RNS Number:7212S
Robert Wiseman Dairies PLC
02 December 2003
2 December 2003 Embargoed until 7.00am
Robert Wiseman Dairies PLC
Interim Results for the six months ended 27 September 2003
"Another Record Set of Interim Results"
Robert Wiseman Dairies PLC ("RWD") today announced its interim results for the
six months ended 27 September 2003.
Financial Highlights:
* Sales volumes increased 12.3% to 565 million litres (2002: 503 million litres)
* Turnover up 19.1% to #223.0 million (2002: #187.2 million)
* Operating profit rose 16.8% to #14.3 million (2002: #12.2 million) and
represented 2.53 pence per litre sold (2002: 2.43 ppl)
* Pre-tax profit up 21.1% to #13.5 million (2002: #11.1 million)
* Earnings per share up 19.1% to 11.87p (2002: 9.97p)
* Dividend increased by 21.2% to 2.00p per share (2002: 1.65p)
Operational Highlights:
* Record profits and efficiency recorded during first half
* Sales in England and Wales running at 20% up on last year and now
represent two thirds of the Group's total sales
* Chester Le Street depot (County Durham) to be operational around
September 2004
* Recently announced increase of 0.3 ppl backdated to 1 October to milk
suppliers - RWD continues to offer highest milk price to it's dairy farmers
Balance Sheet and Cash:
* Gearing of 19.8% (2002: 37.6%) with healthy interest cover of 17.5 times
(2002: 11.1 times)
* Strong operational cash performance - net cash inflow from operating
activities of #15.3 million (2002: #17.5 million)
Outlook
Commenting on the results, Chairman Alan Wiseman said:
"It is pleasing to see sales volumes continuing their pattern of growth and
confirming the benefit of additional contract wins during early 2003 with
Safeway, Tesco, Sainsbury's and Somerfield, as well as several of our larger
middle ground customers. We have also made a good start to the second half-year,
recording for the first time ever, weekly sales in liquid milk of over 5 million
gallons (22.73 million litres), another significant milestone for the Group. We
remain confident we are on track to continue our record of delivering growth in
the period ahead."
For further information please contact:
Robert Wiseman Dairies PLC
Alan Wiseman, Chairman Tel: 020 7067 0700 (on 2 December only)
Billy Keane, Group Finance Director Tel: 01355 244 261 (thereafter)
Weber Shandwick Square Mile
Kirsty Raper / Peter Corbin / Nick Dibden Tel: 020 7067 0700
Hatch Group
Graeme Jack, Managing Director Tel: 0141 333 6440 / 07900 430 269
Robert Wiseman Dairies PLC
Interim Results for the six months ended 27 September 2003
"Another Record Set of Interim Results"
CHAIRMAN'S STATEMENT
RESULTS
I am pleased to be able to report a record set of Interim Results for the Group
for the six months ended 27 September 2003.
Sales volumes were up 12.3% to 565 million litres (2002: 503 million litres),
continuing our successful growth. Turnover was up 19.1% to #223.0 million (2002:
#187.2 million), reflecting the effect of the additional volumes and higher milk
prices during the period. Operating profit was up 16.8% to #14.3 million (2002:
#12.2 million), benefiting from higher throughput and the associated improvement
in our operating costs. Operating profit represented 2.53 pence per litre sold
(2002: 2.43 pence per litre), a modest improvement on the same period last year.
Pre-tax profits were up 21.1% to #13.5 million (2002: #11.1 million) and
earnings per share rose 19.1% to 11.87p (2002: 9.97p).
As with previous periods there was a strong operating cash performance during
the period, with a net cash inflow from operating activities of #15.3 million
(2002: #17.5 million). Net debt at the end of the period was #19.4 million
(2002: #31.7 million), which compares with #17.4 million at March 2003. This
slight increase was expected and primarily relates to a #7.3 million increase in
working capital, which should largely reverse in the second half-year. Gearing
at the end of the period was 19.8% (2002: 37.6%), a slight increase on the level
at 29 March 2003 of 19.5%. Interest cover for the half- year remains very
comfortable at 17.5 times (2002: 11.1 times).
DIVIDEND
The Board has declared a dividend of 2.00p per share (2002: 1.65p), an increase
of 21.2% over the same period last year. The interim dividend will be paid on 12
February 2004 to ordinary shareholders on the register at close of business on
16 January 2004.
OPERATING REVIEW
Commercial
It is pleasing to see sales volumes continuing their pattern of growth and
confirming the benefit of additional contract wins during early 2003 with
Safeway, Tesco, Sainsbury's and Somerfield, as well as several of our larger
middle ground customers.
Sales volumes in recent weeks have continued to run at record levels, with our
business in England and Wales showing increases of over 20% on the same period
last year. Sales in England and Wales now represent some two thirds of our total
sales by volume.
Our average sales price per litre rose by 6%, reflecting higher milk and cream
selling prices, which also enabled higher milk prices to be paid to our
suppliers. Bulk cream prices firmed in comparison to last year due to a
combination of the weaker Euro and increased demand.
Discussions are ongoing with our major customers regarding continuing our growth
with them and we are encouraged by the positive feedback received to date.
Reaction to the Scottish generic milk promotional campaign "The White Stuff"
launched in September has been favourable and, although it is early days, we are
hopeful this can be used on a wider UK basis. A recent recruit to having a "Milk
Moustache" has been Formula One driver David Coulthard.
Dairies
We are delighted with the record levels of efficiency and reduced milk wastage
being recorded across the Group. Droitwich Spa continues to benefit from
increased volumes and during the six month period 172 million litres were
processed through this facility, compared with 120 million litres for the same
period last year, an increase of 43.3%. Capacity at Droitwich Spa has recently
been increased to 500 million litres per annum, facilitating our continued sales
growth.
Investment continues at our other dairies and our Glasgow dairy recently
commissioned a reverse osmosis plant, similar to that operating at Droitwich
Spa, which will help further improve wastage levels and efficiency at this site.
We continue to review our options regarding further increases to overall
production capacity within the Group. The permutations include expanding
capacity at existing facilities and/or building a further new dairy in England.
We have not yet reached a conclusion to these deliberations, which obviously
rely heavily on the outcome of discussions with our customers concerning their
future purchasing intentions.
Distribution
Plans to construct a new depot at Chester Le Street, County Durham, at a cost of
#5.2 million, are progressing satisfactorily and we expect that this facility
will be operational around September 2004.
Sales volumes at the new Bristol depot, which opened last August, are growing
steadily and we have targeted future sales growth to use more fully the capacity
at this site.
We are also considering our options for servicing the densely populated London
and South East market.
Milk Procurement
We continue to pay the highest milk price of all the major UK dairy companies
and recently announced an increase to all our suppliers of 0.3 pence per litre
backdated to 1 October 2003. This increase takes the standard price for our
direct suppliers to above 20 pence per litre. We would hope that this price
level provides a reasonable return for efficient dairy farmers.
The challenge in the months ahead will be to maintain this price and allow a
period of stability for our suppliers to plan their future. There has been a
tremendous amount of support during recent years from the major multiple
retailers for initiatives to ensure there is a sustainable milk supply for the
long term.
Staff
There was a great accolade for the business recently when my brother, Robert,
our Managing Director, became Ernst and Young Entrepreneur of the Year for both
Scotland and United Kingdom. Receiving this prestigious award reflects the great
effort that all three thousand three hundred employees have made in building our
business and, once again, I would like to thank them all for their continued
commitment.
OUTLOOK
It is encouraging to be able to report on improving sales and profits, driven by
the success of our strategy in England and Wales. We have also made a good start
to the second half-year, recording for the first time ever weekly sales in
liquid milk of over 5 million gallons (22.73 million litres), another
significant milestone for the Group.
We are well placed to further expand our operations and remain confident that we
are on track to continue our record of delivering growth in the period ahead.
ALAN W WISEMAN
CHAIRMAN
02 December 2003
ROBERT WISEMAN DAIRIES PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the six months ended 27 September 2003
Audited
Six months to Six months to Year to
Notes 27 September 28 September 29 March
2003 2002 2003
#'000 #'000 #'000
Turnover 1 222,989 187,236 390,982
Cost of sales (168,606) (139,864) (295,747)
--------- --------- --------
Gross profit 54,383 47,372 95,235
Other operating expenses (net) 2 (40,098) (35,145) (70,126)
--------- --------- --------
Operating profit 14,285 12,227 25,109
Interest receivable 12 12 23
Interest payable (830) (1,118) (2,329)
--------- --------- --------
Profit on ordinary activities
before taxation 13,467 11,121 22,803
Tax on profit on
ordinary activities 3 (4,180) (3,336) (7,065)
--------- --------- --------
Profit for the period 9,287 7,785 15,738
Dividends 4 (1,580) (1,290) (4,500)
--------- --------- --------
Retained profit for the period 7,707 6,495 11,238
--------- --------- --------
Earnings per ordinary share 5
Basic earnings per share 11.87p 9.97p 20.15p
Diluted earnings per share 11.49p 9.84p 19.85p
--------- --------- --------
Dividends per ordinary share 4 2.00p 1.65p 5.75p
--------- --------- --------
There are no recognised gains or losses in any of the periods other than the profit for each period.
ROBERT WISEMAN DAIRIES PLC
CONSOLIDATED BALANCE SHEET
As at 27 September 2003
Audited
27 September 28 September 29 March
2003 2002 2003
Notes # '000 # '000 # '000
FIXED ASSETS
Goodwill 2,850 3,475 3,133
Tangible assets 142,953 140,019 142,095
Investments: own shares 957 --- 303
--------- --------- --------
146,760 143,494 145,531
--------- --------- --------
CURRENT ASSETS
Stocks 6,022 5,064 5,804
Debtors 41,400 36,396 28,795
Cash at bank and in hand 6,387 6,753 5,581
--------- --------- --------
53,809 48,213 40,180
CREDITORS
Amounts falling due within
one year (78,210) (76,924) (69,326)
--------- --------- --------
NET CURRENT LIABILITIES (24,401) (28,711) (29,146)
--------- --------- --------
TOTAL ASSETS LESS CURRENT
LIABILITIES 122,359 114,783 116,385
CREDITORS - amounts falling due
after more than one year (13,264) (20,638) (16,284)
PROVISIONS FOR LIABILITIES &
CHARGES (11,353) (9,874) (10,814)
--------- --------- --------
NET ASSETS 97,742 84,271 89,287
--------- --------- --------
CAPITAL & RESERVES
Called-up share capital 6 7,899 7,819 7,827
Share premium account 7 17,846 16,330 16,405
Special reserve 7 4,062 4,062 4,062
Merger reserve arising on
consolidation 7 (3,872) (3,872) (3,872)
Capital redemption reserve 7 770 770 770
Profit & loss account 7 71,037 59,162 64,095
--------- --------- --------
EQUITY SHAREHOLDERS' FUNDS 8 97,742 84,271 89,287
--------- --------- --------
ROBERT WISEMAN DAIRIES PLC
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 27 September 2003
Audited
Six months to Six months to Year to
Notes 27 September 28 September 29 March
2003 2002 2003
#'000 #'000 #'000
Net cash inflow from operating activities 9a 15,335 17,533 42,709
---------- ---------- ---------
Returns on investments and servicing
of finance
Interest received 12 12 23
Interest element of finance lease payments (11) (28) (40)
Other interest paid (725) (1,102) (2,128)
---------- ---------- ---------
Net cash outflow from returns on investments
and servicing of finance (724) (1,118) (2,145)
---------- ---------- ---------
UK corporation tax paid (2,396) (1,237) (3,823)
---------- ---------- ---------
Capital expenditure and financial investment
Purchase of tangible fixed assets (10,714) (11,166) (17,274)
Purchase of shares for employee share
option trust (1,175) --- (441)
Sales of tangible fixed assets 188 211 610
---------- ---------- ---------
Net cash outflow for capital expenditure
and financial investment (11,701) (10,955) (17,105)
---------- ---------- ---------
Acquisitions and disposals
Acquisition of businesses (53) (117) (167)
Sales of goodwill 1 25 123
---------- ---------- ---------
Net cash outflow for acquisitions
and disposals (52) (92) (44)
---------- ---------- ---------
Equity dividends paid (3,232) (2,616) (3,906)
---------- ---------- ---------
Cash (outflow)/inflow before management of
liquid resources and financing (2,770) 1,515 15,686
---------- ---------- ---------
Financing
Issue of ordinary share capital 811 112 194
New loans 4,250 --- ---
Repayment of loans (7,830) (7,465) (10,282)
Capital element of finance lease payments (100) (335) (636)
---------- ---------- ---------
Net cash outflow from financing (2,869) (7,688) (10,724)
---------- ---------- ---------
(Decrease)/ increase in cash in the period 9b (5,639) (6,173) 4,962
========== ========== =========
NOTES TO INTERIM FINANCIAL INFORMATION
1. Segment information
The Group's turnover and profits arose wholly from the processing and
distribution of liquid milk and associated products in the UK.
2. Other operating expenses (net)
Audited
Six months to Six months to Year to
27 September 28 September 29 March
2003 2002 2003
#'000 #'000 #'000
Selling and distribution costs 31,844 29,104 57,887
Administrative expenses 8,514 6,340 12,905
Other operating income (260) (299) (666)
----------- ---------- ----------
Total other operating expenses 40,098 35,145 70,126
----------- ---------- ----------
3. Tax on profit on ordinary activities
The taxation charge of 31% for the six months ended 27 September 2003 is
based on the estimated effective rate of tax for the full year ending
3 April 2004 (2003 - 31%).
4. Dividends
The interim dividend of 2.00 pence per ordinary share will be paid on 12
February 2004 to ordinary shareholders on the register at the close of business
on 16 January 2004.
5. Earnings per ordinary share
Basic earnings per ordinary share is based on the Group profit on ordinary
activities after tax of #9,287,000 (six months to 28 September 2002 -
#7,785,000, year to 29 March 2003 - #15,738,000) and on 78,228,972 ordinary
shares (six months to 28 September 2002 - 78,115,646, year to 29 March 2003 -
78,099,973) which represents the weighted average number of ordinary shares in
issue during the period. The diluted earnings per share is the basic earnings
per share adjusted for the effect of the exercise of all outstanding dilutive
share options. The diluted earnings per share is based on the weighted average
number of ordinary shares of 80,802,197 (six months to 28 September 2002 -
79,087,877, year to 29 March 2003 - 79,274,542).
6. Share capital
During the period the Company issued 713,573 ordinary shares with a nominal
value of 10p each in respect of employees exercising options under the share
option and sharesave schemes. The Group made a contribution of #701,000 to the
Employee Share Ownership Trust to enable the trust to satisfy the valid exercise
of options granted under employee share option and sharesave schemes.
7. Reserves
The movements on reserves are as follows:
Profit Share Capital
and loss premium Special Merger redemption
account account reserve reserve reserve
#000 #000 #000 #000 #000
Beginning of period 64,095 16,405 4,062 (3,872) 770
Non-cash UITF 17 charge
written back in respect
of long term incentive
plan (65) --- --- --- ---
Arising on new share
issues (net of expenses) --- 1,441 --- --- ---
Goodwill sold, previously
written off to reserves 1 --- --- --- ---
Contribution to Employee
Share Ownership Trust (701) --- --- --- ---
Retained profit for the
period 7,707 --- --- --- ---
-------- -------- ------- -------- --------
End of period 71,037 17,846 4,062 (3,872) 770
-------- -------- ------- -------- --------
The profit and loss account is a distributable reserve. The other reserves are
non-distributable.
8. Reconciliation of movements in shareholders' funds
Audited
Six months to Six months to Year to
27 September 28 September 29 March
2003 2002 2003
#000 #000 #000
Profit for the period 9,287 7,785 15,738
Dividends (1,580) (1,290) (4,500)
New share capital subscribed (net of
expenses) 1,513 129 212
Non-cash UITF 17 charge written back
to P & L reserve in respect of long
term incentive plan (65) --- 162
Contribution to employee share
ownership trust (701) (17) (18)
Goodwill sold, previously written off
to reserves 1 4 33
---------- ---------- ---------
Net movement on shareholders' funds 8,455 6,611 11,627
Opening shareholders' funds 89,287 77,660 77,660
---------- ---------- ---------
Closing shareholders' funds 97,742 84,271 89,287
---------- ---------- ---------
9. Notes to the cash flow statement
a) Reconciliation of operating profit to net cash inflow from operating activities
Audited
Six months to Six months to Year to
27 September 28 September 29 March
2003 2002 2003
#000 #000 #000
Operating profit 14,285 12,227 25,109
Amortisation of goodwill 336 310 632
Depreciation charges 7,656 7,266 14,943
Amortisation of own shares 521 --- 138
Gain on sale of tangible fixed assets (117) (116) (367)
Amortisation of deferred income (7) (12) (22)
(Increase) /decrease in stock (218) 50 (690)
(Increase)/decrease in debtors (12,605) (6,597) 1,004
Increase in creditors 5,484 4,405 1,962
---------- ---------- ---------
Net cash inflow from operating activities 15,335 17,533 42,709
---------- ---------- ---------
b) Reconciliation of net cash flow to movement in net debt
Audited
Six months to Six months to Year to
27 September 28 September 29 March
2003 2002 2003
#000 #000 #000
(Decrease)/increase in cash in period (5,639) (6,173) 4,962
Cash outflow from decrease in net
debt and lease financing 3,680 7,800 10,918
---------- ---------- ---------
Movement in net debt in the period (1,959) 1,627 15,880
Net debt at beginning of period (17,412) (33,292) (33,292)
---------- ---------- ---------
Net debt at end of period (19,371) (31,665) (17,412)
---------- ---------- ---------
10. Contingent liability - Office of Fair Trading ("OFT")
The OFT decided to close its investigation of Robert Wiseman & Sons Ltd and/or
Robert Wiseman Dairies PLC under Chapter II of the Competition Act in August
2002 as it took the view that further investigation was unlikely to lead to a
finding of abuse. Chapter II prohibits the abuse of a dominant market position
within the UK. Further to an appeal by Express Dairies PLC ("Express") the
Competition Appeals Tribunal ("CAT"), announced that it has jurisdiction to
review the decision of the OFT. This decision by the CAT is a purely technical
one, simply establishing that it has jurisdiction in this matter. It does not
presuppose that the OFT was wrong in finding that Wiseman was unlikely to have
infringed the Chapter II prohibition.
In August 2003 notification was received from the OFT that it had reopened its
investigation into the supply of fresh processed milk to middle ground retailers
in Scotland under Chapter I of the Competition Act 1998. The OFT has advised
that Wiseman is one of the undertakings subject to the investigation. The
initial Chapter I investigation commenced in June 2000 and concluded on October
2002 with no action being taken. Chapter I prohibits agreements between
undertakings which have as their object or effect the prevention, restriction or
distortion of competition within the UK. The appeal lodged by Express with the
CAT against the decision in October 2002 has been stayed until the outcome of
the current investigation is determined.
Businesses that infringe Chapter I or Chapter II may be liable to a financial
penalty of up to 10 per cent of their UK group turnover for each year of the
infringement for each breach. In addition, infringing businesses can be ordered
to change their commercial conduct (e.g. pricing policy) and can be sued for
damages by those who have suffered loss as a result of the breach of the
Competition Act. Given the status of the appeals that have been lodged it is not
possible to quantify the financial effect, if any, of the final outcome.
The above follow a nine-month Competition Commission Inquiry and two OFT
investigations each lasting more than a year, none of which resulted in action
being taken against Wiseman. The Board will continue to defend its position
vigorously until the appeals process is exhausted.
11. Basis of preparation
The results for the six months ended 27 September 2003 and 28 September 2002 are
unaudited but have been prepared on the basis of accounting policies consistent
with those set out in the audited report and financial statements for the year
ended 29 March 2003.
The results for the year ended 29 March 2003 are an abridged version of the
Group's full financial statements for that financial year. These financial
statements carried an unqualified auditors' report which did not contain a
statement under Section 237 (2) or (3) of the Companies Act 1985. The full
financial statements have been filed with the Registrar of Companies.
The report was approved by the Board of Directors on 2 December 2003. It has
been prepared in accordance with applicable accounting standards and on a
consistent basis using accounting policies set out in the 2003 annual report.
INDEPENDENT REVIEW REPORT
To Robert Wiseman Dairies PLC
Introduction
We have been instructed by the Group to review the financial information for the
six months ended 27 September 2003 which comprises the Consolidated Profit and
Loss Account, Consolidated Balance Sheet and Consolidated Cash Flow Statement
and the related notes 1 to 11. We have read the other information contained in
the interim report and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.
This report is made solely to the Group in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the Group those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the Group, for our review work, for this report, or for the conclusions we have
formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 27 September 2003.
Deloitte & Touche LLP
Chartered Accountants
Glasgow
2 December 2003
FINANCIAL CALENDAR 2004
Interim Dividend Paid 12 February
Financial Year End 3 April
Full Year Results Announced May
Annual General Meeting July
Final Dividend Paid September
Interim Results Announced November
This information is provided by RNS
The company news service from the London Stock Exchange
END
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