TIDMNWF
RNS Number : 3167O
NWF Group PLC
31 January 2023
For release 7.00am Tuesday 31 January 2023
NWF Group plc
NWF Group plc: Half Year results for the period ended 30
November 2022
NWF Group plc ('NWF' or the 'Group'), the specialist distributor
of fuel, food and feed across the UK, today announces its half year
results for the period ended 30 November 2022.
H1 2022 H1 2021 %
----------------------------------------------- --------- --------- ------
Financial highlights
Revenue GBP541.8m GBP402.6m 34.6
Headline operating profit 1 GBP6.8m GBP4.7m 44.7
Headline profit before taxation 1 GBP6.2m GBP4.3m 44.2
Diluted headline earnings per share 1 9.9p 7.1p 39.4
Interim dividend per share 1.0p 1.0p
Net cash/(debt) 2 GBP1.2m (GBP7.4m)
----------------------------------------------- --------- --------- ------
Statutory results
Operating profit/(loss) GBP6.7m (GBP3.8m)
Profit/(loss) before taxation GBP5.9m (GBP4.4m)
Diluted earnings per share 9.3p (10.6p)
Net debt (including IFRS 16 lease liabilities) GBP30.0m GBP36.4m (17.6)
----------------------------------------------- --------- --------- ------
1 Headline operating profit excludes exceptional items (see note 4)
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.
2 Net cash/(debt) excluding IFRS 16 lease liabilities.
Group highlights
-- Record first half results, with Group revenues and headline operating
profit significantly ahead of the prior year and the Board's expectations.
-- All divisions traded ahead of the Board's expectations at the end
of the first half, continuing to demonstrate the resilience of the
Group.
-- Strong financial position, with a positive cash position at the end
of the half year supporting the GBP10.0 million acquisition of Sweetfuels
Limited ('Sweetfuels') in December 2022 and a maintained dividend.
-- The Group has traded well since the period end and carries encouraging
momentum into the seasonally busier second half, with the Board confident
in delivering its full year expectations.
Divisional highlights
Fuels - headline operating profit of GBP2.6 million (H1 2021:
GBP3.6 million). Good performance in the period with strong margins
offsetting lower year-on-year volumes. Prior year included a
short-term benefit from increased demand during the autumn fuel
shortage.
Food - headline operating profit of GBP2.1 million (H1 2021:
GBP1.5 million). Strong performance with increased distribution
activity and continued improvements in operating efficiency.
Feeds - headline operating profit of GBP2.1 million (H1 2021:
GBP0.4 million loss). Performance ahead of expectations with volume
a little lower than prior year, as a result of good grazing
conditions. This was more than offset by a strong margin as farmers
optimised feed rations to benefit from a significantly higher milk
price.
Ri chard Whiting, Chief Executive, NWF Group plc, commented:
"We have delivered a record first half with a good performance
from all three divisions in spite of an uncertain economic outlook
and inflationary pressures. NWF has continued to demonstrate its
resilience as a business and has significant further growth
opportunities. The acquisition of Sweetfuels in December highlights
delivery of our growth strategy to consolidate the fragmented fuels
distribution market. We have started the important winter period
well and continue to focus on the long-term growth of the Group,
with a clear investment strategy, which is supported by a strong
financial position."
A hybrid meeting is being held today for analysts starting at
9.30am. For login details please contact NWF @mhp group .com or
call MHP on 020 3128 8013.
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 / Mike Bell /
Executive Catherine Chapman Ed Allsopp
Chris Belsham, Group / Peel Hunt LLP (Nominated adviser
Finance Director Christian Harte and broker)
NWF Group plc MHP Communications Tel: 020 7418 8900
Tel: 01829 260 260 Tel: 020 3128
8339
Chair's statement
NWF delivered a very strong performance in the first half with
all three divisions ahead of the Board's expectations and, overall,
significantly ahead of the prior year. The Group has also continued
to make progress towards its longer-term objectives, including the
acquisition of Sweetfuels in December 2022, which is in line with
the strategy to further consolidate the fragmented fuels
distribution market. Fuels' performance in the first half was
robust in spite of reduced demand for heating oil following a mild
autumn and inflationary pressures on businesses and consumers. In
Food, distribution activity increased compared to the prior year
and operating efficiency continued to improve. Feeds' performance
was ahead of expectations with a high milk price supporting farmers
in optimising feed rations, which improved our margins. This more
than offset slightly lower volumes resulting from good autumn
grazing conditions.
Results
Revenue for the half year ended 30 November 2022 was 34.6%
higher at GBP541.8 million (H1 2021: GBP402.6 million), primarily
as a result of higher commodity prices in Fuels and Feeds. Headline
operating profit [1] was higher at GBP6.8 million (H1 2021: GBP4.7
million), with a strong performance in all three divisions.
Headline profit before taxation [1] was up 44.2% to GBP6.2 million
(H1 2021: GBP4.3 million).
Basic headline earnings per share [1] was 9.9p (H1 2021: 7.1p)
and diluted headline earnings per share [1] was 9.9p (H1 2021:
7.1p).
Net cash absorbed from operations for the period amounted to
GBP0.5 million (H1 2021: GBP5.1 million generated). Cash generation
was lower as a result of the investment in additional working
capital to manage increased commodity costs and supply constraints
in the fuel market. Net capital expenditure in the period was
GBP1.3 million (H1 2021: GBP1.4 million).
Net cash at the period end, excluding the impact of IFRS 16, was
materially higher at GBP1.2 million (H1 2021: GBP7.4 million net
debt), reflecting the Group's strong cash generation. This excludes
the net cash consideration of GBP10.0 million for the acquisition
of Sweetfuels completed post period end.
The Group's banking facilities of GBP65.0 million are committed
to October 2023 and NWF continues to operate with substantial
headroom. Net debt including the impact of IFRS 16 was GBP30.0
million (H1 2021: GBP36.4 million). Refinancing of this facility is
in progress as planned.
Net assets at 30 November 2022 increased to GBP70.2 million (30
November 2021: GBP53.8 million). The IAS 19R defined benefits
pension scheme valuation deficit has increased from GBP9.3 million
as at 31 May 2022 to GBP10.5 million at the half year, as a result
of increases in discount and inflation rate assumptions only
partially offsetting lower asset values.
Dividend
The Board has approved an unchanged interim dividend per share
of 1.0p (H1 2021: 1.0p), in line with its policy. This will be paid
on 2 May 2023 to shareholders on the register as at 17 March 2023.
The shares will trade ex-dividend on 16 March 2023. The Group has
increased the annual dividend by approximately 5% in each of the
last ten years reflecting the Group's strong underlying financial
performance and position.
Operations
Fuels
Revenue increased by 40.2% to GBP401.8 million (H1 2021:
GBP286.5 million) as a result of significantly higher oil prices
and a greater proportion of commercial volume. Headline operating
profit was GBP2.6 million (H1 2021: GBP3.6 million), ahead of
expectations, but behind the prior year which benefitted from
additional demand from the short-term retail supply challenges in
autumn 2021.
Volumes decreased by 13.5%, to 300 million litres (H1 2021: 347
million litres) with the largest reduction being in domestic
heating oil which was over 20.0% lower than prior year. This was a
consequence of a warm autumn and consumer concerns over cost of
living and the higher price of oil. Diesel volumes increased given
the changes to gas oil duty in April 2022, but this did not fully
offset the decline in gas oil sales. In the first half Brent Crude
averaged $99.08 per barrel (H1 2021: $76.22 per barrel) and ended
the reporting period at $85.43 per barrel.
Across the period and particularly in November and December, the
oil distribution market suffered from supply issues which have
resulted in some constraints on supplying customers and additional
haulage costs as product is moved around the country. Against this,
NWF benefited from national supply agreements and a UK-wide depot
network which has continued to service our domestic and commercial
customers.
The acquisition of Sweetfuels in December has added a 20 million
litre fuel distributor based in Faringdon, Oxfordshire, supplying
fuel to predominantly domestic customers across the Cotswolds. It
further expands and infills NWF's geographic coverage of its Fuels
business within the UK. The acquisition is expected to be
immediately earnings enhancing to the Group.
The Group will implement its proven post-acquisition integration
plan, retaining the local brand and customer facing parts of the
business whilst centralising support services. In the 12 months to
31 August 2021, Sweetfuels generated EBITDA of GBP1.3 million,
profit before tax of GBP1.2 million and had net assets of GBP2.8
million.
The UK fuels distribution market is highly fragmented, and the
Board believes the opportunity for NWF to expand its depot network,
broadening the customer base and leveraging scale efficiencies,
remains significant. The Group has a strong and established
acquisition and integration track record and is actively exploring
several opportunities.
Food
Revenue increased by 15.0% to GBP36.0 million (H1 2021: GBP31.3
million). Headline operating profit was GBP2.1 million (H1 2021:
GBP1.5 million).
Demand for ambient grocery products was stable during the
period, which was reflected in consistent storage volumes at an
average of 122,000 spaces (H1 2021: 122,000), with total capacity
now at 135,000 pallet spaces. This utilisation at an average of
just over 90% is in line with our plans and highlights the business
has the customer base to fully utilise our facilities. In terms of
throughput, pallets dispatched were 6% higher than the prior year
reflecting a greater stock turn of our customers' products and
generating additional revenue and contribution.
The improvement in profitability has been driven through
improved distribution contribution on the back of additional
activity and an associated increase in backload opportunities.
There were no significant demand spikes as were experienced in
prior years and customers' peak demand was planned for and managed
effectively, delivering consistently high levels of service. We
have continued to have both the appropriate skills and labour
capacity for our warehouse activities, as well as a stable
population of drivers in the business.
The packing room operation was well ahead of prior year, working
on added value services for a number of our storage customers.
Whilst e-fulfilment was similar to prior year, Palletline revenue
was significantly lower than prior year, in line with reported
lower levels of network activity.
Feeds
Revenue increased by 22.6% to GBP104.0 million (H1 2021: GBP84.8
million) as higher commodity and selling prices more than offset
slightly lower volumes in the period. Headline operating profit was
GBP2.1 million (H1 2021: GBP0.4 million loss) as the business
passed on inflationary cost increases in commodities, other cost
inputs and farmers fed to optimise performance and benefitted from
a record high milk price.
Volumes were 1.7% lower at 238,000 tonnes (H1 2021: 242,000
tonnes) as a result of good grazing conditions through the mild
autumn period. DEFRA data suggests the ruminant feed market was
2.2% lower.
The market experienced continued volatility of commodity prices
linked to the news flow from the Ukraine conflict, harvest data and
global economic outlook. In the period, whilst a basket of
commodities on the spot market was generally lower, proteins
increased in price and grains fell significantly. Average milk
prices increased by over 10p per litre over the period which more
than offset the impact of higher feed prices and other cost inputs
on a dairy farm. Average milk prices at the end of November were
51.1p per litre (November 2021: 33.8p per litre). Milk production
was 0.6% higher year-on-year.
Our operational platform, with key mills close to customers in
the North, Central and Southern regions, delivered the expected
efficiencies and provides an effective base for future development.
Investment has continued into NWF's Feeds training academy to
develop our future nutritionists.
ESG framework
The leadership team of NWF continues to develop its work on ESG
with measures and targets now embedded in monthly reporting to the
Board and a focus on continuous improvement activity. We are in
line with our plan to deliver appropriate UK-CFD (United Kingdom -
Climate-related Financial Disclosures) reports and disclosures in
our 2023 Annual Report.
Board update
As announced in August, I have agreed to remain as Chair until
such a time that a successor is appointed. With effect from 1
September 2022, Dawn Moore was appointed as a Non-Executive
Director, bringing significant HR experience in public, private and
third sectors.
Outlook and future prospects
Following a very strong first half, the Group has continued to
trade well since the period end. In Fuels, demand for heating oil
increased as cold weather was experienced in December, although we
are unclear what the cost of living crisis will mean for domestic
demand across the key winter months. Acquisition development
activity continues, and the integration of Sweetfuels is following
our proven post-acquisition process. In Food, demand was a little
greater than anticipated leading into Christmas as retailers
increased stocks of core commodity product lines. In Feeds, volumes
and margin remain robust; however, there continues to be volatility
and uncertainty around commodity prices. Across all three divisions
there are inflationary cost pressures in labour and energy which
are being managed.
Our financial position is strong and we continue to focus on
development opportunities, both organic and through targeted
acquisitions, which underpin our continued confidence in NWF's
growth potential and future prospects.
We have made a positive start to the year and consequently the
Board remains very confident in its expectations for the full year
as we move through the significant winter period for the Group. I
look forward to updating shareholders later this year.
Philip Acton
Chair
31 January 2023
Condensed consolidated income statement
for the half year ended 30 November 2022 (unaudited)
Half year Half year Year
ended ended ended
30 November 30 November 31 May
2022 2021 2022
Note GBPm GBPm GBPm
------------------------------------------ ---- ------------ ------------ -------
Revenue 3 541.8 402.6 878.6
Cost of sales and administrative expenses (535.1) (406.4) 865.4
------------------------------------------ ---- ------------ ------------ -------
Headline operating profit([1]) 6.8 4.7 21.8
Exceptional items 4 - (8.4) (8.3)
Amortisation of acquired intangibles (0.1) (0.1) (0.3)
------------------------------------------ ---- ------------ ------------ -------
Operating profit/(loss) 3 6.7 (3.8) 13.2
Finance costs 5 (0.8) (0.6) (1.2)
------------------------------------------ ---- ------------ ------------ -------
Headline profit before taxation([1]) 6.2 4.3 20.9
Exceptional items 4 - (8.4) (8.3)
Amortisation of acquired intangibles (0.1) (0.1) (0.3)
Net finance cost in respect of the
defined benefit pension scheme (0.2) (0.2) (0.3)
------------------------------------------ ---- ------------ ------------ -------
Profit/(loss) before taxation 5.9 (4.4) 12.0
Income tax expense 6 (1.3) (0.8) (3.6)
------------------------------------------ ---- ------------ ------------ -------
Profit/(loss) for the period attributable
to equity shareholders 4.6 (5.2) 8.4
------------------------------------------ ---- ------------ ------------ -------
Earnings per share (pence)
Basic 7 9.3 (10.6) 17.1
Diluted 7 9.3 (10.6) 17.0
------------------------------------------ ---- ------------ ------------ -------
Headline earnings per share (pence)
([1])
Basic 7 9.9 7.1 35.0
Diluted 7 9.9 7.1 34.8
------------------------------------------ ---- ------------ ------------ -------
The notes form an integral part of this condensed consolidated
Half Year Report.
1 Headline operating profit is statutory operating profit of GBP6.7
million (H1 2021: GBP3.8 million loss) before exceptional items of
GBPNil (H1 2021: GBP8.4 million) and amortisation of acquired intangibles
of GBP0.1 million (H1 2021: GBP0.1 million). Headline profit before
taxation is statutory profit before taxation of GBP5.9 million (H1
2021: GBP4.4 million loss), after adding back the net finance cost
in respect of the Group's defined benefit pension scheme of GBP0.2
million (H1 2021: GBP0.2 million), the exceptional items and the amortisation
of acquired intangibles. Headline earnings per share also takes into
account the taxation effect thereon.
Condensed consolidated statement of comprehensive income
for the half year ended 30 November 2022 (unaudited)
Half
year Half year Year
ended ended ended
30 November 30 November 31 May
2022 2021 2022
GBPm GBPm GBPm
------------------------------------------ ------------ ------------ -------
Profit/(loss) for the period attributable
to equity shareholders 4.6 (5.2) 8.4
Items that will never be reclassified
to profit or loss:
Re-measurement (loss)/gain on
the defined benefit pension scheme (2.2) (0.3) 4.0
Tax on items that will never be
reclassified to profit or loss 0.3 (0.1) (1.0)
------------------------------------------ ------------ ------------ -------
Total comprehensive income/(expense)
for the period 2.7 (5.6) 11.4
------------------------------------------ ------------ ------------ -------
The notes form an integral part of this condensed consolidated
Half Year Report.
Condensed consolidated balance sheet
as at 30 November 2022 (unaudited)
30 November
30 November 2021 31 May
2022 (restated(1) 2022
)
Note GBPm GBPm GBPm
--------------------------------- ----- ------------- ------------- -------
Non-current assets
Property, plant and equipment 44.1 45.9 45.4
Right of use assets 30.5 28.7 27.5
Intangible assets 22.5 22.9 22.7
--------------------------------- ----- ------------- ------------- -------
97.1 97.5 95.6
--------------------------------- ----- ------------- ------------- -------
Current assets
Inventories 10.3 8.7 9.8
Trade and other receivables 8 115.9 90.3 96.2
Reimbursement assets 9 2.7 3.9 2.8
Current income tax asset - 0.2 -
Cash and cash equivalents 8 1.2 0.5 9.1
Derivative financial instruments 8 0.4 0.2 0.4
--------------------------------- ----- ------------- ------------- -------
130.5 103.8 118.3
--------------------------------- ----- ------------- ------------- -------
Total assets 227.6 201.3 213.9
--------------------------------- ----- ------------- ------------- -------
Current liabilities
Trade and other payables 8 (108.5) (89.7) (100.6)
Current income tax liabilities (0.4) - (0.4)
Borrowings 8 - (4.7) -
Lease liabilities 8 (9.6) (8.4) (8.6)
Provision for liabilities 10 (2.9) (3.9) (3.1)
Derivative financial instruments 8 (0.2) (0.1) (0.2)
--------------------------------- ----- ------------- ------------- -------
(121.6) (106.8) (112.9)
--------------------------------- ----- ------------- ------------- -------
Non-current liabilities
Borrowings 8 - (3.0) -
Lease liabilities 8 (21.6) (20.8) (19.7)
Provision for liabilities 10 (0.6) (0.4) (0.7)
Deferred income tax liabilities (3.1) (2.0) (3.2)
Retirement benefit obligations (10.5) (14.5) (9.3)
--------------------------------- ----- ------------- ------------- -------
(35.8) (40.7) (32.9)
--------------------------------- ----- ------------- ------------- -------
Total liabilities (157.4) (147.5) (145.8)
--------------------------------- ----- ------------- ------------- -------
Net assets 70.2 53.8 68.1
--------------------------------- ----- ------------- ------------- -------
Equity
Share capital 11 12.4 12.3 12.3
Share premium 0.9 0.9 0.9
Retained earnings 56.9 40.6 54.9
--------------------------------- ----- ------------- ------------- -------
Total equity 70.2 53.8 68.1
--------------------------------- ----- ------------- ------------- -------
The notes form an integral part of this condensed consolidated
Half Year Report.
1 A GBP3.9 million provision for liabilities has been recognised as
at 30 November 2021 in respect of third-party claims made against
the Group, but which are indemnified under the terms of its insurance
policy. A corresponding reimbursement asset of GBP3.9 million has
been recognised as at 30 November 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 December 2020 would be the
inclusion of a provision for insurance claims of GBP2.5 million and
a corresponding re-imbursement asset of GBP2.5 million in respect
of third party claims made against the Group, but which were indemnified
under the terms of its insurance policy.
Condensed consolidated statement of changes in equity
for the half year ended 30 November 2022 (unaudited)
Share Share Retained Total
capital premium earnings equity
GBPm GBPm GBPm GBPm
--------------------------------------------- -------- -------- --------- -------
Balance at 1 June 2021 12.3 0.9 46.3 59.5
--------------------------------------------- -------- -------- --------- -------
Loss for the period - - (5.2) (5.2)
Items that will never be reclassified
to profit or loss:
Re-measurement loss on the defined
benefit pension scheme - - (0.3) (0.3)
Tax on items that will never be reclassified
to profit or loss - - (0.1) (0.1)
--------------------------------------------- -------- -------- --------- -------
Total comprehensive expense for the
period - - (5.6) (5.6)
--------------------------------------------- -------- -------- --------- -------
Transactions with owners:
Value of employee services - - (0.1) (0.1)
--------------------------------------------- -------- -------- --------- -------
- - (0.1) (0.1)
--------------------------------------------- -------- -------- --------- -------
Balance at 30 November 2021 12.3 0.9 40.6 53.8
--------------------------------------------- -------- -------- --------- -------
Profit for the period - - 13.6 13.6
Items that will never be reclassified
to profit or loss:
Re-measurement gain on the defined
benefit pension scheme - - 4.3 4.3
Tax on items that will never be reclassified
to profit or loss - - (0.9) (0.9)
--------------------------------------------- -------- -------- --------- -------
Total comprehensive income for the
period - - 17.0 17.0
--------------------------------------------- -------- -------- --------- -------
Transactions with owners:
Dividend paid - - (3.5) (3.5)
Credit to equity for equity-settled
share-based payments - - 0.8 0.8
--------------------------------------------- -------- -------- --------- -------
- - (2.7) (2.7)
--------------------------------------------- -------- -------- --------- -------
Balance at 31 May 2022 12.3 0.9 54.9 68.1
--------------------------------------------- -------- -------- --------- -------
Profit for the period - - 4.6 4.6
Items that will never be reclassified
to profit or loss:
Re-measurement loss on the defined
benefit pension scheme - - (2.2) (2.2)
Tax on items that will never be reclassified
to profit or loss - - 0.3 0.3
--------------------------------------------- -------- -------- --------- -------
Total comprehensive income for the
period - - 2.7 2.7
--------------------------------------------- -------- -------- --------- -------
Transactions with owners:
Issue of shares 0.1 - (0.1) -
Value of employee services - - (0.6) (0.6)
--------------------------------------------- -------- -------- --------- -------
0.1 - (0.7) (0.6)
--------------------------------------------- -------- -------- --------- -------
Balance at 30 November 2022 12.4 0.9 56.9 70.2
--------------------------------------------- -------- -------- --------- -------
The notes form an integral part of this condensed consolidated
Half Year Report.
Condensed consolidated cash flow statement
for the half year ended 30 November 2022 (unaudited)
Half year Half year Year
ended ended ended
30 November 30 November 31 May
2022 2021 2022
GBPm GBPm GBPm
-------------------------------------------------- ------------ ------------ -------
Cash flows from operating activities
Operating profit/(loss) 6.7 (3.8) 13.2
Adjustments for:
Depreciation and amortisation 7.5 6.9 14.0
Impairment of intangible assets - 7.9 7.9
Impairment of property, plant and equipment - 0.5 0.5
Profit on disposal of fixed assets (0.4) (0.1) -
Fair value profit on financial derivative - - (0.1)
Share-based payment expense - - 0.8
Value of employee services (0.6) (0.1) (0.1)
Contributions to pension scheme not recognised
in income statement (1.1) (0.8) (1.8)
-------------------------------------------------- ------------ ------------ -------
Operating cash flows before movements in working
capital 12.1 10.5 34.4
Movements in working capital:
Increase in inventories (0.5) (2.1) (3.2)
Increase in receivables (19.5) (18.2) (23.9)
Increase in payables 7.4 14.9 26.4
-------------------------------------------------- ------------ ------------ -------
Net cash (absorbed)/generated from operations (0.5) 5.1 33.7
Interest paid (0.6) (0.4) (0.9)
Income tax paid (1.2) (0.7) (2.7)
-------------------------------------------------- ------------ ------------ -------
Net cash (absorbed)/generated from operating
activities (2.3) 4.0 30.1
-------------------------------------------------- ------------ ------------ -------
Cash flows from investing activities
Purchase of intangible assets - (0.1) (0.2)
Purchase of property, plant and equipment (1.3) (1.4) (3.4)
Acquisition of subsidiaries - cash paid (net
of cash acquired) - - -
Proceeds on sale of property, plant and equipment 0.6 0.1 0.4
-------------------------------------------------- ------------ ------------ -------
Net cash absorbed by investing activities (0.7) (1.4) (3.2)
-------------------------------------------------- ------------ ------------ -------
Cash flows from financing activities
Decrease in bank borrowings - (1.8) (9.5)
Capital element of leases (4.9) (4.3) (8.8)
Dividends paid - - (3.5)
-------------------------------------------------- ------------ ------------ -------
Net cash absorbed by financing activities (4.9) (6.1) (21.8)
-------------------------------------------------- ------------ ------------ -------
Net movement in cash and cash equivalents (7.9) (3.5) 5.1
Cash and cash equivalents at beginning of period 9.1 4.0 4.0
-------------------------------------------------- ------------ ------------ -------
Cash and cash equivalents at end of period 1.2 0.5 9.1
-------------------------------------------------- ------------ ------------ -------
The notes form an integral part of this condensed consolidated
Half Year Report.
Notes to the condensed consolidated half year report
for the half year ended 30 November 2022 (unaudited)
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 address of its 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.
These condensed consolidated interim financial statements
('interim financial statements') were approved by the Board for
issue on 31 January 2023.
These interim financial statements do not constitute statutory
accounts within the meaning of Section 434 of the Companies Act
2006. The interim financial statements for the half years ended 30
November 2022 and 30 November 2021 are neither audited nor reviewed
by the Company's auditors. Statutory accounts for the year ended 31
May 2022 were approved by the Board of Directors on 2 August 2022
and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement
under Section 498 of the Companies Act 2006.
2. Basis of preparation and accounting policies
Except as described below, these interim financial statements
have been prepared in accordance with the principal accounting
policies used in the Group's consolidated financial statements for
the year ended 31 May 2022. These interim financial statements
should be read in conjunction with those consolidated financial
statements, which have been prepared in accordance with the
international accounting standards in conformity with the
requirements of the Companies Act 2006 and the UK-adopted
International Accounting Standards.
These interim financial statements do not fully comply with IAS
34 'Interim Financial Reporting', as is currently permissible under
the rules of AIM.
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total annual
earnings.
The triennial actuarial valuation of the Group's defined benefit
pension scheme was completed during the half year ended 30 November
2020, with a deficit of GBP16.2 million at the valuation date of 31
December 2019. In these interim financial statements, this
liability has been updated in order to derive the IAS 19R valuation
as of 30 November 2022. The triennial valuation resulted in Group
contributions of GBP2.1 million per annum, including recovery plan
payments of GBP1.8 million per annum 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 Directors consider that headline operating profit, headline
profit before taxation, headline earnings per share and headline
EBITDA measures, referred to in these interim 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, amortisation of
acquired intangibles, exceptional items and the taxation effect
thereon where relevant. 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.
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 7
of these interim financial statements.
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, asset impairment and
income from legal settlements. In determining whether an item
should be disclosed as an exceptional item, the Directors consider
qualitative as well as quantitative 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.
The Group tests annually for impairment, or at the end of each
reporting date if there is any indication that an asset may be
impaired. This involves using key judgements including estimates of
future business performance and cash generation, discount rates and
long-term growth rates.
Certain statements in these interim financial statements 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 actual results and events could differ materially
from those expressed or implied by these forward-looking
statements.
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.
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.
3. 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 product/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 are summarised below:
sale and distribution of domestic heating, industrial and road
Fuels - fuels
warehousing and distribution of clients' ambient grocery and other
Food - 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 headline operating profit. Finance income and
costs are not included in the segment results which are 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 current income tax assets and cash and
cash equivalents. Segment liabilities exclude deferred income tax
liabilities, borrowings and retirement benefit obligations.
Excluded items are part of the reconciliation to consolidated total
assets and liabilities.
Half year ended 30 November Fuels Food Feeds Group
2022 Note GBPm GBPm GBPm GBPm
------------------------------------- ---- ----- ----- ----- -----
Revenue
Total revenue 406.1 36.1 104.0 546.2
Inter-segment revenue (4.3) (0.1) - (4.4)
------------------------------------- ---- ----- ----- ----- -----
Revenue 401.8 36.0 104.0 541.8
------------------------------------- ---- ----- ----- ----- -----
Result
Headline operating profit 2.6 2.1 2.1 6.8
Amortisation of acquired intangibles (0.1) - - (0.1)
-----
Operating profit as reported 6.7
Finance costs 5 (0.8)
-----
Profit before taxation 5.9
Income tax expense 6 (1.3)
------------------------------------- ---- ----- ----- ----- -----
Profit for the period 4.6
------------------------------------- ---- ----- ----- ----- -----
Other information
Depreciation and amortisation 2.9 3.0 1.5 7.4
Fixed asset additions 0.2 0.6 0.5 1.3
------------------------------------- ---- ----- ----- ----- -----
Fuels Food Feeds Group
As at 30 November 2022 GBPm GBPm GBPm GBPm
-------------------------------- ------ ------ ------ -------
Balance sheet
Assets
Segment assets 119.4 52.4 54.6 226.4
-------------------------------- ------ ------ ------
Cash and cash equivalents 1.2
-------------------------------- ------ ------ ------ -------
Consolidated total assets 227.6
-------------------------------- ------ ------ ------ -------
Liabilities
Segment liabilities (96.9) (23.6) (22.9) (143.4)
-------------------------------- ------ ------ ------
Current income tax liabilities (0.4)
Deferred income tax liabilities (3.1)
Retirement benefit obligations (10.5)
-------------------------------- ------ ------ ------ -------
Consolidated total liabilities (157.4)
-------------------------------- ------ ------ ------ -------
Half year ended 30 Fuels Food Feeds Group
November 2021 Note GBPm GBPm GBPm GBPm
------------------------------ ---- ----- ----- ----- -----
Revenue
Total revenue 290.0 31.4 84.8 406.2
Inter-segment revenue (3.5) (0.1) - (3.6)
------------------------------ ---- ----- ----- ----- -----
Revenue 286.5 31.3 84.8 402.6
------------------------------ ---- ----- ----- ----- -----
Result
Headline operating
profit/(loss) 3.6 1.5 (0.4) 4.7
Segment exceptional
item 4 - - (8.4) (8.4)
Amortisation of acquired
intangibles (0.1) - - (0.1)
-----
Operating loss as
reported (3.8)
Finance costs 5 (0.6)
-----
Loss before taxation (4.4)
Income tax expense 6 (0.8)
------------------------------ ---- ----- ----- ----- -----
Loss for the period (5.2)
------------------------------ ---- ----- ----- ----- -----
Other information
Depreciation and amortisation 2.4 3.0 1.5 6.9
Fixed asset additions 0.4 0.4 0.6 1.4
------------------------------ ---- ----- ----- ----- -----
Fuels Food Feeds Group
As at 30 November 2021 GBPm GBPm GBPm GBPm
-------------------------------- ------ ------ ------ -------
Balance sheet
Assets
Segment assets 95.4 50.0 51.3 196.7
-------------------------------- ------ ------ ------
Current income tax assets 0.2
Cash and cash equivalents 0.5
-------------------------------- ------ ------ ------ -------
Consolidated total assets 197.4
-------------------------------- ------ ------ ------ -------
Liabilities
Segment liabilities (78.6) (21.4) (19.4) (119.4)
-------------------------------- ------ ------ ------
Deferred income tax liabilities (2.0)
Borrowings (7.7)
Retirement benefit obligations (14.5)
-------------------------------- ------ ------ ------ -------
Consolidated total liabilities (143.6)
-------------------------------- ------ ------ ------ -------
Year ended 31 May Fuels Food Feeds Group
2022 Note 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 4 - - (8.4) (8.4)
Group exceptional
item 4 0.1
Amortisation of acquired
intangibles (0.3) - - (0.3)
-----
Operating profit as
reported 13.2
Finance costs 5 (1.2)
-----
Profit before taxation 12.0
Income tax expense 6 (3.6)
------------------------------ ------ ----- ----- ----- -----
Profit for the year 8.4
------------------------------ ------ ----- ----- ----- -----
Other information
Depreciation and amortisation 5.2 5.9 2.9 14.0
Fixed asset additions 0.9 1.1 1.4 3.4
------------------------------ ------ ----- ----- ----- -----
Fuels Food Feeds Group
As at 31 May 2022 GBPm GBPm GBPm GBPm
-------------------------------- ------ ------ ------ -------
Balance sheet
Assets
Segment assets 106.5 48.3 50.0 204.8
-------------------------------- ------ ------ ------
Cash at bank and in hand 9.1
-------------------------------- ------ ------ ------ -------
Consolidated total assets 213.9
-------------------------------- ------ ------ ------ -------
Liabilities
Segment liabilities (88.7) (20.1) (24.1) (132.9)
-------------------------------- ------ ------ ------
Deferred income tax liabilities (3.2)
Borrowings (0.4)
Retirement benefit obligations (9.3)
-------------------------------- ------ ------ ------ -------
Consolidated total liabilities (145.8)
-------------------------------- ------ ------ ------ -------
4. Profit before taxation - exceptional items
Half year Half year Year
ended ended ended
30 November 30 November 31 May
2022 2021 2022
GBPm GBPm GBPm
-------------------------------------------- ------------- ------------ -------
Impairment of goodwill and other intangible
assets - 7.9 7.9
Impairment of property, plant and equipment - 0.5 0.5
Insurance reclaim credit - - (0.1)
-------------------------------------------- ------------- ------------ -------
Exceptional costs - 8.4 8.3
-------------------------------------------- ------------- ------------ -------
5. Finance costs
Half
year Half year Year
ended ended ended
30 November 30 November 31 May
2022 2021 2022
GBPm GBPm GBPm
-------------------------------------- ------------ ------------ -------
Interest on bank loans and overdrafts 0.3 0.2 0.4
Finance costs on lease liabilities
relating to IFRS 16 0.3 0.2 0.5
Net finance cost in respect of
the defined benefit pension scheme 0.2 0.2 0.3
-------------------------------------- ------------ ------------ -------
Total finance costs 0.8 0.6 1.2
-------------------------------------- ------------ ------------ -------
6. Income tax expense
The income tax expense for the half year ended 30 November 2022
is based upon management's best estimate of the weighted average
annual tax rate (before impairment-related exceptional costs)
expected for the full financial year ending 31 May 2023 of 21.9%
(H1 2021: 21.0%).
7. Earnings per share
The calculation of basic and diluted earnings per share is based
on the following data:
Half
year Half year Year
ended ended ended
30 November 30 November 31 May
2022 2021 2022
GBPm GBPm GBPm
------------------------------------------ ------------ ------------ -------
Earnings
Earnings for the purposes of basic
and diluted earnings per share,
being profit for the period attributable
to equity shareholders 4.6 (5.2) 8.4
------------------------------------------ ------------ ------------ -------
Half
year Half year Year
ended ended ended
30 November 30 November 31 May
2022 2021 2022
'000 '000 '000
-------------------------------------- ------------ ------------ -------
Number of shares
Weighted average number of shares
for the purposes of basic earnings
per share 49,302 49,084 49,109
Weighted average dilutive effect
of conditional share awards (note
11) 106 51 299
-------------------------------------- ------------ ------------ -------
Weighted average number of shares
for the purposes of diluted earnings
per share 49,408 49,135 49,408
-------------------------------------- ------------ ------------ -------
The calculation of basic and diluted headline earnings per share
is based on the following data:
Half year Half year Year
ended ended ended
30 November 30 November 31 May
2022 2021 2022
GBPm GBPm GBPm
--------------------------------------------- ------------ ------------ -------
Profit/(loss) for the period attributable to
equity shareholders 4.6 (5.2) 8.4
Add back:
Net finance cost in respect of the defined
benefit pension scheme 0.2 0.2 0.3
Exceptional items - 8.4 8.3
Exceptional impact of remeasuring deferred -
tax balances - -
Amortisation of acquired intangibles 0.1 0.1 0.3
Tax effect of the above - - (0.1)
--------------------------------------------- ------------ ------------ -------
Headline earnings 4.9 3.5 17.2
--------------------------------------------- ------------ ------------ -------
8. Financial instruments
The Group's financial instruments comprise cash, bank
overdrafts, invoice discounting advances, lease liabilities,
commodity derivatives and various items such as receivables and
payables, which arise from its operations. All financial
instruments in 2022 and 2021 were denominated in Sterling. There is
no significant foreign exchange risk in respect of these
instruments.
The carrying amounts of all of the Group's financial instruments
are measured at amortised cost in the financial statements, with
the exception of derivative financial instruments being forward
supply contracts. Derivative financial instruments are measured at
fair value subsequent to initial recognition.
IFRS 13 (amended) 'Financial Instruments: Disclosures' requires
disclosure of financial instruments measured at fair value, grouped
into Levels 1 to 3 below, based on the degree to which the fair
value is observable:
-- Level 1 fair value measurements are those derived from unadjusted
quoted prices in active markets for identical assets or liabilities;
-- Level 2 fair value measurements are those derived from inputs, other
than quoted prices included within Level 1 above, that are observable
for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices); and
-- Level 3 fair value measurements are those derived from valuation techniques
that include inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
All of the Group's derivative financial instruments were
classified as Level 2 in the current and prior periods. There were
no transfers between levels in both the current and prior
periods.
The book and fair values of financial assets are as follows:
30 November 30 November 31 May
2022 2021 2022
Total book and fair value GBPm GBPm GBPm
-------------------------------------- ----------- ----------- ------
Trade and other receivables(1) 109.1 83.7 93.0
Financial assets carried at amortised
cost: cash and cash equivalents 1.2 0.5 9.1
Financial assets carried at fair
value: derivatives 0.4 0.2 0.4
-------------------------------------- ----------- ----------- ------
Financial assets 110.7 84.4 102.5
-------------------------------------- ----------- ----------- ------
(1 Excludes prepayments.)
The book and fair values of financial liabilities are as
follows:
30 November 30 November 31 May
2022 2021 2022
Total book and fair value GBPm GBPm GBPm
----------------------------------- ----------- ----------- ------
Financial liabilities carried
at amortised cost:
Trade and other payables(2) 107.2 88.7 99.2
Floating rate invoice discounting
advances - 4.7 -
Lease liabilities repayable within
one year 9.6 8.4 8.6
Financial liabilities carried
at fair value: derivatives 0.2 0.1 0.2
----------------------------------- ----------- ----------- ------
117.0 101.9 108.0
----------------------------------- ----------- ----------- ------
Revolving credit facility - 3.0 -
Lease liabilities repayable after
one year 21.6 20.8 19.7
----------------------------------- ----------- ----------- ------
21.6 23.8 19.7
----------------------------------- ----------- ----------- ------
Financial liabilities 138.6 125.7 127.7
----------------------------------- ----------- ----------- ------
(2 Excludes social security and other taxes.)
9. Reimbursement assets
30 November
30 November 2021 31 May
(restated(1)
2022 ) 2022
GBPm GBPm GBPm
--------------------- ------------ ------------- ------
Reimbursement assets 2.7 3.9 2.8
--------------------- ------------ ------------- ------
1 GBP3.9 million of reimbursement assets have been recognised as
at 30 November 2021 in respect of the reimbursement of third-party
claims made against the Group, which are indemnified under the
terms of its insurance policy. A corresponding provision for
liabilities of GBP3.9 million has been recognised as at 30 November
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.
10. Provisions for liabilities
30 November
30 November 2021 31 May
(restated(1)
2022 ) 2022
GBPm GBPm GBPm
------------------------------- ------------ ------------- ------
Current
Provision for insurance claims 2.7 3.9 2.8
Provision for dilapidations 0.2 - 0.1
Other provisions - - 0.2
------------------------------- ------------ ------------- ------
2.9 3.9 3.1
------------------------------- ------------ ------------- ------
Non-current
Provision for dilapidations 0.6 0.4 0.7
------------------------------- ------------ ------------- ------
Total 3.5 4.3 3.8
------------------------------- ------------ ------------- ------
1 GBP3.9 million of reimbursement assets have been recognised as
at 30 November 2021 in respect of the reimbursement of third-party
claims made against the Group, which are indemnified under the
terms of its insurance policy. A corresponding provision for
liabilities of GBP3.9 million has been recognised as at 30 November
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 Group recognises a provision for liabilities in respect of
third-party claims made against the Group. A corresponding
reimbursement asset of GBP2.7 million (2021: GBP3.9 million) has
been recognised as all of the expenditure required to settle such
claims will be reimbursed by the insurer under the terms of the
policy. As the Group expects insurance claims to be settled within
one year, recognition of these balances is made with current assets
and current liabilities.
The Group also recognises current and non-current provisions for
dilapidations totalling GBP0.8 million (2021: GBP0.4 million) in
respect of leased properties and commercial vehicles.
11. Share capital
Number
of shares Total
'000 GBPm
----------------------------------------- ---------- -----
Allotted and fully paid: ordinary shares
of 25p each
Balance at 31 May 2021 49,004 12.3
Issue of shares (see below) 130 -
----------------------------------------- ---------- -----
Balance at 30 November 2021 49,134 12.3
Issue of shares - -
----------------------------------------- ---------- -----
Balance at 31 May 2022 49,134 12.3
Issue of shares (see below) 274 0.1
----------------------------------------- ---------- -----
Balance at 30 November 2022 49,408 12.4
----------------------------------------- ---------- -----
During the half year ended 30 November 2022, 273,800 shares (H1
2021: 130,198) with an aggregate nominal value of GBP68,450 (H1
2021: GBP32,550) were issued under the Company's conditional
Performance Share Plan.
The maximum total number of ordinary shares that may vest in the
future in respect of conditional Performance Share Plan awards
outstanding at 30 November 2022 amounted to 857,210 (H1 2021:
1,386,289) shares. These shares will only be issued subject to
satisfying certain performance criteria.
12. Post balance sheet events
On 21 December 2022, the Group acquired 100% of the share
capital of Sweetfuels Limited, a 20 million litre fuel distributor
based near Faringdon, Oxfordshire, supplying mainly domestic
customers across the Cotswolds. The net cash consideration of
GBP10.0 million on a debt and cash free basis was settled at
completion.
2023 financial calendar
Interim dividend paid 2 May 2023
Financial year end 31 May 2023
Full year results announcement Early August 2023
Publication of Annual Report and Accounts Late August 2023
Annual General Meeting 28 September 2023
Final dividend paid Early December 2023
[1] Headline operating profit excludes exceptional items (see
note 4) 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.
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END
IR BMMRTMTJJBFJ
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