|
Financial highlights |
2018 |
2017 |
% |
|
Revenue |
£611.0m |
£555.8m |
+9.9% |
|
Headline operating profit* |
£10.6m |
£9.0m |
+17.8% |
|
Headline profit before taxation* |
£10.2m |
£8.5m |
+20.0% |
|
Fully diluted headline earnings per share* |
16.7p |
14.0p |
+19.3% |
|
Total dividend per share |
6.3p |
6.0p |
+5.0% |
|
Net debt |
£6.4m |
£13.0m |
|
|
Net debt to EBITDA |
0.4x |
1.0x |
|
|
|
|
|
|
|
Statutory results |
|
|
|
|
Operating profit |
£10.6m |
£7.8m |
+35.9% |
|
Profit before taxation |
£9.7m |
£6.7m |
+44.8% |
|
Fully diluted earnings per share |
15.9p |
11.3p |
+40.7% |
|
|
|
|
|
* Headline operating profit excludes exceptional items (2017 only). Headline profit before taxation excludes exceptional items and the net finance cost in respect of the Group's defined benefit pension scheme. Diluted headline EPS also takes into account the taxation effect thereon.
Operational highlights:
· Record results for the Group benefiting from exceptional conditions
· Revenue growth in all three divisions – reflecting increased activity and higher commodity prices
· Outstanding result from Fuels, rewarded for excellent customer service in a long, cold winter
· Lower level of debt (0.4x EBITDA) as a result of strong cash conversion and continued working capital improvements
· Renewal of a five year £65 million funding facility with RBS to support future development
· Increased dividend reflecting Board's confidence in the business
Divisional highlights:
· Fuels – headline operating profit of £6.9 million (2017: £4.5 million). Outstanding results from delivering excellent service during a long, cold winter from our nineteen depots with an increase in volumes, especially heating oil sales, and pence per litre profit.
· Food – headline operating profit of £0.7 million (2017: £3.0 million). Successful in winning 20,000 pallets of new contracted business, but significant challenges in the on-take of new customers with warehouse reorganisation and recruitment of new staff.
· Feeds – headline operating profit of £3.0 million (2017: £1.5 million). Results in line with plan with returns increasing as a consequence of investment in the prior year and improved market conditions with more stable milk prices.
Richard Whiting, Chief Executive, NWF Group plc, commented:
“NWF has delivered a record performance in exceptional conditions. The Fuels division has benefited from providing high levels of service to customers across the country through a long, cold winter. Food has won contracts that underpin its future development and we have delivered the planned increase in returns in Feeds as a result of the capital investment in the prior year and effective management of the business against a backdrop of more stable milk prices. The benefits of the record year have been converted into cash and the lower level of debt is supported by a renewed five year banking facility. We are proposing an increased dividend and continue to see opportunity for further strategic and operational progress. Trading in the current financial year to date has been in line with our expectations.“
For further information please visit www.nwf.co.uk or contact:
|
Richard Whiting, Chief Executive |
Reg Hoare |
Justin Jones / Mike Bell |
|
Chris Belsham, Finance Director |
MHP Communications |
Peel Hunt LLP |
|
NWF Group plc |
Tel: 020 3128 8100 |
(Nominated Adviser) |
|
Tel: 01829 260 260 |
|
Tel: 020 7418 8900 |
CHAIRMAN'S STATEMENT
Overview
In my first year as Chairman I am pleased to report a record set of results with the business benefiting from some exceptional conditions, principally in the Fuels division. It is positive to note that the increase in revenue and profit has been converted into cash resulting in a lower level of year end net debt. At the same time we have a clear strategic development plan for the Group supported by significant funding capability with a renewed five year banking facility.
The benefit of the NWF diversified and service-led business model was clearly demonstrated in the year. Fuels' outstanding performance was a result of an increase in commercial business and most significantly the capability at a local level to provide excellent service to customers through a long and cold winter period. Food out-performed in terms of new business wins but the on-take of 20,000 pallets of new business after winning multiple contracts proved operationally challenging. This resulted in the reorganisation of warehouses and the recruitment and training of over 50 new members of staff in a short space of time. Feeds delivered on investments made in the previous year in the feed mill expansions at Longtown and Wardle and has the operational platform to support future development.
As a consequence of the good progress achieved and the Group's strong cash generation, the Board is recommending a final dividend of 5.3p per share (record date: 2 November 2018, payment date: 6 December 2018) (2017: 5.0p) giving a total dividend of 6.3p per share (2017: 6.0p), a 5.0% increase on the prior year.
Our business
NWF Group is a specialist distributor delivering fuel, food and feed across the UK. Each of our trading divisions has scale, good market position, are 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 2018 were:
Responding proactively to market condition
The Group has responded well to some exceptional market conditions in the year. The long, cold winter resulted in some challenging conditions across the country as oil terminals, fuel depots and feed mills were inaccessible for periods of the winter as a result of snow and ice. The focus on service across the Group was put to the test and the result was very positive with additional customers being supplied by our Fuels division in particular. This was as a consequence of our local depot business model prioritising customers who had run out or had the potential to run out and reorganising tanker deliveries on an hourly basis to provide the best service across their respective territories. This delivered the benefits of additional volume and improved margins.
Benefiting from strategic investment
The Group has benefited from the previous investment in feed milling capacity and capability made at both Longtown in Cumbria and at Wardle in Cheshire. In the first full year of operations the mill at Longtown has supplied feed to customers across the North of England and Southern Scotland, with lower transport and operational costs as planned. The automated blend shed at Wardle has delivered both increased efficiency and capacity output.
Cash generation
Cash generation remains a focus for the Group and a further improvement in working capital has been achieved in Feeds, managed effectively at a time of greater stability in the dairy market.
Rewarding good service
The consistent focus on excellence in customer service across the Group has been critical to our continued development and has enabled gains to be achieved in each of the three divisions in the year.
Commodity volatility
Volatility in the commodity markets impacted the Group's performance in 2018. In Fuels, oil (which is purchased on the spot market) moved between $45 per barrel and $80 per barrel for Brent Crude with further volatility resulting from exchange rates. In line with market practice, Feeds buys its raw materials under forward purchase contracts. Significant increases in feed input commodities were successfully passed through in feed price increases in the year.
Board and senior management changes
My thanks go to all who have supported NWF throughout the year both inside and outside the Group.
In particular I would like to thank Sir Mark Hudson KCVO who chaired the Group successfully over the past ten years, before retiring in September 2017. He helped guide me both as a non-executive and in stepping up to the role of Chairman. David Downie joined the Board as non-executive director in February to complete the Board changes.
In addition I would like to recognise the significant contribution that Kevin Kennerley (Managing Director of NWF Fuels) has made in his 40 years' service to the Group from starting in the Wardle Fuel depot to assuming the role of Managing Director in 1992. Kevin has overseen the successful development of the Fuels division both organically and through acquisitions to the scale it is today and in his last year has delivered an outstanding result for the Group. Kevin retires at the end of September and will be succeeded by Richard Huxley who joined the Group in May.
I look forward to updating shareholders on the Group's continuing progress at the time of the Annual General Meeting on 27 September 2018.
Philip Acton
Chairman