TIDMNWF
RNS Number : 5239U
NWF Group PLC
02 August 2022
For release 7.00am Tuesday 2 August 2022
NWF Group plc
NWF Group plc: Final results for the year ended 31 May 2022
"A record set of results, significantly ahead of market
expectations at the start of the financial year, demonstrating the
capability of the business to optimise performance and the
resilient nature of our markets."
NWF Group plc ('NWF' or 'the Group'), the specialist distributor
of fuel, food and feed across the UK, today announces its audited
final results for the year ended 31 May 2022.
2022 2021 %
------------------------------------------------------ --------- --------- ------
Financial highlights
Revenue GBP878.6m GBP675.6m +30.0%
Headline operating profit(1) GBP21.8m GBP12.9m +69.0%
Headline profit before taxation(1) GBP20.9m GBP11.9m +75.6%
Diluted headline earnings per share(1) 34.8p 20.4p +70.6%
Total dividend per share 7.5p 7.2p +4.2%
Headline EBITDA(1) GBP26.6m GBP17.8m +49.4%
Net cash/(debt) (excluding IFRS 16 lease liabilities) GBP9.0m GBP(5.7)m
------------------------------------------------------ --------- --------- ------
Statutory results
Operating profit GBP13.2m GBP12.1m +9.1%
Profit before taxation GBP12.0m GBP10.8m +11.1%
Diluted earnings per share 17.0p 15.9p +6.9%
Net debt (including IFRS 16 lease liabilities) GBP19.2m GBP31.3m -38.7%
------------------------------------------------------ --------- --------- ------
1 Headline operating profit excludes exceptional items and
amortisation of acquired intangibles. Headline profit before
taxation excludes exceptional items, amortisation of acquired
intangibles and the net finance cost in respect of the Group's
defined benefit pension scheme. Diluted headline earnings per share
also takes into account the taxation effect thereon.
Highlights:
-- Record results for the Group, reflecting very strong
operational and commercial execution in a challenging
environment.
-- Significant outperformance in Fuels as a result of volatility
in oil prices in our final quarter, together with short-term
benefits arising from periods when the UK market was supply
constrained.
-- Solid performance in Food across the year with warehouses at
an effective operating capacity, high service levels and an
improvement in operating efficiency as planned.
-- Strong second half performance in Feeds, implementing price
increases in response to unprecedented inflation in feed
commodities and other key inputs more than offsetting lower
volumes.
-- The balance sheet remains in a robust position with the Group
cash positive at the year-end for the first time, highlighting the
resilience of the Group and providing significant capacity to
support investment driven growth.
-- Continued increase in shareholder returns; proposed increase
in the total dividend of 4.2% to 7.5p per share, reflecting the
strong performance and the Board's confidence in the prospects of
the business.
-- Performance to date in the current financial year has been in
line with the Board's expectations.
Divisional highlights:
Fuels - headline operating profit of GBP17.2 million (2021:
GBP9.3 million). Strong performance across the year with improved
returns from a focus on customer service across our 25 depots, with
significant one-off gains from providing service to customers when
market pricing and availability was challenging in our final
quarter.
Food - headline operating profit of GBP2.8 million (2021: GBP1.9
million). Consistent improvement in performance across the year.
Warehouses were at an effective operating capacity and delivering
high levels of customer service, with anticipated improvements in
operating efficiency delivered ahead of plan.
Feeds - headline operating profit of GBP1.8 million (2021:
GBP1.7 million). A strong recovery in the second half, following a
disappointing first half, successfully navigating unprecedented
volatility and increases in feed commodities supported by an
increasing milk price across the country.
Richard Whiting, Chief Executive, NWF Group plc, commented:
"NWF has delivered a record set of results, significantly ahead
of the market expectations at the start of our financial year. It
has been delivered by focusing on service to our customers across
the country and our teams responding effectively to unprecedented
volatility in cost inputs and issues of supply availability. Oil
and feed commodities were particularly impacted in our final
quarter, as a consequence of the conflict in Ukraine. The Group has
established a strong track record of resilience and performance and
we are excited by the opportunities across the Group to continue
our development."
A meeting will be held for analysts at 9.30 a.m. on the day of
the results announcement at MHP Communications, 60 Great Portland
Street, London W1W 7RT . Please contact MHP for further details at
nwf@mhpc.com .
Information for investors, including analyst consensus
forecasts, can be found on the Group's website at www.nwf.co.uk
.
Richard Whiting, Chief Reg Hoare / Catherine
Executive Chapman Mike Bell / Ed Allsopp
Chris Belsham, Group Finance
Director
NWF Group plc MHP Communications Peel Hunt LLP
(Nominated Advisor)
Tel: 01829 260 260 Tel: 020 3128 8339 Tel: 020 7418 8900
Chair's statement
Overview
I am pleased to report another year of significant
outperformance for the Group, exceeding the market expectations
that were established at the start of the financial year. There
have been significant challenges in our markets with periods of
supply shortage, unprecedented volatility of key commodities and
inflationary pressures. I am pleased to report our teams across the
Group have managed these challenges very effectively and have
delivered outperformance as a result of their response in difficult
times.
As a consequence of the good progress achieved, the Group's
strong cash generation and the growing confidence in the Group's
future prospects, the Board is recommending a final dividend of
6.5p per share, to be paid to shareholders on 9 December 2022
(2021: 6.2p) giving a total dividend of 7.5p per share (2021:
7.2p), a 4.2% increase on the prior year. This is the eleventh year
that the Group has increased the dividend, highlighting continual
sustained improvements in performance.
Our business
NWF Group is a specialist distributor delivering fuel, food and
feed across the UK. Each of our trading divisions has scale and
good market position and is profitable and cash generative. Each
division trades under different brands with their own brand
architecture as follows:
Fuels NWF Fuels (including a number of local sub-brands)
Food Boughey
Feeds NWF Agriculture, SC Feeds, New Breed and Jim Peet
Key areas of focus for the Board in 2022 were:
Responding proactively to market conditions
The Group has responded well to challenging market conditions
throughout the year. In the autumn, fuel shortages at retail sites
across the country led to concerns for Fuels' commercial and
domestic customers. We were able to maintain full supply and had no
supply shortages. In our final quarter, as a result of the Ukraine
conflict, the price of oil rose sharply and with the move away from
Russian oil, supply shortages were experienced across the country.
Through a combination of supply agreements in place across the UK
and our local depot network focused on maintaining supplies to
regular customers, we were able to maintain service even when this
has involved trunking fuel across the country. In Food, customer
demand has been more stable, however labour shortages experienced
by customers resulted in lower than anticipated stock levels in the
run up to Christmas. In Feeds, commodity prices increased to
unprecedented levels in our final quarter and we have been able to
pass these through to our customers who in turn have been supported
by increasing milk prices.
Delivering on strategy
The Group has a clearly articulated strategy which has a focus
on expanding the Fuel depot network through acquisitions and
consolidating a fragmented market. There is a strong pipeline of
opportunities and this remains a focus for the Group. In Food
following the successful expansion with the Crewe warehouse we
continue to discuss additional contracts with customers which will
support further expansion of the warehousing and distribution
business. In Feeds we are focused on developing nutritionists
through the NWF Academy who can increase volumes and utilise our
national operations platform.
Cash generation
Cash generation remains a focus for the Group and it is pleasing
to report a positive year-end net cash balance for the first time,
of GBP9.0 million (excluding lease liabilities), which highlights
both the cash generative nature of our business and the capability
and funding for development opportunities.
Rewarding good service
The consistent focus on excellence in customer service has been
critical to managing unprecedented market conditions and supporting
our continued development.
ESG framework
The Board recognises the importance of ESG and the Group has
made significant progress on its ESG framework in 2022. We have
established a target of net zero by 2040 and increased the focus of
our four pillars across the Group. An executive steering committee
has been established, detailed measures developed and we are
establishing targets and goals for the short, medium and long-term.
We will report in more detail on our ESG framework in the Annual
Report. We continue to adopt the Quoted Companies Alliance
Corporate Governance Code ('the QCA Code') which we believe has
been constructed in a simple, practical and effective style and
that meaningful compliance with its ten main principles should
provide shareholders with confidence in how the Group operates.
Employees
The Group now employs in excess of 1,300 people across our three
divisions and Head Office. I would like to offer my personal thanks
to all of our employees for their outstanding efforts and
commitment to the Group during these challenging times.
Board Changes
In line with NWF's governance policy, and as previously
reported, I will be stepping down from the Board at the time of the
2022 AGM in September, having completed nine years' service with
NWF. David Downie, currently Senior Independent Non-Executive
Director, will be appointed as Chair at that time and Richard
Armitage, currently a Non-Executive Director, will be appointed as
Senior Independent Non-Executive Director. We are pleased to
welcome Dawn Moore, who will be joining the board as a
Non-Executive Director and Chair of the Remuneration Committee.
I look forward to updating shareholders on the Group's
continuing progress at the time of the Annual General Meeting on 29
September 2022.
Philip Acton
Chair
2 August 2022
Business and financial review
NWF has delivered a record set of results, significantly ahead
of the expectations we had at the start of our financial year. It
has been delivered by focusing on service to our customers across
the country and our teams responding effectively to unprecedented
volatility in cost inputs and issues of supply availability. Oil
and feed commodities were particularly impacted in our final
quarter, as a consequence of the conflict in Ukraine. The Group has
established a strong track record of resilience and performance and
we are excited by the opportunities across the Group to continue
our development.
The continued focus on cash and record level of profit has moved
the Group into a net cash positive position (excluding lease
liabilities) for the first time, which both demonstrates the
ongoing cash generative nature of our business and gives us
significant capability to fund continued growth and development. In
addition, and in line with our established practice, we are
proposing an increased dividend as part of our continuing focus on
driving shareholder returns.
Fuels delivered significant outperformance in the year with a
backdrop of supply issues across the country and oil price
volatility which our local depot teams were able to optimise by
providing continued high level of service to regular customers.
This delivered significantly higher than normal returns in the
financial year but reflects the flexibility and strong operating
model of the business.
The Food division delivered a significant improvement in
performance, ahead of our expectations. The result was delivered as
a consequence of our warehouses being at an effective level of
utilisation, drivers and staff being retained, good service levels
being achieved and a significant improvement in operational
efficiency.
Feeds had a challenging first half with lower volumes and
increasing commodity costs. This was turned around in the second
half, when commodity prices hit unprecedented highs, with a focus
on margin management supported by a continued increasing milk price
for our core UK customer base.
The Group delivered headline operating profit of GBP21.8 million
(2021: GBP12.9 million) and record headline profit before tax of
GBP20.9 million (2021: GBP11.9 million). Operating profit was
GBP13.2 million (2021: GBP12.1 million). Diluted headline earnings
per share were 70.6% higher at 34.8p (2021: 20.4p).
Cash management remains strong with net cash of GBP9.0 million
(2021: net debt of GBP5.7 million) excluding lease liabilities,
after GBP3.2 million of net capital expenditure (2021: GBP3.0
million).
Fuels
Fuels' significant outperformance was delivered by a consistent
improvement across the year and the dramatic impact of shortages in
oil and price volatility which followed the start of the conflict
in Ukraine and the desire to cease importation of Russian oil by
all major suppliers. This led to shortages and higher value placed
on service and availability of fuel. Our depots focused supplies on
regular customers and volumes declined in our final quarter as
availability issues impacted all distributors. The relatively mild
winter reduced demand for heating oil and NWF, along with the
majority of distributors, reduced sales via online brokers to
concentrate on core direct customers.
Volumes declined by 4.6% to 663 million litres (2021: 695
million litres). Revenue increased by 38.7% to GBP621.1 million
(2021: GBP447.8 million) as a consequence of a higher oil price and
the majority of the volume reduction being from lower value heating
oil. This was as a result of a relatively mild winter and higher
prices in our final quarter when domestic customers were able to
defer buying decisions. The average Brent Crude oil price in the
year was $87 per barrel compared to $52 per barrel in the prior
year. Critically, the oil price peaked at $137 per barrel in March
2022 which coincided with shortages at many terminals and
refineries.
Headline operating profit was GBP17.2 million (2021: GBP9.3
million) as a consequence of higher returns arising from supply
concerns, pricing volatility and the reduction in lower margin spot
business. Net profits of 2.6 pence per litre are significantly
higher than the 1.4 pence per litre in the prior year highlighting
the significant one-off gains.
Acquisition activity has continued through the year and whilst
none have completed in the year, the pipeline of opportunities is
healthy and this remains a focus for our development activity. We
have a proven post-acquisition integration plan, retaining the
local brand and customer facing parts of the business and
centralising finance, IT, procurement and credit control.
The Fuels division operates on a de-centralised model with depot
management teams focused on optimising performance for the specific
conditions of their local markets. This model supported our ability
to respond swiftly and effectively to the increased consumer demand
and significant commodity price volatility experienced during
lockdown. We continue to believe that our model is the most
effective way to maximise performance, given the industry
structure, but we also believe there are opportunities to leverage
benefits from the breadth of our growing network. As such we
continue to invest in enhancing systems and capabilities for the
Fuels division which we believe will improve efficiencies and
provide a strong platform for continued growth.
With over 109,000 customers (2021: 127,000) being supplied
across 25 fuel depots in the year (2021: 25), Fuels operates in
large and robust markets and, as a business, it has consistently
proved it can effectively manage the impact of volatility in oil
prices. The industry remains highly fragmented, with many small
operators, which provides NWF with further opportunities to
consolidate the market and increase its market share.
Food
Food reported a solid and significant improvement in
performance, delivering on the investment in, and growth of the
business when we opened the Crewe warehouse. This has been
underpinned by effective warehouse utilisation across the year, the
retention of staff and drivers, the ability to pass on inflationary
cost increases swiftly and an improvement in operating efficiency
across both sites.
Revenue increased by 14.2% to GBP62.6 million (2021: GBP54.8
million). Storage overall was at an average of 118,000 pallets
(2021: 120,000 pallets), with warehouses effectively utilised
across the year. Stock levels dipped in the run up to Christmas as
customers suffering labour shortages were unable to replenish
stocks in line with retailer demand. The mix of business improved
from prior year as food service and cash and carry volumes
recovered resulting in more complex added value work. Pallets
dispatched were in line with the prior year, reflecting the more
stable business environment.
Headline operating profit was GBP2.8 million (2021: GBP1.9
million). E-fulfilment, Palletline and the packing room all
increased returns in the year, with the most significant growth in
Palletline as customers utilised pallet networks to offset concerns
around driver shortages in the market.
Demand for our customers' products continues to be stable and
the outlook for most product categories handled by the business is
resilient. The business operates in a competitive supply chain and
needs to continually demonstrate the value and service that it
provides to food manufacturers and importers. The business has a
leading position in consolidating ambient grocery products in the
North West, with high service levels, industry leading systems and
a consistent operating performance being the key components of its
customer proposition.
Feeds
Feeds is focused on providing nutritional advice and on time
deliveries of animal feed to farmers across the country. Total feed
volume decreased by 8.2% to 528,000 tonnes (2021: 575,000 tonnes).
This reduction was due to the following reasons; total ruminant
feed market volumes were 3.5% lower than prior year with the
largest deficit in dairy blends as good forage from the previous
summer was utilised by farmers; and NWF's own volumes were lower as
a result of lower retail sales in the North and the loss of a
merchant in the South due to its acquisition.
Commodity prices increased through the year with an average 8%
increase in a basket of commodities to the end of February 2022. As
a consequence of the conflict in Ukraine there has been significant
concern around the availability of key commodities and prices
spiked, increasing by an unprecedented 35%, to a peak in early
April. As required price increases were implemented to cover
additional commodity and energy costs, the business recovered
strongly in the second half of the year.
Revenue was higher at GBP194.9 million (2021: GBP173.0 million)
reflecting the higher feed prices more than offsetting lower
volumes in the year. Headline operating profit was GBP1.8 million
(2021: GBP1.7 million).
We have continued investment in the NWF Academy in which new
trainees engage on an 18-month structured training programme to
become future NWF nutritionists. The Academy has recruited a third
group to the programme, which has been well received across the
industry. Graduates of the programme are now developing as
successful nutritionists in our national sales team.
Average milk prices in the UK have increased to unprecedented
levels, supporting farming customers higher feed, energy and labour
costs. The average price for the year of 34.3p per litre compared
to an average in the prior year of 29.3p per litre. The price in
May 2022 of 40.4p per litre compares to 30.1p per litre in May
2021. Milk production was 2.4% lower to 12.3 billion litres (2021:
12.6 billion litres).
Feeds has a very broad customer base, working with over 4,325
farmers across the UK. This base, and the underlying robust demand
for milk and dairy products, results in a reasonably stable overall
demand for our feed in most market conditions.
Outlook
In Fuels, we have a proven depot-based operating model and a
clear growth strategy to add to the network with acquisitions. With
a strong pipeline, these are being actively pursued and the
opportunity for growth remains significant.
In Food, we continue to seek further improvements in operational
efficiency, whilst targeting additional business to support our
current operations and generate opportunities for further
development.
In Feeds, with commodity prices remaining volatile but farmers
supported by a good milk price, demand is anticipated to remain
solid and we are seeking volume growth on the back of our Academy,
additions to the sales team and utilising an effective national
operations platform.
The Group has again clearly demonstrated its capability to
deliver performance and has great resilience. There are significant
growth opportunities, backed by strong cash flows, funding
availability and a solid asset base. We will therefore continue to
consider acquisition opportunities, building on our successful
track record of acquiring and integrating businesses, as well as
investment in organic development.
Performance to date in the current financial year has been in
line with the Board's expectations. Fuels trading has returned to
more normal levels following the one-off gains achieved in the year
ended 31 May 2022. Overall, the Board continues to remain confident
about the Group's future prospects.
Group results
For the year ended 31 May 2022
2022 2021
GBPm GBPm
------------------------------------------------------- ------- -------
Revenue 878.6 675.6
Cost of sales and administrative expenses (865.4) (663.5)
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Headline operating profit(1) 21.8 12.9
Exceptional items (8.3) (0.5)
Amortisation of acquired intangibles (0.3) (0.3)
------------------------------------------------------- ------- -------
Operating profit 13.2 12.1
Financing costs (1.2) (1.3)
------------------------------------------------------- ------- -------
Headline profit before tax(1) 20.9 11.9
Exceptional items (8.3) (0.5)
Amortisation of acquired intangibles (0.3) (0.3)
Net finance cost in respect of defined benefit pension
scheme (0.3) (0.3)
------------------------------------------------------- ------- -------
Profit before taxation 12.0 10.8
Income tax expense(2) (3.6) (3.0)
------------------------------------------------------- ------- -------
Profit for the year 8.4 7.8
------------------------------------------------------- ------- -------
Headline EPS(1) 35.0p 20.4p
------------------------------------------------------- ------- -------
Diluted headline EPS(1) 34.8p 20.4p
------------------------------------------------------- ------- -------
Dividend per share 7.5p 7.2p
------------------------------------------------------- ------- -------
Headline dividend cover(1) 4.6 2.8
------------------------------------------------------- ------- -------
Headline interest cover 54.5 25.8
------------------------------------------------------- ------- -------
1 Headline operating profit is statutory operating profit of
GBP13.2 million (2021: GBP12.1 million) before exceptional items of
GBP8.3 million (2021: GBP0.5 million) and amortisation of acquired
intangibles of GBP0.3 million (2021: GBP0.3 million). Headline
profit before taxation is statutory profit before taxation of
GBP12.0 million (2021: GBP10.8 million) after adding back the net
finance cost in respect of the Group's defined benefit pension
scheme of GBP0.3 million (2021: GBP0.3 million), the exceptional
items and amortisation of acquired intangibles. Headline EPS also
takes into account the taxation effect thereon. Headline dividend
cover is calculated using diluted headline EPS.
Group revenue increased by 30.0% to GBP878.6 million (2021:
GBP675.6 million) with revenue growth from significantly higher
commodity prices in Fuels and Feeds. Headline operating profit was
GBP21.8 million, an increase of 69.0% (2021: GBP12.9 million).
Operating profit increased 9.1% to GBP13.2 million (2021: GBP12.1
million).
Financing costs decreased by GBP0.1 million to GBP1.2 million.
The interest on bank debt was GBP0.4 million (2021: GBP0.5 million)
and headline interest cover was 54.5x (excluding IAS 19 net pension
finance costs and IFRS 16 lease interest) (2021: 25.8x).
Headline profit before taxation increased by 75.6% to a record
result of GBP20.9 million (2021: GBP11.9 million). Profit before
taxation increased by GBP1.2 million to GBP12.0 million (2021:
GBP10.8 million). There were net exceptional (non-cash) items in
the year of GBP8.3 million relating to the impairment of Feeds
goodwill and fixed assets announced in our half year results (2021:
GBP0.5 million).
The tax charge for the year was GBP3.6 million (2021: GBP3.0
million). The effective tax rate for the year was 30.0% (or 19.4%
excluding impairment), (2021: 19.4%). The post-tax profit for the
year was GBP8.4 million (2021: GBP7.8 million).
The headline earnings per share of 35.0p represented an increase
of 71.6% (2021: 20.4p); diluted headline earnings per share
increased by 70.6% to 34.8p (2021: 20.4p). The proposed full year
dividend per share increased by 4.2% to 7.5p which reflects the
strong performance and the Board's confidence in the prospects of
the business. The proposed dividend equates to a dividend cover
ratio of 4.6x.
The finance costs in respect of the defined benefit pension
scheme were GBP0.3 million (2021: GBP0.3 million).
Balance sheet summary
As at 31 May 2022
2022 2021
(restated(1)
)
GBPm GBPm
------------------------------------------------------ ------ ------------
Tangible and intangible fixed assets 68.1 78.2
Right of use assets 27.5 25.4
Net working capital 5.4 3.9
Reimbursement assets 2.8 3.0
Derivative financial instruments 0.2 0.1
Net cash/(debt) (excluding IFRS 16 lease liabilities) 9.0 (5.7)
Lease liabilities (28.2) (25.6)
Provision for liabilities (3.8) (3.4)
Current income tax (liabilities)/assets (0.4) 0.4
Deferred income tax liabilities (3.2) (1.9)
Retirement benefit obligations (9.3) (14.9)
------------------------------------------------------ ------ ------------
Net assets 68.1 59.5
------------------------------------------------------ ------ ------------
The Group increased net assets by GBP8.6 million to GBP68.1
million (31 May 2021: GBP59.5 million) reflecting a profit for the
year of GBP8.4 million (2021: GBP7.8 million), strong cash
conversion and the reduction in the IAS 19 deficit on the defined
benefit pension scheme which together more than offset the
impairment of goodwill and fixed assets.
Tangible and intangible fixed assets decreased by GBP10.1
million to GBP68.1 million as at 31 May 2022 (31 May 2021: GBP78.2
million) as a result of the impairment of goodwill and fixed assets
in Feeds. The depreciation (excluding IFRS 16 depreciation on right
of use assets) and amortisation charges for the year to 31 May 2022
were GBP4.6 million and GBP0.5 million respectively (2021: GBP4.5
million and GBP0.7 million respectively).
Group level ROCE (based on headline operating profit) is 30.3%
as at 31 May 2022 (31 May 2021: 15.8%).
Net working capital increased by GBP1.5 million in the year as
higher commodity costs required additional working capital in
Feeds. The Group's inventories increased by GBP3.2 million to
GBP9.8 million (31 May 2021: GBP6.6 million) with trade and other
receivables increasing to GBP96.2 million (31 May 2021: GBP72.1
million) and an increase in trade and other payables to GBP100.6
million (31 May 2021: GBP74.8 million).
Net debt (excluding lease liabilities) decreased by GBP14.7
million to a net cash position of GBP9.0 million (31 May 2021: net
debt GBP5.7 million), as a result of capital expenditure being
lower than planned, ongoing disciplined cash management and a
strong trading performance. At the year end, the Group's net debt
to headline EBITDA ratio was -0.3x (2021: 0.3x).
The deficit of the Group's defined benefit pension scheme
decreased by GBP5.6 million to GBP9.3 million (31 May 2021: GBP14.9
million). The value of pension scheme assets decreased by GBP5.4
million to GBP39.7 million (31 May 2021: GBP45.1 million) as a
result of actuarial losses on plan assets offset to an extent by
employer contributions. The value of the scheme liabilities
decreased by GBP11.0 million to GBP49.0 million (31 May 2021:
GBP60.0 million) driven by a significant increase in the discount
rate used to calculate the present value of the future obligations
(31 May 2022: 3.45%; 31 May 2021: 2.00%). The discount rate is
based on the yield available on AA rated corporate bonds, which
have increased during the year.
1 A GBP3.0 million provision for liabilities has been recognised
as at 31 May 2021 in respect third-party claims made against the
Group, but which are indemnified under the terms of its insurance
policy. A corresponding reimbursement asset of GBP3.0 million has
been recognised as at 31 May 2021. As the Group expects, on
average, insurance claims to be settled within one year which is
driven by a review of the historic claims data, recognition of
these balances is made with current assets and current liabilities.
The impact on the brought forward balance sheet at 1 June 2020
would be the inclusion of a provision for insurance claims of
GBP2.9 million and a corresponding re-imbursement asset of GBP2.9
million in respect of third party claims made against the Group,
but which were indemnified under the terms of its insurance
policy.
Cash flow and banking facilities
For the year ended 31 May 2022
2022 2021
GBPm GBPm
--------------------------------------------------------------- ------ ------
Operating cash flows before movements in working capital
and provisions 34.4 22.4
Working capital movements (0.7) 2.4
Interest paid (0.9) (1.0)
Tax paid (2.7) (2.8)
--------------------------------------------------------------- ------ ------
Net cash generated from operating activities 30.1 21.0
--------------------------------------------------------------- ------ ------
Capital expenditure (net of receipts from disposals) (3.2) (3.0)
Acquisition of subsidiaries - cash paid (net of cash acquired) - (1.1)
Net cash used in investing activities (3.2) (4.1)
--------------------------------------------------------------- ------ ------
Net decrease in bank borrowings (9.5) (7.7)
Repayment of capital element of leases (8.8) (7.1)
Dividends paid (3.5) (3.4)
--------------------------------------------------------------- ------ ------
Net cash used in financing activities (21.8) (18.2)
--------------------------------------------------------------- ------ ------
Net increase/(decrease) in cash and cash equivalents 5.1 (1.3)
Cash and cash equivalents at beginning of year 4.0 5.3
--------------------------------------------------------------- ------ ------
Cash and cash equivalents at end of year 9.1 4.0
--------------------------------------------------------------- ------ ------
The closing net cash (excluding IFRS 16 lease liabilities) was
GBP9.0 million (2021: net debt GBP5.7 million).
The cash impact of working capital movements was a cash outflow
of GBP0.7 million. Net cash generated from operating activities and
after IFRS 16 lease payments was GBP21.3 million (2021: GBP13.9
million) representing a cash conversion ratio of 97.7% of headline
operating profit (2021: 107.8%).
Net capital expenditure in the year at GBP3.2 million (2021:
GBP3.0 million) was lower than the annual depreciation charge,
excluding IFRS 16 depreciation, of GBP4.6 million (2021: GBP4.5
million).
The Group's banking facilities, totalling GBP65.0 million, were
renewed in June 2018 and are committed through to 31 October 2023
with the exception of the bank overdraft facility of GBP1.0 million
and the GBP4.0 million bank guarantee facility which are renewed
annually. There remains substantial facility headroom available to
support the development of the Group. Within the total facility of
GBP65.0 million, the Group has an invoice discounting facility, the
availability of which depends on the level of trade receivables
available for refinancing and which is subject to a maximum
drawdown of GBP50.0 million. The banking facilities are provided
subject to ongoing compliance with conventional banking covenants
against which the Group has substantial levels of headroom.
Principal risks and uncertainties
As with all businesses, the Group is affected by a number of
risks and uncertainties, some of which are beyond our control. The
principal risks and uncertainties which could have a material
adverse impact on the Group are:
-- Impact of inflation and underlying cost growth - The Group is
exposed to the impact of higher inflation and increases in
underlying overhead costs. For the first time in a generation, the
economy is entering a higher inflationary environment. Furthermore,
the Group is exposed to cost accretion arising from increasing
responsibilities around compliance, ESG and IT. These increases in
central overheads are in addition to those arising from labour and
general cost inflation across the businesses and put further
pressure on overall Group profitability.
-- Employee availability - In the aftermath of the Covid-19
pandemic there is a shortage of employees generally in the UK
market. This could lead to significant wage inflation which the
Group will need to respond to, and it may not be possible to pass
these additional costs on to customers.
-- Commodity prices and volatility in raw material prices - The
Group's Feeds and Fuels divisions operate in sectors which are
vulnerable to volatile commodity prices both for fuel and for raw
materials.
-- Transitional risks of climate change - The long-term
profitability of our current businesses is more likely to be
impacted by Government strategy and policy in relation to the
decarbonisation of the economy, rather than as a direct impact of
climate change. The view of the Board is that the main risk to the
Group is a transitional risk as the Government introduces policies
which could negatively impact the Group. There are also potential
additional costs to the Group, arising from the need to redesign
and replace infrastructure as a result of ambitions towards
decarbonisation.
-- Pension scheme volatility - Increases in the ongoing deficit
associated with the Group's defined benefit pension scheme would
adversely impact on the strength of the Group's balance sheet and
could lead to an increase in cash contributions payable by the
Group.
-- Recruitment, retention and development of key people -
Recruiting and retaining the right people is crucial for the
success of the Group and its development. Furthermore, the Group is
entering a stage of transition at the Board and Senior Executive
level as a consequence of planned retirements. There is a risk
around a limited number of key Executives across the Group.
-- Infrastructure and IT systems - IT system failures or
business interruption events (such as cyber incidents) could have a
material impact on the Group's ability to operate effectively.
-- Non-compliance with legislation and regulations - The Group
operates in diverse markets and each sector has its own regulatory
and compliance frameworks which require ongoing monitoring to
ensure that the Group maintains full compliance with all
legislative and regulatory requirements. Any incident of major
injury or fatality or which results in significant environmental
damage could result in reputational or financial damage to the
Group.
-- Impact of weather on earnings volatility - The demand for
both the Feeds and Fuels divisions is impacted by weather
conditions and the severity of winter conditions, which directly
affect the short-term demand for heating oil and animal feeds. The
inherent uncertainty regarding weather conditions represents a risk
of volatility in the profitability of the Fuels and Feeds
divisions.
-- Strategic growth and change management - Significant
development of the Group is only achievable via a significant
acquisition or several smaller transactions. The current strategic
plan is focused on Fuel acquisitions, which tend to be smaller and
therefore do not represent a significant risk on an individual
basis.
Further information on the Group's mitigating actions against
risks and uncertainties will be detailed in the Annual Report.
Going concern
The Group has an agreement with NatWest Group for credit
facilities totalling GBP65.0 million. With the exception of the
bank overdraft facility of GBP1.0 million and the GBP4.0 million
bank guarantee facility, which are renewed annually, these
facilities are committed through to 31 October 2023. The Group's
banking facilities, provided by NatWest Group, were renewed on 29
June 2018 and are committed until 31 October 2023. The Group is
profitable, cash generative, has a strong balance sheet position
and a good relationship with its lender. As such, there are no
concerns regarding the refinancing of the Group's facilities which
is expected to complete in 2023. As at 31 May 2022 the Group had
available funds of GBP70.1 million (based on cash balances, invoice
discounting availability, RCF and overdraft facilities), against
which the Group was utilising GBPNil.
The Board has prepared cash flow forecasts for the period to 31
May 2024. Under this base case scenario, the Group is expected to
continue to have significant headroom relative to the funding
available to it and to comply with its banking covenants.
The Board has also considered a severe downside scenario based
on a significant and sustained reduction in Fuels' profitability
alongside underperformance in Food and Feeds. This downside
scenario excludes any mitigating actions that the Board would be
able to take to reduce costs. Under this scenario, the Group would
still expect to have sufficient headroom in its financing
facilities.
Accordingly, the Directors, having made suitable enquiries, and
based on financial performance to date and forecasts along with the
available banking facilities, have a reasonable expectation that
the Group has adequate resources to continue in operational
existence for the foreseeable future. The Group therefore continues
to adopt the going concern basis of accounting in preparing the
annual financial statements.
Share price
The market price per share of the Company's shares at 31 May
2022 was 220.0p (31 May 2021: 212.0p) and the range of market
prices during the year was between 187.0p and 230.0p.
Richard Whiting Chris Belsham
Chief Executive Finance Director
Consolidated income statement
for the year ended 31 May 2022
2022 2021
Note GBPm GBPm
-------------------------------------------------------- ---- ------- -------
Revenue 4 878.6 675.6
Cost of sales (823.3) (637.7)
-------------------------------------------------------- ---- ------- -------
Gross profit 55.3 37.9
Administrative expenses (42.1) (25.8)
-------------------------------------------------------- ---- ------- -------
Headline operating profit(1) 21.8 12.9
Exceptional items 5 (8.3) (0.5)
Amortisation of acquired intangibles (0.3) (0.3)
-------------------------------------------------------- ---- ------- -------
Operating profit 4 13.2 12.1
Finance costs 6 (1.2) (1.3)
-------------------------------------------------------- ---- ------- -------
Headline profit before taxation(1) 20.9 11.9
Net finance cost in respect of the defined benefit
pension scheme (0.3) (0.3)
Exceptional items 5 (8.3) (0.5)
Amortisation of acquired intangibles (0.3) (0.3)
-------------------------------------------------------- ---- ------- -------
Profit before taxation 12.0 10.8
Income tax expense 7 (3.6) (3.0)
-------------------------------------------------------- ---- ------- -------
Profit for the year attributable to equity shareholders 8.4 7.8
-------------------------------------------------------- ---- ------- -------
Earnings per share (pence)
Basic 8 17.1 15.9
Diluted 8 17.0 15.9
-------------------------------------------------------- ---- ------- -------
Headline earnings per share (pence)(1)
Basic 8 35.0 20.4
Diluted 8 34.8 20.4
-------------------------------------------------------- ---- ------- -------
1 Headline operating profit is statutory operating profit of
GBP13.2 million (2021: GBP12.1 million) before exceptional items of
GBP8.3 million (2021: GBP0.5 million) and amortisation of acquired
intangibles of GBP0.3 million (2021: GBP0.3 million). Headline
profit before taxation is statutory profit before taxation of
GBP12.0 million (2021: GBP10.8 million) after adding back the net
finance cost in respect of the Group's defined benefit pension
scheme of GBP0.3 million (2021: GBP0.3 million), the exceptional
items and amortisation of acquired intangibles. Headline earnings
per share also take into account the taxation effect thereon.
The results relate to continuing operations.
Consolidated statement of comprehensive income
for the year ended 31 May 2022
2022 2021
GBPm GBPm
-------------------------------------------------------- ----- ----
Profit for the year attributable to equity shareholders 8.4 7.8
--------------------------------------------------------- ----- ----
Items that will never be reclassified to income
statement:
Remeasurement gain on defined benefit pension scheme 4.0 4.0
Tax on items that will never be reclassified to
income statement (1.0) 0.1
--------------------------------------------------------- ----- ----
Total other comprehensive income 3.0 4.1
--------------------------------------------------------- ----- ----
Total comprehensive income for the year 11.4 11.9
--------------------------------------------------------- ----- ----
Consolidated balance sheet
as at 31 May 2022
2021
(restated(1)
2022 )
Note GBPm GBPm
--------------------------------- ---- ------- -------------
Non-current assets
Property, plant and equipment 11 45.4 47.3
Right of use assets 27.5 25.4
Intangible assets 12 22.7 30.9
95.6 103.6
--------------------------------- ---- ------- -------------
Current assets
Inventories 9.8 6.6
Trade and other receivables 96.2 72.1
Reimbursement assets 2.8 3.0
Current income tax assets - 0.4
Cash and cash equivalents 13 9.1 4.0
Derivative financial instruments 0.4 0.2
--------------------------------- ---- ------- -------------
118.3 86.3
--------------------------------- ---- ------- -------------
Total assets 213.9 189.9
--------------------------------- ---- ------- -------------
Current liabilities
Trade and other payables (100.6) (74.8)
Current income tax liabilities (0.4) -
Borrowings 13 - (6.5)
Lease liabilities (8.6) (7.4)
Provisions for liabilities (3.1) (3.0)
Derivative financial instruments (0.2) (0.1)
--------------------------------- ---- ------- -------------
(112.9) (91.8)
--------------------------------- ---- ------- -------------
Non-current liabilities
--------------------------------- ---- ------- -------------
Borrowings 13 - (3.0)
Lease liabilities (19.7) (18.4)
Provisions for liabilities (0.7) (0.4)
Deferred income tax liabilities (3.2) (1.9)
Retirement benefit obligations 14 (9.3) (14.9)
--------------------------------- ---- ------- -------------
(32.9) (38.6)
--------------------------------- ---- ------- -------------
Total liabilities (145.8) (130.4)
--------------------------------- ---- ------- -------------
Net assets 68.1 59.5
--------------------------------- ---- ------- -------------
Equity
Share capital 10 12.3 12.3
Share premium 0.9 0.9
Retained earnings 54.9 46.3
--------------------------------- ---- ------- -------------
Total equity 68.1 59.5
--------------------------------- ---- ------- -------------
(1) A GBP3.0 million provision for liabilities has been
recognised as at 31 May 2021 in respect third-party claims made
against the Group, but which are indemnified under the terms of its
insurance policy. A corresponding reimbursement asset of GBP3.0
million has been recognised as at 31 May 2021. As the Group
expects, on average, insurance claims to be settled within one year
which is driven by a review of the historic claims data,
recognition of these balances is made within current assets and
current liabilities. The impact on the brought forward balance
sheet at 1 June 2020 would be the inclusion of a provision for
insurance claims of GBP2.9 million and a corresponding
re-imbursement asset of GBP2.9 million in respect of third party
claims made against the Group, but which were indemnified under the
terms of its insurance policy.
Consolidated statement of changes in equity
for the year ended 31 May 2022
Share Share Retained Total
capital premium earnings equity
GBPm GBPm GBPm GBPm
------------------------------------------------- ------- ------- -------- ------
Balance at 1 June 2020 12.2 0.9 38.0 51.1
------------------------------------------------- ------- ------- -------- ------
Profit for the year - - 7.8 7.8
------------------------------------------------- ------- ------- -------- ------
Items that will never be reclassified to income
statement:
Actuarial gain on defined benefit pension scheme
(note 14) - - 4.0 4.0
Tax on items that will never be reclassified
to income statement - - 0.1 0.1
------------------------------------------------- ------- ------- -------- ------
Total other comprehensive income - - 4.1 4.1
------------------------------------------------- ------- ------- -------- ------
Total comprehensive income for the year - - 11.9 11.9
------------------------------------------------- ------- ------- -------- ------
Transactions with owners:
Issue of shares 0.1 - (0.1) -
Dividends paid (note 9) - - (3.4) (3.4)
Value of employee services - - (0.5) (0.5)
Credit to equity for equity-settled share-based
payments - - 0.4 0.4
------------------------------------------------- ------- ------- -------- ------
Total transactions with owners 0.1 - (3.6) (3.5)
------------------------------------------------- ------- ------- -------- ------
Balance at 31 May 2021 12.3 0.9 46.3 59.5
------------------------------------------------- ------- ------- -------- ------
Profit for the year - - 8.4 8.4
------------------------------------------------- ------- ------- -------- ------
Items that will never be reclassified to income
statement:
Actuarial gain on defined benefit pension scheme
(note 14) - - 4.0 4.0
Tax on items that will never be reclassified
to income statement - - (1.0) (1.0)
------------------------------------------------- ------- ------- -------- ------
Total other comprehensive income - - 3.0 3.0
------------------------------------------------- ------- ------- -------- ------
Total comprehensive income for the year - - 11.4 11.4
------------------------------------------------- ------- ------- -------- ------
Transactions with owners:
Issue of shares - - - -
Dividends paid (note 9) - - (3.5) (3.5)
Value of employee services - - (0.1) (0.1)
Credit to equity for equity-settled share-based
payments - - 0.8 0.8
------------------------------------------------- ------- ------- -------- ------
Total transactions with owners - - (2.8) (2.8)
------------------------------------------------- ------- ------- -------- ------
Balance at 31 May 2022 12.3 0.9 54.9 68.1
------------------------------------------------- ------- ------- -------- ------
Consolidated cash flow statement
for the year ended 31 May 2022
2022 2021
GBPm GBPm
----------------------------------------------------- ------ ------
Cash flows from operating activities
Profit before tax 12.0 10.8
Adjustments for:
Depreciation and amortisation 14.0 12.9
Impairment of assets 8.4 -
Finance costs 1.2 1.3
Share-based payment expense 0.8 0.4
Value of employee services (0.1) (0.5)
Fair value loss/(profit) on financial derivatives (0.1) (0.1)
Contribution to pension scheme not recognised in
income statement (1.8) (2.4)
------------------------------------------------------ ------ ------
Operating cash flows before movements in working
capital and provisions 34.4 22.4
Movements in working capital:
Increase in inventories (3.2) (1.9)
Increase in trade and other receivables (23.9) (15.3)
Increase in trade and other payables 26.4 19.6
------------------------------------------------------ ------ ------
Net cash generated from operations 33.7 24.8
Interest paid (0.9) (1.0)
Income tax paid (2.7) (2.8)
------------------------------------------------------ ------ ------
Net cash generated from operating activities 30.1 21.0
------------------------------------------------------ ------ ------
Cash flows used in investing activities
Purchase of intangible assets (0.2) (0.1)
Purchase of property, plant and equipment (3.4) (2.9)
Acquisition of subsidiaries - cash paid (net of
cash acquired) - (1.1)
Proceeds on sale of property, plant and equipment 0.4 -
------------------------------------------------------ ------ ------
Net cash used in investing activities (3.2) (4.1)
------------------------------------------------------ ------ ------
Cash flows used in financing activities
Decrease in bank borrowings (9.5) (7.7)
Capital element of finance leases (8.8) (7.1)
Dividends paid (3.5) (3.4)
------------------------------------------------------ ------ ------
Net cash used in financing activities (21.8) (18.2)
------------------------------------------------------ ------ ------
Net increase/(decrease) in cash and cash equivalents 5.1 (1.3)
Cash and cash equivalents at beginning of year 4.0 5.3
------------------------------------------------------ ------ ------
Cash and cash equivalents at end of year 9.1 4.0
------------------------------------------------------ ------ ------
Notes to the Group financial statements
for the year ended 31 May 2022
1. General information
NWF Group plc ('the Company') is a public limited company
incorporated and domiciled in England, United Kingdom, under the
Companies Act 2006. The principal activities of NWF Group plc and
its subsidiaries (together 'the Group') are the sale and
distribution of fuel oils, the warehousing and distribution of
ambient groceries and the manufacture and sale of animal feeds.
Further information on the nature of the Group's operations and
principal activities is set out in the Group financial
statements.
The address of the Company's registered office is NWF Group plc,
Wardle, Nantwich, Cheshire CW5 6BP. The Company has its primary
listing on AIM, part of the London Stock Exchange.
2. Significant accounting policies
The Group's principal accounting policies are set out below.
Basis of preparation
On 31 December 2020, IFRS as adopted by the European Union at
that date were brought into UK law and became UK-adopted
International Accounting Standards, with future changes being
subject to endorsement by the UK endorsement Board. The Group
transitioned to the UK-adopted International Accounting Standards
in the Group financial statements on 1 June 2021. This change
constitutes a change in accounting framework. However, there is no
impact recognition, measurement or disclosure in the period
reported as a result of the change in framework. The Group
financial statements have been prepared in accordance with
UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 applicable to companies
reporting under those standards. The Group financial statements
have been prepared on the going concern basis and on the historical
cost convention modified for the revaluation of certain financial
instruments.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates, which
are outlined in note 15 below. It also requires management to
exercise its judgement in the process of applying the Group's
accounting policies. The accounting policies have been applied
consistently throughout the period, other than where new policies
have been adopted.
Going concern
Based on financial performance to date and forecasts along with
the available banking facilities, there is a reasonable expectation
that the Group has adequate resources to continue in operational
existence for the foreseeable future. The Group therefore continues
to adopt the going concern basis of accounting in preparing the
annual financial statements.
The Board has prepared cash flow forecasts for the period to 31
May 2024. Under this base case scenario, the Group is expected to
continue to have significant headroom relative to the funding
available to it and to comply with its banking covenants.
The Board has also considered a severe downside scenario based
on a significant and sustained reduction in Fuels' profitability
alongside underperformance in Food and Feeds. This downside
scenario excludes any mitigating actions that the Board would be
able to take to reduce costs. Under this scenario, the Group would
still expect to have sufficient headroom in its financing
facilities.
The Group therefore continues to adopt the going concern basis
of accounting in preparing the annual financial statements.
Alternative performance measures ('APMs')
The Directors consider that headline operating profit, headline
profit before taxation, headline EBITDA, headline ROCE and headline
earnings per share measures, referred to in these Group financial
statements, provide useful information for shareholders on
underlying trends and performance.
Headline operating profit is reported operating profit after
adding back exceptional items and amortisation of acquired
intangibles.
Headline profit before taxation is reported profit before
taxation after adding back the net finance cost in respect of the
Group's defined benefit pension scheme, exceptional items and
amortisation of acquired intangibles, to show the underlying
performance of the Group.
Headline EBITDA refers to reported operating profit after adding
back exceptional items and amortisation of acquired intangibles.
The headline EBITDA calculation excludes the impact of IFRS 16
depreciation.
Headline ROCE refers to the return on capital employed
calculated as headline operating profit as a proportion of net
assets.
The calculation of headline earnings includes any exceptional
impact of remeasuring deferred tax balances. The calculations of
basic and diluted headline earnings per share are shown in note
8.
Exceptional items
The Group's income statement separately identifies exceptional
items. Such items are those that, in the Directors' judgement, are
one-off in nature or non-operating and need to be disclosed
separately by virtue of their size or incidence and may include,
but are not limited to, restructuring costs, acquisition-related
costs, costs of implementing new systems, cyber-related costs,
impairment of assets and income from legal or insurance
settlements. In determining whether an item should be disclosed as
an exceptional item, the Directors consider quantitative as well as
qualitative factors such as the frequency, predictability of
occurrence and significance. This is consistent with the way
financial performance is measured by management and reported to the
Board. Disclosing exceptional items separately provides additional
understanding of the performance of the Group.
Forward-looking statements
Certain statements in this results announcement are forward
looking. The terms 'expect', 'anticipate', 'should be', 'will be'
and similar expressions identify forward-looking statements.
Although the Board of Directors believes that the expectations
reflected in these forward-looking statements are reasonable, such
statements are subject to a number of risks and uncertainties and
events could differ materially from those expressed or implied by
these forward-looking statements.
Adoption of new and revised standards
The following new standards, amendments to standards or
interpretations are mandatory for the first time for the financial
year beginning 1 June 2021.
The company has adopted the following new standards, amendments
and interpretations now applicable. None of these standards and
interpretations have had any material effect on the company's
results or net assets.
Applicable for
financial year
Standard or interpretation Content beginning on
-------------------------- ---------------------------------- ---------------
Amendment to IFRS
3 Business Combinations 1 June 2021
Amendment to IFRS
9 Financial Instruments 1 June 2021
Amendment to IFRS
16 Leases 1 June 2021
Amendments to IAS
16 Property, Plant and Equipment 1 June 2021
Amendments to IAS Provisions, Contingent Liabilities
37 and Contingent Assets 1 June 2021
-------------------------- ---------------------------------- ---------------
The following standards, amendments and interpretations are not
yet effective and have not been adopted early by the company:
Applicable for
financial year
Standard or interpretation Content beginning on
-------------------------- ------------------------------------ ---------------
IFRS 4 Insurance Contracts 1 June 2022
Amendments to IAS
1 Presentation of financial statements 1 June 2023
Amendments to IAS
8 Accounting policies 1 June 2023
Amendments to IAS
12 Income Taxes 1 June 2023
Amendments IFRS 17 Insurance Contracts 1 June 2023
IFRS Practice Statement
2 Making Materiality Judgements 1 June 2023
-------------------------- ------------------------------------ ---------------
These standards are not expected to have a material impact on
the company in the current or future reporting periods and on
foreseeable future transactions.
3. Group Annual Report and statutory accounts
The financial information set out above does not constitute the
Group's statutory accounts for the years ended 31 May 2022 or 31
May 2021, but is derived from those accounts.
Statutory accounts for 2021 have been delivered to the Registrar
of Companies. The auditors, PricewaterhouseCoopers LLP, have
reported on the 2021 accounts; the report (i) was unqualified, (ii)
did not include a reference to any matters to which the auditors
drew attention by way of emphasis without qualifying their report,
and (iii) did not contain a statement under Section 498(2) or (3)
of the Companies Act 2006.
The statutory accounts for 2022 will be delivered to the
Registrar of Companies following the Annual General Meeting. The
auditors, PricewaterhouseCoopers LLP, have reported on these
accounts and their report is unqualified, does not include a
reference to any matters to which the auditors drew attention by
way of emphasis without qualifying their report, and does not
include a statement under either Section 498(2) or (3) of the
Companies Act 2006.
The Annual Report and full financial statements will be posted
to shareholders during the week commencing 15 August 2022. Further
copies will be available to the public, free of charge, from the
Company's Registered Office at NWF Group plc, Wardle, Cheshire CW5
6BP, or can be viewed on the Company's website: www.nwf.co.uk .
4. Segment information
The chief operating decision-maker has been identified as the
Board of Directors ('the Board'). The Board reviews the Group's
internal reporting in order to assess performance and allocate
resources. The Board has determined that the operating segments,
based on these reports, are Fuels, Food and Feeds.
The Board considers the business from a products/services
perspective. In the Board's opinion, all of the Group's operations
are carried out in the same geographical segment, namely the
UK.
The nature of the products/services provided by the operating
segments is summarised below:
Fuels - sale and distribution of domestic heating, industrial and road fuels
Food - warehousing and distribution of clients' ambient grocery
and other products to supermarket and other retail distribution
centres
Feeds - manufacture and sale of animal feeds and other agricultural products
Segment information about the above businesses is presented
below.
The Board assesses the performance of the operating segments
based on a measure of operating profit ('headline operating
profit'). Finance income and costs are not included in the segment
result that is assessed by the Board. Other information provided to
the Board is measured in a manner consistent with that in the
financial statements.
Inter-segment transactions are entered into under the normal
commercial terms and conditions that would also be available to
unrelated third parties.
Segment assets exclude deferred income tax assets and cash at
bank and in hand. Segment liabilities exclude taxation, borrowings
and retirement benefit obligations. Excluded items are part of the
reconciliation to consolidated total assets and liabilities.
Fuels Food Feeds Group
2022 GBPm GBPm GBPm GBPm
---------------------------------------- ----- ----- ----- -----
Revenue
Total revenue 628.9 62.7 194.9 886.5
Inter-segment revenue (7.8) (0.1) - (7.9)
---------------------------------------- ----- ----- ----- -----
Revenue 621.1 62.6 194.9 878.6
---------------------------------------- ----- ----- ----- -----
Result
Headline operating profit 17.2 2.8 1.8 21.8
---------------------------------------- ----- ----- ----- -----
Segment exceptional item (note 5) - - (8.4) (8.4)
Group exceptional item (note 5) 0.1
Amortisation of acquired intangibles (0.3) - - (0.3)
-----
Operating profit as reported 13.2
Finance costs (note 6) (1.2)
-----
Profit before taxation 12.0
Income tax expense (note 7) (3.6)
---------------------------------------- ----- ----- ----- -----
Profit for the year 8.4
---------------------------------------- ----- ----- ----- -----
Other information
Depreciation and amortisation 5.2 5.9 2.9 14.0
Property, plant and equipment additions 0.9 1.1 1.4 3.4
---------------------------------------- ----- ----- ----- -----
Fuels Food Feeds Group
2022 GBPm GBPm GBPm GBPm
----------------------------------------- ------ ------ ------ -------
Balance sheet
Assets
Segment assets 106.5 48.3 50.0 204.8
----------------------------------------- ------ ------ ------ -------
Cash and cash equivalents 9.1
----------------------------------------- ------ ------ ------ -------
Consolidated total assets 213.9
----------------------------------------- ------ ------ ------ -------
Liabilities
Segment liabilities (88.7) (20.1) (24.1) (132.9)
----------------------------------------- ------ ------ ------ -------
Deferred income tax liabilities (3.2)
Current income tax liabilities (0.4)
Retirement benefit obligations (note 14) (9.3)
----------------------------------------- ------ ------ ------ -------
Consolidated total liabilities (145.8)
----------------------------------------- ------ ------ ------ -------
Fuels Food Feeds Group
2021 GBPm GBPm GBPm GBPm
---------------------------------------- ----- ----- ----- -----
Revenue
Total revenue 453.9 54.9 173.0 681.8
Inter-segment revenue (6.1) (0.1) - (6.2)
---------------------------------------- ----- ----- ----- -----
Revenue 447.8 54.8 173.0 675.6
---------------------------------------- ----- ----- ----- -----
Result
Headline operating profit 9.3 1.9 1.7 12.9
---------------------------------------- ----- ----- ----- -----
Segment exceptional item (note 5) (0.1) - (0.2) (0.3)
Group exceptional item (note 5) - - - (0.2)
Amortisation of acquired intangibles (0.3) - - (0.3)
Operating profit as reported 12.1
Finance costs (note 6) (1.3)
-----
Profit before taxation 10.8
Income tax expense (note 7) (3.0)
---------------------------------------- ----- ----- ----- -----
Profit for the year 7.8
---------------------------------------- ----- ----- ----- -----
Other information
Depreciation and amortisation 4.3 5.6 3.0 12.9
Property, plant and equipment additions 1.0 1.1 0.8 2.9
---------------------------------------- ----- ----- ----- -----
Fuels Food Feeds Group
2021 (restated(1) ) GBPm GBPm GBPm GBPm
----------------------------------------- ------ ------ ------ -------
Balance sheet
Assets
Segment assets 82.3 46.3 56.9 185.5
----------------------------------------- ------ ------ ------ -------
Current income tax asset 0.4
Cash and cash equivalents 4.0
----------------------------------------- ------ ------ ------ -------
Consolidated total assets 189.9
----------------------------------------- ------ ------ ------ -------
Liabilities
Segment liabilities (65.2) (18.0) (20.9) (104.1)
----------------------------------------- ------ ------ ------ -------
Deferred income tax liabilities (1.9)
Borrowings (note 13) (9.5)
Retirement benefit obligations (note 14) (14.9)
----------------------------------------- ------ ------ ------ -------
Consolidated total liabilities (130.4)
----------------------------------------- ------ ------ ------ -------
(1) A GBP3.0 million provision for liabilities has been
recognised as at 31 May 2021 in respect third-party claims made
against the Group, but which are indemnified under the terms of its
insurance policy. A corresponding reimbursement asset of GBP3.0
million has been recognised as at 31 May 2021. As the Group
expects, on average, insurance claims to be settled within one year
which is driven by a review of the historic claims data,
recognition of these balances is made within current assets and
current liabilities. The impact on the brought forward balance
sheet at 1 June 2020 would be the inclusion of a provision for
insurance claims of GBP2.9 million and a corresponding
re-imbursement asset of GBP2.9 million in respect of third party
claims made against the Group, but which were indemnified under the
terms of its insurance policy.
5. Profit before taxation - exceptional items
A net exceptional cost of GBP8.3 million (2021: GBP0.5 million)
is included in administrative expenses. Exceptional items by type
are as follows:
2022 2021
GBPm GBPm
--------------------------------------------------- ----- -----
Impairment of goodwill and other intangible assets 7.9 -
Impairment of property, plant and equipment 0.5 -
Acquisition-related costs - 0.2
Cyber-related costs - 0.7
Insurance reclaim credit (0.1) (0.4)
--------------------------------------------------- ----- -----
Net exceptional cost 8.3 0.5
--------------------------------------------------- ----- -----
Impairment of goodwill and other intangible assets - Recent
performance in Feeds has been below planned levels, driven
predominantly by lower volumes, and consequently a detailed
impairment review was performed at the half-year reporting period
end.
The key assumptions used in the base case value in use
calculations were updated to reflect a slower speed of recovery,
and future growth, of volume.
As a result, a total impairment loss of GBP7.9 million has been
recognised for the Feeds reporting segment, reducing the carrying
amount of the goodwill and other intangible assets to GBP4.4
million; see note 12.
Impairment of property, plant and equipment - The impairment of
various items of plant and machinery in the Feeds segment which are
no longer in use and deemed obsolete; see note 11.
Acquisition-related costs - Prior year acquisition-related costs
comprise professional fees and other costs in relation to the
integration and hive-up of acquisitions made during the year ended
31 May 2021.
Cyber-related costs - Prior year cyber-related costs comprise
certain insurance excesses on the Group's cyber insurance policy,
and other rebuild, business interruption and professional service
costs, which were incurred during the year ended 31 May 2021 as a
result of the cyber incident announced on 2 November 2020.
Insurance reclaim credit - The insurance reclaim comprises
amounts reimbursed through the Group's insurer, in respect of costs
incurred as a result of the cyber incident. A final reimbursement
of GBP0.1 million has been received during the year ended 31 May
2022 in respect of cyber costs incurred in the prior year.
6. Finance costs
2022 2021
GBPm GBPm
------------------------------------------------------- ---- ----
Interest on bank loans and overdrafts 0.4 0.5
Finance costs on lease liabilities relating to IFRS 16 0.5 0.5
------------------------------------------------------- ---- ----
Total interest expense 0.9 1.0
Net finance cost in respect of defined benefit pension
schemes (note 14) 0.3 0.3
------------------------------------------------------- ---- ----
Total finance costs 1.2 1.3
------------------------------------------------------- ---- ----
7. Income tax expense
2022 2021
GBPm GBPm
-------------------------------------------------- ----- -----
Current tax
UK corporation tax on profits for the year 3.8 2.2
Adjustments in respect of prior years (0.1) (0.2)
-------------------------------------------------- ----- -----
Current tax expense 3.7 2.0
-------------------------------------------------- ----- -----
Deferred tax
Origination and reversal of temporary differences (0.1) (0.1)
Adjustments in respect of prior years - (0.2)
Effect of increased tax rate on opening balances - 1.3
-------------------------------------------------- ----- -----
Deferred tax expense (0.1) 1.0
-------------------------------------------------- ----- -----
Total income tax expense 3.6 3.0
-------------------------------------------------- ----- -----
During the year ended 31 May 2022, corporation tax has been
calculated at 19% of estimated assessable profits for the year
(2021: 19%).
In the Spring Budget 2021, the Government announced that from 1
April 2023 the corporation tax rate would increase to 25%. This new
law was substantively enacted on 24 May 2021. At the prior year
reporting date, deferred tax balances were remeasured to either 19%
or 25% depending on when the Directors expect these timing
differences to reverse. The impact of the change in tax rate was
recognised in tax expense in the income statement, except to the
extent that it related to items previously recognised outside the
income statement. For the Group, such items included remeasurements
of post-employment benefit liabilities and the expected tax
deduction in excess of the recognised expense for equity-settled
share-based payments.
The tax charge for the year can be reconciled to the profit per
the income statement as follows:
2022 2021
GBPm GBPm
------------------------------------------------------- ----- -----
Profit before taxation 12.0 10.8
------------------------------------------------------- ----- -----
Profit before taxation multiplied by the standard rate
of UK corporation tax of 19% (2021: 19%) 2.3 2.0
Effects of:
- expenses not deductible for tax purposes 1.7 0.1
- super-deduction allowance (0.1) -
- impact of share-based payments (0.2) -
- impact of increased tax rate on opening balances - 1.3
- adjustments in respect of prior years (0.1) (0.4)
------------------------------------------------------- ----- -----
Total income tax expense 3.6 3.0
------------------------------------------------------- ----- -----
A net GBP1.0 million has been recognised in Other Comprehensive
Income, relating to a GBP1.4 million debit to equity arising on the
movement within the deferred tax provision (2021: GBP0.3 million)
offset with a movement in current tax of a credit of GBP0.4 million
(2021: GBP0.4 million).
The tax charge in the current year is higher than the standard
tax charge as a result of the level of the Group's disallowable
expenses, which are largely related to goodwill impairment.
8. Earnings per share
The calculation of basic and diluted earnings per share is based
on the following data:
2022 2021
------------------------------------------------------------ ------ ------
Earnings (GBPm)
Earnings for the purposes of basic and diluted earnings
per share being profit for the year attributable to equity
shareholders 8.4 7.8
------------------------------------------------------------ ------ ------
Number of shares ('000)
Weighted average number of shares for the purposes of
basic earnings per share 49,109 48,940
Weighted average dilutive effect of conditional share
awards 299 194
------------------------------------------------------------ ------ ------
Weighted average number of shares for the purposes of
diluted earnings per share 49,408 49,134
------------------------------------------------------------ ------ ------
Earnings per ordinary share (pence)
Basic earnings per ordinary share 17.1 15.9
Diluted earnings per ordinary share 17.0 15.9
------------------------------------------------------------ ------ ------
Headline earnings per ordinary share (pence)
Basic headline earnings per ordinary share 35.0 20.4
Diluted headline earnings per ordinary share 34.8 20.4
------------------------------------------------------------ ------ ------
The calculation of basic and diluted headline earnings per share
is based on the following data:
2022 2021
GBPm GBPm
-------------------------------------------------------- ----- -----
Profit for the year attributable to equity shareholders 8.4 7.8
Add back/(deduct):
Net finance cost in respect of defined benefit pension
scheme 0.3 0.3
Exceptional items 8.3 0.5
Exceptional impact of remeasuring deferred tax balances - 1.3
Amortisation of acquired intangibles 0.3 0.3
Tax effect of the above (0.1) (0.2)
-------------------------------------------------------- ----- -----
Headline earnings 17.2 10.0
-------------------------------------------------------- ----- -----
9. Dividends paid
2022 2021
GBPm GBPm
----------------------------------------------------------- ---- ----
Final dividend for the year ended 31 May 2021 of 6.2p
(2020: 5.9p) per share 3.0 2.9
Interim dividend for the year ended 31 May 2022 of 1.0p
(2021: 1.0p) per share 0.5 0.5
----------------------------------------------------------- ---- ----
Amounts recognised as distributions to equity shareholders
in the year 3.5 3.4
----------------------------------------------------------- ---- ----
Proposed final dividend for the year ended 31 May 2022
of 6.5p (2021: 6.2p) per share 3.2 3.0
----------------------------------------------------------- ---- ----
The proposed final dividend is subject to approval at the AGM on
29 September 2022 and has not been included as a liability in these
Group financial statements.
10. Share capital
Number
of shares Total
'000 GBPm
----------------------------------------------------- --------- -----
Allotted and fully paid: ordinary shares of 25p each
Balance at 1 June 2020 48,750 12.2
Issue of shares (see below) 254 0.1
----------------------------------------------------- --------- -----
Balance at 31 May 2021 49,004 12.3
Issue of shares (see below) 130 -
----------------------------------------------------- --------- -----
Balance at 31 May 2022 49,134 12.3
----------------------------------------------------- --------- -----
During the year ended 31 May 2022, 130,198 shares (2021: 253,524
shares) with an aggregate nominal value of GBP32,550 (2021:
GBP63,381) were issued under the Group's conditional Performance
Share Plan.
The maximum total number of ordinary shares, which may vest in
the future in respect of conditional Performance Share Plan awards
outstanding at 31 May 2022, amounted to 1,386,289 (31 May 2021:
1,400,421). These shares will only be issued subject to satisfying
certain performance criteria.
11. Property, plant and equipment
Long
Cars
Freehold leasehold and
land land Plant
and and and commercial
buildings buildings machinery vehicles Total
GBPm GBPm GBPm GBPm GBPm
---------------------------------------- --------- --------- --------- ---------- -----
Cost
At 1 June 2020 37.9 2.7 31.0 6.6 78.2
Additions - 0.4 2.5 - 2.9
Transfers in from right of use asset - - - 0.6 0.6
Disposals - - (0.9) (0.9) (1.8)
---------------------------------------- --------- --------- --------- ---------- -----
At 1 June 2021 37.9 3.1 32.6 6.3 79.9
Additions 0.4 - 2.9 0.1 3.4
Transfers in from right of use asset - - - 0.3 0.3
Disposals - - (0.9) (2.3) (3.2)
---------------------------------------- --------- --------- --------- ---------- -----
At 31 May 2022 38.3 3.1 34.6 4.4 80.4
---------------------------------------- --------- --------- --------- ---------- -----
Accumulated depreciation and impairment
At 1 June 2020 11.8 0.3 14.8 2.8 29.7
Charge for the year 0.8 0.1 2.4 1.2 4.5
Transfers in from right of use asset - - - 0.2 0.2
Disposals - - (0.9) (0.9) (1.8)
---------------------------------------- --------- --------- --------- ---------- -----
At 1 June 2021 12.6 0.4 16.3 3.3 32.6
Charge for the year 0.9 0.1 2.6 1.0 4.6
Transfers in from right of use asset - - - 0.1 0.1
Impairment charge - - 0.5 - 0.5
Disposals - - (0.7) (2.1) (2.8)
---------------------------------------- --------- --------- --------- ---------- -----
At 31 May 2022 13.5 0.5 18.7 2.3 35.0
---------------------------------------- --------- --------- --------- ---------- -----
Carrying amount
At 31 May 2022 24.8 2.6 15.9 2.1 45.4
---------------------------------------- --------- --------- --------- ---------- -----
At 31 May 2021 25.3 2.7 16.3 3.0 47.3
---------------------------------------- --------- --------- --------- ---------- -----
The Group has pledged certain freehold land and buildings with a
carrying value of GBP20.9 million (31 May 2021: GBP21.3 million) to
secure banking facilities granted to the Group.
Depreciation charges are recognised in administrative expenses
in the consolidated income statement.
12. Intangible assets
Computer Customer
Goodwill software relationships Brands Total
GBPm GBPm GBPm GBPm GBPm
---------------------------------------- -------- -------- ------------- ------ -----
Cost
At 1 June 2020 28.1 6.7 2.2 1.4 38.4
Additions 0.1 0.1 - - 0.2
---------------------------------------- -------- -------- ------------- ------ -----
At 1 June 2021 28.2 6.8 2.2 1.4 38.6
Additions - 0.2 - - 0.2
At 31 May 2022 28.2 7.0 2.2 1.4 38.8
---------------------------------------- -------- -------- ------------- ------ -----
Accumulated amortisation and impairment
At 1 June 2020 0.6 5.6 0.2 0.6 7.0
Charge for the year - 0.4 0.2 0.1 0.7
---------------------------------------- -------- -------- ------------- ------ -----
At 1 June 2021 0.6 6.0 0.4 0.7 7.7
Charge for the year - 0.2 0.3 - 0.5
Impairment charge 7.5 0.2 - 0.2 7.9
---------------------------------------- -------- -------- ------------- ------ -----
At 31 May 2022 8.1 6.4 0.7 0.9 16.1
---------------------------------------- -------- -------- ------------- ------ -----
Carrying amount
At 31 May 2022 20.1 0.6 1.5 0.5 22.7
---------------------------------------- -------- -------- ------------- ------ -----
At 31 May 2021 27.6 0.8 1.8 0.7 30.9
---------------------------------------- -------- -------- ------------- ------ -----
Amortisation or impairment charges have been charged to
administrative expenses in the consolidated income statement.
Customer relationships
Customer relationships are allocated as follows:
2022 2021
GBPm GBPm
------ ---- ----
Fuels 1.5 1.8
------ ---- ----
Brands
Brands are allocated as follows:
2022 2021
GBPm GBPm
------ ---- ----
Feeds - 0.2
Fuels 0.5 0.5
------ ---- ----
0.5 0.7
------ ---- ----
Goodwill
Goodwill acquired is allocated, at acquisition, to
cash-generating units ('CGUs') that are expected to benefit from
that business combination. The carrying value of goodwill is
allocated as follows:
2022 2021
GBPm GBPm
------ ---- ----
Feeds 4.4 11.9
Fuels 15.7 15.7
------ ---- ----
20.1 27.6
------ ---- ----
The Group tests annually for impairment of goodwill, or more
frequently if there are indications that goodwill may be impaired.
The recoverable amounts of CGUs are determined using value in use
calculations. The value in use calculations use post-tax cash flow
projections based on the Board-approved budgets and four years of
divisional strategic plans thereafter. Subsequent cash flows are
extrapolated using the growth rates detailed below.
The Group identifies its CGUs as the smallest identifiable group
of assets that generate cash inflows, and which are largely
independent of the cash inflows of the other assets or groups of
assets. CGU specific discount rates are applied in each of the
impairment tests as the principal risks and uncertainties
associated with each CGU may vary as they operate in different
industries and as such the Group risks identified on pages 19 to 22
of the Annual Report may impact each CGU differently.
Feeds
The Feeds goodwill impairment test is performed based on the
aggregate value in use calculations for the group of CGUs making up
this reporting segment. In line with IAS 36, these units represent
the lowest level within the Group at which goodwill is monitored
for internal management purposes and this group of units is not
larger than the operating segment before aggregation.
The performance of the Feeds segment at the half-year to 30
November 2021 was below historical levels, driven predominantly by
lower volumes, and consequently a detailed impairment review was
performed at the half-year reporting period end.
The value in use calculations performed at the half-year
included key assumptions to reflect a slower speed of recovery, and
future growth of volume. Whilst performance in the second half of
the financial year has been stronger, volumes are still lower and
the outlook for the segment remains in line with the Board's
expectations as at 30 November 2021. As at the half-year reporting
date the rate used to discount the projected cash flows, equating
to the pre-tax discount rates based on comparative businesses, was
10.46% (31 May 2021: 10.80%).
As a result, a goodwill and brand impairment loss of GBP7.7
million has been recognised for the Feeds aggregated CGUs, reducing
the carrying amount of the goodwill and brands for this CGU to
GBP4.4 million. A further GBP0.2 million of computer software has
been separately identified as obsolete and written off during the
period.
The impairment test was reperformed at 31 May 2022 against the
carrying value of GBP4.4 million and the Group are satisfied that
the value in use calculations indicate no further impairment. The
rate used at 31 May 2022 to discount the projected cash flows,
equating to the pre-tax discount rates based on comparative
businesses is noted in the table below.
Fuels
The value in use calculations described above indicate ample
headroom and therefore do not give rise to impairment concerns.
Value in use assumptions and sensitivities
The rates used to discount the projected cash flows, equating to
the pre-tax discount rates based on comparative businesses, are as
follows:
2022 2021
% %
------ --- ------ -----
Fuels 10.43 11.22
Feeds 10.26 10.80
----------- ------ -----
The headroom on the value in use calculations for Fuels and
Feeds are GBP106.0 million and GBP3.9 million respectively. The
following sensitivities have been performed on the CGU
Board-approved forecasts, the impact of which still result in
satisfactory headroom and do not give rise to further
impairment:
Value in
Use Impact
Fuels Feeds
GBPm GBPm
----------------------------- ------ -----
Decrease EBITDA by 10% (11.9) (0.6)
Increase discount rate by 1% (16.3) (0.5)
------------------------------ ------ -----
13. Analysis of cash and cash equivalents and reconciliation to
net debt
Other
1 June Cash non-cash 31 May
2021 flow movements 2022
GBPm GBPm GBPm GBPm
------------------------------------------- ------ ---- --------- ------
Cash and cash equivalents 4.0 5.1 - 9.1
Borrowings (9.5) 9.5 - -
Hire purchase obligations(1) (0.2) 0.1 - (0.1)
------------------------------------------- ------ ---- --------- ------
Total Group (excluding lease liabilities) (5.7) 14.7 - 9.0
------------------------------------------- ------ ---- --------- ------
Lease liabilities (excluding hire purchase
obligations transferred) (25.6) 9.2 (11.8) (28.2)
------------------------------------------- ------ ---- --------- ------
Total Group (including lease liabilities) (31.3) 23.9 (11.8) (19.2)
------------------------------------------- ------ ---- --------- ------
(1) Following the adoption of IFRS 16 'Leases', hire purchase
obligations are now recognised within lease liabilities, shown here
for comparative purposes only.
14. Retirement benefit obligations
The Group operates a defined benefit pension scheme providing
benefits based on final pensionable earnings, which is closed to
future accrual.
NWF Group Benefits Scheme
The scheme is administered by a fund that is legally separated
from the Group. The trustees of the pension fund are required by
law to act in the interest of the fund and of all relevant
stakeholders in the scheme. The trustees are responsible for the
investment policy with regard to the assets of the fund.
The scheme was closed to new members during the year ended 31
May 2002 and closed to future accrual with effect from April
2016.
The triennial actuarial valuation of this scheme was completed
in the year ended 31 May 2021, with a deficit of GBP16.8 million at
the valuation date of 31 December 2019. The present value of the
defined benefit obligation and the related current service cost
were measured using the Projected Unit Credit Method. In these
financial statements this liability has been updated in order to
derive the IAS 19R valuation as of 31 May 2022. The next full
triennial valuation will be completed in the year ending 31 May
2024.
The triennial valuation resulted in Group contributions of
GBP2.1 million per annum, including recovery plan payments of
GBP1.8 million for financial years ending 31 May 2021 and 31 May
2022. From 1 June 2022 to 31 December 2027 recovery plan payments
of GBP2.1 million per annum will be paid. In addition, from 1
January 2022 a percentage increase based on total dividend growth
over GBP3.1 million will be paid.
The amounts recognised in the balance sheet in respect of the
defined benefit scheme are as follows:
2022 2021
GBPm GBPm
------------------------------------------------------- ------ ------
Present value of defined benefit obligations (49.0) (60.0)
Fair value of scheme assets 39.7 45.1
------------------------------------------------------- ------ ------
Deficit in the scheme recognised as a liability in the
balance sheet (9.3) (14.9)
Related deferred tax asset 2.3 3.7
------------------------------------------------------- ------ ------
Net pension liability (7.0) (11.2)
------------------------------------------------------- ------ ------
Changes in the present value of the defined benefit obligation
are as follows:
2022 2021
GBPm GBPm
------------------------------------------------------------- ------ -----
At 1 June 60.0 61.1
Interest cost 1.2 1.0
Remeasurement (gains)/losses:
- actuarial (gains)/losses arising from changes in financial
assumptions (10.2) 2.6
- actuarial gains arising from changes in demographic
assumptions (0.6) (4.0)
- actuarial losses on experience assumptions 0.4 1.2
Benefits paid (1.8) (1.9)
------------------------------------------------------------- ------ -----
At 31 May 49.0 60.0
------------------------------------------------------------- ------ -----
Changes in the fair value of scheme assets are as follows:
2022 2021
GBPm GBPm
------------------------------------------ ----- -----
At 1 June 45.1 40.1
Interest income 0.9 0.7
Remeasurement (losses)/gains:
- actuarial (losses)/gains on plan assets (6.4) 3.8
Contributions by employer 2.2 2.7
Expenses (0.3) (0.3)
Benefits paid (1.8) (1.9)
------------------------------------------ ----- -----
At 31 May 39.7 45.1
------------------------------------------ ----- -----
15. Critical accounting estimates and judgements
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The assumptions that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are discussed below.
Defined benefit pension scheme - valuation assumptions
The balance sheet carrying values of defined benefit pension
scheme surpluses or deficits are calculated using independently
commissioned actuarial valuations. These valuations are based on a
number of assumptions, including the most appropriate mortality
rates to apply to the profile of scheme members and the financial
assumptions regarding discount rates and inflation. All of these
are estimates of future events and are therefore uncertain.
Significant actuarial assumptions for the determination of the
defined benefit liability are discount rate, price inflation and
mortality. The sensitivity analyses shown below have been
determined based on reasonably possible changes of the respective
assumptions occurring at the balance sheet dates, while holding all
other assumptions constant.
Increase Decrease
Impact on defined benefit obligation GBPm GBPm
------------------------------------------------- -------- --------
0.25% change in discount rate (1.8) 2.2
0.25% change in RPI inflation 1.3 (1.7)
One-year change in the life expectancy at age 65 2.3 (2.6)
------------------------------------------------- -------- --------
Assessment of impairment
The Group tests annually for impairment of goodwill and fixed
asset balances, which involves using key judgements including
estimates of future business performance and cash generation,
discount rates and long-term growth rates.
The recoverable amounts of CGUs are determined using value in
use calculations. The value in use calculations use post-tax cash
flow projections based on the Board-approved budget for the year
ending 31 May 2023 and four years of divisional strategic plans
thereafter. Subsequent cash flows are extrapolated using an
estimated growth rate of 2%.
These value in use calculations are subject to a series of
sensitivity analyses using reasonable assumptions concerning the
future performance of the CGUs and assessing the impact of a 1%
increase in the discount rate.
See note 12 for further details.
Carrying value of trade receivables
The Group holds material trade receivable balances, and the
calculations of provisions for impairment are estimates of future
events and therefore uncertain. IFRS 9 requires the Group to
consider forward-looking information and the probability of default
when calculating expected credit losses. The Group considers
reasonable and supportable customer-specific and market information
about past events, current conditions and forecasts of future
economic conditions when measuring expected credit losses.
From a completeness perspective, the Directors are not aware of
any other critical judgements within the Group that give rise to a
significant risk of material adjustment within the next financial
year.
16. Directors' responsibilities statement
The Directors are responsible for preparing the Annual Report in
accordance with applicable laws and regulations and consider that
the Annual Report, taken as a whole, is fair, balanced and
understandable and that it provides the information necessary for
shareholders to assess the Company's performance, business model
and strategy.
The Company's Annual Report for the year ended 31 May 2022,
which will be posted to shareholders on or before 16 August 2022,
contains the following statement regarding responsibility for the
Strategic Report, the Directors' Report (including the Corporate
Governance Report), the Board Report on Remuneration and the
financial statements included within the Annual Report:
Each of the Directors confirms that to the best of their
knowledge:
-- the Group financial statements, which have been prepared in
accordance with UK-adopted International Accounting Standards and
with the requirements of the Companies Act 2006 applicable to
companies reporting under those standards, give a true and fair
view of the assets, liabilities, financial position and result of
the Group;
-- the Strategic Report includes a fair review of the
development and performance of the business and the position of the
Group, together with a description of the principal risks and
uncertainties that it faces;
-- there is no relevant audit information of which the Company's auditors are unaware; and
-- each Director has taken all the steps that they ought to have
taken as a Director to make themselves aware of any relevant audit
information and to establish that the Company's auditors are aware
of that information.
17. Financial calendar
Annual General Meeting 29 September 2022
Dividend:
- Ex-dividend date 3 November 2022
- Record date 4 November 2022
- Payment date 9 December 2022
Announcement of half-year results Early February 2023
Publication of Interim Report Early February 2023
Interim dividend paid May 2023
Financial year end 31 May 2023
Announcement of full-year results Early August 2023
Publication of Annual Report and Accounts Late August 2023
----------------------------------------- -------------------
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