A N N U A L R E P O R T
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WELCOME
- TO OU R -
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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WELCOMEANNUAL REPORT 2022 CONTENTS
STR ATEGIC REPORT
Key Performance Indicators
Chairman’s Statement
Our Business Model
Chief Executive Officer’s Report
Happier Future Progress Report
Chief Financial Officer’s Report
Risk Management
Section 172 Report
GOVERNANCE
The Board
Corporate Governance Statement
Audit Committee Report
Remuneration Committee Report
Nomination Committee Report
Directors’ Report
FINANCIAL STATEMENTS
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Statement of Financial Position
Consolidated Statement of Cash Flows
Parent Company Statement of Cash Flows
Consolidated Statement of Changes in Equity
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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ANNUAL REPORT 2022 OUR
BRANDS
OUR
PORTFOLIO
At Nichols we are
proud to offer a leading
portfolio of distinctive,
iconic brands, which
meet a variety of
consumer needs and
occasions.
PACKAGED
Our Packaged range
includes Still and
Carbonates in a range
of formats.
Vimto is the refreshingly different
Our Vimto range includes squash,
soft drink that has it all. Created
carbonates, still drinks, flavoured
in Manchester in 1908 by John
waters and frozen drinks. With
Noel Nichols, Vimto was originally
a choice of unique flavours and
designed as a herbal tonic to give
Original and No Added Sugar
its drinkers ‘Vim and Vigour’.
options, there are lots of ways to
For over 100 years, we have been
enjoy Vimto. This also includes
mixing our secret recipe – a blend
our extensive range of licensed
of fruits, herbs and spices – to
products – from protein powders
produce a unique and irresistible
and fruit spreads to desserts and
range of drinks.
confectionery.
Today, we’re the 9th most chosen
beverage brand in the UK1, and
are enjoyed in 73 countries around
the world.
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Refreshingly different. Unmistakably
1Kantar – British Brand Footprint 2021
ANNUAL REPORT 2022OUR BRANDS Levi Roots is one of the UK’s best loved and most successful
Experience the taste of California with Sunkist, the brand that has been
Feel Good is a range of fruitful sparkling waters available in three unique
entrepreneurs. In 2010, we were proud to gain the licence to create Levi’s
making waves since 1978. Our Sunkist product range reflects the brand’s
flavours that are 100% natural with no added sugar. Feel Good has a
range of low sugar carbonated soft drinks – offering a mouth-watering
Californian roots of sun, sand and surf and makes Sunkist a firm favourite
mission to ‘make the world feel better one sip at a time’, donating 3%
taste of the Caribbean. These delicious, tropical fruit flavours each put a
across the UK. Available in a variety of refreshing low sugar flavours.
of sales to initiatives that support people and planetary wellbeing and
little “music in your glass”.
through our ‘You Buy We Plant’ initiative, helping to restore our marine
ecosystems and protect against climate change.
OUR
BRANDS
OUT OF HOME
POST-MIX
COFFEE
We’re a one stop shop for
the UK’s hospitality and
leisure industry with the
widest range of iconic soft
drinks brands for frozen,
post-mix and coffee
occasions.
We offer the widest range of
Working in partnership with Jacobs
owned and licensed post-mix
Douwe Egberts – one of the largest
brands in the industry. This
coffee roasters in the world, we
includes many of the biggest and
supply high quality coffee blends
most well-loved brands in the UK,
including Douwe Egberts, Kenco,
alongside our own premium range
and the unique liquid roast coffee
of post-mix drinks, offering our
concept Cafitesse.
customers unrivalled choice.
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ANNUAL REPORT 2022OUR BRANDS OUR
BRANDS
OUT OF HOME
FROZEN
We’re a one stop shop for
the UK’s hospitality and
leisure industry with the
widest range of iconic soft
drinks brands for frozen,
post-mix and coffee
occasions.
We are the UK’s leading frozen
ICEE - Frozen, fizzy and full of
beverage supplier with a range of
flavour, there’s no other slush like
enviable category leading brands
the world’s No.1 brand - ICEE. A
favourite in the USA and around
the globe since 1967, ICEE is the
Swizzle Fizzle Freshy Freezy frozen
drink, with a range that can be
found chilling in some of the
UK’s largest cinema chains and
premium leisure venues.
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ANNUAL REPORT 2022OUR BRANDS Starslush is the perfect addition to add some thirst-quenching fun to
family days out, with a full range of fabulous flavours, from traditional
Strawberry and Blue Raspberry to Vimto and Unicorn Watermelon. With
full-on flavour, and zero sugar – you can feel good about ‘Bursting Your
Thirst’ with Starslush.
SLUSH PUPPiE, the iconic and original frozen drink has been loved by
consumers across the world for over 50 years. Available in a range of
four delicious fruit flavours that are all sugar free, vegan friendly and
contain Vitamin C, it’s the perfect combination of frozen, healthy fun for
all to enjoy.
STR ATEGIC
REPORT
Key Performance Indicators
Chairman’s Statement
Our Business Model
Chief Executive Officer’s Report
Our Happier Future Progress Report
Chief Financial Officer’s Report
Risk Management
Section 172 Report
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CONTENTSSTRATEGIC REPORT KEY
PERFORMANCE
INDICATORS
REVENUE (£M)
ADJUSTED PBT1 (£M) AND MARGIN (%)
PBT (£M) AND MARGIN (%)
This year we have reviewed our
Key Performance Indicators based
on our 2022 Strategic Review.
142.0
147.0
144.3
164.9
118.7
31.8
32.4
22.4%
22.1%
25.0
21.8
15.1%
15.1%
11.6
9.8%
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
+£20.6m
+14.3%
+£3.2m
+14.5%
31.8
32.4
22.4%
22.1%
13.8
8.4%
6.5
5.5%
(12.2%)
(17.7)
2018
2019
2020
2021
2022
+£31.5m
+178.4%
STATUTORY EBITDA2 (£M)
ADJUSTED1 BASIC EARNINGS PER SHARE
(PENCE)
BASIC EARNINGS PER SHARE (PENCE)
33.9
37.0
26.9
23.7
69.23
72.81
69.23
72.81
55.38
46.15
16.5
25.56
31.86
13.14
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
+£3.2m
+13.3%
+9.23p
+20.0%
2018
2019
2020
2021
2022
(60.04)
+91.90p
+153.1%
FREE CASH FLOW3 (£M)
STATUTORY ROCE4 (%)
FULL YEAR DIVIDEND (PENCE)
19.6
21.4
17.6
17.5
14.6
28.7%
26.3%
38.1
36.8
27.7
23.1
14.2%
5.2%
12.4
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
-£2.9m
-16.7%
(15.8%)
2018
2019
2020
2021
2022
+30.0ppts
+4.60p
+19.9%
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1 Excluding Exceptional items.
2 EBITDA is the statutory profit before tax, interest,
depreciation, and amortisation.
3 Free Cash Flow is the net increase in cash and cash
equivalents before acquisition funding and dividends.
4 Statutory return on capital employed is the operating profit
divided by the average period-end capital employed.
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KEY PERFORMANCE INDICATORSSTRATEGIC REPORT CHAIRMAN’S
STATEMENT
JOH N
- NICHOLS -
NON-EXECUTIVE CHAIRMAN
It gives me great
pleasure to write to our
shareholders in what is
my final report as Non-
Executive Chairman of
Nichols.
Actions are expected to be
In the UK, revenue increased by
implemented throughout FY23,
13.7% versus last year to £127.0m
with benefits being realised largely
(2021: £111.6m) as the OoH route
in FY24 and beyond. Given the
to market, and in particular the
differing strategic challenges
Dispense business, recovered post
between our Packaged and OoH
the pandemic. The Vimto brand
routes to market, the Group will
be segmented during FY23 to
continued to progress by +3.0% to
£105.9m, according to Nielsen1.
Vimto continues to perform well
ensure appropriate strategic focus
both in the UK and internationally
exists for each of its two proposed
and despite ongoing inflationary
operating segments.
pressures, which accelerated
during the second half, the brand
TRADING
has ensured a robust financial
Total Group revenues for the
performance for the Group. In
period were £164.9m, an increase
the UK we have again seen the
of 14.3% compared to 2021,
brand outperform in dilutes and
with all routes to market and
continued to make significant
geographies progressing in the
progress in the ready to drink
period.
Sales across our International
markets were £38.0m, an
increase of 16.1% (underlying
+13.4% adjusting for the impact
of the completion of the Group’s
marketing investment in the
Middle East in 2021) versus the
prior year (2021: £32.7m). Revenue
in Africa increased 15.0%, following
a 17.1% growth last year which
was particularly pleasing given the
(RTD) subcategory. Internationally,
we continued to see solid growth
across all regions. In particular,
it was pleasing to see strong
underlying growth in both the
Middle East and Africa given the
importance of these markets to
the Group.
Revenue of Still products increased
long-term opportunity presented
by 8.2% to £78.3m (2021:
by these markets.
£72.4m), driven by the strong
performance of the Vimto Squash
SHARE BUYBACK
and RTD brands in the UK and
On 14 December 2021, the Group
the progression of Vimto Cordial
announced its plans to conduct
in the Middle East. Revenue from
on-market purchases under
Carbonated products increased
a share buyback programme.
As Out of Home (OoH) recovers
20.4% to £86.6m (2021: £71.9m),
This included the intention to
from the impact of the pandemic,
driven largely by the recovery
repurchase up to 453,486 ordinary
the Group’s OoH Strategic
Review is now complete, with
opportunities for net margin
improvement identified.
of the Group’s OoH Dispense
shares of 10p each in the capital of
business as outlets fully reopened
the Group (the ‘Ordinary Shares’),
following the pandemic, and by
representing up to approximately
continued strong growth in Africa.
1.2 per cent of the Group’s issued
share capital, pursuant to the
have identified an outstanding
authority obtained at the Group’s
candidate with significant
PBT2 to be in line with FY22
and market expectations3, with
most recent Annual General
experience in consumer-facing
International ahead and OoH
Meeting (AGM) at that time, held
businesses and public company
behind initial market forecasts.
on 28 April 2021 (“the Buyback”).
boards.
The Buyback was put in place
Liz joined the Group as a
to meet the Group’s future
Non-Executive Director (NED) on
obligations under its SAYE Option
1 February 2023 and will become
Scheme and/or Long-Term
Non-Executive Chair on 26 April
The Board remains confident of
significant progress in FY24 as
inflationary pressures abate and
the benefits of the Out of Home
Strategic Review are realised.
Incentive Plan. The Buyback was
2023 following the conclusion of
With a long-term track record
completed on 5 April 2022 and was
the AGM on that date, subject to
of growth, a proven and
funded from the Group’s existing
her re-appointment as a Director.
diversified strategy in the UK and
cash resources. All Ordinary
Shares repurchased are now held
in treasury. The weighted average
price paid was 1428.18 pence and
the total cost of the Buyback in the
period was £5.5m.
I am delighted to remain on
the Board as a NED, taking the
second of the two Nichols family
Board seats, agreed as part of the
Relationship Agreement signed in
July 2020 alongside my son James
internationally, a quality range
of brands and a strong balance
sheet, the Board remains highly
confident that the Group is very
well positioned to deliver its
long-term growth plans.
DIVIDEND
Nichols.
Considering the Group’s improved
OUTLOOK
performance in the period and
in-line with the Group’s stated
dividend policy of broadly 2x cover,
the Board today proposes a final
dividend of 15.3p which, together
with the interim dividend paid,
would result in a full year dividend
for 2022 of 27.7p, representing a
19.9% increase year-on-year.
The Group has a proven,
diversified, and international
business model. However, it is
John Nichols
not immune to the significant and
Non-Executive Chairman
accelerating inflationary pressures
28 February 2023
impacting the wider consumer
and soft drinks markets. Whilst
FY23 will be a challenging year
as cost of living pressures impact
Subject to approval at the Group’s
consumer demand across all
AGM on 26 April 2023, payment
routes to market, the Group will
will be made on 4 May 2023. The
continue to seek to mitigate
ex-dividend date and record date
these pressures through
will be 23 March and 24 March
both cost efficiency and
2023 respectively.
revenue management.
CHAIR SUCCESSION
Throughout FY22,
this has helped
I announced at the last AGM that,
the Vimto brand
after 15 years in the role, it was my
continue to grow
intention to retire as Non-Executive
in the UK and
Chair once a suitable replacement
internationally,
had been identified. On 11 January
which the Board
2023, the Board was pleased to
announce the appointment of
is confident will
continue in FY23.
Elizabeth (Liz) McMeikan as the
The Board
Group’s next Non-Executive Chair.
currently expects
In Liz, the Nominations Committee
FY23 Adjusted
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1 Nielsen IQ RMS data for the Total Soft Drinks category for the YTD ending 31December 2022 for the GB Total Coverage market.
2 Excluding exceptional items. 3 FY23 market expectations refers to a Group compiled consensus of adjusted PBT of £25.1m.
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CHAIRMAN’S STATEMENTSTRATEGIC REPORT OUR
BUSINESS
MODEL
EXISTS TO
MAKE
LIFE
IN GREDIE NTS
Like all great tastes - it all starts
with the best ingredients!
The ‘Vimto secret recipe’ is
testimony to this.
CONSUMER S
It’s ultimately all about
getting our much loved
brands into people’s hands!
M ANUFACTURE
Our much loved products are
made by the very best - ourselves
or our supplier partners.
RETAILER S
Our retailers vary from some
of the biggest to some of the
smallest in the world.
TR ANSPORT
We use the most effective distribution
solutions to meet customer needs,
whether that be via our own team or an
expert partner.
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OUR BUSINESS MODELSTRATEGIC REPORT CHIEF
EXECUTIVE
OFFICER’S
REPORT
ANDR EW
- MILNE -
CHIEF EXECUTIVE OFFICER
logistical challenges relating to
consumers can enjoy our brands
the strike action that occurred
on a daily basis. A key initiative
in Spain during the first half of
that has been successfully
2022 that, whilst not affecting
delivered to drive this during the
the overall year performance,
year was the transition of our
did cause a phasing issue H1 to
dilutes contract manufacturing
H2. Whilst our teams have had
to more efficient and faster lines
to be flexible and continuously
that has increased our capability
adapt to changing circumstances,
and capacity at an underlying
I am really pleased that our
favourable cost of goods position.
I am incredibly proud to
say that Vimto is the only
UK dilutes brand to have
achieved growth pre,
during, and post Covid.
clear strategy and diversified
business model have enabled
us to successfully overcome the
challenges throughout the year
and, ultimately, deliver returns for
our shareholders.
The performance of the Vimto
brand was central to the Group’s
success in 2022. Vimto’s unique
flavour continues to be loved by
consumers across the globe. In
the UK, the brand saw growth of
3.0%1 during the year, once again
outperforming the dilutes and
ready to drink (RTD) subcategories.
One of the Group’s key strategic
focus areas in 2022 was to drive
further operational excellence,
with the objective of delivering
enhanced levels of product
availability and ensuring our
I am incredibly proud
of the Group’s strong
performance in 2022,
which is a great
testament to the
commitment, resilience
and determination of the
entire Nichols team as
we navigated what was a
challenging and volatile
trading environment.
The teams should be
very pleased with what
we have achieved this
year, delivering strong
sales growth across all
our key geographies.
Having experienced
unprecedented trading conditions
in recent years because of
the Covid-19 pandemic, 2022
was another challenging and
unpredictable year. We saw rapidly
rising inflation, increased cost of
living pressures on consumers
and experienced a number of
HAPPIER FUTURE
communities we serve and
The Vimto brand continued to
At the beginning of the year,
we shared our Happier Future
sustainability commitments with
our stakeholders, and I am pleased
to report that in 2022 we made
strong progress against our three
key pillars of:
looking after our Nichols plc
family and giving back to our
local communities
Developing products that allow
consumers to make healthier
choices, strengthening our
approach to responsible sourcing,
and continuing to find sustainable
packaging solutions
ensuring that we continue to
perform well in 2022 and, once
launch a range of No Added
again, delivered strong value sales
Sugar (NAS) products to offer our
of £105.9m. This was a result of
consumers a balanced choice of
the continued investment in its
product range. Within our Owning
distribution channels, product
Our Climate Impact pillar we have
availability, innovation, promotions
delivered on transitioning all our
and strong marketing campaigns.
Nichols UK sites to be operating on
100% renewable energy. You can
read more on our Happier Future
strategy and progress during the
year in our FY22 Happier Future
Progress Report.
UK SOFT DRINKS1
The UK soft drinks market
delivered value growth during
2022 of 9.2% with a total market
value of £10.5bn (2021: 9.6bn).
However, market sales volumes
declined 2.1% year-on-year,
mainly due to the impact of cost
of living pressures on consumers
The dilutes category continued to
be a segment where we flourished.
I am incredibly proud to say that
Vimto is the only UK dilutes brand
to have achieved growth pre,
during, and post Covid. Building
on the momentum of our brand
re-launch in 2021, Vimto dilutes
continues to gain market share
from peers and during 2022 we
further cemented our clear No.2
position in the market. Vimto
Squash is the fastest-growing
dilutes brand and outperformed
the sub-sector by 2.3% in 2022.
and despite the easing of trading
Our Vimto Still RTD range
and social restrictions imposed
experienced significant value
during the Covid-19 pandemic.
growth in 2022, achieving 15.9%
This value growth reflected price
year-on-year sales growth, and a
Ensuring we are conducting our
increases seen across the market
+3.8% market outperformance.
business in the most sustainable
in response to
way to protect the world around us
inflationary
pressures.
Our people are focused on
embedding our commitments
and pledges in these key areas
across all our business practices.
Sustainability is front of mind for
everyone, and key to our day-
to-day decision-making. Some
of our key highlights during the
year included launching our first
Camp Vimto programme which
is focused on raising aspirations
and driving opportunities for
young people in the
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1 Nielsen IQ RMS data for the Total Soft Drinks, Squash, Flavoured Carbonates and RTD Stills category for the YTD ending 31 December 2022 for the GB
Total Coverage market
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CHIEF EXECUTIVE OFFICER’S REPORTSTRATEGIC REPORT
Our Levi Roots brand had another successful year,
delivering strong value growth of 5.3%. This has been
driven by an increase in the number of distribution
points across wholesale and convenience channels,
alongside a successful sales distribution drive,
ensuring that the Levi Roots brand is readily accessible
for both retailers and consumers.
Our Feel Good brand continues
on-trade. In addition to our retail
Wales through our
to see accelerated customer
distribution wins, our new direct to
#youbuyweplant programme.
and consumer demand, with
consumer partnership will unlock
year-on-year volume and revenue
more growth for the brand online.
Throughout 2022, we continued to
work closely with all our customers
growth. This was driven by strong
distribution gains for multi-packs
into new grocery retailers as well
as new listings for our single serve
range in the
In April 2022, Feel Good launched
across our UK grocery, foodservice,
an exciting new partnership
discounter and wholesale channels
with Project Seagrass, a marine
to ensure their needs are at the
conservation charity dedicated
heart of our operations. The
to global seagrass meadow
strength of these relationships is
protection. We supported the
paramount to ensuring our end
protection of the UK’s first
consumers can enjoy our products
seagrass nursery in
each day.
This has been achieved as a result
Innovation continued to be a
of winning several new listings for
key growth driver in 2022 as
our products across a range of key
we launched a range of exciting
outlets during the year.
new products that all share the
2022 has been a challenging year
for our Carbonates portfolio.
We have faced significant cost of
goods pressures in what is a highly
competitive subcategory.
unique and distinctive Vimto taste
experience. We remain passionate
and committed to providing
consumers with the opportunities
to make balanced and informed
choices when it comes to healthy
As a result we have focused on
hydration, with all our Packaged
protecting our margins which has
products now High in Fat, Salt
resulted in both value (-3.3%) and
and Sugar (HFSS) compliant. Our
volume decline (-16.4%).
product launches in 2022 included:
• Vimto Zero Cherry, Raspberry &
Blackcurrant Sparkling
• Vimto Zero Blackberry,
Raspberry & Blueberry Still
• Two new NAS dilutes flavours -
Vimto Orange and Pineapple,
on platforms including TV, video
and Vimto Mango and
on demand, digital, social media
Passionfruit
Following its launch in 2021,
summer 2022 saw the return of
Vimto’s highly successful ‘Find
Your Different’ marketing and
and in cinemas. The campaign
was seen by around six million
consumers in total, with 80% of
this group sitting within our key
target audience of families.
advertising campaign. Building on
In addition to our broadcast
the strength of its activation last
communications, we also ran two
year, the multi-media campaign
promotions across our Carbonates
continued to drive a strong uplift
and RTD ranges, including our ‘Big
in overall brand awareness,
Cash Giveaway’ and ‘Love Potion’
consideration and engagement,
initiatives in the impulse sector.
whilst highlighting the benefits of
Both incentivised shoppers with
our fortified squash flavour range.
the chance to win cash instantly
Our fully-integrated campaign ran
when buying our products.
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CHIEF EXECUTIVE OFFICER’S REPORTSTRATEGIC REPORT
OUT OF HOME STRATEGIC REVIEW
quite distinct from those that
•
improving financial reporting,
As previously announced, in 2022
we conducted a strategic review
of our OoH route to market as we
assessed the significant impact of
the pandemic on this channel. The
review has allowed us to create a
clear strategy that we believe will
exist within our Packaged route
including divisional and regional
to markets. The likely long-term
reporting focusing on net profit
returns from OoH are lower
and return on capital employed.
and a different approach to the
management of the business is
required to deliver shareholder
value in the long term.
The Group incurred £0.5m of
costs in the period, to prepare
its recommendations for
implementation. Implementation
deliver significant additional net
The strategic review identified
of these actions commenced in Q1
margin gains through a range of
several immediate actions that will
FY23 and additional exceptional
actions that will be implemented
be implemented through FY23.
costs will be incurred through the
during 2023, with the benefits
being largely realised in 2024 and
beyond.
The OoH route to market’s
These actions include:
• operating OoH as a distinct
division within the Group
year as these recommendations
are implemented.
The benefits from these actions
will largely be realised during FY24.
financial performance was
• exiting underperforming
heavily impacted by the Covid-19
contracts and product
pandemic, reflecting the lower
categories, including coffee and
margin and higher level of
national frozen accounts
operational gearing that exists
compared to our Packaged route
to markets, particularly when
its full operational costs and
overheads are factored in.
• exiting the in-house central
frozen region, which is
considered sub scale and
unprofitable and for dispense is
already serviced by a
The OoH dispense business
distributor
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• reviewing processes to
simplify the business ensuring
a rationalisation of operating
costs and central overheads
is serviced on a regional basis
through both owned distribution
channels and third party
distributors. OoH also services
several national frozen contracts
which cannot be serviced
profitably without a wholly owned
national distribution network.
The strategic review performed
by the Company during 2022
provided clarity on the financial
performance of OoH. It also
identified that OoH operates with
distinct operations, customers,
products and, in part, suppliers.
It is clear post the pandemic that
the strategic challenges within
our OoH route to market are
UK ON-TRADE
accelerating cost of living crisis
We continue to have strong
which resulted in reduced footfall
relationships with our key partners
and consumer spending in our key
including Coca-Cola, Pepsi, Irn-Bru,
Similar to the broader hospitality
industry, our Out of Home route
to market experienced another
leisure outlets.
challenging 12 months in 2022.
Strong innovation and marketing
During the year, we supported our
key customers and partners as
they faced numerous challenges
resulting from increasing energy
costs to rising inflation and
supply shortages. Throughout the
year, we remained focused on
maintaining strong service levels
and always maximising product
availability, thereby ensuring all of
our customers’ drinks equipment
were fully operational, and that
our deliveries arrived on time and
in full.
I am satisfied with the OoH route
to market’s performance in 2022,
as it continued to recover from the
impact of the pandemic to deliver
sales growth of 43% versus 2021.
Nonetheless, its performance
during the second half of the year
slowed to +5% against tougher
post-Covid comparatives and many
channels were impacted by the
programmes have once again
been fundamental in driving the
performance of our brands across
key leisure and hospitality venues.
Synchronising with movie launches
has become an increasingly
important part of our ICEE brand’s
strategy, driving brand visibility by
trialling the product in venue. In
2022, this included collaborating
with Paramount Pictures and
Cineworld on the ‘ICEE Challenge’,
a cinema advert reel led by Johnny
Knoxville, to support the launch of
the Jackass Forever movie.
During the year, we also launched
our ‘ICEE Big Flavour Vote’, inviting
fans to select their preferred new
flavour from a range of three. As a
result, the winning flavour, Mango
& Passion Fruit, was launched
in July across a range of cinema
venues and was focused on driving
incremental consumers to the
brand on a more regular basis.
Ocean Spray and Sunkist. This
year, we also introduced the Old
Jamaica Ginger Beer brand on
draught in the UK as part of an
exclusive partnership. The strength
of these partnerships underpinned
double digit revenue growth versus
last year on our core dispense
branded offerings. In addition,
in November we launched our
new Vimto Out of Home website,
providing customers with a more
user-friendly experience, where
they can easily view our portfolio
and service offering in full. The
website will be at the heart of
future trade engagement plans.
Strong innovation and
marketing programmes
have once again been
fundamental in driving
the performance of
our brands
22
23
CHIEF EXECUTIVE OFFICER’S REPORTSTRATEGIC REPORT
key territories delivered further
In Europe, positive sales growth of
success, with seasonal activations
23% was extremely encouraging
around Valentine’s Day, Ramadan
in the context of the challenging
and Tabaski within all key markets
market conditions. In Europe we
in Africa. In Algeria, we invested in
are maintaining our strong focus
a range of shopper activations and
on driving new distribution wins,
a first-ever digital campaign across
improving product availability,
Instagram and Facebook, which
and ensuring excellent in-market
supported the delivery of record
execution.
sales in 2022.
In Africa, sales growth remained
Inflation in North America proved
strong at 15% year-on-year, as we
extremely challenging to mitigate
increased our distribution network
throughout 2022 and we saw
into Angola, Chad and the Central
demand for our products soften
African Republic, and launched
during the period. We continue to
new flavour extensions into a
number of existing markets.
Our investment in strong
marketing programmes across
work in close collaboration with
our partners in-market to ensure
we maintain our key distribution
points.
INTERNATIONAL
Double digit growth and market
In its 96th Ramadan season, our
I am pleased to report strong
International sales growth of 16%
in 2022. This was achieved despite
the challenges posed by inflation,
global supply chain challenges,
and political instability in some of
our international markets during
the year.
share gains were achieved across
partner in MEAP, Aujan Coca-
all our key geographies. Sales in
Cola Bottling Company (ACCBC),
MEAP (Middle East Asia Pacific)
launched the region’s first ever
were up 20% supported by strong
Zero Sugar cordial, a limited-
in performance in Yemen, despite
edition format which proved
the ongoing tragic civil war, and
extremely popular. Outstanding
across the Gulf Cooperation
market execution and a highly
Council (GCC). This was fuelled by
effective promotional campaign,
strengthened in-store execution,
including a spectacular take-over
effective integrated marketing
of the Burj Khalifa, helped ensure
campaigns and product innovation.
that sales across the season
exceeded those achieved in 2021.
We also achieved strong sales
growth in our RTD ranges with
the launch of a new campaign
celebrating ‘The Unique Taste of
Sweet Togetherness’. In November,
we launched a new Vimto citrus
flavoured RTD product in a green
can, targeted to drive incremental
consumers to the brand.
Across all our key markets and
geographies, we have continued to
roll out our new Vimto branding,
with Senegal, Cameroon and Mali
all being delivered in Africa, as
well as Sweden and Cyprus within
Europe.
Double digit growth and
market share gains were
achieved across all our key
geographies
w
e
i
v
o
t
e
r
e
h
n
a
c
S
e
t
i
s
b
e
w
r
u
o
24
25
CHIEF EXECUTIVE OFFICER’S REPORTSTRATEGIC REPORT
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.
CORE PRODUCTS,
CORE CUSTOMERS,
CORE MARKETS.
Our core range of iconic brands
continue to be loved by our
consumers and customers around
the world and we will continue to
invest to support and drive their
growth. 2022 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.
Our enhanced operational
excellence programme has
ensured we deliver great customer
service and drive product
availability enabling our consumers
to enjoy our products wherever
they are.
26
27
CHIEF EXECUTIVE OFFICER’S REPORTSTRATEGIC REPORT INNOVATION AND
ACQUISITION
Driving growth through innovation
will continue to be at the heart of
our long-term growth strategy. This
pillar has delivered growth in the
business over many years and will
continue to be a key area in which
we will prioritise our efforts.
Using market and consumer
insights to understand the long-
LOOKING AHEAD
We have successfully delivered consistently strong
I am confident that the momentum we have built
term trends and consumer needs,
performances across the breadth of the Group,
will enable us to continue to deliver our long-term
through our diversified business model, clear
strategic objectives, achieve profitable growth and
strategy, strong brand equity and embedded ESG
generate considerable returns for all our stakeholders.
commitments, as well as the strength of our key
partnerships and talent of our highly engaged people.
Our outstanding portfolio of iconic brands has
continued to grow across all markets in 2022, which
remains at the heart of our success. We have a strong
balance sheet and international reach.
Andrew Milne
Our performance this year is testament to the
Chief Executive Officer
strength of our business. Whilst 2023 will undoubtedly
28 February 2023
bring challenges, as inflationary pressures are
expected to persist and consumer confidence remains
under pressure, the soft drinks category has proven to
be highly resilient over many years and I expect that
this resilience will continue to support our business
growth.
will be crucial to ensuring we
evolve our business and deliver
long term, sustainable growth.
MAKING LIFE
TASTE BETTER FOR
EVERYONE
I was very proud that during 2022
All businesses have an important
we published our ESG Strategy and
responsibility to tackle the global
shared a clear set of commitments
climate crisis and at Nichols, we are
that outlined the Nichols vision for
serious about Owning Our Climate
impact and are taking the right
actions to reduce our own direct
emissions and working closely
with our partners across our UK
operations in the first instance, to
reduce our impact throughout our
supply chain.
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 those in the
communities we serve, particularly
supporting the people in those
communities who need it most.
Fundamental to creating our
Happier Future is to develop
Products that we are Proud of,
helping our consumers to make
healthier hydration choices, to
having sustainable packaging
solutions and ensuring that
we source our ingredients and
materials responsibly.
28
29
CHIEF EXECUTIVE OFFICER’S REPORTSTRATEGIC REPORT OUR HAPPIER
FUTURE
PROGRESS
PROGRESS
REPORT 2022
REPORT
In 2022 we made clear progress
in embedding our Happier Future
Strategy into “how we do things
at Nichols”.
For example, we have introduced High in Saturated
Fat, Salt and Sugar (HFSS) compliant products across
our UK packaged portfolio, collected Scope 3 emissions
data across our UK supply chains, embedded clear
social and environmental requirements into our
contracts with key partners, and worked on formalising
key policies for packaging and responsible sourcing.
We have also continued our focus on giving back
to our local communities – evidenced by both the
ongoing partnerships with Waves for Change, Salford
City Football Club and Warrington Youth Zone, and
through new opportunities with Manchester Thunder
and launching our own Camp Vimto Programme.
Our progress has been delivered under challenging
external circumstances. In 2022, like many businesses
worldwide, we have been impacted by the war in
Ukraine and, in the UK, the significant inflationary
environment and supply chain challenges. This
dynamic external context has required us to remain
both agile and pragmatic, whilst retaining our focus
on our Happier Future commitments.
On behalf of the Board, we would like
to thank everyone who has contributed
to the successful delivery of the 2022
Happier Future achievements.
Continuing our hard work, our 2023 focus
includes embedding our community partnerships,
implementing the Deposit Return Scheme (DRS) in
Scotland, reducing our direct (Scope 1 & 2) emissions
through initiatives such as electrifying our van fleets,
which was impacted by global supply chain issues
in 2022, and developing our Scope 3 roadmap for
our UK operations.
3030
31
31
HAPPIER FUTURE PROGRESS REPORTSTRATEGIC REPORT OUR
HAPPIER FUTURE
STRATEGY
INTRODUCING THE HAPPIER FUTURE STRATEGY
From the heritage of our brands to the values our
Over a hundred years of experience has taught us
employees demonstrate every day, social purpose
that it is through continuous evolution that we ensure
has been at the heart of how Nichols works across
the sustainability of our business and, with this in
the world for more than a century. In fact, we have
mind, we have organised our strategy for a Happier
made it our business to help people young and old,
Future into three pillars. These are interconnected but
from Manchester to the Middle East, to enjoy the
provide us with tangible goals around which we can
habit of regular healthy hydration. Our Happier Future
align our resources, employees and stakeholders,
framework sets out our approach to doing business in
and measure our progress against each year.
the right way, for our consumers, customers, partners,
employees, and the world around us.
We pledge to improve the future for over 100 young
people in our local communities, raising aspirations
through skills development and career development
opportunities.
We will innovate to allow our consumers
to make healthier choices.
All of our UK Packaged products will contain 51%
sustainably sourced rPET by 2022. We are striving to
reach 100% by 2025.
We will reduce our impact on climate change by
reducing absolute Scope 1 & Scope 2 Green House
Gas emissions* by 25% by 2025 and define our net
zero roadmap.
* 2018 baseline
BRINGING OUR HAPPIER FUTURE STRATEGY TO LIFE EVERY DAY
We have worked hard to ensure
that our Happier Future strategy
is embedded throughout the
organisation, with every employee
understanding what it means for
them and their role.
team members who can input customer, consumer
and supply partners requirements and expectations.
Outside of the formal Happier Future Programme,
all employees are responsible for enacting Happier
Future’s purpose – doing the right things, in the right
way in their everyday work, decisions, and interactions.
We have clear governance, leadership and
activation of our strategy, with every team within
the organisation having an important role to play to
ensure we are delivering on our commitments and
that Environmental and Social Governance (ESG)
is a part of how we do business everyday.
We have taken deliberate steps to ensure that the
strategy is embedded within our company culture
at every level. Steps taken to embed the strategy
throughout the organisation include:
• We launched the strategy at the company-wide
Our Happier Future Steerco, chaired by our People
quarterly team brief meeting, with physical and
& Sustainability Director, sets our overarching direction
digital communication to advertise its launch to
with approval from the Board and alignment with the
all employees. We continue to provide updates on
Senior Leadership Team. The Steerco monitors and
progress at every quarterly team brief meeting
reviews our progress and ensures that new insights
are considered and incorporated into our Happier
• We introduced a ‘green chair’ into each meeting
Future workstreams and projects as appropriate.
room, as a reminder that ESG must ‘have a seat’ at
the table and be considered in every decision taken
A clear set of workstreams ensures all plans and
commitments across the 3 pillars are managed
• We also introduced a new ‘Happier Future star award’,
through project teams, who regularly report progress
awarding employees who have really made a difference
and escalate issues and risks through our project
management office. Our project teams are multi-
• All employees are expected to have a specific
disciplinary and include relevant technical experts and
personal Happier Future objective each year
32
33
HAPPIER FUTURE PROGRESS REPORTSTRATEGIC REPORT
EVERYONE
MATTERS
Doing things in the right way
means ensuring everyone is
looked after, from our people to
those in our local communities.
Our approach is led by our strong
values, with a focus on putting
our people first and giving back to
those who need it most.
Our primary consumers are young
people, and we want to support them
with more than just refreshment.
Therefore, we are committed to
improving the lives of young people
who need it most.
Highlights this year include:
• Successfully trialling a new agile working policy,
supported by an Agile Working Toolkit. The trial
received positive feedback in our Employee Engagement
Survey with 98% of respondents saying agile working
supports them positively with their wellbeing
• Launching our ‘Leading @ Vimto’ programme,
to train and provide managers with the skills to lead
and support their teams effectively
• Inclusion remained a key focus area and this year we
delivered training on Inclusion and Diversity (I&D) for
leaders and managers and established a Female
Leaders Network, bringing together women from across
the organisation to explore ways to overcome common
challenges and share opportunities. We also continued
with our #ThisisMe series, where employees share their
personal stories and connect on an individual level with
other people across the business
• Further developing the Wellbeing hub, to ensure
a well-rounded offering of services and support to
our people, including delivering seminars and further
training on financial wellbeing, mental health and the
Employee Assistance Programme (available for all staff)
• Running a full Employee Engagement Survey this
FOCUS FOR THE FUTURE
We will continue to put our people first, including:
• Developing our Inclusion & Diversity strategy
year, covering a wide range of topics including day-to
• In 2023, our Female Leaders Network will
day life at Vimto, Leadership, Communication,
look to engage more women across the business
Development, Wellbeing and I&D. Three priority group
and we will encourage the development of our
themes have been identified, with actions already
LGBTQ+ resource group
underway on areas which will make a real difference
to our people and the business
• Providing exciting development opportunities
for our people through our strategic projects
Our Results:
and key initiatives
98%
97%
97%
84%
AGREE THAT THEY SHARE
MANY OF THE VALUES OF VIMTO
AGREE THAT THEY ARE CLEAR ABOUT WHAT
THEY ARE EXPECTED TO ACHIEVE IN THEIR JOB
AGREE THAT THEIR MANAGER TREATS THEM WITH
RESPECT
FEEL THE EXPERIENCES THEY HAVE GAINED AT VIMTO
SUPPORT THEIR PERSONAL/CAREER ASPIRATIONS
THE BEST THING ABOUT WORKING FOR VIMTO WAS
‘THE PEOPLE, TEAMWORK & A FAMILY-LIKE CULTURE’
WHILST 84% EMPLOYEES BELIEVE THEIR PERSONAL
SAFETY, HEALTH AND WELLBEING IS ALWAYS A HIGH
PRIORITY FOR VIMTO, THEY ALSO TOLD US THAT
THEY WOULD LIKE MORE SUPPORT IN HELPING THEM
MANAGE THEIR OWN MENTAL HEALTH
• Further developing our agile working practices
in 2023 to reflect the evolving external context
and the needs of our people and our business
• In 2023, continuing to support our people’s
wellbeing and provide opportunities for them
to develop their understanding and the skills
to manage their own mental health, physical and
financial wellbeing
• Continuing to implement our Employee
Engagement Survey plan to drive improvements
and enhance our three Group Priority Themes -
Wellbeing, Systems, and continuing to develop
our people-focussed Culture
WE PLEDGE TO IMPROVE THE FUTURE
FOR OVER 100 YOUNG PEOPLE IN
OUR LOCAL COMMUNITIES, RAISING
ASPIRATIONS THROUGH SKILLS
DEVELOPMENT AND CAREER
DEVELOPMENT OPPORTUNITIES
PUTTING
OUR PEOPLE
FIRST
PROGRESS IN 2022
Our people are the foundation
of our business and it’s thanks to
their continued commitment and
motivation to ‘make life taste
better‘ that we have had another
successful year.
We have continued to put our people first in terms
of their wellbeing and development. This year, we
have been working on our Inclusion and Diversity
(including Wellbeing) approach. The feedback we
received from the Employee Engagement Survey
this year has reinforced that Nichols remains a great
place to work and provided us with rich insight into
how we can do even better in these areas.
34
35
HAPPIER FUTURE PROGRESS REPORTSTRATEGIC REPORT
GIVING BACK
TO OUR LOCAL
COMMUNITIES
PROGRESS IN 2022
We believe that every young person
matters, yet in today’s society, access
to opportunities is not equal.
The primary consumers of our products are young
people, and we are committed to supporting them
with more than just refreshment. This year we
continued to deepen our existing partnerships
with youth programmes, as well as launching
new partnerships and initiatives that extend our
support and commitment for local young people.
Highlights this year include:
• Running our first pilot for Camp Vimto - our
• Celebrating another year of our
new programme for young people designed to
‘Day to Make a Difference’ scheme,
enable them to gain life skills, build confidence
where every employee can take a day
and get real-life experience of working at
off from work and volunteer in their
Nichols (read more in the case study on page 38
local community
• Continuing our partnership with Waves for
Change (WFC) in Africa – a scheme that combines
the positive health benefits of surfing with activities
proven to help young people build positive
relationships and develop resilience around their
mental wellbeing. WFC helps build sustainable
communities; for example, young people coming out
of the surfing programme then go on to be trained as
mentors and coaches themselves. The programme
then supports the coaches with their next steps in
employment or education
• Launching a new partnership with Manchester
Thunder, to establish the first ever ParaNetball club,
by a Super League netball team. The programme
is designed to ‘focus on the ABILITY within DisABILITY,
and ensure NetbALL really is for ALL’
• Supporting both The Wave’s ‘Summer of Waves’
programme, that helps vulnerable young people try
surfing, and Project Seagrass, which plants seagrass
seed to help restore marine ecosystems and protect
against climate change with our Feel Good brand
• Continuing our partnership with Salford
City Football Club, providing support to their
development teams
• Raising £10k through our annual Charity Golf
Event to support the continued running of the
fabulous Warrington Youth Zone facility
FOCUS FOR THE FUTURE
We are really proud of the Community Partnerships
we have in place, and will continue to enhance these
through the following activities in 2023:
• Further developing our existing partnerships,
with clear opportunities for employee involvement
• Welcoming our second cohort of young
people to Camp Vimto
36
37
HAPPIER FUTURE PROGRESS REPORTSTRATEGIC REPORT
C A S E S T U D Y CAMP VIMTO
Last year we pledged to improve the futures of over 100 young people
in our local communities by 2025. To help achieve our goal, we launched
Camp Vimto this year – a programme created, led and delivered by our
employees and expert partners Whysup and Bright Leaders.
Its aim was to raise the aspirations
1. Engagement - With support from our partners at
of young people aged 16-18 years old,
Warrington Youth Zone, we recruited young people
local to our Head Office, through skills
from the local community to join the programme.
and career development opportunities.
Our specially designed programme
2. Induction - We ran an introductory session with
consisted of five sessions, with in-person
participants, giving them and their parents and
check-ins along the way to maintain
guardians the opportunity to ask questions and
engagement. The sessions were:
learn more about the programme.
3. Residential - We ran a 2-day residential
in North Wales, where participants were able
to connect with and learn from one another,
and were taken out of their comfort zones
in order to develop ‘real’ life skills.
4. Farm to Fizz - We organised and hosted an event
at our Head Office, where the participants got to
learn more about every area of our business, from
sourcing and supply chain to product development,
marketing and sales. Participants even got to design
their own product!
5. Graduation - To celebrate their successful
completion of the programme, a graduation
event was held for all participants, parents
and guardians.
The success of Camp Vimto’s first year has been tremendous. The testimonials from our graduates
demonstrate the impact the programme has had on their confidence, knowledge of how our business works,
and understanding of potential career paths. The feedback from our partners highlights the authenticity and
effectiveness of the programme.
I’m thankful for Camp Vimto because
it’s given me a new confidence in myself.
It’s also been great to see how adults in
the work environment sometimes need
help too, because it reassures me it’s okay
not to be okay even when we’re older.
Camp participant testimonial
We were delighted to be part of this
project and collaborate with like-minded
organisations that are passionate
about making a difference. This project
demonstrated just that! Through lots
of planning and consideration we built
a well-rounded, impactful programme.
In our 5 years of doing this job, this has
been one of our most rewarding projects.
Camp Vimto proved to be a
transformational journey for ALL
involved. The young people gained so
much and really grew in confidence over
such a short period of time. The variety
of activities offered throughout the
duration of the programme brought
challenge, diversity and fun, something
which all young people need. Camp
Vimto was a huge success and it
showcased the culture and values
that lie at the heart of Nichols.
Chris Reddy, Director
& Founder, Bright Leaders
Mark Murrey, Co-Founder
& Director, Whysup
Camp Vimto was an incredible
experience for all of the young people
who took part, all of them got fully
involved and embraced the opportunities
and challenges. I genuinely believe that all
of them have developed skills, confidence
and knowledge which will support them
throughout the transition to adulthood.
Thank you for everything each of you did
to make Camp Vimto a reality.
Dave McNicholl, Chief
Executive, Warrington Youth Zone
What’s next?
We feel very proud to have had such a transformative
impact on participants’ lives through our programme.
This is not the end of our journey together, and we look
forward to continuing to work with our participants
beyond this summer, exploring schemes such as
mentoring and work placements.
Next summer, we plan to run the programme again
with a second cohort, bringing us closer to our 2025
goal of improving the futures of 100 young people.
38
39
39
HAPPIER FUTURE PROGRESS REPORTSTRATEGIC REPORT
GENDER PAY
GAP REPORT
Nichols plc is pleased to present our 2022 Gender Pay Report, which
also offers an opportunity to share what we have been focusing on
with regard to gender diversity in the business.
AN INCLUSIVE WORKPLACE WHERE EVERYONE FEELS THEY CAN TRULY BE
THEMSELVES, FEEL VALUED, INCLUDED AND HAVE EQUAL ACCESS TO OPPORTUNITIES
IS FIRMLY ROOTED IN OUR CULTURE, VALUES AND HERITAGE.
It is also paramount for our employees to feel they are able to perform to their best which of course is integral
to the ongoing success of our business. In our 2022 Employee Engagement Survey our employees told us that
our people and culture are one of the best things about working at Nichols, that the culture is open and inclusive.
OF OUR EMPLOYEES BELIEVE THAT INDIVIDUAL DIFFERENCES SUCH AS RACE,
GENDER, DISABILITY AND SEXUAL ORIENTATION ARE RESPECTED AND VALUED AT
NICHOLS
HAVE LEADERS
THEY CAN RELATE
TO AT WORK
BELIEVE THAT
DIFFERENCE
IS VALUED AT
NICHOLS
34% of our senior leaders and managers are
in leadership development programmes which
OUR PAY QUARTILES
The proportion of males and females in each pay
Every employee has the potential to earn
quartile continues to reflect the workforce and
a bonus at Nichols plc. For new employees,
remains broadly consistent with 2021 although we
eligibility in their first year will be based on their
did see an increase in the number of females in
start date in the calendar year and this is the
the bottom quartile, which we can attribute to the
reason our reported percentages are not 100%.
increase in turnover in two specific areas and our
success in recruiting females into these roles. Whilst
In 2022, we saw a higher number of new
good progress has been made in developing our
employees joining the business later in the
female talent, particularly in our leadership pipeline,
calendar year versus 2021, which was reflective
we need to realise a more balanced gender split
of an active market in the UK more generally due
across our workforce to see a substantive change.
to wage inflation and lower unemployment.
OUR GENDER PAY & BONUS GAP
We have seen some substantial swings this year
and in 2022 the business reported a good
in the median variances of both our hourly pay
financial performance which was reflected
and bonus resulting in negative gaps. Our median
positively in employee bonuses, including in
gender pay gap for our hourly pay is marginally
Executive and Senior Leadership rewards where
favourable to females at -1% compared to the
we have greater male representation.
UK average of +14.9%1. The median on bonus is
-94% favourable to females. The substantial swing
from 2021 (we reported no gap) is reflective of the
business performance in 2021 and the proportion
of females eligible for higher bonus levels
compared to males.
Due to the nature of gender pay reporting in the
UK, which measures the average pay and bonus
of men and women across different levels and
roles in the company, the reporting of our median
and mean gender pay gaps continue to be skewed
by the underlying structure of our workforce
female. This is reflective of the overall employee
provide structured learning, peer support and build
In the mean variances for hourly pay and bonus,
and are also impacted by the dynamic external
gender split in the business. But we want and
external networks. Establishment of our Female
we saw a swing towards males, particularly for
environment the business has been operating
need this to improve as having broad employee
Leaders Network has already proven invaluable in
bonuses. In 2021 bonuses were impacted by the
in over the past couple of years.
diversity is fundamental to the business having
providing peer support and developing leadership
performance of the business due to the pandemic,
the right discussions and making robust decisions.
capability and confidence across the business.
1ONS Annual Survey of Hours and Earnings (ASHE) for 2022
We are working proactively to increase female
representation in these roles, with a focus on
accelerating the development of our female
talent, through stretch opportunities in new
roles, secondments or projects and investing
OUR GENDER SPLIT
Whilst we continue to focus on developing our
inclusive culture, we know we have work to do to
increase female representation in our business.
OUR RESULTS
We present our gender pay gap results for the year
ending 5 April 2022 in line with our legal obligation and
commitment to produce gender pay gap information.
Quartile
Bottom
2022
Male
Female
60%
74%
65%
69%
40%
26%
35%
31%
2
3
Top
This year’s gender split remains broadly
professions. Our gender split remains reflective
2. Proportion of males & females in each pay quartile
consistent with 2021 levels with a slight increase
of our large employee group within the operations
see table right
1. Employee % split by gender: 33 Female / 67 Male
in females employed. We are pleased that we
function of our Out of Home (OoH) business.
achieved close to an even proportion of new
Males make up the vast proportion of employees
employees hired during this reporting period with
undertaking our driver or technician roles and
46% of new hires being female and 54% being
the high proportion of males is reflective of the
male. This was particularly pleasing as many of
broader talent pool in the market despite a highly
the roles were in traditionally male dominated
competitive market post the pandemic.
40
3. Proportion of males & females receiving a bonus
within the reporting period 87% of males / 83% of females
4. Mean & Median pay gap*
Hourly pay – median -1.0% (2021: 10%) / mean 19% (2021: 7%)
Bonuses – median -94% (2021: equal) / mean 31% (2021: 15%)
*variance in male pay to female pay
2021
Male
Female
Quartile
Bottom
2
3
Top
70%
78%
64%
71%
30%
22%
36%
29%
41
41
HAPPIER FUTURE PROGRESS REPORTSTRATEGIC REPORT
PRODUCTS
WE’RE PROUD OF
We’re passionate about making products
consumers love – it’s at the heart of what we do.
This means developing products that allow consumers to make
healthier choices, strengthening our approach to responsible
sourcing, and continuing to challenge ourselves to find
sustainable solutions for our packaging.
01
WE WILL INNOVATE TO ALLOW
OUR CONSUMERS TO MAKE
HEALTHIER CHOICES
02
ALL OF OUR UK PACKAGED
PRODUCTS WILL CONTAIN 51%
SUSTAINABLY SOURCED RPET
BY 2022. WE ARE STRIVING
TO REACH 100% BY 2025
HEALTHIER
HYDRATION
PROGRESS IN 2022
We know that we have an important
role to play in helping our consumers
make healthier choices. Whether by
reducing sugar content or adding
nutrients, we continue to develop
our portfolio through innovation and
continuous renovation.
That is why we wanted to ensure that we were
100% HFSS compliant across our owned portfolio.
Highlights this year include:
• Ensuring our whole UK Packaged portfolio
is now 100% HFSS compliant
• Also ensuring that 97% of sales of our
Out of Home (OoH) owned portfolio are
now HFSS compliant1
• Celebrating that all of our new product
launches in 2022 were Low or No Added
Sugar. This included Double Concentrate Vimto,
Cherry, Raspberry & Blackcurrant Vimto in fizzy
and still varieties and zero-sugar cordial in the
Middle East (read more in the case study on
page 46)
FOCUS FOR THE FUTURE
Providing consumers with healthier choices is how
we do business at Nichols, our focus areas include:
• Continuing with our established approach
to Innovation & Renovation, strengthening the
depth of our consumer insight in 2023, in order
to meet evolving needs
• Continuing to work closely with our
international partners to explore sugar
reduction, where appropriate to the
consumer needs in local markets
42
43
1 Excluding Slurp, our frozen milkshake, which we are now reviewing.
HAPPIER FUTURE PROGRESS REPORTSTRATEGIC REPORT
RESPONSIBLY
SOURCED
PROGRESS IN 2022
The unique flavour of our
products begins with quality
ingredients sourced from trusted
and responsible suppliers.
We source ingredients and materials primarily
from long-standing partnerships, providing us with
a clear understanding of product quality, labour
protections and environmental practices.
FOCUS FOR THE FUTURE
This year, we have focused on developing the
Next year, we will continue to review and
policies and practices to ensure sustainability is
update the procedures and processes which
embedded within the entire production process
support our ethical business practices, in line
of our products.
with our commitment for this pillar:
Highlights this year include:
• We will embed our responsible sourcing
• Supplementing our existing supplier
assurance processes, including assessing
current and potential suppliers’ ethical
policies and business processes
• Developing and agreeing a responsible
sourcing policy and supplier code of conduct
• Embedding sustainable practices into the
product innovation process
policy as our way of working and it will form
part of our expectations in all new strategic
partners’ contracts
• We will be partnering with Sedex to review our
policies and practices and ensure they meet
industry social and environmental standards
SUSTAINABLE
PACKAGING
PROGRESS IN 2022
Unsustainable and unnecessary
packaging is a pressing concern
for our consumers, who don’t
want to see the products they
buy going on to impact the natural
world. We are committed to working
with our partners and the wider
industry to promote sustainable
options and encourage responsible
consumer behaviour.
• We have also conducted trials on inner
‘Liquipure’ bags - a sustainable packaging
solution for our BiB products
• All of our UK Packaged shrink wrap contains
at least 30% post-consumer recycled waste,
with 50% post-consumer recycled waste being
reached with some of our suppliers. Material
availability and packaging stability has prevented
further progress this year
• Launching a new Vimto squash bottle made
from 51% recycled PET (rPET); the new bottle
allows us to pack more efficiently, reducing the
number of transport loads (and our carbon
footprint as a result)
•
Introducing our new sustainable packaging
policy; which clearly defines which materials we
consider to be acceptable for use in our packaging
That is why we are working to remove plastic
going forward
shrink wrapping from Bag-in-Box (BiB) formats
and develop a fully recyclable BiB solution for OoH.
We are also working with our suppliers to ensure
that all remaining UK Packaged shrink wrap uses
FOCUS FOR THE FUTURE
50% post-consumer recycled waste.
We will continue to trial and implement new,
innovative ways to reduce packaging in our
Our plan for all of our UK Packaged products to
products, and use more sustainable packaging
contain 51% sustainably sourced rPET in 2022
across our portfolio. Next year this will include:
unfortunately wasn’t fully achieved, however
40.5% of the UK Packaged portfolio contains
• Continuing to trial & evaluate the impact of
51% sustainably sourced rPET. As a result of the
removing shrink wrap from our BiB formats
significant inflationary environment and cost
pressures on our business, and the impact of
• Introducing a fully recyclable inner BiB
passing these costs onto our consumers during
substrate ‘Liquipure’ packaging across our
the cost-of-living crisis, we took a strategic decision
post-mix portfolio
not to expand further our UK Packaged portfolio
containing 51% sustainably sourced rPET in 2022.
• Ensuring a robust implementation of the
Despite this setback, we continue to strive to reach
DRS in Scotland, supporting us to move forward
100% rPET by 2025.
on our roadmap to 100% rPET in our UK
Highlights this year include:
packaged products
• Implementing our new sustainable packaging
• Running trials to enable the removal of shrink
policy with all our UK partners
wrap from our BiB formats
• Redesigning our owned V Range BiB
products to include clear OPRL recycling logos,
making it clear to our customers where our boxes
can be recycled
44
45
HAPPIER FUTURE PROGRESS REPORTSTRATEGIC REPORT
C A S E S T U D Y
EXTENDING
HEALTHIER
HYDRATION
BEYOND
THE UK
At Nichols, we are passionate about innovating
and renovating our products to meet emerging
consumer needs for healthier hydration. In our
International business, we continue to work
closely with our partners to explore ways to
accelerate uptake of lower sugar and no-added
sugar products in countries outside of the UK.
The uptake of Low or No Added Sugar products can
What’s next?
be lower in some international markets than in the
UK. Market research has shown a growing trend in
This case study evidences appetite within the
health and wellness across the Middle East and a
market for Low or No Added Sugar products.
need for more products suitable for people looking
There is a real opportunity to extend our healthier
to consume less sugar in their diets.
hydration strategy beyond the UK ensuring all
our consumers can benefit from Nichols healthy
Responding to this, last year our longstanding
and great-tasting products. Due to the success of
partner, Aujan Coca-Cola Beverages Company,
Vimto Zero Cordial in 2022, it will be made available
launched Vimto Zero Cordial. This sugar-free
again in 2023. We will look to expand the markets
product was launched as a limited-edition product
and outlets of this product to enable even more
for the Ramadan season. The launch was very
of our consumers to make healthier choices in
successful, and the product exceeded all its set
International, as well as UK outlets.
key performance indicators.
Vimto Zero Cordial proved to be popular amongst
consumers, selling out rapidly and receiving good
feedback on the health benefits, as well as the taste.
In a survey following the product launch, 81% of
respondents stated that they intend to try Vimto
Zero Cordial1.
46
1Source: IPSOS, Cordial Brand Health Study, Ramadan 2022
47
HAPPIER FUTURE PROGRESS REPORTSTRATEGIC REPORT
OWNING OUR
CLIMATE IMPACT
The climate crisis is the greatest
issue facing society today and as a
responsible company, we have an
important role to play.
By taking science-based actions to reduce our
total carbon emissions, and by understanding
and reviewing our operational footprint and
supply chain, we can ensure we are conducting
our business in the most sustainable way.
Nichols recognise that the climate crisis is a
principal risk to our business, with a number of
potential short, medium and long-term impacts.
The Board takes overall accountability for
owning our climate impact and managing the
risks and opportunities that this presents.
The process for identifying and assessing
climate-related risks is aligned to the Group’s risk
management policy which is set out on pages
62 to 67.
WE WILL REDUCE OUR
IMPACT ON CLIMATE
CHANGE BY REDUCING
ABSOLUTE SCOPE 1 &
SCOPE 2 GREENHOUSE
GAS EMISSIONS* BY
25% BY 2025 AND
DEFINE OUR NET ZERO
ROADMAP
*2018 BASELINE
48
STR ATEGIC REP ORT
REDUCING OUR
DIRECT EMISSIONS
PROGRESS IN 2022
Nichols has a strong track record
in reducing carbon emissions across
our Scope 1 and 2 emissions, and we
have an ambitious target to reduce
our Scope 1 & 2 emissions by 80%
by 2030, in order to reach net zero
by or before 2050.
Last year, gas and electricity represented a third
of the energy we consumed at Nichols and 24% of our
total carbon impact. In 2022 we have seen increased
sales, manufacturing and new equipment installation
Highlights this year include:
• Installing solar panels at our head
office, Laurel House in February this year
SINCE REPORTING BEGAN IN MAY,
THE SOLAR PANELS HAVE GENERATED
NEARLY 26MWH OF ENERGY. THIS HAS
SAVED OVER 35T OF CO2 EMISSIONS,
EQUIVALENT IN WEIGHT TO 1 MILLION
VIMTO CANS!
activity across our Out of Home (OoH) business, due to
• All of our Nichols UK sites are now operating
further recovery within the hospitality sector. This has
on 100% renewable energy, including gas
resulted in an increase in our carbon emissions of 246
supplies, supplied from a combination of hydro,
tCO2e for the reporting year in comparison to 2021.
wind and solar power. This has saved us 239tCO2e,
16.51% of our total carbon footprint for this year
We are decarbonising our fleet to reduce our
transport emissions, which make up a large
proportion of our Scope 2 emissions. This year we
planned to replace 10 vehicles with their electric
equivalents. Due to supply chain issues that
impacted delivery dates and availability of suitable
e-vehicles, we could not achieve this goal.
FOCUS FOR THE FUTURE
In 2023, we will continue our roadmap for
carbon reduction across our Scope 1 and 2
emissions. This includes:
• Doubling next year’s order to 20 electric vans
• Embedding our new green car policy,
to keep us on track with our decarbonisation
which seeks to encourage our employees
ambitions (given the context of 2022)
to choose electric vehicle options
H
A
P
P
I
E
R
F
U
T
U
R
E
P
R
O
G
R
E
S
S
R
E
P
O
R
T
49
HAPPIER FUTURE PROGRESS REPORTSTRATEGIC REPORT
DECARBONISING
OUR SUPPLY
CHAINS
PROGRESS IN 2022
Reducing our Scope 1 and 2
emissions is important, but we
know the majority of our emissions
in the UK are created by the various
supply chains that help us create
quality products and deliver them
to our customers (known as Scope
3 emissions).
Reducing our Scope 3 emissions is vital if we are
to really reduce our carbon footprint and reach
our decarbonisation targets.
Highlights this year include:
For more details on our emissions and progress
see page 52 for our Streamlined Energy and
Carbon Report (SECR).
FOCUS FOR THE FUTURE
To continuously track and reduce our Scope 3
emissions, our focus for next year will include:
• Developing and launching our UK Scope 3
emissions reduction strategy by the end of 2023,
working with our key partners and suppliers to
set targets and develop a roadmap for continuous
reduction in our Scope 3 emissions
• Following the above, we will be looking to
incorporate our Scope 3 carbon data from our
suppliers with our Scope 1 and 2 emissions
• Mapping our supply chain comprehensively
data, to track our direct and indirect carbon
in the UK
footprint. We can then set science-based
emissions reduction targets, which we hope
• Working collaboratively with our key suppliers
to submit for validation by SBTi in 2023
to help them track and measure their carbon emissions
• Through this process, we are now able to
collect the UK supplier and partner Scope 1, 2
and (where possible) 3 emissions data. You can
read more about our work decarbonising
our supply chain in our case
study on page 55.
RESPONSIBLE
WATER
USAGE
PROGRESS IN 2022
We recognise that with both the
need to reduce 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 is why a focus for us will be to develop a clear
water strategy that encompasses all of our impact
in the UK.
Highlights this year include:
•
In 2022 we have developed systems and
processes that track our water consumption
in our OoH manufacturing site at Ross on Wye
• We now track our water consumption and
compare it to the volume of goods produced in
our Ross on Wye manufacturing site. We can use
this data as a baseline to inform our future
water consumption reduction targets
FOCUS FOR THE FUTURE
We plan to identify opportunities to reduce our
impact from our water use. This includes:
• In 2023, measuring our water consumption
across our other Nichols-owned and key UK
copacker sites and identify opportunities to
improve our water use at Ross on Wye
• Based on the above assessment, developing
our water strategy to make appropriate
improvements across all Nichols-owned and
key supplier sites
50
51
HAPPIER FUTURE PROGRESS REPORTSTRATEGIC REPORT
SECR
REPORT
Parameter
Natural gas consumed
Grid electricity consumed
Solar PV electricity generated
Transport fuels consumed
Units
kWh
kWh
kWh
kWh
Current reporting year
01/01/2022 - 31/12/2022
Comparison calendar year
01/01/2021 - 31/12/2021
Total energy consumption used to calculate emissions
kWh
6,371,626
Emissions from combustion of gas (scope 1)
tCO2e
139
Emissions from transportation in vehicles owned or
controlled by reporting company (scope 1)
tCO2e
1,135
Fugitive emissions from refrigeration plant (scope 1)
tCO2e
Emissions from purchased electricity (scope 2)
Emissions from business travel in vehicles owned or
operated by 3rd parties (scope 3)
Total gross carbon emissions
tCO2e
tCO2e
tCO2e
760,663
873,461
26,508
4,710,994
4
169
0
1,447
(169)
451,700
957,010
0
3,336,348
4,745,058
83
789
126
203
0
1,201
(196)
(3)
0
1,002
138
115
In accordance with The Companies
In 2022, we procured 100% green electricity, through
(Directors’ Report) and Limited Liability Partnerships
tariffs backed by Renewable Energy Guarantees of
(Energy and Carbon Report) Regulations 2018, we
Origin certificates, for our Ross-on-Wye factory, Laurel
have prepared a Streamlined Energy & Carbon Report
House head office and all electricity consumed at
(SECR) for the 2022 financial year. This measurement
our depots. Additionally, as of 1st July 2022, 100% of
and reporting of environmental performance will drive
the natural gas consumed is purchased via a green
direct benefits for the business such as lower energy
tariff, which involves the retirement of Renewable Gas
costs, improved understanding of exposure to the
Guarantees of Origin certificates which covers 10% of
Carbon reduction through green electricity tariff (REGOs)
tCO2e
risks of climate change and by allowing the business
consumption, and the purchase of Carbon Credits to
Carbon reduction through green natural gas tariff
to demonstrate sustainable leadership within the soft
cover the remaining 90%. The result of these green
(RGGOs)
drinks industry.
tariffs is a reduction of net emissions of 238 tCO2e, or
Carbon reduction through green natural gas tariff
16% of the gross emissions. Therefore, the 6,371 MWh
(Carbon Credits)
tCO2e
(8)
tCO2e
(62)
Therefore, the following report has been
energy consumed resulted in net carbon emissions
Total net carbon emissions
tCO2e
1,208
prepared in conjunction with Carbon Architecture,
of 1,208 tCO2e, corresponding to an 5% increase in
who we have been working with since 2016 to provide
normalised net emissions when compared to 2021,
independent analysis of our carbon footprint across
increasing from 115 tCO2e/ML to 121 tCO2e/ML.
our UK Group operations. We have selected tCO2e/ kL
as our SECR ratio, as we feel this is most aligned to the
Nichols has continued its focus on energy and
activities of the Group.
carbon-saving measures in the last year. At our
Ross-on-Wye factory, we have continued to make
Intensity ratio: Total gross emissions / 1,000,000 Litre
product
Intensity ratio: Total net emissions / 1,000,000 Litre
product
Methodology
tCO2e/ML
145
tCO2e/ML
121
Energy Efficient Actions:
Nichols’ total energy consumption for
improvements to lighting systems via replacements
• This report has been prepared following the GHG
• A continued programme to install high-efficiency
this financial year was 6,371 MWh, resulting
of LED lighting, as well as reaping the benefits
Reporting Protocol – Corporate Standard and using
LED lighting, including proximity sensors where
in gross carbon emissions of 1,447 tCO2e.
of the Laurel House head office solar panels,
the guidance set out in Environmental Reporting
appropriate, has continued within our Ross-on-Wye
These figures correspond to a 34% increase
which generated 26.5 MWh of electricity in 2022.
Guidelines: Including streamlined energy and carbon
factory. This has continued to result in the
in total energy consumption and a 20% increase in
Furthermore, staff engagement has continued in 2022,
reporting guidance – HM Government (March 2019)
optimisation of our electricity use for lighting
gross emissions when compared to the 2021 financial
with topics including increasing the understanding of
throughout the factory
year. 2022 represented a more normal operating year
our carbon footprint at work and encouraging simple
• Energy consumption data has been sourced from
for our OoH business following the Covid pandemic
steps to reduce our footprint, including switching
utility supplier invoices, or where this is not available
• Solar panels and an air source heat pump have been
and as a result our volumes increased, impacting our
off lights and equipment when not in use. Finally,
calculated from site-based records and travel
installed at our Laurel House head office, reducing
vehicles delivering and servicing our customers, along
we sought to progress our plans to replace our
expense data
with new installations across the UK.
transport fleet with electric vehicles, with the initial
the consumption of natural gas for providing hot
water for the office staff, which we have seen the
In an ongoing trend, our production
2022, 20 by 2023 and 30 by 2024. Given the significant
by application of the relevant emissions factor from
has rebounded from the COVID impacted year of 2020,
challenges within the global automotive market and
UK Government GHG Conversion Factors for
• Given the significant challenges within the global
by further increasing production volumes from 5.037
the subsequent delay in receiving delivery of the first
Company Reporting for the appropriate year
automotive market and the subsequent delay in
target of replacing 10 fossil fuel powered vans in
• Conversion from energy to emissions was completed
benefit of throughout 2022
million litres (ML) in 2020 to 8.689 ML in 2021 and then
electric vans, we have bolstered the 2023 delivery plan
9.965ML in 2022. Despite this increase in production
to 20 vehicles.
volume, there has been an increase in normalised
gross emissions, by 5% from 2021 to 2022, from 138
tCO2e/ML to 145 tCO2e/ML drinks produced.
52
receiving delivery of the first electric vans, we have
bolstered the 2023 delivery plan to 20 vehicles
• Finally, Nichols has continued a programme of staff
engagement which involves suggesting practical
ways in which they can reduce their carbon footprint
at work, including through the climate action switch
off awareness campaign
53
HAPPIER FUTURE PROGRESS REPORTSTRATEGIC REPORT
C A S E S T U D Y
MAPPING OUR
SCOPE 3 IMPACT
At Nichols we are committed to a low-carbon future. We know that our influence
extends beyond our immediate operations and given our partnership model, the
majority of our carbon emissions are produced by our suppliers and manufacturers
who make our products. These are called our Scope 3, or indirect, carbon emissions.
Successfully managing and reducing Scope 3
Suppliers then shared this data with us, enabling
emissions is often more complex than reducing Scope
us to build a comprehensive picture of our UK
1 and 2 (direct emissions), requiring engaging with
emissions across our supply chain.
our entire supply chain - collaborating with suppliers
to track and measure their own emissions and then
This collaborative effort has enabled us to identify
supporting them as they make reductions.
‘carbon hotspots’ in our UK supply chain – areas where
we are producing a significant proportion of our carbon
This challenge couldn’t be tackled on our own.
emissions. Hotspots include our product packaging, the
We have partnered with specialist consultants Green
sourcing and transportation of our ingredients and the
Element to support us in carrying out an in-depth
energy our suppliers’ use when producing our products.
assessment of the carbon footprint of our UK-based
These identified ‘hotspots’ inform where we will focus
supply chain. Together, we engaged our suppliers,
our efforts to reduce our carbon in the future, working
many of with whom we have long-standing,
collaboratively with our supply chain partners to identify
collaborative relationships, to put in place systems
alternative practices and processes that reduce their
and processes to measure and track their emissions.
direct (and our indirect) carbon emissions significantly.
What’s next?
In 2023, we will continue to develop
our Scope 3 emissions reduction
strategy with the expert guidance of
Green Element. This work will enable
us to set robust, science based targets
and ensure we are reducing our direct
and indirect emissions in line with
global goals and targets. In this way,
we can own our climate impact and
work to conduct our business in the
most sustainable way.
With the help of Nichols, we very quickly
navigated the different business streams
and relevant contacts for who would help us
to collect the necessary data. We have engaged
with >30 individual suppliers and many internal
contacts, the vast majority of which were very
helpful and were able to provide detailed
information. This was aided by efficient project
management from Nichols’ side. Our analysis
is only as good as the raw data we receive,
so this was very important for us.
Green Element testimonial
54
55
HAPPIER FUTURE PROGRESS REPORTSTRATEGIC REPORT
CHIEF
FINANCIAL
OFFICER’S
REPORT
DAVID
- R ATTIGAN -
CHIEF FINANCIAL OFFICER
FINANCIAL HIGHLIGHTS
• Group revenue increased by 14.3% to £164.9m
• Maintained Adjusted PBT Margin at 15.1%,
(2021: £144.3m)
despite significant inflationary pressures
• Still products +8.2% to £78.3m (2021: £72.4m)
(2021: 15.1%)
• Carbonated products +20.4% to £86.6m
(2021: £71.9m)
• Continued strong cash performance with FCF1
of £14.6m (2021: £17.5m)
• UK revenues increased by 13.7% to £127.0m
• £18.9m excluding historic HMRC incentive
(2021: £111.6m)
scheme tax settlement during the year
• UK Packaged route to market sales +2.9%
• Cash conversion2 at 72% (2021: 103%)
• UK Out of Home (OoH) recovery continues post
• Exceptional charge of £11.1m
pandemic, with revenues +42.8%
• £8.7m attributable to non-cash impairment of
• International revenues +16.1% to £38.0m
OoH intangible and fixed assets
(2021: £32.7m)
• Middle East revenue +20.4% (+11.3% excluding
2021 marketing investment)
• Proposed final dividend of 15.3p, up 15.0%
year-on-year and reflecting 2x cover3, in-line
with the Group’s dividend policy
Year ended
31 December 2022
£m
Year ended
31 December 2021
£m
Group Revenue
4
Adjusted Profit Before Tax (PBT)
Profit/(loss) Before Tax (PBT)
4
Adjusted PBT Margin
PBT Margin
Statutory EBITDA
5
4
Adjusted earnings per share (basic)
Earnings/(loss) per share (basic)
1
Free Cash Flow
(FCF)
6
Adjusted Return on Capital Employed
7
Statutory Return on Capital Employed
Proposed Final Dividend
Full Year Dividend
£164.9m
£25.0m
£13.8m
15.1%
8.4%
£26.9m
55.38p
31.86p
£14.6m
27.2%
14.2%
15.3p
27.7p
£144.3m
£21.8m
Movement
+14.3%
+14.5%
£(17.7)m
+178.4%
15.1%
-
(12.2%)
+20.6ppts
£23.7m
46.15p
+13.3%
+20.0%
(60.04p)
+153.1%
£17.5m
(16.7%)
26.6%
+0.6ppts
(15.8%)
+30.0ppts
13.3p
23.1p
+15.0%
+19.9%
• Significant progress in Africa continued with
•
If approved at the Group’s AGM, the full year
1 Free Cash Flow is the net increase in cash and cash equivalents before acquisition funding and dividends
revenue +15.0%
dividend of 27.7p would represent a 19.9%
2 Cash Conversion is the Free Cash Flow/Adjusted Profit After Tax
• ROW markets revenue +12.7%, supported by
strong OoH recovery in Europe
increase year-on-year
3 Dividend cover is adjusted basic earnings per share divided by the dividend per share
4 Excluding Exceptional items
5 EBITDA is the statutory profit before tax, interest, depreciation, and amortisation
6 Adjusted return on capital employed is the adjusted operating profit divided by the average period-end capital employed. This is not
considered to be a KPI for the Group, however, due to the number of adjustments in recent years, this has been included within our
Financial Highlights
7 Statutory return on capital employed is the operating profit divided by the average period-end capital employed
56
57
CHIEF FINANCIAL OFFICER’S REPORTSTRATEGIC REPORT
REVENUE
Group’s revenue line). The balance
were marginally offset by positive
Distribution expenses totalled
Out of Home Strategic Review
In line with market expectations,
of revenue growth was generated
changes to the sales mix, resulted
£10.7m (2021: £9.1m), an increase
by net improved volumes (both
in a negative gross profit impact
quantity and sales mix) across the
of £0.9m. The removal of the
Group’s three routes to market.
marketing investment (reported
Throughout FY22, this balanced
as part of the Group’s revenue
of 17.0%, due to a combination
of net higher trading volumes
across the UK and ongoing and
significant inflationary pressure.
approach helped the Vimto brand
line) in the Middle East in 2021
The Group entered a new five-year
Group revenues were £164.9m,
an increase of £20.6m or 14.3%
compared to 2021. The period
was dominated by significant and
accelerating inflationary pressures
and, in H2 in particular, by the
widely publicised cost of living
pressures impacting consumers.
to continue to achieve growth in
supported year-on-year gross
the UK and internationally, whilst
profit comparisons by £0.8m.
also protecting the Group’s net
Underlying cost of goods inflation
The Group’s clear and long held
margins.
value over volume strategy
provided clear direction as we
GROSS PROFIT
approached 14% across the year,
with mitigating actions successfully
implemented to reduce this to
sought to mitigate these pressures
Gross profit at £71.0m was £5.8m
closer to 10%. Mitigating actions
through both cost efficiency
higher than 2021 (£65.2m) and
included the successful transfer
and revenue management. Of
2.1 percentage points lower at
of the Group’s UK dilutes contract
the £20.6m revenue growth,
43.1% (2021: 45.2%). Excluding the
manufacturing volume to faster
£8.8m came from a combination
impact of the input costs aligned
and more efficient lines in H1
In Q1 2021 the Group commenced
a strategic review into its OoH
route to market, to consider
customer and product mix as
well as review ways to enhance
net margin and profitability going
we anticipate that growth
projections for OoH beyond 2022
will be lower than previously
estimated, given the economic
outlook and change in consumer
patterns.
forward. The Group incurred
Whilst cost pressure is expected
£0.5m of costs in the period to
to be fully recovered within OoH,
prepare its recommendations for
the gross margin progression
implementation. Additional costs
anticipated previously is not now
will be incurred through 2023
likely to be achieved, despite there
as these recommendations are
being significant opportunities to
distribution arrangement in H2
2021 that became operational
during 2022, resulting in both
significant additional capacity as
well as opportunities for improved
efficiency in the coming years.
ADMINISTRATION EXPENSES
implemented. These additional
enhance net margin through better
Administration expenses excluding
exceptional items totalled £35.7m
(2021: £34.1m), an increase of
implementation costs are one-off
alignment of our customer and
in nature and will be treated as
product mix with our cost base.
exceptional.
The Group’s cost of capital has
of appropriate price recovery
to the price recovery implemented
following completion of its UK
£1.6m or 4.7% year-on-year, largely
Impairment of intangible and
increased, largely due to macro-
(+£8.0m), implemented in
in partnership with our customers
operational supply chain review.
related to increases in net payroll
fixed assets
partnership with our customers,
gross profit % was consistent with
and the impact of the removal
2021.
The impact of movements in
foreign exchange rates on gross
and staff related costs in response
to cost of living increases.
of the marketing investment
(+£0.8m) in the Middle East in
2021 (reported as part of the
Significant volume growth was
profit was favourable at +£0.2m.
EXCEPTIONAL ITEMS
seen in both the Group’s OoH and
International routes to market
DISTRIBUTION EXPENSES
and improved gross profit by
Distribution expenses within the
approximately £5.7m. Reduced
Group are those associated with
volumes in the UK Packaged
the UK Packaged route to market
The Group has incurred £11.1m of
exceptional costs during the year
(2021: £39.5m), £8.7m of which is
non-cash.
The impact of Covid-19 resulted
in a difficult period of trade for
OoH from 2020 through 2021,
with many outlets being closed
economic factors affecting all
businesses, from 8.2% to 13.1%.
This has resulted in a higher
threshold required to support the
carrying values of assets.
for a prolonged period of time.
As a result, management have
Whilst trade within the hospitality
recognised a further non-cash
industry has reopened post
impairment charge of £8.7m, in
the pandemic, the impact of
the current year, impairing all
route to market,
and, for OoH, the distribution
Review of UK Packaged supply
the war in the Ukraine, and its
the remaining intangible assets
where quantity
costs incurred from factory to
chain
declines
depot. “Final leg” distribution costs
within OoH are reported within
administrative expenses.
In Q4 2020, the Group commenced
a review of its UK operational
supply chains. The project has
progressed steadily with significant
changes implemented, including
the Group entering several new
five-year contract manufacturing
and distribution arrangements that
both built significant additional
capacity, in-line with the Group’s
growth plans, and improved
efficiency. These projects, which
completed during 2022, resulted in
£1.5m of exceptional costs in the
period (2021: £0.6m, 2020: £0.3m).
impact on inflation and cost of
(£4.8m) within our OoH route to
living pressures have meant that
market and a proportion of its
whilst trade within the hospitality
fixed assets (£3.9m). In 2021, as
industry initially returned to pre-
previously announced, the Group
Covid levels, growth is significantly
impaired the Goodwill generated
slower than previously forecast
from previous OoH acquisitions
in the short term and saw a
(2021: £36.2m).
significant slowdown in Q4 as
inflationary pressures impacted
Historic incentive scheme
consumers. Certain sectors of the
The Group has now settled
hospitality industry, for example
with HMRC the £4.3m tax and
Cinema, Holiday and Theme
interest charges relating to a
Parks where our frozen business
historic incentive scheme and
operates, have seen significant
will now commence recovery of
volume decline all year versus pre-
debts from current and previous
pandemic revenues.
management who had indemnified
the Company.
58
59
CHIEF FINANCIAL OFFICER’S REPORTSTRATEGIC REPORT The Group’s clear
and long held value
over volume strategy
provided clear
direction as we sought
to mitigate significant
and accelerating
inflationary pressures
through both cost
efficiency and revenue
management.
EXCEPTIONAL ITEMS
deposits following the Bank of
(CONTINUED)
England interest rate rises.
Historic incentive scheme
ADJUSTED PROFIT BEFORE TAX/
(continued)
PROFIT BEFORE TAX AND TAX
The Group incurred legal costs in
RATE
the period of £0.1m in relation to
Adjusted profit before tax
the case.
Group Systems Review
increased by 14.5% to £25.0m
(2021: £21.8m). The tax charge
on adjusted profit before tax for
The Group has commenced
the period of £4.8m (2021: £4.8m)
a project to implement a new
represents an effective tax rate
enterprise resource planning
of 19.0% (2021: 21.9%). Reported
(ERP) system, which is expected
profit before tax was £13.8m
to be operational through 2024.
(2021: £17.7m loss).
Initial review costs of £0.3m were
incurred in the period.
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.
FINANCE COSTS
ADJUSTED EARNINGS PER SHARE/
EARNINGS PER SHARE
On an adjusted basis, diluted
earnings per share (EPS) was
55.32 pence (2021: 46.09p). Total
adjusted EPS increased to 55.38
pence (2021: 46.15p) with basic
EPS at 31.86 pence (2021: -60.04p).
CASH AND CASH EQUIVALENTS
Net finance income of £0.4m
AND BALANCE SHEET
(2021: £0.1m loss) was significantly
up on the prior year, as the Group
ensured the best return for its
The Group’s focus on cash
conversion continued and the
Group achieved a cash conversion
PENSIONS
of 72% (31 December 2021: 103%).
The Group operates two employee
Free cash flow (FCF) in the period
benefit plans: a defined benefit
was £14.6m (31 December 2021:
plan that provides benefits based
£17.5m), after paying a gross
on final salary, which is now closed
£4.3m tax settlement in relation to
to new members, and a defined
historic incentive schemes during
contribution group personal plan.
the year as described above.
At 31 December 2022, the Group
Excluding this settlement, the
recognised a surplus on its UK
Group’s FCF would have improved
defined benefit scheme of £4.1m
year-on-year to £18.9m.
(2021: surplus £5.3m).
The Group’s FCF was fully utilised
During the year the Trustees
this year, undertaking a £5.5m
were able, with the support of the
treasury share Buyback to facilitate
Company, to further de-risk the
future servicing of the Group’s
assets held within the scheme.
SAYE Option Scheme and/or Long-
This is in addition to the de-risking
Term Incentive Plan, alongside
work carried out during 2021.
£9.4m for dividend payments
Assets versus liabilities is now at
made during the period.
122% versus 83% at the time of
the last valuation (April 2020). The
Company is now working with
the Trustees to develop its future
funding strategy ahead of the next
valuation in April 2023.
David Rattigan
Chief Financial Officer
28 February 2023
Cash and cash equivalents at the
end of the period remained strong
at £56.3m (31 December 2021:
£56.7m).
Working capital is now normalised
post the pandemic and is reflective
of the higher raw material and
packaging costs experienced in
the period. Capital expenditure
of £1.2m was broadly consistent
year-on-year (2021: £1.2m).
The Group’s current Adjusted
Return on Capital Employed
progressed marginally at 27.2% (31
December 2021: 26.6%). Statutory
Return on Capital employed is
14.2% (31 December 2021: 15.8%
loss).
60
61
CHIEF FINANCIAL OFFICER’S REPORTSTRATEGIC REPORT RISK
MANAGEMENT
PRINCIPAL RISKS AND
UNCERTAINTIES
LOSS OF SYSTEM AVAILABILITY
Risk score movement key
Increased Decreased No change
The primary aim of the Group’s
Updates and progress from the
The following represents the
Impact
Mitigation
Development
risk management process is to
RMT are presented back to the
principal risks identified by the
assist the business in meeting
Audit Committee regularly which
Board. As previously stated,
its strategic and operational
monitors the effectiveness of the
there are other risks affecting the
objectives.
process.
The Board identifies the principal
The Board continues to review
risks while operational risks
its overall risk framework
are identified via a bottom up
within the context of an ever
approach and managed via
shifting and dynamic post-
functional risk registers. Both
Covid-19 environment, which
current risks and emerging risks
has seen rapidly rising inflation
are regularly reviewed using both
and increased cost of living
this top down and bottom up
pressures. During the year we
approach. The Board has created a
have maintained our focus on
Risk Management Team (RMT)
the delivery of the risk mitigation
which regularly meets to discuss,
plans whilst supporting the
monitor and oversee the risks and
ongoing progression of the control
controls within the Group.
environment.
business, but with a lower risk
score and impact. The Senior
Leadership Team regularly reviews
the output from the RMT and the
Board has confidence that the
current risk management process
highlights any relevant changes
in both current and emerging
risks that may be strategically
important.
Risk management key
Short term
Medium term
Long term
62
In common with many other
Nichols operates several
Whilst significant work has been
businesses, we are highly
preventative systems and controls
undertaken over the previous
dependent on the availability of IT
to reduce the risk.
years in order to mitigate the risk
systems. The supply chain function
specifically is heavily reliant on
technology. Accordingly, disruption
to IT systems could limit availability
of products and consequently
impact sales.
In addition, we have a disaster
recovery plan, including the use of
third-party professional providers
to host our systems and data.
The offsite data centre hosts our
business critical applications in a
dual mirrored set-up, which would
restore systems within 2 hours in
the event of a major outage.
of system availability, the Group
continues to update the current
systems and controls whilst
seeking out further improvements
as appropriate.
In the year, the Group has
commenced a project to
implement a new a new
enterprise resource planning
(ERP) system, which is expected
to be operational through 2024.
The Group has engaged a third
party transformation specialist
to partner throughout all stages
of the implementation who will
work alongside a dedicated cross
functional team from within the
business.
THREAT OF CYBER-ATTACK
Impact
Mitigation
Development
The threat of cyber-attack is an
Nichols operates several
Building on the recent system
ever present and indeed, ever
preventative systems and controls,
updates, during the year the
growing risk in today’s global
including regular penetration
Group has focussed on enhancing
business environment. Disruption
testing, to reduce the risk.
staff awareness of cyber risk via
to IT systems could limit availability
of products and consequently
reduce sales.
focussed training, in addition to
further strengthening of controls
where possible such as blocking
user access and log on outside of
the UK for example.
Significant upgrades were made
in the prior year including,
but not limited to, encryption
developments, multifactor
authentication and a default
deployment strategy of security
measures.
In addition, we have a disaster
recovery plan including the use of
third-party professional providers
to host our systems and data
whilst providing 24/7 monitoring
and reporting of security events.
63
RISK MANAGEMENTSTRATEGIC REPORT HEALTH & SAFETY INCIDENT
Impact
Mitigation
Development
The Group operates with multiple
The Group is supported by
Significant progress has been
office locations, a large field-based
an effective Health & Safety
made during the year with the
team and one manufacturing site.
Management system, comprising
introduction of a new incident
A health and safety incident, for
policies and procedures to
management SharePoint including
example in a warehouse or on the
support all functions. The review
Group policies and legal register.
road, could result in serious injury
and delivery of the health and
or death or investigation by the
safety management system is
relevant authority.
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.
Training within the business across
all Health and Safety matters
continues to be a key focus for the
Group.
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
The Group has continued to
and behaviours in relation to soft
monitor market and category
innovate, extending our owned
drinks purchase and consumption
trends and consumer attitudes
and licensed brands into new
are constantly evolving. Failure
and behaviours to ensure our
flavours and consumption
to anticipate and respond to
continued relevance to consumers.
occasions in the UK and
these changes and adapt our
This insight is the foundation
Internationally.
portfolio through renovation and
for our Portfolio, Brand and
innovation, may result in a loss of
Innovation Strategies.
The Innovation Steering
Committee has continued to
volume or impede our ability to
deliver growth.
We have a rolling 3-year pipeline of
govern and oversee these key
Innovation and Renovation across
strategic projects.
both new and existing brands.
SINGLE SOURCE OF SUPPLY OF VIMTO CONCENTRATE
Impact
Mitigation
Development
The unique Vimto flavour is
Working in partnership with our
During the year the Group
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
created across our supply base
suppliers, we have established
successfully entered into
Negative publicity affecting the
The business adheres to core
The Group continues to regularly
using the Vimto compound.
alternate production capability at
several new five-year contract
brand could reduce consumer
values of originality, authenticity
monitor and track media coverage
Unavailability of the Vimto
more than one location to ensure
manufacturing and distribution
demand for the Group’s products.
and ethics which result in a strong
relating to the Group and its
brand.
Brands.
The Group has completed a media
monitoring trial during the year
in addition to exploring the use of
social media monitoring.
compound could impede our
continuity of supply.
ability to produce and therefore
significantly impact the Group’s
revenue. As a result, it is vital that
we have surety of supply of the
compound.
PRODUCT QUALITY ISSUES
arrangements. Work continues
with our strategic suppliers to
further strengthen our business
continuity plans.
Impact
Mitigation
Development
Inconsistent quality or
The business demands strict
The Group’s Incident Management
contamination of any products
quality controls from all
Process has continued to be
across the Group’s portfolio reduce
manufacturers and suppliers of
reviewed and refined throughout
demand within the market. This
our materials and finished goods.
the year.
could have significant impact on
We seek independent validation
the Group’s financial performance
of these controls via Global Food
and cause reputational damage.
Safety Initiative (GFSI) approved
bodies such as the British Retail
Consortium (BRC).
We adopt a comprehensive risk-
based monitoring approach to
all suppliers and manufacturers
across all routes to market,
specifically designed to mitigate
quality risks.
64
65
RISK MANAGEMENTSTRATEGIC REPORT
LOSS OF A MAJOR CUSTOMER ACCOUNT OR KEY PARTNER
FAILURE TO PROTECT THE GROUP’S INTELLECTUAL PROPERTY RIGHTS
Impact
Mitigation
Development
Impact
Mitigation
Development
Loss of a major customer or key
We are dedicated to maintaining
We have been reviewing our key
A failure to protect the Group’s
The Group’s legal team employ
Monitoring of all trademark activity
partner could limit availability of
long-term relationships with all
partnerships to evolve contingency
intellectual property rights across
a specialist legal firm to monitor
continues with the support of a
our products and consequently
our customers and key partners.
plans and business continuity
the globe could negatively impact
and litigate in response to all
third party provider.
impact sales.
However, the Group’s diverse
planning.
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.
INTRODUCTION OF NEW GOVERNMENT LEGISLATION
Impact
Mitigation
Development
The introduction of new
The Group monitors its markets
The cross functional working
Government legislation within
and any potential changes in
group established to manage
either the UK or overseas, could
legislation. Where such changes
the Group’s implementation of
reduce demand for the Group’s
are identified, the Group considers
the Scottish DRS scheme has
products and significantly impact
several scenarios to manage the
undertook significant work during
the Group’s revenue. In addition,
potential outcome, working with
the year in preparation of the 2023
new legislation could have an
our key partners as necessary.
go live. This includes liaising with
the perception of the brand and
trademark infringements to
therefore revenues as a result.
protect its 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
In the year the Group made
environmental and social issues
a Environmental, Social and
clear progress in embedding our
in Government. This may result in
Governance (ESG) strategy which
Happier Future Strategy within
new legislation (eg. plastic tax &
is focused on creating a Happier
the business. This included but
High in Fat, Sugar, Salt (HFSS) foods
Future for our planet by doing the
isn’t limited to; introducing HFSS-
legislation) being issued which may
right things in the right way.
compliant products across our
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.
UK packaged portfolio, collecting
Scope 3 emissions data across our
UK supply chains and embedding
clear social and environmental
requirements into our contracts
with key partners.
impact upon the cost 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.
appropriate governing bodies and
external experts whilst meeting
on a regular basis to ensure
the business is well positioned
to mitigate any impacts from a
commercial, operational, financial
and systems perspective.
This team will also monitor
guidance regarding and prepare
for the implementation of an
English scheme.
David Rattigan
Chief Financial Officer
28 February 2023
66
67
RISK MANAGEMENTSTRATEGIC REPORT SECTION 172
STATEMENT
PROMOTING THE SUCCESS OF
• the desirability of the company
The following section of this
ACTION:
C A S E S T U D Y
OUT OF HOME STRATEGIC REVIEW (CONTINUED)
THE COMPANY
maintaining a reputation
Annual Report serves as an
for high standards of business
overview of how the Directors, with
Under Section 172(1) of the
Companies Act 2006, a director
conduct
of a company must act in the
• the need to act fairly between
way they consider, in good faith,
members of the company
would be most likely to promote
the success of the company for
the benefit of its members as a
whole, and in doing so have regard
(amongst other matters) to the
following factors:
The Board is ultimately responsible
for the direction, management,
performance and long-term
sustainable success of the
the support of the wider business,
engage with our stakeholders and
consider these range of factors in
the course of their s172 duties.
PRINCIPAL BOARD DECISIONS
AND CONSIDERATIONS DURING
2022
Company. It sets the Group’s
The Board considers the key
strategy and objectives taking
matters detailed on page 70 to
• the likely consequences of any
into account the interests of all its
be the Principal Decisions and
decision in the long-term
stakeholders.
• the interests of the company’s
A good understanding of the
considerations it has made during
the year to 31 December 2022.
employees
Company’s stakeholders enables
The Board considers ‘Principal
• the need to foster the
company’s business
relationships with suppliers,
customers and others
the Board to factor the potential
Decisions’ to be those decisions
impact of strategic decisions
which entail significant long-term
on each stakeholder group
implications and consequences for
into Boardroom discussions.
the Company and its stakeholders
Consequently, Board resolutions
- to distinguish these from the
• the impact of the company’s
are determined with reference to
normal, ordinary course decision-
operations on the community
the Company’s key stakeholders:
making processes that the Board
and the environment
its employees, its customers, its
engages in.
suppliers, the community in which
it operates, the environment and
its shareholders.
C A S E S T U D Y
OUT OF HOME STRATEGIC REVIEW
BACKGROUND:
the Covid-19 pandemic with the prolonged closure
customer base.
of many outlets. Whilst the hospitality trade began to
return to pre-Covid-19 levels, albeit at a slower pace
than previously forecast, on further assessment of
the underlying financial performance of the route
to market it was noted that margin progression
after overheads could only be achieved with
transformational change in terms
As a result a strategic review of the Group’s OoH route
to market was undertaken during 2022 in order to
develop a clear strategy that the Board believe will
deliver a near term return to net profitability whilst
also providing clear direction in terms of how the OoH
route to market should be optimally managed and
developed going forward.
With the assistance of external consultants, the
Potential options included rationalisation of
strategic review was undertaken to fully understand
the business, greater outsourcing and further
the drivers of performance and explore the potential
consolidation or acquisition.
strategic options available to improve profitability.
OUTCOME:
The strategic review provided clarity on the financial
These actions include:
performance of OoH whilst also identifying that
OoH operates with discrete operations, customers,
products and suppliers.
It is clear post the pandemic that the strategic
challenges within our OoH business are quite distinct
from those that exist within our Packaged business.
• operating OoH as a distinct division within the
Company
• exit of underperforming contracts and product
categories, including coffee and national frozen
accounts
The likely long term returns from our OoH business
• exit of the in-house central frozen region, which
are lower and a different approach to management of
is considered sub scale and unprofitable and for
the business is required to deliver shareholder value
dispense is already serviced by a distributor
in the long term.
• a review of processes to simplify the business
The strategic review identified several immediate
ensuring a rationalisation of operating costs and
actions that will be implemented through FY23.
central overheads
•
improved financial reporting, including divisional
and regional reporting focusing on net profit and
return on capital employed
CONSIDERATION OF STAKEHOLDERS:
The Strategic review undertaken and the actions
The changes proposed whilst reducing numbers
arising are an affirmative step by the Board into
of employees within the OoH route to market
addressing the challenging conditions within the route
considerably increase for employee’s local
to market.
The change to the Group’s operating results in its
to the Group’s shareholders around the ongoing
future challenges and progress made within this route
to market.
FUTURE ACTIONS:
accountability and understanding of the financial
performance within their regions. Redundancy and
retention packages offered to employees affected by
the changes are considerably greater than statutory
and various support packages are in place for
individuals affected by the change.
The plan to deliver this strategic project is expected to
realised during FY24. OoH financial performance will
be implemented during 2023 with benefits largely
be segmentally reported from FY23.
The OoH drinks market was significantly impacted by
of how the Group services the trade and its wider
external Annual Report and Accounts will give visibility
68
69
SECTION 172 STATEMENTSTRATEGIC REPORT
PRINCIPAL BOARD DECISIONS AND CONSIDERATIONS DURING 2022
HOW THE GROUP ENGAGED WITH ITS KEY STAKEHOLDERS DURING 2022
BOARD DECISION:
In 2022, the Group commenced a review of its OoH route to market.
EMPLOYEES
Why we engage
CONSIDERATIONS:
The purpose of the strategic review was to develop a clear strategy that would
deliver a near term return to net profitability whilst also providing clear direction
in terms of how the OoH route to market should be optimally managed and
developed going forward.
Details on the review and outcome is within the case study on pages 68 to 69.
BOARD DECISION:
During the year the Board considered HMRC’s ruling into 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.
In the prior year a tribunal was convened to consider the dispute of the Group’s
scheme as well as similar schemes operated by other companies.
At the start of 2022, the tribunal found that the arrangements should have been
taxed as employment income.
The Board sought its own legal opinion regarding both the likelihood of success
under further appeal and debt recovery before settling with HMRC and the debt
recovery process.
CONSIDERATIONS:
Following the ruling from HMRC the Company has settled its tax liability and will
commence recovery of debts from current and previous management during 2023.
BOARD DECISION:
The Board carried out a review of the soft drinks market in terms of long-term
growth prospects and consumer trends highlighting potential acquisition
opportunities.
In conjunction with the OoH strategic review the Board agreed capital allocation
would focus on the Group’s Packaged route to market.
The Board reviewed management’s M&A business case development processes,
including financial metrics required to ensure robust integration planning and
future shareholder value.
The Group’s long-term success is predicated on the commitment of our employees
to our purpose and its demonstration of our values on a daily basis. To maintain our
competitive advantage and meet the growing demands of the environment in which
we operate, we need a workforce which is adaptive and whose skill base constantly
evolves.
We also value workers with long-term practical experiences. We engage with our
workforce to ensure that we are fostering an environment that they are happy to
work in and that best supports their well-being.
How we engaged during 2022
We have continued to use employee engagement surveys to understand what areas
we can improve upon. Engagement by employees in these surveys is high with an
average of 85% of employees responding.
The Group scores highly with regards to organisational integrity; engaging
managers; leadership; realising employees potential; and employees understanding
the culture of the Group.
Areas the Group needs to improve upon are wellbeing and employee voice. We
worked to fully understand what improvements we need to make and ran local
focus groups to get more specifics on the feedback and to understand where there
are variations across functions/level/location. Actions plans were then drafted and
implemented during the last quarter of 2022.
CUSTOMERS
Why we engage
Communications and relationships with our direct customers is a fundamental
ingredient to our success.
How we engaged during 2022
The Nichols plc commercial teams have continuous communications with our direct
customers, through face-to-face and virtual meetings, to understand their needs,
share our plans, seek feedback, and nurture collaborative working practices. We
engage with our end consumers through our on-going promotional and advertising
activity.
CONSIDERATIONS:
The Board considered the long-term consumer trends, potential acquisition targets,
appropriate cost of capital including risk premiums, reasonable valuation metrics
and integration synergy planning.
SUPPLIERS
Why we engage
BOARD DECISION:
The Board considered and approved a grant under the Company’s Save-As-You-
Earn Share Option Scheme (SAYE Option Scheme).
CONSIDERATIONS:
The Board considered the terms of the proposed SAYE Option Scheme grant, noting
that it would be open to all eligible employees.
The Board agreed the price at which the options would be subscribed for, being
set at a 20% discount to the average mid-market share price for the previous three
days prior to the grant of the options. When the SAYE Option Scheme matures, the
exercise of the options would be satisfied by using shares held in Treasury, having
been bought as part of the share buyback process that took place in 2022.
Given Nichols’ Packaged outsourced manufacturing model and OoH in house
manufacturing footprint, having long-term strategic partnerships 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.
How we engaged during 2022
The Nichols plc supply chain team and senior management have regular review
meetings with our supplier base.
70
71
SECTION 172 STATEMENTSTRATEGIC REPORT HOW THE GROUP ENGAGED WITH ITS KEY STAKEHOLDERS DURING 2022 (CONTINUED)
THE COMMUNITY
Why we engage
SHAREHOLDERS
Why we engage
The Group cares about its community and understands the importance of giving
back to help and inspire others to achieve, developing positive relationships and
maintaining a strong reputation within the community.
How we engaged during 2022
The Group pledged to improve the future for over 100 young people in our
local communities, raising aspirations through skills development and career
development opportunities.
In addition to existing partnerships, during 2022 the Group entered into a
partnership with Manchester Thunder, a ParaNetball team whose goal is to change
the lives of deaf and disabled young people through the provision of a welcoming,
accessible and inclusive ParaNetball programme.
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 2022 employees participated in “Camp Vimto” our brand-new programme
that helps children from disadvantaged backgrounds learn life skills via workshops
& interactive/outdoor activities to learn ‘real’ life skills such as resilience, good
choices and how to look after their health. The programme also provides them
with the opportunity to learn about FMCG careers and provides opportunities in
mentoring, mock interview and placements within the UK business.
THE ENVIRONMENT
Why we engage
Nichols plc is aware of its environmental responsibilities and whilst all its current
consumer packaging is already recyclable, the Group is working with suppliers and
customers to reduce plastic waste as part of its “Happier Future” strategy.
Continued access to capital is of vital importance to the long-term success of our
business. Through our engagement 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 both dividends and a platform for future shareholder value growth.
We are seeking to promote an investor base that is interested in a long-term
holding in the Group.
How we engaged during 2022
The Executive Directors meet our institutional shareholders on a number of
occasions throughout the year and aim to have an open dialogue to receive
feedback.
Investor roadshow meetings are undertaken at least twice a year following the
preliminary and interim results announcements.
During 2022, the Board committed to publish the presentations on interim and
full-year results that the executive management give to institutional investors on the
Company’s website so that our retail shareholders are able to view these as well.
The presentation for the 2022 Interim Results has already been published.
In addition the Executive Directors now utilise the online meeting platform, Investor
Meet, to enable retail shareholders to participate in live investor presentations as
well. This took place for the first time through 2022 and will continue into the future.
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.
How we engaged during 2022
The Strategic Report has been approved by the Board on
The Group has committed to reduce its impact on climate change by reducing
28 February 2023
absolute Scope 1 & Scope 2 Green House Gas emissions by 25% by 2025 and define
its net zero roadmap.
100% renewable energy is now used at the Group’s Ross-on-Wye factory and Laurel
House head office in the UK.
Further details can be found on the Company’s website,
www.nicholsplc.co.uk/happier-future/
72
73
SECTION 172 STATEMENTSTRATEGIC REPORT GOVE RNANCE
The Board
Corporate Governance Statement
Audit Committee Report
Remuneration Committee Report
Nomination Committee Report
Directors’ Report
76
78
86
90
98
100
74
75
CONTENTSGOVERNANCE REPORT OUR
BOARD
CH A IR M AN
DIRECTOR
E
V
I
T
U
C
E
X
E
-
N
O
N
ohn 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
moved to Non-Executive Chairman.
John has three grown up children and three grandchildren. John’s two
sons both work in the Company. John enjoys spending time with his
family and using his spare time sailing, playing golf and walking his
dog on the beach in Wales.
E
V
I
T
U
C
E
X
E
-
N
O
N
ames 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 two young children who take up much
of their free time. James and his family enjoy travelling and spending
time on, in or around the sea.
CHIEF EXECUTIVE
O
F
F
I
C
E
R
ndrew 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.
OFF ICE R
L
A
I
C
N
A
N
I
F
F
E
I
H
C
avid 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 four sons. He enjoys football,
sailing and generally being in the great outdoors as much as possible
in his spare time.
ohn 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.
DIRECTOR
INDEPENDENT
N
O
N
-
E
X
E
C
U
T
I
V
E
D
I
R
E
C
T
O
R
E
V
I
T
U
C
E
X
E
-
N
O
N
T
N
E
D
N
E
P
E
D
N
I
elen Keays Helen was appointed to the Board of Nichols as
an Independent Non-Executive Director in September 2017
and is a member of the Remuneration Committee (which
she chairs) as well as the Audit and Nomination Committees.
After a career in Consumer Marketing at organisations such
as GE Capital, Sears and Vodafone, Helen has developed significant
experience working as a Non-Executive Director. She was previously
Senior Independent Director at Dominos Pizza Group plc, Chair of the
Remuneration Committee at Communisis plc and has also previously
held NED roles at Majestic Wines plc and Chrysalis plc.
Helen is married with two teenage children who keep her busy
watching their sports matches. In her spare time she likes to play
tennis. Helen is also a Life Trustee of the Shakespeare Birthplace Trust.
76
77
OUR BOARDGOVERNANCE REPORT
CORPORATE
GOVERNANCE
STATEMENT
JOH N
- NICHOLS -
NON-EXECUTIVE CHAIRMAN
PRINCIPLES OF THE QCA CODE HOW THE COMPANY HAS COMPLIED
PRINCIPLE 1
The Board has collective responsibility for setting the strategic
Establish a strategy and business
model which promote long-term
value for shareholders.
aims and objectives of the Group. Our strategy is articulated on
pages 26 to 28 and on our website. In the course of implementing
our strategy, the Board takes into account the expectations of
the Company’s stakeholders and wider social and environmental
responsibilities.
PRINCIPLE 2
The Group maintains communication with institutional shareholders
CORPORATE GOVERNANCE
established roles, policies and
Seek to understand and meet
shareholder needs and expectations.
through individual meetings with Executive Directors, particularly
following publication of the Group’s interim and full year results,
enabling the Executive Directors to have an open dialogue
and receive feedback. Further details can be found in our s172
Statement on pages 68 to 73.
I have pleasure in
introducing Nichols’
Corporate Governance
Statement in what is my
final report as
Non-Executive Chairman
of Nichols.
Having experienced
unprecedented trading conditions
in recent years due to the effects
of the Covid-19 pandemic, 2022
was another challenging and
unpredictable year with rising
inflation, increased cost of living
pressures on consumers and
global logistical challenges.
However, our commitment to
supporting high standards of
corporate governance and our
strong governance framework
have enabled the Board to
act quickly and support the
management team in making
decisions and taking appropriate
actions.
procedures designed to support
our compliance with the QCA
Code, the AIM Rules and other
legal, regulatory and compliance
requirements which apply to the
Group. Details of how we comply
with the QCA Code are set out in
the table opposite.
Further detail on our approach to
corporate governance can also be
found at www.nicholsplc.co.uk/
Home/Aim26.
REPORT
In this section of the Annual
Report, we set out our governance
framework and describe the work
that we have done during the
year to ensure good corporate
governance throughout Nichols plc
and its subsidiaries (“the Group”).
THE QUOTED COMPANIES
ALLIANCE CORPORATE
GOVERNANCE CODE
During 2022, 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
and we have complied with each of
the ten principles of the QCA Code.
We recognise the need to continue
to develop our governance
practices and disclosures in order
to ensure that they support the
strategic progress of the Group
and the effective application of
the principles going forward.
Our governance structure
provides a framework of clearly
PRINCIPLE 3
We consider that our stakeholders are: our shareholders; our
Take into account wider stakeholder
and social responsibilities, and their
implications for long-term success.
employees; our customers; our suppliers; our community; and the
environment. The Board recognises the importance of maintaining
regular dialogue with our stakeholders to ensure, and receive and
consider, their views.
Information on how the Company engages with its key stakeholders
is provided on pages 71 to 73.
PRINCIPLE 4
The Board has ultimate responsibility for the systems of internal
Embed effective risk management,
considering both opportunities and
threats, throughout the organisation.
control and risk management. The Audit Committee reviews the
Group’s internal controls and risk management processes on the
Board’s behalf.
The Company’s Risk Management Team (RMT) comprises members
of the Senor Leadership Team (SLT), the Risk Controller and
both a legal and H&S representative. The RMT has met regularly
throughout 2022. The RMT reports to the SLT who will provide an
update to the Audit Committee three times a year.
The Group’s significant risks and related mitigation/ control are
disclosed in the Strategic Review on pages 62 to 67.
PRINCIPLE 5
Details of how the Company has complied with this principle is set
Maintain the Board as a well-
functioning, balanced team led by
the Chairman.
out further in this report.
78
79
CORPORATE GOVERNANCE STATEMENTGOVERNANCE REPORT
PRINCIPLES OF THE QCA CODE HOW THE COMPANY HAS COMPLIED
PRINCIPLE 5
holds the position of Commercial
Board Committees: the Audit
PRINCIPLE 6
Details of how the Company has complied with this principle are set
Ensure that between them the
Directors have the necessary
up-to-date experience, skills and
capabilities.
out further in this report.
PRINCIPLE 7
Details of how the Company has complied with this principle are set
Evaluate Board performance based on
clear and relevant objectives, seeking
continuous improvement.
out further in this report.
PRINCIPLE 8
Details of how the Company has complied with this principle are set
Promote a corporate culture that
is based on ethical values and
out further in this report.
behaviours.
PRINCIPLE 9
Maintain governance structures and
processes that are fit for purpose and
support good decision-making by
the Board.
Details of how the Company has complied with this principle are set
out further in this report.
PRINCIPLE 10
Communications with shareholders are explained in Principle 2
Communicate how the Company
above. In addition to the interim and full year investor roadshows,
is governed and is performing
regular meetings are held with analysts, retail investor groups and
by maintaining a dialogue with
prospective investors.
shareholders and other relevant
stakeholders.
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 86 to 99.
Principle 5 of the Code requires
the maintenance of the Board as
a well-functioning, balanced team
led by the Chair.
Controller at Vimto Out of Home
Committee, the Remuneration
and has worked within the
Committee and the Nomination
business for 18 years. James was
Committee. The Audit
appointed as a representative
Committee and Remuneration
of the Nichols Family pursuant
Committee are chaired by the
The Board is led by our Non-
to a Relationship Agreement
two independent Non-Executive
Executive Chairman, John Nichols
dated 22 July 2020 between the
Directors. John Nichols chairs the
and includes two independent
Company and the Nichols Family.
Nomination Committee. Details
Non-Executive Directors, John
The purpose of the Relationship
of the operation of the Board
Gittins and Helen Keays, both of
Agreement is to formalise Board
Committees are set out in their
whom have significant experience
representation for the Nichols
respective reports.
of plc directorships.
Liz McMeikan has been appointed
on 11 January 2023 as Chair
designate and is deemed to be
an independent Non-Executive
Director on appointment.
However, when they are appointed
Family whilst ensuring that the
Company is capable of carrying
on, at all times, its business
independently. Further details
of the terms of the Relationship
Agreement are provided on
page 101.
as Chair of the Company at the
The Board also comprises of two
2023 AGM, they will no longer be
Executive Directors, Andrew Milne
deemed independent.
and David Rattigan.
In addition, James Nichols is a Non-
The Board has delegated specific
Executive Director. James also
responsibilities to its three
There were six Board meetings
during the year. Details of
Board and Committee meeting
attendance of Directors during the
year is set out below.
In addition, the Board held a
Strategy Session in October
2022, to review its medium-
term strategic plans, at which all
Directors were present.
DIRECTORS
BOARD
AUDIT
REMUNERATION
NOMINATION
P J Nichols
J A Gittins
H M Keays
J E Nichols
A P Milne
D T Rattigan
6/6
6/6
6/6
6/6
6/6
6/6
3/3
3/3
3/3
n/a
n/a
n/a
4/4
4/4
4/4
n/a
n/a
n/a
4/4
4/4
4/4
n/a
n/a
n/a
Chair’s role
As Chair, Mr Nichols’ primary
affecting the delivery of Nichols
Currently, at the time of
publication of this Annual Report
and Accounts, our Non-Executive
Chairman is John Nichols who
is the grandson of our founder,
John Noel Nichols. The Board has
announced the appointment of Liz
McMeikan as Chair designate who
will take over from Mr Nichols at
the 2023 AGM.
responsibility is to effectively
plc’s strategy.
guide, develop and lead the Board
and ensure that the Group’s
corporate governance framework
is appropriate, is communicated
and is adopted across the business
activities. The Chairman is also
responsible for ensuring the Board
agenda concentrates on the key
operational and financial issues
Whilst Mr Nichols’ shareholding
and long association with the
business means that he is not
regarded as an independent
Chairman, he is not involved in the
day to day operations of Nichols
plc. Those responsibilities are
managed by the Group’s CEO.
80
81
CORPORATE GOVERNANCE STATEMENTGOVERNANCE REPORT
that the Directors ensure that
A formal Board and Committee
between them they have the
performance evaluation was
necessary up to-date experience,
undertaken in November 2021, in
skills and capabilities.
the form of a questionnaire which
Board meetings to be
held at other Group
locations.
per annum being held at a Group site that is not the head office.
PRINCIPLE 5 (CONTINUED)
Directors are expected to attend
legal counsel presents to the Board
Independent Non-Executive Directors
(INEDs)
all meetings of the Board, and of
regularly on legal and regulatory
the Committees on which they sit,
matters and a written report on
and to devote sufficient time to
governance developments is
Mr John Gittins and Ms Helen
the Group’s affairs to enable them
presented at each Board meeting
Keays are considered by the
to fulfil their duties as Directors.
by Prism Cosec, the Company’s
Company as INEDs. The INED
In the event that Directors are
corporate governance advisor.
role is to provide oversight and
unable to attend a meeting,
scrutiny of the performance of
their comments on papers to
the Executive Directors. John
be considered at the meeting
and Helen chair the Audit and
will be discussed in advance
Remuneration Committees
with the Chairman, so that their
Biographies on all Directors giving
details of their experience and
roles on the Board are shown on
pages 76 to 77.
respectively.
contribution can be included as
PRINCIPLE 7
Our INEDs are expected to devote
such time as is necessary for
the proper performance of their
duties and normally expect to
part of the wider Board discussion.
All Directors attended every
meeting which they were eligible
to attend.
spend a minimum of 12 days per
PRINCIPLE 6
Principle 6 of the Code requires
Principle 7 of the Code requires
that the Board and Committees
evaluate their own performance
based on clear and relevant
objectives and seek continuous
improvement.
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
The current Nichols plc Board has
strategy meetings. However, the
significant sector, financial and
INEDs and the Company recognise
plc experience and the Executive
that due to the nature of their role,
Directors have broad experience
it is impossible to be specific about
in the soft drinks industry and in
the required time commitment,
manufacturing.
was completed by each member
of the Board. The questionnaire
focussed on purpose and culture,
ESG, Board and Committee
composition, stakeholder
engagement Board effectiveness,
Board processes including
and additional time commitment
required when the Company is
undergoing a period of increased
activity. In accordance with their
appointment letter, our INEDs
agree to commit sufficient time to
perform their duties.
Executive Directors
The Company has two Executive
Directors: Andrew Milne and David
Rattigan. The Executive Directors
are charged with the delivery of
the business model within the
strategy set by the Board.
INEDs communicate with Executive
Directors and senior management
between formal Board meetings.
David Rattigan who was appointed
professional development,
as Group Chief Financial Officer
strategy and leadership, and Board
in 2020, was also appointed as
and Group performance. The
Company Secretary on that date.
evaluation raised some actions to
Prism Cosec Limited is engaged
be considered by the Board and
to provide certain company
these were addressed during 2022.
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 Financial Officer.
Accordingly, there wasn’t a formal
performance evaluation of the
Board and Committees during
2022. Instead, time was focussed
on addressing the issues raised
from the 2021 performance
review. Progress was found to
have been made on the actions
With the support of our NOMAD
suggested in the 2021 review, as
and our advisors, the Board
summarised in the table opposite.
training and development needs
are met. The Company’s in-house
TOPIC AREA
PROGRESS MADE AGAINST AGREED ACTIONS
Board Succession:
Liz McMeikan has been appointed as Chair designate to success John Nichols at the
Commence search for
Chair successor.
2023 AGM.
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 98. 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.
Board Diversity:
Align according to
Board succession
planning.
Following the appointment of Liz McMeikan, gender diversity on the Board has
increased to 29%. A rigorous recruitment process is undertaken for new 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 candidates
with the required experience and ability as well as considering gender and ethnic
diversity.
Any potential candidate for appointment as a Non -Executive Director will be required
to disclose their other commitments before being appointed as a Director.
Board Effectiveness:
With effect from 2023, the Board calendar will include at least two sets of meetings
Processes:
Draft minutes are issued to the online board portal after each meeting for each
Ensure Board minutes
are issued in the
online board portal
after each meeting.
Director to review prior to the minutes being confirmed and approved at the following
meeting.
Professional
Development:
Details of training sessions and webinars offered by third parties are circulated by
email to the Board. The Group’s advisers provide updates as necessary to the Board
for them to comply with the AIM rules and other legal, regulatory and compliance
requirements which apply to the Group.
Strategy:
The Board and SLT hold an annual strategy day. Outside of this day, there are regular
updates on strategy at each Board meeting and the SLT hold regular strategy sessions
throughout the year as a whole.
Stakeholders:
The AGM is held in person each year. The Board is reviewing the use of Investor Meet
How to increase Board
visibility to the Group’s
stakeholders.
Board & Group
Performance:
to enable it to reach more retail investors. The Board will meet more employees as
Group site visits increase.
The next Board and Committee performance evaluation will take place in 2023, once
the new Chair has settled into their role.
The Remuneration Committee evaluates Executive Director performance, alongside
remuneration and reward. The Audit Committee engages with the Company’s external
auditors biannually and holds discussions on the financial systems, procedures and
efficacy of management.
82
83
CORPORATE GOVERNANCE STATEMENTGOVERNANCE REPORT PRINCIPLE 8
• Sustainable Business: We
any form. In addition, to ensure
Principle 8 of the Code requires
that the Company promotes a
corporate culture that is based on
ethical values and behaviours.
value our commitment to
that any of our employees can
having a sustainable business.
raise any matters of genuine
Our sustainable business
concern without fear of any action
on page 88.
strategy takes into account our
being taken against them, we also
wider corporate, environmental
operate a whistleblowing policy.
Nichols plc is very proud of its
and social responsibilities.
Further detail of the anti-bribery
warm and inclusive culture. It
Further details are included in
and whistleblowing policies,
is our people and how they go
pages 32 to 55 of the Strategic
which are monitored by the Audit
about their business that has been
Report.
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:
• Customers and Suppliers: We
believe in building long-term
partnerships with our
customers and suppliers.
• Community: We actively
Committee, is provided in the
Committee’s Report on page 86
of this Annual Report. In addition,
these policies and the Human
Slavery Statement are available on
the Company’s website at
www.nicholsplc.co.uk.
encourage our employees to
PRINCIPLE 9
• People: We value and respect
our employees. Their
give something back to the
wider community.
Principle 9 of the Code requires
that the Company maintains
enthusiasm, ideas and hard
The Company has adopted a
governance structures and
work are fundamental to the
Slavery and Human Trafficking
processes that are fit for purpose
success of our Company and
Transparency Statement (the
and support good decision making
we recognise that the education
“Statement”) and has an anti-
by the Board.
and development of our people
bribery policy. These set out the
is important. We believe that
ethical behaviour expected of
developing our talent at Nichols
our employees, with our Human
is essential to our success and
Slavery Statement also including
we identify the development
details of actions that we have
needs of all our employees
taken to ensure that human
through our appraisal
slavery does not exist within
programme. We support the
Nichols or within our supply chain.
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 external audit
provider, BDO LLP. In addition,
professional development of
our employees.
We have a zero-tolerance
the Company has appointed EY,
approach for giving or receiving
as its co-sourcing partner to assist
of bribes or corrupt payments in
management in the development
of a 3-year internal audit strategy.
Further detail of the Group’s
internal audit process is provided
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
INEDs, John Gittins, Chairman
of the Audit Committee and
Helen Keays, Chairman of the
Remuneration Committee.
This culture of challenge and
continuous improvement is
encouraged to ensure that controls
evolve with the business.
The Nichols plc website at
www.nicholsplc.co.uk describes the
roles and terms of reference for
the Committees.
John Nichols
Non-Executive Chairman
28 February 2023
84
85
CORPORATE GOVERNANCE STATEMENTGOVERNANCE REPORT
AUDIT
COMMITTEE
REPORT
JOH N
- GITTINS -
INDEPENDENT NON-EXECUTIVE DIRECTOR
On behalf of the
Committee, I am pleased
to present the Audit
Committee Report for
the year ended
31 December 2022,
which includes actions
taken by the Committee
during the year.
The Audit Committee met
• To oversee the relationship
three times during 2022 and all
with the external auditor
Committee members were present
including recommendations
at every meeting.
DUTIES
on their remuneration,
approving their terms of
engagement, assessing
The main duties of the Committee
annually their independence
are set out in its Terms of
and objectivity and assessing
Reference which are available on
annually the qualifications,
the Company’s website (www.
expertise and resources of
nicholsplc.co.uk/investors/ aim-
the external auditor and the
rule-26/) and include the following:
effectiveness of the audit
MEMBERSHIP OF THE AUDIT
• To monitor the integrity of the
process; and
The Committee comprises three
Non -Executive Directors. I continue
to act as Committee Chair, with
my colleagues John Nichols and
Helen Keays. Helen and I are
considered independent Directors.
John Nichols is not considered
independent as a result of his
significant shareholding and
previous executive role.
The Board is satisfied that I, as
Chair of the Committee, have
recent and relevant financial
experience. I am a chartered
including its annual and half-
policy on the supply of
yearly reports and accounts,
non-audit services by the
announcements of preliminary
external auditor including
results and any other formal
prior approval of non-audit
announcement relating to its
services by the committee and
financial performance;
taking into account any relevant
• To review the adequacy and
effectiveness of the Group’s
internal financial controls
ethical guidance on the matter
and thorough consideration of
all appropriate matters.
and internal control and risk
The Committee reviews its Terms
management systems;
of Reference annually and they
• To consider and make
recommendations to the Board,
currently meet best practice
standards.
to be put to shareholders for
AREAS OF FOCUS DURING THE
accountant and currently chair
approval at the AGM, in
YEAR
the audit committee of Appreciate
relation to the appointment,
Group plc and previously of
Electricity North West Limited.
re-appointment or removal of
the Company’s external auditor;
During the year, the Audit
Committee discharged its
responsibilities by:
COMMITTEE
accounts of the Group,
• To develop and implement a
living crisis.
• approving the external
• approving the plan of targeted
impairment review and segmental
auditor’s plan for the audit
internal reviews conducted
reporting as follows.
of the Group’s annual accounts,
by the finance team and the
including key audit matters,
internal audit plan proposed by
Impairment Review
key risks, confirmation of
EY, monitoring the results
The Committee reviewed
auditor independence and
of these reviews and the
accounting papers prepared by
terms of engagement, including
timely follow up of any control
management in connection with
audit fees.
recommendations. These
annual impairment reviews.
• reviewing the Group’s draft
accounts and interim results
statements and reviewing the
activities are further explained
in the internal audit section
below.
Out of Home, the Group’s only
cash-generating unit (CGU) with
indefinite life Intangible assets,
external auditor’s detailed
• reviewing the Group’s risk
has been significantly impacted
reports thereon, including
management process, key risk
by COVID-19 from 2020 through
consideration of key audit
register, risk dashboard and risk
2021 and whilst trade within
matters and risks. In each
mitigations.
case, the Committee reviewed
accounting papers prepared
by management. In addition,
• approving a refreshed
Delegation of Authority matrix.
the hospitality industry has now
opened post the pandemic, the
impact of the war in the Ukraine,
and its impact on inflation and
notwithstanding the Group’s
SIGNIFICANT ISSUES
cost of living pressures had added
strong balance sheet, the
CONSIDERED IN RELATION TO
further challenges to the CGU
Committee reviewed the going
THE FINANCIAL STATEMENTS
with growth now significantly
concern assessment prepared
by management, given the
impact of the ongoing cost of
As part of the monitoring of
the integrity of the financial
statements, significant matters and
accounting judgments identified
• meeting the external auditor,
by the finance team and the
without management, to discuss
external auditor are reviewed by
matters relating to its remit and
the Committee and reported to
any issues arising from its work.
the Board. The significant matters
lower than previously expected.
Based on this trading performance
and the CGU’s future prospects,
management assessed the need
for an impairment of £8.7m,
representing the entire intangibles
assets (£4.8m) and a proportion of
the fixed assets (£3.9m) with which
the Committee concurred.
considered by the Committee
in respect of the year ended 31
Details of the impairment reviews
December 2022 are set out below:
performed are outlined in note 14
including (i) the audit partner
Strategic Review
• reviewing the performance
of the external auditor. This
assessment covered key areas
and team (ii) the audit approach
and execution (iii) the
Committee and Company
interactions with the external
auditor and (iv) the added value
and insights that the external
auditors bring. The Committee’s
findings were subsequently
discussed with the external
auditor.
to the financial statements.
Segmental Reporting
During the year the Committee
have reviewed papers prepared
In light of the strategic review into
by management for all accounting
Out of Home, the Committee have
matters relating to the Out of
reviewed management’s continued
Home Strategic review and its
assessment and disclosure of the
potential impacts during the
Group’s operating segments under
current year, 2023 and beyond.
IFRS 8. The Committee concur
These matters include but are
with management’s view that
not limited to, exceptional items,
the Group’s operating segments
86
86
86
87
87
87
AUDIT COMMITTEE REPORTGOVERNANCE REPORT
capital expenditure, which were
established in 2020, now regularly
report to the Committee.
WHISTLEBLOWING
The Group has in place a
whistleblowing policy which sets
out the formal process by which
an employee of the Group may, in
confidence, raise concerns about
possible improprieties in financial
reporting or other matters. The
Committee is satisfied that the
policy is operating effectively.
ANTI-BRIBERY
The Group has in place an anti-
bribery and anti corruption policy
which sets out its zero-tolerance
position and provides information
and guidance to those working for
the Group on how to recognise
and deal with bribery and
corruption issues. The Committee
is satisfied that the policy is
operating effectively.
John Gittins
Chair of the Audit Committee
28 February 2023
for these financial statements
Going Concern Status
audit services at least every ten
Following the Out of Home
Group’s external auditors.
continues to be both Stills and
Carbonates, as these are the
operating results that are reviewed
regularly by the Board (as chief
operating decision maker) in order
to make decisions about resources
to be allocated to the segment and
assess its performance.
strategic review and management’s
decision to manage Out of Home
separately, commencing H1
2023, from the Group’s Packaged
business, the Board will change the
operating segments it reviews the
results for and makes decisions
on as chief operating decision
maker. These segments will now
be Packaged, Out of Home and
Corporate rather than Stills and
Carbonates.
Reviews of the Group’s going
concern status were carried out
by management at both the half
and full-year period ends. Detailed
years and accordingly, it is the
Committee’s intention, during
2023, to conduct an external audit
tender process.
papers setting out the relevant
INTERNAL AUDIT
considerations were tabled by
management and discussed with
the Committee, together with the
The Group has continued its
successful co-sourced relationship
with EY in order to undertake a
number of internal audit reviews
The Committee noted that severe
within the Group. A 2022 internal
but plausible risk scenarios had
audit plan was developed between
been identified; a robust risk
management and EY and approved
assessment had been carried out;
by the Committee at the beginning
and the Group’s going concern
of the year. This plan took into
statements remained appropriate
consideration the Company’s
when stress tested. Taking into
principal risks, as well as sector
account the Company’s balance
specific risks. Areas of focus in
sheet position, the Committee
the year included IT controls,
concurred with management’s
procurement and contract
view that the Group has
management, as well as follow
adequate resources to continue
up of actions implemented from
The Committee were satisfied with
in operational existence for the
the previous year. EY attended all
the proposed change to Segmental
foreseeable future (being at least
three Committee meetings during
reporting.
one year following the date of
the year and completed the agreed
Exceptional Items
The Committee reviewed the
approval of this Annual Report).
internal audit plan.
EXTERNAL AUDIT
INTERNAL CONTROL
accounting treatment of the items
The Committee monitors the
The Board has overall
listed in note 4 and concurred with
relationship with the external
responsibility for maintaining
management’s view that they are
auditor, BDO, to ensure that
sound internal control systems
exceptional in size and nature in
auditor independence and
to safeguard the investment of
relation to the Group.
objectivity are maintained. The
shareholders and the Group’s
Net Liability for Historic
Incentive Schemes
The Group has now settled with
HMRC the tax and interest charges
regarding the historic incentive
scheme and will now commence
recovery of debts from current
and previous management who
had indemnified the Company.
The Committee have regularly
reviewed management’s progress
to date and their continued
approach to concluding this
matter.
external auditor is not engaged to
assets. The systems are reviewed
perform any non- audit services, in
by the Board and, when asked, the
line with the Group’s policy.
Audit Committee, and are designed
Having reviewed and assessed
the auditor’s independence and
performance, the Committee
to provide reasonable, but not
absolute, assurance against
material misstatement or loss.
recommended to the Board that
During the year the Company has
a resolution to reappoint BDO as
taken action to further develop
the Group’s external auditor be
its internal control and risk
proposed at the forthcoming AGM.
management environment. In
BDO have been the Company’s
addition to the development of
external auditor for nine years
internal audit as explained above,
(including the current financial
management committees with
year). The Committee has adopted
remits over risk management,
a policy of tendering external
treasury management and
88
88
88
89
89
89
AUDIT COMMITTEE REPORTGOVERNANCE REPORT REMUNERATION
COMMITTEE
REPORT
HELEN
- KE AYS -
INDEPENDENT NON-EXECUTIVE DIRECTOR
DUTIES
The Committee operates under
the Group’s agreed Terms of
Reference and is responsible for
reviewing all senior executive
appointments and determining
the Group’s policy in respect
of the terms of employment,
55% against the Adjusted Profit
Before Tax objective which was in
line with city consensus of financial
performance. Full details of the
performance assessment against
both the financial and key business
objectives can be found on
pages 94 to 95..
On behalf of the
Remuneration
Committee, I am
pleased to present the
Remuneration report for
the year ended
31 December 2022.
MEMBERS OF THE
REMUNERATION COMMITTEE
The Committee comprises the
three Non-Executive Directors:
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.
Whilst John is not considered
independent, he is a valued
member of the Committee and
brings over 51 years of company
experience. PwC, our independent
external consultants, also attend
on a regular basis.
outcome. The Committee will
31 December 2022 the share price
To ensure alignment with these
continue to set stretching targets
was 1,072p.
for the Hybrid Incentive Plan in
the context of business plan and
consensus forecasts.
In relation to the 2021 Hybrid
Incentive Plan award deferred into
shares, the share price used for
In line with the Policy approved at
calculating the number of shares
the 2022 AGM, 60% of the award
was based on a year-end 2021
will be deferred into shares and
price of 1,441p. As at 31 December
principles, the Group operates
a hybrid incentive plan which
combines the previous individual
bonus and long-term incentive
plans into a single plan. This hybrid
incentive plan assesses both short
and long-term performance in a
combination of cash and deferred
shares.
The table on pages 92 to 93
including remuneration packages
The Committee is comfortable
the remainder will be paid in
2022 the share price was 1,072p.
of Executive Directors. The
that the outcome is in line with
Remuneration Committee met four
underlying corporate performance
cash. This deferred element of the
award, which is intended to align
REMUNERATION POLICY
times during the year and plans
and shareholder experience over
Executive Directors’ remuneration
The objective of the Group’s
summarises the key elements of
to meet at least three times a year
the year, with the Nichols share
with shareholder value in the
Remuneration Policy is to attract,
the revised remuneration policy
going forward.
I continue to act as Committee
2022 REMUNERATION
Chair, with my colleagues John
OUTCOMES
price movement broadly in line
with the wider AIM market (Nichols
-28%, AIM -31%). Total dividend of
27.7p for the year is up 19.9% on
This is the second year in which
the prior year which is in line with
we operated our Hybrid Incentive
the Group adjusted earnings per
Plan. In the context of positive
share performance of 19.2% and
financial and exceptional personal
market consensus as signposted at
longer term, vests 3 years after the
motivate and retain high quality
for Executive Directors.
start of the performance period
individuals who will contribute fully
(i.e. 2 years after the pay-out of the
to the success of the Group. To
Non-Executive Directors
cash element).
achieve this, the Group provides
The Non-Executive Directors
OUTSTANDING AWARDS
competitive salaries and benefits
signed letters of appointment with
to all employees.
the Group for the provision of
In relation to the LTIP awards
granted to Andrew Milne in 2019,
Executive Directors
Non- Executive Directors’ services,
which may be terminated by
performance during the year, the
the beginning of FY22. The outturn
the Committee reviewed the
The Committee has the following
either party giving three months’
Committee determined that it was
is also in line with the experience
performance conditions after the
principles it follows when
written notice. The Non-Executive
appropriate for awards to pay
of the wider workforce with
year end and determined that
establishing Executive Director
Directors’ fees are determined by
out at 69% of maximum overall.
maximum bonus being awarded.
performance for these awards was
remuneration at Nichols:
the Board.
This incorporates maximum
achievement against the Group
Strategic Objectives which
included completion of the Out
of Home strategic review and the
Operational Change Programme.
Financial performance paid out
Taken as a whole, the Committee
is satisfied that the overall pay
outcomes for the year ended
31 December 2022 are appropriate
and, accordingly, we have not
applied any discretion to this year’s
below the threshold levels. The
awards have, therefore, lapsed.
• Motivating
• Simple
In relation to the 2020 Matching
• Aligned to group strategy
Award deferred into shares, the
• Flexible
share price used for calculating the
• Transparent
number of shares was 1,408p at
• Fair
the time of award. As at
90
91
REMUNERATION COMMITTEE REPORTGOVERNANCE REPORT REMUNERATION POLICY FOR EXECUTIVE DIRECTORS
REMUNERATION POLICY FOR EXECUTIVE DIRECTORS
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
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
Directors.
Supports a high
performance culture
Rewards performance
in the context of
achieving key goals,
and encourages
sustainable
performance
that supports the
achievement of
strategic goals.
A combination of financial and non-
The maximum incentive
For 2023 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
determined based on performance
Incentive Plan is 250% (2022:
be weighted 70%
against this scorecard.
200%) of base salary.
towards financial
For Executive Directors, 60% of
awards will be deferred into shares.
The deferred proportion of awards
will pay out 3 years from the start
of the performance period. The
Committee retains discretion to
adjust the pay-out level of deferred
incentives based on performance
in the deferral period.
The deferred element of the award
will attract dividend equivalents for
the period between assessment
and pay-out.
performance
and 30% towards
Strategic Goals.
The financial
element of the
performance
conditions will act
as an underpin on
pay outs from the
remainder of the
award.
BASE SALARY
Base salary reflects the size of the
Increases to base salary are
Not applicable -
Supports the
recruitment and
retention of Executive
Directors, reflecting
their role, skills, and
role and responsibilities, individual
determined annually by the
although individual
performance (assessed annually)
Committee considering:
performance is
and the skills and experience of the
individual.
•
Individual performance.
considered when
determining base
In setting appropriate salary levels,
• The scope of the role.
salary increases.
experience.
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.
PENSION
Supports recruitment
and retention of
Executive Directors.
Generally, the Company
contributes to a defined
Up to 9% of base salary.
Not applicable
This is in line with wider
contribution pension scheme
workforce. After 10 years’
for the Executive Directors. The
service the wider workforce
contribution can instead be paid
is entitled to 10% of base
in cash (which is excluded from
salary.
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
the following benefits:
not capped but is based on
cost which may change from
year to year.
Supports recruitment
and retention of
Executive Directors.
• Life assurance;
• Directors and Officers Liability
Insurance
• Private medical insurance and
• Company car/car allowance and
fuel
The Committee may determine
that Executive Directors should
receive additional reasonable
benefits if appropriate, considering
typical market practice and practice
throughout the company.
92
93
REMUNERATION COMMITTEE REPORTGOVERNANCE REPORT ANNUAL REPORT ON REMUNERATION IN 2022
The following table summarises the total gross remuneration of the Directors who served during the year to
The Group achieved a strong financial performance in the year with Adjusted Profit Before Tax (“Adjusted PBT”)
31 December 2022.
of £25.0m, up £3.2m (+14.3%) on the prior year result of £21.8m.
Fixed remuneration
Performance related –
Hybrid Incentive Plan
Salary
and fees
£’000
Benefits in
kind2
£’000
Pension3
£’000
Cash
£’000
Deferred
shares4
£’000
Total
2022
£’000
30
18
183
123
275
185
840
565
Performance targets were set at the beginning of FY22 financial year. Based upon financial planning at that time,
Executive Directors would be able to earn 60% of maximum bonus with Adjusted PBT of £25.2m (+£3.4m 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 £26.5m represented a stretch target for the Group and would
result in a maximum pay out of 100%.
Based on actual performance, both the Chief Executive Officer and Chief Financial Officer achieved 55% of the
maximum bonus, acknowledging the Group performance in the period, broadly in line with target.
Total
2021
£’000
1,021
668
1,405
1,689
Personal element outcomes (30% of award)
Executive Directors
A P Milne
D T Rattigan
Non-Executive Directors
P J Nichols
J Nichols1
H M Keays
J A Gittins
332
222
101
22
45
45
20
17
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
102
102
22
45
45
20
40
40
214
202
1,619
1,891
1 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.
2 Benefits consist of the provision of a company car (or cash equivalent), fuel and private healthcare.
3 Pension may be paid as a cash sum in lieu of.
4 Vesting of awards will be 2 years from the date of grant.
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 Strategic Review
relating to year 2 of our
relating to year 2 of Strategic
3 year programme
Change
Shaping the Group’s ESG
Review of UK Packaged supply
Undertaking a strategic review
agenda and year 2 delivery,
chain focussing on delivering
of the Out of Home route to
focusing on scope 1 and scope 2
Strategic Supply partnerships,
market
2025 commitments in the
enabling significant capacity
areas of climate action,
expansion and efficiency
packaging, healthier options
improvements, optimising
and community support
our outbound supply chain and
advancing the Group’s internal
Sales and Operational Planning
process
HYBRID INCENTIVE PLAN
Based on the exceptional performance of both Executive Directors during the year, the Committee have
For the 2022 financial year, the maximum bonus opportunity for the Executive Directors was 200% of base salary.
determined that the maximum potential 30% award in respect of their personal objectives was achieved.
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.
Financial elements outcome (70% of award)
Performance Targets
Actual
Performance
FY21
Adjusted
PBT
Threshold
Target
Maximum
£m Payout
£m Payout
£m Payout
£m Payout
21.8
23.9
25%
25.2
60%
26.5
100% 25.0
55%
Group
Adjusted
Profit
Before Tax1
1 Excluding exceptional items
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95
REMUNERATION COMMITTEE REPORTGOVERNANCE REPORT
OUTSTANDING SHARE AWARDS
ATTENDANCE AT REMUNERATION COMMITTEE MEETINGS
The table below sets out details of all outstanding share awards in respect of current Executive Directors:
There were 4 Remuneration Committee meetings held during the year. The following table sets out individual
Award
Grant date Vesting date
Recipient
Exercise
price
Number of shares
outstanding
Number
of shares
lapsed
2020 SAYE
2020
shareholding
policy
guideline
- matching
award
2021 SAYE
2021 Hybrid
Incentive
Scheme
15 April
2020
15 April
2020
15 April
2023
15 April
2023
Andrew Milne
£7.93
David Rattigan
£7.93
18 December
2020
18 December
2023
Andrew Milne
£0
18 December
2020
18 December
2023
David Rattigan
£0
15 April
2021
23 March
2022
15 April
2024
23 March
2024
Andrew Milne
£10.15
Andrew Milne
23 March
2022
23 March
2024
David Rattigan
£0
£0
1,513
2,269
9,668
7,734
1,064
26,987
17,770
-
-
-
-
-
-
-
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
2022 and our plans for 2023.
Helen Keays
Chair of the Remuneration Committee
28 February 2023
IMPLEMENTATION OF
REMUNERATION POLICY IN 2023
In 2023, the Hybrid Incentive Plan
The maximum bonus opportunity
The performance targets are not
will be assessed against financial
performance (Adjusted Profit
for the Executive Directors will be
250%1 of base salary with 70%
disclosed prospectively as they
are considered to be commercially
Before Tax) and Group Strategic
of the award being based upon
sensitive. Details of performance
Objectives. Threshold performance
financial performance and 30%
against the targets and the
under the profit target will act as
was based on performance against
resulting awards earned will be
an underpin on the remainder of
Group Strategic Objectives. On
disclosed retrospectively at the
the award. The bonus outcome
achievement of the award 60%
end of the performance period.
will range from zero at a threshold
will be deferred into shares to be
performance, up to 100% for a
paid out 3 years from the start of
stretch performance.
the performance period with the
remaining 40% being paid in cash.
1 The Committee reviewed the Hybrid Incentive Plan during the year as it has been in operation for two years. After careful consideration it was
agreed that the Plan remains the right incentive structure with which to incentivise and retain Executive Directors. However, in order to further
increase incentivisation and align more closely with market levels of remuneration, the Committee approved an increase in the maximum
opportunity from 200% to 250% of salary, with a commensurate increase in the level of stretch in the targets.
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97
REMUNERATION COMMITTEE REPORTGOVERNANCE REPORT
NOMINATION
COMMITTEE
REPORT
JOH N
- NICHOLS -
NON-EXECUTIVE CHAIRMAN
• Keep under review the
• Review annually the time
Helen Keays and John Gittins led
company experience, having spent
Board’s structure, size and
required from Non-Executive
this process and were assisted
the majority of her executive
composition, including diversity
Directors.
and the balance of independent
and non-independent
Non-Executive Directors, and
make recommendations to the
Board with regard to any
changes required.
• Make recommendations to
the Board on the re-election by
Shareholders of Directors under
the annual re-election
provisions of the QCA Code
or the retirement by rotation
• Ensure plans are in place for
provisions in the Company’s
orderly succession to Board
articles of association.
and senior management
positions, and oversee the
The Committee reviews its Terms
development of a diverse
of Reference annually and these
by the Company’s People &
career at Colgate Palmolive and
Sustainability Director. The brief
Tesco and, more recently, from a
was to find a candidate who had
number of Non-Executive board
relevant consumer experience
roles where she is either the
and had strong experience of
Senior Independent Non-Executive
being a senior board director and
Director or Chair of a committee,
the required skills necessary to
and I am very confident will be of
support the ongoing delivery of
great value to the Group.
the Group’s strategy. The Group
engaged an external recruitment
consultant to assist the Committee
in its search.
pipeline for succession.
were last reviewed in December
Helen and John met with a number
John 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
• Keep under review the
2022.
as a result of my significant
shareholding and previous
executive role.
The Nomination Committee
met three times in 2022 and all
Committee members were present
leadership needs of the
ACTIVITIES DURING THE YEAR
organisation, both executive
and non-executive, with a view
to ensuring the continued ability
of the organisation to compete
effectively in the marketplace.
During the year, the Nomination
Committee discharged its
responsibilities by considering
succession planning as a
whole for the Board and senior
at every meeting.
• Be responsible for identifying
management.
ROLE OF THE NOMINATION
COMMITTEE
and nominating for the approval
of the Board, candidates to
Board vacancies as and when
APPOINTMENT OF
NON-EXECUTIVE CHAIR
The main duties of the Committee
they arise.
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:
• Before any appointment is
made by the Board, evaluate
the balance of skills, knowledge
experience and diversity on the
Board.
The Committee was made aware
in April 2022 that I wished to
stand down as Chair of the
Company and the market was
advised accordingly and a search
commenced for a new Chair.
of candidates and shortlisted
Non-Executive Chairman
two to meet with the Board as a
28 February 2023
whole and after due consideration
and discussion Elizabeth (Liz)
McMeikan was approved as the
Chair designate.
Liz initially joined the Group as
a Non-Executive Director on
1 February 2023 and will be
appointed Non-Executive Chair on
26 April 2023 at the conclusion of
the 2023 AGM where I will stand
down as Non-Executive Chair
but remain on the Board as the
Nichols’ family second board seat.
Liz has a wealth of consumer-
focused public and private
98
99
NOMINATION COMMITTEE REPORTGOVERNANCE REPORT
DIRECTORS’
REPORT
Nichols plc (“the Company”) is a
FINANCIAL RESULTS AND
The roles and biographies of the
Summary of Directors’ Interests in the Company
public limited company, registered
DIVIDENDS
in England, and is listed on AIM of
the London Stock Exchange. The
Directors present their report for
the year ended 31 December 2022,
in accordance with section 415
of the Companies Act 2006. The
Corporate Governance Statement
set out on pages 78 to 85 forms
part of this report.
As permitted by Paragraph 1A
of Schedule 7 to the Large and
The Group’s Profit Before Taxation
from continuing operations for
the year ended 31 December 2022
amounted to £25.0m
(2021: loss: £17.7m). The Directors
Directors in office as at the date of
this report are set out on pages 76
to 77. Details of their interests in
ordinary shares of the Company as
at 31 December 2022 are shown in
the table opposite.
will recommend a dividend of
Details of Directors’ remuneration,
15.3p at the 2023 Annual General
including pension arrangements,
Meeting to be held on 26 April
service agreements and Long-
2023 the (“2023 AGM”).
Term Incentive Plan Awards are
ARTICLES OF ASSOCIATION
provided in the Annual Report
on Remuneration within the
Medium-sized Companies and
The rules governing the
Remuneration Committee Report
Groups (Accounts and Reports)
appointment and replacement
on pages 90 to 97.
Regulations 2008 certain matters
of Directors are set out in the
which are required to be disclosed
Company’s Articles of Association.
in the Report of the Directors have
The Articles of Association may be
been omitted as they are included
amended by a special resolution
in the Strategic Report on pages
of the Company’s shareholders. A
12 to 73. These matters relate to a
copy of the Articles of Association
full review of the performance of
can be found on the Company’s
the Company and its subsidiaries
website, nicholsplc.co.uk.
(together “the Group”) for the year,
current trading and future outlook.
DIRECTORS AND THEIR
INTERESTS
The statement by the Directors
in performance of their statutory
duties in accordance with section
172(1) Companies Act 2006 is
provided on pages 68 to 73.
PRINCIPAL ACTIVITIES
The Directors who have held office
during the year ended
31 December 2022 and to the date
of this report are as follows:
EXECUTIVE DIRECTORS
Nichols plc is an international soft
drinks business with sales in over
Andrew Milne
David Rattigan
73 countries, selling products
NON-EXECUTIVE DIRECTORS
in both the Still and Carbonate
categories.
John Nichols, Chairman
John Gittins
Helen Keays
James Nichols
Director
P J Nichols
A P Milne
D T Rattigan
J A Gittins
H M Keays
J E Nichols
Shares held as at
2022
Shares held as at
1 January 2022
movement
31 December 2022
2,000,000
12,446
1,659
1,280
-
835,476
-
3,152
3,806
-
-
-
2,000,000
15,598
5,465
1,280
-
835,478
RELATIONSHIP AGREEMENT
share capital of the Company, they
and abilities of the applicants.
On 22 July 2020, the Company
entered into a Relationship
Agreement with the Nichols Family.
shall be entitled (but not required)
In the event of employees
to appoint one further Non-
becoming disabled, every effort is
Executive Director to the Board.
made to ensure their continued
The Nichols Family consists of
In accordance with the terms
employment.
certain members of the immediate
of the Relationship Agreement,
Management continuously consult
and extended family of the
John Nichols, the Chairman of the
with employees and keep them
Company’s founder John Noel
Company and James Nichols, Non-
informed on matters of current
Nichols. Members of the Nichols
Executive Director are the Family
interest and concern to the
Family hold in aggregate an
Representative Directors.
business. Further information
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 whilst also ensuring that
the Company is capable of carrying
independently. In accordance
with the terms of the Relationship
Agreement, so long as the Nichols
Family retain (i) an aggregate
interest of equal to or greater than
FINANCIAL RISK MANAGEMENT
OBJECTIVES AND POLICIES
Business risks and uncertainties
are included within the Risk
regarding employment at Nichols
is provided on page 71 of the
Strategic Report.
CUSTOMERS AND SUPPLIERS
Management section on pages 62
Detail of how the Board has
to 67 and financial risks are set out
engaged with its customers
in note 2 to the accounts.
and suppliers is included in the
Strategic Report on page 71.
POLITICAL DONATIONS
Detail of how the Board has
engaged with its employees is
The Company does not make any
included in the Strategic Report on
political donations and does not
page 71.
incur any political expenditure.
on, at all times, its business
EMPLOYEES
20 per cent in the issued ordinary
The Group’s policy is to recruit and
SHARE CAPITAL
share capital of the Company, they
promote on the basis of aptitude
shall be entitled (but not required)
and ability without discrimination
to appoint one Non-Executive
of any kind. Applications for
Director; and (ii) an aggregate
employment by disabled people
interest of equal to or greater than
are always fully considered
30 per cent in the issued ordinary
bearing in mind the qualification
Details of the Company’s share
capital, including changes during
the year, are set out in note 28 to
the Accounts. As at 31 December
2022, the Company’s share capital
100
101
DIRECTORS’ REPORTGOVERNANCE REPORT consisted of 36,968,772 Ordinary
At the Company’s AGM held on
As at 31 December 2022, the ESOT
the Directors have considered
and the other principal risks that
DIRECTORS’ INDEMNITY
Shares of ten pence each, of which
27 April 2022, the Group was
held 4,101 Nichols plc Ordinary 10
the current financial position of
the Group is exposed to. At the
493,150 are held in treasury and
generally and unconditionally
pence shares (2021: 4,889).
accordingly have no voting rights.
authorised by its shareholders to
make market purchases (within
RESEARCH AND DEVELOPMENT
the Group, its principal risks and
31 December 2022 the Group
uncertainties, the potential impact
had cash and cash equivalents
of further Covid-19 restrictions
of £56.3m with no external bank
the meaning of section 693 of
The Group undertakes research
in addition to a continued cost of
borrowings.
The Group has agreed to
indemnify its Directors against
third party claims which may be
brought against them and has in
place a Directors’ and Officers’
Ordinary Shareholders are
entitled to receive notice of, and to
attend and speak at, any general
meeting of the Company. Every
shareholder present in person or
the Companies Act 2006) of up
and development activities in
to a maximum of 3,696,877 of its
order to develop its range of new
Ordinary Shares.
and existing products. Expenditure
during the year on research and
development amounted to £0.2m
(2021: £0.3m).
by proxy (or being a corporation
During 2022, the Company
represented by a duly authorised
completed its share buyback
representative) shall have one vote
programme, the purpose of which
living crisis. The review performed
considers severe but plausible
downside scenarios that could
reasonably arise within the period.
On the basis of these reviews, the
insurance policy.
Directors consider the Group has
adequate resources to continue
ANNUAL GENERAL MEETING
in operational existence for the
The 2023 AGM of the Company
The estimated impacts of Covid-19
foreseeable future (being at least
will be held at Nichols plc, Laurel
restrictions are primarily based
one year following the date of
House, 5 Woodlands Park,
on a show of hands, and on a poll
is to meet future obligations
ENVIRONMENT AND
around our OoH market and the
approval of the Annual Report)
Ashton Road, Newton-le-Willows,
shall have one vote for every share
under the Company’s SAYE
GREENHOUSE GAS EMISSIONS
potential for future lockdowns
and, accordingly, consider it
Merseyside, WA12 OHH on
rights to receive dividends.
In accordance with The Companies
of which he or she is the holder
Option Scheme and/or Long Term
or authorised representative. The
Incentive Plan. In the period the
Notice of Annual General Meeting
Company repurchased 385,486
specifies deadlines for exercising
Ordinary Shares under this
voting rights and appointing a
authority, which is due to expire
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
at the AGM to be held on 26 April
2023. These Ordinary Shares are
held in Treasury and accordingly
do not have any voting rights or
a holding or on the transfer of the
In exercising its authority in
Ordinary Shares.
The Board believes that being
permitted to allot shares within
the limits set out in the resolution
without the delay and expense of a
general meeting gives the ability to
take advantage of circumstances
that may arise during the year.
respect of the purchase and
cancellation of the Group’s
shares, the Board takes as its
major criterion the effect of such
purchases on future expected
earnings per share. No purchase is
made if the effect is likely to lead
to deterioration in future expected
earnings per share growth.
AUTHORITY FOR THE COMPANY
TO PURCHASE ITS OWN SHARES
SHARE OPTIONS
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
immediately upon completion of
the purchase.
The Company operates a Save-As-
You-Earn Share Option scheme. In
conjunction with this, the Company
will use some of the shares held
in Treasury to satisfy future
exercises of options under the
scheme. The Company has, in the
past, also made donations to an
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.
(Directors’ Report) and Limited
Liability Partnerships (Energy and
Carbon Report) Regulations 2018,
we have prepared a Streamlined
Energy & Carbon Report (SECR) for
the financial year of 2022. More
information is provided on pages
52 to 53 of the Strategic Report
and on our website,
nicholsplc.co.uk.
GOING CONCERN
The Group’s business activities,
together with the factors likely
to affect its future development,
performance and position are set
out in the Strategic Report. The
financial position of the Group is
described in the Chief Financial
Officer’s Report on pages 56 to 61.
Employee Share Ownership Trust
In assessing the appropriateness
(“the ESOT”) to enable shares to
of adopting the going concern
be bought in the market to satisfy
basis in preparing the Annual
the demand from option holders.
Report and financial statements,
within the hospitality industry. Our
appropriate to adopt the going
26 April 2023 at 11:00am. The
modelling has sensitised trading
concern basis in preparing the
notice convening the meeting,
within this market to reflect varying
accounts.
degrees of lockdowns with the
most severe scenario assuming
that some restrictions will return
INFORMATION TO THE
INDEPENDENT AUDITORS
together with details of the
business to be considered and
explanatory notes for each
resolution, is set out on pages 170
during the remainder of 2023 and
Each of the Directors who are
to 171. Copies of the notice will be
the start of 2024.
Directors at the time when this
distributed to shareholders who
Directors’ Report is approved have
have elected to receive hard copies
During the year the Group
experienced a period of significant
confirmed that:
inflation and a cost of living
• so far as each of the Directors
crisis against which a number of
is aware there is no relevant
mitigation actions were introduced.
audit information of which the
These are largely evidenced in the
Company’s auditor is unaware;
results announced. Our modelling
and
of shareholder information. The
voting on all resolutions at the
2023 AGM will be via a poll and not
on a show of hands in accordance
with best practice.
has sensitised the impacts of
Russia’s continued invasion
of Ukraine, in particular their
impact on global supply chains
and macroeconomic inflationary
factors.
• the Directors have taken all
steps that they ought to have
taken as Directors in order to
make themselves aware of any
relevant audit information and
to establish that the auditors
David Rattigan
In addition to the further impacts
are aware of that information.
Secretary
of Covid-19, alternative scenarios,
including the potential impact of
key principal risks from a financial
RESOLUTION TO RE-APPOINT
28 February 2023
INDEPENDENT AUDITORS
Laurel House, Woodlands Park,
and operational perspective,
In accordance with Section 489
have been modelled with the
of the Companies Act 2006, a
Ashton Road, Newton-le-Willows,
WA12 0HH.
resulting implications considered.
resolution will be proposed at the
Registered in England and Wales
In all cases, the business model
2023 AGM that BDO LLP be re-
No. 00238303.
remained robust. The Group’s
appointed auditors.
diversified business model and
strong balance sheet provide
resilience against these factors
102
103
DIRECTORS’ REPORTGOVERNANCE REPORT
DIRECTORS’
REPORT
DIRECTORS’ RESPONSIBILITIES STATEMENT
The Directors are responsible for preparing the annual report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
Directors are required to prepare the group and company financial statements in accordance with UK adopted
international accounting standards. Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of affairs of the group and company and
of the profit or loss of the group for that period.
In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with UK adopted international accounting standards
subject to any material departures disclosed and explained in the financial statements;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the group and the company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the company’s transactions and disclose with reasonable accuracy at any time the financial position of the
company and enable them to ensure that the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available
on a website. Financial statements are published on the company’s website in accordance with legislation in
the United Kingdom governing the preparation and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity of the company’s website is the responsibility
of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the financial statements
contained therein.
Andrew Milne
David Rattigan
Chief Executive Officer
Chief Financial Officer
28 February 2023
28 February 2023
104
105
DIRECTORS’ REPORTGOVERNANCE REPORT
F INANC IAL
STATEMEN TS
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
Consolidated Statement of Changes in Equity
Statement of Changes in Equity
Notes to the Financial Statements
Unaudited Five Year Summary
Notice of Annual General Meeting
General Notes
Financial Calendar
108
118
118
119
120
121
122
123
124
167
168
172
174
106
106
106
107
107
107
CONTENTSFINANCIAL STATEMENTS INDEPENDENT
AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT TO THE
statements section of our report. We believe that the
Based on the work we have performed, we have not
for a period of at least twelve months from when
MEMBERS OF NICHOLS PLC
audit evidence we have obtained is sufficient and
identified any material uncertainties relating to events
the financial statements are authorised for issue.
appropriate to provide a basis for our opinion.
or conditions that, individually or collectively, may
Our responsibilities and the responsibilities of the
OPINION ON THE FINANCIAL STATEMENTS
In our opinion:
• the financial statements give a true and fair view of
the state of the Group’s and of the Parent
Company’s affairs as at 31 December 2022 and of
the Group’s profit for the year then ended;
Independence
We remain independent of the Group and the Parent
Company in accordance with the ethical requirements
that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical
Standard as applied to listed entities, and we have
• the Group financial statements have been properly
fulfilled our other ethical responsibilities in accordance
prepared in accordance with UK adopted
international accounting standards;
• the Parent Company financial statements have
with these requirements.
CONCLUSIONS RELATING TO GOING CONCERN
been properly prepared in accordance with UK
In auditing the financial statements, we have
adopted international accounting standards and
concluded that the Directors’ use of the going concern
cast significant doubt on the Group and the Parent
Directors with respect to going concern are described
Company’s ability to continue as a going concern
in the relevant sections of this report.
OVERVIEW
Coverage
100% (2021: 100%) of Group profit before tax (2021: Group loss before tax)
100% (2021: 100%) of Group revenue
99%0 (2021: 99%) of Group total assets
Key audit
matters
Brand Support Arrangements
Goodwill and Intangible Asset Impairment*
2022
2021
as applied in accordance with the provisions of the
basis of accounting in the preparation of the financial
Impairment - Brands with indefinite lives and Out of Home assets
Companies Act 2006; and
• the financial statements have been prepared in
accordance with the requirements of the
Companies Act 2006.
statements is appropriate. Our evaluation of the
Directors’ assessment of the Group and the Parent
ability to continue to adopt the going concern basis of
accounting included:
We have audited the financial statements of Nichols
plc (the ‘Parent Company’) and its subsidiaries (the
‘Group’) for the year ended 31 December 2022 which
comprise the consolidated income statement, the
consolidated statement of comprehensive income,
• 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;
*Goodwill was fully impaired in the prior year, therefore the Key Audit Matter titled ‘Goodwill and Intangible Asset
Impairment’ is no longer applicable for the current year.
Materiality
Group financial statements as a whole
£1.1m (2021: £1.0m) based on approximately 5% of profit before tax after adjusting for
exceptional items (2021: based on 5% of loss before tax after adjusting for exceptional items)
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
these components were performed by the Group
Our Group audit was scoped by obtaining an
engagement team.
the Group and Parent company statement of financial
• Considering the appropriateness and accuracy of
understanding of the Group and its environment,
The remaining components are dormant and
position, the Group and Parent company statement of
these forecasts and robustly challenging their
including the Group’s system of internal control, and
therefore were considered non-significant to the
cash flows, the Group and Parent company statement
inputs using our knowledge of the business and
assessing the risks of material misstatement in the
Group.
of changes in equity and notes to the financial
the sector and wider commentary available from
statements, including a summary of significant
competitors and peers; and
financial statements. We also addressed the risk of
management override of internal controls, including
Key audit matters
accounting policies. The financial reporting framework
that has been applied in their preparation is applicable
law and UK adopted international accounting
standards and, as regards the Parent Company
financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities
under those standards are further described in the
Auditor’s responsibilities for the audit of the financial
• 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 the Directors
would take under these scenarios; and
• Reviewing the going concern disclosures, and
assessing their consistency with the Director’s
forecasts.
assessing whether there was evidence of bias by the
Key audit matters are those matters that, in our
Directors that may have represented a risk of material
professional judgement, were of most significance in
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.
our audit of the financial statements of the current
period and include the most significant assessed
risks of material misstatement (whether or not due to
fraud) that we identified, including those which had
the greatest effect on: the overall audit strategy, the
allocation of resources in the audit, and directing the
Our Group audit scope focused on the Group’s trading
efforts of the engagement team. These matters were
entities, being Vimto Out of Home Limited and the
addressed in the context of our audit of the financial
Parent Company which were considered to be the
statements as a whole, and in forming our opinion
significant components. Full scope audits on
thereon, and we do not provide a separate opinion on
these matters.
108
108
108
109
109
109
INDEPENDENT AUDITOR’S REPORTFINANCIAL STATEMENTS
BRAND SUPPORT ARRANGEMENTS
(accounting policy in note 2)
Key Audit Matter
Consistent with industry practice, the Group incurs
understanding of the contractual arrangements
How the scope of our audit addressed the key
audit matter
significant costs or rebates to customers in the
themselves as well as complete and accurate source
We undertook the following audit procedures in
support and development of the Group’s brands.
data. Estimates are based on past history and the level
relation to brand support arrangements:
These include short term promotional discounts, long
of recent sales made to each customer.
term discounts and rebates.
Whilst the majority of costs and rebates incurred
relevant controls related to the approval of brand
a sample of live and completed brand
• We tested the operating effectiveness of the
• We performed detailed cut-off testing by selecting
The classification of these costs within the income
on these arrangements have been settled at 31
support arrangement agreements before inception
arrangements, agreeing back to supporting
statement is dependent upon the type of arrangement
December 2022, management judgement is required
and going live on the system;
with the customer. As the majority of these costs and
in determining the level of closing accrual required
rebates are recognised as a deduction to revenue
at the year end for promotions and brand support
we consider there to be a significant risk concerning
campaigns that either span two financial years or
the appropriate application of accounting standards,
where the costs or rebates have not been fully settled
particularly in respect of the Group’s measurement
by the year end date.
of the fair value of variable consideration in revenue
transactions as well as the Group’s accounting for
arrangements where cash consideration is given by
the Group to the customer.
As a result of the level of estimation and judgements
applied in this area, as well as management being in a
position to be able to override controls and potentially
manipulate profits by changing accounting estimates
As described in note 2, the estimation of the fair value
and judgements, we consider there to be a risk of
of variable consideration requires a level of estimation
fraud within this area and therefore considered brand
• We challenged the judgements and estimates made
and judgement to be applied by management.
support arrangements to be a key audit matter.
by management in determining the year end
Judgement is required in determining the period over
which these costs and rebates should be recognised
for these arrangements, requiring both a detailed
contractual terms and performing a recalculation
to verify that brand support arrangements were
recorded in the correct period;
• We assessed whether the accounting policy for
brand support arrangements complied with UK
adopted international accounting standards.
• We tested manual journal postings to
• We performed detailed testing over a sample of
brand support arrangements charged to revenue
and to costs in the year through verification to
revenue throughout the year back to supporting
documentation for evidence of misstatement or
manipulation;
the underlying agreement and recalculation of the
• We selected a sample of post year end credit notes
amounts recognised as a cost or rebate and the
and checked that, where audit evidence
value of the liability accrued.
demonstrated that the credit note related to
the audit period, that these credit notes were
appropriately provided for in the financial
statements; and
accrual through:
• Reviewing the contractual terms within the
brand support agreements
• We reviewed the year end liability for completeness
and accuracy by reviewing arrangements in place
for key customers, generating an expectation as to
• assessing the appropriateness of the inputs
the year end liability and comparing to that
used such as sales data by verifying to
recorded by the Group.
supporting documentation and
• performing a recalculation of the year end
accrual for a sample of promotions.
Key observations:
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.
110
110
110
111
111
111
INDEPENDENT AUDITOR’S REPORTFINANCIAL STATEMENTS
IMPAIRMENT - BRANDS WITH INDEFINITE LIVES AND OUT OF HOME ASSETS
(note 14, note 11 and accounting policy in note 2)
Key Audit Matter
The Group has significant tangible assets and
operates within the hospitality industry which has
How the scope of our audit addressed the key
audit matter
intangible assets including brands with indefinite
been impacted significantly over the past 2 years
Our audit procedures to address this risk included but
lives. There is a risk that the underlying results of the
by the Covid-19 pandemic and more recently, rising
were not limited to:
separately identified cash generating units (CGUs)
inflation and cost of living pressures which has led to
do not support the carrying value of indefinite life
a Strategic Review commencing into the Out of Home
intangible assets and other assets held by one CGU
business.
(being the Out of Home business).
As such there is inherent uncertainty within these
Management performed a full impairment assessment
forecasts arising from the changing industry and
to determine if the carrying value of the indefinite
economic conditions and thus significant management
life intangible assets is supported. The assessment
judgement and assumptions are required.
resulted in an impairment that was greater than the
forecasts arising from the changing industry and
indefinite life intangible assets carrying value and
economic conditions and thus significant management
therefore the impairment charge was allocated on a
judgement and assumptions are required.
pro-rata basis across the assets within the CGU.
An impairment charge was recognised of £4.8m in
relation to intangible assets and £3.9m in relation to
property, plant and equipment.
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
• Discount rates.
We considered this to be a key audit matter as the
value of the indefinite life intangible assets and
tangible assets is supported by forecasts of future
cash flows of the business. The Out of Home business
• We evaluated and challenged management’s
• reviewing key estimates employed by the Directors
impairment models by:
• challenging management’s assessment of the
Cash Generating Units (CGUs) being assessed for
impairment with reference to IAS 36 and
by comparing the identified CGUs to internal
within the cash flow forecasts and challenging the
rationale for the assumptions utilised by using our
knowledge of the business, the sector and
wider commentary available from competitors and
peers; and
management reporting demonstrating how the
• performing sensitivity analysis over key
cash flows are monitored;
assumptions to understand the impact of
reasonable changes in assumptions on the
impairment models and conclusions.
• reviewing management’s workings for mechanical
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 our internal valuation
experts;
• checking historical financial information against
budget to assess accuracy of the budgeting process
and preparation of cash flow forecasts;
• checking the consistency of the forecasts used in
the impairment review to those prepared for going
concern purposes;
Key observations:
We found the judgements and assumptions adopted by management in the impairment assessment of the
carrying value of tangible assets, intangible assets with indefinite lives and other intangibles to be reasonable.
112
112
112
113
113
113
INDEPENDENT AUDITOR’S REPORTFINANCIAL STATEMENTS
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
be the magnitude by which misstatements, including
the particular circumstances of their occurrence, when
omissions, could influence the economic decisions of
evaluating their effect on the financial statements as
reasonable users that are taken on the basis of the
a 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
Basis for
determining
materiality
Group financial statements
Parent Company financial statements
2022
2021
2022
2021
£1,100,000
£1,000,000
£430,000
£620,000
Approximately 5%
5% of loss before
5% of profit before
5% of profit before
of profit before tax
tax after adjusting
tax after adjusting
tax after adjusting
after adjusting for
for exceptional
for exceptional
for exceptional
exceptional items.
items.
items.
items.
Rationale for the
Adjusted profit
Adjusted loss
Adjusted profit
Adjusted profit
benchmark applied
before tax is
before tax is
before tax is
before tax is
determined to be
determined to be
determined to be
determined to be
a stable basis of
a stable basis of
a stable basis of
a stable basis of
assessing business
assessing business
assessing business
assessing business
performance and
performance and
performance and
performance and
is considered to be
is considered to be
is considered to be
is considered to be
the most significant
the most significant
the most significant
the most significant
determinant of
determinant of
determinant of
determinant of
performance
for the users
performance
for the users
performance for
performance for
the users of the
the users of the
of the financial
of the financial
financial statements
financial statements
statements.
statements.
£825,000
£750,000
£322,000
£465,000
75% of materiality
75% of materiality
This was considered appropriate based
This was considered appropriate based
on audit knowledge of the control
on audit knowledge of the control
environment, historic misstatement
environment and historic misstatement
levels, and given the trade of the Group is
levels.
contained in the Parent Company and one
other component which minimises the risk
of additional unadjusted misstatements
across a number of components.
Performance
materiality
Basis for
determining
performance
materiality
component, subsidiary entity Vimto Out of Home. We
set materiality for this component at 65%
(2021: 62%) of Group materiality based on its size in
relation to the Group and our assessment of the risk of
material misstatement of the component. Component
• 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
materiality was £720,000 (2021: £620,000). In the audit
• the Strategic report and the Directors’ report have
of the component, we further applied performance
been prepared in accordance with applicable legal
materiality levels of 75% (2021: 75%) of the component
requirements.
materiality to our testing to ensure that the risk
of errors exceeding component materiality was
appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would
report to them all individual audit differences in excess
of £22,000 (2021: £20,000). We also agreed to report
differences below this threshold that, in our view,
warranted reporting on qualitative grounds.
OTHER INFORMATION
The Directors are responsible for the other
information. The other information comprises the
information included in the annual report other than
the financial statements and our auditor’s report
thereon. Our opinion on the financial statements does
not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do
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
Matters on which we are required to report by
exception
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept
by the Parent Company, or returns adequate for
our audit have not been received from branches
not visited by us; or
• the Parent Company financial statements are not in
agreement with the accounting records and
not express any form of assurance conclusion thereon.
returns; or
Our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements
or our knowledge obtained in the course of the audit,
or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent
material misstatements, we are required to determine
• certain disclosures of Directors’ remuneration
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit.
RESPONSIBILITIES OF DIRECTORS
whether this gives rise to a material misstatement in
As explained more fully in the Directors’
the financial statements themselves. If, based on the
responsibilities statement, the Directors are
work we have performed, we conclude that there is a
responsible for the preparation of the financial
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
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.
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.
In preparing the financial statements, the Directors
are responsible for assessing the Group’s and the
Parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related
to going concern and using the going concern basis
114
114
114
115
115
115
INDEPENDENT AUDITOR’S REPORTFINANCIAL STATEMENTS
of accounting unless the Directors either intend to
Our procedures in response to the above included:
team members and remained alert to any indications
USE OF OUR REPORT
liquidate the Group or the Parent Company or to
cease operations, or have no realistic alternative but
to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF
THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of
these financial statements.
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities,
including fraud is detailed below:
We obtained an understanding of the legal and
regulatory frameworks that are applicable to the
Group and determined that the most significant
frameworks which are directly relevant to specific
assertions in the financial statements are those
that relate to the reporting framework (UK adopted
international accounting standards and the
Companies Act 2006) and the relevant tax compliance
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,
environmental, occupational health and safety and
data protection. We discussed the matters above
among the audit engagement team and relevant
internal specialists including tax and IT specialists
and our internal valuation experts regarding non-
compliance with laws, regulations and where fraud
might occur in the financial statements.
• We reviewed the financial statement disclosures,
testing to supporting documentation to assess
compliance with the provisions with the relevant
laws and regulations listed above. We assessed
whether any accounting entries and disclosure
were required as a consequence of compliance
with the Companies Act.
• We obtained an understanding of the control
environment in monitoring compliance with laws
and regulations and enquiring of management,
the Audit Committee and those responsible for
legal and compliance procedures concerning actual
and potential litigation and claims and non
compliance with laws and regulations. We
corroborated our enquiries through our review
of Board minutes, and any correspondence
received from regulatory bodies.
• We assessed the susceptibility of the financial
statements to material misstatement, including
fraud and evaluated management’s incentives
and opportunities for fraudulent manipulation
of the financial statements and considered these
areas to be management override of controls,
manual journal adjustments to revenue and
revenue recognition in relation to the cut-off of
international sales
• We performed audit procedures to address each
identified fraud risk. These procedures included
but were not limited to:
• Testing manual journals posted to revenue
accounts back to supporting documentation;
• Testing a sample of revenue recognised for
international sales either side of the year
end to supporting documentation to check
recognition in the correct period
•
In response to risk of management override
of controls, testing a sample of journals entries
which met a defined risk criteria to supporting
documentation and challenging the
assumptions made by management in their
significant accounting estimates in particular
in relation to the estimation of brand support
arrangements and impairment of tangible and
intangible assets, which are key audit matters.
We also communicated relevant identified laws and
regulations and potential fraud risks to all engagement
of fraud or non-compliance with laws and regulations
throughout the audit.
This report is made solely to the Parent Company’s
members, as a body, in accordance with Chapter 3 of
Our audit procedures were designed to respond
Part 16 of the Companies Act 2006. Our audit work
to risks of material misstatement in the financial
has been undertaken so that we might state to the
statements, recognising that the risk of not detecting a
Parent Company’s members those matters we are
material misstatement due to fraud is higher than the
required to state to them in an auditor’s report and
risk of not detecting one resulting from error, as fraud
for no other purpose. To the fullest extent permitted
may involve deliberate concealment by, for example,
by law, we do not accept or assume responsibility
forgery, misrepresentations or through collusion.
to anyone other than the Parent Company and the
There are inherent limitations in the audit procedures
Parent Company’s members as a body, for our audit
performed and the further removed non-compliance
work, for this report, or for the opinions we have
with laws and regulations is from the events and
formed.
transactions 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.
Stuart Wood (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor,
Manchester, UK
28 February 2023
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
OUR
ADVISORS
AUDITORS
BDO LLP,
SOLICITORS
DLA Piper,
3 Hardman Street,
101 Barbirolli Square,
Spinningfields,
Manchester,
M3 3AT.
Manchester,
M2 3DL.
BANKERS
STOCKBROKERS &
The Royal Bank of Scotland PLC,
NOMINATED ADVISOR
1 Spinningfields Square,
Singer Capital Markets,
Manchester,
M3 3AP.
West One Wellington Street,
Leeds,
LS1 1BA.
REGISTRARS
Link Group,
10th Floor,
Central Square,
29 Wellington Street,
Leeds,
LS1 4DL.
REGISTERED OFFICE
Laurel House,
Woodlands Park,
Ashton Road,
Newton-le-Willows,
WA12 0HH.
REGISTERED NUMBER
00238303.
116
116
116
117
117
117
INDEPENDENT AUDITOR’S REPORTFINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT - YEAR ENDED 31 DECEMBER 2022
STATEMENT OF FINANCIAL POSITION - YEAR ENDED 31 DECEMBER 2022
2022
2021
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
164,926
(93,905)
71,021
(10,677)
-
-
-
-
164,926
144,328
(93,905)
(79,153)
71,021
(10,677)
65,175
(9,129)
- 144,328
-
-
-
(79,153)
65,175
(9,129)
(35,742)
(11,146)
(46,888)
(34,124)
(39,477)
(73,601)
5
6
6
8
24,602
(11,146)
13,456
21,922
(39,477)
(17,555)
514
(134)
-
-
514
(134)
57
(158)
-
-
57
(158)
24,982
(11,146)
13,836
21,821
(39,477)
(17,656)
(4,757)
2,556
(2,201)
(4,783)
271
(4,512)
20,225
(8,590)
11,635
17,038
(39,206)
(22,168)
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
55.38p
55.32p
31.86p
46.15p
(60.04p)
31.82p
46.09p
(60.04p)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME -
YEAR ENDED 31 DECEMBER 2022
Profit/(loss) 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 (expense)/income for the year
2022
£’000
2021
£’000
11,635
(22,168)
(2,071)
459
(1,612)
4,083
(962)
3,121
Total comprehensive income/(expense) attributable to equity shareholders
10,023
(19,047)
118
118
Assets
Non-current assets
Property, plant and equipment
Investments
Intangibles
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
Parent
Notes
2022
£’000
2021
£’000
2022
£’000
2021
£’000
11
13
14
26
16
17
18
19
20
19
15
35,988
86,345
14
28
10,958
17,099
-
88
4,125
15,171
10,432
39,561
695
-
5,546
5,276
27,921
9,706
36,124
743
5,755
16,566
88
4,125
26,534
5,868
45,373
708
56,296
56,674
48,248
106,984
103,247
100,197
6,327
16,566
122
5,276
28,291
6,070
40,407
756
38,767
86,000
122,155
131,168
126,731
114,291
30,711
-
30,711
2,038
670
2,708
33,419
88,736
3,697
3,255
1,209
1,280
79,295
88,736
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
75,414
-
75,414
1,553
1,000
2,553
77,967
48,764
3,697
3,255
1,209
2,055
38,548
48,764
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
The Parent Company reported a profit for the year ended 31 December 2022 of £7,245,000 (2021: £6,932,000).
The financial statements on pages 118 to 166 were approved by the Board of Directors on 28 February 2023 and
were signed on its behalf by:
P J Nichols
Chairman
Registered number 00238303
119
CONSOLIDATED STATEMENT OF CASH FLOWS - YEAR ENDED 31 DECEMBER 2022
PARENT COMPANY STATEMENT OF CASH FLOWS - YEAR ENDED 31 DECEMBER 2022
Notes
2022
£’000
2022
£’000
2021
£’000
2021
£’000
Parent
Notes
2022
£’000
2022
£’000
2021
£’000
2021
£’000
11,635
(22,168)
Profit for the financial year
7,245
6,932
Cash flows from operating activities
Group
Cash flows from operating activities
Profit/(loss) for the financial year
Adjustments for:
Depreciation and amortisation
Impairment losses on goodwill, intangible and fixed assets
Loss on sale of property, plant and equipment
Finance income
Finance expense
Taxation expense recognised in the income statement
Increase in inventories
Increase in trade and other receivables
Increase in trade and other payables
4
6
6
4,521
8,714
186
(514)
134
2,201
(726)
(4,100)
2,963
(Decrease)/increase in provisions
20
(4,242)
Change in pension obligations and employee benefits
Fair value loss/(gain) on derivative financial instruments
22
(920)
662
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
Payment of contingent consideration
Net cash used in investing activities
Cash flows from financing activities
Payment of lease liabilities
Purchase of own shares
Dividends paid
Net cash used in financing activities
514
-
(1,245)
(71)
(995)
(5,534)
(9,383)
21
24
9
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
18
4,969
36,244
63
(57)
158
4,512
(3,785)
(6,804)
7,429
4,242
(846)
(178)
57
2
(1,239)
(67)
45,947
23,779
(3,878)
19,901
8,879
20,514
(4,178)
16,336
(802)
(1,247)
(1,189)
(1,217)
(6,868)
(15,912)
(378)
56,674
56,296
(9,274)
9,380
47,294
56,674
Adjustments for:
Depreciation and amortisation
Loss on sale of property, plant and equipment
Finance income
Finance expense
Taxation expense recognised in the income statement
Decrease/(increase) in inventories
Increase in trade and other receivables
Increase in trade and other payables
(Decrease)/increase in provisions
Change in pension obligations and employee benefits
Fair value loss/(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
1,368
-
(514)
106
1,887
202
(5,630)
28,953
(4,242)
(920)
662
1,585
46
(57)
126
2,228
(2,544)
(4,949)
15,036
4,242
(846)
(178)
21,872
29,117
(4,178)
24,939
14,689
21,621
(3,920)
17,701
514
(185)
57
(471)
Net cash generated from/(used in) investing activities
329
(414)
Cash flows from financing activities
Payment of lease liabilities
Purchase of own shares
Dividends paid
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
18
(870)
(5,534)
(9,383)
24
9
(1,064)
(1,217)
(6,868)
(15,787)
9,481
38,767
48,248
(9,149)
8,138
30,629
38,767
120
120
121
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - YEAR ENDED 31 DECEMBER 2022
COMPANY STATEMENT OF CHANGES IN EQUITY - YEAR ENDED 31 DECEMBER 2022
Group
Called up
share
capital
£’000
Share
premium
reserve
£’000
Capital
redemption
reserve
£’000
Other
reserves
£’000
Retained
earnings
£’000
Total
equity
£’000
Parent
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 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
(6,868)
(6,868)
Dividends
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
-
-
-
At 1 January 2022
3,697
3,255
1,209
676
Dividends
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
expense
Total comprehensive
income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
272
(1,217)
(1,217)
(8,085)
(7,803)
(22,168)
(22,168)
3,121
3,121
(19,047)
(19,047)
84,189
(9,383)
-
-
93,026
(9,383)
5
599
-
5
599
-
(5,534)
(5,534)
Purchase of own shares
604
(14,917)
(14,313)
-
-
-
11,635
(1,612)
11,635
(1,612)
10,023
10,023
Total transactions
with owners
Profit for the year
Other comprehensive
expense
Total comprehensive
income
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
Dividends
Movement in ESOT
Credit to equity for equity-
settled share based payments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
599
(9,383)
(9,383)
-
-
5
599
-
(5,534)
(5,534)
604
(14,917)
(14,313)
-
-
-
7,245
7,245
(1,612)
(1,612)
5,633
5,633
At 1 January 2022
3,697
3,255
1,209
1,451
47,832
57,444
At 31 December 2022
3,697
3,255
1,209
1,280
79,295
88,736
At 31 December 2022
3,697
3,255
1,209
2,055
38,548
48,764
122
122
123
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
1. REPORTING ENTITY
Nichols plc (the “Company”) is a company incorporated
and domiciled in the United Kingdom, listed on the
Alternative Investment Market. The address of the
Company’s registered office is Laurel House, Woodlands
Park, Ashton Road, Newton-le-Willows, WA12 0HH. The
consolidated financial statements of the Company as
at and for the year ended 31 December 2022 comprise
the Company and its subsidiaries (together referred to
as the “Group”). The Group is primarily engaged in the
supply of soft drinks to the retail, wholesale, catering,
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 provide resilience
against these factors and the other principal risks that
the Group is exposed to. At the 31 December 2022 the
Group had cash and cash equivalents of £56.3m with no
external bank borrowings.
licensed and leisure industries.
On the basis of these reviews, the Directors consider
2. ACCOUNTING POLICIES
Basis of preparation
The Group’s Consolidated and Parent Company financial
statements have been prepared in accordance with UK
adopted International Accounting Standards and the
requirements of the Companies Act 2006.
The accounting policies have been applied consistently
by the Group, with those adopted in the previous year.
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
Accounts, the Directors have considered the current
financial position of the Group, its principal risks and
uncertainties, the potential impact of further Covid-19
restrictions in addition to a continued cost of living crisis.
The review performed considers severe but plausible
downside scenarios that could reasonably arise within
the period.
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 Accounts) and consider
it appropriate to adopt the going concern basis in
preparing the Group’s Annual Report and Accounts.
Use of adjusted measures
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 adjusted profit before tax, which both remove
the impact of exceptional items (note 4). The Group
also reports EBITDA which measures underlying
performance having removed the impact of interest,
taxation, depreciation and amortisation from profit after
tax. The Group also calculates an adjusted earnings per
share, based on the adjusted profit after tax which again
removes the impact 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 that, due to their
nature and size, do not reflect the Group’s underlying
The estimated impacts of Covid-19 restrictions are
performance. The measures are not comparable to
primarily based around our OoH market and the
similar measures used by other companies.
potential for future lockdowns within the hospitality
industry. Our modelling has sensitised trading within
Use of estimates and judgements
this market to reflect varying degrees of lockdowns
with the most severe scenario assuming that some
restrictions will return during the remainder of 2023 and
the start of 2024.
During the year the Group experienced a period of
significant inflation and a cost of living crisis against
which a number of mitigation actions were introduced.
The preparation of financial statements requires
management to make estimates, judgements and
assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities,
income and expenses. Due to the nature of estimation,
the actual outcomes may differ from these estimates.
These are largely evidenced in the results announced.
The following paragraphs detail the key estimates and
Our modelling has sensitised the impacts of Russia’s
judgements that the Group believes have the most
continued invasion of Ukraine, in particular their impact
significant effect on the carrying amounts of assets
on global supply chains and macroeconomic inflationary
factors.
and liabilities at the reporting date and within the next
financial year.
Intangible assets with indefinite lives
support campaigns that either span two financial years
In the opinion of the Directors, the industry in which
the Group operates is stable and there are relatively
or where the costs have not been fully settled by the
year end date.
high barriers to entry. The brands acquired are well
Promotions and brand support campaigns comprise:
established in their respective sales channels and both
have an important role to play in all of the Group’s
Long term discounts and rebates
routes to market. The brands are also well positioned
• Fixed, a defined amount over a period of time
to mitigate against the impact of recent sugar levy
announcements.
The Directors have therefore made a judgement
that certain intangible assets relating to brands have
indefinite lives. It is expected that these brands will be
held and supported for an indefinite period of time and
are expected to generate economic benefits. The Group
is committed to supporting its brands and invests in
significant consumer marketing promotional spend.
Should management have judged the intangible assets
not to be of indefinite lives, an amortisation charge
would be made to the Consolidated Income Statement
on an annual basis.
Impairment of goodwill and intangible assets with
indefinite lives
• % of net revenue, a percentage of net revenue,
which may have associated hurdle rates
Short term promotional discounts
Promotional discounts consist of many individual
rebates across numerous customers and represent the
cost to the Group of short-term deal mechanics. The
common deals typically include price reductions for
specific SKUs during a promotional period.
To provide an amount for these brand support accruals
at the end of a period requires a degree of estimation
supported by historical data and experience. The
accruals are calculated using the expected value
approach, however, in most instances, the discounts
can be estimated using known facts with a high level of
Determining whether goodwill and intangible assets
accuracy.
with indefinite lives are impaired requires an estimation
Defined benefit obligations
of the value in use of the cash-generating units to
which the assets have been allocated. The value in use
calculation requires management to estimate the future
cash flows expected to arise from the cash-generating
unit and a suitable discount rate in order to calculate
present value (see note 12).
Customer list intangible assets have finite lives assigned.
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
Such assets are tested for impairment if an impairment
uncertainty for the Group.
indicator exists. As a result of the impairment review,
management have recognised a further impairment
charge of £8.7m in the current year, impairing all the
remaining intangible assets and a proportion of fixed
assets within our OoH business. In 2021, as previously
announced, the Group impaired the Goodwill generated
from previous OoH acquisitions (2021: £36.2m).
The carrying amount of goodwill at the reporting date
was £nil (2021: £nil).
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
the Group’s additional tax liability, interest costs and
amounts expected to be recovered.
Basis of consolidation and goodwill
The carrying amount of brands with indefinite lives was
£nil (2021: £2.6m).
The Group financial statements consolidate those of the
Company and all of its subsidiary undertakings drawn
Carrying value of brand support accruals
up to 31 December 2022.
The Group incurs significant costs in the support and
development of the Group’s brands. The majority of
costs incurred on these arrangements have been settled
at 31 December 2022, however certain judgement is
required in determining the level of closing accrual
required at a year end for promotions and brand
Subsidiaries are entities controlled by the Group.
Control exists if all three of the following elements are
present: power over the investee, exposure to variable
returns from the investee, and the ability of the investor
to use its power to affect those variable returns. Control
is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements
124
124
125
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
2. ACCOUNTING POLICIES (CONTINUED)
With regard to discounts, rebates, promotional costs
Foreign currency transactions
Deferred tax
of control. The financial statements of subsidiaries are
included in the consolidated financial statements from
the date that control commences until the date that
control ceases.
and brand support costs, consideration is given as to
whether a distinct good or service has been received
from the goods sold to the customer. Where the
payments do not result in the receipt of a distinct
good or service, they are treated as a deduction from
Intra-Group balances and any unrealised gains and
revenue. However, when they do, they are recorded as
losses arising from intra-Group transactions are
an expense and recognised in administrative expenses.
eliminated in preparing the consolidated financial
statements.
Acquisitions of subsidiaries are dealt with by the
For discounts, rebates, promotional costs and brand
support costs, accumulated experience is used to
estimate and provide for these using the expected value
acquisition method. The acquisition method involves
method, and revenue is only recognised to the extent
the recognition at fair value of all identifiable assets and
that it is highly probable that a significant reversal will
Transactions in foreign currencies are translated into
Deferred tax is recognised using the balance sheet
the respective functional currencies of Group entities
liability method, with no discounting, providing for
at exchange rates at the date of transactions. Monetary
temporary differences between the carrying amounts of
assets and liabilities denominated in foreign currencies
assets and liabilities for financial reporting purposes and
at the reporting date are retranslated to the functional
the amounts used for taxation purposes.
currency at the exchange rate at that date.
Deferred tax is not provided on the initial recognition
Any exchange differences arising on the settlement of
of goodwill, or on the initial recognition of an asset or
monetary items or on translating monetary items at
liability unless the related transaction is a business
rates different from those at which they were initially
combination or affects tax or accounting profit. Deferred
recorded are recognised in the consolidated income
tax is measured at the tax rates that are expected to be
statement in the period in which they arise.
applied to the temporary differences when they reverse,
liabilities at the acquisition date, regardless of whether
not occur. The statement of financial position includes
Exceptional items
or not they were recorded in the financial statements of
accruals for claims yet to be received for discounts,
the subsidiary prior to acquisition. On initial recognition,
rebates and promotional costs.
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 the
Group’s accounting policies.
Accruals are made for each individual promotion or
rebate based on the specific terms and conditions of the
customer agreement. Management makes estimates
on an ongoing basis, to assess customer performance
and sales volume, to calculate total amounts earned
The Group has adopted an accounting policy that seeks
to highlight significant exceptional items of income and
expense within Group results for the year. Exceptional
items are those considered to be one off items that
are of such significance, by either nature or scale,
that separate disclosure is required in the financial
statements in order to provide a better understanding
provided they are enacted or substantively enacted at
the reporting date.
A deferred tax asset is recognised to the extent that it
is probable that future taxable profits will be available
against which temporary differences can be utilised.
Deferred tax assets are reviewed at each reporting
date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
Goodwill is stated after separating out identifiable
to be recorded as deductions from revenue. In most
of the Group’s trading performance.
Deferred tax assets and liabilities are offset where there
assets. Goodwill represents the excess of the fair value
instances, the discount can be estimated using known
of the consideration transferred over the fair value
facts with a high level of accuracy.
Research and Development
is a legally enforceable right to set off current tax assets
and liabilities and the deferred tax assets and liabilities
of the Group’s share of the identifiable net assets of
the acquired subsidiary at the date of acquisition. In
Segmental reporting
calculating goodwill, the fair value of consideration has
An operating segment is a component of the Group
been calculated using the cash consideration plus the
that engages in business activities from which it may
Directors’ best estimate of contingent consideration at
earn revenues and incur expenses, including revenues
the acquisition date.
Revenue recognition
and expenses that relate to transactions with any of
the Group’s other components and for which discrete
financial information is available. In line with market
Revenue from the sale of goods is based on the price
research and data made available by Nielsen, which
specified in the contract, being the invoice price less any
documents industry performance in respect of Stills
agreed discounts or rebates and excluding VAT and after
and Carbonates, management identify both Stills and
the deduction of certain promotional and brand support
Carbonates as operating segments where operating
costs invoiced by customers.
Revenue is recognised when control of the goods have
been transferred to the buyer. Payment terms vary by
customer but never exceed 12 months. The transaction
results are reviewed regularly by the Board (as chief
operating decision maker) to make decisions about
resources to be allocated to the segment and assess its
performance.
price is therefore not adjusted for the effects of a
Segment results that are reported to the Board include
significant financing component.
Transfer of control varies depending on the individual
term of the contract of sale. For sales in the UK, transfer
of control occurs when the product is delivered to the
customer. However, for some international shipments,
transfer of control occurs either upon loading the
goods onto the relevant carrier or when the goods have
arrived in the overseas port. The point of transfer for
international shipments is dictated by the terms of each
sale.
126
126
items directly attributable to a segment as well as those
that can be allocated on a reasonable basis. Segment
reporting for the Group is made to the gross profit level
for the operating segments but no segment reporting
is made for further expenditure or for the assets and
liabilities of the Group. The assets and liabilities of the
Group are reported as Group totals and no reporting
of these balances is recorded at a segment level. As
a result, all of the Group’s assets and liabilities are
unallocated items and no reconciliation of segment
assets to the Group’s total assets is prepared.
Research expenditure is recognised in the consolidated
relate to income taxes levied by the same taxation
income statement in the year in which it is incurred.
authority on the same taxable entity.
Internal development expenditure is capitalised only
if it meets the recognition criteria of IAS 38, Intangible
Assets. If the Group cannot distinguish the research
phase of an internal project to create an intangible
asset from the development phase, the entity treats
the expenditure for that project as if it were incurred
in the research phase only. Where recognition criteria
are met, intangible assets are capitalised and amortised
on a straight-line basis over their useful economic lives.
All intangible assets are tested for impairment when
there are indications that the carrying value may not
be recoverable. Any impairment losses are recognised
immediately in the consolidated income statement.
Taxation
Income tax expense comprises consolidated current
and deferred tax. Income tax expense is recognised in
Brands
Brands acquired in a business combination are
recognised at fair value at the acquisition date. Brands
acquired separately through a business combination are
assessed at the date of acquisition as to whether they
have an indefinite life. The assessment includes whether
the brand name will continue to trade and the expected
lifetime of the brand. All brands acquired to date have
been assessed as having an indefinite life as they are
expected to continue to contribute to the long-term
future of the Group. The brands are reviewed annually
for impairment, being carried at cost less accumulated
impairment charges. The fair value of a brand at
the date of acquisition is based on the Relief from
Royalties method, which is a valuation model based on
discounted cash flows.
the income statement except to the extent that it relates
Customer lists
to items recognised in other comprehensive income/
(expense), in which case it is recognised in consolidated
other comprehensive income/(expense).
Current tax
Current tax is the expected tax payable on the taxable
Customer lists acquired in a business combination are
recognised at fair value at the acquisition date. They are
amortised over the useful economic life identified at the
date of acquisition with amortisation charges included
within administrative expenses.
income for the year, using rates which are enacted or
Customer lists are amortised between 7 - 15 years.
substantively enacted at the reporting date and any
adjustment to tax payable in respect of previous years.
127
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
2. ACCOUNTING POLICIES (CONTINUED)
the unit on a pro-rata basis. Impairment losses are
losses using the simplified approach contained within
target, are not measurement period adjustments and
recognised in the income statement.
IFRS 9. Estimated irrecoverable amounts are based on
are, therefore, recognised in profit or loss.
Reserves
Share capital represents the nominal value of equity
shares.
Goodwill and intangible assets with indefinite lives are
reviewed for impairment annually.
Share premium represents the excess over nominal
Property, plant and equipment
value of the fair value of the consideration received for
equity shares.
Items of property, plant and equipment are measured
at cost less accumulated depreciation and impairment
Capital redemption reserve represents the reserve
losses. Cost includes expenditures that are directly
created upon redemption of shares.
attributable to the acquisition of the asset.
Other reserves incorporate purchase of own shares,
The cost of replacing part of an item of property, plant
movements in the Group’s ESOT and equity settled
and equipment is recognised in the carrying amount
share-based payments in respect of Long-Term
of the item if it is probable that the future economic
Incentive Plans.
benefits embodied within the part will flow to the Group
historical experience and forward-looking information,
together with specific amounts that are not expected to
Leased assets
be recovered. Individual amounts are written off when
All leases are accounted for under IFRS16 by recognising
management deems them to be irrecoverable. The
a right-of-use asset and a lease liability except for:
amount of expected credit losses are updated at each
reporting date.
Interest income is recognised by applying the effective
interest rate, except for short-term receivables when the
recognition of interest would be immaterial.
• Leases of low value assets; and
• Leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease
term, with the discount rate determined by reference to
Amounts owed by Group undertakings are stated after
the rate inherent in the lease unless (as is typically the
any provision for expected credit loss in line with the
case) this is not readily determinable, in which case the
three-stage model in IFRS 9.
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
and its cost can be measured reliably. The costs of the
For the purpose of the consolidated statement of cash
day-to-day servicing of property, plant and equipment
flows, cash and cash equivalents comprise deposits with
are recognised in the income statement as incurred.
banks and bank and cash balances.
Retained earnings represents retained earnings.
Dividends
Dividend distribution to the Company’s shareholders
is recognised as a liability in the Group’s financial
statements in the period in which the dividends are
interim dividends these are recognised once paid.
Impairment
Depreciation is calculated on a straight line basis to
Cash equivalents are short-term, highly liquid
element will remain unchanged throughout the lease
write down the cost less estimated residual value on
investments that are readily convertible to known
term. Other variable lease payments are expensed in
property, plant and equipment over their estimated
amounts of cash and which are subject to an
the period to which they relate.
approved by the Company’s shareholders. In respect of
useful lives.
insignificant risk of changes in value.
Subsequent to initial measurement lease liabilities
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
comparative periods are as follows:
relation to foreign currency forward contracts. They are
rate on the balance outstanding and are reduced
The carrying values of the Group’s non-current assets
are reviewed at each reporting date to determine
whether there is any indication of impairment. All
property, plant and equipment is tested for impairment
Plant, machinery, fixtures
and fittings
3-10 years
Buildings
50 years
whenever events or changes in circumstances indicate
Material residual value estimates and useful economic
that the carrying amount may not be recoverable.
lives are updated at least annually.
Intangible assets which have indefinite useful lives,
including the Group’s acquired brands, are subject to
Land is not depreciated.
annual impairment testing or more frequent testing if
Inventories
there are indicators of impairment.
Inventories are measured at the lower of cost and net
For the purposes of assessing impairment, assets
realisable value. The cost of inventories is based on
are grouped at the lowest levels for which there are
the first-in first-out principle and includes expenditure
separately identifiable cash flows (cash-generating
incurred in acquiring the inventories and bringing them
units). As a result, some assets are tested individually for
to their existing location and condition. Net realisable
impairment and some are tested at a cash-generating
value is the estimated selling price in the ordinary
unit (CGU) level.
course of business, less the costs of completion and
An impairment loss is recognised if the carrying amount
selling expenses.
of an asset or its CGU exceeds its recoverable amount.
Financial assets
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 CGU. Impairment losses recognised in
respect of CGUs are allocated first to reduce the carrying
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.
amount of any goodwill allocated to the units and then
Trade receivables are measured at amortised cost using
to reduce the carrying amount of the other assets in
the effective interest method, less any expected credit
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
depreciated on a straight-line basis over the remaining
statement.
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
date) about facts and circumstances that existed at the
acquisition date. Changes in the amount of contingent
consideration payable that results from events after the
term of the lease or over the remaining economic life of
the asset if, rarely, this is judged to be shorter than the
lease term.
When the Group revises its estimate of the term of
any lease (because, for example, it re-assesses the
probability of a lessee extension or termination option
being exercised), it adjusts the carrying amount of the
lease liability to reflect the payments to make over the
revised term, which are discounted using a revised
discount rate. The carrying value of lease liabilities is
similarly revised when the variable element of future
lease payments dependent on a rate or index is revised,
except the discount rate remains unchanged. In both
cases an equivalent adjustment is made to the carrying
value of the right-of-use asset, with the revised carrying
amount being 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:
if the renegotiation results in one or more
•
additional assets being leased for an amount
commensurate with the standalone price for the
acquisition date, such as meeting a revenue or profit
additional rights-of-use obtained, the modification
128
128
129
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
2. ACCOUNTING POLICIES (CONTINUED)
contributions, which are recognised as an expense in
entitled to receive dividends over the relevant holding
purchase nor sale of own shares leads to a gain or loss
the period that relevant employee services are received.
period.
being recognised in the consolidated income statement.
is accounted for as a separate lease in accordance
with the above policy
Defined benefit plan
•
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
Under the Group’s defined benefit plan, the amount
of pension benefit that an employee will receive on
retirement is defined by reference to the employee’s
length of service and final salary. The legal obligation for
any benefits remains with the Group, even if plan assets
for funding the defined benefit plan have been set aside.
Plan assets may include assets specifically designated to
a long-term benefit fund as well as qualifying insurance
•
if the renegotiation results in a decrease in the
policies.
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
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).
liability is then further adjusted to ensure
Management estimates the DBO annually with the
its carrying amount reflects the amount of the
assistance of independent actuaries. This is based
renegotiated payments over the renegotiated term,
on the standard rates of inflation, salary growth and
with the modified lease payments discounted at the
mortality. Discount factors are determined close to
rate applicable on the modification date. The right-
each year end by reference to high quality corporate
of-use asset is adjusted by the same amount.
bonds that are denominated in the currency in which
the benefits will be paid and that have terms to maturity
The Group sometimes negotiates break clauses in its
approximating to the terms of the related pension
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
operations for the Group.
comprising actuarial gains and losses and the return on
scheme assets (excluding interest), are recognised in the
statement of other comprehensive income in the year in
which they arise.
Share-based payment transactions
At 31 December 2022 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
certain that the Group would not exercise its right to
Executive share award scheme for certain directors and
exercise any right to break the lease.
Total lease payments of £774,557 (2021: £1,079,000) are
senior executives. All schemes comprise the grant of
options under the Group’s share option schemes.
potentially avoidable were the Group to exercise break
The Group recognises an expense to the income
clauses at the earliest opportunity.
Post-employment benefit plans
The Group provides post-employment benefits through
defined contribution and defined benefit plans.
Defined contribution plan
The Group pays fixed contributions into independent
entities in relation to plans and insurances for individual
employees. The Group has no legal or constructive
obligations to pay contributions in addition to its fixed
statement representing the fair value of outstanding
equity-settled share-based payment awards to
employees which have not vested as at 31 December
2022.
Those fair values are charged to the income statement
over the relevant vesting period adjusted to reflect
actual and expected vesting levels. The Group calculates
the fair market value of the options as being based on
the market value of a company’s shares at the date of
grant adjusted to reflect the fact that an employee is not
The total amount to be expensed over the vesting period
As at 31 December 2022, the ESOT holds 4,101 shares in
is determined with reference to the fair value of options
the Company (2021: 4,889 shares).
granted, excluding the impact of any non-market vesting
conditions. Non-market vesting conditions are included
Investments in subsidiaries
in the assumptions about the number of options
Investments in subsidiaries are shown in the Parent
expected to vest. At each reporting date the Group
Company statement of financial position at cost less any
revises its estimate of the number of options expected
provision for impairment.
to vest.
Standards and interpretations in issue not yet
It recognises the impact of revisions to original
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
The following amendments are effective for the period
beginning 1 January 2023:
Amendments to IAS 1 and IFRS Practice Statement 2 -
Disclosure of Accounting Policies
•
Amendments to IAS 8 - Definition of Accounting
Estimates
• Amendments to IAS 12 - Deferred Tax Related to
Assets and Liabilities arising from a Single Transaction
The following amendments are effective for the period
beginning 1 January 2024:
• Amendments to IFRS 16 - Liability in a Sale and
Leaseback
• Amendments to IAS 1 - Classification of Liabilities as
Current or Non-current
• Amendments to IAS 1 - Non-current Liabilities with
Covenants
The Directors are currently considering the
potential impact of adoption of these standards and
interpretations in future periods on the consolidated
financial statements of the Group.
The Group does not expect any other standards issued,
but not yet effective, to have a material impact on the
Group.
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.
Provisions and contingent liabilities
A provision is recognised if, as a result of a past event,
the Group has a present legal or constructive obligation
that can be estimated reliably and it is probable that an
outflow of economic benefits will be required to settle
the obligation. Provisions are determined by discounting
the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of
money and the risks specific to the liability.
Finance income
Finance income comprises interest income on funds
invested. Interest income is recognised as it accrues,
using the effective interest method.
Finance costs
Finance costs comprise of interest expenses on leases
and defined benefit pension obligations. Interest
expenses are recognised as they accrue, using the
effective interest method.
Government grants
Government grants are recognised in profit or loss on
a systematic basis over the periods in which the entity
recognises expenses for the related costs for which the
grants are intended to compensate.
Employee share ownership trust
The assets and liabilities of the Employee Share
Ownership Trust (ESOT) have been included in the
consolidated financial statements.
The costs of purchasing own shares held by the ESOT
are shown as a deduction against equity. Neither the
130
130
131
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
3. SEGMENTAL INFORMATION
a. Key operating segments
The Board analyses the Group’s internal reports to
market research and industry data made available by
enable an assessment of performance and allocation of
Nielsen. Gross profit is the measure used to assess the
resources. The operating segments are based on these
performance of each operating segment.
reports.
The Group’s OoH strategic review is now complete.
The Board considers the business from a product
Given the differing strategic challenges between our
perspective and reviews the Group on the operating
Packaged and OoH routes to market, the Group will be
segments identified below. There has been no change
segmented during FY23 to ensure appropriate strategic
to the segments during the year. Based on the nature
focus exists for each of its two proposed operating
of the products sold by the Group, the types of
segments.
customers and methods of distribution, management
consider reporting operating segments at the Still and
Carbonate level to be reasonable, particularly in light of
b. Reporting by geographic area
Revenue by geographic destination
Middle East
Africa
Rest of the World
Total exports
United Kingdom
2022
£’000
11,752
18,870
7,350
37,792
126,954
164,926
2022
%
7.1
11.4
4.5
23.0
77.0
100.0
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
Revenue
Gross Profit
The Group’s business segments operate in the Middle East, Africa, the Rest of the World and the United Kingdom.
Revenue from continuing operations arose principally from the provision of goods.
Still
Carbonate
2022
£’000
78,307
86,619
2021
£’000
72,393
71,935
164,926
144,328
2022
£’000
40,277
30,744
71,021
2021
£’000
37,980
27,195
65,175
There are no sales between the two operating segments and all revenue is earned from external customers.
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.
Total assets
Depreciation
The assets of the Group at 31 December 2022 and
The Group’s depreciation charges for the years ended
31 December 2021 are located within the United
31 December 2022 and 31 December 2021 are against
Kingdom and Europe.
Capital expenditure
property, plant and equipment retained within the
United Kingdom and Europe.
The gross profit of the operating segments is reconciled to profit before taxation as per the consolidated income
The capital expenditure of the Group for the years
Amortisation
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
Amortisation
Impairment losses on goodwill, intangible and fixed assets
2022
£’000
1,245
577
3,881
640
8,714
2021
£’000
1,239
108
4,309
660
36,244
132
132
ended 31 December 2022 and 31 December 2021 was
The Group’s amortisation charges for the years ended
made within the United Kingdom and Europe.
31 December 2022 and 31 December 2021 are against
IFRS 16 additions
The IFRS 16 additions of the Group for the years ended
31 December 2022 and 31 December 2021 were made
within the United Kingdom and Europe.
4. EXCEPTIONAL ITEMS
intangible assets retained within the United Kingdom
and Europe.
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:
Review of UK packaged supply chain
Out of Home Strategic Review
Impairment of goodwill, intangible and fixed assets
Historic incentive scheme
Group Systems Review
2022
£’000
1,464
518
8,714
134
316
2021
£’000
620
-
36,244
2,613
-
11,146
39,477
133
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
Group’s growth plans, and improved efficiency. These
fixed assets (£3.9m). In 2021, as previously announced,
Short-term lease rental payments
The Group has now settled with HMRC the £4.3m tax
Loss on sale of property, plant and equipment
4. EXCEPTIONAL ITEMS (CONTINUED)
previously is not now likely to be achieved, despite there
2022 Exceptional Items
being significant opportunities to enhance net margin
through better alignment of our customer and product
The Group incurred £11.1m of exceptional costs during
mix with our cost base.
the year (2021: £39.5m), £8.7m of which is non-cash.
The Group’s cost of capital has increased, largely due to
Review of UK Packaged Supply Chain
macro-economic factors affecting all businesses, from
In Q4 2020, the Group commenced a review of its UK
operational supply chains. The project has progressed
8.2% to 13.1%. This has resulted in a higher threshold
required to support the carrying values of assets.
steadily with significant changes implemented, including
As a result, management have recognised a further non-
the Group entering several new five-year contract
cash impairment charge of £8.7m, in the current year,
manufacturing and distribution arrangements that
impairing all the remaining intangible assets (£4.8m)
both built significant additional capacity, in-line with the
within our OoH route to market and a proportion of its
projects, which completed during 2022, resulted in
the Group impaired the Goodwill generated from
£1.5m of exceptional costs in the period (2021: £0.6m,
previous OoH acquisitions (2021: £36.2m).
2020: £0.3m).
Out of Home Strategic Review
Historic Incentive Scheme
In Q1 2021 the Group commenced a strategic review
and interest charges relating to a historic incentive
into its OoH route to market, to consider customer
scheme and will now commence recovery of debts from
and product mix as well as review ways to enhance
current and previous management who had indemnified
net margin and profitability going forward. The
the Company. The Group incurred legal costs in the
Group incurred £0.5m of costs in the period to
period of £0.1m in relation to the case.
prepare its recommendations for implementation.
Additional costs will be incurred through 2023 as these
Group Systems Review
recommendations are implemented. These additional
The Group has commenced a project to implement a
implementation costs are one-off in nature and will be
new enterprise resource planning (ERP) system, which is
treated as exceptional.
expected to be operational through 2024. Initial review
Impairment of intangible and fixed assets
The impact of Covid-19 resulted in a difficult period
of trade for OoH from 2020 through 2021, with
many outlets being closed for a prolonged period of
time. Whilst trade within the hospitality industry has
costs of £0.3m were incurred in the period.
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.
reopened post the pandemic, the impact of the war
2021 Exceptional Items
in the Ukraine, and its impact on inflation and cost of
living pressures have meant that whilst trade within the
hospitality industry initially returned to pre-Covid levels,
growth is significantly slower than previously forecast
in the short term and saw a significant slowdown in Q4
as inflationary pressures impacted consumers. Certain
sectors of the hospitality industry, for example Cinema,
Holiday and Theme Parks where our frozen business
In the previous year, the Group incurred £39.5m of
exceptional costs, £38.9m of which was non-cash.
Following the annual impairment review of the Group’s
Out of Home cash-generating unit (CGU), the Group
incurred a non-cash impairment to Goodwill of £36.2m.
Further detail is provided in note 12.
operates, have seen significant volume decline all year
The Group continued its work on the review of its UK
versus pre-pandemic revenues.
operational supply chains and, as a result of this work,
In line with market expectations, we anticipate that
incurred £0.6m of costs in the previous year.
growth projections for OoH beyond 2022 will be lower
As at 31 December 2021, the Group recognised a net
than previously estimated, given the economic outlook
liability of £2.6m in relation to the historic incentive
and change in consumer patterns.
scheme, being a reasonable estimate of the Group’s
Whilst cost pressure is expected to be fully recovered
within OoH, the gross margin progression anticipated
additional tax liability, interest costs and amounts
expected to be recovered.
5. OPERATING PROFIT
Operating profit is stated after charging/(crediting):
2022
£’000
2021
£’000
Inventory amounts charged to cost of sales
93,905
79,153
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
Charge for equity-settled share-based payments
(Gain)/loss on foreign exchange differences
Fair value loss/(gain) on derivative financial instruments (note 22)
Release of contingent consideration on acquisition
Expected credit loss provision (release)/charge (note 17)
162
3,881
3,896
640
349
599
(588)
662
186
3
(365)
110
4,309
-
660
240
272
437
(178)
63
(63)
294
Operating lease rental payments have been included within administrative expenses and represent short-term lease
expenses.
6. FINANCE INCOME AND EXPENSE
Finance income comprises:
Bank interest receivable
Net interest income on defined benefit pension scheme surplus
Finance income
Finance expense comprises:
IFRS 16 interest charge
Finance expense
Notes
2022
£’000
2021
£’000
26
24
409
105
514
(134)
(134)
47
10
57
(158)
(158)
134
134
135
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
7. DIRECTORS AND EMPLOYEES
Group and Parent Company key management personnel compensation
a. Average monthly number of persons employed during the year, including Director
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 101.
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 credit
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
2022
£’000
325
282
2022
£’000
13,693
1,813
838
94
599
2021
£’000
308
274
2021
£’000
13,290
1,388
811
69
272
Salary
Defined contribution pension costs
Social security costs
2022
£’000
1,571
48
175
1,794
2021
£’000
1,849
42
214
2,105
The highest paid director has received £811,000
There is a share-based payment charge of £98,000 in the
(2021: £992,000) excluding pension contributions.
year (2021: £75,000) in relation to executive matching
Benefits are accruing to 2 Directors (2021: 2 Directors)
share awards made to 2 Directors.
17,037
15,830
under a defined contribution scheme, the highest paid
A Director has made a gain of £nil (2021: £57,000) on the
Director has received contributions of £30,000 in the
exercise of share options during the year.
year (2021: £29,000).
Further information regarding Directors’ remuneration
Aggregate amounts for loss of office totalled £nil
and the Incentive Plan is provided in the Remuneration
(2021: £nil).
Committee Report on pages 90 to 97.
2022
£’000
13,693
1,813
838
94
599
2021
£’000
13,290
1,388
811
69
272
17,037
15,830
A charge of £599,000 (2021: £272,000) was recognised during the year in relation to benefits accruing under the
Group’s Save As You Earn schemes, Long-Term Incentive Plan (LTIP) and Executive share award scheme.
136
136
137
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
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
2022
£’000
4,403
(177)
4,226
(2,072)
47
(2,025)
2021
£’000
3,862
(58)
3,804
675
33
708
Total tax expense in the consolidated income statement
2,201
4,512
The tax expense is wholly in respect of UK taxation.
b. Tax reconciliation
Profit before taxation
Profit before taxation multiplied by the standard rate of corporation tax in the United
Kingdom of 19.00% (2021: 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
Impact on deferred tax due to rate change
Amounts relating to other comprehensive income
2022
£’000
2021
£’000
13,836
(17,656)
2,629
(3,355)
297
65
38
(130)
-
(698)
-
7,402
142
(70)
(25)
(13)
441
(10)
Total tax expense in the consolidated income statement
2,201
4,512
c. The effective rate of tax on adjusted profit before tax is 19.04% (2021: 21.9%) which is higher than the standard
rate of Corporation Tax in the United Kingdom (19.00%). The effective rate of tax on profit before tax is 15.9%
(2021: -24.5%) which is lower than this rate.
In May 2021, an amendment to the UK Corporation Tax rate was subsequently enacted to increase the rate of tax
Interim dividend 12.4p (2021: 9.8p) paid 9 September 2022
Final dividend for 2021 13.3p (2021: 8.8p) paid 5 May 2022
2022
£’000
4,523
4,860
9,383
2021
£’000
3,619
3,249
6,868
The interim dividend for the prior year of £3,619,000 was paid on 10 September 2021.
The 2022 final proposed dividend of 15.3p per share has not been accrued as it had not been approved by the year end.
10. EARNINGS PER SHARE
Earnings/(loss) per share (basic)
Earnings/(loss) per share (diluted)
Adjusted earnings per share (basic) - before exceptional items
Adjusted earnings per share (diluted) - before exceptional items
2022
2021
31.86p
(60.04p)
31.82p
(60.04p)
55.38p
55.32p
46.15p
46.09p
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. The weighted average number of ordinary shares is
calculated by adjusting the shares in issue at the beginning of the period by the number of shares bought back or
issued during the period multiplied by a time-weighting factor. 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.
2022
Weighted
average
number of
shares
Earnings
£’000
Earnings
per share
Loss
£’000
2021
Weighted
average
number
of shares
Loss per
share
Basic earnings/(loss) per share
11,635
36,522,645
31.86p
(22,168)
36,919,085
(60.04p)
Dilutive effect of share options
39,639
-
Diluted earnings/(loss) per share
11,635
36,562,284
31.82p
(22,168)
36,919,085
(60.04p)
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 Group’s operations. It can be reconciled from the basic
earnings per share as follows:
2022
Weighted
average
number
of shares
Earnings
£’000
Earnings
per share
(Loss)/
Earnings
£’000
2021
Weighted
average
number
of shares
(Loss)/
Earnings
per share
from 19% to 25% with effect from 1 April 2023. Deferred tax balances as at 31 December 2022 have been recognised
Basic earnings/(loss) per share
11,635
36,522,645
31.86p
(22,168)
36,919,085
(60.04p)
at 25% (2021: 25%).
Exceptional items after taxation
8,590
39,206
d. In addition to the amount charged to the consolidated income statement, a credit of £459,000 (2021: £962,000
charge) has been recognised in other comprehensive income/ (expense), being the movement on deferred taxation
Adjusted earnings per share (basic)
- before exceptional items
20,225
36,522,645
55.38p
17,038
36,919,085
46.15p
relating to retirement benefit obligations and equity-settled share-based payments.
Dilutive effect of share options
39,639
48,656
Adjusted earnings per share
(diluted) - before exceptional items
20,225
36,562,284
55.32p
17,038
36,967,741
46.09p
138
138
139
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
11. PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 January 2021
Additions
Disposals
Land and
buildings
£’000
3,444
-
-
At 1 January 2022
3,444
Additions
Disposals
-
-
At 31 December 2022
3,444
Depreciation
At 1 January 2021
Charge for the year
On disposals
At 1 January 2022
Charge for the year
On disposals
Impairment (see below)
At 31 December 2022
Net book value at
31 December 2022
Net book value at
31 December 2021
454
69
-
523
69
-
-
592
2,852
2,921
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
26,727
1,239
(3,191)
24,775
1,245
(599)
25,421
13,188
3,172
(3,126)
13,234
2,886
(413)
3,896
19,603
5,818
11,541
2,977
2,784
35,932
At 1 January 2021
28
-
3,005
114
-
3,119
1,413
684
-
2,097
546
-
-
80
-
1,347
(3,191)
2,864
34,088
463
-
1,822
(599)
3,327
35,311
751
384
15,806
4,309
-
(3,126)
1,135
16,989
380
-
-
3,881
(413)
3,896
2,643
1,515
24,353
476
908
1,812
10,958
1,729
17,099
Additions
Disposals
At 1 January 2022
Additions
At 31 December 2022
Depreciation
At 1 January 2021
Charge for the year
On disposals
At 1 January 2022
Charge for the year
At 31 December 2022
Net book value at
31 December 2022
Net book value at
31 December 2021
Group impairment losses of £3,896,000 in the year (2021: £nil) are within the Out of Home route to market. See note
14 for further details on the Group’s impairment review.
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
5,416
472
(242)
5,646
185
5,831
3,921
519
(196)
4,244
445
4,689
1,142
1,402
2,977
1,836
13,673
28
-
3,005
114
3,119
1,413
684
-
2,097
546
2,643
476
908
80
-
580
(242)
1,916
14,011
463
762
2,379
14,773
541
279
-
820
274
1,094
6,329
1,551
(196)
7,684
1,334
9,018
1,285
5,755
1,096
6,327
Land and
buildings
£’000
3,444
-
-
3,444
-
3,444
454
69
-
523
69
592
2,852
2,921
140
140
141
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
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 2021
Impairment (see below)
At 1 January 2022 and 31 December 2022
2021 Impairment Review
£’000
36,244
(36,244)
-
An annual impairment review was performed on the goodwill (£36.2m) and intangible assets with indefinite lives
(£2.6m), all of which related the Group’s Out of Home Business. Following the review performed the entire goodwill
(£36.2m) was impaired.
13. INVESTMENTS: SHARES IN GROUP UNDERTAKINGS
Parent
Cost and net book amount
At 1 January 2021, 1 January 2022 and 31 December 2022
£’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.
142
142
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.
14. INTANGIBLES
Group
Cost
At 1 January 2022 and
31 December 2022
Amortisation
At 1 January 2021
Charge for the year
At 1 January 2022
Charge for the year
Impairment (see note 4)
At 31 December 2022
Net book value at
31 December 2022
Net book value at
31 December 2021
Parent
Cost
At 1 January 2022 and
31 December 2022
Amortisation
At 1 January 2021
Charge for the year
At 1 January 2022
Charge for the year
At 31 December 2022
Net book value at
31 December 2022
Net book value at
31 December 2021
Contractual
agreement
£’000
Customer
list
£’000
180
5,521
Brand
name
£’000
3,889
Computer
software
£’000
Total
£’000
170
9,760
69
36
105
36
39
180
-
75
2,155
590
2,745
570
2,206
5,521
1,316
-
1,316
-
2,573
3,889
14
34
48
34
-
82
3,554
660
4,214
640
4,818
9,672
-
-
88
88
2,776
2,573
122
5,546
Brand
name
£’000
1,316
Computer
software
£’000
Total
£’000
170
1,486
1,316
-
1,316
-
1,316
-
-
14
34
48
34
82
88
122
1,330
34
1,364
34
1,398
88
122
143
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
14. INTANGIBLES (CONTINUED)
2022 Impairment Review
Intangible assets which have indefinite useful lives,
Key assumptions
A softening of inflationary pressures and improvement
including the Group’s acquired brands, are subject to
The calculation of value in use is most sensitive to the
in material input prices would lead to an improvement
annual impairment testing or more frequent testing if
following assumptions:
there are indicators of impairment.
• Revenue growth
Annual impairment reviews were performed on the
• Gross margin
intangible assets with indefinite lives, all of which relate
• Overheads
the Group’s OoH route to market. The value in use
• Discount rate
calculation uses cash flow projections from financial
• Growth rate estimates used to extrapolate cash
budgets approved by management in addition to annual
flows beyond the forecast period
growth projections for the next five years and into
perpetuity.
Revenue growth
The impact of Covid-19 resulted in a difficult period
of trade for OoH from 2020 through 2021 with many
outlets being closed for a prolonged period of time.
We exit 2022 with a smaller OoH route to market than
anticipated 12 months ago which in turn is significantly
smaller than that anticipated pre-pandemic.
Whilst trade within the hospitality industry has now
The impact of inflation on the UK economy and its
opened post the pandemic, the impact of the war in the
resulting cost of living pressure for our consumers
Ukraine, and its impact on inflation and cost of living
have meant that, whilst trade within the hospitality
pressures have meant that, whilst trade within the
industry initially returned to pre-Covid levels, growth is
in the gross margin forecast. An increase of 3.3ppts in
the gross margin by the end of the five year forecast
period would result in no impairment being required for
OoH.
Overheads
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.
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 9% at the
end of the five-year forecast period would result in no
impairment to OoH.
hospitality industry initially returned to pre-Covid levels,
significantly slower than previously forecast in the short
Discount rate
growth is significantly slower than previously forecast
term and saw a significant slowdown in Q4 2022. Certain
in the short term and saw a significant slowdown in Q4
sectors of the hospitality industry, for example Cinema,
as inflationary pressures impacted consumers. Certain
Holiday and Theme Parks where our frozen business
sectors of the hospitality industry, for example Cinema,
operates, have seen significant volume decline all year
Holiday and Theme Parks where our frozen business
versus pre-pandemic revenues.
Discount rates represent the current market assessment
of the risks specific to the OoH 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
operates, have seen significant volume decline all year
versus pre-pandemic revenues.
Whilst we do expect growth to return in the medium
is based on the specific circumstances of the Group
term, the short-term impact of events in recent years
and is derived from its weighted average cost of capital
Growth projections beyond 2022 are now expected to
- the pandemic, cost of living pressures, consumer
(WACC). Adjustments to the discount rate are made to
be lower than previously estimated given the economic
spending habits - is significant for the OoH route to
factor in the specific amount and timing of the future tax
outlook and change in consumer patterns.
market.
flows in order to reflect a pre-tax discount rate.
Whilst cost pressure is expected to be fully recovered
Within the year-end impairment review revenue growth
A reduction in the pre-tax discount rate to 8.6% (i.e.
within OoH, the gross margin progression anticipated
of 2% has been forecast from year five into perpetuity
-4.5ppts) would result in no impairment.
previously is not now likely to be achieved despite there
but before that we see slower growth than anticipated
being significant opportunities to enhance net margin
previously.
Growth rate estimates
through better alignment of our customer and product
mix with our cost base.
A faster rate of recovery would increase the value in use
calculation and therefore reduce any impairment noted.
The pre-tax discount rate applied to cash projections
A year-on-year increase in annual revenue of 3% per
is 13.1% (2021: 8.2%) and cash flows beyond the five-
year over the five- year period, starting from year one,
year period are extrapolated using a 2% growth rate
would result in no impairment being required for OoH.
(2021: 2%). Based on the review it was concluded that
the carrying value of the assets were not supported by
Gross margin
the value in use calculated. As a result of this analysis,
Whilst cost pressure is expected to be fully recovered
management have recognised an impairment charge
within OoH, the gross margin progression anticipated
of £8.7m in the current year, £4.8m in relation to the
previously is now unlikely to be achieved despite there
intangible assets and £3.9m relating to a proportion
being significant opportunities to enhance net margin
of the fixed assets. The impairment charge has been
through better alignment of our customer and product
recognised as an exceptional item within these financial
mix with our cost base.
statements.
144
144
The long-term growth rate used to extrapolate
the period of review is based upon management’s
expectations of the OoH CGUs’ ongoing potential and
is considered consistent with the drinks hospitality
industry as a whole. An increase of 5.0ppts from 2% to
7% growth into perpetuity would be required for there
to be no impairment.
145
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2021
15. DEFERRED TAX ASSETS AND LIABILITIES
Movement in temporary differences during the year
Recognised deferred tax assets and liabilities
The UK deferred tax balances are measured at 25% (2021: 25%).
Deferred tax assets and liabilities are attributable to the following:
Group
Property, plant and equipment
Goodwill and intangibles
Employee benefits
Provisions
Group
Property, plant and equipment
Goodwill and intangibles
Employee benefits
Provisions
Parent
Property, plant and equipment
Goodwill and intangibles
Employee benefits
Provisions
Parent
Property, plant and equipment
Goodwill and intangibles
Employee benefits
Provisions
Net
balance at
1 January
2022
£’000
Arising on
business
combination
£’000
Recognised
in income
£’000
Recognised
in other
comprehensive
income
£’000
Net
balance at
31 December
2022
£’000
(832)
(1,156)
(1,200)
33
(3,155)
-
-
-
-
-
904
1,323
(210)
9
2,026
-
-
459
-
459
72
167
(951)
42
(670)
Net
balance at
1 January
2021
£’000
Arising on
business
combination
£’000
Recognised
in income
£’000
Recognised
in other
comprehensive
expense
£’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
2022
£’000
Arising on
business
combination
£’000
Recognised
in income
£’000
Recognised
in other
comprehensive
income
£’000
Net
balance at
31 December
2022
£’000
(138)
167
(1,200)
33
(1,138)
-
-
-
-
-
(120)
-
(210)
9
(321)
-
-
459
-
459
(258)
167
(951)
42
(1,000)
Net
balance at
1 January
2021
£’000
Arising on
business
combination
£’000
Recognised
in income
£’000
Recognised
in other
comprehensive
expense
£’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)
Group
Assets
Liabilities
Net
Property, plant and equipment
Goodwill and intangibles
Employee benefits
Provisions
72
167
-
42
281
-
-
-
33
33
2022
£’000
2021
£’000
2022
£’000
2021
£’000
(832)
(1,156)
-
-
(951)
(1,200)
-
-
2022
£’000
72
167
(951)
42
2021
£’000
(832)
(1,156)
(1,200)
33
(951)
(3,188)
(670)
(3,155)
Parent
Property, plant and equipment
Goodwill and intangibles
Employee benefits
Provisions
Assets
Liabilities
Net
2022
£’000
-
167
-
42
209
2021
£’000
-
167
-
33
2022
£’000
(258)
-
2021
£’000
(138)
-
(951)
(1,200)
-
-
2022
£’000
(258)
167
(951)
42
2021
£’000
(138)
167
(1,200)
33
200
(1,209)
(1,338)
(1,000)
(1,138)
16. INVENTORIES
Finished goods
Raw materials
Group
Parent
2022
£’000
8,997
1,435
10,432
2021
£’000
8,375
1,331
9,706
2022
£’000
5,270
598
5,868
2021
£’000
6,067
3
6,070
At the year-end, the Group provision for the write-down of inventories to net realisable value amounted to £306,000
(2021: £168,000).
146
146
147
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS-YEAR ENDED 31 DECEMBER 2022
17. TRADE AND OTHER RECEIVABLES
Trade receivables
Group
Parent
2022
£’000
2021
£’000
2022
£’000
2021
£’000
35,483
32,584
28,705
25,678
Movements in the expected credit loss allowance are summarised below:
Group
At 1
January 2022
£’000
Charge in
the year
£’000
Release in
the year
£’000
Utilised
£’000
At 31
December 2022
£’000
Expected credit loss provision
956
62
(365)
(98)
555
Group
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
767
294
(65)
(40)
956
Parent
At 1
January 2022
£’000
Charge in
the year
£’000
Release in
the year
£’000
Utilised
£’000
At 31
December 2022
£’000
Expected credit loss provision
204
-
(20)
-
184
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
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.
Less: provision for impairment of trade receivables
(555)
(956)
(204)
Trade receivables - net
34,928
31,628
28,501
Amounts owed by Group undertakings
Other receivables
Derivative financial instruments - forward contracts (note 22)
Prepayments
-
2,788
-
1,845
-
12,805
2,294
178
2,024
2,345
-
1,722
(204)
25,474
10,087
2,719
178
1,949
39,561
36,124
45,373
40,407
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
£555,000 (2021: £956,000) 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 2022 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 (2021: £nil).
The Group's expected credit loss provision was determined as follows:
31 December 2022
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
0.7%
30,390
211
4.1%
3,023
123
0.7%
1,248
9
0.6%
249
2
36.7%
573
210
35,483
555
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
364
32,584
956
148
148
149
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
At 1
January 2022
£’000
Cash flow
£’000
At 31
December 2022
£’000
20. PROVISIONS
Group
At 1
January 2022
£’000
Charge in
the year
£’000
Release in
the year
£’000
Utilised
£’000
At 31
December 2022
£’000
56,674
(378)
56,296
Historic incentive scheme
4,242
-
-
(4,242)
-
Parent
At 1
January 2022
£’000
Charge in
the year
£’000
Release in
the year
£’000
Utilised
£’000
At 31
December 2022
£’000
Historic incentive scheme
4,242
-
-
(4,242)
-
The Group has now settled with HMRC the tax and interest charges regarding the historic incentive scheme provided
for in the prior year annual report (£4.2m).
Recovery of debts from current and previous management who had indemnified the Company has commenced.
Included within other receivables is a reimbursement asset in respect of these historic contracts.
21. PRIOR YEAR ACQUISITIONS
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 £71,000 was paid representing the third and final stage of contingent consideration and thus
settling this matter.
18. CASH AND CASH EQUIVALENTS
Group
Cash at bank and in hand
Parent
Cash at bank and in hand
At 1
January 2022
£’000
Cash flow
£’000
At 31
December 2022
£’000
38,767
9,481
48,248
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
Derivative financial instruments - forward contracts (note 22)
Group
Parent
2022
£’000
2021
£’000
2022
£’000
2021
£’000
11,115
9,210
8,925
7,326
-
1,635
18
151
-
794
75
-
50,264
25,548
382
19
151
392
8
-
Accruals
17,291
17,843
15,274
16,053
IFRS 16 lease liabilities (note 24)
501
869
399
773
30,711
28,791
75,414
50,100
Non-current liabilities
IFRS 16 lease liabilities (note 24)
Group
Parent
2022
£’000
2,038
2,038
2021
£’000
1,954
1,954
2022
£’000
1,553
1,553
2021
£’000
1,367
1,367
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.
150
150
151
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
22. FINANCIAL INSTRUMENTS
Foreign currency sensitivity
Exposure to treasury management, liquidity, credit and currency risks arise in the normal course of the Group’s
business.
Treasury management
The Group’s treasury activities are targeted to provide suitable, flexible funding arrangements to satisfy the
Group’s requirements. Interest rate and liquidity risk are managed at a Group level. Foreign currency risk is
managed, in consultation with Group management, in subsidiaries which are responsible for the majority of
purchases. The Group’s policy for investing any surplus cash balances is to place such amounts on deposit.
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% (2021: 5%), then this would have had the following
impact:
US Dollar
£’000
(156)
2022
Euro
£’000
(84)
Total
£’000
(240)
US Dollar
£’000
(119)
2021
Euro
£’000
(161)
Total
£’000
(280)
Liquidity risk
Net result for the year
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.
If Sterling had weakened against the US Dollar and Euro by 5% (2020: 5%), then this would have had the following
impact:
Net result for the year
US Dollar
£’000
172
2022
Euro
£’000
93
Total
£’000
265
US Dollar
£’000
132
2021
Euro
£’000
177
Total
£’000
309
Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions.
Nonetheless, the analysis above is considered to be representative of the Group’s exposure to currency risk.
The possibility of a 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
Derivative financial instruments
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 2022 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
2022
£’000
3,267
1,773
5,040
2021
£’000
2,501
3,371
5,872
Derivative financial (liabilities)/assets
Foreign currency forward contracts carried at fair value
2022
£’000
(151)
2021
£’000
178
In December 2022, the Group entered into foreign exchange forward contracts to manage the foreign currency risk
associated with anticipated cash inflows in 2023.
The following table details the foreign currency forward contracts outstanding at the year-end:
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)
5,800
5,000
5,037
4,067
(99)
(52)
Forward rate
1.1514
1.2293
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 2021.
At 31 December 2022, 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.
152
152
153
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
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
Financial assets
Trade receivables and other
receivables
Cash and cash equivalents
Total financial assets
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
-
-
-
178
37,716
32,294
-
56,296
56,674
178
94,012
88,968
-
-
-
178
43,651
36,652
-
48,248
38,767
178
91,899
75,419
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
Total financial liabilities
2022
£’000
2021
£’000
2022
£’000
3
-
3
67
-
67
11,130
2,539
13,669
12,041
2021
£’000
9,218
2,823
2022
£’000
2021
£’000
2022
£’000
2021
£’000
-
-
-
-
-
-
59,208
32,882
1,952
2,140
61,160
35,022
The following table sets out the Group contractual maturities (representing undiscounted contractual cash-flows) of
financial liabilities:
At 31 December 2022
Trade and other payables
Total
At 31 December 2021
Trade and other payables
Total
Up to 3
months
£’000
11,133
11,133
Up to 3
months
£’000
9,285
9,285
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
-
-
-
-
-
-
The contractual maturities of IFRS 16 lease liabilities are disclosed in note 24.
The Group has presented right-of-use assets within property, plant and equipment, with the corresponding liabilities
presented within trade and other payables split between current and non-current liabilities on the consolidated
statement of financial position.
The Group has classified the principal and interest portions of lease payments within financing activities on the
consolidated statement of cash flows. Lease payments for short-term leases and low-value assets are not included in
the measurement of the lease liability. These are presented within administrative expenses within the consolidated
income statement and are classified as cash flows from operating activities.
The following tables reconcile the Group’s right-of-use assets and lease liabilities to 31 December 2022:
Group
Right-of-use assets
Property
£'000
Motor
Vehicles
£'000
Total
£'000
Property
£'000
Parent
Motor
Vehicles
£'000
At 1 January 2021
2,033
1,564
3,597
1,295
1,564
Additions
Depreciation
At 1 January 2022
Additions
Depreciation
At 31 December 2022
80
(384)
1,729
463
(380)
1,812
28
108
(684)
(1,068)
908
114
2,637
577
(546)
(926)
476
2,288
80
(279)
1,096
463
(274)
1,285
28
(684)
908
114
(546)
476
Lease liabilities
At 1 January 2021
Additions
Interest expense
Lease payments
At 1 January 2022
Additions
Interest expense
Lease payments
Group
Property
£'000
Motor
Vehicles
£'000
Total
£'000
Property
£'000
Parent
Motor
Vehicles
£'000
2,089
1,657
3,746
1,313
1,657
80
89
(391)
1,867
463
90
28
69
108
158
(798)
(1,189)
956
114
44
2,823
577
134
(420)
(575)
(995)
80
57
(266)
1,184
463
62
(296)
1,413
28
69
(798)
(1,064)
956
114
44
(575)
539
2,140
577
106
(871)
1,952
At 31 December 2022
2,000
539
2,539
Total
£'000
2,859
108
(963)
2,004
577
(820)
1,761
Total
£'000
2,970
108
126
154
154
155
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
24. LEASES (CONTINUED)
The following table sets out the Group maturities of IFRS 16 lease liabilities based on the contractual
The following table reconciles the changes in IFRS 16 liabilities from financing activities during the year to 31
undiscounted cash flows:
Group
At 31 December 2022
Lease liabilities
Parent
At 31 December 2022
Lease liabilities
Group
At 31 December 2021
Lease liabilities
Parent
At 31 December 2021
Lease liabilities
Up to 3
months
£’000
229
Up to 3
months
£’000
198
Up to 3
months
£’000
273
Up to 3
months
£’000
242
Between
3 and 12
months
£’000
Between 1
and 2 years
£’000
Between 2
and 5 years
£’000
Over 5 years
£’000
570
559
1,118
220
Between
3 and 12
months
£’000
Between 1
and 2 years
£’000
Between 2
and 5 years
£’000
Over 5 years
£’000
477
426
720
220
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
December 2022:
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
2,724
3,746
-
-
63
(833)
(1,189)
158
108
-
1,954
2,823
-
(995)
-
372
(288)
134
577
-
2,038
2,539
930
(1,064)
126
45
736
773
(871)
106
205
185
398
2,040
2,970
-
-
63
(736)
(1,064)
126
108
-
1,367
2,140
-
(871)
-
372
(185)
106
577
-
1,554
1,952
At 1 January 2021
Cash Flows
Non-cash flows
- interest paid
- lease additions
- transfers
At 1 January 2022
Cash Flows
Non-cash flows
- interest paid
- lease additions
- transfers
At 31 December 2022
1,022
(1,189)
158
45
833
869
(995)
134
205
288
501
25. RELATED PARTY TRANSACTIONS
Parent Company
Lease payments incurred for short-term leases not included in the measurement of lease liabilities under IFRS 16
The Parent Company entered into the following transactions with subsidiaries during the year:
were as follows:
Short-term lease expense
2022
2021
Group
£’000
349
Parent
£’000
349
Group
£’000
240
Parent
£’000
240
Sale of goods and services (including recharge of costs)
Transaction value
Year ended 31 December
Balance outstanding
as at 31 December
2022
£’000
1,403
2021
£’000
1,039
2022
£’000
(37)
2021
£’000
959
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 £258,000 (2021: £262,000).
156
156
157
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
26. PENSION OBLIGATIONS AND EMPLOYEE BENEFITS
Defined benefit obligation
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.
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 £838,000 (2021: £811,000).
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 2022 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
Longevity risk
The present value of the defined benefit liability
The Group is required to provide benefits for life for the
is calculated using a discount rate determined by
members of the defined benefit liability. Increases in the
reference to market yields of high quality corporate
life expectancy of the members will increase the defined
bonds. The estimated term of the bonds is consistent
benefit liability.
with the estimated term of the defined benefit
obligation and it is denominated in sterling. A decrease
Inflation risk
in market yield on high quality corporate bonds will
A significant proportion of the defined benefit liability is
The details of the Group’s defined benefit obligation are as follows:
Opening defined benefit obligation
Current service cost (Company only)
Interest cost
Actual contributions paid by plan participants
Experience adjustment
Actuarial gains from changes in financial assumptions
Actuarial losses/(gains) from changes in demographic assumptions
Benefits paid - including insurance premiums
Closing defined benefit obligation
31 December 2022
£’000
31 December 2021
£’000
27,620
30,536
25
502
3
320
(8,951)
159
(990)
18,688
26
390
3
-
(1,910)
(331)
(1,094)
27,620
Defined benefit plan assets
The reconciliation of the balance of the assets held for the Group’s defined benefit plan is presented below:
increase the Group’s defined benefit liability, although
linked to inflation. An increase in the inflation rate will
Return on plan assets (excluding amounts included in net interest)
it is expected that this would be offset partially by an
increase the Group’s liability. A portion of the plan assets
increase in the fair value of the plan assets.
are inflation-linked debt securities, which will mitigate
Investment risk
The plan assets at 31 December 2022 are predominantly
credit, liability driven investments and bonds.
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 2022 and 2021 is shown below.
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
Fair value of plan assets at start of accounting period
Interest income
31 December 2022
£’000
31 December 2021
£’000
32,896
607
(10,543)
909
3
(990)
(69)
22,813
30,883
400
1,842
905
3
(1,094)
(43)
32,896
Present value of funded obligations
Fair value of plan assets
Surplus in the plan
Related deferred tax liability
Net surplus recognised
31 December 2022
£’000
31 December 2021
£’000
(18,688)
22,813
4,125
(1,031)
3,094
(27,620)
32,896
5,276
(1,319)
3,957
158
158
The actual return on plan assets was a loss of £9,936,000 (2021: gain of £2,242,000).
Plan assets do not comprise any of the Group’s own financial instruments or any assets used by Group companies.
The fair value of the scheme assets in each category has been summarised below.
The major categories of plan assets measured at fair value are:
31 December 2022
£’000
31 December 2021
£’000
Equities
Credit
Liability driven investments
Absolute return bonds
Other, including cash
-
13,592
6,749
1,031
166
21,538
3,455
13,664
6,865
7,267
295
31,546
159
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
26. PENSION OBLIGATIONS AND EMPLOYEE BENEFITS (CONTINUED)
Defined benefit plan expenses (continued)
Defined benefit plan assets (continued)
Remeasurements recognised in other comprehensive income/(expense) relating to the Group’s defined
With the agreement of Trustees, the Scheme fully disinvested from the L&G Managed Property Fund in October
2021, following a period of high interest rates, to increase liquidity and reduce investment risk to target levels.
benefit plan are as follows:
Assets included which do not have a quoted market value:
Property
31 December 2022
£’000
31 December 2021
£’000
1,275
1,350
The fair value of the property was revalued as at 31 December 2022, 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:
Future salary increases
Rate of increase in (post 1997) pensions in payment (a)
Discount rate at 31 December
Expected rate of inflation - RPI
31 December
2022
31 December
2021
3.25%
3.60%
4.75%
3.25%
3.40%
3.40%
1.85%
3.40%
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 (2021:
88 years) and 90 years for women (2021: 90 years). For pensioners currently aged 65, life expectancies have been
estimated as 86 years for men (2021: 86 years) and 88 years for women (2021: 89 years).
a) Increases on pre-6 April 1997 pensions are fixed at 3% per annum. Post-6 April 1997 increases are in line with
consumer price inflation, subject to a minimum of 3% and a maximum of 5%.
Over the year the Company contributed to the plan at the rate of 46.3% of salaries. The Company will continue to
contribute at this rate pending the results of the next actuarial valuation. The plan is now closed to new entrants.
This means that the average age of the membership can be expected to rise which in turn means that the future
service cost (as a percentage of scheme members’ pensionable salaries) can be expected to rise.
Defined benefit plan expenses
Amounts recognised in profit or loss are:
Current service cost (Company)
Net interest (on net defined benefit asset)
Scheme administration expenses
Total amount recognised in the Consolidated Income Statement
31 December
2022
£’000
31 December
2021
£’000
25
(105)
69
(11)
26
(10)
43
59
The current cost is included in employee benefits expense and the net interest credit is included within interest
receivable.
160
160
Actuarial (losses)/gains on assets
Experience adjustment
Actuarial gains from changes in financial assumptions
Changes in demographic assumptions
Total (loss)/gain recognised in other comprehensive income/(expense)
31 December
2022
£’000
31 December
2021
£’000
(10,543)
(320)
8,951
(159)
(2,071)
1,842
-
1,910
331
4,083
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 £nil to be paid in 2023.
The weighted average duration of the defined benefit obligation at 31 December 2022 is 13 years
(2021: 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.
31 December
2022
£’000
31 December
2022
%
31 December
2021
£'000
31 December
2021
%
Increase in discount rate by 0.5%
Increase in price inflation adjustment by 0.5%
1 year increase in life expectancy
(1,128)
324
761
-6.04%
1.73%
4.07%
(1,985)
646
1,467
-7.00%
2.00%
5.00%
The sensitivities may not be representative of the actual change in the present value of the scheme obligation, as
it is unlikely that the change in assumptions would occur in isolation of each other, as the assumptions may be
linked.
The method and assumptions used in this analysis have been reviewed and remain unchanged from the prior
year.
161
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
27. AUDIT EXEMPTION STATEMENT
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
The Buyback was purposed to meet the Group’s
average price paid was 1428.18 pence and the total
future obligations under its SAYE Option Scheme
cost of the Buyback in the period was £5.5m.
and/or Long-Term Incentive Plan. The Buyback was
completed on 5 April 2022 and was funded from the
Group’s existing cash resources. All Ordinary Shares
The total number of shares held in Treasury as at
31 December 2022 is 493,150.
31 December 2022 for each company unless otherwise stated). The guarantee is enforceable against the parent
repurchased are now held in treasury. The weighted
undertaking by any person to whom the subsidiary company is liable in respect of those liabilities.
Company Number
29. EMPLOYEE SHARE SCHEMES
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
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
2022
£’000
3,697
2021
£’000
3,697
The share capital of Nichols plc consists of ordinary
During 2022, the Group repurchased 385,486
10p shares. All shares are equally eligible to receive
Ordinary shares under this authority, which is due
dividends and the repayment of capital and represent
to expire at the AGM to be held on 26 April 2023.
The Group operates three equity-settled share-based payment schemes; a Save As You Earn (SAYE) scheme
open to all employees; a Hybrid Incentive Plan for certain Directors and Senior Executives (replacing the
previous year’s Long-Term Incentive Plan (LTIP)) 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
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.
Awards
Share price
on grant
date
£
Expected
dividend
yield
Risk free
rate
Volatility
Fair value
per award
£
2019 LTIP
47,245
17.67
1.92%
1.80%
17.70%
16.68
The movement of outstanding LTIP awards during the year is also set out below.
Awards
outstanding at
1 January 2022
Granted
Exercised
Lapsed
Awards
outstanding at
31 December 2022
2019 LTIP
23,352
-
-
(23,352)
-
Of the total number of options outstanding at 31 December 2022, nil (2021: nil) had vested and were exercisable.
one vote at shareholders’ meetings.
The Group, therefore, has an unexpired authority
The weighted average remaining life of LTIP awards at 31 December 2022 is nil years.
There were no movements in the Group’s authorised
and allotted, issued and fully paid share capital for
to purchase up to 3,175,391 Ordinary shares with a
nominal value of £317,539.
The 2019 LTIP award didn’t vest based on performance against the agreed targets between 1 January 2019 and
31 December 2021.
the financial years ending 31 December 2022 and 31
On 14 December 2021, the Group announced its
December 2021.
plans to conduct on-market purchases under a share
Hybrid Incentive Plan
At the Company’s AGM held on 27 April 2022, 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
buyback programme. This included the intention to
During 2021 the Group introduced a Hybrid Incentive Plan to replace the existing LTIP. A combination of
repurchase up to 453,486 ordinary shares of 10p each
financial and non-financial measures and targets are set annually with outcomes determined by performance
in the capital of the Group (the “Ordinary Shares”),
against this scorecard. Awards made under the Hybrid Incentive Plan vest provided the participant remains
representing up to approximately 1.2 per cent of the
under employment within the 2-year vesting period following the award. Awards made under the Hybrid
Group’s issued share capital.
Incentive plan have a £nil exercise price.
shares.
162
162
The weighted average fair value of Hybrid Incentive Plan awards at their grant date in previous years are set out
on the next page. The fair value is calculated using the Black-Scholes valuation model.
163
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
29. EMPLOYEE SHARE SCHEMES (CONTINUED)
Hybrid Incentive Plan (continued)
Awards
Share price
on grant
date
£
Expected
dividend
yield
Risk free
rate
Volatility
Fair value
per award
£
2021 Hybrid incentive plan
58,550
13.63
1.50%
1.30%
49.10%
13.22
The movement of outstanding Hybrid Incentive Plan awards during the year is also set out below.
Awards
outstanding at
1 January 2022
Granted
Exercised
Lapsed
Awards
outstanding at
31 December 2022
2021 Hybrid incentive plan
-
58,550
-
(4,173)
54,377
Of the total number of options outstanding at 31 December 2022, nil had vested and were exercisable.
The weighted average remaining life of LTIP awards at 31 December 2022 is 1.0 years.
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 opposite. The
fair value is calculated using the Black-Scholes valuation model.
The movement of outstanding SAYE options during the year is also set out opposite.
The weighted average remaining life of SAYE awards at 31 December 2022 is 1.4 years. Volatility has been
determined using statistical analysis of the Group’s 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 £12.80.
SAYE (CONTINUED)
2017 5 year
2018 5 year
2019 3 year
2019 5 year
Options
7,339
4,035
27,789
6,304
2020 3 year
103,095
2020 5 year
2021 3 year
2021 5 year
2022 3 year
2022 5 year
15,014
29,098
5,967
33,545
4,197
Exercise
price per
option
£
Share
price on
grant
date
£
Expected
dividend
yield
Risk free
rate
Volatility
Fair value
per option
£
14.57
12.25
12.84
12.84
7.93
7.93
10.15
10.15
10.79
10.79
19.20
14.28
16.90
16.90
11.35
11.35
13.95
13.95
13.70
13.70
1.93%
1.87%
1.87%
1.87%
1.87%
1.87%
2.70%
2.70%
1.50%
1.50%
0.51%
1.12%
0.79%
0.91%
0.09%
0.09%
0.19%
0.40%
1.54%
1.58%
21.50%
23.40%
25.50%
25.40%
31.30%
31.30%
44.60%
37.50%
47.66%
41.00%
1.95
2.86
2.29
2.19
3.33
4.14
4.50
4.33
4.76
4.96
2017 5 year
2018 5 year
2019 3 year
2019 5 year
2020 3 year
2020 5 year
2021 3 year
2021 5 year
2022 3 year
2022 5 year
Options
outstanding at
1 January 2022
Granted
Exercised
Lapsed
Options
outstanding at
31 December 2022
1,334
1,882
12,336
2,146
88,176
15,014
28,939
5,967
-
-
-
-
-
-
-
-
-
-
33,545
4,197
-
-
(1,334)
(489)
(38)
(12,298)
-
-
-
-
-
-
-
(700)
(5,271)
-
(5,911)
(591)
(3,726)
(2,529)
-
1,393
-
1,446
82,905
15,014
23,028
5,376
29,819
1,668
164
164
165
NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2022
UNAUDITED FIVE YEAR SUMMARY - YEAR ENDED 31 DECEMBER 2022
29. EMPLOYEE SHARE SCHEMES (CONTINUED)
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.
Revenue
Adjusted operating profit
Exceptional items
Operating profit/(loss)
2022
£’000
2021
£’000
2020
£’000
2019
£’000
2018
£’000
164,926
144,328
118,657
146,985
142,037
24,602
21,922
(11,146)
(39,477)
11,654
(5,074)
32,439
31,638
-
-
13,456
(17,555)
6,580
32,439
31,638
Awards
Share price
on grant
date
Expected
dividend
yield
Risk free
rate
Volatility
Fair value
per award
£
Net finance income/(expense)
380
(101)
(40)
(17)
115
Profit/(loss) before taxation
13,836
(17,656)
6,540
32,242
31,753
2020 Executive share awards
17,402
14.08
2.70%
-0.07%
42.40%
12.98
Taxation
(2,201)
(4,512)
(1,686)
Profit/(loss) after taxation
11,635
(22,168)
4,854
(5,587)
26,835
(6,238)
25,515
Awards
outstanding at
1 January 2022 Granted Exercised
Lapsed
Awards
outstanding at
31 December 2022
2020 Executive share awards
17,402
-
-
-
17,402
The remaining life of Executive share awards at 31 December 2022 is 1.0 years.
Volatility has been determined using statistical analysis of the Group’s 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:
SAYE
Hybrid Incentive Plan
Executive share awards
Total charge
2022
£’000
194
307
98
599
2021
£’000
197
-
75
272
Dividends paid
(9,383)
(6,868)
(10,338)
(14,466)
(12,803)
Retained earnings movement
(4,894)
(29,036)
(5,484)
12,189
12,712
Earnings/(loss) per share - (basic)
31.86p
(60.04p)
13.14p
72.81p
69.23p
Earnings/(loss) - (diluted)
31.82p
(60.04p)
13.13p
72.77p
69.19p
Earnings per share - (basic) before
exceptional items
Earnings per share - (diluted) before
exceptional items
55.38p
46.15p
25.56p
72.81p
69.23p
55.32p
46.09p
25.54p
72.77p
69.19p
Dividends paid per share
25.70p
13.3p
28.0p
39.2p
34.7p
166
166
167
NOTICE OF ANNUAL GENERAL MEETING 2023
NOTICE OF ANNUAL GENERAL MEETING 2023
Notice is hereby given that the thirty-first Annual
of the next annual general meeting of the
14.
That if resolution 12 is passed the Directors
immediately preceding the day on which the
General Meeting (the ‘AGM’) of Nichols plc (the
Company after the passing of this resolution
be authorized in addition to any authority
purchase is made, and (unless previously
‘Company’) will be held at Nichols plc, Laurel House,
or on 26 July 2024 (whichever is the earlier),
granted under resolution 13 to allot equity
revoked, varied or renewed) this authority shall
Woodlands Park, Ashton Road, Newton-le-Willows,
save that the Company may make an offer
securities (as defined in the Companies Act
expire at the conclusion of the next annual
Merseyside, WA12 0HH on Wednesday 26 April 2023 at
or agreement before this authority expires
2006) for cash under the authority given by
general meeting of the Company after
11.00 a.m for the following purposes:
which would or might require shares to be
that resolution and/or to sell ordinary shares
the passing of this resolution or on 26 July
To consider and, if thought fit, to pass the following
resolutions as ordinary resolutions:
allotted or rights to subscribe for or to convert
any security into shares to be granted after this
authority expires and the Directors may allot
held by the Company as treasury shares for
2024 (whichever is the earlier), save that the
cash as if section 561 of the Companies Act
Company may enter into a contract to purchase
2006 did not apply to any such allotment or
Shares before this authority expires under
1.
To receive the Company’s annual accounts,
shares or grant such rights pursuant to any
sale, such authority to be limited to the
which such purchase will or may be completed
strategic report and directors’ and auditors’
such offer or agreement as if this authority
allotment of equity securities or sale of treasury
or executed wholly or partly after this authority
reports for the year ended 31 December 2022.
had not expired. This authority is in
shares up to a nominal amount of £364,756.20
expires and may make a purchase of Shares
such authority to be used only for the purposes
pursuant to any such contract as if this
of financing (or refinancing, if the authority
authority had not expired.
is to be used within 12 months after the
original transaction) a transaction which the
Board of the Company determines to be either
By order of the Board
an acquisition or a specified capital investment
of a kind contemplated by the Statement of
Principles on Disapplying Pre-Emption Rights
most recently published by the Pre-Emption
Group prior to the date of this notice; and
such authority to expire at the end of the next
AGM of the Company (or, if earlier, at the close
of business on 26 July 2024 but, in each case,
David Rattigan
Secretary
28 February 2023
prior to its expiry the Company may make
offers, and enter into agreements, which
would, or might, require equity securities to
be allotted (and treasury shares to be sold)
after the authority expires and the Board may
allot equity securities (and sell treasury shares)
under any such offer or agreement as if the
Registered Office, Laurel House, Woodlands Park,
Ashton Road, Newton-le-Willows, WA12 0HH.
Registered in England and Wales No. 00238303.
2.
To declare a final dividend for the year ended
31 December 2022 of 15.3 pence per ordinary
share of £0.10 in the capital of the Company, to
be paid on 4 May 2023 to shareholders whose
substitution for all existing authorities under
section 551 of the Act (which, to the extent
unused at the date of this resolution, are
revoked with immediate effect).
names appear on the register of members at
To consider and, if thought fit, to pass the following
the close of business on 24 March 2023.
resolutions as special resolutions:
3.
To re-elect John Nichols as a Director of the
13.
That, subject to the passing of resolution
12 being passed, the Directors be authorised
to allot equity securities (as defined in the
Companies Act 2006) for cash under the
authority given by that resolution and/or to
sell ordinary shares held by the Company
as treasury shares for cash as if section
561 of the Companies Act 2006 did not apply
to any such allotment or sale, such authority to
be limited:
(A)
to allotments for rights issues and other
pre-emptive issues; and
Company.
4.
To re-elect Andrew Milne as a Director of the
Company.
5.
To re-elect David Rattigan as a Director of the
Company.
6.
To re-elect John Gittins, as a Director of the
Company.
7.
To re-elect Helen Keays, as a Director of the
Company.
8.
To re-elect James Nichols, as a Director of the
Company.
9.
To elect Elizabeth McMeikan, as a Director of
the Company.
10.
To reappoint BDO LLP as auditors of the
Company.
11.
To authorise the Directors to determine the
remuneration of the auditors.
12.
That, pursuant to section 551 of the Companies
Act 2006 (‘Act’), the Directors be and are
generally and unconditionally authorised to
allot shares in the Company or to grant rights
to subscribe for or to convert any security into
shares in the Company up to an aggregate
nominal amount of £1,232,292.40 (representing
one third of the existing issued ordinary share
capital of the Company), provided that, (unless
previously revoked, varied or renewed)
this authority shall expire at the conclusion
(B)
to the allotment of equity securities or sale of
authority had not expired.
treasury shares (otherwise than under
paragraph (A) above) up to a nominal amount
of £364,756.20 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 2024 (whichever is the
earlier), save that the Company may make an
offer or agreement before this power expires
15.
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:
which would or might require equity securities
15.1
the maximum aggregate number of Shares
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
which may be purchased is 3,647,562:
15.2
the minimum price (excluding expenses) which
may be paid for a Share is 10p; and
or agreement as if this power had not expired.
15.3
the maximum price (excluding expenses) which
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).
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
168
169
NOTICE OF ANNUAL GENERAL MEETING 2023
NOTICE OF ANNUAL GENERAL MEETING 2023
EXPLANATORY NOTES ON THE RESOLUTIONS
to discharge their duties effectively, taking into
respect of allotments of shares and other equity
authority granted last year and would expire at
account their other commitments.
securities (and sales of treasury shares for cash)
the end of the 2024 AGM, or if earlier, at close of
Resolutions 1 to 12 (inclusive) are ordinary
resolutions; resolutions 13, 14 and 15 are special
Appointment of the auditor
resolutions. To be passed, ordinary resolutions
require more than 50% of votes cast to be in favour
of the resolution whilst special resolutions require
at least 75% of the votes cast to be in favour of the
resolution. Votes withheld do not count towards the
total votes cast for or against a resolution.
ORDINARY RESOLUTIONS
To receive the Annual Report and Accounts 2022
Resolution 1 is a standard resolution. The
Companies Act 2006 requires the Directors to lay
The auditor of a company must be appointed or
re-appointed at each general meeting at which the
accounts are laid before shareholders. Resolution
10 seeks approval to appoint BDO LLP as the
Company’s auditor.
Remuneration of the auditor
Resolution 11 seeks consent for the Directors to
determine the remuneration of the auditor.
Directors’ authority to allot shares
before the Company in a general meeting copies
Resolution 12 seeks consent for shareholders to
of the Company’s annual accounts, the Directors’
grant the Directors authority to allot shares or
report and the auditor’s report on those accounts.
grant rights to subscribe for or convert securities
The Annual Report and Accounts for the year ended
into shares, up to an aggregate nominal value of
31 December 2022 along with a copy of the AGM
£1,232,292.40, which is approximately one-third
notice will be available online at
of the nominal value of the issued ordinary share
www.nicholsplc.co.uk
Final dividend
capital of the Company as at 8 March 2023, being
the latest practicable date prior to the publication
of this notice. The authority will expire at the
In Resolution 2 the Directors are recommending
next AGM of the Company or if earlier, at close of
the payment of a final dividend of 15.3 pence
business on 26 July 2024. The Directors have no
per ordinary share in respect of the year ended
current intention of exercising such authority and
31 December 2022. If approved at the AGM, the
will exercise this power only when they believe
dividend will be paid on 4 May 2023 to shareholders
that such exercise is in the best interests of the
who are on the Register of Members at the close of
shareholders.
business on 24 March 2023.
Election and re-election of directors
Dis-application of pre-emption rights
Special resolution 13 if passed would grant the
In line with the practice adopted by the Company
Directors authority to allot securities of the
in previous years, all Directors will be standing for
Company up to a specified amount in connection
election. Resolutions 3 to 8 seek approval for the re-
with rights issues without having to obtain prior
election of those Directors who were in office during
approval from the shareholders on each occasion
the year ended 31 December 2022. Resolution 9
and also to allot a certain number of securities
deals with the election of Elizabeth McMeikan who
for cash without first being required to offer such
was appointed as a director of the Company on 1
shares to existing shareholders. The proposed
February 2023. Biographical information is provided
disapplication of pre-emption rights will mean that
on pages 76 to 77 of the Annual Report and
the number of Ordinary Shares which may be issued
representing no more than an additional 10% of
business on 26 July 2024. In reaching a decision to
issued ordinary share capital (exclusive of treasury
purchase ordinary shares, the Directors will take
shares), to be used only in connection with an
account of the Company’s cash resources and
acquisition or specified capital investment. The
capital and the general effect of such purchase on
Pre-Emption Group’s Statement of Principles defines
the Company’s business. The authority would only
‘specified capital investment’ as meaning one or
be exercised by the Directors if they considered
more specific capital investment related uses for
it to be in the best interests of the shareholders
the proceeds of an issuance of equity securities, in
generally and if the purchase could be expected to
respect of which sufficient information regarding
result in an increase in earnings per ordinary share.
the effect of the transaction on the Company, the
assets that are the subject of the transaction and
(where appropriate) the profits attributable to them
is made available to shareholders to enable them to
reach an assessment of the potential return.
Accordingly, and in line with the template
resolutions published by the Pre-Emption Group,
resolution 14 seeks to authorise the Directors
to allot new shares and other equity securities
pursuant to the authority given by resolution 12, or
sell treasury shares, for cash up to a further nominal
amount of £364,756.20, being approximately 10%
of the total issued ordinary share capital of the
Company as at 8 March 2023, only in connection
with an acquisition or specified capital investment
which is announced contemporaneously with
the allotment, or which has taken place in the
preceding six-month period and is disclosed in the
announcement of the issue. If the authority given
in resolution 14 is used, the Company will publish
details of the placing in its next Annual Report. If
these resolutions are passed, the authorities will
expire at the end of the 2024 AGM or at close of
business on 26 July 2024, whichever is the earlier.
The Board considers the authorities in resolutions
13 and 14 to be appropriate in order to allow
the Company flexibility to finance business
opportunities or to conduct a rights issue or other
pre-emptive offer without the need to comply with
the strict requirements of the statutory pre-emption
Accounts for the year ended 31 December 2022 for
for cash without first being required to offer such
provisions.
each of the current directors.
shares to existing shareholders will not exceed
The Board has no hesitation in recommending the
election of the Directors to shareholders. In making
these recommendations, the Board confirms that
it has given careful consideration to the Board’s
3,647,562 Ordinary Shares, being approximately
10 per cent. of the issued ordinary share capital of
the Company as at 8 March 2023, excluding those
shares held in treasury.
balance of skills, knowledge and experience and
The Pre-Emption Group Statement of Principles
is satisfied that each of the Directors putting
2022 issued on 4 November 2022 supports the
themselves forward for election has sufficient time
annual disapplication of pre-emption rights in
Authority to purchase own shares
Resolution 15 seeks authority for the Company to
make market purchases of its own ordinary shares
up to a maximum number of 3,647,562 ordinary
shares, representing approximately 10% of the
issued ordinary share capital at 8 March 2023.
The authority requested would replace a similar
170
171
GENERAL NOTES
GENERAL NOTES
1. Entitlement to attend and vote
•
Register your vote online through our
The right to vote at the meeting is determined
by reference to the register of members. Only
those shareholders registered in the register of
members of the Company as at close of business
on Monday 24 April 2023 (or, if the meeting is
adjourned, close of business on the date which
is two working days before the date of the
adjourned meeting) shall be entitled to 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
registrar’s portal – www.signalshares.com.
You will need your investor code which is
printed on your share certificate or may be
obtained by calling the Company’s registrar,
Link Group (‘Link’) on 0371 664 0300. Calls are
charged at the standard geographic rate and
will vary by provider. Calls outside the
United Kingdom will be charged at the
applicable international rate. Lines are open
between 09:00 – 17:30, Monday to Friday
excluding public holidays in England and Wales.
All proxy appointments, whether electronic or
responsibility of the CREST member concerned
hard copy, must be received by the Company’s
to take (or, if the CREST members is a CREST
registrar no later than 11.00 a.m. on Monday 24
personal member or sponsored member or has
April 2023 (or, in the event that the meeting is
appointed a voting service provider(s) takes(s))
adjourned, no later than 48 hours (excluding any
such action as shall be necessary to ensure that a
part of the day that is not a working day) before
message is transmitted by means of the CREST
the time of any adjourned meeting).
system by an particular time. In this connection,
5. CREST members who wish to appoint a proxy
or proxies for the meeting (or any adjournment
of it) through the CREST electronic proxy
appointment service may do so by using the
procedures described in the CREST Manual.
CREST 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.
disregarded in determining the rights of any
•
Link has launched a shareholder app: LinkVote+.
CREST personal members or other CREST
7. The Company may treat a CREST Proxy Instruction
person to attend or vote (and the number of votes
It’s free to download and use and gives
they may cast) at the meeting.
shareholders the ability to access their
2. Appointment of proxies
shareholding record at any time and allows
users to submit a proxy appointment quickly and
A member is entitled to appoint another person
easily online rather than through the post. The
as his or her proxy to exercise all or any of his or
app is available to download on both the Apple
her rights to vote at the meeting. A proxy need
App Store and Google Play.
not be a member of the Company. A member
may appoint more than one proxy in relation to
the meeting provided that each proxy is
appointed to exercise the rights attached to
•
CREST members may use the CREST electronic
proxy appointment service as detailed in note 7
below.
a different share or shares held by him or her.
•
Proxymity Voting - if you are an institutional
To appoint more than one proxy, each different
investor you may also be able to appoint a proxy
proxy instruction must be received by the
electronically via the Proxymity platform, a
Company’s registrars at: Link Group, PXS 1,
process which has been agreed by the Company
Central Square, 29 Wellington Street, Leeds, LS1
and approved by the Registrar. For further
4DL no later than 48 hours before the time
information regarding Proxymity, please go to
appointed for the meeting (excluding non-working
www.proxymity.io. Your proxy must be lodged
days). You will need to state clearly the number
by 11:00 a.m on Monday 24 April 2023 in order
of shares in relation to which the proxy is
to be considered valid or, if the meeting is
appointed. A failure to specify the number
adjourned, by the time which is 48 hours before
of shares each proxy appointment relates to
the time of the adjourned meeting. Before you
or specifying a number which when taken
can appoint a proxy via this process you will need
together with the number of shares set out in the
to have agreed to Proxymity’s associated terms
other proxy appointments is in excess of
and conditions. It is important that you read these
those held by the member, may result in the
carefully as you will be bound by them and they
proxy appointment being invalid. A proxy may
will govern the electronic appointment of your
only be appointed in accordance with the
proxy. An electronic proxy appointment via the
procedures set out in notes 4 to 7 below and the
Proxymity platform may be revoked completely
notes to the form of proxy.
3. The appointment of a proxy will not preclude a
member from attending and voting in person at
by sending an authenticated message via the
platform instructing the removal of your proxy
vote.
the meeting if he or she so wishes
•
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
sponsored members, and those CREST members
as invalid in the circumstances set out in
who have appointed a voting service provider(s),
Regulation 35(5)(a) of the Uncertificated Securities
should refer to their CREST sponsor or voting
Regulations 2001.
service provider(s), who will be able to take
appropriate action on their behalf.
8. Unless otherwise indicated on the Form of Proxy,
CREST, Proxymity or any other electronic voting
6.
In order for a proxy appointment or instruction
instruction, the proxy will vote as they think fit or,
made using the CREST service to be valid,
at their discretion or withhold from voting.
the appropriate CREST message (a “CREST Proxy
Instruction”) must be properly authenticated in
accordance with Euroclear UK & International
Limited’s specifications and must contain
the information required for such instructions,
as described in the CREST Manual. The message,
regardless of whether it constitutes the
appointment of a proxy or is an amendment to
the instruction given to a previously appointed
proxy, must, in order to be valid, be transmitted
so as to be received by the Company’s Registrars,
9. A shareholder which is a corporation may
authorise one or more persons to act as
its representative(s) at the meeting. Each such
representative may exercise (on behalf of the
corporation) the same powers as the corporation
could exercise if it were an individual shareholder,
provided that (where there is more than one
representative and the vote is otherwise than on
a show of hands) they do not do so in relation to
the same shares.
Link Group (CREST ID RA10) no later than 11.00
10. As at 8 March 2023 (being the last practicable date
a.m. on Monday 24 April 2023) (or, if the meeting
before the publication of this notice), the
is adjourned, no later than 48 hours (excluding
Company’s issued share capital consists of
any part of the day that is not a working day)
36,968,772 ordinary shares of 10 pence each.
before the time of any adjourned meeting). For
As the Company holds 493,150 ordinary shares
this purpose, the time of receipt will be taken to
in treasury, in respect of which it cannot exercise
be the time (as determined by the timestamp
any votes, the total voting rights in the Company
applied to the message by the CREST Applications
as at 8 March 2023 are 36,475,622 .
Host) from which Link Group 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 & International Limited does not
11. 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.
4.
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:
172
Wellington Street, Leeds, LS1 4DL.
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
173
DIRECTIONS TO THE ANNUAL GENERAL MEETING
GENERAL NOTES
Car:
Train:
Bus:
Leave the M6 at Junction 23
Newton-le-Willows railway station
The nearest bus service to
and take the A49 south towards
is located 1.3 miles away from
Woodlands Park is located on
Newton, Woodlands Park is on the
Woodlands Park on Southworth
Cobden Street, 0.8 miles from
left in approximately 0.3 miles. On
Road, WA12 9SF.
Woodlands Park, operating the
entering the estate, Laurel House
is accessed from the fourth exit of
the roundabout.
number 22 service into
Newton-le-Willows.
FINANCIAL CALENDAR
Annual General Meeting
Interim Results Announced
26 April 2023
26 July 2023
Laurel House, Woodlands Park, Ashton Road,
Newton-Le-Willows, WA12 0HH.
01925 22 22 22 www.nicholsplc.co.uk
174
175
NOTES
176
177
W E M A K E L I F E
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