Final Results
PZ CUSSONS PLC
31 July 2007
31st July 2007
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR TO 31ST MAY 2007
PZ Cussons Plc, the leading international consumer products group in personal
and non-personal care categories, announces its preliminary results for the year
ended 31st May 2007.
Results (before exceptional items1) YE YE % change
31/05/07 31/05/06
Revenue £577.9m £539.9m + 7%
Operating profit £66.2m £60.2m + 10%
Profit before tax £68.3m £63.6m + 7%
Adjusted basic earnings per share 9.78p 8.90p + 10%
Statutory results
Operating profit £65.8m £57.8m + 14%
Profit before tax £67.9m £61.2m + 11%
Basic earnings per share 9.99p 8.33p + 20%
Dividend per share 4.27p 3.88p + 10%
Net funds2 £60.3m £51.9m + 16%
1 Exceptional items are detailed in note 2.
2 Net funds, above and hereafter, is defined as cash, short-term deposits and
current asset investments less borrowings.
Highlights
• Strong trading performance, particularly in Nigeria and all European
units
• Significant growth in our white goods business with Haier in Nigeria
with further expansion of the product range
• Significant growth in our nutrition joint venture with Glanbia in
Nigeria with successful new product launches
• The opening of the first Nigerian world class standard electrical retail
superstore. HT Cool World opened in Lagos showcasing the range of quality
'Haier-Thermocool' brand electrical appliances
• No. 1 position achieved in personal wash category in UK following
successful brand renovation programme
• Successful roll-out of the Charles Worthington haircare brand into the
UK nationwide trade
• Construction commenced of a new £26m Innovation Centre in Manchester,
incorporating a liquids manufacturing facility, a Fragrance Development
Centre and a Research and Development Centre
• Completion of ten for one share split
Commenting today, Anthony Green (Chairman) said:
'2007 has been another year of considerable progress for PZ Cussons. Revenue and
profits have improved as a result of good trading performance, particularly in
Nigeria and the UK. In our main market Nigeria, our electrical goods and
nutrition businesses have delivered strong growth in the year and continue to
add diversity to our consumer product portfolio. In the UK, our successful brand
renovation programme has given us the market leading position in the personal
wash category.
During the year, we have launched important new capital projects. We are
increasing manufacturing capacity in Nigeria, and have announced plans for a
major new Innovation Centre in the UK which will act as a 'Personal Wash Centre
of Excellence' for the whole Group.
Our focus remains on growth and margin improvement in selected markets. Overall
performance since the year end has been in line with management expectations.'
Press Enquiries
PZ Cussons Graham Calder (Deputy Chairman)
Brandon Leigh (Finance Director)
Hogarth Partnership John Olsen, Sarah MacLeod, Sarah Richardson
On 31st July and 1st August 2007 c/o Hogarth on 020 7357 9477.
After 1st August to Graham Calder on 0161 491 8000.
An analysts' presentation will be held on 31st July 2007 at 9.30am at the
offices of JP Morgan Cazenove, 20 Moorgate, London, EC2R 6DA.
Overview
PZ Cussons is pleased to report another year of considerable progress for the
twelve months to 31st May 2007. Profit before tax and exceptional items rose 7%
to £68.3m (2006: £63.6m) on revenue up 7% to £577.9m (2006: £539.9m). After
exceptional items reported profit before tax increased by 11% to £67.9m (2006:
£61.2m). Basic earnings per share were 9.99p (2006: 8.33p). Adjusted for
exceptional items, earnings per share rose 10% to 9.78p (2006: 8.90p). As at
31st May 2007 the Group had net funds of £60.3m (2006: £51.9m).
The board is recommending a final dividend of 3.27p per share (2006: 2.95p) to
give a total dividend for the year of 4.27p per share (2006: 3.88p), a 10%
increase for the year. Subject to approval at the annual general meeting, the
final dividend will be paid on 26th September 2007 to shareholders on the
register at the close of business on 24th August 2007.
Trading performance - overview
Operating profit before exceptional items rose by 10% to £66.2m (2006: £60.2m)
on revenue up 7% to £577.9m (2006: £539.9m). Overall, strong trading
performance, particularly in Nigeria and in all European units, has countered
the impact of the weak US dollar and continued increases in the price of certain
commodities.
Mature markets
In the European units, successful brand development has resulted in improved
market shares in the core product categories and consequently higher turnover
and profitability versus the prior year. In Australia, margins have been
impacted by a highly competitive detergent market, although a strong new product
pipeline provides a solid base from which to grow.
Emerging markets
The Group's main market, Nigeria, has continued to experience strong growth,
particularly from the newer product categories of electrical goods and
nutrition, although a weak US dollar has impacted sterling margins. The Group's
other key emerging market, Indonesia, has grown turnover and profitability
versus the prior year through successful development of the babycare range.
Financial position - overview
The Group's balance sheet remains strong with net funds at 31st May 2007 of
£60.3m (2006: £51.9m). Improvements in the Group's supply chain, particularly in
Nigeria, have benefited net working capital levels. This has resulted in higher
cash generated from operations and enabled Group net funds to be maintained at a
similar level to the prior year.
Major projects
Updates on major projects are as follows:
In the UK, as announced last year, the Group is constructing a new, purpose
built liquids factory to provide additional capacity to meet the long-term
supply needs of our growing UK business. In March 2007, the Group announced that
the scope of this project was being extended to cover construction of a new
Innovation Centre that will become the 'Personal Wash Centre of Excellence' for
the Group. The Centre will incorporate the new manufacturing facility, a new
Research and Development Centre and a Fragrance Development Centre. The new
Centre will open in mid 2008 and costs of the total project are estimated at
£26m which should largely be funded by the proceeds from the planned sale of the
UK factory sites in Nottingham, Manchester and Ellesmere Port.
In Nigeria, as previously announced, the current milk factory is being extended
and a second factory is planned for the manufacture of further nutritional
products. Construction of the current factory extension, which will provide
further capacity for the production of powdered and evaporated milk, is on
schedule with the increased capacity expected to come on stream at the end of
2007. The scope and design of the second factory has now been finalised and
construction will commence later this year with completion scheduled for early
2009. The Group's share of the cost of both projects will be approximately £10m
in aggregate.
Regional reviews
Performance by region
Operating profit before
Revenue (£m) exceptional items(1) (£m)
2007 2006 2007 2006
Africa 252.9 211.8 26.1 25.1
Asia 107.2 113.9 9.8 12.5
Europe 217.8 214.2 30.3 22.6
------- ------- ------- --------
Total 577.9 539.9 66.2 60.2
------- ------- ------- --------
1 Exceptional items are detailed in note 2.
Africa
Overall performance in Nigeria has been strong, with limited disruption from the
election process which took place in April 2007. Revenue and profit in local
currency showed increases over the prior year of 30% and 12% respectively. The
Nigerian currency remained stable against the dollar during the year, however
the results are affected on translation to sterling as a result of the weak
dollar.
The business is separated into the following business units:
• Soaps and detergents
• Health and beauty
• Electrical goods (HPZ, a joint venture with Haier)
• Food and nutrition (Nutricima, a joint venture with Glanbia)
• Supply chain and distribution
Soaps and detergents performed well in the year although the market remains
competitive with increased levels of supply and pressure on margins through
higher commodity costs. However, brand positioning remains strong and was
supported in the year with significant new product launches including Elephant
Gold detergent and extensive brand renovation of all of the category leading
brands including Zip and Jet (detergents), and Premier, Canoe and Duck (soaps).
Savings from in-house power generation as a result of the investment made last
year have helped to counter cost increases elsewhere within the business.
Sales in Health and beauty grew year on year predominantly through new product
launches such as Super Robb mentholated rub and relaunches of our existing
brands such as Venus hair relaxer. The Venus relaunch was the first product
launch under the pan-regional project to leverage the strength of our brands
across the African territories. A review of the portfolio of brands in this
division has now been concluded in order to prioritise those that will be
targeted for growth in the future. These include Robb (medicaments), Venus, Joy
and Carex (personal care) and Cussons Baby. During the year manufacturing
operations for this division were reviewed, resulting in the transfer of
production for certain products to Ghana.
The electrical goods business experienced another year of significant growth
with the business strengthening its number one market position in both the
refrigerator and freezer categories. Growth is also being achieved in the other
product categories including air conditioners, televisions, DVD players, washing
machines, dishwashers, microwave ovens and water heaters. Sales of laptop
computers and mobile phones commenced early in the new financial year. In June
2007, HPZ was proud to open a showroom in Lagos being the first 'world class
standard' electrical retail outlet of its kind to be opened in Nigeria. Named
'HT Cool World', the showroom will allow the full range of electrical products
to be sold to both retail and commercial customers to complement sales through
existing distribution channels.
The joint venture with Glanbia continues to progress well with turnover
considerably ahead of last year following a number of successful new product
launches including Coast milk, Nunu flavoured powdered milk and Powerfist energy
drinks. While the rising cost of milk across global markets has impacted margins
in the short-term, selling prices in the Nigerian market are now moving upwards.
There will be further new product launches in the new financial year and further
capacity for existing products available at the end of 2007 on completion of the
current factory extension.
A number of significant initiatives in Supply chain and distribution have been
rolled out in the year including:
• Completion of a second phase of upgrades to the nationwide depot network
• Opening of two regional distribution centres to enable faster supply to
the depots and a lower stockholding at each individual depot
• Expansion of the dedicated haulage fleet which now numbers in excess of
sixty 'megatrucks'
• Improvements to the clearing and forwarding operation to assist in the
reduction of lead times of supply into Nigeria
During the course of the new financial year, a wider review of the traditional
Nigerian manufacturing base will be undertaken to ensure facilities are
appropriately structured to cater for future growth plans.
Revenue and profitability in the other African territories, Ghana and Kenya, are
ahead of last year mainly as a result of growth from relaunches of existing
products and the introduction of new products, such as Nunu milk and HPZ
electrical goods, which commenced sales in Ghana during the year.
Asia
In Australia, the market for branded detergent products has become significantly
more competitive, principally as a result of the introduction of private label
ranges by the prominent retailers. Consequently sales and margins have been
impacted by the effect of lower selling prices and additional promotional
support costs. A number of initiatives are being actioned in order to respond to
these market developments. Firstly, the business's extensive new product
pipeline has been prioritised and a significant number of innovative new
products are being launched across the brand portfolio of Radiant and Duo
(clothes care), Morning Fresh (dishwash) and Pure (personal wash) in the early
part of the new financial year. Secondly, cost reduction initiatives have been
accelerated supported by a cross functional group team in order to restore
margins to previous levels. The fundamentals of the Australian business remain
sound and the Group's strength of local market knowledge is expected to assist
in returning this business to growth in the coming year.
Sales and profitability in Indonesia improved in the year as a result of
successful development of the baby range, resulting in a strengthening of the
brand's number one position in the Indonesian market. During the year, the baby
range was extended with the launch of a Baby Needs range of products including
bottles, plates and feeding spoons. The core Cussons Baby range was also
complemented by the launch of a basics range called Cussons Sahaja to target a
further segment of the population. Further range extensions are also planned for
the new financial year. Other brands such as Imperial Leather and Cussons
Extreme continue to perform well. Improvements to the nationwide depot network
have continued in the year with rationalisation of depot operations in Jakarta
now complete.
In the other Asian units, Thailand, Malaysia and the Middle East, revenue and
profitability were maintained at the previous year's level.
Europe
In the UK, performance has exceeded expectations as a result of a successful
programme of brand renovation across the portfolio, resulting in the achievement
of the number one position in the personal wash category. The Imperial Leather
range was expanded during the year with new variants and the launch of limited
edition shower and bath products. Consumer loyalty to the Carex range remains
high and growth was achieved through the introduction of new variants and a
'Hand Carexperts' campaign which was run both on television and in targeted
print publications. The Original Source brand, which was completely renovated
last year, has grown as a result of the introduction of new products such as
body scrubs and an innovative range of skin food shower and bath products.
The Charles Worthington haircare brand was successfully rolled out to the
nationwide trade during the year with a very positive response from both the
trade and consumers. Towards the end of the financial year, the core Charles
Worthington Results range was completely renovated with exciting new graphics
and is being supported in the new financial year with the first Charles
Worthington TV campaign.
In the UK, the supply chain focus is largely on the new manufacturing facility
which will begin operation in mid 2008 as part of the new Innovation Centre.
Negotiations for the sale of the Manchester and Ellesmere Port sites are at an
advanced stage. Completion of the sale of the Nottingham site, which is subject
to a conditional contract, is expected by the end of the 2008 calendar year.
During the year, a UK restructuring programme was undertaken both to prepare for
the new Innovation Centre and as part of a wider move to build up overseas
resource in areas previously supported by head office. An exceptional charge
relating to this programme has been made in the year.
Sales in Poland have been strong against a competitive background with both the
'E' detergent brand and Luksja personal wash brand performing well. The 'E'
range was renovated in the year with new variants of both powders and fabric
conditioners and was expanded into household cleaning products in the second
half with the launch of 'E Boom'. The Luksja range of soaps and shower gels was
also expanded in the year and achieved market leader position based on volume
share. During the year, the head office and warehousing site in Warsaw was sold
therefore enabling the business to operate from a reduced fixed cost base and to
focus on margin improvement initiatives at the Wroclaw factory site.
Sales and profitability in Greece have improved in the year following the
rebranding and relaunch of the core Minerva brand. Our share of the olive oil
market has increased and the portfolio of products has been strengthened with
the launch of a premium range of olive oil in tins. Further expansion of the
product range continues with successful launches of Minerva So Real butter and
Minerva Benecol cheese products.
Exceptional items
A net operating charge of £0.4m (2006: £2.4m) for exceptional items has been
made, comprising UK restructuring costs and profit on disposal of fixed assets.
Further details are given in note 2.
Taxation
The effective tax rate before exceptional items was in line with the previous
year at 29.0% (2006: 29.2%).
Share split
The share split of ten shares per one share previously in issue was approved at
the 2006 annual general meeting and therefore all figures affected have been
restated accordingly.
Outlook
The Group's focus on selected markets, leading brands and first class
distribution continues to provide a clear strategy for the future. Over the next
year, the Group will be pursuing growth in all existing businesses and
investigating further exciting new opportunities.
Nigeria remains our key market for future growth and we are encouraged by the
continued stable economic and political climate following the recent elections.
The weak dollar and continuing cost increases of a large number of the Group's
key raw materials will provide a challenge going forward, which will be
mitigated by the Group focus on its margin improvement programme.
The balance sheet remains strong with all projects currently being financed from
Group net funds.
Overall performance since the year end has been in line with management
expectations.
Consolidated income statement for the year to 31st May 2007
Notes Before Exceptional Total Before Exceptional Total
exceptional items 2007 exceptional items 2006
items (note 2) items
£m £m £m £m £m £m
-------------------- ------ -------- -------- -------- -------- -------- -------
Revenue 1 577.9 - 577.9 539.9 - 539.9
Cost of sales (365.9) - (365.9) (330.9) 1.0 (329.9)
-------------------- ------ -------- -------- -------- -------- -------- -------
Gross profit 212.0 - 212.0 209.0 1.0 210.0
Selling and
distribution
expenses (86.1) - (86.1) (86.7) (0.7) (87.4)
Administrative
expenses (58.9) (0.4) (59.3) (62.0) - (62.0)
Other costs - - - - (2.7) (2.7)
Share of results of
joint venture (0.8) - (0.8) (0.1) - (0.1)
-------------------- ------ -------- -------- -------- -------- -------- -------
Operating profit 1 66.2 (0.4) 65.8 60.2 (2.4) 57.8
Finance income 2.8 - 2.8 4.3 - 4.3
Finance costs (0.7) - (0.7) (0.9) - (0.9)
-------------------- ------ -------- -------- -------- -------- -------- -------
Net finance income 3 2.1 - 2.1 3.4 - 3.4
-------------------- ------ -------- -------- -------- -------- -------- -------
Profit before
taxation 68.3 (0.4) 67.9 63.6 (2.4) 61.2
Taxation 4 (19.8) 1.3 (18.5) (18.6) - (18.6)
-------------------- ------ -------- -------- -------- -------- -------- -------
Profit for the year 48.5 0.9 49.4 45.0 (2.4) 42.6
-------------------- ------ -------- -------- -------- -------- -------- -------
Attributable to:
Equity holders
of the parent 41.5 0.9 42.4 37.8 (2.4) 35.4
Minority interest 7.0 - 7.0 7.2 - 7.2
-------------------- ------ -------- -------- -------- -------- -------- -------
48.5 0.9 49.4 45.0 (2.4) 42.6
-------------------- ------ -------- -------- -------- -------- -------- -------
Basic EPS (p) 6 9.99 8.33
Diluted EPS (p) 6 9.89 8.23
-------------------- ------ -------- -------- -------- -------- -------- -------
Adjusted basic
EPS (p) 6 9.78 8.90
Adjusted diluted
EPS (p) 6 9.68 8.79
-------------------- ------ -------- -------- -------- -------- -------- -------
The results shown above for both 2007 and 2006 relate to continuing operations.
Consolidated balance sheet as at 31st May 2007
31st May 2007 31st May 2006
£m £m
-------------------------------- ------------ -----------
Assets
Non-current assets
Goodwill and other intangible assets 54.2 54.0
Property, plant and equipment 143.2 140.1
Investments in joint ventures (1.7) -
Other investments 0.8 0.8
Receivables 0.1 0.1
Non-current assets held for sale 2.6 1.3
Retirement benefit surplus 23.1 23.4
-------------------------------- ------------ -----------
222.3 219.7
-------------------------------- ------------ -----------
Current assets
Inventories 150.4 142.7
Receivables and prepayments 98.3 87.2
Investments 12.8 2.2
Cash and short-term deposits 53.3 65.8
Current taxation receivable 3.7 2.7
-------------------------------- ------------ -----------
318.5 300.6
-------------------------------- ------------ -----------
Total assets 540.8 520.3
-------------------------------- ------------ -----------
Liabilities
Current liabilities
Borrowings (5.8) (14.0)
Trade and other payables (95.7) (83.8)
Current taxation payable (11.2) (13.3)
Provisions (7.3) (1.9)
-------------------------------- ------------ -----------
(120.0) (113.0)
-------------------------------- ------------ -----------
Non-current liabilities
Borrowings - (2.1)
Other liabilities (1.4) (3.6)
Deferred tax liabilities (20.1) (24.6)
UK retirement benefit obligation (37.2) (30.5)
Provisions (2.7) (8.1)
-------------------------------- ------------ -----------
(61.4) (68.9)
-------------------------------- ------------ -----------
Total liabilities (181.4) (181.9)
-------------------------------- ------------ -----------
Net assets 359.4 338.4
-------------------------------- ------------ -----------
Equity
Ordinary share capital 4.3 4.3
Capital redemption reserve 0.7 0.7
Revaluation reserve 29.6 27.3
Other reserve (3.0) (2.9)
Currency translation reserve 0.9 3.3
Retained earnings 279.3 259.3
-------------------------------- ------------ -----------
Equity attributable to equity holders of the 311.8 292.0
parent
Equity minority interest 47.6 46.4
-------------------------------- ------------ -----------
Total equity 359.4 338.4
-------------------------------- ------------ -----------
Consolidated cash flow statement for the year to 31st May 2007
Year to Year to
31st May 31st May
2007 2006
£m £m
------------------------------- ---------- ----------
Operating activities
Cash generated from operations 58.7 35.8
Taxation (19.3) (18.3)
------------------------------- ---------- ----------
Net cash flow from operating activities 39.4 17.5
------------------------------- ---------- ----------
Investing activities
Investment income received 3.1 8.5
Purchase of property, plant and equipment (27.5) (25.5)
Sale of property, plant and equipment 12.6 10.2
Purchase of intangible assets - (0.2)
Proceeds from disposal of subsidiary 2.5 -
Net cash balances disposed of with (1.0) (0.4)
subsidiary undertaking
Purchase of non-current asset investments - (0.3)
(Purchase) / sale of current asset (10.4) 14.0
investments
Loans to joint ventures (0.5) -
------------------------------- ---------- ----------
Net cash flow from investing activities (21.2) 6.3
------------------------------- ---------- ----------
Financing activities
Interest paid (0.7) (0.9)
Preference dividends paid - (0.1)
Dividends paid to minority shareholders in (2.3) (2.5)
subsidiary companies
Purchase of shares for ESOT (0.5) (2.6)
Ordinary dividends paid (16.7) (15.2)
Net decrease in short-term borrowings (1.9) (3.4)
Cash received from minority shareholders in - 5.3
respect of rights issue
Repayment of preference share capital - (15.5)
------------------------------- ---------- ----------
Net cash flow from financing activities (22.1) (34.9)
------------------------------- ---------- ----------
Net decrease in cash and cash equivalents (3.9) (11.1)
Cash and cash equivalents at the beginning 53.9 65.4
of the year
Effect of foreign exchange rates 0.1 (0.4)
------------------------------- ---------- ----------
Cash and cash equivalents at the end of the 50.1 53.9
year
------------------------------- ---------- ----------
Reconciliation of profit before tax to cash generated from operations
2007 2006
£m £m
-------------------------------- ---------- --- -----------
Profit before tax 67.9 61.2
Adjustment for finance income (2.1) (3.4)
-------------------------------- ---------- --- -----------
Operating profit 65.8 57.8
-------------------------------- ---------- --- -----------
Depreciation and adjustments on disposals 7.3 10.1
Share of results from joint ventures 0.8 -
Loss on sale of operations 0.5 -
Add back charge for shares purchased for ESOT 0.4 0.8
Impairment of tangible fixed assets - 3.3
-------------------------------- ---------- --- -----------
Operating cash flows before movements in 74.8 72.0
working capital
Movements in working capital:
Inventories (12.6) (14.0)
Receivables (11.0) (18.2)
Payables 7.2 (1.9)
Provisions 0.3 (2.1)
-------------------------------- ---------- --- -----------
Cash generated from operations 58.7 35.8
-------------------------------- ---------- --- -----------
Consolidated statement of total recognised income and expense
for the year to 31st May 2007
2007 2006
£m £m
--------------------------------------- -------- --------
Actuarial losses on defined benefit pension schemes (8.3) (3.8)
Exchange differences on translation of foreign operations (4.0) (2.4)
Taxation on items taken directly to equity 4.1 1.8
Net expense recognised directly in equity (8.2) (4.4)
Profit for the year 49.4 42.6
Adoption of IAS 39 - 2.0
--------------------------------------- -------- --------
Total net income and expense recognised for the year 41.2 40.2
--------------------------------------- -------- --------
Attributable to:
Equity holders of the parent 35.9 33.2
Minority interests 5.3 7.0
--------------------------------------- -------- --------
NOTES
1 Segmental analysis
Geographic segments
2007 Africa Asia Europe Eliminations Total
£m £m £m £m £m
--------------------------- -------- -------- -------- -------- -------
Total gross segment revenue 252.9 120.4 372.1 (167.5) 577.9
Inter segment revenue - (13.2) (154.3) 167.5 -
--------------------------- -------- -------- -------- -------- -------
Revenue 252.9 107.2 217.8 - 577.9
Segmental operating profit 26.1 9.8 30.3 - 66.2
before exceptional items
Exceptional items (note 2) (0.5) - 0.1 - (0.4)
--------------------------- -------- -------- -------- -------- -------
Segmental operating profit 25.6 9.8 30.4 - 65.8
--------------------------- -------- -------- -------- -------- -------
2006
--------------------------- -------- -------- -------- -------- -------
Total gross segment revenue 211.9 116.8 355.4 (144.2) 539.9
Inter segment revenue (0.1) (2.9) (141.2) 144.2 -
--------------------------- -------- -------- -------- -------- -------
Revenue 211.8 113.9 214.2 - 539.9
Segmental operating profit 25.1 12.5 22.6 - 60.2
before exceptional items
Exceptional items (0.5) (0.2) (1.7) - (2.4)
--------------------------- -------- -------- -------- -------- -------
Segmental operating profit 24.6 12.3 20.9 - 57.8
--------------------------- -------- -------- -------- -------- -------
Business segments
Revenue by business segment
2007 2006
£m £m
------------------------------------ ------------ -------------
Toiletries and household 431.6 435.8
Other 146.3 104.1
------------------------------------ ------------ -------------
Total 577.9 539.9
------------------------------------ ------------ -------------
2 Exceptional items
The Group has adopted a columnar income statement format which seeks to
highlight significant items within the Group's results for the period. Such
items are considered by the directors to be exceptional in nature rather than
being representative of the underlying trading of the Group, and may include
such items as fundamental restructuring costs, material impairments of
non-current assets and profit or loss on disposal or termination of operations.
The directors believe that the separate disclosure of these items is relevant to
an understanding of the Group's financial performance.
Year to 31st May 2007
Profit before Profit after
taxation Taxation taxation
Exceptional items included Effect £m £m £m
within operating profit: on:
---------------------------- ------- --------- -------- --------
Restructuring of UK operations (5.1) 1.5 (3.6)
(i)
Profit on disposal of fixed 4.7 (0.2) 4.5
assets (ii)
---------------------------- ------- --------- -------- --------
Total (0.4) 1.3 0.9
---------------------------- ------- --------- -------- --------
(i) Restructuring of UK operations
A significant restructuring of the UK business, made up of redundancy and other
associated restructuring costs.
(ii) Profit on disposal of fixed assets
During the year the sale of the Polish head office in Warsaw resulted in an
exceptional gain on disposal of £5.2 million, while a net loss of £0.5 million
was realised in relation to the sale of the Cameroun business, due to
rationalisation of the Group's smaller operations.
3 Net finance income
----------------------------------------- ------- -------
2007 2006
£m £m
----------------------------------------- ------- -------
Current asset investment income:
Net investment gains 0.1 2.7
Interest and dividends receivable 2.7 1.6
----------------------------------------- ------- -------
2.8 4.3
Interest payable on bank loans and overdrafts (0.7) (0.9)
----------------------------------------- ------- -------
Total 2.1 3.4
----------------------------------------- ------- -------
4 Taxation
----------------------------------------- ------- -------
2007 2006
£m £m
----------------------------------------- ------- -------
Current tax 16.8 18.1
Deferred tax 1.7 0.5
----------------------------------------- ------- -------
Total tax charge 18.5 18.6
----------------------------------------- ------- -------
UK corporation tax is calculated at 30% (2006: 30%) of the estimated assessable
profit for the year. Taxation for other jurisdictions is calculated at the rates
prevailing in the respective jurisdictions.
The tax charge for the year can be reconciled to the profit per the consolidated
income statement as follows:
2007 2006
£m £m
----------------------------------------- ------- -------
Profit before tax 67.9 61.2
----------------------------------------- ------- -------
Tax at the UK corporation tax rate of 30% (2006: 30%) 20.4 18.4
Tax effect of revenue / expenses that are not (taxable) / (0.4) 1.3
deductible in determining taxable profit
Tax effect of timing differences on which deferred tax is not - (0.2)
provided
Tax effect of utilisation of tax losses and other assets not (1.1) (0.8)
recognised in deferred tax
Effect of different tax rates of subsidiaries in overseas 0.4 (0.7)
jurisdictions
Tax effect of share of results of joint ventures 0.2 -
Sale of properties (0.3) -
Prior period adjustment (0.7) 0.6
----------------------------------------- ------- -------
Tax charge for the year 18.5 18.6
----------------------------------------- ------- -------
5 AGM and dividend
The board is recommending a dividend increase of 10.0% for the year with a
proposed final dividend of 3.27p (2006: 2.95p) per share for a total of 4.27p
(2006: 3.88p).The gross amount for the proposed final dividend and interim
dividend is £18.1 million (2006: £16.4 million).
The date of the annual general meeting has been fixed for 24th September 2007
and dividend warrants in respect of the proposed final dividend, subject to
shareholders' approval, will be posted on 26th September 2007 to members on the
register at 5.00 pm on 24th August 2007.
6 Earnings per share
Basic earnings per share and diluted earnings per share are calculated by
dividing profit for the period attributable to equity holders by the weighted
average number of shares in issue.
----------------------------------- --------- ----------
Year ended Year ended
31st May 2007 31st May 2006*
----------------------------------- --------- ----------
Basic weighted average (000) 424,343 423,750
----------------------------------- --------- ----------
Diluted weighted average (000) 428,720 428,720
----------------------------------- --------- ----------
The difference between the basic and diluted weighted average number of shares
represents the dilutive effect of the deferred annual share bonus scheme and the
executive share option scheme.
The profit attributable to equity holders for the period is as follows:
2007 2006*
£m £m
--------------------------------------- -------- -------
Profit attributable to ordinary equity shareholders 42.4 35.3
Exceptional items (note 2) (0.9) 2.4
--------------------------------------- -------- -------
Adjusted profit 41.5 37.7
--------------------------------------- -------- -------
Adjusted earnings per share
2007 2006*
--------------------------------------- -------- -------
Basic earnings per share 9.99p 8.33p
Exceptional items (0.21)p 0.57p
--------------------------------------- -------- -------
Adjusted basic earnings per share 9.78p 8.90p
--------------------------------------- -------- -------
Diluted earnings per share 9.89p 8.23p
Exceptional items (0.21)p 0.56p
--------------------------------------- -------- -------
Adjusted diluted earnings per share 9.68p 8.79p
--------------------------------------- -------- -------
*The comparative figures have been restated for the share split, on the basis of
ten for one, which was approved at the last annual general meeting on 25th
September 2006, such that there are now ten 1p ordinary shares for every 10p
ordinary share previously in existence before the share split.
7 Net funds
2007 2006
£m £m
--------------------------------------- ------- --------
Cash at bank and in hand 21.2 25.9
Deposits 32.1 39.9
Current asset investments 12.8 2.2
Overdrafts (3.2) (11.9)
Loans due within one year (2.6) (2.1)
Loans due after one year - (2.1)
--------------------------------------- ------- --------
Net funds 60.3 51.9
--------------------------------------- ------- --------
8 Accounting policies
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted for use in the European Union
(EU), including International Accounting Standards (IAS) and interpretations
issued by the International Financial Reporting Interpretations Committee
(IFRIC).
The financial statements have been prepared on a historical cost basis.
Whilst the financial information in this preliminary announcement has been
computed in accordance with IFRS this announcement does not itself contain
sufficient information to comply with IFRS. The company expects to publish full
financial statements that comply with IFRS on 24th August 2007.
9 Basis of financial statements
The 2007 results are an abridged version of the statutory financial statements
for the year ended 31st May 2007 which have been approved by the board of
directors and which carry an unqualified audit report. The 2006 results for the
year ended 31st May 2006 which were prepared in accordance with IFRS carry an
unqualified audit report and have been filed with the Registrar of Companies.
Neither financial statements contain a statement in respect of s.237(2) or (3)
of the Companies Act 1985.
Approved by the board of directors on 31st July 2007.
This information is provided by RNS
The company news service from the London Stock Exchange
Tuesday, 14th May 2024
COMPANIES COVERED:
Latest directors dealings
- 2 minutes ago United Utilities Group
- 18 minutes ago ITV
- 18 minutes ago GSK
- 18 minutes ago Tesco
- 39 minutes ago Morgan Sindall Group