Nisa refinances as half-year results see it back in black

Nisa chief executive Nick Read talks to member at its annual exhibition. (Picture: Bristo Photography)

The convenience store chain, which is headquartered in Scunthorpe, said its half-year earnings were £3.3m, while sales volumes had passed two million cases a week.

A £1bn five-year deal to supply new My Local chain helped boost its performance, along with cost efficiency and improved margins.

It puts the business £3.5m ahead of its earnings position for the first six months of 2014/15. Last year, it recorded loss of £7.2m.

The group is now on track to reach £7.2m earnings before interest, taxes, depreciation, and amortization (EBITDA), without exceptional charges.

Nick Read, who joined Nisa as chief executive in February, said the results reflected work to turn around the group, which supports 1,200 local retailers and 2,500 stores across the UK.

He said: “The last financial year was not a good one, but we put in place robust measures to ensure Nisa would not suffer again this year.

“It was imperative that we returned the business to profitable growth and that has very much been the focus of the team at the MSC (member support centre).”

Nisa said it had refinanced its existing banking arrangements after “significantly improved performance”.

It facility with Barclays has been extended by 24 months, while it has also received further funding to fulfil its supply contract to the recently-launched My Local chain.

Nisa chief financial officer Robin Brown said the agreement would allow the business to operate efficiently and plan for future growth.

He said: “After the company’s poor showing last year, the new management team has been keen to drive the business forward into profitable growth and the strength of our financial plan was appreciated by our bank.

“The turnaround we have delivered in the first half of 2015/16 was recognised and the confidence in our business is demonstrated through the increased size of the facility and the length of the extension.”

Mr Read added: “It is pleasing to see the business performing more strongly and I am confident that our end of year target will be achieved.

“The new business we have brought in, combined with the operational efficiencies achieved in the first half, have really boosted Nisa.”

The results signal a change in fortunes for the retailer, following a testing period.

Mr Read’s predecessor Neil Turton stood down from the business after 23 years in September 2014.

Three months later, chief operating officer Amanda Jones left to join Bargain Booze owner Conviviality Retail.

The group was also rocked by a data leak in September of last year, when contact details for members of the Scunthorpe-based mutual was circulated and passed to the media.

Two non-executive directors - Harris Aslam, 18, and Raza Rehman, 24 - were dismissed from the board as the result of a probe by EY and Kroll.

Earlier this year, Lord Myners criticised “uninformed”, “confused” and “weak” governance structures at the distributor, after being commissioned to investigate the incident.

The former Labour politician, who also reviewed The Co-operative’s governance following a series of damaging scandals, said at the time that changes were needed throughout the company to end “the current climate of distrust and hostility”.

In addition to making improvements on trading margins and significant savings in overheads, Nisa said its half-year results were buoyed by recent contract wins.

Its distribution network won a £1bn five-year contract to supply My Local, the 130-strong chain of former Morrisons stores relaunched by entrepreneur Mike Greene last month.

Nisa said that despite a challenging schedule, the launch week of the stores saw it increase deliveries by 11 per cent over plan, making almost 800 deliveries over a five-day period, and processing a further 250 orders to solve a last-minute issue with branded items.

Nisa also secured a five-year £250m contract extension with Ramsden International, while McColl’s move towards a convenience-focused business has also seen an increase in orders for Nisa.

It is another boost for the group, which last year lost one of its major contracts.

York-based rival Costcutter severed its distribution ties with Nisa, bringing its full-year turnover down from £1.6bn in 2014 to £1.4bn in 2015.