Interim Results
PZ CUSSONS PLC
07 February 2006
7th February 2006
PZ CUSSONS PLC
INTERIM ANNOUNCEMENT
HIGHLIGHTS
RESULTS FOR THE SIX MONTH PERIOD TO 30TH NOVEMBER 2005*:
• Turnover increased by 11% to £258.3m from £232.6m.
• Operating profits+ increased by 18% to £27.0m from £22.8m.
• Pre-tax profits+ increased by 18% to £28.9m from £24.5m.
• Net funds of £32.7m after £14.7m repayment of preference share capital.
• Basic earnings per share+ increased by 12.4% to 38.54p from 34.28p++
• The interim dividend increased by 7.5% to 9.30p per share from 8.65p.
OVERVIEW AND STRATEGY
Operating profits have improved as a result of good performance in all key
territories, in particular Nigeria, and the elimination of losses incurred last
year in Russia.
The new milk factory in Nigeria, constructed with joint venture partner Glanbia
Plc, has opened on schedule with the new products being well received in the
market. Further opportunities have been identified in nutritional based products
which will be developed in the second half.
A significant margin improvement programme has continued to help counter
substantial ongoing oil price related cost increases.
The Group's strategy remains to:
• Focus on specific geographical markets which have potential for future growth,
particularly Nigeria, Indonesia, the UK and Australia.
• Understand the needs and aspirations of local consumers and develop quality,
innovative products.
• Ensure the availability of these products via the establishment of first class
supply and distribution networks.
* Prepared under International Financial Reporting Standards.
+ before restructuring and fixed asset disposals.
++ the prior year EPS figures have been restated as a result of the compensatory
bonus issue.
For further information please contact:
PZ Cussons Plc
Graham Calder - Deputy Chairman Tel: 0161 491 8000
Weber Shandwick Square Mile
Terry Garrett / John Moriarty Tel: 0207 067 0700
REGIONAL UNIT REVIEWS
Europe
In the UK, whilst the market remains competitive with continued pressure on
selling prices, successful brand development has resulted in good performance
this year. The Imperial Leather shower range was relaunched with exciting new
fragrances and supported by a nationwide media campaign. The Original Source
brand, purchased in 2002, has been completely renovated with distinctive
packaging and has been favourably received by the consumer. The Charles
Worthington haircare brand, purchased in 2004, has performed well with new
additions to the portfolio including 'Results for Men' and 'Dream Hair.' A
decision has now been taken to expand the distribution of the Charles Worthington
brand into the nationwide trade with effect from the summer of this year.
Sales of Carex continue to be strong with the bathroom range launched last year
performing well.
The closure of the Nottingham factory will be completed ahead of schedule with
all bar soap production transferred to the newly constructed Thailand factory
before the end of the financial year. Production commenced at the new facility
ahead of schedule in the autumn of last year and the performance of the factory
is meeting expectations.
The restructuring programme for the business in Poland, announced last year, has
been successfully completed with losses of the unit now eliminated following the
withdrawal of a direct presence in the Russian market. The cost base of the
domestic operation has been considerably reduced through closure of the liquids
and creams factory in Warsaw and overhead reduction at the head office.
Efforts are now being concentrated in margin improvement initiatives at the
detergent factory in Wroclaw and in growing domestic sales. Sales of the core
brand, 'E' detergent, have increased on last year as a result of successful
brand renovation, although the market remains extremely competitive.
Sales in Greece have continued at last year's level although margins have
improved. The core Minerva brand range is being relaunched later this year and
the overall portfolio has been widened with the purchase of a small local pomace
oil brand.
Africa
Performance in Nigeria has been strong with sales and profitability up on the
previous year. In particular, the white goods business, established with Chinese
partner Haier, has experienced significant growth with sales of fridges, freezers
and air conditioners doubling over the same period last year with annual equivalent
sales now in excess of £20m. Strong growth has also occurred from soaps, detergents
and health and beauty products as a result of new product development, as well
as increased spending power in the economy. The margin improvement programme has
continued to counter ongoing pressures on raw material and utility costs.
The new milk factory in Nigeria, constructed with joint venture partner Glanbia
Plc, has opened on schedule with the new products being well received in the
market. Sales of powdered milk, under the brand name Nunu, began in the summer of
2005 followed by the launch of evaporated milk later in the year. Sales of both
products were £6m in the first half and are meeting expectations.
The Nigerian currency has remained steady against the dollar during the year as
a result of continued political and economic stability. Shortly after the half-
year end, our Nigerian business announced a rights issue which will result in
further investment from the UK of circa £20m taking the Group's holding to over
64%. Funds will be invested in our capital investment programme to provide
increased capacities going forward, as well as improvements to the infrastructure
and power generation capabilities of our sites.
The significant working capital increase in the first half arose principally in
Nigeria as a result of higher stocks driven by growth and increased receivables
from a change in credit policy. Efforts are now being concentrated on the
Nigerian supply chain in order to reduce the lead times for supply of materials
into Nigeria, with the key objective being to minimise working capital levels.
Turnover and profitability in Ghana and Kenya are ahead of last year as a result
of both growth and margin improvement. African brands are being 'pan-regionalised'
to maximise efficiencies across the region.
A decision has been taken to close the Cameroun business due to limited
opportunities in that market.
Asia
In Australia sales were ahead of last year although increases in raw material
and freight costs have impacted on margins. Sales of the Trix detergent brand,
purchased in May 2005, have met expectations and all production will have been
brought in house by the end of the financial year.
Consumer disposable income in Indonesia was reduced in the year as a result of
significant increases in the price of oil following the withdrawal of Government
subsidies. Despite this, both sales and profitability in the Indonesian business
were maintained at last year's level due to consumer loyalty to the product
portfolio, in particular the baby range, and an ongoing margin improvement
programme.
In the other Asian units, Thailand, Malaysia and the Middle East, sales and
profitability were maintained at last year's level.
Group-wide initiatives
The long term people development programme is continuing with the objective to
improve the quality of management and staff both from within and from external
recruitment. All group companies have embraced the programme and are targeted on
key performance objectives with regard to people development.
Further investment has been made in group wide communications following the
successful completion of a group virtual private network which went live in 2005.
Equant (part of France Telecom) are now conducting a major IT infrastructure
review in order to conclude on the optimum supply of IT services through our
private network.
Investments
The value of the equity investment portfolio increased in the period with £1.9m
taken to profit with realised and unrealised gains. A decision was taken after the
period end to liquidate the equity portfolio to generate funds for the investments
in Nigeria referred to above.
Directors
Nigel Green, Chief Executive, will retire from the company on 31st May 2006 and
will be succeeded by Alex Kanellis, who has been Deputy Chief Executive since
5th May 2005.
Graham Calder was appointed Deputy Chairman on 1st January 2006 and was succeeded
as Finance Director by Brandon Leigh who was appointed to the board on that date.
Chris Davis was appointed to the board on 1st January 2006 as Regional Director
Designate for Africa.
John Spyridoulias, Technical Director, will retire from the company on 28th
February 2006.
David Godwin retired from the company on 30th September 2005 and James Steel,
currently head of Corporate Finance at Arbuthnot Securities, was appointed a
non-executive director on 1st October 2005.
Enfranchisement and preference share repayment
In June 2005 shareholder approval was given for the enfranchisement of the 'A'
non-voting shares and the repayment of the preference shares by a reduction of
share capital, which has now been completed. As part of the enfranchisement a
compensatory bonus issue, on the basis of one new ordinary share for every ten
ordinary shares held by each ordinary shareholder, was made on 29th June 2005.
This has resulted in dividends being paid on an enhanced number of shares.
IFRS
From 1st June 2005, PZ Cussons Plc has been required to comply with International
Financial Reporting Standards (IFRS). These results, and prior period comparisons,
are consistent with IFRS, with the exception of IAS 39 which, as previously
announced, has been applied prospectively from 1st June 2005. Reconciliation
between IFRS and UK accounting standards is provided for the half-year ended
30th November 2004 in note 2 of this announcement, while the reconciliation for
the year ended 31st May 2005 is found in the IFRS restatement document, which is
also discussed in note 2 of this announcement.
Outlook
The positive signs experienced in the first half should continue for the remainder
of the year although trading in some territories remains challenging due to pressure
on both selling prices and costs.
The Group's focus remains on growth and margin improvement in selected geographical
markets, particularly Nigeria, where the stable economic and political environment
give reason for optimism.
The Group's balance sheet remains strong with all projects currently being
financed from Group net funds.
The directors submit the unaudited accounts of the Group for the half-year to
30th November 2005.
CONSOLIDATED INCOME STATEMENT
Half-year Half-year
to 30th to 30th
November November
2005 2004
Before Restructuring Total Before Restructuring Total
restructuring and fixed restructuring and fixed
and fixed asset and fixed asset
asset disposals asset disposals
disposals disposals
£000 £000 £000 £000 £000 £000
___________________________________________________________________________________
Revenue 258,304 - 258,304 232,595 - 232,595
Operating costs:
Restructuring of
operations - - - - - -
Profit on disposal
of tangible fixed
assets - - - - 1,611 1,611
Loss on sale of
operation - - - - - -
Other costs (231,349) - (231,349) (209,809) - (209,809)
___________________________________________________________________________________
Total operating
(costs)/income (231,349) - (231,349) (209,809) 1,611 (208,198)
___________________________________________________________________________________
Operating profit 26,955 - 26,955 22,786 1,611 24,397
Finance income 2,348 - 2,348 2,146 - 2,146
Finance costs (394) - (394) (468) - (468)
___________________________________________________________________________________
Net finance
income 1,954 - 1,954 1,678 - 1,678
___________________________________________________________________________________
Profit before
tax 28,909 - 28,909 24,464 1,611 26,075
Income tax
expense (8,868) - (8,868) (8,683) - (8,683)
___________________________________________________________________________________
Profit for the
period 20,041 - 20,041 15,781 1,611 17,392
___________________________________________________________________________________
Attributable to:
Equity holders
of the parent 16,445 - 16,445 14,923 1,611 16,534
Minority interests 3,596 - 3,596 858 - 858
___________________________________________________________________________________
20,041 - 20,041 15,781 1,611 17,392
___________________________________________________________________________________
Basic EPS (p) 38.54 - 38.54 34.28 3.80 38.08
Diluted EPS (p) 38.09 - 38.09 33.91 3.76 37.67
___________________________________________________________________________________
Year to
31st
May 2005
Before Restructuring Total
restructuring and fixed
and fixed asset
asset disposals
disposals
£000 £000 £000
_________________________________________
Revenue 480,118 - 480,118
Operating costs:
Restructuring of
operations - (6,642) (6,642)
Profit on disposal
of tangible fixed
assets - 5,295 5,295
Loss on sale of
operation - (3,352) (3,352)
Other costs (426,666) - (426,666)
_________________________________________
Total operating
(costs)/income (426,666) (4,699) (431,365)
_________________________________________
Operating profit 53,452 (4,699) 48,753
Finance income 5,311 - 5,311
Finance costs (664) - (664)
_________________________________________
Net finance
income 4,647 - 4,647
_________________________________________
Profit before
tax 58,099 (4,699) 53,400
Income tax
expense (17,659) (616) (18,275)
_________________________________________
Profit for the
period 40,440 (5,315) 35,125
_________________________________________
Attributable to:
Equity holders
of the parent 34,159 (5,315) 28,844
Minority interests 6,281 - 6,281
_________________________________________
40,440 (5,315) 35,125
_________________________________________
Basic EPS (p) 78.72 (12.53) 66.19
Diluted EPS (p) 77.88 (12.39) 65.49
_________________________________________
CONSOLIDATED BALANCE SHEET
30th November 2005 30th November 2004 31st May 2005
£000 £000 £000
_________________________________________________________
Assets
Non-current assets
Intangible assets 54,162 47,815 54,077
Property, plant and
equipment 145,116 147,688 139,304
Investments in
joint ventures 637 (141) 104
Other investments 602 555 572
Receivables 208 694 136
Non-current assets
held for sale
(note 3) 4,062 - -
Retirement benefit
surplus 22,974 20,229 22,974
Deferred tax assets 3,459 1,673 3,414
_________________________________________________________
231,220 218,513 220,581
_________________________________________________________
Current assets
Inventories 155,805 116,352 128,923
Receivables and
prepayments 91,503 82,277 70,614
Other investments 20,316 16,664 16,182
Cash and cash
equivalents 36,926 50,755 65,663
Current taxation
receivable 2,114 - 1,514
_________________________________________________________
306,664 266,048 282,896
_________________________________________________________
Total assets 537,884 484,561 503,477
_________________________________________________________
Liabilities
Current liabilities
Financial liabilities (20,329) (7,115) (5,173)
Trade and other
payables (97,029) (89,002) (81,874)
Current taxation
payable (11,109) (9,335) (11,433)
_________________________________________________________
(128,467) (105,452) (98,480)
_________________________________________________________
Non-current
liabilities
Financial
liabilities (4,203) (389) (2,718)
Other liabilities (5,365) (7,143) (5,719)
Deferred tax
liabilities (31,096) (29,892) (28,472)
Retirement benefit
obligation (28,047) (21,578) (28,047)
Provisions (12,910) (7,753) (12,045)
_________________________________________________________
(81,621) (66,755) (77,001)
_________________________________________________________
Total liabilities (210,088) (172,207) (175,481)
_________________________________________________________
Net assets 327,796 312,354 327,996
_________________________________________________________
Equity
Ordinary share
capital 4,287 4,073 4,073
Preference share
capital - 7,898 7,898
Capital redemption
reserve 671 671 671
Revaluation reserve 28,086 29,171 28,086
Other reserve (3,519) (1,299) (1,137)
Equity reserve 586 261 397
Currency translation
reserve 12,492 2,001 5,551
Special reserve 7,898 - -
Retained earnings 236,792 238,433 245,482
_________________________________________________________
Equity attributable
to equity holders
of the parent 287,293 281,209 291,021
Equity minority
interest 40,503 31,145 36,975
_________________________________________________________
Total equity 327,796 312,354 327,996
_________________________________________________________
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
Half-year to Half-year to Year to
30th November 30th November 31st May
2005 2004 2005
£000 £000 £000
____________________________________________________
Actuarial losses on
defined benefit
pension schemes
(net of tax) - - (2,452)
Exchange differences
on translation
of foreign
operations 9,776 1,398 5,975
Reversal of deferred
tax on revalued
properties disposed
of - 334 556
Premium on repayment
of preference share
capital (6,812) - -
Enfranchisement costs (788) - -
____________________________________________________
Net income recognised
directly in equity 2,176 1,732 4,079
Profit for the period
after preference
dividends 19,925 17,007 34,355
____________________________________________________
Total net income and
expense recognised
for the period 22,101 18,739 38,434
____________________________________________________
Attributable to:
Equity holders of
the parent 15,630 18,848 31,729
Minority interests 6,471 (109) 6,705
CONSOLIDATED CASH FLOW STATEMENT
Half-year to Half-year to Year to
30th November 30th November 31st May
2005 2004 2005
£000 £000 £000
____________________________________________________
Operating activities
Cash generated from
operations 3,016 24,425 53,866
Taxation (8,600) (8,079) (18,650)
____________________________________________________
Net cash flow from
operating activities (5,584) 16,346 35,216
____________________________________________________
Investing activities
Investment income received 2,608 4,350 7,118
Purchase of tangible fixed
assets (12,069) (8,460) (18,258)
Sale of tangible fixed
assets 1,018 2,344 19,179
Purchase of intangible
fixed assets - - (6,010)
Purchase of subsidiaries - (22,963) (22,963)
Net overdrafts acquired
with subsidiary undertaking - - (1,489)
Net cash balances disposed of
with subsidiary undertaking - - (235)
Payments to acquire interests
in joint ventures - - (496)
Purchase of current asset
investments (3,686) (7,798) (9,344)
Sale of current asset
investments 3,683 6,402 8,595
____________________________________________________
Net cash flow from
investing activities (8,446) (26,125) (23,903)
____________________________________________________
Financing activities
Interest paid (395) (468) (664)
Preference dividends paid (116) (385) (770)
Dividends paid to minority
shareholders in subsidiary
companies (1,558) (240) (1,875)
Purchase of shares for
ESOT (3,026) (329) (329)
Equity dividends paid (11,275) (9,624) (13,129)
Net increase in short
term borrowings 10,872 2,678 2,804
Loans to joint ventures - (5,700) (6,200)
Repayment of preference
share capital (14,710) - -
Enfranchisement costs (788) - -
____________________________________________________
Net cash flow from
financing activities (20,996) (14,068) (20,163)
____________________________________________________
Net decrease in cash and
cash equivalents (35,026) (23,847) (8,850)
Cash and cash equivalents
at the beginning of the
period 65,352 73,635 73,635
Effect of foreign
exchange rates 663 (152) 567
____________________________________________________
Cash and cash equivalents
at the end of the period 30,989 49,636 65,352
____________________________________________________
Analysis of net funds
At 31st Cash flow Exchange Uplift on At 30th
May 2005 difference adoption of November 2005
IAS 39
£000 £000 £000 £000 £000
___________________________________________________________________
Cash at bank and in hand 14,845 (6,615) 557 - 8,787
Overdrafts (311) (5,377) (249) - (5,937)
Deposits 50,818 (23,034) 355 - 28,139
___________________________________________________________________
Cash and cash equivalents 65,352 (35,026) 663 - 30,989
Loans due within one year (4,862) (9,506) (24) - (14,392)
Loans due after one year (2,718) (1,366) (119) - (4,203)
Other current asset
investments 16,182 3 102 4,029 20,316
___________________________________________________________________
Net funds 73,954 (45,895) 622 4,029 32,710
___________________________________________________________________
Reconciliation of net cash flow to movement in net funds
Half-year to Half-year to Year to
30th November 30th November 31st May
2005 2004 2005
£000 £000 £000
_______________________________________________
Net decrease in cash and cash
equivalents in the period (35,026) (23,847) (8,850)
Cash flow on loans (10,872) (2,678) (2,804)
Purchase of current asset investments 3,686 7,798 9,344
Sale of current asset investments (3,683) (6,402) (8,595)
_______________________________________________
Change in net funds resulting from
cash flows (45,895) (25,129) (10,905)
Currency retranslation 622 (135) 645
IAS 39 adoption 4,029 - -
Borrowings acquired with subsidiary - - (962)
_______________________________________________
Movement in net funds in the period (41,244) (25,264) (11,222)
Opening net funds in the period 73,954 85,176 85,176
_______________________________________________
Closing net funds 32,710 59,912 73,954
_______________________________________________
Reconciliation of operating profit to net cash generated from
operating activities
Half-year to Half-year to Year to
30th November 30th November 31st May
2005 2004 2005
£000 £000 £000
_______________________________________________
Operating profit 26,955 24,397 48,753
Depreciation and adjustments on disposals 7,145 7,836 11,598
Loss on sale or termination of operations - - 3,352
Profit on disposal of property, plant and
equipment - (1,611) (5,295)
Add back charge for shares purchased for
ESOT 645 - 162
_______________________________________________
Operating cash flows before movements
in working capital 34,745 30,622 58,570
Movements in working capital:
Inventories (19,569) (5,229) (13,371)
Receivables (20,844) (13,883) 6,660
Payables 8,104 11,693 (3,417)
Provisions 580 1,222 5,424
_______________________________________________
Cash generated from operations 3,016 24,425 53,866
_______________________________________________
RECONCILIATION OF MOVEMENTS IN CONSOLIDATED EQUITY
Half-year to Half-year to Year to
30th November 30th November 31st May
2005 2004 2005
£000 £000 £000
_______________________________________________
Total net income recognised for the
period 22,101 18,739 38,434
Ordinary dividends (11,275) (9,646) (13,130)
Shares purchased for ESOT (2,382) (329) (329)
Shares to be awarded from ESOT - - 162
Movement in equity reserve 189 137 272
Minority interest dividend paid (2,903) (2,737) (2,366)
Sale of subsidiary undertakings - - (1,237)
Repayment of preference share capital (7,898) - -
_______________________________________________
Net (decrease)/increase in equity for
the period (2,168) 6,164 21,806
Opening equity 327,996 306,190 306,190
Adoption of IAS 39 1,968 - -
_______________________________________________
Closing equity 327,796 312,354 327,996
_______________________________________________
Attributable to:
Equity shareholders of the parent 287,293 281,209 291,021
Minority interests 40,503 31,145 36,975
_______________________________________________
NOTES
1. Basis of preparation
These interim financial statements for the period ended 30th November 2005,
which are neither audited nor reviewed, have been prepared for the first time
consistent 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). Results for the comparative periods
have been restated under IFRS as adopted for use in the EU.
Practice is continuing to evolve on the application and interpretation of IFRS.
Further standards may be issued by the International Accounting Standards Board
(IASB) and standards currently in issue and endorsed by the EU may be subject to
interpretations issued by the IFRIC. For these reasons, it is possible that the
financial information for the six months ended 30th November 2005 and the restated
information for the year ended 31st May 2005 may be subject to change before its
inclusion in the Group's 2006 annual report, which will contain the Group's first
complete financial statements prepared in accordance with IFRS.
The full IFRS accounting policies of the Group are set out in the document
entitled 'Restatement of Financial Information under International Financial
Reporting Standards (IFRS),' which can be found at the Group's website
www.pzcussons.com. The interim financial statements for the period ended 30th
November 2005 do not constitute statutory accounts within the meaning of
Section 240 of the Companies Act 1985.
The financial information set out in this statement relating to the year ended
31st May 2005 does not constitute statutory accounts for that period. Full
audited accounts of PZ Cussons Plc in respect of that financial period in
accordance with UK GAAP, which received an unqualified audit opinion and did
not contain a statement under either Section 237(2) or (3) of the Companies
Act 1985, have been delivered to the Registrar of Companies.
2. Reconciliations between IFRS and UK GAAP
The Group adopted IFRS with a transition date of 1st June 2004. Comparative
figures for the year ended 31st May 2005 and period ended 30th November 2004,
which were previously reported in accordance with UK GAAP, have been restated
to comply with IFRS.
The rules for the first time adoption of IFRS are set out in IFRS 1 (First-time
Adoption of International Financial Reporting Standards). IFRS 1 requires that
IFRS be applied retrospectively unless a specific exemption is applied. In
preparing these IFRS consolidated financial statements, the Group has opted to
take the following exemptions as permitted under IFRS 1:
• IFRS 3 (Business combinations): Business combinations that took place before
the transition date have not been restated and therefore all goodwill written
off to reserves or amortised prior to the date of transition remains written
off to reserves and will not be taken into account either for subsequent
impairment reviews or on disposal of the subsidiary.
• To treat the fixed asset valuations as undertaken at 31st May 2004 as deemed
cost at 1st June 2004; the related asset values therefore are unchanged on
transition to IFRS.
• To deem cumulative translation differences for all foreign operations to be
zero as at the IFRS transition date.
• To apply IAS 32 (Financial Instruments: Disclosure and Presentation) and
IAS 39 (Financial Instruments: Recognition and Measurement) as adopted for
use in the EU with an effective date of 1st June 2005.
• To implement IFRS 5 from 1st January 2005 onwards. Although the Group is
taking advantage of this exemption, no specific measurement differences
arise on 1st January 2005 from this change in accounting policy.
• To recognise in full all actuarial gains and losses relating to pension
schemes both at the opening balance sheet date, and prospectively, through
the statement of recognised income and expense.
A summary of the adjustments that affected profit after tax and shareholders'
equity in both of these comparative periods is presented below:
Half-year ended Year ended
30th November 2004 31st May 2005
£000 £000
______________________________________
Profit after tax under UK GAAP 17,488 35,304
Adjustments:
Share-based payments (96) (191)
Defined benefit pension schemes - 12
______________________________________
Profit for the period under IFRS 17,392 35,125
______________________________________
30th November 2004 31st May 2005
£000 £000
______________________________________
Shareholders' equity under UK GAAP 282,319 286,399
Adjustments:
Defined benefit pension schemes 6,865 4,425
Deferred tax on revalued assets (11,537) (11,198)
Share-based payments 78 119
Ordinary dividends 3,484 11,276
______________________________________
Shareholders' equity under IFRS 281,209 291,021
______________________________________
Explanation of the adjustments between UK GAAP
and IFRS for the period ended 30th November 2004:
Under IFRS 2, the charge to the income statement in respect of the executive share
option scheme is based on the fair value of the options granted and is spread over
the vesting period of the instrument. This has resulted in an additional net charge
to the income statement of £96,000, and a net increase in shareholders' equity of
£78,000.
Under IAS 10, proposed dividends do not meet the definition of a liability until
such time as they have been approved by the shareholders at the annual general
meeting. The Group has recognised an adjustment under IFRS at 30th November 2004 to
exclude the interim dividend of £3,484,000 previously recognised under UK GAAP,
as it was neither approved or paid before the period end.
Under IAS 12, deferred tax is recognised in respect of all taxable temporary
differences arising between the tax base and the accounting base of balance sheet
items at the balance sheet date which includes revaluations. Under UK GAAP deferred
tax was not provided on timing differences arising from the revaluation of fixed
assets where there was no binding contract to dispose of such assets. This has
resulted in a decrease in shareholders' equity of £11,537,000.
Under IFRS the balance sheet reflects the full value of the pension scheme
surplus/deficit, actuarial gains and losses are recognised directly in equity
through the statement of recognised income and expense (SRIE) and the charge to the
income statement includes current and past service costs. Under UK GAAP the Group
accounted for its defined benefit schemes under SSAP 24 which spread the cost of
retirement pensions and related benefits over the periods benefiting from the
employees' services. The impact of reversing the SSAP 24 numbers and implementing
IAS 19 numbers increased shareholders' equity by £6,865,000.
Explanation of the reconciling items for the year ended 31st May 2005:
A full reconciliation, including detailed explanations, from UK GAAP to IFRS at
31st May 2005 can be found in the document entitled 'Restatement of Financial
Information under International Financial Reporting Standards (IFRS)' at the
Group's website www.pzcussons.com.
The impact of adoption of IAS 39 at 1st June 2005:
The key impact of the adoption of IAS 39 on the Group's non-derivative financial
assets is to recognise movements in the fair value of those listed investments that
are 'held for trading' through the income statement. At 1st June 2005 this has
resulted in an increase in the value of investments of £2,812,000, an increase in
retained earnings of £1,968,400 and an increase in deferred tax liabilities of
£843,600.
3. Non-current assets held for sale at 30th November 2005
A significant element of the non-current assets held for sale relates to the
liquids and creams factory in Warsaw which was closed in the year ended 31st
May 2005 as previously reported. The remaining assets held in this category
relate to properties in Africa, in Nigeria and Ghana, which the board has
determined are surplus to the current and ongoing requirements of the Group.
The board's expectation is that the assets, which are being actively marketed,
will be sold within 12 months of the balance sheet date.
The board considers that the fair value of the assets classified as held for
sale at 30th November 2005 exceeds their carrying value and accordingly no
adjustment has been made to the carrying value of the assets.
4. Dividends
An interim dividend of 9.30p per share for the half-year to 30th November 2005
(2004 - 8.65p) has been declared totalling £3,938,000 (2004 - £3,484,000)
payable on 6th April 2006 to ordinary shareholders on the register on 3rd
March 2006.
5. Earnings per share
Basic earnings per share and diluted earnings per share are calculated by
dividing profit for the period, after payment of preference dividends, by the
following weighted average number of shares in issue:
Half-year ended Half-year ended Year ended 31st
30th November 2005 30th November2004 May 2005
______________________________________________________
Basic weighted average (000) 42,373 42,407 42,415
Diluted weighted average (000) 42,872 42,872 42,872
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 comparative weighted averages above have
been restated for the compensatory bonus issue on 29th June 2005.
The basic and diluted earnings per share for the period are as follows:
Half-year ended Half-year ended Year ended 31st
30th November 2005 30th November2004 May 2005
______________________________________________________
Basic earnings per share *:
- Before restructuring
and fixed asset disposals 38.54p 34.28p 78.72p
- Restructuring and fixed
asset disposals - 3.80p (12.53)p
______________________________________________________
38.54p 38.08p 66.19p
______________________________________________________
Diluted earnings per share *:
- Before restructuring
and fixed asset disposals 38.09p 33.91p 77.88p
- Restructuring and fixed
asset disposals - 3.76p (12.39)p
______________________________________________________
38.09p 37.67p 65.49p
______________________________________________________
* On the 29th June 2005 the 'A' ordinary shares were redesignated as ordinary
shares. Therefore the comparative figures for 30th November 2004 and 31st
May 2005 include both the ordinary and 'A' ordinary shares.
6. Preference shares
The preference shares which had a nominal value of £7,898,001 were fully repaid
on 1st August 2005.
The company has created a 'special reserve' of £7,898,001 being a sum equal to
the nominal value of the issued preference shares. As previously announced the
special reserve will not be distributed until all creditors of the company
outstanding as at 25th July 2005 have been paid or secured or have consented to
any such distribution.
7. Enfranchisement
On 29th June 2005 the 'A' ordinary shares were redesignated as ordinary shares
as previously announced.
This information is provided by RNS
The company news service from the London Stock Exchange
Wednesday, 15th May 2024
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