TIDMPZC
RNS Number : 3282O
PZ CUSSONS PLC
29 January 2019
29 January 2019
INTERIM ANNOUNCEMENT OF RESULTS
FOR THE HALF YEAR TO 30 NOVEMBER 2018
PZ Cussons Plc, a leading consumer products group, announces its
unaudited interim results for the six months ended 30 November
2018.
(Restated)*
Half year
Adjusted results (before Half year to Constant Like for
exceptional items(1) to 30 November 30 November Reported currency like %
) 2018 2017 % change % change(3) change(4)
Revenue(2) GBP335.1m GBP373.9m (10.4%) (4.6%) (4.6%)
Adjusted operating profit GBP35.4m GBP36.8m (3.8%) (1.1%) (1.1%)
Adjusted profit before
tax GBP32.8m GBP33.3m (1.5%) 1.5% 1.5%
Adjusted basic earnings
per share 5.67p 5.62p 0.9%
Statutory results (after exceptional
items(1) )
Revenue(2) GBP335.1m GBP373.9m (10.4%)
Operating profit GBP29.3m GBP37.0m (20.8%)
Profit before tax GBP26.7m GBP33.5m (20.3%)
Basic earnings per share 4.57p 4.90p (6.7%)
Interim dividend per
share 2.67p 2.67p -
Net debt(5) (GBP177.2m) (GBP191.2m)
*The results for the half year to 30 November 2017 have been
restated to reflect a change in accounting policy and application
of IFRS 15. Further details are set out in note 2.
HIGHLIGHTS
Group
-- Adjusted profit before tax slightly lower than the prior
period on a reported basis with good performance in Europe and Asia
offset by extremely challenging conditions in Nigeria
-- Higher levels of innovation, brand support and distribution
expansion delivering improved performance in Europe and Asia
-- Focus in Nigeria on maintaining market shares and minimising
downside risk until growth returns to the country
-- Balance sheet remains strong with good cash flow management
and net debt lower than the prior period
-- Interim dividend maintained at 2.67p per share
Outlook and Initiatives
-- Adjusted profit before tax for the full year now expected to
be towards GBP70 million driven by conditions in Nigeria, including
an estimated GBP5.5 million impact as a result of significant port
disruption
-- Specific strategic initiatives approved to streamline the
Group's portfolio of activities allowing more focused investment
behind key brands across Europe and Asia and limiting the exposure
to Nigeria volatility
Africa
-- Weak consumer environment, higher supply chain costs and
lower exchange rate contributing to lower prices, volumes and
margins in Nigeria
-- Nigerian portfolio under continuous review to ensure best
placed for when growth returns to the market
Asia
-- Good growth in profitability in Australia across all
categories of Personal Care, Home Care and Food & Nutrition
-- In Indonesia improved profitability driven by new product
launches across Cussons Baby, Cussons Kids and Imperial Leather
Europe
-- Good overall performance for Europe despite macro uncertainty in the UK
-- Significant step up in new product launches driving good
revenue growth in UK washing and bathing division
-- Strong revenue growth achieved in Beauty division driven by
both innovation and distribution expansion
(1) Exceptional items before tax (2018: cost GBP6.1m; 2017:
income GBP0.2m) are detailed in note 4.
(2) Excludes joint ventures revenue of GBP57.0m (2017: GBP74.7m
at reported rate, GBP65.4m at constant currency rate).
(3) Constant currency comparison (2017 results retranslated at
2018 exchange rates). See page 2 for values of currency impact.
(4) Like for like comparison after adjusting 2017 for constant
currency and 2018 for the impact of acquisitions and disposals.
There were no such acquisitions or disposals in either period.
(5) Net debt, above and hereafter, is defined as cash,
short-term deposits and current asset investments, less bank
overdrafts and borrowings (refer to note 11).
Commenting today, Caroline Silver (Chair) said:
"The Group continues to make pleasing progress in Europe and
Asia, with new product development and increased support across our
key brands delivering positive momentum. Disappointingly, however,
the macroeconomic conditions in Nigeria remain extremely
challenging and continue to have a significant negative impact on
overall Group performance. Reflecting this, we now expect Group
adjusted profit before tax for the year to be towards GBP70
million.
Balance sheet strength will remain a priority for the business.
The Group's balance sheet remains strong, with net debt lower than
the prior period. The Board has maintained the interim dividend at
2.67p per share.
We anticipate that consumer demand in all our key markets will
remain subdued. Whilst these conditions prevail, we will maintain
our strong market shares in key product categories in Nigeria until
growth returns to the market. In Personal Care and Beauty across
Europe and Asia, identified as sources of growth for the Group, we
will continue to prioritise higher investment levels behind
carefully targeted key brand and market opportunities. Furthermore,
the Board has approved specific strategic initiatives which will
streamline our portfolio of activities and limit exposure to
volatility in Nigeria, with more information to be provided in due
course."
Press Enquiries
PZ Cussons Brandon Leigh (Chief Financial Officer)
Instinctif Tim Linacre / Guy Scarborough
On 29,30,31 January c/o Instinctif on 020 7457 2020
After 31 January to Brandon Leigh on 0161 435 1236
Investor and Analyst conference call
Management will be hosting a conference call for investors and
analysts at 9:30am (UK Time) today. Please call Guy Scarborough at
Instinctif Partners for dial-in details on 020 7457 2047 or email
Guy.Scarborough@instinctif.com.
The presentation slides to accompany the conference call are
available to download from the Company's website at
http://www.pzcussons.com/en_int/investor.
Basis of Preparation
In our financial statements we use alternative performance
measures that are not recognised under IFRS. These metrics are used
to allow the readers of the financial statements to obtain a more
meaningful comparison of the underlying performance of the Group by
adjusting for certain items which, if included, could distort the
understanding of the Group's performance and comparability between
periods. The same measures are used by management for planning,
budgeting and reporting purposes and for the internal assessment of
operating performance across the Group. The adjusted presentation
is adopted on a consistent basis for the purposes of the half year
and full year reporting. Where relevant, comparative IFRS measures
have also been presented.
Adjusted results are presented before exceptional items which in
the current period include certain restructuring costs and past
service costs in relation to a recent UK High Court ruling that
trustees of UK defined benefit pension schemes must equalise
guaranteed minimum pensions (GMPs).
The reported results for the current period are presented with
variances to reported prior period results and also as variances
between the current and prior period on a constant currency basis.
The constant currency impact has been derived by retranslating the
2017 result using 2018 foreign currency exchange rates. The adverse
translational impact on revenue, adjusted operating profit and
adjusted profit before tax was GBP22.7 million, GBP1.0 million and
GBP1.0 million respectively. As there were no acquisitions or
disposals in the current or prior period, the like for like impact
equals the constant currency impact.
Business Review
Group Overview
Group revenue was 10.4% lower on a reported basis and 4.6% lower
on a constant currency basis with adjusted operating profit 3.8%
lower on a reported basis and 1.1% lower on a constant currency
basis. The majority of the decline in both revenue and adjusted
operating profit was driven by the extremely tough trading
conditions in Nigeria. After lower interest charges for the period,
adjusted profit before tax was GBP32.8 million versus a prior
period result of GBP33.3 million. Statutory operating profit and
profit before tax, after exceptional items as detailed in note 4,
were GBP29.3 million and GBP26.7 million respectively.
Financial Position
Net debt at 30 November 2018 was lower than the prior period at
GBP177.2 million (2017: GBP191.2 million). The key elements that
affect the Group's net debt position are operating cash flows,
working capital movements and capital expenditure, with net debt
typically peaking around the middle of the financial year due to
seasonal factors.
During the period, the working capital outflow of GBP5.9 million
was lower than the prior period (2017: outflow of GBP44.1 million)
due to improved flows on both trade receivables and payables,
whilst capital expenditure was also lower at GBP7.1 million (2017:
GBP15.5 million) due to reduced levels of capital projects
currently being undertaken. Overall, the Group's balance sheet
remains strong with net debt at 1.6 x EBITDA(^) .
The Group's main borrowing facility was successfully renewed
during the period. Further details have been provided in note
11.
(^) EBITDA as used in this ratio calculation is defined as
adjusted operating profit before charges for depreciation and
amortisation for the 12 months to the reporting date, in this case
the 12 months to 30 November 2018.
Regional Reviews
Performance by region
Constant Like for
(Restated)* Reported currency like %
Revenue(1) (GBPm) 2018 2017 % change % change(2) change(3)
Africa 111.3 144.6 (23.0%) (13.3%) (13.3%)
Asia 95.6 102.6 (6.8%) (0.7%) (0.7%)
Europe 128.2 126.7 1.2% 1.4% 1.4%
------ ------------ ---------- ------------- -----------
335.1 373.9 (10.4%) (4.6%) (4.6%)
------ ------------ ---------- ------------- -----------
Adjusted operating Constant Like for
profit before exceptional (Restated)* Reported currency like %
items(4) (GBPm) 2018 2017 % change % change(2) change(3)
Africa 1.2 4.1 (70.7%) (67.7%) (67.7%)
Asia 9.6 8.5 12.9% 20.1% 20.1%
Europe 24.6 24.2 1.7% 1.6% 1.6%
------ ------------ ---------- ------------- -----------
35.4 36.8 (3.8%) (1.1%) (1.1%)
------ ------------ ---------- ------------- -----------
* The results for the half year to 30 November 2017 have been
restated to reflect a change in accounting policy and application
of IFRS 15. Further details are set out in note 2.
(1) Excludes joint ventures revenue of GBP57.0m (2017: GBP74.7m
at reported rate, GBP65.4m at constant currency rate).
(2) Constant currency comparison (2017 results retranslated at
2018 exchange rates).
(3) Like for like comparison after adjusting 2017 for constant
currency and 2018 for the impact of acquisitions and disposals.
There were no such acquisitions or disposals in either period.
(4) Exceptional items before tax (2018: cost GBP6.1m; 2017:
income GBP0.2m) are detailed in note 4.
Regional Overview
Africa's results showed a decline in reported revenue of 23.0%
and on a constant currency basis of 13.3%. Adjusted operating
profit was 70.7% lower on a reported basis and 67.7% lower on a
constant currency basis. Revenue and adjusted operating profit were
lower as a result of higher supply chain costs, the subdued
consumer environment and weaker exchange rates. The negative
currency impact was caused by both the move to use the NIFEX
exchange rate rather than the CBN rate to translate Nigerian
results from 1 June 2018 (as indicated in the Group's full year
results to 31 May 2018), as well as an underlying weakening of the
Naira during the period.
Asia's results showed a decline in reported revenue of 6.8% and
on a constant currency basis of 0.7%. Adjusted operating profit was
12.9% higher on a reported basis and 20.1% higher on a constant
currency basis. The constant currency results reflect an overall
improvement in the shape of the portfolio in Asia with a focus
behind the key brands and a resultant improvement in profitability,
largely due to mix. Reported results reflect the weakening of both
the Australian Dollar and Indonesian Rupiah during the period.
Europe's results showed an increase in reported revenue of 1.2%
and on a constant currency basis of 1.4%. Adjusted operating profit
was 1.7% higher on a reported basis and 1.6% higher on a constant
currency basis. The results reflect good top line growth in both
the UK washing and bathing division and the Beauty division, with
margin improvement invested back into the business through higher
levels of brand support resulting in a broadly flat profit outturn
for Europe for the period.
Africa
In Nigeria, consumer disposable income has remained weak ahead
of the general election which is scheduled for February 2019. There
are ongoing cost challenges due to significant disruption being
faced in clearing goods at the port and a further 10% weakening of
the Naira against the US Dollar in the period. These factors have
combined to deliver a materially lower first half adjusted
operating profit versus the comparative period. The impact of the
port disruption on adjusted profit before tax is estimated to be
GBP5.5 million for the full year.
Given the challenging macroeconomic backdrop, additional focus
has been placed on optimising all areas of the Nigerian business
including streamlining product portfolios, depot rationalisation
and maximising the efficiency of the factories.
With prices, volumes and margins continuing to remain under
pressure, the Personal Care, Home Care and Nutricima businesses
have been optimising price points and pack sizes across the key
brands in order to maintain or grow market share. Losses being
incurred in the Nutricima business have significantly reduced
versus the prior period.
The Electricals business has maintained its overall market
leadership position with the Haier Thermocool brand and remains the
only consumer brand delivering significant energy reduction to the
consumer following the investment in and launch of a differentiated
energy saving range in the previous financial year. Whilst both the
consumer environment and particularly the port situation have
frustrated sales in the first half, the business remains well
placed for when the market environment improves.
The PZ Wilmar joint venture has continued to focus on sales of
consumer edible oil packs under both the Mamador and Devon Kings
brands and during the period has launched spreads and seasoning
cubes under both brands to enhance the portfolio offering to the
consumer.
Overall profitability for the smaller African businesses in
Ghana and Kenya was lower than the prior period.
Asia
In Australia, performance was solid across all categories of
Personal Care, Home Care and Food & Nutrition, with new product
launches across all areas of the portfolio. Good growth in
particular was achieved in the Australian Beauty portfolio with
both St. Tropez and Fudge.
In Indonesia, whilst the overall market environment is tighter
with pressure on both the retail trade and the consumer, Cussons
Baby has continued to strengthen its number one position with
launches to further expand the range. Cussons Kids and Imperial
Leather have also made good progress.
As part of the broader South East Asia expansion, led by a
regional team based in Singapore, the Rafferty's Garden brand
expanded its distribution in China and also launched into the
Vietnamese market during the period, securing ranging in
approximately 500 premium stores in each country.
Europe
In the UK washing and bathing division, a significant number of
new product launches have taken place in the period, supported by
innovative marketing campaigns. This has driven good growth across
the key brands of Imperial Leather, Carex and Original Source, with
increasing focus on trend-led products such as Imperial Leather 'No
Drama Llama' Foamburst and Carex 'Unicorn' hand wash.
In the Beauty division, new product launches and further
expansion of on and off-line distribution channels, have driven
growth across the portfolio of Sanctuary, St. Tropez, Charles
Worthington and Fudge. Particularly pleasing has been the strong
growth of St. Tropez in the United States, which now accounts for
approximately 15% of the Beauty division's revenue.
Overall profitability for the smaller European businesses in
Poland and Greece was lower than the prior period.
Exceptional items
The Group has incurred net exceptional costs of GBP6.1 million
in the period relating to costs associated with the previously
announced Group structure and systems project (GBP4.1 million) and
GMP equalisation (GBP2.0 million).
Taxation
The effective tax rate before exceptional items was 26.8% (2017:
27.9%) and the effective tax rate post-exceptional items was 28.1%
(2017: 37.3%).
Related parties
Related party disclosures are given in note 14.
Principal risks and uncertainties facing the Group
Our principal risks and uncertainties are explained in more
detail in note 16 and remain as stated on pages 35 to 39 of our
2018 Strategic Report which is available on our website at
www.pzcussons.com.
The impact of Brexit continues to be considered as part of the
risk management process. Whilst uncertainty in relation to the
outcome of the Brexit process is affecting consumer confidence, and
we continue to monitor the potential impact on our supply chain, at
the present time any Brexit impact is expected to be
manageable.
Outlook
We expect the consumer to remain under pressure in all of the
markets in which we operate. The overall outturn for this year will
in particular be affected by the macro environment in Nigeria
during the seasonally-important second half of the year.
Based on current and expected trading conditions in Nigeria,
including an estimated impact of GBP5.5 million as a result of the
port situation, we now expect Group adjusted profit before tax for
the year to be towards GBP70 million.
The Group's balance sheet remains strong, with net debt expected
to reduce in the second half of the year.
The Board has approved specific strategic initiatives with the
aim of streamlining the Group's portfolio of activities, allowing
the Group to focus on and invest behind the key growth initiatives
in Personal Care and Beauty across Europe and Asia and with the
objective of limiting the exposure to Nigeria volatility. Further
details of these initiatives will be communicated in due
course.
We have a strong pipeline of innovation for our key brands,
supported by additional brand investment. Together with further
expansion of our distribution in our key existing and target
markets, we expect this to underpin continued sound performance in
Europe, including Beauty, and Asia.
CONDENSED CONSOLIDATED INCOME STATEMENT
(Restated)* (Restated)*
Unaudited Unaudited Audited
Half year to Half year to Year to
30 November 2018 30 November 2017 31 May 2018
Before Exceptional Before Exceptional Before Exceptional
exceptional items exceptional items exceptional items
items (note 4) Total items (note 4) Total items (note 4) Total
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------- ------------- -------- ------------- ------------- -------- ------------- ------------- --------
Continuing
operations
Revenue 3 335.1 - 335.1 373.9 - 373.9 739.8 - 739.8
Cost of sales (212.8) - (212.8) (245.0) - (245.0) (477.5) - (477.5)
------------- ------------- -------- ------------- ------------- -------- ------------- ------------- --------
Gross profit 122.3 - 122.3 128.9 - 128.9 262.3 - 262.3
Selling and
distribution
costs (49.9) - (49.9) (54.6) - (54.6) (101.1) - (101.1)
Administrative
expenses (37.6) (6.1) (43.7) (39.4) 0.2 (39.2) (76.9) (13.8) (90.7)
Share of results
of joint
ventures 0.6 - 0.6 1.9 - 1.9 1.4 0.3 1.7
------------- ------------- -------- ------------- ------------- -------- ------------- ------------- --------
Operating profit 35.4 (6.1) 29.3 36.8 0.2 37.0 85.7 (13.5) 72.2
------------- ------------- -------- ------------- ------------- -------- ------------- ------------- --------
Finance income 0.4 - 0.4 0.1 - 0.1 0.9 - 0.9
Finance costs (3.0) - (3.0) (3.6) - (3.6) (6.5) - (6.5)
------------- ------------- -------- ------------- ------------- -------- ------------- ------------- --------
Net finance
costs 5 (2.6) - (2.6) (3.5) - (3.5) (5.6) - (5.6)
------------- ------------- -------- ------------- ------------- --------
Profit before
tax 32.8 (6.1) 26.7 33.3 0.2 33.5 80.1 (13.5) 66.6
Tax 7 (8.8) 1.3 (7.5) (9.3) (3.2) (12.5) (22.1) 4.3 (17.8)
------------- ------------- -------- ------------- ------------- -------- ------------- ------------- --------
Profit for the
period 24.0 (4.8) 19.2 24.0 (3.0) 21.0 58.0 (9.2) 48.8
------------- ------------- -------- ------------- ------------- -------- ------------- ------------- --------
Attributable to:
Owners of the
Parent 23.7 (4.6) 19.1 23.5 (3.0) 20.5 56.0 (8.3) 47.7
Non-controlling
interests 0.3 (0.2) 0.1 0.5 - 0.5 2.0 (0.9) 1.1
------------- ------------- -------- ------------- ------------- -------- ------------- ------------- --------
24.0 (4.8) 19.2 24.0 (3.0) 21.0 58.0 (9.2) 48.8
------------- ------------- -------- ------------- ------------- -------- ------------- ------------- --------
Basic EPS (p) 9 5.67 (1.10) 4.57 5.62 (0.72) 4.90 13.39 (1.98) 11.41
Diluted EPS (p) 9 5.67 (1.10) 4.57 5.62 (0.72) 4.90 13.39 (1.98) 11.41
------------- ------------- -------- ------------- ------------- -------- ------------- ------------- --------
*See note 2 for details of restatement
The notes on pages 11 to 21 are an integral part of these
condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Restated)*
Unaudited Unaudited
Half year Half year Audited
to to Year to
30 November 30 November 31 May
2018 2017 2018
GBPm GBPm GBPm
------------- ------------- ---------
Profit for the period / year 19.2 21.0 48.8
Other comprehensive (expense) / income
Items that will not subsequently be
reclassified to profit or loss
Remeasurement of post-employment obligations
(note 12) (7.6) 8.3 26.7
Deferred tax on remeasurement of post-employment
obligations - - (4.5)
Tax on items that will not be subsequently
reclassified to profit or loss - - 0.2
Total items that will not subsequently
be reclassified to profit or loss (7.6) 8.3 22.4
------------- ------------- ---------
Items that may be subsequently reclassified
to profit or loss
Exchange differences on translation
of foreign operations (1.2) (14.4) (25.8)
Cash flow hedges - fair value gain /
(loss) in period / year 0.7 - (1.8)
Total items that may subsequently be
reclassified to profit or loss (0.5) (14.4) (27.6)
Other comprehensive expense for the
period / year net of taxation (8.1) (6.1) (5.2)
Total comprehensive income for the period
/ year 11.1 14.9 43.6
------------- ------------- ---------
Attributable to:
Owners of the Parent 11.5 16.4 47.1
Non-controlling interests (0.4) (1.5) (3.5)
------------- ------------- ---------
*See note 2 for details of restatement
The notes on pages 11 to 21 are an integral part of these
condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED BALANCE SHEET
(Restated)*
Unaudited Unaudited Audited
30 November 30 November 31 May
2018 2017 2018
Notes GBPm GBPm GBPm
------------ ------------ --------
Assets
Non-current assets
Goodwill, software and other intangible
assets 6 403.9 410.0 406.1
Property, plant and equipment 6 153.1 165.0 156.6
Other investments 0.3 0.3 0.3
Net investments in joint ventures 29.2 25.1 22.9
Trade and other receivables 0.9 1.6 0.4
Retirement benefit surplus 12 26.8 12.3 33.3
------------ ------------ --------
614.2 614.3 619.6
------------ ------------ --------
Current assets
Inventories 150.7 151.7 132.6
Trade and other receivables 168.6 212.2 163.9
Derivative financial asset 13 0.5 0.6 -
Current asset investments 11 0.3 0.3 0.3
Cash and short term deposits 11 56.6 125.0 102.7
376.7 489.8 399.5
------------ ------------ --------
Total assets 990.9 1,104.1 1,019.1
------------ ------------ --------
Equity
Share capital 4.3 4.3 4.3
Capital redemption reserve 0.7 0.7 0.7
Currency translation reserve (80.5) (71.0) (79.8)
Hedging reserve 1.3 2.4 0.6
Retained earnings 524.4 506.2 536.4
Attributable to owners of the
Parent 450.2 442.6 462.2
Non-controlling interests 28.3 31.0 29.0
------------ ------------ --------
Total equity 478.5 473.6 491.2
Liabilities
Non-current liabilities
Borrowings 11 212.2 - -
Trade and other payables 1.7 0.3 1.0
Deferred taxation liabilities 44.3 40.5 44.2
Retirement benefit obligations 12 11.5 14.4 12.0
269.7 55.2 57.2
------------ ------------ --------
Current liabilities
Borrowings 11 21.9 316.5 268.4
Trade and other payables 187.8 221.2 174.4
Derivative financial liability 13 0.3 - 1.1
Current taxation payable 28.7 35.0 25.6
Provisions 4.0 2.6 1.2
------------ ------------ --------
242.7 575.3 470.7
------------ ------------ --------
Total liabilities 512.4 630.5 527.9
------------ ------------ --------
Total equity and liabilities 990.9 1,104.1 1,019.1
------------ ------------ --------
*See note 2 for details of restatement
The notes on pages 11 to 21 are an integral part of these
condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to owners of the
Parent
---------------------------------------------------
Currency Capital Non
Share translation redemption Retained Hedging controlling
capital reserve reserve earnings reserve interests Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 June 2017 4.3 (58.6) 0.7 501.3 2.4 33.8 483.9
------- ----------- ---------- -------- ------- ----------- ------
Profit for the period - - - 20.5 - 0.5 21.0
Other comprehensive (expense)/income
for the period* - (12.4) - 8.3 - (2.0) (6.1)
------- ----------- ---------- -------- ------- ----------- ------
Total comprehensive (expense)/income
for the period - (12.4) - 28.8 - (1.5) 14.9
------- ----------- ---------- -------- ------- ----------- ------
Transactions with owners:
Ordinary dividends - - - (23.5) - - (23.5)
Acquisition of shares by
ESOT - - - (0.4) - - (0.4)
Non-controlling interests
dividend paid - - - - - (1.3) (1.3)
------- ----------- ---------- -------- ------- ----------- ------
Total transactions with owners
recognised directly in equity - - - (23.9) - (1.3) (25.2)
------- ----------- ---------- -------- ------- ----------- ------
At 30 November 2017 4.3 (71.0) 0.7 506.2 2.4 31.0 473.6
------- ----------- ---------- -------- ------- ----------- ------
At 1 June 2017 4.3 (58.6) 0.7 501.3 2.4 33.8 483.9
------- ----------- ---------- -------- ------- ----------- ------
Profit for the year - - - 47.7 - 1.1 48.8
Other comprehensive (expense)/income
for the year - (21.2) - 22.4 (1.8) (4.6) (5.2)
------- ----------- ---------- -------- ------- ----------- ------
Total comprehensive (expense)/income
for the year - (21.2) - 70.1 (1.8) (3.5) 43.6
------- ----------- ---------- -------- ------- ----------- ------
Transactions with owners:
Ordinary dividends - - - (34.6) - - (34.6)
Acquisition of shares by
ESOT - - - (0.4) - - (0.4)
Non-controlling interests
dividend paid - - - - - (1.3) (1.3)
------- ----------- ---------- -------- ------- ----------- ------
Total transactions with owners
recognised directly in equity - - - (35.0) - (1.3) (36.3)
------- ----------- ---------- -------- ------- ----------- ------
At 31 May 2018 4.3 (79.8) 0.7 536.4 0.6 29.0 491.2
------- ----------- ---------- -------- ------- ----------- ------
At 1 June 2018 4.3 (79.8) 0.7 536.4 0.6 29.0 491.2
--- ------ --- ------ --- ----- ------
Profit for the period - - - 19.1 - 0.1 19.2
Other comprehensive (expense)/income
for the period - (0.7) - (7.6) 0.7 (0.5) (8.1)
--- ------ --- ------ --- ----- ------
Total comprehensive (expense)/income
for the period - (0.7) - 11.5 0.7 (0.4) 11.1
--- ------ --- ------ --- ----- ------
Transactions with owners:
Ordinary dividends - - - (23.5) - - (23.5)
Non-controlling interests
dividend paid - - - - - (0.3) (0.3)
--- ------ --- ------ --- ----- ------
Total transactions with owners
recognised directly in equity - - - (23.5) - (0.3) (23.8)
--- ------ --- ------ --- ----- ------
At 30 November 2018 4.3 (80.5) 0.7 524.4 1.3 28.3 478.5
--- ------ --- ------ --- ----- ------
*See note 2 for details of restatement
The notes on pages 11 to 21 are an integral part of these
condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
Half year Half year
to to Year to
30 November 30 November 31 May
2018 2017 2018
GBPm GBPm GBPm
------------- ------------- --------
Cash flows from operating activities
Cash generated from / (used in) operations
(note 10) 33.6 (4.7) 59.1
Taxation paid (4.8) (4.9) (18.0)
Interest paid (note 5) (3.0) (3.6) (6.5)
------------- ------------- --------
Net cash generated from / (used in) operating
activities 25.8 (13.2) 34.6
------------- ------------- --------
Cash flows from investing activities
Interest income (note 5) 0.4 0.1 0.9
Purchase of property, plant and equipment
and software (note 6) (7.1) (15.5) (22.2)
Proceeds from sale of assets - 10.6 10.6
Advance of short term deposits to joint
venture (6.1) - -
Net cash used in investing activities (12.8) (4.8) (10.7)
------------- ------------- --------
Cash flows from financing activities
Dividends paid to non-controlling interests (0.3) (1.3) (1.3)
Purchase of shares for ESOT - (0.4) (0.4)
Dividends paid to Company shareholders
(note 8) (23.5) (23.5) (34.6)
(Decrease) / increase in borrowings (note
11) (24.8) 6.1 (7.9)
Net cash used in financing activities (48.6) (19.1) (44.2)
Net decrease in cash and cash equivalents
(note 11) (35.6) (37.1) (20.3)
Cash and cash equivalents at the beginning
of the period (note 11) 86.2 116.1 116.1
Effect of foreign exchange rates (note
11) (0.9) (4.5) (9.6)
------------- ------------- --------
Cash and cash equivalents at the end of
the period (note 11) 49.7 74.5 86.2
------------- ------------- --------
The notes on pages 11 to 21 are an integral part of these
condensed consolidated interim financial statements.
1. Basis of preparation
The Company is a public limited company incorporated and
domiciled in England. It has a primary listing on the London Stock
Exchange. The address of its registered office is shown on page
24.
These condensed consolidated interim financial statements for
the six months ended 30 November 2018, which have been reviewed,
not audited, have been prepared in accordance with the Disclosure
and Transparency Rules (DTR) of the Financial Conduct Authority and
in accordance with IAS 34, 'Interim Financial Reporting' as adopted
by the European Union (EU). The condensed consolidated interim
financial statements should be read in conjunction with the annual
financial statements for the year ended 31 May 2018 which have been
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted for use in the EU, including
International Accounting Standards (IAS) and interpretations issued
by the International Financial Reporting Standard Interpretations
Committee (IFRS IC).
The condensed consolidated interim financial statements for the
period ended 30 November 2018 do not constitute statutory accounts
within the meaning of section 434 of the Companies Act 2006.
The financial information set out in this statement relating to
the year ended 31 May 2018 does not constitute statutory accounts
for that year. Full audited statutory accounts of the Group in
respect of that financial year were approved by the Board of
Directors on 24 July 2018 and have been delivered to the Registrar
of Companies. The report of the auditors on these statutory
accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain a statement under section 498 of the
Companies Act 2006.
These condensed consolidated interim financial statements were
approved for issue on 29 January 2019.
Judgements and estimates
The preparation of condensed consolidated interim financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
annual financial statements for the year ended 31 May 2018.
As disclosed in the annual financial statements for the year
ended 31 May 2018, the Group concluded that the NIFEX exchange rate
was the most appropriate official rate at which to translate the
results of Nigerian operations; NIFEX was the rate at which the
majority of transactions were expected to be settled. On 31
December 2018, subsequent to the interim results being finalised,
the NIFEX rate ceased to be quoted, and is no longer an official
exchange rate in Nigeria. Effective from 1 January 2019 the Group's
Nigerian results have been translated at the official NAFEX rate.
The NAFEX exchange rate now represents the exchange rate at which
the Group expects the majority of its transactions to be settled.
This change in reference exchange rate from 1 January 2019 is not
expected to have a significant impact on the Group given that the
NIFEX rate has gradually converged almost to parity with NAFEX over
the past year.
Going concern basis
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Business Review. The financial position of the
Group and liquidity position are also described within the
Financial Position section of that review.
After making enquiries and having considered the availability of
resources, the Directors consider it appropriate to continue to
adopt the going concern basis in preparing the condensed
consolidated interim financial statements.
2. Accounting policies
The accounting policies are consistent with those of the annual
financial statements for the year ended 31 May 2018 except for
those described below. Taxes on income in the interim periods are
accrued using the tax rate that would be applicable to expected
total annual profit or loss before tax.
The Group has applied the following standards and amendments for
the first time for the annual reporting period commencing 1 June
2018:
-- IFRS 9 - Financial Instruments;
-- IFRS 15 - Revenue from Contracts with Customers;
-- IFRS 2 - Classification and Measurement of Share-based Payment Transactions;
-- IFRIC 22 - Foreign Currency Transactions and Advance Consideration; and
-- Annual improvements to IFRSs: 2014-16 Cycle (Dec 2016).
On 1 June 2018 the Group adopted IFRS 9 'Financial Instruments',
which replaced IAS 39 'Financial Instruments - Recognition and
Measurement'. The Group has not restated comparative information
for prior periods on the following grounds:
-- Impairment: From 1 June 2018 the Group implemented an
expected credit loss impairment model for financial assets. For
trade receivables, the Group's calculation methodology has been
updated to consider expected losses based on ageing profile. The
adoption of the expected credit loss approach has not resulted in a
material change in impairment provision for any financial
asset.
-- Hedge accounting: The Group applied the hedge accounting
requirements of IFRS 9 prospectively. At the date of initial
application, all of the Group's existing hedging relationships were
eligible to be treated as continuing hedge relationships and hence
the adoption of IFRS 9 has not had a material impact on the on the
recognition of such financial instruments. Further to this, the
impact of the basis adjustment is currently immaterial but will be
monitored on a monthly basis.
On 1 June 2018 the Group adopted IFRS 15 'Revenue from Contracts
with Customers', which replaced IAS 18 'Revenue' and IAS 11
'Construction Contracts'. The implementation of this new standard
has resulted in a change in accounting policy, leading to a
reclassification adjustment in the Income Statement between Revenue
and Selling and distribution costs as previously reported in the
year ended 31 May 2018 and six month period ended 30 November 2017.
The Group has elected to restate comparative results under the full
retrospective approach - see restatement section below for
details.
Certain new accounting standards and interpretations have been
published that are not mandatory for the 31 May 2019 reporting
period and have not been early adopted by the Group. The Group will
undertake an assessment of the impact of the following new
standards and interpretations in due course:
-- IFRS 16 Leases;
-- IFRIC 23 - Uncertainty over Income Tax Treatments;
-- Amendments to IAS 28 - Long-term Interests in Associates and Joint Ventures;
-- Annual improvements to IFRSs: 2015-17 Cycle (Dec 2017); and
-- Amendments to IFRS 10 and IAS 28 - Sale or Contribution of
Assets between an Investor and its Associate or Joint Venture.
Of the standards noted above, only one is expected to have a
material impact on the financial statements. IFRS 16 'Leases' is
effective for annual periods beginning on or after 1 January 2019
and sets out a new approach to accounting for leases by lessees.
Whilst under IAS 17 'Leases', the accounting treatment of a lease
was determined on the basis of the transfer of risks and rewards
incidental to ownership of the asset, whereas under the new
standard, all leases in general are to be accounted for by the
lessee in a similar way to finance lease arrangements. Whilst IFRS
16 is not yet effective, the Group has continued with its IFRS 16
project during the financial year and is currently in the process
of evaluating the impact of the new standard through the review of
the existing lease profile across the Group and the compilation and
assessment of contracts, as well as understanding process and
system changes that will be required. The outcome of this
assessment has yet to be concluded and as such, a reliable
quantitative measurement of the impact of IFRS 16 cannot be made at
this stage. The Group will, however, apply the available exceptions
regarding the recognition of short-term leases and low value
leasing assets. An update on the expected impact of IFRS 16 will be
disclosed in the annual financial statements to 31 May 2019.
Restatements
a. Change in accounting policy during the year ended 31 May 2018
As documented in the 2018 annual financial statements, during
the year ended 31 May 2018, the Group changed its accounting policy
for the recognition of surpluses in its defined benefit pension
schemes: in particular, the policy for determining whether or not
it has an unconditional right to a refund of surpluses in its
employee pension funds. Where the Group has a right to a refund,
this is not deemed unconditional if pension fund trustees are able
unilaterally to wind up the scheme and distribute the surplus to
members. The revised accounting policy, by taking account of the
powers of pension trustees in assessing the economic benefit
available as a refund, provides enhanced information about the
effect on the Group's financial position of its defined benefit
pension schemes.
This change in accounting policy resulted in the Group
de-recognising the pension surplus in relation to the expatriate
defined benefit scheme. In accordance with IAS 8 'Accounting
Policies, Changes in Accounting Estimates and Errors', the amended
policy has been applied retrospectively and 30 November 2017
results have been restated. The impacts of the change in policy are
shown in the tables below:
Condensed Consolidated Income Statement
30 November 2017
GBPm
Under previous Adjustment As published
policy
---------------
Administrative expenses (38.5) (0.7) (39.2)
Operating profit 37.7 (0.7) 37.0
Profit before tax 34.2 (0.7) 33.5
Tax (12.6) 0.1 (12.5)
Profit for the year 21.6 (0.6) 21.0
Profit attributable to owners
of the parent 21.1 (0.6) 20.5
Condensed Consolidated Statement of Other
Comprehensive Income
30 November 2017
GBPm
Under previous Adjustment As published
policy
---------------
Profit for the year 21.6 (0.6) 21.0
Remeasurement of post-employment
benefit obligations 7.8 0.5 8.3
Other comprehensive expense for
the year net of tax (6.6) 0.5 (6.1)
Consolidated Balance Sheet
30 November 2017
GBPm
Under previous Adjustment As published
policy
---------------
Retirement benefit surplus 63.8 (51.5) 12.3
Total assets 1,155.6 (51.5) 1,104.1
Deferred taxation liabilities (49.3) 8.8 (40.5)
Retained earnings 548.9 (42.7) 506.2
Equity attributable to owners
of the parent 485.3 (42.7) 442.6
Consolidated Statement of Changes in Equity
30 November 2017
GBPm
Under previous Adjustment As published
policy
---------------
Retained earnings at 1 June 2017 543.9 (42.6) 501.3
Profit for the year attributable
to owners of the parent 21.1 (0.6) 20.5
Remeasurement of post-employment
obligations 7.8 0.5 8.3
Retained earnings as at 30 November
2017 548.9 (42.7) 506.2
The 30 November 2017 values for basic EPS and adjusted EPS have
also been restated for the impact of the pension surplus
de-recognition (previously reported basic EPS 2017: 5.76p,
re-stated basic EPS 2017: 5.62p; previously reported adjusted EPS
2017: 5.04p, re-stated adjusted basic EPS 2017: 4.90p).
b. Implementation of IFRS 15 resulting in a change in accounting
policy in the period to 30 November 2018
As documented above, due to the implementation of IFRS 15
'Revenue from Contracts with Customers', the Group has changed its
accounting policy in relation to revenue recognition.
The primary impact on the Group is a change in presentation of
certain elements of trade spend that do not relate to the Group
paying for a separate distinct good or service, but do relate to
some form of payment or reduction in transaction price to a
customer. These elements were previously recognised within selling
and distribution costs, however under IFRS 15 these costs are now
recognised as part of the transaction price and therefore as a
reduction to revenue.
The Group has elected to restate comparative results under the
full retrospective approach. The impacts of restatement due to the
change in accounting policy are shown in the table below:
Consolidated Income Statement
30 November 2017 31 May 2018
GBPm GBPm
Under Adjustment As published Under Adjustment As published
previous previous
policy policy
---------- ---------- ----------- -------------
Revenue 385.4 (11.5) 373.9 762.6 (22.8) 739.8
Selling and Distribution
costs (66.1) 11.5 (54.6) (123.9) 22.8 (101.1)
The changes described above have not impacted the Group's
operating profit or profit before tax for either period.
3. Segmental analysis
The Chief Operating Decision Maker (CODM) has been identified as
the Executive Board which comprises the two Executive Directors.
The CODM reviews the Group's internal reporting in order to assess
performance and allocate resources. The CODM has determined the
operating segments based on these reports which include an
allocation of central revenue and costs as appropriate. For
reporting purposes, in accordance with IFRS 8 'Operating segments',
the Board aggregates operating segments with similar economic
characteristics and conditions into reporting segments, which form
the basis of the reporting in the condensed consolidated interim
financial statements.
The CODM considers the business from a geographic perspective,
with Africa, Asia and Europe being the operating segments. The CODM
assesses the performance based on operating profit before any
exceptional items. Other information provided, except as noted
below, to the CODM is measured in a manner consistent with that of
the Financial Statements.
Revenues and operating profit of the Europe and Asia segments
arise from the sale of Personal Care, Home Care and Food &
Nutrition products. Revenue and operating profit from the Africa
segment arise from the sale of Personal Care, Home Care, Food &
Nutrition and Electrical products. Sales between segments are
carried out on an arm's length basis.
Business segments
Half year to 30 November Africa Asia Europe Eliminations Total
2018 GBPm GBPm GBPm GBPm GBPm
------- ------ ------- -------------
Gross segment revenue 111.3 101.0 192.6 (69.8) 335.1
Inter segment revenue - (5.4) (64.4) 69.8 -
----------------------------- ------- ------ ------- ------------- ------
Revenue 111.3 95.6 128.2 - 335.1
----------------------------- ------- ------ ------- ------------- ------
Segmental operating profit
before exceptional items
and share of results of
joint ventures 0.6 9.6 24.6 - 34.8
Share of results of joint
ventures 0.6 - - - 0.6
----------------------------- ------- ------ ------- ------------- ------
Segmental operating profit
before exceptional items 1.2 9.6 24.6 - 35.4
----------------------------- ------- ------ ------- ------------- ------
Exceptional Items (1.0) (0.9) (4.2) - (6.1)
----------------------------- ------- ------ ------- ------------- ------
Segmental operating profit 0.2 8.7 20.4 - 29.3
----------------------------- ------- ------ ------- ------------- ------
Finance income 0.4
Finance cost (3.0)
----------------------------- ------- ------ ------- ------------- ------
Profit before taxation 26.7
----------------------------- ------- ------ ------- ------------- ------
Half year to 30 November Africa Asia Europe Eliminations Total
2017 (Restated)* GBPm GBPm GBPm GBPm GBPm
------- ------ ------- -------------
Gross segment revenue 144.6 108.6 179.6 (58.9) 373.9
Inter segment revenue - (6.0) (52.9) 58.9 -
----------------------------- ------- ------ ------- ------------- ------
Revenue 144.6 102.6 126.7 - 373.9
----------------------------- ------- ------ ------- ------------- ------
Segmental operating profit
before exceptional items
and share of results of
joint ventures 2.2 8.5 24.2 - 34.9
Share of results of joint
ventures 1.9 - - - 1.9
----------------------------- ------- ------ ------- ------------- ------
Segmental operating profit
before exceptional items 4.1 8.5 24.2 - 36.8
----------------------------- ------- ------ ------- ------------- ------
Exceptional Items (0.1) 6.3 (6.0) - 0.2
----------------------------- ------- ------ ------- ------------- ------
Segmental operating profit 4.0 14.8 18.2 - 37.0
----------------------------- ------- ------ ------- ------------- ------
Finance income 0.1
Finance cost (3.6)
----------------------------- ------- ------ ------- ------------- ------
Profit before taxation 33.5
----------------------------- ------- ------ ------- ------------- ------
*See note 2 for details of restatement
Year to 31 May 2018 (Restated)* Africa Asia Europe Eliminations Total
GBPm GBPm GBPm GBPm GBPm
------- ------- -------- -------------
Gross segment revenue 274.1 214.8 386.0 (135.1) 739.8
Inter segment revenue - (13.5) (121.6) 135.1 -
---------------------------------- ------- ------- -------- ------------- -------
Revenue 274.1 201.3 264.4 - 739.8
---------------------------------- ------- ------- -------- ------------- -------
Segmental operating profit
before exceptional items
and share of results of
joint ventures 4.9 18.6 60.8 - 84.3
Share of results of joint
ventures 1.4 - - - 1.4
---------------------------------- ------- ------- -------- ------------- -------
Segmental operating profit
before exceptional items 6.3 18.6 60.8 - 85.7
---------------------------------- ------- ------- -------- ------------- -------
Exceptional Items (4.7) 3.8 (12.6) - (13.5)
---------------------------------- ------- ------- -------- ------------- -------
Segmental operating profit 1.6 22.4 48.2 - 72.2
---------------------------------- ------- ------- -------- ------------- -------
Finance income 0.9
Finance cost (6.5)
---------------------------------- ------- ------- -------- ------------- -------
Profit before taxation 66.6
---------------------------------- ------- ------- -------- ------------- -------
*See note 2 for details of restatement
There are no differences from the last annual financial
statements in the basis of segmentation or in the basis of
measurement of segment profit.
The Group analyses its net revenue by the following
categories:
(Restated)* (Restated)*
Unaudited Unaudited Audited
Half year Half year
to to Year to
30 November 30 November 31 May
2018 2017 2018
GBPm GBPm GBPm
------------------ ------------- ------------- ------------
Personal Care 196.9 205.4 420.0
Home Care 45.1 60.6 116.3
Food & Nutrition 55.8 68.2 125.5
Electricals 33.7 37.0 72.2
Other 3.6 2.7 5.8
------------------ ------------- ------------- ------------
335.1 373.9 739.8
------------------ ------------- ------------- ------------
*See note 2 for details of restatement
4. Exceptional items
Half year to 30 November 2018
The Group generated net exceptional expenditure before tax of
GBP6.1 million as follows:
- Costs of GBP4.1 million relating to the Group structure and
systems project to realign the organisation design to create a more
effective operating model. These represent a continuation of the
same project on which exceptional costs were recognised in previous
periods and mainly consist of restructuring, advisory and IT system
related costs; and
- Costs of GBP2.0 million relating to estimated past service
pension costs following a recent UK High Court judgement confirming
that defined benefit pension schemes are required to equalise male
and female members' benefits for the effect of guaranteed minimum
pensions (GMPs). This estimate will be trued up following
completion of detailed analysis by the Group's third party actuary
prior to 31 May 2019.
Half year to 30 November 2017
The Group generated net exceptional income before tax of GBP0.2
million as follows:
- Costs of GBP4.6 million relating to the Group structure and
systems project to realign the organisation design to create a more
effective operating model. These represent a continuation of the
same project on which exceptional costs were recognised in previous
periods and mainly consist of restructuring, advisory and IT system
related costs;
- Costs of GBP3.6 million relating to the impairment of a
non-operational European fixed asset; and
- Income of GBP8.4 million relating to the sale of land relating
to a redundant manufacturing site in Australia.
Year to 31 May 2018
The Group incurred net exceptional expenditure before tax of
GBP13.5 million as follows:
- Group structure and systems project costs (cost of GBP11.6 million);
- Impairment of a non-operational European fixed asset (cost of GBP3.7 million);
- Sale of land relating to a redundant manufacturing site in
Australia (income of GBP8.1 million); and
- Change in Naira exchange rate for translation purposes (cost of GBP6.3 million).
5. Net finance costs Unaudited Unaudited Audited
Half year Half year Year to
to to 31 May
30 November 30 November 2018
2018 2017
GBPm GBPm GBPm
------------------------------------ ------------- ------------- --------
Interest receivable 0.4 0.1 0.9
Interest income 0.4 0.1 0.9
Interest payable on bank loans and
overdrafts (3.0) (3.6) (6.5)
------------------------------------ ------------- ------------- --------
Net finance costs (2.6) (3.5) (5.6)
------------------------------------ ------------- ------------- --------
6. Property, plant and equipment and Goodwill, software Property,
intangible assets and other plant and
intangible assets equipment
GBPm GBPm
Opening net book amount as at 1 June
2017 403.4 177.0
Additions 8.8 6.7
Transfers between asset classification 0.7 (0.7)
Depreciation - (9.4)
Amortisation (2.7) -
Impairment of asset - (2.6)
Currency retranslation (0.2) (6.0)
------------------------------------------- ------------------- -----------
Closing net book amount as at 30 November
2017 410.0 165.0
------------------------------------------- ------------------- -----------
Opening net book amount as at 1 June
2018 406.1 156.6
Additions 0.1 7.0
Disposals - (0.1)
Transfers between asset classification 0.7 (0.7)
Depreciation - (8.7)
Amortisation (3.1) -
Currency retranslation 0.1 (1.0)
------------------------------------------- ------ ------
Closing net book amount as at 30 November
2018 403.9 153.1
------------------------------------------- ------ ------
Goodwill, software and other intangible assets comprise goodwill
of GBP63.2 million (30 November 2017: GBP63.0 million), software of
GBP45.2 million (30 November 2017: GBP51.4 million), the majority
of which relates to the implementation and associated costs of the
SAP project and other intangible assets of GBP295.5 million (30
November 2017: GBP295.6 million) relating to the Group's acquired
brands.
The Group's other intangible assets, which represent brand
values and goodwill, have all arisen from previous business
combinations. The value in use models, prepared annually and
otherwise when potential impairment triggers are identified to
support the carrying value of the cash generating units ('CGUs')
contain assumptions such as future revenue volume/price growth
rates, associated future levels of marketing support, cost base of
manufacture, short and long term growth rates and discount rates.
These assumptions are based on historical trends and future market
expectations specific to each CGU and the markets and geographies
in which it operates. As at 30 November 2018, other than in
relation to the Nutricima CGU, no impairment triggers were
identified that would give rise to an impairment review.
For the Nutricima CGU, given that it is located in Nigeria where
the macroeconomic environment continues to be volatile, management
performed an impairment review to support the carrying value as at
30 November 2018. Whilst this did not result in a requirement for
impairment, in preparing the Nutricima value in use model,
management had to carefully consider the range of reasonable
possible changes in assumptions when performing sensitivity
analysis. Whilst it is not management's current expectation, should
Nutricima trading results in FY19 be lower than currently
forecasted by GBP1.7 million, which is considered by the Directors
to be reasonably possible given the inherent market uncertainty,
this would result in an impairment of GBP2.0 million.
At 30 November 2018, the Group had entered into commitments for
the acquisition of property, plant and equipment amounting to
GBP5.1 million (30 November 2017: GBP6.5 million). At 30 November
2018, the Group's share in the capital commitments of joint
ventures was GBPnil (30 November 2017: GBPnil).
7. Tax
(Restated)*
Unaudited Unaudited Audited
Half year Half year
to to Year to
30 November 30 November 31 May
2018 2017 2018
GBPm GBPm GBPm
---------------- ------------- ------------- --------
United Kingdom 3.0 2.9 5.1
Overseas 4.5 9.6 12.7
---------------- ------------- ------------- --------
7.5 12.5 17.8
---------------- ------------- ------------- --------
*See note 2 for details of restatement
Income tax expense is recognised based on management's best
estimate of the weighted average annual tax rate expected for the
full financial year. The estimated average annual tax rate to be
used for the year ending 31 May 2019, before exceptional items, is
26.8% (2017: 27.9%) and the effective tax rate to be used
post-exceptional items, is 28.1% (2017: 37.3%).
8. Dividends
An interim dividend of 2.67p per share for the half year to 30
November 2018 (2017: 2.67p) has been declared totalling GBP11.2
million (2017: GBP11.2 million) and is payable on 6 April 2019 to
shareholders on the register at the close of business on 15
February 2019. This interim dividend has not been recognised in
this half yearly report as it was declared after the end of the
reporting period. The proposed final dividend for the year ended 31
May 2018 of 5.61p per share, totalling GBP23.5 million, was
approved by shareholders at the Annual General Meeting of the
Company and paid on 4 October 2018.
9. Earnings per share
Basic earnings per share and diluted earnings per share are
calculated by dividing profit for the period attributable to owners
of the Parent by the following weighted average number of shares in
issue:
Unaudited Unaudited
Half year Half year Audited
to to Year to
30 November 30 November 31 May
2018 2017 2018
Basic weighted average (000) 418,323 418,320 418,313
Diluted weighted average (000) 418,324 418,320 418,313
-------------------------------- ------------- ------------- ---------
The difference between the average number of Ordinary Shares and
the basic weighted average number of Ordinary Shares represents the
shares held by the Employee Share Option Trust, whilst the
difference between the basic and diluted weighted average number of
shares represents the dilutive effect of the Deferred Annual Share
Bonus Scheme, Executive Share Option Schemes and the Performance
Share Plan (together the 'share incentive plans'). The average
number of shares is reconciled to the basic and diluted weighted
average number of shares below:
Unaudited Unaudited
Half year Half year Audited
to to Year to
30 November 30 November 31 May
2018 2017 2018
Average number of Ordinary Shares
in issue during the
period (000) 428,725 428,725 428,725
Less weighted average number of
Ordinary Shares held by the Employee
Share Option Trust (000) (10,402) (10,405) (10,412)
--------------------------------------- ------------- ------------- ---------
Basic weighted average number of
Ordinary Shares in issue during
the period (000) 418,323 418,320 418,313
Dilutive effect of share incentive
plans (000) 1 - -
Diluted weighted average number
of Ordinary Shares in issue during
the period (000) 418,324 418,320 418,313
--------------------------------------- ------------- ------------- ---------
Adjusted basic and diluted earnings per share are calculated as
follows:
(Restated)*
Unaudited Unaudited Audited
Half year Half year
to to Year to
30 November 30 November 31 May
2018 2017 2018
Basic earnings per share:
* Adjusted basic earnings per share 5.67p 5.62p 13.39p
* Exceptional items (1.10p) (0.72p) (1.98p)
-------------------------------------------- ------------- ------------- --------
Basic earnings per share 4.57p 4.90p 11.41p
-------------------------------------------- ------------- ------------- --------
Diluted earnings per share:
* Adjusted diluted earnings per share 5.67p 5.62p 13.39p
* Exceptional items (1.10p) (0.72p) (1.98p)
-------------------------------------------- ------------- ------------- --------
Diluted earnings per share 4.57p 4.90p 11.41p
-------------------------------------------- ------------- ------------- --------
*See note 2 for details of restatement
The adjusted profit for the period has been calculated as
follows:
(Restated)*
Unaudited Unaudited Audited
Half year Half year
to to Year to
30 November 30 November 31 May
2018 2017 2018
GBPm GBPm GBPm
Profit attributable to owners of
the Parent 19.1 20.5 47.7
Exceptional items (net of taxation
effect) 4.6 3.0 8.3
------------------------------------ ------------- ------------- --------
Adjusted profit after tax 23.7 23.5 56.0
------------------------------------ ------------- ------------- --------
*See note 2 for details of restatement
10. Reconciliation of profit before tax to cash generated from operations
(Restated)*
Unaudited Unaudited Audited
Half year Half year
to to Year to
30 November 30 November 31 May
2018 2017 2018
GBPm GBPm GBPm
-------------------------------------------- ------------- ------------- --------
Profit before tax 26.7 33.5 66.6
Adjustment for net finance costs 2.6 3.5 5.6
-------------------------------------------- ------------- ------------- --------
Operating profit 29.3 37.0 72.2
Depreciation (note 6) 8.7 9.4 18.1
Amortisation (note 6) 3.1 2.7 6.4
Impairment of fixed asset - 3.6 2.8
Profit on sale of tangible fixed
assets - (8.4) (7.7)
Difference between pension charge
and cash contributions (1.0) (3.0) (6.5)
Share of results from joint ventures (0.6) (1.9) (1.7)
Operating cash flows before movements
in working capital 39.5 39.4 83.6
Movements in working capital:
Inventories (18.6) 5.0 16.2
Trade and other receivables (2.5) (27.2) 20.9
Trade and other payables 15.2 (20.8) (59.0)
Provisions - (1.1) (2.6)
-------------------------------------------- ------------- ------------- --------
Cash generated from / (used in) operations 33.6 (4.7) 59.1
-------------------------------------------- ------------- ------------- --------
*See note 2 for details of restatement
11. Net debt reconciliation
Group net debt comprises the following:
Audited Unaudited Unaudited Unaudited
Foreign
1 June exchange 30 November
2018 Cash flow movements 2018
GBPm GBPm GBPm GBPm
--------------------------- -------- ---------- ----------- ------------
Cash at bank and
in hand 97.8 (45.6) (0.5) 51.7
Overdrafts (16.5) 10.0 (0.4) (6.9)
Short term deposits 4.9 - - 4.9
Cash and cash equivalents 86.2 (35.6) (0.9) 49.7
Current asset investments 0.3 - - 0.3
Loans due within
one year (251.9) 236.9 - (15.0)
Loans due over one
year - (212.2) - (212.2)
Net debt (165.4) (10.9) (0.9) (177.2)
---------------------------- -------- ---------- ----------- ------------
Loans due over one year include the Group's main borrowing
facility which was renewed during the period. This is provided by a
syndicate of lenders in the form of a GBP325 million Revolving
Credit Facility committed until 28 November 2023. The Group also
has access to uncommitted working capital facilities amounting to
GBP197.3 million.
Overdrafts do not form part of the Group's main borrowing
facility and arise as part of the Group's composite banking
arrangements with key banking partners. Under the terms of this
arrangement, cash and overdraft balances recognised by the
Overdraft's Obligor Group are considered as one cash pool with the
net position being monitored by the Directors and Lenders. These
overdraft balances have been presented gross with a corresponding
increase in cash at bank and in hand.
12. Retirement benefits
The Group operates retirement benefit schemes for its UK and
certain overseas subsidiaries. These obligations have been measured
in accordance with IAS 19 'Employee Benefits (revised)' and are as
follows:
(Restated)*
Unaudited Unaudited Audited
30 November 30 November 31 May
2018 2017 2018
GBPm GBPm GBPm
---------------------------------- ------------ ------------ --------
UK schemes in surplus 81.5 63.8 90.3
UK schemes in deficit (4.1) (5.0) (4.2)
Restriction due to asset ceiling (54.7) (51.5) (57.0)
---------------------------------- ------------ ------------ --------
Net UK position 22.7 7.3 29.1
Overseas schemes (7.4) (9.4) (7.8)
---------------------------------- ------------ ------------ --------
15.3 (2.1) 21.3
---------------------------------- ------------ ------------ --------
*See note 2 for details of restatement
The Group has four main defined benefit schemes which are based
and administered in the UK and are closed to future accrual and new
entrants.
The key financial assumptions (applicable to all UK schemes)
applied in the actuarial review of the pension schemes have been
reviewed in the preparation of these interim condensed consolidated
financial statements and amended where appropriate from those
applied at 31 May 2018. The key assumptions made were:
Unaudited Unaudited Audited
Half year Half year
to to Year to
30 November 30 November 31 May
2018 2017 2018
% per annum % per annum % per annum
----------------------------------------- ------------- ------------- ------------
Rate of increase in retirement benefits
in payment 3.05% 3.05% 2.85%
Discount rate 3.10% 2.70% 2.80%
Inflation assumption 3.25% 3.10% 3.00%
----------------------------------------- ------------- ------------- ------------
The movement during the period in the UK schemes is broken down
as follows:
(Restated)*
Unaudited Unaudited
30 November 30 November
2018 2017
GBPm GBPm
------------------------------------------------ ------------ ------------
Retirement benefit surplus / (deficit) as
at 1 June 29.1 (3.7)
Net pension interest income / (expense) 0.4 (0.2)
Past service cost (2.0) -
Administration expenses paid by the schemes (0.2) (0.1)
Contributions paid 3.0 3.0
Remeasurement gain due to changes in financial
assumptions 5.1 15.6
Loss on scheme assets (excluding interest
income) (15.8) (7.8)
Changes in asset ceiling (including interest) 3.1 0.5
-------------------------------------------------- ------------ ------------
Retirement benefit surplus as at 30 November 22.7 7.3
-------------------------------------------------- ------------ ------------
*See note 2 for details of restatement
The GBP2.0 million past service cost included in the above
reconciliation relates to the GMP equalisation following a recent
High Court ruling. Further information can be found in note 4.
13. Financial risk management and financial instruments
The Group's operations expose it to a variety of financial risks
including foreign currency risk, credit risk, liquidity risk and
interest rate risk. The Group's treasury policy addresses issues of
liquidity, funding and investment as well as currency, credit,
liquidity and interest rate risks.
The condensed consolidated interim financial statements do not
include all the financial risk management information and
disclosures required in the annual financial statements. This
information and related disclosures are presented in the Group's
annual financial statements as at 31 May 2018. There have been no
significant changes to risk management policies or processes since
the year end.
i) Fair value estimation
The Group holds a number of financial instruments that are held
at fair value within the condensed consolidated interim financial
statements. In deriving the fair value, the derivative financial
instruments are classified as level 1, level 2 or level 3 dependent
on the valuation method applied in determining their fair
value.
The different levels are defined as follows:
Level
----- ------------------------------------------------------------
1 Quoted prices (unadjusted) in active markets for identical
assets or liabilities.
2 Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly
(prices) or indirectly (derived from prices).
3 Inputs for the assets and liabilities that are not based
on observable market data (unobservable inputs).
----- ------------------------------------------------------------
The financial instruments held at fair value by the Group relate
to foreign currency forward contracts used as derivatives for
hedging. For both the six months ended 30 November 2018 and 30
November 2017 and the year ended 31 May 2018 the assets and
liabilities arising from foreign currency forward contracts have
been classified as level 2. The fair value of these instruments at
each of the period ends was:
Unaudited Unaudited Audited
Half year Half year
to to Year to
30 November 30 November 31 May
2018 2017 2018
GBPm GBPm GBPm
------------------------------------ ------------- ------------- --------
Assets
Foreign currency forward contracts 0.5 0.6 -
------------------------------------ ------------- ------------- --------
Liabilities
Foreign currency forward contracts (0.3) - (1.1)
------------------------------------ ------------- ------------- --------
There have been no transfers between level 1 and 2 in any
period.
The fair value of the following financial assets and liabilities
approximates to their carrying amount:
-- Trade receivables and other receivables
-- Cash and cash equivalents
-- Trade and other payables
-- Borrowings
ii) Fair value measurement
Level 2 trading and hedging derivatives comprise forward foreign
currency exchange contracts. The fair value of forward foreign
currency exchange contracts is determined using forward currency
exchange rates quoted in an active market at the Balance Sheet
date. The Group has considered but deemed the impact of discounting
level 2 derivatives that mature in the next 12 months as generally
insignificant.
14. Related party transactions
PZ Wilmar Limited and PZ Wilmar Food Limited
The following related party transactions were entered into by
subsidiary companies during the year under the terms of a joint
venture agreement with Singapore based Wilmar International
Limited:
- At 30 November 2018 the outstanding loan balance receivable
from PZ Wilmar Limited was GBP26.7 million (30 November 2017:
GBP25.0 million) and from PZ Wilmar Food Limited was GBP8.1 million
(30 November 2017: GBP7.6 million). These receivables relate to
long term loan investments that have been made by both joint
venture partners.
- The value of certain raw materials and services provided by
the Group to PZ Wilmar Limited was GBPnil (30 November 2017: GBP3.7
million). At 30 November 2018 the outstanding trade receivable
balance from PZ Wilmar Limited was GBP2.1 million (30 November
2017: GBP0.6 million).
- At 30 November 2018 the outstanding other receivable balance
from PZ Wilmar Limited was GBPnil (30 November 2017: GBP4.9
million). These receivables related to short term loan investments
that have been made by the Group's Nigeria subsidiaries.
All trading balances will be settled in cash. There were no
provisions for doubtful related party receivables at 30 November
2018 (30 November 2017: GBPnil) and no charge to the income
statement in respect of doubtful related party receivables (30
November 2017: GBPnil).
Wilmar PZ International Pte Limited
The following related party transactions were entered into by
subsidiary companies during the year under the terms of a joint
venture agreement with Singapore based Wilmar International
Limited:
- At 30 November 2018 the outstanding other receivable balance
from Wilmar PZ International Pte Limited was GBP4.3 million (30
November 2017: GBP3.3 million). These receivables relate to
services provided by subsidiary companies to Wilmar PZ
International Pte Limited.
15. Seasonality
Certain business units have a degree of seasonality with the
biggest factors being the weather and Christmas. However, no
individual reporting segment is seasonal as a whole and therefore
no further analysis is provided.
16. Principal risks and uncertainties
PZ Cussons has over 130 years of trading history with a long
standing tradition of sustainable growth in our key regions of
Europe, Africa and Asia. Our in-depth local understanding, strong
brand position and robust infrastructure within these markets,
allied to a strong Group balance sheet, enable us to withstand
short to medium-term political and financial instabilities that may
adversely impact the Group.
The Group's risk management framework is explained on page 37 of
our 2018 Strategic Report which is available on our website at
www.pzcussons.com. The Board assumes overall accountability for the
management of risk whilst the Audit & Risk Committee continues
to monitor and review the effectiveness of the Group's risk
management and internal control systems. The Executive Leadership
Team ensures that the risk management framework is embedded and
operates throughout the Group and regularly reviews both the
regional and consolidated risk registers, verifying appropriate
mitigation activities are operating effectively.
The identified principal risks are considered largely unchanged
from those outlined on pages 35 to 39 of our 2018 Strategic Report.
These are: consumer, customer and economic trends, IT and
information security, sustainability and environment, legal and
regulatory compliance, talent retention, business transformation,
consumer safety, supply chain and logistics and treasury and
tax.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that these condensed consolidated interim
financial statements have been prepared in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and that the interim
management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
The Directors of PZ Cussons Plc are listed on page 24. A list of
current Directors is maintained on the PZ Cussons Plc website.
By order of the Board
Mr S Plant
Company Secretary
29 January 2019
Independent review report to PZ Cussons Plc
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 November 2018 which comprises the condensed
consolidated income statement, condensed consolidated statement of
comprehensive income, condensed consolidated balance sheet,
condensed consolidated statement of changes in equity, condensed
consolidated cash flow statement and related notes 1 to 16. We have
read the other information contained in the half-yearly financial
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the Company those matters we are required to state to it
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 Company, for our review
work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34 "Interim
Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
November 2018 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
Manchester, United Kingdom
29 January 2019
Directors
Chair
C Silver *
Chief Executive
G Kanellis
B Leigh
J Maiden *
J Nicolson *
H Owers *
T Minick-Scokalo *
D Kucz *
* Non-executive
Secretary
S Plant
Registered Office
Manchester Business Park
3500 Aviator Way
Manchester
M22 5TG
Registered number
Company registered number 00019457
Registrars
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
Website
www.pzcussons.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BPMRTMBITBBL
(END) Dow Jones Newswires
January 29, 2019 02:00 ET (07:00 GMT)
Pz Cussons (LSE:PZC)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Pz Cussons (LSE:PZC)
Gráfica de Acción Histórica
De May 2023 a May 2024