
Up to 9% of base salary
Not applicable
Supports recruitment
contributes to a defined
and retention of
contribution pension scheme
Executive Directors.
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.
BENEFITS
Executive Directors are entitled to
The value of such benefits is
Not applicable
Supports recruitment
the following benefits:
not capped.
and retention of
Executive Directors
•
Life assurance;
Directors.
For Executive Directors, 60% of
Supports a high
performance culture
awards will be deferred into shares.
The deferred proportion of awards
will pay out 3 years from the start
Rewards performance
of the performance period. The
in the context of
Committee retains discretion to
achieving key goals,
adjust the pay-out level of deferred
and encourages
incentives based on performance
sustainable
performance
that supports the
achievement of
strategic goals.
in the deferral period.
The deferred element of the award
will attract dividend equivalents for
the period between assessment
and pay-out.
• Directors and Officers Liability
Insurance
• Private medical insurance;
• 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.
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.
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91
G O V E R N A N C E
G O V E R N A N C E
NON-EXECUTIVE DIRECTORS
HYBRID INCENTIVE PLAN
The Non-Executive Directors signed letters of appointment with the Group for the provision of Non- Executive
Directors’ services, which may be terminated by either party giving three months’ written notice. The Non-Executive
Directors’ fees are determined by the Board.
ANNUAL REPORT ON REMUNERATION IN 2021
The following table summarises the total gross remuneration of the Directors who served during the year to 31
December 2021.
Fixed remuneration
Performance related –
Hybrid Incentive Plan
Salary
and fees
£’000
Benefits in
kind4
£’000
Pension5
£’000
Executive Directors
A P Milne
D T Rattigan
M J Millard1
T J Croston2
Non-Executive
Directors
P J Nichols
J Nichols3
H M Keays
J A Gittins
325
213
-
-
101
20
40
40
18
15
-
-
1
-
-
-
29
13
-
-
-
-
-
-
Cash
£’000
259
170
-
-
-
-
-
-
Deferred
shares6
£’000
Total
2021
£’000
Total
2020
£’000
-
-
-
-
-
-
20
40
40
9
40
40
202
191
1,891
1,203
1 MJ Millard stepped down from the Board as Group CEO as of 31 December 2020.
2 TJ Croston stepped down from the Board as Group CFO as of 2 March 2020.
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 Pension may be paid as a cash sum in lieu of.
6 Vesting of awards will be 3 years from the start of the performance period of 1 January 2021.
For the 2021 financial year, the maximum bonus opportunity for the Executive Directors was 200% of base salary.
70% of the award was based upon financial performance and 30% was based on performance against Group
Strategic Objectives. Of the award achieved, 60% has been deferred into shares to be paid out 3 years from the start
of the performance period. The remaining 40% awarded is to be paid in cash.
Performance Targets
Target2 £m
Payout Maximum £m
Payout
Actual
Performance
Actual
Payout
18.9
70%
21.9
100%
21.8
99%
Group Adjusted
Profit Before Tax1
1 Excluding exceptional items
2 Group compiled market consensus, March/April 2021 post Q1 lockdown, following release of 2020 preliminary results and confirmed at AGM
trading update.
390
257
1,021
668
-
-
286
205
475
46
The Group achieved a strong financial performance in the year with Adjusted Profit Before Tax (“Adjusted PBT) of
£21.8m, up £10.2m (+88%) on the prior year result of £11.6m.
The target financial performance set at the end of Q1 2021 following clarity on the UK Government’s planned
roadmap out of lockdown. Based upon financial planning at that time, Executive Directors would be able to earn
1,689
1,012
70% of maximum bonus with Adjusted PBT of £18.9m (+£7.3m versus prior year). This target represented the Group
compiled market consensus for full year performance in existence at that time. An achievement of Adjusted PBT
£21.9m represented a stretch target for the Group and would result in a maximum payout of 100%.
102
102
maximum bonus, acknowledging the strong Group performance in the period, significantly above external
Based on actual performance, both the Chief Executive Officer and Chief Financial Officer achieved 99% of the
expectations at that time.
Personal element outcomes (30% of award)
Both Executive Directors were set three personal objectives to be measured as a whole, weighted at a maximum of
30% as follows:
1. Happier Future objectives
2. Operational change objectives
3. Out of Home initial review
relating to year 1 of our
relating to year 1 of Strategic
3 year programme
Change Programme
Undertaking a review of the Out
of Home route to market in terms
Shaping the Group’s ESG agenda
Review of UK packaged supply
of the Group’s return on capital
and year 1 delivery, focusing
chain focussing on delivering
employed metrics. This work has
on scope 1 and scope 2 2025
Strategic Supply partnerships,
outlined the key areas of focus
commitments in the areas of
enabling significant capacity
for the Strategic Change
climate action, packaging,
expansion and efficiency
Programme to be delivered
healthier options and community
improvements, optimising
through 2022/2023.
support.
our outbound supply chain and
advancing the Group’s internal
Sales and Operational Planning
process.
Based on the strong performance of both Executive Directors during the year, the Committee have determined that
the maximum potential 30% award in respect of their personal objectives was achieved.
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93
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:
In 2022, the Hybrid Incentive Plan will be assessed against financial performance (Adjusted Profit Before Tax) and
Group 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 maximum bonus opportunity for the Executive Directors will be 200% of base salary with 70% of the award being
based upon financial performance and 30% was based on for performance against Group Strategic Objectives. On
achievement of the award 60% will be deferred into shares to be paid out 3 years from the start of the performance
period with the remaining 40% being awarded paid in cash.
The performance targets are not disclosed prospectively as they are considered to be commercially sensitive. Details
of performance against the targets and the resulting awards earned will be disclosed retrospectively at the end of
the performance period.
ATTENDANCE AT REMUNERATION COMMITTEE MEETINGS
There were 4 Remuneration Committee meetings held during the year. The following table sets out individual
attendance by members:
NON-EXECUTIVE DIRECTORS
MEETINGS ATTENDED
H M Keays
P J Nichols
J A Gittins
CONCLUSION
4
4
4
On behalf of the Committee, I hope this report gives you a clear view of how we have implemented the policy in 2021
and our plans for 2022. The Committee hopes that shareholders are able to support the 2021 Annual Remuneration
Report at the forthcoming AGM.
Helen Keays
Chair of the Remuneration Committee
1 March 2022
Award
Grant date Vesting date
Recipient
Exercise
price
Number of
shares out-
standing
Number
of shares
lapsed
2019 LTIP award
1 May 2019
1 May 2022
Andrew Milne
£0
12,828
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
2023
Andrew Milne
David Rattigan
£7.93
£7.93
£0
£0
1,513
2,269
9,668
7,734
2021 SAYE
15 April 2021
15 April 2024
Andrew Milne
£10.15
1,064
-
-
-
-
-
-
During the year, Andrew Milne exercised share awards in relation to the 2016 SAYE scheme (603 shares), the 2018 SAYE scheme (587 shares) and
the 2017 LTIP (6,609 shares). The 2019 LTIP award granted to Andrew Milne didn’t vest, based on performance against the agreed targets between 1
January 2019 and 31 December 2021. David Rattigan was appointed to the role of CFO on 2 March 2020 and therefore was not granted a 2019 LTIP
award.
IMPLEMENTATION OF REMUNERATION POLICY IN 2022
The following table summarises Executive Director salaries, pension levels and incentive opportunities, and Non-
Executive Director fees for the 2022 financial year. This table excludes benefits in kind which are referenced in the
table above.
Basic salary/
fee1
£’000
Pension2
£’000
Maximum incentive (200% of salary)
£’000
Cash element
Deferred element3
Executive Directors
A P Milne
D T Rattigan
Non-Executive Directors
P J Nichols
J E Nichols
H M Keays
J A Gittins
325
214
101
20
40
40
29
17
-
-
-
-
260
171
-
-
-
-
390
257
-
-
-
-
1 Salary many change upon review with changes enacted from 1 April 2022.
2 Pension may be paid as a cash sum in lieu of.
3 As per the policy, 60% of pay outs from the Hybrid Incentive Plan will be deferred into shares for a further 2 years.
94
95
NOMINATION
COMMITTEE
REPORT
• Keep under review the Board’s structure, size and
• Approving adoption of annual re-election of the
composition, including diversity and the balance of
Directors at the AGM, in line with best practice; and
independent and non-independent Non-Executive
Directors, and make recommendations to the Board
• Succession Planning.
with regard to any changes required.
BOARD SKILLS ASSESSMENT
• Ensure plans are in place for orderly succession to
During the year, working with the Group’s People and
Board and senior management positions,
Sustainability Director, the Committee developed a
and oversee the development of a diverse pipeline
Board Skills Matrix and carried out a skills assessment
for succession.
• Keep under review the leadership needs of the
organisation, both executive and non-executive,
with a view to ensuring the continued ability of the
organisation to compete effectively in
the marketplace.
• Be responsible for identifying and nominating for the
approval of the Board, candidates to Board vacancies
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.
• Review annually the time required from Non-
Executive Directors.
of the Board of Directors. The purpose of the exercise
was to agree and understand the key skills and areas
of expertise required on the Board of the Company.
The Committee agreed the requisite skills, experience
and related descriptors and then carried out a self-
assessment at the end of 2021 which will be discussed
at Committee meetings in 2022.
The Board Skills Matrix will assist the Committee when
making new appointments to the Board and in its
succession planning.
BOARD PERFORMANCE EVALUATION PROCESS
As described on page 81, a formal Board performance
evaluation was undertaken in 2021. The evaluation
was carried out by way of questionnaires. The review
concluded that, during the year, the Board and
• Make recommendations to the Board on the
Committees have continued to perform effectively.
re-election by Shareholders of directors under the
annual re-election provisions of the QCA Code or
SUCCESSION PLANNING
the retirement by rotation provisions in the
A session focusing on succession planning was held
Company’s articles of association.
in October 2021 focusing on the outputs from the
The Committee reviews its Terms of Reference annually
and were last reviewed in July 2021.
ACTIVITIES DURING THE YEAR
During the year, the Nomination Committee discharged
its responsibilities by:
• Reviewing the membership of the Board and Board
Committees, including the skills and experience of
current Directors and the development of a Board
Skills Matrix;
Group’s talent management process with particular
focus on CEO and CFO succession, Senior Leadership
Team recruitment and Diversity and Inclusion
(D&I). Succession Planning is an ongoing item for
consideration by the Board.
John Nichols
Non-Executive Chairman
• Reviewing the Non-Executive Directors’ time
1 March 2022
commitment;
N
A
M
A I R
H
E C
T I V
U
C
E
X
E
-
N
O
N
NICHOLS
On behalf of the Committee, I am pleased to present our
Nomination Committee Report.
MEMBERSHIP OF THE NOMINATION COMMITTEE
The Committee comprises three Non-Executive
Directors: I act as Committee Chair, with my
colleagues John Gittins and Helen Keays. John and
Helen are considered independent Directors. I
am not considered independent as a result
of my significant shareholding and previous
executive role.
The Nomination Committee met twice in
2021 and all Committee members were
present at every meeting.
ROLE OF THE NOMINATION
COMMITTEE
The main duties of the Committee
are set out in its Terms of
Reference which are available
on the Company’s website
(www.nicholsplc.co.uk/
investors/aim-rule-26/) and
include the following:
96
96
97
The Directors who have held office during the year
ended 31 December 2021 and to the date of this report
In accordance with the terms of the Relationship
Agreement, so long as the Nichols Family retain (i)
SHARE CAPITAL
DIRECTORS’
REPORT
Nichols plc (the “Company”) is a public limited company,
general meeting to be held on 27 April 2022 (the ‘2022
registered in England and is listed on AIM of the London
AGM’).
Stock Exchange. The Directors present their report for
the year ended 31 December 2021, in accordance with
ARTICLES OF ASSOCIATION
section 415 of the Companies Act 2006. The Corporate
The rules governing the appointment and replacement
Governance Statement set out on pages 76 to 83 forms
of Directors are set out in the Company’s Articles of
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 Report of the Directors
Association. The Articles of Association may be amended
by a special resolution of the Company’s shareholders.
A copy of the Articles of Association can be found on
the Company’s website: Articles-of-Association.pdf
(nicholsplc.co.uk)
have been omitted as they are included in the Strategic
DIRECTORS AND THEIR INTERESTS
Report on pages 16 to 71. These matters relate to a
full review of the performance of the Company and its
subsidiaries (together the “Group”) for the year, current
trading and future outlook.
The statement by the Directors in performance of
are as follows:
EXECUTIVE DIRECTORS
their statutory duties in accordance with section 172(1)
Andrew Paul Milne
Companies Act 2006 is provided on pages 66 to 71.
David Thomas Rattigan
PRINCIPAL ACTIVITIES
NON-EXECUTIVE DIRECTORS
Nichols plc is an international diversified soft drinks
Peter John Nichols, Chairman
business with sales in over 73 countries, selling products
John Anthony Gittins
in both the Still and Carbonate categories.
FINANCIAL RESULTS AND DIVIDENDS
Helen Margaret Keays
James Edward Nichols
The Group’s Loss Before Taxation from continuing
The roles and biographies of the Directors in office as
operations for the year ended 31 December 2021
at the date of this report are set out on pages 74 to
amounted to £17.7m (2020: profit £6.5m). The Group’s
75. Details of their interests in ordinary shares of the
adjusted Profit Before Taxation, excluding exceptional
Company as at 31 December 2021 are shown in the
items, was £21.8m (2020: £11.6m). The Directors will
table below.
recommend a dividend of 13.3p at the 2022 annual
Summary of Director’s Interests in the Company
Director
P J Nichols
A P Milne
D T Rattigan
J A Gittins
H M Keays
J E Nichols
Shares held as at
1 January 2021
2021
Shares held as at
movement
31 December 2021
2,000,000
1,665
-
1,280
-
835,476
-
10,781
1,659
-
-
-
2,000,000
12,446
1,659
1,280
-
835,476
Details of Directors’ remuneration, including pension arrangements, service agreements and Long-Term Incentive
Plan Awards are provided in the Directors’ Remuneration Report on pages 88 to 95.
98
G O V E R A N C E
RELATIONSHIP AGREEMENT
On 22 July 2020, the Company entered into a
Relationship Agreement with the Nichols Family. The
Nichols Family consists of certain members of the
immediate and extended family of the Company’s
Management continuously consult with employees and
keep them informed on matters of current interest and
concern to the business. Further information regarding
employment at Nichols is provided on pages 38 to 39 of
the Strategic Report.
founder John Noel Nichols. Members of the Nichols
CUSTOMERS AND SUPPLIERS
Family hold in aggregate an interest of approximately
35.8% in the Company’s issued share capital as at the
year end.
The purpose of the Relationship Agreement is to
formalise Board representation for the Nichols Family
Detail of how the Board has engaged with its customers
and suppliers is included in the Strategic Report on
pages 66 to 71.
POLITICAL DONATIONS
whilst also ensuring that the Company is capable of
The Company does not make any political donations and
carrying on, at all times, its business independently.
does not incur any political expenditure.
an aggregate interest of equal to or greater than 20
Details of the Company’s share capital, including
per cent in the issued ordinary share capital of the
changes during the year, are set out in note 28 to
Company, they shall be entitled (but not required)
the Financial Statements. As at 31 December 2021,
to appoint one Non-Executive Director; and (ii) an
the Company’s share capital consisted of 36,968,772
aggregate interest of equal to or greater than 30
Ordinary shares of ten pence each.
per cent in the issued ordinary share capital of the
Company, they shall be entitled (but not required) to
appoint one further Non-Executive Director to the
Board.
Ordinary shareholders are entitled to receive notice
of, and to attend and speak at, any general meeting of
the Company. On a show of hands, every shareholder
present in person or by proxy (or being a corporation
In accordance with the terms of the Relationship
represented by a duly authorised representative) shall
Agreement John Nichols, the Chairman of the Company
have one vote, and on a poll every shareholder who
and James Nichols, Non-Executive Director are the
is present in person or by proxy shall have one vote
Family Representative Directors.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND
POLICIES
Business risks and uncertainties are included within
the Risk Management section on pages 60 to 65 and
financial risks are set out in note 22 to the financial
statements.
EMPLOYEES
for every share of which he or she is the holder. The
Notice of Annual General Meeting specifies deadlines
for exercising voting rights and appointing a proxy or
proxies.
Other than the general provisions of the Articles of
Association (and prevailing legislation), there are no
specific restrictions on the size of a holding or on the
transfer of the Ordinary shares.
The Board believes that being permitted to allot shares
Detail of how the Board has engaged with its employees
within the limits set out in the resolution without the
is included in the Strategic Report on pages 66 to 71.
delay and expense of a general meeting gives the ability
The Group’s policy is to recruit and promote on the
basis of aptitude and ability without discrimination
to take advantage of circumstances that may arise
during the year.
of any kind. Applications for employment by disabled
AUTHORITY FOR THE COMPANY TO PURCHASE ITS
people are always fully considered bearing in mind the
OWN SHARES
qualification and abilities of the applicants. In the event
of employees becoming disabled, every effort is made to
ensure their continued employment.
Subject to authorisation by shareholder resolution, the
Group may purchase its own shares in accordance with
the Companies Act 2006. Any shares which have been
bought back may be held as treasury shares or cancelled
99
G O V E R A N C E
G O V E R A N C E
immediately upon completion of the purchase.
Report) Regulations 2018, we have prepared a
INFORMATION TO THE INDEPENDENT AUDITORS
• prepare the financial statements on the going
At the Company’s AGM held on 28 April 2021, the Group
was generally and unconditionally authorised by its
shareholders to make market purchases (within the
Streamlined Energy & Carbon Report (SECR) for the
financial year of 2021. More information is provided on
pages 48 to 51 of the Strategic Report.
meaning of section 693 of the Companies Act 2006) of
GOING CONCERN
up to a maximum of 3,696,877 of its Ordinary shares.
During 2021, the Company has repurchased 68,000
Ordinary shares under this authority, which is due to
expire at the AGM to be held on 27 April 2022, and
accordingly has an unexpired authority to purchase
up to 3,628,877 Ordinary shares with a nominal value
likely to affect its future development, performance and
position are set out in the Strategic Report on pages 16
to 71. The financial position of the Group is described in
the Financial Review on pages 54 to 59.
The Group’s business activities, together with the factors
auditor is unaware; and
of £362,888. The Group announced its intention to
In assessing the appropriateness of adopting the going
information.
conduct on-market purchases under a share buy-back
concern basis in preparing the Annual Report and
programme on 14 December 2021. The purpose of the
financial statements, the Directors have considered the
share buy-backs is to meet future obligations under
current financial position of the Group, its principal risks
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
concern basis unless it is inappropriate to presume
that the Company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose with
reasonable accuracy at any time the financial position
• the Directors have taken all steps that they ought
of the Company and enable them to ensure that the
to have taken as Directors in order to make
financial statements comply with the requirements of
themselves aware of any relevant audit information
the Companies Act 2006. They are also responsible
and to establish that the auditors are aware of that
for safeguarding the assets of the Company and hence
RESOLUTION TO RE-APPOINT INDEPENDENT
AUDITORS
WEBSITE PUBLICATION
for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
the Company’s SAYE Option Scheme and/or Long Term
and uncertainties and the potential impact of further
In accordance with Section 489 of the Companies Act
The Directors are responsible for ensuring the Annual
Incentive Plan. Shares repurchased are held in Treasury.
COVID restrictions. The review performed considers
2006, a resolution will be proposed at the 2022 AGM
Report and the financial statements are made available
The total number of shares held in Treasury as at 31
severe but plausible downside scenarios that could
that BDO LLP be re-appointed auditors.
on a website. Financial statements are published on
December is 107,664.
reasonably arise within the period.
In exercising its authority in respect of the purchase and
The estimated impacts of Covid-19 restrictions are
cancellation of the Group’s shares, the Board takes as its
primarily based around our Out of Home market and
major criterion the effect of such purchases on future
the potential for future lockdowns within the hospitality
expected earnings per share. No purchase is made if
industry. Our modelling has sensitised trading within
the effect is likely to be deterioration in future expected
this market to reflect varying degrees of lockdowns
earnings per share growth.
SHARE OPTIONS
The Company operates a Save As You Earn share option
scheme. In conjunction with this, it makes donations
to an Employee Share Ownership Trust (the ‘ESOT’) to
enable shares to be bought in the market to satisfy the
demand from option holders. As at 31 December 2021,
with the most severe scenario assuming that some
restrictions will persist throughout the whole of 2022.
In addition to the further impacts 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
implications considered.
the ESOT held 4,889 Nichols plc Ordinary 10 pence
In all cases, the business model remained robust. The
shares (2020: 8,975).
RESEARCH AND DEVELOPMENT
Group’s diversified business model and strong balance
sheet entering 2022, combined with its strong cash
generation in 2021 all provide resilience against these
The Group undertakes research and development
factors and the other principal risks that the Group is
activities in order to develop its range of new and
exposed to. At the 31 December 2021 the Group had
existing products. Expenditure during the year on
cash and cash equivalents of £56.7m with no external
research and development amounted to £0.3m (2020:
bank borrowings. This equates to 87% of 2021 gross
£0.1m).
profit.
ENVIRONMENT AND GREENHOUSE GAS EMISSIONS
On the basis of these reviews, the Directors consider
Environmental sustainability is a core priority for
Nichols, which we have embedded within our “Happier
Future” strategy, which outlines the ways the business
is working with its partners and for its communities to
make life taste better for everyone.
In accordance with The Companies (Directors’ Report)
and Limited Liability Partnerships (Energy and Carbon
100
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 the
Annual Report) and, accordingly, consider it appropriate
to adopt the going concern basis in preparing the
financial statements.
DIRECTORS’ RESPONSIBILITIES STATEMENT
the Company’s website in accordance with legislation
in the United Kingdom governing the preparation
The Directors are responsible for preparing the annual
and dissemination of financial statements, which
report and the financial statements in accordance with
may vary from legislation in other jurisdictions. The
applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law
the Directors have elected to prepare the Group and
maintenance and integrity of the Company’s website
is the responsibility of the Directors. The Directors’
responsibility also extends to the ongoing integrity of
the financial statements contained therein.
Company financial statements in accordance with
DIRECTORS’ INDEMNITY
UK adopted international accounting standards in
conformity with the requirements of the Companies
Act 2006. Under Company law the Directors must
not approve the financial statements unless they are
The Group has agreed to indemnify its Directors against
third party claims which may be brought against them
and has in place an officers’ insurance policy.
satisfied that they give a true and fair view of the state
ANNUAL GENERAL MEETING
of affairs of the Group and Company and of the profit
or loss of the Group and Company for that period.
The Directors are also required to prepare financial
statements in accordance with the rules of the London
Stock Exchange for companies trading securities on AIM.
The 2022 AGM of the Company will be held at Nichols
plc, Laurel House, Woodlands Park, Ashton Road,
Newton-le-Willows, Merseyside, WA12 0HH on 27
April 2022 at 11am. The notice convening the meeting,
together with details of the business to be considered
In preparing these financial statements, the Directors
and explanatory notes for each resolution, is set out on
are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
pages 158 to 162. Copies of the notice will be distributed
to shareholders who have elected to receive hard copies
of shareholder information.
• state whether they have been prepared accordance
with UK adopted international accounting standards
in conformity with the requirements of the
David Rattigan
Secretary
1 March 2022
Companies Act 2006, subject to any material
Laurel House, Woodlands Park,
departures disclosed and explained in the financial
Ashton Road, Newton-le-Willows, WA12 0HH.
statements;
Registered in England and Wales No. 00238303.
101
FINANCIAL
STATEMENTS
F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
103
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
104
112
112
113
114
115
116
118
158
159
161
161
03
102
INDEPENDENT
AUDITOR’S
REPORT
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
BASIS FOR OPINION
OF NICHOLS PLC
F I N A N C I A L S T A T E M E N T S
• We reviewed the going concern disclosures, and
Company’s ability to continue as a going concern for a
We conducted our audit in accordance with
assessed their consistency with the Director’s
period of at least twelve months from when the financial
OPINION ON THE FINANCIAL STATEMENTS
International Standards on Auditing (UK) (ISAs
forecasts.
statements are authorised for issue.
In our opinion:
(UK)) and applicable law. Our responsibilities under
those standards are further described in the
• the financial statements give a true and fair view of
Auditor’s responsibilities for the audit of the financial
the state of the Group’s and of the Parent Company’s
statements section of our report. We believe that the
affairs as at 31 December 2021 and of the
audit evidence we have obtained is sufficient and
Group’s loss for the year then ended;
appropriate to provide a basis for our opinion.
• the Group financial statements have been properly
INDEPENDENCE
prepared in accordance with UK adopted
international accounting standards;
We remain independent of the Group and the Parent
Company in accordance with the ethical requirements
• the Parent Company financial statements have been
that are relevant to our audit of the financial statements
Based on the work we have performed, we have not
Our responsibilities and the responsibilities of the
identified any material uncertainties relating to events
Directors with respect to going concern are described in
or conditions that, individually or collectively, may
the relevant sections of this report.
cast significant doubt on the Group and the Parent
OVERVIEW
Coverage
100% (2020: 124%) of Group loss before tax (2020: Group profit before tax)
100% (2020: 98%) of Group revenue
99% (2020: 98%) of Group total assets
properly prepared in accordance with UK adopted
in the UK, including the FRC’s Ethical Standard as applied
Key audit matters
2021
2020
CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded
Materiality
Group financial statements as a whole
Brand Support Arrangements
Goodwill and Intangible Asset Impairment
international accounting standards and as applied
to listed entities, and we have fulfilled our other ethical
in accordance with the provisions of the Companies
responsibilities in accordance with these requirements.
Act 2006; and
• 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
We have audited the financial statements of Nichols plc
statements is appropriate. Our evaluation of the
(the ‘Parent Company’) and its subsidiaries (the ‘Group’)
Directors’ assessment of the Group and the Parent
for the year ended 31 December 2021 which comprise
ability to continue to adopt the going concern basis of
the consolidated income statement, the consolidated
accounting included:
statement of comprehensive income, the group and
parent company statement of financial position, the
consolidated and parent company statement of cash
flows, the group and parent company statement of
changes in equity and notes to the financial statements,
including a summary of significant accounting policies.
• Obtaining the Directors’ 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;
The financial reporting framework that has been applied
• Considering the appropriateness and accuracy of
in their preparation is applicable law and UK adopted
these forecasts and robustly challenging their inputs
international accounting standards and, as regards the
using our knowledge of the business, the sector and
Parent Company financial statements, as applied in
wider commentary available from competitors and
accordance with the provisions of the Companies Act
peers; and
2006.
104
• Challenging the Directors’ assumptions and
judgements made with regards to stress-testing of
forecasts, re-performing sensitivities on the
Directors’ base case and stressed case scenarios,
considering the likelihood of these occurring and
understanding the mitigating actions management
would take under these scenarios
£1.0m (2020: £1.2m) based on 5% of loss before tax after adjusting for exceptional items
(2020: 3 year average basis utilising 5% 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
significant components. Full scope audits on these
understanding of the Group and its environment,
components were performed by the Group engagement
including the Group’s system of internal control, and
team.
The remaining components are dormant and therefore
were considered non-significant to the Group.
assessing the risks of material misstatement in the
financial statements. We also addressed the risk of
management override of internal controls, including
assessing whether there was evidence of bias by the
Directors that may have represented a risk of material
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.
Our Group audit scope focused on the Group’s trading
entities, being Vimto Out of Home Limited and the
Parent Company which were considered to be the
105
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
consider there to be a risk of fraud within this area and
Key observations:
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
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
and judgements.
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.
KEY AUDIT MATTER
Brand Support Arrangements (accounting policy in
note 2)
HOW WE ADDRESSED THE KEY AUDIT MATTER
IN THE AUDIT
Consistent with industry practice, the Group incurs
We undertook the following audit procedures in
significant costs or rebates to customers in the support
relation to brand support arrangements:
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.
• 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 UK adopted international accounting
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
correct period and reviewed manual journal
postings to revenue throughout the year for
evidence of misstatement or manipulation;
of recent sales made to each customer.
• We selected a sample of post year end credit notes
Whilst the majority of costs and rebates incurred on
and checked that, where audit evidence
Goodwill and Intangible Asset Impairment (note 12
Our audit procedures to address this risk included but
and accounting policy in note 2)
were not limited to:
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
• We evaluated and challenged management’s
impairment models by:
identified cash generating unit (CGUs) do not support
• challenging management’s assessment of the
the carrying value of indefinite life intangible assets
Cash Generating Units (CGUs) being assessed for
and goodwill.
Management performed a full impairment assessment
to determine if the carrying values of of the goodwill
and indefinite life intangible assets is supported. An
impairment with reference to IAS 36 and by
comparing the identified CGUs to internal
management reporting demonstrating how the cash
flows are monitored;
impairment charge of £36.2m was recognised in the
• reviewing management’s workings for mechanical
year relating to goodwill.
The key assumptions applied by the Directors in the
impairment reviews are:
• Cash flow forecasts in the context of the going
concern review, including assumptions on future
growth, gross margin and overhead allocation; and
accuracy and compliance with the requirements of
relevant accounting standards
• assessing the discount rate used within the
impairment calculation and ensuring the rate
applied lay within an acceptable range determined
with the assistance of internal valuation specialists
• checking historical financial information against
budget to assess accuracy of the budgeting process
• reviewing key estimates employed by the
Directors within the cash flow forecasts to
underlying information to assess reasonableness
and achievability
to understand the impact of reasonable changes
in assumptions on the impairment models and
conclusions
headroom on the Vimto Out of Home CGU however
the impact of the Covid-19 pandemic on the hospitality
recovery at a much slower pace than previously
forecast.
sector lasted longer than originally expected, with
• performing sensitivity analysis over key assumptions
As described in note 2, the estimation of the fair value
standards, had been appropriately applied and that
• Discount rates.
of variable consideration requires a level of estimation
the classification of charges in the income statement
and judgement to be applied by management.
was appropriate;
We considered this to be a key audit matter as the
and preparation of cash flow forecasts
value of the goodwill and indefinite life intangible
• We performed detailed cut-off testing to verify that
assets is supported by forecasts of future cash flows
brand support arrangements were recorded in the
of the business. Historically, there has been significant
these arrangements have been settled at 31 December
demonstrated that the credit note related to the
As such there is inherent uncertainty within these
2021, management judgement is required in
audit period, that these credit notes were
forecasts arising from the changing industry and
Key observations:
determining the level of closing accrual required at the
appropriately provided for in the financial
economic conditions and thus significant management
year end for promotions and brand support campaigns
statements; and
judgement and assumptions are required.
that either span two financial years or where the costs
or rebates have not been fully settled by the year end
date.
• We reviewed the year end liability for completeness
and accuracy by reviewing arrangements in place for
key customers and generating an expectation as to
As a result of the level of estimation and judgements
the year end liability.
applied in this area, as well as management being
in a position to be able to override controls, we
We found the judgements and assumptions adopted
by management in the assessment of the carrying
value of goodwill, assets with indefinite lives and
the impairment charge recognised in the year to be
reasonable and appropriate in all material aspects.
106
107
Group financial statements
Parent Company financial statements
REPORTING THRESHOLD
2021
2020
2021
2020
We agreed with the Audit Committee that we would
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
COMPONENT MATERIALITY
Strategic report and Directors’ report
We apply the concept of materiality both in planning
Importantly, misstatements below these levels will not
Aside from the parent company whose materiality
In our opinion, based on the work undertaken in the
and performing our audit, and in evaluating the
necessarily be evaluated as immaterial as we also take
is detailed above, the Group has one significant
course of the audit:
effect of misstatements. We consider materiality to
account of the nature of identified misstatements, and
component, subsidiary entity Vimto Out of Home. We
be the magnitude by which misstatements, including
the particular circumstances of their occurrence, when
set materiality for this component at 62% of Group
omissions, could influence the economic decisions of
evaluating their effect on the financial statements as a
materiality based on its size in relation to the Group and
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.
Materiality
£1,000,000
£1,200,000
£620,000
£700,000
Basis for determining
materiality
Rationale for the benchmark
applied
5% of profit before
tax after adjusting
for exceptional
items.
3 year average
basis utilising 5%
of profit before tax
after adjusting for
exceptional items.
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.
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.
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, 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.
Performance materiality
£750,000
£900,000
£465,000
£525,000
Basis for determining
performance materiality
75% of materiality
This was
considered
appropriate
based on audit
knowledge, and
given the trade
of the Group is
contained in the
parent company
and one other
component which
minimises the
risk of additional
unadjusted
misstatements
across a number
of components.
75% of materiality
This was
considered
appropriate
based on audit
knowledge, and
given the trade
of the Group is
contained in the
parent company
and one other
component which
minimises the
risk of additional
unadjusted
misstatements
across a number
of components.
75% of materiality
This was
considered
appropriate
based on audit
knowledge, and
given the trade
of the Group is
contained in the
parent company
and one other
component which
minimises the
risk of additional
unadjusted
misstatements
across a number
of components.
75% of materiality
This was
considered
appropriate
based on audit
knowledge, and
given the trade
of the Group is
contained in the
parent company
and one other
component which
minimises the
risk of additional
unadjusted
misstatements
across a number
of components.
• the information given in the Strategic report and the
Directors’ report for the financial year for which the
financial statements are prepared is consistent with
the financial statements; and
our assessment of the risk of material misstatement of
the component. Component materiality was £620,000.
In the audit of the component, we further applied
• the Strategic report and the Directors’ report have
performance materiality levels of 75% of the component
been prepared in accordance with applicable legal
materiality to our testing to ensure that the risk of errors
requirements.
exceeding component materiality was appropriately
mitigated.
In the light of the knowledge and understanding of
the Group and Parent Company and its environment
obtained in the course of the audit, we have not
identified material misstatements in the strategic report
or the Directors’ report.
report to them all individual audit differences in excess
of £20,000 (2020: £24,000). We also agreed to report
Matters on which we are required to report by
differences below this threshold that, in our view,
exception
warranted reporting on qualitative grounds.
OTHER INFORMATION
The Directors are responsible for the other information.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
The other information comprises the information
• adequate accounting records have not been kept by
included in the annual report other than the financial
the Parent Company, or returns adequate for our
statements and our auditor’s report thereon. Our
audit have not been received from branches
opinion on the financial statements does not cover
not visited by us; or
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,
• the Parent Company financial statements are not in
agreement with the accounting records and returns;
or
in doing so, consider whether the other information is
• certain disclosures of Directors’ remuneration
materially inconsistent with the financial statements
specified by law are not made; or
or our knowledge obtained in the course of the audit,
or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent
• we have not received all the information and
explanations we require for our audit.
material misstatements, we are required to determine
RESPONSIBILITIES OF DIRECTORS
whether this gives rise to a material misstatement in the
financial statements themselves. If, based on the work
we have performed, we conclude that there is a material
misstatement of this other information, we are required
to report that fact.
We have nothing to report in this regard.
OTHER COMPANIES ACT 2006 REPORTING
Based on the responsibilities described below and our
work performed during the course of the audit, we are
required by the Companies Act 2006 and ISAs (UK) to
report on certain opinions and matters as described
below.
As explained more fully in the Directors’ responsibilities
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
internal control as the Directors determine is necessary
to enable the preparation of financial statements that
are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going
108
109
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
concern and using the going concern basis of accounting
enquiries through our review of Board minutes,
unless the Directors either intend to liquidate the Group
papers provided to the Audit Committee and any
or the Parent Company or to cease operations, or have
correspondence received from regulatory bodies.
no realistic alternative but to do so.
• We assessed the susceptibility of the financial
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE
statements to material misstatement, including
FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
financial statements.
fraud and evaluated management’s incentives
and opportunities for fraudulent manipulation
of the financial statements (including the risk of
override of controls). Where the risk was considered
to be higher, we performed audit procedures to
address each identified fraud risk. These procedures
included but were not limited to testing manual
journals, detailed testing of a sample of items
for revenue cut off around the year end to ensure
they were accounted for in the correct period and
challenging the assumptions made by management
in their significant accounting estimates in
particular in relation to estimation of brand support
arrangements, impairment of goodwill and intangible
assets, which are Key audit matters and the
Extent to which the audit was capable of detecting
recognition and measurement of litigation and
irregularities, including fraud
contingent liabilities.
Irregularities, including fraud, are instances of non-
We also communicated relevant identified laws and
compliance with laws and regulations. We design
regulations and potential fraud risks to all engagement
procedures in line with our responsibilities, outlined
team members and remained alert to any indications
above, to detect material misstatements in respect
of fraud or non-compliance with laws and regulations
of irregularities, including fraud. The extent to which
throughout the audit.
our procedures are capable of detecting irregularities,
including fraud is detailed below:
Our audit procedures were designed to respond to risks
of material misstatement in the financial statements,
• We obtained an understanding of the legal and
recognising that the risk of not detecting a material
regulatory frameworks that are applicable to
misstatement due to fraud is higher than the risk of
the Group and determined that the most significant
not detecting one resulting from error, as fraud may
frameworks which are directly relevant to specific
involve deliberate concealment by, for example, forgery,
assertions in the financial statements are those
misrepresentations or through collusion. There are
that relate to the reporting framework (UK adopted
inherent limitations in the audit procedures performed
international accounting standards and the
and the further removed non-compliance with laws
Companies Act 2006) and the relevant tax compliance
and regulations is from the events and transactions
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
those laws and regulations relating to food safety,
reflected in the financial statements, the less likely
we are to become aware of it. A further description
of our responsibilities is available on the Financial
Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of
our auditor’s report.
environmental, occupational health and safety and
USE OF OUR REPORT
data protection.
This report is made solely to the Parent Company’s
• We understood how the Group is complying with
members, as a body, in accordance with Chapter 3 of
those frameworks by making enquiries of
Part 16 of the Companies Act 2006. Our audit work has
management and those responsible for legal and
been undertaken so that we might state to the Parent
compliance procedures. We corroborated our
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.
Stuart Wood (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor,
Manchester, UK
1 March 2022
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
OUR
ADVISORS
AUDITORS
BDO LLP,
3 Hardman Street,
Spinningfields,
Manchester,
M3 3AT.
BANKERS
REGISTRARS
Link Group,
10th Floor,
Central Square,
29 Wellington Street,
Leeds,
LS1 4DL.
The Royal Bank of Scotland PLC,
REGISTERED OFFICE
Laurel House,
Woodlands Park,
Ashton Road,
Newton-le-Willows,
WA12 0HH.
REGISTERED NUMBER
00238303.
1 Spinningfields Square,
Manchester,
M3 3AP.
SOLICITORS
DLA Piper,
101 Barbirolli Square,
Manchester,
M2 3DL.
STOCKBROKERS & NOMINATED ADVISOR
Singer Capital Markets,
West One Wellington Street,
Leeds,
LS1 1BA.
110
111
CONSOLIDATED INCOME STATEMENT-YEAR ENDED 31 DECEMBER 2021
STATEMENT OF FINANCIAL POSITION-YEAR ENDED 31 DECEMBER 2021
2021
2020
Before
exceptional
items
£’000
Exceptional
items
(note 4)
£’000
Before
exceptional
items
£’000
Exceptional
items
(note 4)
£’000
Total
£’000
Total
£’000
Continuing operations
Notes
3
144,328
(79,153)
65,175
(9,129)
-
-
-
-
144,328
118,657
(79,153)
(69,021)
65,175
(9,129)
49,636
(7,979)
- 118,657
-
-
-
(69,021)
49,636
(7,979)
(34,124)
(39,477)
(73,601)
(30,003)
(5,074)
(35,077)
5
6
6
8
21,922
(39,477)
(17,555)
11,654
(5,074)
6,580
57
(158)
-
-
57
(158)
150
(190)
-
-
21,821
(39,477)
(17,656)
11,614
(5,074)
150
(190)
6,540
(4,783)
271
(4,512)
(2,174)
488
(1,686)
17,038
(39,206)
(22,168)
9,440
(4,586)
4,854
Revenue
Cost of sales
Gross profit
Distribution expenses
Administrative
expenses
Operating profit/(loss)
Finance income
Finance expense
Profit/(loss) before
taxation
Taxation
Profit/(loss) for the
year attributable to
equity shareholders
Earnings per share
attributable to the
ordinary equity
shareholders
Earnings/(loss) per share
(basic)
Earnings/(loss) per share
(diluted)
10
10
46.15p
46.09p
(60.04p)
25.56p
(60.04p)
25.54p
13.14p
13.13p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - YEAR ENDED 31 DECEMBER 2021
(Loss)/profit for the 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 income/(expense) for the year
2021
£’000
(22,168)
4,083
(962)
3,121
Total comprehensive (expense)/income attributable to equity shareholders
(19,047)
2020
£’000
4,854
(155)
32
(123)
4,731
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
Corporation tax recoverable
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Non-current liabilities
Other payables
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium reserve
Capital redemption reserve
Other reserves
Retained earnings
Total equity
Group
2021
£’000
2020
£’000
Parent
2021
£’000
2020
£’000
Notes
11
12
13
14
15
26
16
17
18
19
20
19
15
17
26
14
28
17,099
-
-
20,126
36,244
6,327
7,344
-
-
-
16,566
16,566
5,546
6,206
-
5,276
27,921
9,706
36,124
743
56,674
103,247
-
347
62,923
5,921
29,143
671
47,294
83,029
122
-
5,276
28,291
6,070
40,407
756
38,767
86,000
131,168
145,952
114,291
28,791
4,242
33,033
1,954
3,155
5,109
38,142
93,026
3,697
3,255
1,209
676
84,189
93,026
21,669
-
21,669
2,922
1,485
4,407
26,076
119,876
3,697
3,255
1,209
394
111,321
119,876
50,100
4,242
54,342
1,367
1,138
2,505
56,847
57,444
3,697
3,255
1,209
1,451
47,832
57,444
156
145
347
24,558
3,526
37,655
742
30,629
72,552
97,110
39,876
-
39,876
2,040
-
2,040
41,916
55,194
3,697
3,255
1,209
1,169
45,864
55,194
The Parent Company reported a profit for the year ended 31 December 2021 of £6,932,000 (2020: £4,578,000).
The financial statements on pages 112 to 157 were approved by the Board of Directors on 1 March 2022 and were
signed on its behalf by:
P J Nichols
Chairman
Registered number 00238303.
112
113
CONSOLIDATED STATEMENT OF CASH FLOWS - YEAR ENDED 31 DECEMBER 2021
PARENT COMPANY STATEMENT OF CASH FLOWS - YEAR ENDED 31 DECEMBER 2021
Notes
2021
£’000
2021
£’000
2020
£’000
2020
£’000
Parent
Notes
2021
£’000
2021
£’000
2020
£’000
2020
£’000
(22,168)
4,854
Profit for the financial year
6,932
4,578
Cash flows from operating activities
Group
Cash flows from operating activities
(Loss)/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
(Increase)/decrease in inventories
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Increase in provisions
Change in pension obligations and employee benefits
Fair value gain on derivative financial instruments
Cash generated from operating activities
Taxation 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 intangible assets
Payment of contingent consideration
Net cash used in investing activities
Cash flows from financing activities
Purchase of own shares
Payment of lease liabilities
Dividends paid
4,969
36,244
-
63
(57)
158
4,512
(3,785)
(6,804)
7,429
4,242
(846)
(178)
57
2
(1,239)
-
(67)
(1,217)
(1,189)
(6,868)
4
11
6
6
20
22
21
24
9
4,971
3,820
1,016
71
(150)
190
1,686
2,440
9,220
(838)
-
(755)
-
150
35
(2,701)
(170)
(880)
21,671
26,525
(5,017)
21,508
45,947
23,779
(3,878)
19,901
(1,247)
(3,566)
-
(1,254)
(10,338)
Net cash used in financing activities
(9,274)
(11,592)
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
18
9,380
47,294
56,674
6,350
40,944
47,294
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
(Increase)/decrease in inventories
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Increase in provisions
Change in pension obligations and employee benefits
Fair value gain on derivative financial instruments
Cash generated from operating activities
Taxation 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
Purchase of own shares
Payment of lease liabilities
Dividends paid
1,585
-
46
(57)
126
2,228
(2,544)
(4,949)
15,036
4,242
(846)
(178)
57
(471)
-
14,689
21,621
(3,920)
17,701
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
(414)
(596)
(1,217)
(1,064)
(6,868)
24
9
-
(1,122)
(10,338)
Net cash used in financing activities
(9,149)
(11,460)
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
18
8,138
30,629
38,767
10,535
20,094
30,629
114
115
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY-YEAR ENDED 31 DECEMBER 2021
COMPANY STATEMENT OF CHANGES IN EQUITY-YEAR
ENDED 31 DECEMBER 2021
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 2020
3,697
3,255
1,209
253
116,928
125,342
At 1 January 2020
3,697
3,255
1,209
1,028
51,747
60,936
Dividends
Movement in ESOT
Credit to equity for equity-
settled share based payments
Total transactions
with owners
Profit for the year
Other comprehensive expense
Total comprehensive income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24
117
-
-
24
117
141
(10,338)
(10,197)
-
-
-
4,854
(123)
4,731
4,854
(123)
4,731
Movement in ESOT
Credit to equity for equity-
settled share based payments
Total transactions
with owners
Profit for the year
Other comprehensive expense
Total comprehensive income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24
117
(10,338)
(10,338)
-
-
24
117
141
(10,338)
(10,197)
-
-
-
4,578
(123)
4,455
4,578
(123)
4,455
(10,338)
(10,338)
Dividends
At 1 January 2021
3,697
3,255
1,209
394
111,321
119,876
At 1 January 2021
3,697
3,255
1,209
1,169
45,864
55,194
Dividends
Movement in ESOT
Credit to equity for equity-
settled share based payments
Purchase of own shares
Total transactions
with owners
Loss for the year
Other comprehensive income
Total comprehensive expense
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
272
-
282
-
-
-
(6,868)
(6,868)
Dividends
-
-
10
272
(1,217)
(1,217)
(8,085)
(7,803)
(22,168)
(22,168)
3,121
3,121
(19,047)
(19,047)
Movement in ESOT
Credit to equity for equity-
settled share based payments
Purchase of own shares
Total transactions
with owners
Profit for the year
Other comprehensive income
Total comprehensive income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
272
-
282
-
-
-
(6,868)
(6,868)
-
-
10
272
(1,217)
(1,217)
(8,085)
(7,803)
6,932
3,121
6,932
3,121
10,053
10,053
At 31 December 2021
3,697
3,255
1,209
676
84,189
93,026
At 31 December 2021
3,697
3,255
1,209
1,451
47,832
57,444
116
117
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
1. REPORTING ENTITY
factors and the other principal risks that the Group is
to mitigate against the impact of recent sugar levy
Short term promotional discounts
Nichols plc (the “Company”) is a company incorporated
and domiciled in the United Kingdom, listed on the
Alternative Investment Market. The address of the
Company’s registered office is Laurel House, Woodlands
cash and cash equivalents of £56.7m with no external
bank borrowings. This equates to 87% of 2021 gross
profit.
The Directors have therefore made a judgement
rebates across numerous customers and represent the
that certain intangible assets relating to brands have
cost to the Group of short-term deal mechanics. The
indefinite lives. It is expected that these brands will be
common deals typically include price reductions for
Promotional discounts consist of many individual
exposed to. At the 31 December 2021 the Group had
announcements.
Park, Ashton Road, Newton-le-Willows, WA12 0HH. The
On the basis of these reviews, the Directors consider
held and supported for an indefinite period of time and
specific SKU’s during the promotional period.
Amounts provided for these brand support accruals at
the end of a period requires estimation and historical
data and accumulated experience is used to estimate
the related provision using the expected value amount
method and in most instances the discount can be
estimated using known facts with a high level of
accuracy.
Defined benefit obligations
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
and salary increases, expected return on scheme assets,
mortality and other demographic assumptions (see
note 26) which represent a key source of estimation
uncertainty for the Group.
Historic incentive scheme
The liability and corresponding asset disclosed within
note 20 and note 17 have been calculated based
on specialist tax and legal advice and represent a
reasonable estimate of the final outcome, including
consolidated financial statements of the Company as
the Group has adequate resources to continue in
are expected to generate economic benefits. The Group
at and for the year ended 31 December 2021 comprise
operational existence for the foreseeable future (being
is committed to supporting its brands and invests in
the Company and its subsidiaries (together referred to
at least one year following the date of approval of the
significant consumer marketing promotional spend.
as the “Group”). The Group is primarily engaged in the
Annual Report) and, accordingly, consider it appropriate
Should management have judged the intangible assets
supply of soft drinks to the retail, wholesale, catering,
to adopt the going concern basis in preparing the
not to be of indefinite lives, an amortisation charge
licensed and leisure industries.
financial statements.
would be made to the Consolidated Income Statement
2. ACCOUNTING POLICIES
Use of adjusted measures
Basis of preparation
The consolidated and Parent Company financial
statements have been prepared in accordance with
UK adopted International Accounting Standards in
conformity with the requirements of the Companies Act
2006.
The performance of the Group is assessed using
adjusted measures that are not defined under IFRS
and are therefore deemed non-GAAP measures.
These measures include adjusted operating profit and
with indefinite lives are impaired requires an estimation
adjusted profit before tax, which both remove the
of the value in use of the cash-generating units to
impact of exceptional items. The Group also reports
which the assets have been allocated. The value in use
EBITDA which measures underlying performance having
calculation requires management to estimate the future
on an annual basis.
Impairment of goodwill and intangible assets with
indefinite lives
Determining whether goodwill and intangible assets
The accounting policies have been applied consistently
by the Group, with those adopted in the previous year.
removed the impact of interest, taxation, depreciation
cash flows expected to arise from the cash-generating
and amortisation from profit after tax. The Group also
unit and a suitable discount rate in order to calculate
calculates an adjusted earnings per share, based on the
present value (see note 12).
An income statement is not provided for the parent
Company as permitted by Section 408 of the Companies
Act 2006.
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 future
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 potential for future lockdowns within 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 2022.
In addition to the further impacts 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
implications considered.
In all cases, the business model remained robust. The
Group’s diversified business model and strong balance
sheet entering 2022, combined with its strong cash
generation in 2021, all provide resilience against these
118
adjusted profit after tax which again removes the impact
of exceptional items.
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 carrying amount of goodwill at the reporting date
was £nil (2020: £36.2m).
The carrying amount of brands with indefinite lives was
£2.6m (2020: £2.6m).
Customer list intangible assets have finite lives assigned.
the Group’s additional tax liability, interest costs and
Such assets are tested for impairment if an impairment
amounts expected to be recovered.
indicator exists. No impairment indicators were noted at
31 December 2021.
Basis of consolidation and goodwill
Use of estimates and judgements
Carrying value of brand support accruals
The Group financial statements consolidate those of
the Company and all of its subsidiary undertakings
The preparation of financial statements requires
management to make judgements, estimates and
assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities,
income and expenses. However, the nature of
estimation means that actual outcomes may differ from
these estimates. The following are the key assumptions
concerning the future and other key sources of
estimation uncertainty at the reporting date, that have
the most significant effect on the carrying amounts of
assets and liabilities within the next financial year.
Intangible assets with indefinite lives
In the opinion of the Directors, the industry in which
the Group operates is stable and there are relatively
high barriers to entry. The brands acquired are well
established in their respective sales channels and both
have an important role to play in all of the Group’s
routes to market. The brands are also well positioned
The Group incurs significant costs in the support and
drawn up to 31 December 2021. Subsidiaries are
development of the Group’s brands. The majority of
entities controlled by the Group. Control exists if all
costs incurred on these arrangements have been settled
three of the following elements are present: power over
at 31 December 2021, however certain judgement is
the investee, exposure to variable returns from the
required in determining the level of closing accrual
investee, and the ability of the investor to use its power
required at a year end for promotions and brand
to affect those variable returns. Control is reassessed
support campaigns that either span two financial years
whenever facts and circumstances indicate that there
or where the costs have not been fully settled by the
may be a change in any of these elements of control.
year end date.
Promotions and brand support campaigns comprise:
Long term discounts and rebates
The financial statements of subsidiaries are included in
the consolidated financial statements from the date that
control commences until the date that control ceases.
Intra-Group balances and any unrealised gains and
• Fixed, a defined amount over a period of time
losses arising from intra-Group transactions are
• % of net revenue, a percentage of net revenue, which
eliminated in preparing the consolidated financial
may have associated hurdle rates
statements.
Acquisitions of subsidiaries are dealt with by the
acquisition method. The acquisition method involves
the recognition at fair value of all identifiable assets and
119
the subsidiary prior to acquisition. On initial recognition,
the assets and liabilities of the subsidiary are included
in the consolidated statement of financial position at
their fair values, which are also used as the basis for
subsequent measurement in accordance with Group
accounting policies.
Goodwill is stated after separating out identifiable
assets. Goodwill represents the excess of the fair value
of the consideration transferred over the fair value of
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
liabilities at the acquisition date, regardless of whether
accruals for claims yet to be received for discounts,
Exceptional items
provided they are enacted or substantively enacted at
or not they were recorded in the financial statements of
rebates and promotional costs.
The Group has adopted an accounting policy that seeks
the reporting date.
Accruals are made for each individual promotion or
to highlight significant exceptional items of income and
A deferred tax asset is recognised to the extent that it
rebate based on the specific terms and conditions of the
expense within Group results for the year. Exceptional
is probable that future taxable profits will be available
customer agreement. Management makes estimates
items are those considered to be of such significance,
against which temporary differences can be utilised.
on an ongoing basis to assess customer performance
by either nature or scale, that separate disclosure
Deferred tax assets are reviewed at each reporting
and sales volume to calculate total amounts earned to
is required in the financial statements in order to
date and are reduced to the extent that it is no longer
be recorded as deductions from revenue and in most
provide a better understanding of the Group’s trading
probable that the related tax benefit will be realised.
the Group’s share of the identifiable net assets of the
Segmental reporting
acquired subsidiary at the date of acquisition.
An operating segment is a component of the Group
income statement in the year in which it is incurred
Research expenditure is recognised in the consolidated
instances the discount can be estimated using known
facts with a high level of accuracy.
performance.
Research and Development
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.
In calculating goodwill, the fair value of consideration
that engages in business activities from which it may
has been calculated using the cash consideration plus
earn revenues and incur expenses, including revenues
the Directors’ best estimate of contingent consideration
and expenses that relate to transactions with any of
at the acquisition date.
Revenue recognition
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
Revenue from the sale of goods is based on the price
documents industry performance in respect of Stills
specified in the contract, being the invoice price less any
and Carbonates, management identify both Stills and
agreed discounts or rebates and excluding VAT and after
Carbonates as operating segments where operating
the deduction of certain promotional and brand support
results are reviewed regularly by the Board (as chief
costs invoiced by customers.
operating decision maker) to make decisions about
Revenue is recognised when control of the goods have
been transferred to the buyer. Payment terms vary by
resources to be allocated to the segment and assess its
performance.
Internal development expenditure is capitalised only
if it meets the recognition criteria of IAS 38, Intangible
Brands
Assets. If the Group cannot distinguish the research
Brands acquired in a business combination are
phase of an internal project to create an intangible
recognised at fair value at the acquisition date. Brands
asset from the development phase, the entity treats
acquired separately through a business combination are
the expenditure for that project as if it were incurred
assessed at the date of acquisition as to whether they
in the research phase only. Where recognition criteria
have an indefinite life. The assessment includes whether
are met, intangible assets are capitalised and amortised
the brand name will continue to trade and the expected
on a straight-line basis over their useful economic lives.
lifetime of the brand. All brands acquired to date have
All intangible assets are tested for impairment when
been assessed as having an indefinite life as they are
there are indications that the carrying value may not
expected to continue to contribute to the long-term
be recoverable. Any impairment losses are recognised
immediately in the consolidated income statement.
future of the Group. The brands are reviewed annually
for impairment, being carried at cost less accumulated
customer but never exceed 12 months. The transaction
Segment results that are reported to the Board include
price is therefore not adjusted for the effects of a
items directly attributable to a segment as well as those
Taxation
impairment charges. The fair value of a brand at
the date of acquisition is based on the Relief from
significant financing component.
that can be allocated on a reasonable basis. Segment
Income tax expense comprises consolidated current
Royalties method, which is a valuation model based on
reporting for the Group is made to the gross profit level
and deferred tax. Income tax expense is recognised in
discounted cash flows.
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.
With regard to discounts, rebates, promotional costs
for the operating segments but no segment reporting
is made for further expenditure or for the assets and
liabilities of the Group. The assets and liabilities of the
Group are reported as Group totals and no reporting
of these balances is recorded at a segment level. As
a result, all of the Group’s assets and liabilities are
unallocated items and no reconciliation of segment
assets to the Group’s total assets is prepared.
Foreign currency transactions
and brand support costs, consideration is given as to
Transactions in foreign currencies are translated into
whether a distinct good or service has been received
the respective functional currencies of Group entities
from the goods sold to the customer. Where the
at exchange rates at the date of transactions. Monetary
payments do not result in the receipt of a distinct
assets and liabilities denominated in foreign currencies
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
an expense and recognised in administrative expenses.
currency at the exchange rate at that date.
Any exchange differences arising on the settlement of
For discounts, rebates, promotional costs and brand
monetary items or on translating monetary items at
support costs, accumulated experience is used to
rates different from those at which they were initially
estimate and provide for these using the expected value
recorded are recognised in the consolidated income
the income statement except to the extent that it relates
to items recognised in other comprehensive income/
Customer lists
(expense), in which case it is recognised in consolidated
Customer lists acquired in a business combination are
other comprehensive income/ (expense).
recognised at fair value at the acquisition date. They are
Current tax
amortised over the useful economic life identified at the
date of acquisition with amortisation charges included
Current tax is the expected tax payable on the taxable
within administrative expenses.
income for the year, using rates which are enacted or
substantively enacted at the reporting date and any
Reserves
adjustment to tax payable in respect of previous years.
Share capital represents the nominal value of equity
Deferred tax
shares.
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.
Share premium represents the excess over nominal
value of the fair value of the consideration received for
equity shares.
Capital redemption reserve represents the reserve
created upon redemption of shares.
Deferred tax is not provided on the initial recognition
Other reserves incorporate purchase of own shares,
of goodwill, or on the initial recognition of an asset or
movements in the Group’s ESOT and equity settled
liability unless the related transaction is a business
share-based payments in respect of Long-Term
method, and revenue is only recognised to the extent
that it is highly probable that a significant reversal will
not occur. The statement of financial position includes
120
statement in the period in which they arise.
combination or affects tax or accounting profit. Deferred
Incentive Plans.
tax is measured at the tax rates that are expected to be
applied to the temporary differences when they reverse,
Retained earnings represents retained earnings.
121
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
Dividends
write down the cost less estimated residual value on
investments that are readily convertible to known
term. Other variable lease payments are expensed in
Dividend distribution to the Company’s shareholders
is recognised as a liability in the Group’s Financial
property, plant and equipment over their estimated
amounts of cash and which are subject to an
the period to which they relate.
useful lives.
insignificant risk of changes in value.
Subsequent to initial measurement lease liabilities
Statements in the period in which the dividends are
The estimated useful lives for the current and
This Group holds derivative financial instruments in
increase as a result of interest charged at a constant
approved by the Company’s shareholders. In respect
comparative periods are as follows:
relation to foreign currency forward contracts. They are
rate on the balance outstanding and are reduced
of interim dividends these are recognised once paid.
Impairment
The carrying values of the Group’s non-current assets
are reviewed at each reporting date to determine
whether there is any indication of impairment. All
Plant, machinery, fixtures
3-10 years
and fittings
Buildings
50 years
Material residual value estimates and useful economic
property, plant and equipment is tested for impairment
lives are updated at least annually.
whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable.
For the purposes of assessing impairment, assets
are Grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating
units). As a result, some assets are tested individually for
impairment and some are tested at a cash-generating
unit level.
An impairment loss is recognised if the carrying amount
of an asset or its cash-generating unit exceeds its
recoverable amount. The recoverable amount is the
higher of fair value, reflecting market conditions less
costs to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted to
their present value using the cost of capital that reflects
the current market assessments of the time value of
money and the risks specific to the cash-generating
unit. Impairment losses recognised in respect of
cash-generating units are allocated first to reduce the
carrying amount of any goodwill allocated to the units
and then to reduce the carrying amount of the other
assets in the unit on a pro-rata basis. Impairment losses
are recognised in the income statement.
Goodwill and intangible assets with indefinite lives are
reviewed for impairment annually.
Property, plant and equipment
Items of property, plant and equipment are measured
at cost less accumulated depreciation and impairment
losses.
Land is not depreciated.
Inventories
Inventories are measured at the lower of cost and net
realisable value. The cost of inventories is based on
the first-in first-out principle and includes expenditure
incurred in acquiring the inventories and bringing them
to their existing location and condition. Net realisable
value is the estimated selling price in the ordinary
course of business, less the costs of completion and
selling expenses.
Financial assets
The Group’s financial assets comprise primarily cash,
bank deposits and trade receivables that arise from its
business operations. Financial assets are a contractual
right to receive cash or another financial asset from
another entity or to exchange financial assets or
financial liabilities with another entity under conditions
that are potentially favourable to the entity.
Trade receivables are measured at amortised cost using
the effective interest method, less any expected credit
losses using the simplified approach contained within
IFRS 9. Estimated irrecoverable amounts are based on
historical experience and forward looking information,
together with specific amounts that are not expected
to be recovered. Individual amounts are written off
when management deems them to be irrecoverable.
The amount of expected credit losses are updated at
each reporting date. Interest income is recognised by
applying the effective interest rate, except for short-
carried in the statement of financial position at fair value
for lease payments made. Right-of-use assets are
with changes in fair value recognised in the income
statement.
depreciated on a straight-line basis over the remaining
term of the lease or over the remaining economic life of
Financial liabilities
The Group’s financial liabilities comprise trade and
other payables and IFRS 16 lease liabilities. Financial
liabilities are obligations to pay cash or other financial
assets and are recognised when the Group becomes a
party to the contractual provisions of the instruments.
Trade payables are initially measured at fair value and
are subsequently measured at amortised cost, using the
effective interest rate method.
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
the asset if, rarely, this is judged to be shorter than the
lease term.
When the Group revises its estimate of the term of
any lease (because, for example, it re-assesses the
probability of a lessee extension or termination option
being exercised), it adjusts the carrying amount of the
lease liability to reflect the payments to make over the
revised term, which are discounted using a revised
discount rate. The carrying value of lease liabilities is
similarly revised when the variable element of future
lease payments dependent on a rate or index is revised,
except the discount rate remains unchanged. In both
cases an equivalent adjustment is made to the carrying
value of the right-of-use asset, with the revised carrying
amount being 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.
When the Group renegotiates the contractual terms of
a lease with the lessor, the accounting depends on the
nature of the modification:
date) about facts and circumstances that existed at the
• if the renegotiation results in one or more additional
acquisition date. Changes in the amount of contingent
assets being leased for an amount commensurate
consideration payable that results from events after the
with the standalone price for the additional rights-
acquisition date, such as meeting a revenue or profit
of-use obtained, the modification is accounted for as
target, are not measurement period adjustments and
a separate lease in accordance with the above policy
are, therefore, recognised in profit or loss.
Leased assets
All leases are accounted for by recognising a right-of-use
asset and a lease liability except for:
• Leases of low value assets; and
• Leases with a duration of 12 months or less.
•
in all other cases where the renegotiation increases
the scope of the lease (whether that is an extension
to the lease term, or one or more additional
assets being leased), the lease liability is remeasured
using the discount rate applicable on the modification
date, with the right-of-use asset being adjusted by the
same amount
• if the renegotiation results in a decrease in the scope
of the lease, both the carrying amount of the lease
liability and right-of-use asset are reduced by the
same proportion to reflect the partial or full
termination of the lease with any difference
recognised in profit or loss. The lease liability
is then further adjusted to ensure its carrying amount
reflects the amount of the renegotiated payments
over the renegotiated term, with the modified lease
payments discounted at the rate applicable on the
modification date. The right-of-use asset is adjusted
by the same amount.
123
Cost includes expenditures that are directly attributable
term receivables when the recognition of interest would
Lease liabilities are measured at the present value of the
to the acquisition of the asset.
be immaterial.
The cost of replacing part of an item of property, plant
Amounts owed by Group undertakings are stated after
and equipment is recognised in the carrying amount
any provision for expected credit loss in line with the
of the item if it is probable that the future economic
three stage model in IFRS 9.
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.
For the purpose of the consolidated statement of cash
flows, cash and cash equivalents comprise deposits with
banks and bank and cash balances.
Depreciation is calculated on a straight line basis to
Cash equivalents are short-term, highly liquid
122
contractual payments due to the lessor over the lease
term, with the discount rate determined by reference to
the rate inherent in the lease unless (as is typically the
case) this is not readily determinable, in which case the
Group’s incremental borrowing rate on commencement
of the lease is used. Variable lease payments are only
included in the measurement of the lease liability if they
depend on an index or rate. In such cases, the initial
measurement of the lease liability assumes the variable
element will remain unchanged throughout the lease
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
The Group sometimes negotiates break clauses in its
approximating to the terms of the related pension
Provisions and contingent liabilities
• Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 -
certain that the Group would not exercise its right
Executive share award scheme for certain Directors and
Finance costs
property leases. On a case-by-case basis, the Group will
liability. Service cost on the net defined benefit liability
consider whether the absence of a break clause exposes
is included in employee benefits expense. Net interest
the Group to excessive risk. Typically factors considered
income on the net defined benefit surplus is included
in deciding to negotiate a break clause include:
in finance income. Remeasurement of the DBO,
• the length of the lease term;
• the economic stability of the environment in which
the property is located; and
• whether the location represents a new area of
comprising actuarial gains and losses and the return on
scheme assets (excluding interest), are recognised in the
statement of other comprehensive income in the year in
which they arise.
operations for the Group.
Share-based payment transactions
At 31 December 2021 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 (SAYE) scheme
that would be avoided from exercising break clauses
open to all employees; a Long-Term Incentive Plan
because on both dates it was considered reasonably
(LTIP) for certain Directors and senior executives and an
to exercise any right to break the lease. Total lease
senior executives. All schemes comprise the grant of
payments of £1,079,000 (2020: £1,746,000) are
options under the Group’s share option schemes.
potentially avoidable were the Group to exercise break
clauses at the earliest opportunity.
The Group recognises an expense to the income
statement representing the fair value of outstanding
Post-employment benefit plans
equity-settled share-based payment awards to
The Group provides post-employment benefits through
defined contribution and defined benefit plans.
Defined contribution plan
employees which have not vested as at 31 December
2021.
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.
Defined benefit plan
Under the Group’s defined benefit plan, the amount
of pension benefit that an employee will receive on
retirement is defined by reference to the employee’s
length of service and final salary. The legal obligation for
any benefits remains with the Group, even if plan assets
for funding the defined benefit plan have been set aside.
Plan assets may include assets specifically designated to
The total amount to be expensed over the vesting
period is determined with reference to the fair value
of options granted, excluding the impact of any
non-market vesting conditions. Non-market vesting
conditions are included in the assumptions about the
number of options expected to vest. At each reporting
date the Group revises its estimate of the number of
options expected to vest.
a long-term benefit fund as well as qualifying insurance
It recognises the impact of revisions to original
policies.
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
124
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.
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
Annual Improvements to IFRS Standards 2018-2020
• Amendments to IFRS 3 - References to Conceptual
Framework
outflow of economic benefits will be required to settle
The following amendments are effective for the period
the obligation. Provisions are determined by discounting
beginning 1 January 2023:
the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of
• Amendments to IAS 1 and IFRS Practice Statement 2 -
money and the risks specific to the liability.
Disclosure of Accounting Policies
Finance income
• Amendments to IAS 8 - Definition of Accounting
Estimates
Finance income comprises interest income on funds
• Amendments to IAS 12 - Deferred Tax Related to
invested. Interest income is recognised as it accrues,
using the effective interest method.
Assets and Liabilities arising from a Single Transaction
•
•
IFRS 17 Insurance Contracts (effective 1 January 2023)
In June 2020, the IASB issued amendments to IFRS
17, including a deferral of its effective date to 1
Finance costs comprise of interest expenses on leases
January 2023.
and defined benefit pension obligations. Interest
expenses are recognised as they accrue, using the
effective interest method.
Government grants
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.
Government grants are recognised in profit or loss on
a systematic basis over the periods in which the entity
The Group does not expect any other standards issued,
but not yet effective, to have a material impact on the
recognises expenses for the related costs for which the
Group.
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.
As at 31 December 2021, the ESOT holds 4,889 shares in
the Company (2020: 8,975 shares).
Investments in subsidiaries
Investments in subsidiaries are shown in the Parent
Company statement of financial position at cost less any
provision for impairment.
Standards and interpretations in issue not yet
adopted
There are a number of standards, amendments to
standards, and interpretations which have been issued
by the IASB that are effective in future accounting
periods that the Group has decided not to adopt early.
• Amendments to IAS 37 - Onerous Contracts – Cost of
Fulfilling a Contract
• Amendments to IAS 16 - Property, Plant and
Equipment: Proceeds before Intended Use
125
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
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
2021
£’000
72,393
71,935
2020
£’000
65,688
52,969
144,328
118,657
2021
£’000
37,980
27,195
65,175
2020
£’000
32,817
16,819
49,636
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
2021
£’000
9,765
16,410
6,523
32,698
111,630
144,328
2021
%
6.8
11.4
4.5
22.7
77.3
100.0
2021
£’000
1,239
108
4,309
-
660
36,244
2020
£’000
7,309
14,010
5,712
27,031
91,626
118,657
2020
£’000
2,871
1,226
4,258
1,016
713
3,820
2020
%
6.2
11.8
4.8
22.8
77.2
100.0
Revenue from continuing operations arose principally from the provision of goods.
The Group’s business segments operate in the Middle East, Africa, the Rest of the World and the United Kingdom.
The Group’s Head Office operations are located in the United Kingdom.
In presenting information on the basis of geographical areas, area revenue is based on the geographical location of
customers and not on the legal entity in which the transaction occurred.
No individual customer accounts for 10% or more of the Group’s revenue in either 2021 or 2020.
Total assets
The assets of the Group at 31 December 2021 and 31 December 2020 are located within the United Kingdom and
Europe.
Capital expenditure
The capital expenditure of the Group for the years ended 31 December 2021 and 31 December 2020 was made
within the United Kingdom and Europe.
IFRS 16 additions
The IFRS 16 additions of the Group for the years ended 31 December 2021 and 31 December 2020 were made within
the United Kingdom and Europe.
Depreciation
The IFRS 16 additions of the Group for the years ended 31 December 2021 and 31 December 2020 were made within
the United Kingdom and Europe.
Amortisation
The Group’s amortisation charges for the years ended 31 December 2021 and 31 December 2020 are against
intangible assets retained within the United Kingdom and Europe.
4. EXCEPTIONAL ITEMS
By virtue of their nature and size, there are a number of items which 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
Historic incentive scheme
Redundancy costs
Restructuring costs
2021 exceptional items
2021
£’000
36,244
620
2,613
-
-
2020
£’000
3,820
277
-
723
254
39,477
5,074
The Group has incurred £39.5m of exceptional costs during the year (2020: £5.1m), £38.9m of which is non-cash.
Following the annual impairment review of the Group’s Out of Home Cash Generating Unit (CGU), the Group has
incurred a non-cash impairment to Goodwill of £36.2m. Further detail is provided in note 12.
In Q4 2020 the Group commenced a review of its UK operational supply chains. The project has progressed
steadily with significant change already implemented, including entering into new 5-year contract manufacturing
and distribution arrangements that both build significant additional capacity, given the Group’s growth plans, and
improve efficiency. These specific projects are expected to be completed through 2022, with further foundation work
progressing. As a result of this work, the Group has incurred a further £0.6m of costs (2020: £0.3m) in the year, with
additional costs expected in 2022.
In previous annual reports, the Group reported a contingent liability in respect of historic contracts with some of its
senior management relating to incentive schemes which were designed to motivate, retain and engage those key
employees. HMRC were of the view that the arrangements should have been taxed as employment income, which
the Group and its advisors had previously disputed. During the period a tribunal was convened to consider the
dispute of the Group’s scheme as well as similar schemes operated by other companies. Subsequent to the year
end, the tribunal found that the arrangements should have been taxed as employment income. Accordingly, as at
31 December 2021, the Group has recognised a net liability of £2.6m in relation to this ruling, being a reasonable
estimate of the final outcome, including the Group’s additional tax liability, interest costs and amounts expected to
be recovered.
126
127
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
4. EXCEPTIONAL ITEMS (CONTINUED)
7. DIRECTORS AND EMPLOYEES
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.
a. Average monthly number of persons employed during the year,
including Directors:
2021
Number
2020
Number
2020 exceptional items
In the previous year, the Group incurred a non-cash impairment of £3.8m to Goodwill and Intangible Assets of its
Feel Good CGU.
The Group commenced a review of its UK packaged supply chain in the previous year, incurring costs of £0.3m.
The Group completed a review of its operational and leadership structures in the previous year, making a number of
roles redundant and incurring costs of £0.7m.
The Group decided to move from three Executive Directors to two in the previous year, incurring early termination
costs of £0.3m.
5. OPERATING PROFIT
Operating profit is stated after charging/ (crediting):
2021
£’000
2020
£’000
Inventory amounts charged to cost of sales
79,153
69,021
BDO LLP remuneration:
Audit services of the Group’s annual accounts
Depreciation of property, plant and equipment
Impairment of property, plant and equipment
Amortisation of intangible assets
Short-term lease rental payments
Charge for equity settled share based payments
Loss / (gain) on foreign exchange differences
Fair value gain on derivative financial instruments (note 22)
Loss on sale of property, plant and equipment
Release of contingent consideration on acquisition
Expected credit loss provision charge (note 17)
110
4,309
-
660
240
272
437
(178)
63
(63)
294
93
4,258
1,016
713
203
177
(162)
-
71
(1,349)
854
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
308
274
2021
£’000
13,290
1,388
811
69
272
352
268
2020
£’000
11,738
1,534
787
146
177
15,830
14,382
2021
£’000
13,290
1,388
811
69
272
2020
£’000
10,889
1,428
762
146
177
15,830
13,402
A charge of £272,000 (2020: £177,000) was recognised during the year in relation to benefits accruing under the
Group’s 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 98.
Operating lease rental payments have been included within administrative expenses and represent short-term lease
expenses.
Salary
Defined contribution pension costs
Social security costs
6. FINANCE INCOME AND EXPENSE
Finance income comprises:
Bank interest receivable
Net interest income on defined benefit pension scheme surplus
Finance expense comprises:
IFRS 16 interest charge
Finance expense
128
Notes
2021
£’000
2020
£’000
26
24
47
10
57
(158)
(158)
147
3
150
(190)
(190)
The highest paid Director has received £992,000 (2020: £471,000) excluding pension contributions.
Benefits are accruing to 2 Directors (2020: 3 Directors) under a defined contribution scheme, the highest paid
Director has received contributions of £29,000 in the year.
Aggregate amounts for loss of office totalled £nil (2020: £555,000).
There is a share based payment charge of £75,000 in the year (2020: £nil) in relation to executive share awards made
to 2 Directors.
A Director has made a gain of £57,000 (2020: £nil) on the exercise of share options during the year.
Further information regarding Directors’ remuneration and the Incentive Plan is provided in the Remuneration
Committee Report on pages 88 to 95.
129
2021
£’000
1,849
42
214
2,105
2020
£’000
1,181
22
201
1,404
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
8. TAXATION
9. EQUITY DIVIDENDS
a. Analysis of expense recognised in the consolidated income statement
Current taxation:
UK Corporation Tax on income for the year
Adjustments in respect of prior years
Total current tax charge for the year
Deferred tax:
Origination and reversal of temporary differences
Adjustments in respect of prior years
Total deferred tax charge for the year
2021
£’000
2020
£’000
3,862
1,754
(58)
3,804
(83)
1,671
675
33
708
(82)
97
15
Total tax expense in the consolidated income statement
4,512
1,686
The tax expense is wholly in respect of UK taxation.
b. Tax reconciliation
(Loss)/Profit before taxation
(Loss)/Profit before taxation multiplied by the standard rate of Corporation Tax in the
United Kingdom of 19.00% (2020: 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 capital allowances
Impact on deferred tax due to rate change
Amounts relating to other comprehensive income
2021
£’000
(17,656)
(3,355)
7,402
142
(70)
(25)
(13)
-
441
(10)
2020
£’000
6,540
1,243
41
479
117
14
(256)
(15)
31
32
Total tax expense in the consolidated income statement
4,512
1,686
c. The effective rate of tax on adjusted profit before tax is 21.9% (2020: 18.7%) which is higher than the standard
rate of Corporation Tax in the United Kingdom (19.00%). The effective rate of tax on loss before tax is -24.5% (2020:
25.8%) which is also higher than this rate.
In May 2021, an amendment to the UK Corporation Tax rate was subsequently enacted to increase the rate of tax
from 19% to 25% with effect from 1 April 2023. Accordingly, deferred tax balances as at 31 December 2021 have
been recognised at 25% and this has had a significant impact on the effective rate of tax.
d. Tax on items recognised in other comprehensive income/ (expense)
In addition to the amount charged to the consolidated income statement, a charge of £962,000 (2020: £32,000 credit)
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.
Interim dividend 9.8p (2020: 28.0p) paid 10 September 2021
Final dividend for 2020 is 8.8p (2019: £nil) paid 6 May 2021
2021
£’000
3,619
3,249
6,868
2020
£’000
10,338
-
10,338
The interim dividend for the prior year of £10,338,000 was paid on 4 September 2020.
The 2021 final proposed dividend of 13.3p per share has not been accrued as it had not been approved by the year
end.
10. EARNINGS PER SHARE
(Loss)/earnings per share (basic)
(Loss)/earnings per share (diluted)
Adjusted earnings per share (basic) - before exceptional items
Adjusted earnings per share (diluted) - before exceptional items
2021
2020
(60.04p)
(60.04p)
46.15p
46.09p
13.14p
13.13p
25.56p
25.54p
Basic earnings per share is calculated by dividing the Group’s profit after tax for the year 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
2021
Weighted
average
number
of shares
Loss
£’000
Loss
per share
Earnings
£’000
2020
Weighted
average
number
of shares
Earnings
per share
Basic (loss)/earnings per share
(22,168)
36,919,085
(60.04p)
4,854
36,932,032
13.14p
Dilutive effect of share options
-
26,551
Diluted (loss)/earnings per share
(22,168)
36,919,085
(60.04p)
4,854
36,958,583
13.13p
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:
2021
Weighted
average
number
of shares
(Loss)/
earnings
per share
(Loss)/
earnings
per share
Earnings
£’000
2020
Weighted
average
number
of shares
Earnings
per share
Basic (loss)/earnings per share
(22,168)
36,919,085
(60.04p)
4,854
36,932,032
13.14p
Exceptional items after taxation
39,206
4,586
Adjusted earnings per share
(basic) - before exceptional items
17,038
36,919,085
46.15p
9,440
36,932,032
25.56p
Dilutive effect of share options
48,656
26,551
Adjusted earnings per share
(diluted) - before exceptional
items
17,038
36,967,741
46.09p
9,440
36,958,583
25.54p
130
131
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
11. PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 January 2020
Additions
Adjustment to
acquisition of subsidiary
Disposals
Land and
buildings
£’000
3,444
-
-
-
At 1 January 2021
3,444
Additions
Disposals
-
-
At 31 December 2021
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
Parent
Cost
2,365
33,507
At 1 January 2020
25,528
2,701
(163)
(1,339)
26,727
1,239
(3,191)
24,775
2,170
807
-
-
419
-
-
3,927
(163)
(1,339)
2,977
2,784
35,932
28
-
80
-
1,347
(3,191)
3,005
2,864
34,088
Land and
buildings
£’000
3,444
-
-
Additions
Disposals
At 1 January 2021
3,444
Additions
Disposals
-
-
At 31 December 2021
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
4,882
576
(42)
5,416
472
(242)
5,646
2,170
807
-
2,977
28
-
1,417
11,913
419
-
1,802
(42)
1,836
13,673
80
-
580
(242)
3,005
1,916
14,011
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
10,376
3,029
1,016
(1,233)
13,188
3,172
(3,126)
13,234
11,541
637
776
-
-
1,413
684
-
2,097
908
Total
£’000
11,765
4,258
1,016
(1,233)
15,806
4,309
367
384
-
-
751
384
-
(3,126)
1,135
16,989
1,729
17,099
13,539
1,564
2,033
20,126
Depreciation
At 1 January 2020
Charge for the year
Impairment losses
Disposals
At 1 January 2021
Charge for the year
Disposals
At 31 December 2021
Net book value at
31 December 2021
Net book value at
31 December 2020
385
69
-
-
454
69
-
523
2,921
2,990
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 2020
Charge for the year
Disposals
At 1 January 2021
Charge for the year
Disposals
At 31 December 2021
Net book value at
31 December 2021
Net book value at
31 December 2020
385
69
-
454
69
-
523
2,921
2,990
3,531
420
(30)
3,921
519
(196)
4,244
1,402
1,495
637
776
-
1,413
684
-
2,097
262
279
-
541
279
-
820
Total
£’000
4,815
1,544
(30)
6,329
1,551
(196)
7,684
908
1,096
6,327
1,564
1,295
7,344
Group impairment losses of £nil (2020: £1,016,000) were noted in the year for assets deemed as obsolete or lost
within the Out of Home business.
132
133
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
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.
Group
Cost
At 1 January 2020
Impairment (see below)
Adjustment to acquisitions
At 1 January 2021
Impairment (see below)
At 31 December 2021
Parent
Cost
At 1 January 2020
Impairment (see below)
At 1 January 2021 and 31 December 2021
£’000
38,585
(2,504)
163
36,244
(36,244)
-
£’000
2,504
(2,504)
-
All Goodwill relates to the Out of Home business which is considered by management to be two independent Out
of Home 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
2021
£’000
-
-
-
2020
£’000
21,431
14,813
36,244
2021 Impairment review
Goodwill and intangible assets with indefinite lives are
tested at least annually for impairment and whenever
there are indications that the assets might be impaired.
The recoverable amount of a cash-generating unit (CGU)
is based on its value in use, being the present value of
the projected cash flows of the CGU.
An annual impairment review was performed on the
Goodwill (£36.2m) and Intangible assets with indefinite
lives (£2.6m), all of which relate the Group’s Out of
Home Business. The value in use calculation uses cash
flow projections from financial budgets approved by
management in addition to annual growth projections
for the next five years and into perpetuity.
The impact of COVID-19 has resulted in a difficult period
of trade for Out of Home with many outlets being closed
for a prolonged period of time. Whilst trade within
the hospitality industry has begun to show growth
and return towards pre-COVID-19 levels, it is doing so
at a slower pace than previously forecast and is only
forecast to fully return to pre-pandemic levels through
2022. Growth projections beyond 2022 are expected to
be lower than previously estimated given a number of
outlets are expected not to open and footfall is expected
to be restricted for a prolonged period as staffing
shortages and local restrictions/social distancing is
either mandated or occurs naturally, as was experienced
through 2021.
The Group has experienced unprecedented cost
inflation towards the end of 2021 which will impact
returns in 2022 and beyond. Whilst cost pressure is
expected to be fully recovered within Out of Home,
the gross margin progression anticipated previously is
now not likely to be achieved without transformational
change in terms of how the business services the trade
and its wider customer base. Overhead cost estimates
have been reviewed and increased to reflect both
inflationary pressures and the cost estimates required
to serve the customer base given the complexities of
the current business environment/model. As a result,
and in response to this challenging climate, during 2022
the Board has commenced a full strategic review into
its Out of Home route to market in terms of customer
and product mix as well as ways to ensure appropriate
margin and appropriate profitability going forward.
customer base given the complexities of the current
business environment/model.
A reduction in overheads would result in an increase
in the value in use calculation and thus a reduced
impairment. A reduction in overheads by 13.7% at the
end of the five year forecast period would result in no
impairment to Out of Home.
Discount rate - Discount rates represent the current
market assessment of the risks specific to the Out of
Home CGU, taking into consideration the time value
of money and risks of the underlying assets that have
not been incorporated in the cash flow estimates.
The discount rate calculation is based on the specific
circumstances of the Group and is derived from its
weighted average cost of capital (WACC). Adjustments
to the discount rate are made to factor in the specific
amount and timing of the future tax flows in order to
reflect a pre-tax discount rate.
A reduction in the pre-tax discount rate to 4.5% (i.e.
-3.7ppts) would result in no impairment.
Growth rate estimates - The long-term growth rate used
to extrapolate the period of review is based upon
management’s expectations of the Out of Home CGUs’
ongoing potential and is considered consistent with the
drinks hospitality industry as a whole. An increase of
4ppts from 2% to 6% growth into perpetuity would be
required for there to be no impairment.
2020 Impairment review
Impairment of Feel Good Goodwill
Following an impairment review of the Feel Good CGU
during 2020, management fully impaired the Goodwill
(£2.5m). This was recognised as an exceptional item.
Adrian Mecklenburgh - Adjustment to acquisitions
During 2020, the Group finalised the purchase price
accounting of Adrian Mecklenburgh, an acquisition
completed on 1 February 2019. As part of this work an
adjustment of £163,000 was identified which increased
the Goodwill balance accordingly.
The pre-tax discount rate applied to cash projections is
8.2% (2020: 8.2%) and cashflows beyond the five year
period are extrapolated using a 2% growth rate (2020:
2%) (being the average of cashflow growth in years 3-5).
Based on the review it was concluded that the fair value
less costs of disposal were not supported by the value in
use calculated. As a result of this analysis, management
have recognised an impairment charge of £36.2m in
the current year, impairing the entire Goodwill held.
The impairment charge has been recognised as an
exceptional item within these financial statements.
Key assumptions
The calculation of value in use is most sensitive to the
following assumptions:
• Revenue growth
• Gross margin
• Overheads
• Discount rate
• Growth rates estimates used to extrapolate cash flows
beyond the forecast period
Revenue growth - Based on the continued impact of
coronavirus and subsequent hospitality lockdowns, the
Board’s view on the outlook for the industry recovery is
that whilst there will be continued revenue growth, it will
be at a slower pace than previously anticipated. Within
the year-end impairment review, revenue growth of 1%
per annum has been forecast for each of the five years.
This compares to the previously assumed 3% revenue
growth noted within the prior year review.
A faster rate of recovery would increase the value in use
calculation and therefore reduce any impairment noted.
A year-on-year increase in annual revenue of 4% per
year over the five year period forecast would result in no
impairment being required for Out of Home.
Gross margin - Based on the continued impact of
coronavirus and the impact of inflationary pressures
including fuel, labour and materials, the gross margins
forecast previously (2021 and previous impairment
models) are not expected to be achieved without
transformational change in terms of how the Group
services the trade and its wider customer base. Gross
margins included within the impairment review are
based on budget expectations and anticipated changes
over the five year forecast period.
A softening of inflationary pressures and improvement
in material input prices would lead to an improvement
in the gross margin forecast. An increase of 6ppts in
the gross margin by the end of the five year forecast
period would result in no impairment required for Out
of Home.
Overheads – Overhead cost estimates have been
reviewed and increased to reflect both inflationary
pressures and the cost estimates required to serve the
134
135
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
13. INVESTMENTS: SHARES IN GROUP UNDERTAKINGS
Parent
Cost and net book amount
At 1 January 2020, 1 January 2021 and 31 December 2021
£’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
* 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.
136
14. INTANGIBLES
Group
Cost
At 1 January 2020
Additions
At 1 January 2021 and
31 December 2021
Amortisation
At 1 January 2020
Charge for the year
Impairment (see note 4)
At 1 January 2021
Charge for the year
At 31 December 2021
Net book value at
31 December 2021
Net book value at
31 December 2020
Parent
Cost
At 1 January 2020
Additions
At 1 January 2021 and
31 December 2021
Amortisation
At 1 January 2020
Charge for the year
Impairment (see note 4)
At 1 January 2021
Charge for the year
At 31 December 2021
Net book value at
31 December 2021
Net book value at
31 December 2020
Contractual
agreement
£’000
Customer
list
£’000
180
-
180
33
36
-
69
36
105
75
111
Brand
name
£’000
3,889
-
5,521
-
5,521
3,889
1,492
663
-
2,155
590
2,745
-
-
1,316
1,316
-
1,316
Computer
software
£’000
-
170
170
-
14
-
14
34
48
Total
£’000
9,590
170
9,760
1,525
713
1,316
3,554
660
4,214
2,776
2,573
122
5,546
3,366
2,573
156
6,206
Brand
name
£’000
1,316
-
Computer
software
£’000
-
Total
£’000
1,316
170
170
1,316
170
1,486
-
-
1,316
1,316
-
1,316
-
-
-
14
-
14
34
48
122
156
-
14
1,316
1,330
34
1,364
122
156
137
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
15. DEFERRED TAX ASSETS AND LIABILITIES
Movement in temporary differences during the year
The UK deferred tax balances are measured at 25% (2020: 19%).
Group
Property, plant and equipment
Goodwill and intangibles
Employee benefits
Provisions
Group
Property, plant and equipment
Goodwill and intangibles
Employee benefits
Provisions
Parent
Property, plant and equipment
Goodwill and intangibles
Employee benefits
Provisions
Parent
Property, plant and equipment
Goodwill and intangibles
Employee benefits
Provisions
138
Net
balance at
1 January
2021
£’000
Arising on
business
combination
£’000
Recognised
in income
£’000
Recognised
in other
comprehensive
income
£’000
Net
balance at
31 December
2021
£’000
(618)
(930)
38
25
(1,485)
-
-
-
-
-
(214)
(226)
(276)
8
(708)
-
-
(962)
-
(962)
(832)
(1,156)
(1,200)
33
(3,155)
Net
balance at
1 January
2020
£’000
Arising on
business
combination
£’000
Recognised
in income
£’000
Recognised
in other
comprehensive
expense
£’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
2021
£’000
Arising on
business
combination
£’000
Recognised
in income
£’000
Recognised
in other
comprehensive
income
£’000
Net
balance at
31 December
2021
£’000
(85)
167
38
25
145
-
-
-
-
-
(53)
-
(276)
8
(321)
-
-
(962)
-
(962)
(138)
167
(1,200)
33
(1,138)
Net
balance at
1 January
2020
£’000
Arising on
business
combination
£’000
Recognised
in income
£’000
Recognised
in other
comprehensive
expense
£’000
Net
balance at
31 December
2020
£’000
(82)
166
174
25
283
-
-
-
-
-
(3)
1
(168)
-
(170)
-
-
32
-
32
(85)
167
38
25
145
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Group
Assets
Liabilities
Net
Property, plant and equipment
Goodwill and intangibles
Employee benefits
Provisions
-
-
-
33
33
2021
£’000
2020
£’000
2021
£’000
(832)
2020
£’000
(618)
2021
£’000
(832)
(1,156)
(1,012)
(1,156)
(1,200)
-
-
-
(1,200)
33
2020
£’000
(618)
(930)
38
25
-
82
38
25
145
(3,188)
(1,630)
(3,155)
(1,485)
Parent
Assets
Liabilities
Net
Property, plant and equipment
Goodwill and intangibles
Employee benefits
Provisions
2021
£’000
-
167
-
33
200
2020
£’000
-
167
38
25
2021
£’000
(138)
-
(1,200)
-
2020
£’000
(85)
-
-
-
2021
£’000
(138)
167
(1,200)
33
230
(1,338)
(85)
(1,138)
16. INVENTORIES
Finished goods
Raw materials
Group
Parent
2021
£’000
8,375
1,331
9,706
2020
£’000
5,214
707
5,921
2021
£’000
6,067
3
6,070
2020
£’000
(85)
167
38
25
145
2020
£’000
3,488
38
3,526
At the year-end, the Group provision for the write-down of inventories to net realisable value amounted to £168,000
(2020: £864,000).
139
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
Movements in the expected credit loss allowance was as follows:
Group
At 1 January
2021
£’000
Charge in
the year
£’000
Release in
the year
£’000
Expected credit loss provision
767
294
(65)
Group
At 1 January
2020
£’000
Charge in
the year
£’000
Release in
the year
£’000
Expected credit loss provision
577
854
(210)
Utilised
£’000
(40)
Utilised
£’000
(454)
At 31
December 2021
£’000
956
At 31
December 2020
£’000
767
Parent
At 1 January
2021
£’000
Charge in
the year
£’000
Release in
the year
£’000
Utilised
£’000
At 31
December 2021
£’000
Expected credit loss provision
269
-
(65)
-
204
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
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.
17. TRADE AND OTHER RECEIVABLES
Trade receivables
Group
Parent
2021
£’000
2020
£’000
2021
£’000
2020
£’000
32,584
28,646
25,678
26,270
Less: provision for impairment of trade receivables
(956)
(767)
Trade receivables - net
31,628
27,879
Amounts owed by Group undertakings
Other receivables
Derivative financial instruments - forward contracts
(note 22)
Prepayments
-
2,294
178
2,024
-
378
-
886
(204)
25,474
10,087
2,719
178
1,949
(269)
26,001
10,631
353
-
670
36,124
29,143
40,407
37,655
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.
All trade receivables have been reviewed under the expected credit loss impairment model and a provision of
£956,000 (2020: £767,000) 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, excluding any reimbursement assets. 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, such as inflation, interest rates and economic growth rates.
An impairment assessment of amounts owed by Group undertakings as at 31 December 2021 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 (2020: £nil).
The Group’s expected credit loss provision was determined as follows:
31 December 2021
Expected loss rate
Gross carrying amount
Credit loss allowance
Current
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
0.8%
27,180
(212)
9.4%
3,152
(295)
3.6%
667
(24)
9.9%
614
(61)
37.5%
971
32,584
(364)
(956)
31 December 2020
Expected loss rate
Gross carrying amount
Credit loss allowance
Current
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
0.3%
25,037
(86)
16.0%
661
(106)
17.0%
675
(115)
10.8%
23.0%
526
(57)
1,747
28,646
(403)
(767)
140
141
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
18. CASH AND CASH EQUIVALENTS
20. PROVISIONS
Group
At 1 January
2021
£’000
Cash flow
£’000
At 31 December
2021
£’000
Cash at bank and in hand
47,294
9,380
56,674
Parent
At 1 January
2021
£’000
Cash flow
£’000
At 31 December
2021
£’000
Cash at bank and in hand
30,629
8,138
38,767
The Group did not have a bank overdraft during the current and previous year.
19. TRADE AND OTHER PAYABLES
Current liabilities
Trade payables
Amounts owed to Group undertakings
Other taxes and social security
Other payables
Accruals
Group
Parent
2021
£’000
2020
£’000
2021
£’000
2020
£’000
9,210
7,831
7,326
7,143
-
794
75
-
430
56
25,548
19,893
392
8
415
5
17,843
12,330
16,053
11,490
IFRS 16 lease liabilities (note 24)
869
1,022
773
930
Non-current liabilities
Other payables
IFRS 16 lease liabilities (note 24)
28,791
21,669
50,100
39,876
Group
Parent
2021
£’000
-
1,954
1,954
2020
£’000
198
2,724
2,922
2021
£’000
-
1,367
1,367
2020
£’000
-
2,040
2,040
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.
Group and parent
At 1 January
2020 and at
1 January
2021
Charge in the
year
£’000
Released in the
year
£’000
Utilised
£’000
At 31
December
2021
£’000
Historic incentive scheme
-
4,242
-
-
4,242
In previous annual reports, the Group reported a contingent liability in respect of historic contracts with some of its
senior management relating to incentive schemes which were designed to motivate, retain and engage those key
employees. HMRC were of the view that the arrangements should have been taxed as employment income, which
the Group and its advisors had previously disputed. During the period a tribunal was convened to consider the
dispute of the Group’s scheme as well as similar schemes operated by other companies. Subsequent to the year end,
the tribunal found that the arrangements should have been taxed as employment income.
Accordingly, as at 31 December 2021, the Group has recognised a provision of £4.2m in relation to this ruling, being
the Group’s additional tax liability and interest costs.
Included within other receivables (note 17) is a reimbursement asset in respect of these historic contracts.
21. PRIOR YEAR 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. Contingent consideration of £915,000 (£805,000 of
cash and £110,000 of overdrawn Directors loans) was paid to acquire the remaining shareholding in the previous
year, with £1,085,000 taken as a credit within administrative expenses during the previous year.
2019 Acquisitions
Adrian Mecklenburgh Limited
On 1 February 2019, the Group acquired 100% of the issued share capital of Adrian Mecklenburgh Limited.
During the previous year £75,000 was paid in relation to the first stage of contingent consideration.
During the current year £67,000 was paid in relation to the second stage of contingent consideration.
As at 31 December 2021, a fair value assessment of the third 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, £63,000 of the amount initially recognised at
acquisition has been taken as a credit within administrative expenses during the year.
142
143
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
22. FINANCIAL INSTRUMENTS
Exposure to treasury management, liquidity, credit and currency risks arise in the normal course of the Group’s
business.
If Sterling had weakened against the US Dollar and Euro by 5% (2020: 5%), then this would have had the following
impact:
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 2021 the Group entered into foreign currency transactions resulting in a natural hedge
for a large majority of the exposure experienced over the course of the year. To supplement this and to further
reduce foreign currency risk, the Group entered into a number of forward contracts to minimise the impact of
movements in foreign currency rates on the spot market.
Foreign currency assets
US Dollar
Euro
Foreign currency sensitivity
2021
£’000
2,501
3,371
5,872
2020
£’000
1,594
6,001
7,595
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% (2020: 5%), then this would have had the following
impact:
US Dollar
£’000
(119)
2021
Euro
£’000
(161)
Total
£’000
(280)
US Dollar
£’000
(76)
2020
Euro
£’000
(286)
Total
£’000
(362)
Net result for the year
144
Net result for the year
US Dollar
£’000
132
2021
Euro
£’000
177
Total
£’000
309
US Dollar
£’000
84
2020
Euro
£’000
316
Total
£’000
400
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.
Derivative financial instruments
Derivative financial assets
Foreign currency forward contracts carried at fair value
2021
£’000
178
2020
£’000
-
In December 2021, the Group entered into foreign exchange forward contracts to manage the foreign currency risk
associated with anticipated cash inflows in 2022.
The following table details the foreign currency forward contracts outstanding at the year-end:
Derivative financial assets
Sell EUR - less than 12 months
Sell USD - less than 12 months
Notional value in
foreign currency
(‘000)
Notional
value in local
currency
(£’000)
Carrying amount of
derivative financial
asset
(£’000)
4,500
6,500
3,852
4,905
72
106
Forward
rate
1.168
1.325
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 2020.
At 31 December 2021, 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.
145
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
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
2021
£’000
2020
£’000
2021
£’000
2020
£’000
2021
£’000
2020
£’000
2021
£’000
2020
£’000
178
-
178
-
-
-
32,294
28,257
56,674
47,294
88,968
75,551
178
-
178
-
-
-
36,652
36,985
38,767
30,629
75,419
67,614
Financial assets
Trade receivables and other
receivables
Cash and cash equivalents
The IFRS 9 categories of financial liability included in the Statement of Financial Position and the headings in which
they are included are as follows:
Group
Parent
Fair value through
profit or loss
Amortised
cost
Fair value through
profit or loss
Amortised
cost
Financial liabilities
Trade and other payables
IFRS 16 lease liabilities
2021
£’000
2020
£’000
198
-
67
-
67
2021
£’000
9,218
2,823
2020
£’000
7,887
3,746
198
12,041
11,633
2021
£’000
2020
£’000
2021
£’000
2020
£’000
-
-
-
-
-
-
32,882
27,041
2,140
2,970
35,022
30,011
At 31 December 2021
Trade and other payables
At 31 December 2020
Trade and other payables
Up to 3
months
£’000
9,285
9,285
Up to 3
months
£’000
7,887
7,887
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
-
-
-
-
-
-
Between 1
and 2 years
£’000
Between 2
and 5 years
£’000
Over 5 years
£’000
198
198
-
-
-
-
The contractual maturities of IFRS 16 lease liabilities are disclosed in note 24.
The following table sets out the Group contractual maturities (representing undiscounted contractual cash-flows) of
financial liabilities:
Lease liabilities
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 2021:
Group
Motor
Vehicles
£'000
1,533
807
Total
£'000
3,531
1,226
(776)
(1,160)
Parent
Motor
Vehicles
£'000
1,533
807
Total
£'000
2,688
1,226
(776)
(1,055)
Property
£'000
1,155
419
(279)
1,564
3,597
1,295
1,564
2,859
28
108
(684)
(1,068)
908
2,637
80
(279)
1,096
28
(684)
908
108
(963)
2,004
Property
£'000
1,998
419
(384)
2,033
80
(384)
1,729
Right-of-use assets
At 1 January 2020
Additions
Depreciation
At 1 January 2021
Additions
Depreciation
At 31 December 2021
Group
Property
£'000
Motor
Vehicles
£'000
419
93
807
97
Parent
Motor
Vehicles
£'000
Property
£'000
1,144
1,568
419
57
807
97
Total
£'000
2,712
1,226
154
Total
£'000
3,584
1,226
190
(439)
(815)
(1,254)
(307)
(815)
(1,122)
At 1 January 2020
2,016
1,568
Additions
Interest expense
Lease payments
At 1 January 2021
2,089
1,657
3,746
1,313
1,657
2,970
Additions
Interest expense
Lease payments
At 31 December 2021
80
89
(391)
1,867
28
69
108
158
(798)
(1,189)
956
2,823
80
57
(266)
1,184
28
69
108
126
(798)
(1,064)
956
2,140
146
147
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
24. LEASES (CONTINUED)
The following table sets out the Group maturities of IFRS 16 lease liabilities based on the contractual undiscounted
cash flows.
Group
At 31 December 2021
Lease liabilities
Parent
At 31 December 2021
Lease liabilities
Group
At 31 December 2020
Lease liabilities
Parent
At 31 December 2020
Lease liabilities
Up to 3
months
£’000
273
Up to 3
months
£’000
242
Up to 3
months
£’000
313
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
641
672
1,009
453
Between
3 and 12
months
£’000
Between 1
and 2 years
£’000
Between 2
and 5 years
£’000
Over 5 years
£’000
623
548
611
321
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
The following table reconciles the changes in IFRS 16 liabilities from financing activities during the year to 31
December 2021:
Group
Parent
Current
loans and
borrowings
£’000
(note 19)
Non-current
loans and
borrowings
£’000
(note 19)
Total
£'000
Current
loans and
borrowings
£’000
(note 19)
Non-current
loans and
borrowings
£’000
(note 19)
Total
£'000
At 1 January 2020
Cash Flows
Non-cash flows
- interest
- lease additions
At 1 January 2021
Cash Flows
Non-cash flows
- interest paid
- lease additions
- transfers
At 31 December 2021
1,018
(1,254)
190
1,068
1,022
(1,189)
158
45
833
869
2,566
3,584
-
(1,254)
-
190
158
1,226
2,724
3,746
921
(1,122)
154
977
930
-
(1,189)
(1,064)
-
63
(833)
158
108
-
1,954
2,823
126
45
736
773
1,791
2,712
-
(1,122)
-
154
249
1,226
2,040
2,970
-
-
63
(736)
(1,064)
126
108
-
1,367
2,140
Lease payments incurred for short-term leases not included in the measurement of lease liabilities under IFRS 16
were as follows:
2021
2020
Group
£’000
240
Parent
£’000
Group
£’000
Parent
£’000
240
203
203
Short-term lease expense
25. RELATED PARTY TRANSACTIONS
Parent Company
The Parent Company entered into the following transactions with subsidiaries during the year:
Sale of goods and services (including recharge of costs)
Transaction value
Year ended 31 December
Balance outstanding
as at 31 December
2021
£’000
1,039
2020
£’000
2021
£’000
2020
£’000
959
(15,461)
(9,262)
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 £262,000 (2020: £226,000).
148
149
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
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 £811,000 (2020: £787,000).
The Company operates a defined benefit plan in the UK. A full actuarial valuation was carried out on 5 April 2020 and
approximately updated to 31 December 2021 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.
Defined benefit obligation
The details of the Group’s defined benefit obligation are as follows:
Opening defined benefit obligation
Current service cost (company only)
Past service cost
Interest cost
Actual contributions paid by plan participants
Experience adjustment
Actuarial (gains) / losses from changes in financial assumptions
Actuarial gains from changes in demographic assumptions
Benefits paid - including insurance premiums
Closing defined benefit obligation
31 December 2021
£’000
31 December 2020
£’000
30,536
28,941
26
-
390
3
-
(1,910)
(331)
(1,094)
27,620
24
64
569
3
(1,169)
3,491
(385)
(1,002)
30,536
Investment risk
Plan assets
The plan assets at 31 December 2021 are predominantly credit, liability driven investments and bonds.
The reconciliation of the balance of the assets held for the Group’s defined benefit plan is presented below:
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 2021 and 2020 is shown below.
Present value of funded obligations
Fair value of plan assets
Surplus in the plan
Related deferred tax (liability)/ asset
Net surplus recognised
31 December 2021
£’000
31 December 2020
£’000
(27,620)
32,896
5,276
(1,319)
3,957
(30,536)
30,883
347
9
356
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 2021
£’000
31 December 2020
£’000
30,883
400
1,842
905
3
(1,094)
(43)
32,896
28,689
572
1,782
898
3
(1,002)
(59)
30,883
The actual return on plan assets was a gain of £2,242,000 (2020: £2,353,000).
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 2021
£’000
31 December 2020
£’000
150
Equities
Credit
Liability driven investments
Diversified growth funds
Absolute return bonds
Equity-linked bonds
Other, including cash
3,455
13,664
6,865
-
7,267
-
295
31,546
2,752
-
3,372
5,951
4,902
12,184
222
29,383
151
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
26. PENSION OBLIGATIONS AND EMPLOYEE BENEFITS (CONTINUED)
With the agreement of Trustees, assets were transferred from equity-linked bonds and diversified growth funds
during the year, to reduce the overall value risk and to secure the gains achieved over the last 2 years.
2020 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:
Assets included which do not have a quoted market value:
• Trustees are obliged to make transfer payments that reflect equalised benefits and are required to make top up
Assets included which do not have a quoted market value:
Property
31 December 2021
£’000
31 December 2020
£’000
1,350
1,500
The fair value of the property was revalued as at 31 December 2021, 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 2021
31 December 2020
Future salary increases
Rate of increase in (post 1997) pensions in payment (a)
Discount rate at 31 December
Expected rate of inflation - RPI
3.40%
3.40%
1.85%
3.40%
2.95%
3.30%
1.30%
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 88 years for men (2020:
88 years) and 90 years for women (2020: 90 years). For pensioners currently aged 65, life expectancies have been
estimated as 86 years for men (2020: 87 years) and 89 years for women (2020: 88 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 until 28 February 2021 and 46.3%
of salaries from 1 March 2021. 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 2021
£’000
31 December 2020
£’000
26
(10)
-
43
59
24
(3)
64
59
144
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 assessment 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 previous year.
Amounts recognised in other comprehensive income/(expense) relating to the Group’s defined benefit plan are as
follows:
Remeasurements recognised in other comprehensive income/(expense)
Actuarial gains on assets
Experience adjustment
Actuarial gains / (losses) from changes in financial assumptions
Changes in demographic assumptions
Total gain / (loss) recognised in other comprehensive income / (expense)
31 December
2021
£’000
31 December
2020
£’000
1,842
-
1,910
331
4,083
1,782
1,169
(3,491)
385
(155)
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 2022.
The weighted average duration of the defined benefit obligation at 31 December 2021 is 17 years (2020: 17
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:
Increase in discount rate by 0.5%
Increase in price inflation adjustment by 0.5%
31 December
2021
£’000
31 December
2021
%
31 December
2020
£'000
31 December
2020
%
(1,985)
646
1,467
-7.00%
2.00%
5.00%
(2,256)
478
1,696
-7.00%
2.00%
6.00%
The current cost is included in employee benefits expense and the net interest credit is included within interest
1 year increase in life expectancy
receivable.
152
The sensitivities may not be representative of the actual change in the present value of the scheme obligation, as it is
unlikely that the change in assumptions would occur in isolation of each other, as the assumptions may be linked.
The method and assumptions used in this analysis have been reviewed and remain unchanged from the prior year.
153
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
27. AUDIT EXEMPTION STATEMENT
29. EMPLOYEE SHARE SCHEMES
Under section 479A of the Companies Act 2006 the Group is claiming exemption from audit for the subsidiary
companies listed below. The parent undertaking, Nichols plc, registered number 00238303, guarantees all
outstanding liabilities to which the subsidiary company is subject at the end of the financial year (being the year
ended 31 December 2021 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 2022)
DJ Drink Solutions Limited (year ended 31 May 2022)
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
28. SHARE CAPITAL
Company Number
01481282
01732905
00231218
00938594
00603111
08671127
05787898
01256006
08766560
05024347
05905631
08795779
Allotted, issued and fully paid 36,968,772 (2020: 36,968,772) 10p
ordinary shares
2021
£’000
3,697
2020
£’000
3,697
The share capital of Nichols plc consists only of ordinary 10p shares. All shares are equally eligible to receive
dividends and the repayment of capital and represent one vote at shareholders’ meetings.
There were no movements in the Group’s authorised and allotted, issued and fully paid share capital for the
financial years ending 31 December 2021 and 31 December 2020.
At the Company’s AGM held on 28 April 2021, the Group was generally and unconditionally authorised by its
shareholders to make market purchases (within the meaning of section 693 of the Companies Act 2006) of up
to a maximum of 3,696,877 of its Ordinary shares. During 2021, the Group has repurchased 68,000 Ordinary
shares under this authority, which is due to expire at the AGM to be held on 27 April 2022, and accordingly
has an unexpired authority to purchase up to 3,560,877 Ordinary shares with a nominal value of £356,088.
The Group announced its intention to conduct on-market purchases under a share buy-back programme on
14 December 2021. The purpose of the share buy-backs is to meet future obligations under the Group’s SAYE
Option Scheme and/or Long Term Incentive Plan. Shares repurchased are held in Treasury. The total number of
shares held in Treasury as at 31 December 2021 is 107,664.
The Group operates three equity-settled share-based payment schemes; a Save As You Earn (SAYE) scheme
open to all employees; a Long-Term Incentive Plan (LTIP) for certain Directors and senior executives and an
Executive 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. The movement of outstanding LTIP awards during
the year is also set out below.
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 2021
20,674
32,063
47,245
Exercised
Lapsed
(20,674)
-
-
-
(32,063)
(23,893)
Awards
outstanding at 31
December 2021
-
-
23,352
2017 LTIP
2018 LTIP
2019 LTIP
Of the total number of options outstanding at 31 December 2021, nil (2020: 20,674) had vested and were
exercisable.
The weighted average remaining life of LTIP awards at 31 December 2021 is 0.3 years.
The 2018 LTIP award didn’t vest based on performance against the agreed targets between 1 January 2018 and
31 December 2020.
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 monthly
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. The movement of outstanding SAYE options during
the year is also set out below.
154
155
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2021
29. EMPLOYEE SHARE SCHEMES (CONTINUED)
2016 5 year
2017 5 year
Options
2,955
7,339
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
2021 3 year
2021 5 year
15,014
29,098
5,967
Exercise
price per
option
£
Share
price on
grant
date
£
9.94
14.57
12.25
12.25
12.84
12.84
7.93
7.93
10.15
10.15
12.80
19.20
14.28
14.28
16.90
16.90
11.35
11.35
13.95
13.95
Expected
dividend
yield
Risk free
rate
Volatility
Fair value
per option
£
2.27%
1.93%
1.87%
1.87%
1.87%
1.87%
1.87%
1.87%
2.70%
2.70%
0.97%
0.51%
0.82%
1.12%
0.79%
0.91%
0.09%
0.09%
0.19%
0.40%
22.80%
21.50%
24.50%
23.40%
25.50%
25.40%
31.30%
31.30%
44.60%
37.50%
3.22
1.95
1.99
2.86
2.29
2.19
3.33
4.14
4.50
4.33
The movement of outstanding SAYE options during the year is also set out below.
Options outstanding
at 1 January
2021
Granted
Exercised
Lapsed
Options outstanding
at 31 December
2021
2016 5 year
2017 5 year
2018 3 year
2018 5 year
2019 3 year
2019 5 year
2020 3 year
2020 5 year
2021 3 year
2021 5 year
2,955
1,745
14,776
3,497
14,716
4,809
101,667
15,014
-
-
-
-
-
-
-
-
-
-
29,098
5,967
(2,654)
-
(13,058)
-
-
-
-
-
-
-
(301)
(411)
(1,718)
(1,615)
(2,380)
(2,663)
(13,491)
-
(159)
-
-
1,334
-
1,882
12,336
2,146
88,176
15,014
28,939
5,967
The weighted average remaining life of SAYE awards at 31 December 2021 is 1.9 years. Volatility has been
determined using statistical analysis of the Group share price over a 3 or 5 year period preceding the grant
date. The share price on the vesting date of the awards vested in the year was £15.35.
Executive matching share awards
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.
Awards
Share
price on
grant date
Expected
dividend
yield
Risk free
rate
Volatility
Fair value per
award
17,402
14.08
2.70%
-0.07%
42.40%
12.98
Awards
outstanding at 1
January 2021
Exercised
Lapsed Awards outstanding
at 31 December
2021
17,402
-
-
17,402
2020 Executive
share awards
2020 Executive
share awards
The remaining life of Executive share awards at 31 December 2021 is 2.0 years.
Volatility has been determined using statistical analysis of the Group share price over a 3 year period preceding
the grant date.
The equity-settled share based payment charge recognised in the year is as follows:
LTIP
SAYE
Executive share awards
Total charge
2021
£’000
-
197
75
272
2020
£’000
(92)
269
-
177
156
157
UNAUDITED FIVE YEAR SUMMARY-YEAR ENDED 31 DECEMBER 2021
2022 ANNUAL GENERAL MEETING
Revenue
Adjusted operating profit
Exceptional items
Operating (loss)/profit
2021
£’000
2020
£’000
2019
£’000
2018
£’000
2017
£’000
Given the current status of the COVID-19 pandemic, it is anticipated that the 2022 Annual General Meeting (the
‘AGM’) will be held in the normal way and shareholders will be invited to attend in person. The Company will continue
144,328
118,657
146,985
142,037
132,789
to monitor the status of the pandemic and will revise arrangements in connection with the AGM should it become
21,922
(39,477)
(17,555)
11,654
(5,074)
32,439
31,638
-
-
30,543
(1,801)
6,580
32,439
31,638
28,742
necessary.
Net finance (expense) / income
(101)
(40)
(17)
115
(20)
NOTICE OF ANNUAL GENERAL MEETING 2022
(Loss)/Profit before taxation
(17,656)
6,540
32,422
31,753
28,722
Taxation
(Loss)/Profit after taxation
Dividends paid
(4,512)
(1,686)
(22,168)
4,854
(5,587)
26,835
(6,238)
25,515
(5,548)
23,174
(6,868)
(10,338)
(14,466)
(12,803)
(11,213)
Retained earnings movement
(29,036)
(5,484)
12,189
12,712
11,961
Notice is hereby given that the thirtieth Annual General
revoked, varied or renewed) this authority shall
Meeting (the ‘AGM’) of Nichols plc (the ‘Company’) will
expire at the conclusion of the next annual
be held at Nichols plc, Laurel House, Woodlands Park,
general meeting of the Company after the
Ashton Road, Newton-le-Willows, Merseyside, WA12
passing of this resolution or on 26 July 2023
0HH on Wednesday, 27 April 2022 at 11:00 a.m. for the
(whichever is the earlier), save that the Company
(Loss)/earnings per share - (basic)
(60.04p)
13.14p
72.81p
69.23p
62.88p
following purposes:
(Loss)/earnings per share - (diluted)
(60.04p)
13.13p
72.77p
69.19p
62.81p
To consider and, if thought fit, to pass the following
46.15p
25.56p
72.81p
69.23p
67.76p
resolutions as ordinary resolutions:
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
Earnings per share - (basic) before exceptional
items
Earnings per share - (diluted) before
exceptional items
Dividends paid per share
13.3p
28.0p
39.2p
34.7p
30.4p
46.09p
25.54p
72.77p
69.19p
67.69p
1.
To receive the Company’s annual accounts,
granted after this authority expires and the
strategic report and directors’ and auditors’
Directors may allot shares or grant such
reports for the year ended 31 December 2021.
rights pursuant to any such offer or agreement
2.
To declare a final dividend for the year ended
as if this authority had not expired. This authority
31 December 2021 of 13.3 pence per ordinary
is in substitution for all existing authorities under
share of £0.10 in the capital of the Company, to
section 551 of the Act (which, to the extent
be paid on 5 May 2022 to shareholders whose
unused at the date of this resolution, are revoked
names appear on the register of members at the
with immediate effect).
close of business on 25 March 2022.
To consider and, if thought fit, to pass the following
3.
To re-elect John Nichols as a Director of the
resolutions as special resolutions:
Company.
12.
That, subject to the passing of resolution 11 and
4.
To re-elect Andrew Milne as a Director of the
pursuant to sections 570 and 573 of the
Company.
Companies Act 2006 (‘Act’), the Directors be
5.
To re-elect David Rattigan as a Director of the
and are generally empowered to allot equity
Company.
securities (within the meaning of section 560
6.
To re-elect John Gittins, as a Director of the
of the Act) for cash pursuant to the authority
Company.
granted by resolution 11 and to sell ordinary
7.
To re-elect Helen Keays, as a Director of the
shares held by the Company as treasury shares
Company.
for cash, as if section 561(1) of the Act did not
8.
To re-elect James Nichols, as a Director of the
apply to any such allotment or sale, provided that
Company.
this power shall be limited to the allotment of
9.
To reappoint BDO LLP as auditors of the
equity securities or sale of treasury shares:
Company.
12.1
in connection with an offer of equity securities
10.
To authorise the Directors to determine the
(whether by way of a rights issue, open offer or
remuneration of the auditors.
otherwise):
11.
That, pursuant to section 551 of the Companies
12.1.1 to holders of ordinary shares in the capital of the
Act 2006 (‘Act’), the Directors be and are generally
Company in proportion (as nearly as practicable)
and unconditionally authorised to allot shares
to the respective numbers of ordinary shares
in the Company or to grant rights to subscribe for
held by them; and
or to convert any security into shares in the
12.1.2 to holders of other equity securities in the capital
Company up to an aggregate nominal amount of
of the Company, as required by the rights
£1,232,292.40 (representing one third of the
of those securities or, subject to such rights, as
existing issued ordinary share capital of the
the Directors otherwise consider necessary,
Company), provided that, (unless previously
but subject to such exclusions or other
158
159
NOTICE OF ANNUAL GENERAL MEETING 2022
GENERAL NOTES
arrangements as the Directors may deem
before this authority expires under which such
1. To receive the Company’s annual accounts, strategic
5. The appointment of a proxy will not preclude
necessary or expedient in relation to treasury
purchase will or may be completed or executed
report and directors’ and auditors’ reports for the
a member from attending and voting in person at
shares, fractional entitlements, record dates or
wholly or partly after this authority expires and
year ended 31 December 2021.
the meeting if he or she so wishes
any legal or practical problems under the laws of
may make a purchase of Shares pursuant to any
any territory or the requirements of any
such contract as if this authority had not expired.
regulatory body or stock exchange; and
12.2 otherwise than pursuant to paragraph 12.1 of
this resolution, up to an aggregate nominal
By order of the Board
David Rattigan
Secretary
1 March 2022
Registered Office, Laurel House, Woodlands Park,
Ashton Road, Newton-le-Willows, WA12 0HH.
Registered in England and Wales No. 00238303.
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 26 July 2023
(whichever is the earlier), save that the Company
may make an offer or agreement before this
power expires which would or might require
equity securities to be allotted or treasury
shares to be sold for cash after this power
expires and the Directors may allot equity
securities or sell treasury shares for cash
pursuant to any such offer or agreement as if
this power had not expired. This power is in
substitution for all existing powers under
sections 570 and 573 of the Act (which, to the
extent unused at the date of this resolution, are
revoked with immediate effect).
13.
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:
13.1
the maximum aggregate number of Shares which
may be purchased is 3,696,877:
13.2
the minimum price (excluding expenses) which
may be paid for a Share is 10p; and
13.3
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 26 July 2023
(whichever is the earlier), save that the Company
may enter into a contract to purchase Shares
2.
In accordance with corporate governance best
practice, all of the Directors will retire and offer
themselves for re-election at the AGM. The Board
considers that each of the Directors continue
to make a valuable contribution to the Board and
to demonstrate commitment to the Group.
Biographical details of all of the directors, who are
each offering themselves for re-election
respectively, are set out on pages 74 and 75 of this
document.
6.
In order to reduce the Company’s environmental
impact, our intention is to remove paper from the
voting process as far as possible. You are therefore
asked to vote in one of the following ways:
• Register your vote online 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
3. Entitlement to attend and vote.
outside the United Kingdom will be charged at the
The right to vote at the meeting is determined
applicable international rate. Lines are open
by reference to the register of members. Only those
between 09:00 – 17:30, Monday to Friday excluding
shareholders registered in the register of members
public holidays in England and Wales.
of the Company as at close of business on Monday,
• CREST members may use the CREST electronic
25 April 2022 (or, if the meeting is adjourned,
proxy appointment service as detailed in note 7
close of business on the date which is two working
below.
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
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.
rights of any person to attend or vote (and the
All proxy appointments, whether electronic or hard
number of votes they may cast) at the meeting.
copy, must be received by the Company’s registrar
4. Appointment of proxies
A member is entitled to appoint another person as
his or her proxy to exercise all or any of his rights
to vote at the meeting. A proxy need not be a
member of the Company. A member may appoint
no later than 11:00 a.m. on Monday, 25 April 2022
(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).
more than one proxy in relation to the meeting
7. CREST members who wish to appoint a proxy or
provided that each proxy is appointed to exercise
proxies for the meeting (or any adjournment of it)
the rights attached to a different share or shares
through the CREST electronic proxy appointment
held by him or her. To appoint more than one
service may do so by using the procedures
proxy, each different proxy instruction must be
described in the CREST Manual. CREST personal
received by the Company’s registrars at: Link Group,
members or other CREST sponsored members, and
PXS 1, Central Square, 29 Wellington Street,
those CREST members who have appointed a voting
Leeds, LS1 4DL no later than 48 hours before the
service provider(s), should refer to their CREST
time appointed for the meeting (excluding non-
sponsor or voting service provider(s), who will be
working days). You will need to state clearly the
able to take appropriate action on their behalf.
number of shares in relation to which the proxy is
appointed. A failure to specify the number of
shares each proxy appointment relates to or
specifying a number which when taken together
with the number of shares set out in the other
proxy appointments is in excess of those held by
the member, may result in the proxy appointment
being invalid. A proxy may only be appointed in
accordance with the procedures set out in notes 6
to 9 below and the notes to the form of proxy.
8.
In order for a proxy appointment or instruction
made using the CREST service to be valid,
the appropriate CREST message (a “CREST Proxy
Instruction”) must be properly authenticated in
accordance with Euroclear UK & Ireland Limited’s
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
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161
GENERAL NOTES
GENERAL NOTES
proxy or is an amendment to the instruction given
11. As at 8 March 2022 (being the last practicable
Directions to the Annual General Meeting
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
Car:
Leave the M6 at Junction 23 and take the A49 south towards Newton, Woodlands Park is on the left in
approximately 0.3 miles. On entering the estate, Laurel House is accessed from the fourth exit of the
roundabout.
25 April 2022) (or, if the meeting is adjourned, no
377,664 ordinary shares in treasury, in
Train:
Newton-le-Willows railway station is located 1.3 miles away from Woodlands Park on Southworth Road,
later than 48 hours (excluding any part of the
respect of which it cannot exercise any votes, the
WA12 9SF.
day that is not a working day) before the time of
total voting rights in the Company as at 8 March
any adjourned meeting). For this purpose, the time
2022 are 36,591,108
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.
10. A shareholder which is a corporationmay 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.
Bus:
The nearest bus service to Woodlands Park is located on Cobden Street, 0.8 miles from Woodlands Park,
operating the number 22 service into Newton-le-Willows.
FINANCIAL CALENDAR
ANNUAL GENERAL
MEETING
27 April 2022
INTERIM RESULTS
ANNOUNCED
27 July 2022
Laurel House, Woodlands Park, Ashton Road,
Newton-Le-Willows, WA12 0HH.
01925 22 22 22. www.nicholsplc.co.uk
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NOTES
NOTES
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165
NOTES
NOTES
166
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