7 February 2024
This release contains inside
information
2024 INTERIM
RESULTS
for the six months ended 2
December 2023
Jonathan Myers, Chief Executive Officer, said:
"PZ Cussons is a
stronger business than when we launched our new strategy, as
demonstrated by our ninth consecutive quarter of like for like
revenue growth and, on a constant currency basis, double-digit
operating profit growth in the first half of the financial year. We
have clearly had our challenges but have also delivered a
turnaround in our UK Personal Care business and put in place
measures to address the underperformance in our Beauty
business.
The most significant challenge we have faced by far has been
the devaluation of the Nigerian Naira, which is today around 70%
weaker than a year ago, representing the biggest drop in the
currency's history. As we set out in September 2023, macroeconomic
developments in Nigeria would be the key determinant of the FY24
results. Whilst we continue to make good progress in managing this
volatility, the further devaluation in recent weeks will inevitably
impact our FY24 results. As a Board, we have taken the prudent step
to reduce the interim dividend in light of the
devaluation.
As
we look ahead we remain confident about the long-term potential for
PZ Cussons as we build a higher growth, higher margin, simpler and
more sustainable business."
£m
unless otherwise stated
|
Adjusted
|
Statutory
|
H1 FY24
|
H1
FY23
|
Change
|
H1 FY24
|
H1
FY23
|
Change
|
Revenue
|
277.1
|
336.9
|
(17.8)%
|
277.1
|
336.9
|
(17.8)%
|
LFL revenue growth
[1]
|
2.2%
|
6.1%
|
-
|
n/a
|
n/a
|
n/a
|
Operating profit/(loss)
|
30.6
|
33.2
|
(7.8)%
|
(89.7)
|
39.2
|
n.m.
|
Operating margin
|
11.0%
|
9.9%
|
110bps
|
(32.4)%
|
11.6%
|
n.m.
|
Profit/(loss) before tax
|
26.1
|
34.5
|
(24.3)%
|
(94.2)
|
40.5
|
n.m.
|
Basic earnings per share
|
4.32p
|
5.16p
|
(16.3)%
|
(10.84)p
|
5.90p
|
n.m.
|
Dividend per share
|
n/a
|
n/a
|
n/a
|
1.50p
|
2.67p
|
(43.8)%
|
See page 12 for definitions of key
terms and page 13 for the reconciliation between Alternative
Performance Measures and Statutory results.
'n.m.' represents non-meaningful growth
rates.
Numbers are shown based on
continuing operations. With the exception of LFL revenue growth, %
changes are shown at actual FX rates.
H1 FY24 refers to the 6 months ended
2 December 2023 and H1 FY23 refers to the 6 months ended 3 December
2022.
[1] Like for like revenue growth
definition has been updated in H1 FY24 to exclude revenue related
to unbranded sales which represented approximately 1% of FY23
revenue. H1 FY23 LFL revenue growth has not been re-presented but
would have been 6.6% under the revised
definition.
Summary
Naira
devaluation
·
As
indicated in previous announcements, the devaluation of the
Nigerian Naira has had a significant impact on our financial
results and comparisons to the prior year. The foreign exchange
loss in the period was £88.2 million and was wholly the result of
the devaluation of the Naira which fell by 51% between 31 May 2023
and 2 December 2023[2]:
o Statutory results show an operating loss of
£89.7 million having been materially impacted by these foreign
exchange losses.
o Revenue declined by 17.8% (£59.8 million) to
£277.1 million of which £52.9 million was attributable to the Naira
devaluation.
o Given the material financial impact of the
Naira devaluation, the Board has determined it is prudent to reduce
the interim dividend by 44% to 1.50p.
[2]
From NGN/GBP of 577 as at 31 May 2023 to NGN/GBP of 1,176 as at 2
December 2023. Historic NGN/GBP rates are summarised on page
11.
Performance and strategic
progress
·
Like for like (LFL) revenue growth was 2.2%
driven by price/mix improvements of 7.0% and a 4.8% decline in
volume.
·
Adjusted
operating profit margin increased 110 basis points (bps) with an
improvement in each of our three regions driven primarily by an
increased gross profit margin.
·
Profit before tax declined by 24.3%
reflecting an increased interest charge, but the reduction in both
the effective tax rate and non-controlling interest as a result of
the Naira devaluation resulted in a lower decline in adjusted EPS
of 16.3%.
·
On a
constant currency basis, the financial performance has been more
robust with adjusted operating profit growth of 17.2% and EPS
growth of 9.0%.
·
Strong
cash generation with free cash flow of £20.0 million (H1 FY23: £4.2
million) with headroom on banking facilities of £105.0 million (31
May 2023: £73.0 million) and further improvements since the period
end.
·
Delivery against our FY24 priorities
including:
o Improved USD sourcing in Nigeria allowing
for cash repatriation and a reduction in the Group's gross
borrowings.
o Turnaround in UK Personal Care performance
benefitting from a focus on executional capabilities.
o Strong growth of Childs Farm continuing to
deliver on the significant international opportunity with
distribution gains in the US and Europe.
o Organisational changes under way to simplify
our UK structure and strengthen Group-wide brand-building and
growth capabilities, addressing underperformance in
Beauty.
Dividend
The Board has reviewed the dividend
carefully given the material devaluation of the Naira, particularly
as it is difficult to foresee a significant rebound in the value of
the currency in current circumstances. Had the exchange rate as at
31 January 2024 been the rate used to translate the FY23 results,
FY23 EPS would have been over 30% lower. As a result, the Board has
determined that it would not be prudent to pay an unchanged
dividend. It has therefore elected to pay an interim dividend
of 1.50p with the objective of achieving a cover of approximately
two times for FY24.
The dividend will be paid on 4 April
2024 to shareholders on the register at the close of business on 8
March 2024.
FY24 outlook
At our FY23 full year results in
September, we noted that the Nigerian macroeconomic environment,
and the currency particularly, would be the key determinant of FY24
results. Since then, we have experienced further depreciation of
the Naira, with the official rate falling more than 30% since our
balance sheet date of 2 December. As a result, we now expect FY24
adjusted operating profit, at reported rates of exchange, to be in
the range of £55-60 million[3].
[3] Compares to prevailing consensus
operating profit range of £61.5-68.2m as at 21 September
2023
For further information
please contact:
Investors
Simon Whittington - IR and Corporate
Development Director +44 (0) 77 1137
2928
Media
Headland PZCussons@headlandconsultancy.com
+44 (0) 20 3805
4822
Susanna Voyle, Stephen Malthouse and
Charlie Twigg
Investor and Analyst
conference call
PZ Cussons' management will host a
presentation for analysts and institutional investors at 9.00 am UK
time to present the results and provide the opportunity for
Q&A. The event will be held at:
Deutsche Numis UK
45 Gresham Street
London
EC2V 7BF
A webcast of the presentation is
available at the link below and will also be available via our
corporate website: www.pzcussons.com.
Audience Webcast link:
https://www.investis-live.com/pzcussons/65ae81394f87571200b92b11/jges
Dial in: +44 20 3936 2999
Access code: 938419
Notes to
Editors
About PZ Cussons
PZ Cussons is a FTSE 250 listed
consumer goods business headquartered in Manchester, UK. We employ
over 2,600 people across our operations in Europe, North America,
Asia-Pacific and Africa. Since our founding in 1884, we have been
creating products to delight, care for and nourish consumers.
Across our core categories of Hygiene, Baby and Beauty, our trusted
and well-loved brands include Carex, Childs Farm, Cussons Baby,
Imperial Leather, Morning Fresh, Original Source, Premier,
Sanctuary Spa and St.Tropez. Sustainability and the wellbeing of
our employees and communities everywhere are at the heart of our
business model and strategy, and captured by our purpose: For
everyone, for life, for good.
Cautionary note regarding forward-looking
statements
This announcement contains certain
forward-looking statements relating to expected or anticipated
results, performance or events. Such statements are subject to
normal risks associated with the uncertainties in our business,
supply chain and consumer demand, along with risks associated with
macroeconomic, political and social factors in the markets in which
we operate. Whilst we believe that the expectations reflected
herein are reasonable based on the information we have as of the
date of this announcement, actual outcomes may vary significantly
owing to factors outside the control of the PZ Cussons Group, such
as cost of materials or demand for our products, or within our
control such as our investment decisions, allocation of resources
or changes to our plans or strategy. The PZ Cussons Group expressly
disclaims any obligation to revise forward-looking statements made
in this or other announcements to reflect changes in our
expectations or circumstances. No reliance may be placed on the
forward-looking statements contained within this
announcement.
GROUP REVIEW
Introduction from our Chief Executive
Officer
It was nearly three years ago that
we launched our new strategy and we are, overall, making good
progress as we build brands to better serve consumers. In doing so,
we will ultimately transform the Group creating value for all
stakeholders. The business has now delivered nine consecutive
quarters of LFL revenue growth and adjusted operating profit for
the first half of the year is up 17% on a constant currency
basis.
Particularly encouraging in the
first six months of the year has been the turnaround of the UK
Personal Care business which has delivered growth in market share,
revenue and profitability. This follows an extended period of
volatility driven by Covid, cost inflation and cost of living
pressures. Carex exited the first half of the year in growth and
each of our UK Personal Care brands grew volumes in the second
quarter.
Offsetting this in the first half of
the year has been the devaluation of the Nigerian Naira. Given the
scale of Nigeria within our business - representing 35% of revenue
and 22% of net assets in FY23 - this has had a material impact on
our earnings and our balance sheet. In addition, it has created
trading challenges in the market itself given its inflationary
impacts with inflation now at a 30-year high of 29%
[4].
We are continuing to navigate these
challenges effectively with both operational and corporate
interventions. However, given the size of our business in Nigeria
and the ongoing macroeconomic uncertainty, we believe the prudent
course of action is to reduce our interim dividend by 44%.
Longer-term, we will continue to simplify and strengthen our
business in Nigeria in order to capture the longer-term
opportunities that the market offers.
Elsewhere, we also know we have much
more to do. The performance of our Beauty brands, even after
allowing for some intentional volume reductions to protect margin,
has fallen short of our expectations in recent months and we have
already taken action to address this. Trading in Indonesia has been
soft in the half largely due to pressures on the consumer, however
we remain confident in the long-term prospects for the market and
are confident that our innovation plans will support a return to
growth over the coming months. Meanwhile,
we see good progress in the UK as noted above and continued solid
growth from Australia as Morning Fresh continues its expansion
'beyond the sink'.
[4] Source: 28.9% based on Central
Bank of Nigeria, December 2023.
Our
strategic progress: Building brands for life. Today and for future
generations.
In the first half of the year, we
have made good progress against our strategy which is centred
around five choices: Build Brands, Serve Consumers, Reduce
Complexity, Develop People and Grow Sustainably. For FY24
specifically, we have established four clear priorities for the
business focusing on the most urgent activity whilst investing
resources into longer-term opportunities.
#1: Further simplifying and strengthening
Nigeria
We have continued to improve our
sourcing of US Dollars and, as previously noted, our local business
expects to be able to continue to meet its needs for the foreign
currency required for day-to-day operations thereby eliminating
further lending from the Group's holding companies. Furthermore, we
repatriated £13 million by the end of November and are working to
repatriate further cash by the end of the financial
year.
Our transaction to de-list and buy
out minority shareholders in Nigeria will, once complete, further
simplify and strengthen our business in Nigeria. We continue to
target completion by the end of the financial year although this is
subject to a number of local approvals.
#2: Returning the UK to sustainable, profitable
growth
Our UK Personal Care business,
comprising primarily Carex, Imperial Leather, Cussons Creations and
Original Source, has seen a turnaround in performance in H1 FY24,
with increased market share, revenue and profitability. This is the
result of a strengthened leadership team and a more determined
focus on building back several core executional capabilities.
Looking ahead, there remains significant opportunity to regain
previous levels of profitability in UK Personal Care and, as
described below, we see opportunity to improve performance of our
other UK brands which have previously been managed as part of our
Beauty organisation.
#3: Driving further expansion from the core
Childs Farm continues to grow
strongly and we have recently gained further distribution in key
German retailers. Our US launch is on track with Amazon sales
increasing rapidly. We expect to secure new listings in premium
regional retailers before the end of this financial
year.
Our recent launch of Imperial
Leather in Thailand continues to go well benefitting from
significant local influencer coverage and broader social media
activity.
The launch of Morning Fresh into the
Australian auto dishwash market has contributed positively to our
revenue in the period, as part of the brand's longer-term ambition
of growing 'beyond the sink'. The auto dishwash market is broadly
double the size of the hand dishwash market and is growing at
approximately twice the rate.
Following its launch in July 2023,
Original Source in Spain continues to build momentum in a highly
competitive market. The launch campaign has
been strong, achieving good social media coverage and consumer
engagement. We expect to reach over 1,500 listing points over the
coming months and have secured listings with Carrefour amongst
others. The sector in Spain is worth around £300m [5]
and is Europe's third largest bath and shower gel market,
signalling the strength and ambition of the brand to continue to
grow.
[5]
Euromonitor
#4: Continuing to transform
capabilities
As part of our continued efforts to
transform the capabilities of the Group, we have made a fundamental
change to our organisational structure as we reorganise and
simplify our UK business while strengthening our overall Group
brand-building and innovation capabilities. These measures are
designed to address the recent under-performance of our Beauty
business and to accelerate growth more widely around the
Group.
Firstly, we have appointed one
leader across the combined UK business compared to the
previously-separate Personal Care and Beauty approach. These
business units have historically had two leadership, two commercial
and two support teams, resulting in significant duplication of
effort. The change will drive significantly greater scale and
faster decision-making, with one team and one 'face to the
customer' as we share best practice and pool our understanding of
customers, consumers and the categories.'
Secondly, we are strengthening
further our brand-building capabilities, particularly behind our
brands with the most growth potential. We have created a dedicated
team under Paul Yocum, previously Managing Director of Business
Development, in the new role of Chief Growth and Marketing Officer.
Over the coming months, we will increase our resourcing of brand
strategy and planning, consumer insights, innovation and marketing
capability. In doing so, we will continue to look to drive the
leverage benefits from centralising certain activities while
retaining the local insights our multi-local portfolio footprint
can provide. The team will also be responsible for overseeing our
growth markets including the US business.
Separately, we continue to invest
behind the tools employed by our teams. During the period we have
brought much of our Revenue Growth Management (RGM) activity
in-house, using latest Microsoft cloud applications to drive
analytics and generate insights. Currently live in the UK, this
will ultimately be extended internationally and is expected to
result in a more cost-effective, faster and more effective RGM
capability.
Summary
I would like to thank my PZ Cussons
colleagues across the world for their hard work in recent months.
We are focused on creating further value from our portfolio of
brands and continuing to execute our FY24 priorities. We remain
optimistic about the longer-term potential for PZ Cussons as we
build a higher growth, higher margin, simpler and more sustainable
business.
FINANCIAL REVIEW
Overview of Group financial performance
Our reported financial
performance has been materially impacted by the devaluation of the
Naira, with the currency having halved in value since June 2023
(see table on page 11 for historic rates used in financial
statements). Revenue has declined by 17.8% (£59.8 million) of which
£52.9 million relates to the reduction in the value of the Naira.
We are reporting a statutory operating loss of £89.7 million
primarily due to the £88.2m foreign exchange loss primarily caused
by an increase in the value of USD denominated liabilities in our
Nigerian subsidiaries and FX losses on the settlement of these
liabilities. This compares to an operating profit of £39.2 million
in the comparative period.
However, if we look at the financial
performance on a constant currency basis, adjusted operating profit
grew by 17.2%. The 110bps increase in adjusted operating profit
margin reflects growth in each of our regions and is driven
primarily by an improved gross profit margin.
There was a 24.3% decline in profit before
tax, however adjusted earnings per share (EPS) declined by a
smaller amount (16.3%) due to a lower effective tax rate of 20.3%,
reflecting a statutory loss in our Nigerian business and a
reduction in the Sterling value of the non-controlling interests in
Nigeria. On a statutory basis, EPS was (10.84)p (H1
FY23: 5.90p).
Our net
debt as at the end of H1 FY24 of £96.7 million is equivalent to
1.1x last twelve months (LTM) EBITDA. This compares to a net cash
position of £5.7 million as at 31 May 2023. This results from the
significant reduction in the value of our large Naira denominated
cash balance when translated into Sterling. The Board considers it
prudent to reduce the interim dividend to 1.50p in response to the
adverse impact of the Naira devaluation on our ongoing earnings and
its effect on our balance sheet.
Performance by geography
Europe and the Americas
£m unless otherwise
stated
|
H1 FY24
|
H1 FY23
|
Growth/
(decline)
|
Revenue
|
97.2
|
99.5
|
(2.3)%
|
LFL revenue growth (%)
|
(1.9)%
|
(6.0)%
|
-
|
Adjusted operating profit
|
12.4
|
9.5
|
30.5%
|
Margin (%)
|
12.8%
|
9.5%
|
330bps
|
Operating (loss)/profit
|
(16.6)
|
4.1
|
n.m.
|
Margin (%)
|
(17.1)%
|
4.1%
|
n.m.
|
Revenue
declined 1.9% on a LFL basis, with strong growth in our UK Personal
Care business and Childs Farm offset by a decline in a number of
our Beauty brands particularly Sanctuary Spa.
Our UK
Personal Care business - primarily Carex, Original Source, Imperial
Leather and Cussons Creations - has delivered a significant
improvement in performance. We have seen market share gains for the
portfolio as a whole for the first time in a number of years.
Original Source and Cussons Creations have been particularly
successful. Having launched less than two years ago to address the
UK's cost of living crisis, Cussons Creations has rapidly
established itself as a notable brand in the washing and bathing
category, while Original Source continues to benefit from strong
marketing activity behind its unique proposition. Carex returned to
revenue growth in the second quarter of FY24 and we expect positive
momentum to be maintained in the second half of the year. Childs
Farm continues to grow strongly benefitting from previous
distribution gains, new listings announced in Germany and strong
momentum in the US with Amazon.
Sanctuary Spa was the primary driver of the
overall decline in LFL revenue. This was partly a result of a
smaller but more profitable Christmas gifting product portfolio and
compares to a strong performance in the comparative period.
Nevertheless, the performance fell below our expectations due to
insufficient innovation and unsatisfactory execution. St.Tropez
declined slightly, primarily in one key US customer, although we
expect improving trends in H2 - the seasonally more important
period - with stronger innovation and a refreshed
campaign with our brand ambassador, Ashley Graham.
Adjusted operating profit margin increased
by 330bps to 12.8%. This improvement was driven by the
annualisation of price increases taken in the second half of FY23
and successful RGM activity resulting in an improved gross profit
margin. On a statutory basis, operating loss was £16.6 million
principally reflecting the £24.4 million impairment of the book
value of Sanctuary Spa.
Asia Pacific
£m
unless otherwise stated
|
H1 FY24
|
H1 FY23
|
Growth /
(decline)
|
Revenue
|
88.8
|
102.2
|
(13.1)%
|
LFL revenue growth
(%)[6]
|
(6.0)%
|
7.5%
|
-
|
Adjusted operating profit
|
15.7
|
15.4
|
1.9%
|
Margin (%)
|
17.7%
|
15.1%
|
260bps
|
Operating profit
|
14.8
|
15.1
|
(2.0)%
|
Margin (%)
|
16.7%
|
14.8%
|
190bps
|
Revenue
declined 13.1% due to a decline in LFL revenue and unfavourable FX
driven by a depreciation in the Indonesian Rupiah and Australian
Dollar. On a LFL basis, revenue declined 6.0% with continued growth
in ANZ offset by a decline in Indonesia.
Cussons
Baby Indonesia declined in the first half of the year due to
ongoing category softness and a reduction in distributor stock
levels which had increased during FY23. Reflecting the long-term
attractiveness of the market, competition has remained strong, with
increasing promotional intensity, particularly in the wipes
category. Our focus remains on growing higher margin segments such
as oils, lotions and creams. We have also recently launched Cussons
Baby into the warming oil segment. The segment is estimated to be
used by over 80% of Indonesian mothers offering a significant
opportunity for Cussons Baby to strengthen its leading market
position in baby toiletries.
Growth
in ANZ was led by Radiant, a portfolio brand, which grew
double-digits. Radiant is now the third largest brand in the
laundry market, with improved margins driven by the successful
launch of laundry capsules alongside the existing powder and liquid
products. Morning Fresh has continued to grow strongly, maintaining
its nearly 50% market share and benefitting during the period from
the contribution of the auto dishwash range which launched in the
second half of FY23. Rafferty's Garden declined slightly which was
principally due to the exiting of some legacy SKUs.
Adjusted operating margin grew by 260bps due
to strong growth in the ANZ gross profit margin and reduced costs
in Indonesia. On a statutory basis, operating profit was
£14.8 million with £0.9 million adjusting items related to
simplification and transformation projects as we transform our
supply chain footprint.
[6]
Like for like revenue growth definition has been updated in H1 FY24
to exclude revenue related to unbranded sales which represented
approximately 1% of FY23 revenue. H1 FY23 LFL revenue growth has
not been re-presented but would have been 9.1% under the revised
definition.
Africa
£m
unless otherwise stated
|
H1 FY24
|
H1 FY23
|
Growth /
(decline)
|
Revenue
|
90.8
|
133.2
|
(31.8)%
|
LFL revenue growth (%)
|
17.4%
|
15.6%
|
-
|
Adjusted operating profit
|
13.7
|
15.8
|
(13.3)%
|
Margin (%)
|
15.1%
|
11.9%
|
320bps
|
Operating (loss)/profit
|
(62.7)
|
27.5
|
n.m.
|
Margin (%)
|
(69.1)%
|
20.6%
|
n.m.
|
LFL revenue growth of 17.4% was driven by
further price/mix improvements with twelve
rounds of price
increases in Nigeria since the beginning of FY24. On a reported
basis, revenue declined by 31.8% due to the Naira being
approximately 44% lower on average during H1 FY24 compared to the
prior year.
In
Nigeria, Premier and Morning Fresh revenue grew very strongly as
consumers continued to maintain spending in non-discretionary
segments such as soaps and home care. Cussons Baby and Stella also
grew very strongly, despite being more discretionary, as we used a
combination of distribution and marketing to drive growth in both
price and volume. In Cussons Baby, we have seen significant volume
growth due to our hospital educational programmes for new mothers.
At the same time, Stella - a long-lasting moisturising
jelly - has benefitted from ongoing work to extend
the typical purchase period beyond the dry season, known as
Harmattan season, which occurs between November and
January.
Across
the Nigerian business, we have increased prices significantly in
response to the devaluation of the Naira and corresponding increase
in input costs. Although these increases have increased the premium
at which our brands are priced compared to competitors, market
positions have so far been largely maintained given the strength of
our brands.
Against
this inflationary backdrop, we have sought to mitigate the decline
in volumes, ensuring our products are front of mind for consumers
at the point of purchase. This has been achieved through the
continued increase in the number of stores served
directly - to around 120,000 today from 97,000 as at
the end of FY23 - as well as increasing the number of 'priority'
stores which attract greater commercial focus and a wider range of
products.
Electricals revenue was £34.3 million and
grew 17% on a constant currency basis as we continue to prioritise
growth in price and mix, focusing on higher margin product segments
and SKUs.
Adjusted operating margin grew by 320bps.
Alongside successive price increases, improving product mix and
good overall cost control, this increase also represents an
improvement in profitability of our PZ Wilmar Joint Venture, where
adjusted operating profit increased by £4.1 million to £7.8 million
due to strong growth in volume and pricing. On a statutory basis,
the operating loss was £62.7 million primarily reflecting the
increase in the value of USD denominated liabilities in our
Nigerian subsidiaries and FX losses on the settlement of these
liabilities.
Other financial items
Adjusted operating profit
Adjusted operating profit for the
Group was £30.6 million which compares to £33.2 million in the
prior period. Adjusted operating profit margins increased by 110bps
to 11.0%. Each of our three regions contributed to the growth in
margin, primarily driven by higher gross profit margins and a
strong performance in our PZ Wilmar Joint Venture. This was partly
offset by increased central costs due to continued investment in
central capabilities, and an unfavourable FX impact.
Adjusting items
Adjusting items in the period
totalled £120.3 million before tax. This related primarily to a
£88.2 million foreign exchange loss arising from the devaluation of
the Nigerian Naira. A charge of £24.4 million was incurred due to
the impairment of Sanctuary Spa, while a charge of £5.5 million
relates to costs associated with the ongoing transformation of the
business including simplification activity in Nigeria.
After accounting for these adjusting
items, the operating loss for the Group was £(89.7) million
compared to an operating profit of £39.2 million in the prior
period.
Net finance expense/(income)
Net finance expense in the period
was £4.5 million compared to a net finance income of £1.3 million
in the prior period. This was driven mainly by lower interest
income due to the reduction in the Sterling value of our Naira cash
balances. It was also modestly impacted by an increased interest
charge due to higher levels of Group gross debt and a higher
borrowing rate compared to the prior year.
Statutory loss before tax was
£(94.2) million, £134.7 million lower than the prior period while
adjusted profit before tax was £26.1 million which was £8.4 million
lower than the prior period.
Taxation
The tax credit in the period for
continuing operations was £27.2 million compared to a tax charge of
£9.2 million in the prior period. The effective tax rate (ETR) on
adjusted profit before tax decreased to 20.3% (26.6% in the prior
period) primarily due to statutory losses on our Nigeria
business.
Loss for the period
Loss for the period from continuing
operations was £(67.0) million which compared to a profit of £31.3
million in the prior period. Basic (loss)/earnings per share was
(10.84)p compared to 5.90p in the prior period. Adjusted basic
earnings per share was 4.32p which compares to 5.16p in the prior
period.
Balance sheet and cash flow
Net debt as at 2 December 2023 was
£96.7 million compared to net cash of £5.7 million at 31 May 2023.
The increase in net debt is wholly attributable to the devaluation
of the Naira which significantly reduced the Sterling value of our
Naira cash balance. As shown in the table below, the impact of
exchange rate changes had there been no change in Group cash or
gross debt during the half year would have changed our balance
sheet from net cash of £5.7 million to net debt of £100.2 million.
During the half year, both gross debt and cash showed reductions
leaving the net debt position £3.5 million better as a result of
management actions.
£m
|
31 May 2023
|
2 December
2023
|
As reported in FY23 financial
statements
|
Current rates
[7]
|
|
Total cash
|
256.4
|
150.5
|
128.1
|
of which Naira
|
201.1
|
98.5
|
77.4
|
Gross debt
|
(251.2)
|
(251.2)
|
(225.3)
|
Other
|
0.5
|
0.5
|
0.5
|
Net
cash/(debt)
|
5.7
|
(100.2)
|
(96.7)
|
Balance sheet NGN/GBP
rates:
|
577
|
1,176
|
1,176
|
[7] Rates as of 2 December
2023
Total free cash flow was £20.0
million (H1 FY23: £4.2 million). The increase reflects primarily an
improvement in net working capital as a result of the
devaluation.
Net assets were £271.5 million
compared to £422.1 million at 31 May 2023. The reduction was mainly
due to the devaluation of the Naira and represented the FX losses
on the translation of Naira denominated assets and liabilities
which went through either operating loss or equity.
During the year ended 31 May 2023 in
the normal course of business, the Group agreed a new £325 million
committed credit facility which is available for general corporate
purposes. The credit facility incorporates both a term loan and
revolving credit facility (RCF) structure, with maturity dates of
up to November 2028. As at 2 December 2023, headroom on this
facility was £105.0 million compared to £73.0 million as at 31 May
2023 and £93.0 million as at 3 December 2022.
Foreign exchange
The general appreciation of Sterling
against our other currencies resulted in a £64.3 million reduction
to FY23 revenue as set out below.
|
% of FY23
|
Average FX
rates
|
|
Revenue
impact
|
|
revenue
|
H1 FY24
|
H1 FY23
|
% change
|
(£m)
|
GBP
|
27%
|
1.00
|
1.00
|
-
|
-
|
NGN (Nigeria)
|
35%
|
915
|
509
|
(44)%
|
(52.9)
|
AUD (Australia)
|
14%
|
1.92
|
1.74
|
(9)%
|
(4.3)
|
IDR (Indonesia)
|
11%
|
19,161
|
17,780
|
(7)%
|
(3.1)
|
USD (USA)
|
7%
|
1.25
|
1.18
|
(6)%
|
(0.9)
|
Other
|
6%
|
-
|
-
|
-
|
(3.1)
|
Total[8]
|
100%
|
-
|
-
|
-
|
(64.3)
|
[8] Table shows the impact of translating H1 FY23 revenue at H1
FY24 foreign exchange rates.
Given the materiality of the
movement in the Nigerian Naira in recent periods, the rates used in
recent reporting periods are summarised below.
NGN/GBP
|
FY22
|
H1 FY23
|
FY23
|
H1 FY24
|
As at 31
January 2024
|
Rate used for P&L
|
558
|
509
|
536
|
915
|
n/a
|
Rate used for balance
sheet
|
530
|
546
|
577
|
1,176
|
1,852
|
Glossary
Term
|
Definition
|
APM
|
Alternative performance
measure.
|
Brand Investment
|
An operating cost related to brand
marketing (previously 'Media & Consumer').
|
EBITDA
|
Earnings before interest, taxes,
depreciation and amortisation.
|
Employee well-being
|
% score based upon a set of questions
within our annual survey of employees.
|
ETR
|
Effective tax rate.
|
Free
cash flow
|
Cash generated from operations less
capital expenditure.
|
Free
cash flow conversion
|
Free cash flow as a % of adjusted
EBITDA from continuing operations.
|
Like
for like (LFL) revenue growth
|
Growth on the prior year at constant
currency, excluding unbranded sales and the impact of disposals and
acquisitions, and adjusting for the number of reporting days in the
period.
|
Must
Win Brands
|
The brands in which we place greater
investment and focus. They comprise: Carex, Childs Farm (acquired
in March 2022), Cussons Baby, Joy, Morning Fresh, Original Source,
Premier, Sanctuary Spa and St.Tropez.
|
Net
debt
|
Cash, short-term deposits and current
asset investments, less bank overdrafts and borrowings. Excludes
IFRS 16 lease liabilities.
|
Portfolio Brands
|
The brands we operate which are not
Must Win Brands.
|
PZ
Cussons Growth Wheel
|
Our 'repeatable model' for driving
commercial execution, comprising 'Consumability', 'Attractiveness',
'Shopability' and 'Memorability'.
|
Revenue Growth Management (RGM)
|
Maximising revenue through ensuring
optimised price points across customers and channels and across
different product sizes.
|
SKUs
|
Stock keeping unit.
|
Through the Line
|
Marketing campaign incorporating both
mass reach and targeted activity.
|
Alternative Performance
Measures
The Group's
business performance is assessed using a number of Alternative
Performance Measures (APMs). These APMs include adjusted
profitability measures where results are presented excluding
separately disclosed items (referred to as adjusting items) as we
believe this provides both management and investors with useful
additional information about the Group's performance and supports a
more effective comparison of the Group's trading performance from
one period to the next.
Adjusted Consolidated
Income Statement
|
Unaudited
Half year
to
2 December
2023
|
Unaudited
Half year
to
3
December 2022
|
|
Business performance
excluding adjusting items
|
Adjusting
items
|
Statutory results for the
half year
|
Business
performance excluding adjusting items
|
Adjusting
items
|
Statutory
results for the half year
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Revenue
|
277.1
|
-
|
277.1
|
336.9
|
-
|
336.9
|
Cost of sales
|
(167.8)
|
(72.2)
|
(240.0)
|
(215.6)
|
-
|
(215.6)
|
|
|
|
|
|
|
|
Gross profit
|
109.3
|
(72.2)
|
37.1
|
121.3
|
-
|
121.3
|
Selling and distribution
expense
|
(44.5)
|
-
|
(44.5)
|
(55.1)
|
-
|
(55.1)
|
Administrative expense
|
(42.0)
|
(45.9)
|
(87.9)
|
(36.7)
|
6.0
|
(30.7)
|
Share of results of joint
venture
|
7.8
|
(2.2)
|
5.6
|
3.7
|
-
|
3.7
|
Operating profit/(loss)
|
30.6
|
(120.3)
|
(89.7)
|
33.2
|
6.0
|
39.2
|
|
|
|
|
|
|
|
Finance income
|
8.3
|
-
|
8.3
|
4.9
|
-
|
4.9
|
Finance expense
|
(12.8)
|
-
|
(12.8)
|
(3.6)
|
-
|
(3.6)
|
Net
finance income/(expense)
|
(4.5)
|
-
|
(4.5)
|
1.3
|
-
|
1.3
|
|
|
|
|
|
|
|
Profit/(loss) before taxation
|
26.1
|
(120.3)
|
(94.2)
|
34.5
|
6.0
|
40.5
|
Taxation
|
(5.3)
|
32.5
|
27.2
|
(9.1)
|
(0.1)
|
(9.2)
|
|
|
|
|
|
|
|
Profit/(loss) for the period
|
20.8
|
(87.8)
|
(67.0)
|
25.4
|
5.9
|
31.3
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
Owners of the Parent
|
18.1
|
(63.5)
|
(45.4)
|
21.6
|
3.1
|
24.7
|
Non-controlling interests
|
2.7
|
(24.3)
|
(21.6)
|
3.8
|
2.8
|
6.6
|
|
20.8
|
(87.8)
|
(67.0)
|
25.4
|
5.9
|
31.3
|
Details of adjusting items are
provided in Note 4 to the condensed consolidated interim financial
statements. Reconciliations from IFRS reported results to APMs are
set out below.
Alternative Performance Measures (continued)
Adjusted operating profit and adjusted operating
margin
|
|
Half year
to
2 December
2023
|
Half year
to
3 December
2022
|
|
|
£m
|
£m
|
Group
|
|
|
|
Operating (loss)/profit from
continuing operations
|
|
(89.7)
|
39.2
|
exclude: adjusting items
|
|
120.3
|
(6.0)
|
Adjusted operating profit
|
|
30.6
|
33.2
|
|
|
|
|
Revenue
|
|
277.1
|
336.9
|
Operating margin
|
|
(32.4)%
|
11.6%
|
Adjusted operating margin
|
|
11.0%
|
9.9%
|
|
|
|
|
By
segment
|
|
|
|
Europe & the
Americas:
|
|
|
|
Operating (loss)/profit from
continuing operations
|
|
(16.6)
|
4.1
|
exclude: adjusting items
|
|
29.0
|
5.4
|
Adjusted operating profit
|
|
12.4
|
9.5
|
|
|
|
|
Revenue
|
|
97.2
|
99.5
|
Operating margin
|
|
(17.1)%
|
4.1%
|
Adjusted operating margin
|
|
12.8%
|
9.5%
|
|
|
|
|
Asia Pacific:
|
|
|
|
Operating profit from continuing
operations
|
|
14.8
|
15.1
|
exclude: adjusting items
|
|
0.9
|
0.3
|
Adjusted operating profit
|
|
15.7
|
15.4
|
|
|
|
|
Revenue
|
|
88.8
|
102.2
|
Operating margin
|
|
16.7%
|
14.8%
|
Adjusted operating margin
|
|
17.7%
|
15.1%
|
|
|
|
|
Africa:
|
|
|
|
Operating (loss)/profit from
continuing operations
|
|
(62.7)
|
27.5
|
exclude: adjusting items
|
|
76.4
|
(11.7)
|
Adjusted operating profit
|
|
13.7
|
15.8
|
|
|
|
|
Revenue
|
|
90.8
|
133.2
|
Operating margin
|
|
(69.1)%
|
20.6%
|
Adjusted operating margin
|
|
15.1%
|
11.9%
|
|
|
|
|
Central:
|
|
|
|
Operating loss from continuing
operations
|
|
(25.2)
|
(7.5)
|
exclude: adjusting items
|
|
14.0
|
-
|
Adjusted operating loss
|
|
(11.2)
|
(7.5)
|
Alternative Performance Measures (continued)
Adjusted share of results of joint venture
|
|
Half year
to
2 December
2023
|
Half year
to
3 December
2022
|
|
|
£m
|
£m
|
Share of results of joint
venture
|
|
5.6
|
3.7
|
Exclude: adjusting items
|
|
2.2
|
-
|
Adjusted share of results of joint
venture
|
|
7.8
|
3.7
|
Adjusted profit before taxation
|
|
Half year
to
2 December
2023
|
Half year
to
3 December
2022
|
|
|
£m
|
£m
|
(Loss)/profit before taxation from
continuing operations
|
|
(94.2)
|
40.5
|
Exclude: adjusting items
|
|
120.3
|
(6.0)
|
Adjusted profit before
taxation
|
|
26.1
|
34.5
|
Adjusted Earnings Before Interest Depreciation and
Amortisation (Adjusted EBITDA)
|
|
Half year
to
2 December
2023
|
Half year
to
3 December
2022
|
|
|
£m
|
£m
|
(Loss)/profit before taxation from
continuing operations
|
|
(94.2)
|
40.5
|
Add back/(deduct): net finance
expense/(income)
|
|
4.5
|
(1.3)
|
Add back: depreciation
|
|
5.5
|
5.2
|
Add back: amortisation
|
|
3.6
|
3.1
|
Add back: impairment and impairment
reversal
|
|
24.4
|
0.1
|
|
|
(56.2)
|
47.6
|
Exclude: adjusting items*
|
|
95.9
|
(6.1)
|
Adjusted EBITDA
|
|
39.7
|
41.5
|
* Excludes adjusting items relating
to impairment.
Alternative Performance Measures (continued)
Adjusted earnings per share
|
|
Half year to
2
December 2023
pence
|
Half year
to
3
December
2022
pence
|
Basic (loss)/earnings per
share
|
|
(10.84)
|
5.90
|
Exclude: adjusting items
|
|
15.16
|
(0.74)
|
Adjusted basic earnings per
share
|
|
4.32
|
5.16
|
Free cash flow
|
|
Half year
to
2 December
2023
|
Half year
to
3 December
2022
|
|
|
£m
|
£m
|
Cash generated from
operations
|
|
22.4
|
7.0
|
Deduct: purchase of property, plant
and equipment and software
|
|
(2.4)
|
(2.8)
|
Free cash flow
|
|
20.0
|
4.2
|
CONDENSED CONSOLIDATED INCOME STATEMENT
|
|
Unaudited
Half year
to
2 December
2023
|
Unaudited
Half year
to
3 December
2022
|
Audited
Year
to
31 May
2023
|
|
Notes
|
£m
|
£m
|
£m
|
Revenue
|
3
|
277.1
|
336.9
|
656.3
|
Cost of sales
|
|
(240.0)
|
(215.6)
|
(399.0)
|
|
|
|
|
|
Gross profit
|
|
37.1
|
121.3
|
257.3
|
Selling and distribution
expense
|
|
(44.5)
|
(55.1)
|
(105.3)
|
Administrative expense
|
|
(87.9)
|
(30.7)
|
(99.8)
|
Share of results of joint
venture
|
|
5.6
|
3.7
|
7.5
|
Operating (loss)/profit
|
3
|
(89.7)
|
39.2
|
59.7
|
|
|
|
|
|
Finance income
|
|
8.3
|
4.9
|
15.4
|
Finance expense
|
|
(12.8)
|
(3.6)
|
(13.3)
|
Net
finance (expense)/income
|
|
(4.5)
|
1.3
|
2.1
|
|
|
|
|
|
(Loss)/profit before taxation
|
|
(94.2)
|
40.5
|
61.8
|
Taxation
|
7
|
27.2
|
(9.2)
|
(15.4)
|
|
|
|
|
|
(Loss)/profit for the
period/year1
|
|
(67.0)
|
31.3
|
46.4
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
Owners of the Parent
|
|
(45.4)
|
24.7
|
36.4
|
Non-controlling interests
|
|
(21.6)
|
6.6
|
10.0
|
|
|
(67.0)
|
31.3
|
46.4
|
(Loss)/earnings per ordinary
share1
|
|
|
|
|
Basic (p)
|
|
(10.84)
|
5.90
|
8.70
|
Diluted (p)2
|
|
(10.84)
|
5.84
|
8.67
|
|
|
|
|
|
1 Wholly derived from
continuing operations.
2 In the half year ended 2
December 2023, the basic and diluted loss per share are equal as a
result of the Group incurring a loss for the
period.
|
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
|
|
Unaudited
Half year
to
2 December
2023
|
Unaudited
Half year
to
3
December
2022
|
Audited
Year
to
31
May
2023
|
|
Notes
|
£m
|
£m
|
£m
|
(Loss)/profit for the period/year
|
|
(67.0)
|
31.3
|
46.4
|
Other comprehensive
(expense)/income:
|
|
|
|
|
Items that will not be reclassified to income
statement:
|
|
|
|
|
Re-measurement loss on net
retirement benefit obligations
|
|
(5.2)
|
(33.2)
|
(32.8)
|
Taxation on other comprehensive
income
|
|
1.3
|
8.1
|
7.4
|
Total items that will not be reclassified to income
statement
|
|
(3.9)
|
(25.1)
|
(25.4)
|
|
|
|
|
|
Items that may be subsequently reclassified to income
statement:
|
|
|
|
|
Exchange differences on translation
of foreign operations
|
|
(64.1)
|
(10.6)
|
(21.7)
|
Cash flow hedges - fair value
movements net of amounts reclassified
|
12
|
(0.9)
|
0.3
|
0.4
|
Total items that may be subsequently reclassified to income
statement
|
|
(65.0)
|
(10.3)
|
(21.3)
|
|
|
|
|
|
Other comprehensive expense for the
period/year
|
|
(68.9)
|
(35.4)
|
(46.7)
|
Total comprehensive expense for the
period/year
|
|
(135.9)
|
(4.1)
|
(0.3)
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
Owners of the Parent
|
|
(100.3)
|
(9.7)
|
(6.9)
|
Non-controlling interests
|
|
(35.6)
|
5.6
|
6.6
|
|
|
(135.9)
|
(4.1)
|
(0.3)
|
CONDENSED CONSOLIDATED BALANCE SHEET
|
|
Unaudited
2 December
2023
|
Unaudited
3 December
2022*
|
Audited
31
May
2023
|
|
Notes
|
£m
|
£m
|
£m
|
Assets
|
|
|
|
|
Non-current assets
|
|
|
|
|
Goodwill and other intangible
assets
|
5
|
284.7
|
331.2
|
312.7
|
Property, plant and
equipment
|
|
55.1
|
77.0
|
74.3
|
Right-of-use assets
|
|
11.6
|
14.2
|
12.5
|
Net investments in joint
venture
|
|
44.5
|
49.0
|
52.0
|
Deferred taxation assets
|
|
26.0
|
4.0
|
7.5
|
Retirement benefit
surplus
|
|
34.2
|
36.4
|
38.5
|
|
|
456.1
|
511.8
|
497.5
|
Current assets
|
|
|
|
|
Inventories
|
|
91.5
|
130.9
|
112.9
|
Trade and other
receivables
|
|
96.5
|
127.5
|
119.1
|
Derivative financial
assets
|
12
|
1.7
|
3.9
|
1.0
|
Current tax receivable
|
|
1.5
|
2.5
|
1.0
|
Current asset investments
|
10
|
0.5
|
0.5
|
0.5
|
Cash and cash equivalents
|
10
|
128.1
|
195.8
|
256.4
|
|
|
319.8
|
461.1
|
490.9
|
Assets held for sale
|
|
1.2
|
1.6
|
-
|
|
|
321.0
|
462.7
|
490.9
|
Total assets
|
|
777.1
|
974.5
|
988.4
|
Equity and liabilities
|
|
|
|
|
Equity
|
|
|
|
|
Share capital
|
|
4.3
|
4.3
|
4.3
|
Own shares
|
|
(35.0)
|
(40.0)
|
(36.9)
|
Capital redemption
reserve
|
|
0.7
|
0.7
|
0.7
|
Hedging reserve
|
|
(0.7)
|
0.1
|
0.2
|
Currency translation
reserve
|
|
(139.1)
|
(78.8)
|
(89.0)
|
Retained earnings
|
|
444.9
|
512.5
|
511.7
|
Other reserves
|
|
5.5
|
4.1
|
4.6
|
Attributable to owners of the Parent
|
|
280.6
|
402.9
|
395.6
|
Non-controlling interests
|
|
(9.1)
|
27.5
|
26.5
|
Total equity
|
|
271.5
|
430.4
|
422.1
|
Liabilities
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Borrowings
|
10
|
219.0
|
232.0
|
251.2
|
Other payables
|
|
3.5
|
5.2
|
4.1
|
Lease liabilities
|
|
10.6
|
11.9
|
11.3
|
Deferred taxation
liabilities
|
|
56.4
|
82.6
|
76.9
|
Retirement and other long-term
employee benefit obligations
|
|
12.0
|
11.9
|
12.4
|
|
|
301.5
|
343.6
|
355.9
|
Current liabilities
|
|
|
|
|
Borrowings
|
10
|
6.3
|
-
|
-
|
Trade and other payables
|
|
178.4
|
175.2
|
182.2
|
Lease liabilities
|
10
|
2.5
|
2.1
|
1.7
|
Derivative financial
liabilities
|
12
|
0.4
|
0.5
|
0.5
|
Current taxation payable
|
|
15.8
|
21.2
|
25.6
|
Provisions
|
|
0.7
|
1.5
|
0.4
|
|
|
204.1
|
200.5
|
210.4
|
Total liabilities
|
|
505.6
|
544.1
|
566.3
|
Total equity and liabilities
|
|
777.1
|
974.5
|
988.4
|
|
|
|
|
|
* 3
December 2022 has been restated in line with the restatements
disclosed in the 2023 Annual Report and Accounts. See Note 1 for
details.
CONDENSED CONSOLIDATED CASH FLOW
STATEMENT
|
|
Unaudited
Half year
to
2 December
2023
|
Unaudited
Half year
to
3 December
2022
|
Audited
Year
to
31
May
2023
|
|
Notes
|
£m
|
£m
|
£m
|
Cash flows from operating activities
|
|
|
|
|
Cash generated from
operations
|
9
|
22.4
|
7.0
|
76.6
|
Interest paid
|
|
(11.4)
|
(3.4)
|
(11.8)
|
Taxation paid
|
|
(10.1)
|
(8.4)
|
(15.6)
|
Net
cash generated from/(used in) operating activities
|
|
0.9
|
(4.8)
|
49.2
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
Interest received
|
|
8.3
|
4.9
|
11.8
|
Purchase of property, plant and
equipment and software
|
|
(2.4)
|
(2.8)
|
(6.7)
|
Proceeds from disposal of property,
plant and equipment
|
|
0.3
|
13.5
|
14.4
|
Loans (advanced to)/repaid by joint
ventures
|
|
4.8
|
(11.4)
|
-
|
Net
cash generated from investing activities
|
|
11.0
|
4.2
|
19.5
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
Dividends paid to owners of the
parent
|
8
|
(15.6)
|
(15.6)
|
(26.8)
|
Dividends paid to non-controlling
interests
|
|
-
|
(0.2)
|
(2.6)
|
Repayment of lease
liabilities
|
|
(1.1)
|
(1.6)
|
(2.5)
|
Repayment of borrowings
|
10
|
(91.9)
|
(205.0)
|
(205.0)
|
Proceeds from borrowings
|
10
|
66.3
|
263.0
|
283.0
|
Financing fees paid on committed
credit facility
|
|
-
|
-
|
(2.8)
|
Net
cash (used in)/generated from financing
activities
|
|
(42.3)
|
40.6
|
43.3
|
|
|
|
|
|
Net
increase in cash and cash equivalents
|
10
|
(30.4)
|
40.0
|
112.0
|
Effect of foreign exchange
rates
|
10
|
(97.9)
|
(7.9)
|
(19.3)
|
Cash and cash equivalents at the
beginning of the period/year
|
10
|
256.4
|
163.7
|
163.7
|
Cash and cash equivalents at the end of the
period/year
|
10
|
128.1
|
195.8
|
256.4
|
1.
Basis of
preparation
PZ Cussons plc (the Company) is a
public limited company incorporated in England and Wales. In these
condensed consolidated interim financial statements (interim
financial statements), 'Group' means the Company and all its
subsidiaries.
These interim financial statements
for the half year ended 2 December 2023, which have been reviewed,
not audited, have been prepared in accordance with the Disclosure
Guidance and Transparency Rules (DTR) of the Financial Conduct
Authority and in accordance with IAS 34 Interim Financial Reporting as adopted
by the UK. The interim financial statements should be read in
conjunction with the annual financial statements for the year ended
31 May 2023 which have been prepared in accordance with UK-adopted
International Accounting Standards (IAS).
The Group's business activities,
together with the factors likely to affect its future development,
performance and position are set out in the Group Review. The
financial position of the Group and liquidity position are
described within the Financial Review section. After taking into
consideration a number of factors including the future impact of
the devaluation of the Nigerian Naira on the financial performance
and cash flows of the Group, the Directors consider it appropriate
to continue to adopt the going concern basis in preparing the
interim financial statements.
The Group's risk management
framework is explained on page 58 of our 2023 Annual Report and
Accounts. The identified principal risks are considered unchanged
from those outlined on pages 62 to 68 of our 2023 Annual Report and
Accounts. These are: IT and information security; talent
development and retention; financial controls (foreign exchange,
treasury and tax); consumer and customer trends; legal and
regulatory compliance; business transformation; market and economic
disruption, including emerging markets; health and safety;
sustainability and the environment; and supply chain and logistics.
All these cover matters in Nigeria.
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.
The interim
financial statements for the half year ended 2 December 2023 do not
constitute statutory accounts within the meaning of section 434 and
435 of the Companies Act 2006. The financial information set out in
this document relating to the year ended 31 May 2023 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 26 September 2023 and have
been delivered to the Registrar of Companies. The report of the
auditors on these statutory accounts was unqualified and did not
contain a statement under section 498 of the Companies Act
2006.
Judgements and estimates
The preparation of 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 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 consolidated financial statements for the year ended 31 May
2023 which are described in note 1(d) of the 2023 Annual Report and
Accounts with the addition of deferred taxation assets:
Deferred taxation assets
Deferred taxation is provided on
temporary differences between the carrying amounts of assets and
liabilities recognised for financial reporting purposes and the
amounts used for taxation purposes, on an undiscounted basis. The
amount of deferred taxation provided is based on the expected
manner of realisation or settlement of the carrying amounts of
assets and liabilities, using tax rates enacted or substantively
enacted at the financial year-end date.
A deferred taxation asset is
recognised only to the extent that it is probable that future
taxable profits will be available against which the asset can be
utilised.
Deferred tax assets are recognised
for unused tax losses to the extent that it is probable that future
taxable profits will be available against which they can be used.
At 2 December 2023, the Group recorded a deferred tax asset
of £31.0 million (31 May 2023: £3.6 million) on recognised but
unused tax losses; the increase being largely due to FX losses
arising as a result of the Nigerian Naira devaluation. The Group
has concluded that the deferred tax assets will be recoverable as
it is probable that the related tax benefit will be realised in the
foreseeable future.
2.
Accounting
policies
The accounting policies are
consistent with those of the Annual Report and Accounts for the
year ended 31 May 2023. Taxes on income in the interim periods are
accrued using the tax rate that would be applicable to the expected
total annual profit or loss before taxation.
In the reporting period commencing 1
June 2023 the Group has applied the exception allowed by the
amendment to IAS 12 Income
Taxes to recognising and disclosing information about
deferred tax assets and liabilities relating to top-up income
taxes. Refer to note 7 for further details. The impact of other new
standards and amendments applied in the reporting period commencing
1 June 2023 is not material.
Restatements
As set out in the 2023 Annual Report
and Accounts, during the year ended 31 May 2023 management
identified a number of errors relating to prior periods.
Accordingly, prior year adjustments were made which are summarised
below (further details are provided in note 1(c) of the 2023 Annual
Report and Accounts). Further, in these condensed consolidated
interim financial statements, there has been a change in accounting
policy presentation of Own Shares for the half year ended 3
December 2022 in accordance with IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors to bring the presentation in line with
the 2023 Annual Report and Accounts. Own Shares are presented in a
separate reserve rather than being included in the other
reserves.
Intangible asset impairment - in the
year ended 31 May 2020 a number of businesses were disposed of by
the Group, resulting in the recognition of a £6.3 million
impairment charge in relation to capitalised software. The
accounting treatment of these impairments has subsequently been
reviewed and determined to be not in accordance with IAS 36
Impairment of Assets. The
effects of correcting for this error are to increase the previously
reported carrying value of intangible assets on the consolidated
balance sheet by £3.9 million as at 1 June 2022 with a
corresponding increase in the deferred tax liability of £1.0
million. The impact on the previously reported consolidated income
statement for the half year ended 3 December 2022 is not
material.
Childs Farm business combination -
in March 2022, the Group acquired Childs Farm. The non-controlling
interest of £3.3 million recognised on the business combination has
subsequently been reviewed and determined to be not in accordance
with IFRS 3 Business
Combinations. The effect of correcting for this error is to
reduce each of the previously reported carrying values of goodwill
and non-controlling interests on the consolidated balance sheet by
£3.3 million as at 1 June 2022. There is no impact on the
previously reported consolidated income statement for the half year
ended 3 December 2022.
The impact of restating the 1 June
2022 consolidated balance sheet (in line with the restatements in
the 2023 Annual Report and Acounts) is set out in the table
below:
|
|
Relating
to prior to 1 June 2022
|
|
|
|
As
previously reported
|
Intangible
asset
impairment
|
Childs
Farm
business
combination
|
As
restated
|
|
|
£m
|
£m
|
£m
|
£m
|
|
Consolidated balance sheet
|
|
|
|
|
|
Goodwill and other intangible
assets
|
330.6
|
3.9
|
(3.3)
|
331.2
|
|
Total assets
|
973.9
|
3.9
|
(3.3)
|
974.5
|
|
Retained earnings
|
(509.6)
|
(2.9)
|
-
|
(512.5)
|
|
Non-controlling interests
|
(30.8)
|
-
|
3.3
|
(27.5)
|
|
Deferred taxation
liabilities
|
(81.6)
|
(1.0)
|
-
|
(82.6)
|
|
Total equity and
liabilities
|
(973.9)
|
(3.9)
|
3.3
|
(974.5)
|
|
3.
Segmental analysis
The segmental information presented
in this note is consistent with management reporting provided to
the Executive Leadership Team (ELT), which is the Chief Operating
Decision Maker (CODM). The CODM reviews the Group's internal
reporting in order to assess performance and allocate resources and
has determined the operating segments based on these reports. The
CODM considers the business from a geographic perspective, with
Europe & the Americas, Asia Pacific and Africa being the
operating segments. In accordance with IFRS 8 Operating
Segments, the ELT has identified
these as the reportable segments.
The CODM assesses the performance
based on operating profit before any adjusting items. Revenues and
operating profit of the Europe & the Americas and Asia Pacific
segments arise from the sale of Hygiene, Beauty and Baby products.
Revenue and operating profit from the Africa segment also arise
from the sale of Hygiene, Beauty and Baby products as well as
Electrical products. The prices between Group companies for
intra-group sales of materials, manufactured goods, and charges for
franchise fees and royalties are on an arm's length
basis.
Central includes in terms of revenue
our in-house fragrance house, and in terms of cost, expenditure
associated with the global headquarters and above market functions
net of recharges to our regions.
Reporting used by the CODM to assess
performance does contain information about brand specific
performance, however global segmentation between the portfolio of
brands is not part of the regular internally reported financial
information.
Business segments
Half
year to 2 December 2023 (unaudited)
|
Europe
& the
Americas
£m
|
Asia
Pacific
£m
|
Africa
£m
|
Central
£m
|
Elimin-ations
£m
|
Total
£m
|
Gross segment revenue
|
99.2
|
92.1
|
90.8
|
22.0
|
(27.0)
|
277.1
|
Inter segment revenue
|
(2.0)
|
(3.3)
|
-
|
(21.7)
|
27.0
|
-
|
Revenue
|
97.2
|
88.8
|
90.8
|
0.3
|
-
|
277.1
|
Segmental operating profit/(loss)
before adjusting items and share of results of joint
ventures
|
12.4
|
15.7
|
5.9
|
(11.2)
|
-
|
22.8
|
Share of results of joint
ventures
|
-
|
-
|
7.8
|
-
|
-
|
7.8
|
Segmental operating profit/(loss) before adjusting
items
|
12.4
|
15.7
|
13.7
|
(11.2)
|
-
|
30.6
|
Adjusting Items
|
(29.0)
|
(0.9)
|
(76.4)
|
(14.0)
|
-
|
(120.3)
|
Segmental operating (loss)/profit
|
(16.6)
|
14.8
|
(62.7)
|
(25.2)
|
-
|
(89.7)
|
Finance income
|
|
|
|
|
|
8.3
|
Finance expense
|
|
|
|
|
|
(12.8)
|
Loss
before taxation
|
|
|
|
|
|
(94.2)
|
Half
year to 3 December 2022 (unaudited)
|
Europe
& the
Americas
£m
|
Asia
Pacific
£m
|
Africa
£m
|
Central
£m
|
Elimin-ations
£m
|
Total
£m
|
Gross segment revenue
|
101.9
|
105.7
|
133.2
|
44.9
|
(48.8)
|
336.9
|
Inter segment revenue
|
(2.4)
|
(3.5)
|
-
|
(42.9)
|
48.8
|
-
|
Revenue
|
99.5
|
102.2
|
133.2
|
2.0
|
-
|
336.9
|
Segmental operating profit before
adjusting items and share of results of joint ventures
|
9.5
|
15.4
|
12.1
|
(7.5)
|
-
|
29.5
|
Share of results of joint
ventures
|
-
|
-
|
3.7
|
-
|
-
|
3.7
|
Segmental operating profit/(loss) before adjusting
items
|
9.5
|
15.4
|
15.8
|
(7.5)
|
-
|
33.2
|
Adjusting Items
|
(5.4)
|
(0.3)
|
11.7
|
-
|
-
|
6.0
|
Segmental operating profit/(loss)
|
4.1
|
15.1
|
27.5
|
(7.5)
|
-
|
39.2
|
Finance income
|
|
|
|
|
|
4.9
|
Finance expense
|
|
|
|
|
|
(3.6)
|
Profit before taxation
|
|
|
|
|
|
40.5
|
3.
Segmental analysis (continued)
Year
to 31 May 2023 (audited)
|
Europe
& the
Americas
£m
|
Asia
Pacific
£m
|
Africa
£m
|
Central
£m
|
Elimin-ations
£m
|
Total
£m
|
Gross segment revenue
|
210.2
|
197.8
|
256.3
|
74.0
|
(82.0)
|
656.3
|
Inter segment revenue
|
(4.4)
|
(7.1)
|
-
|
(70.5)
|
82.0
|
-
|
Revenue
|
205.8
|
190.7
|
256.3
|
3.5
|
-
|
656.3
|
Segmental operating profit before
adjusting items and share of results of joint venture
|
29.3
|
27.5
|
29.7
|
(20.7)
|
-
|
65.8
|
Share of results of joint
venture
|
-
|
-
|
7.5
|
-
|
-
|
7.5
|
Segmental operating profit/(loss) before adjusting
items
|
29.3
|
27.5
|
37.2
|
(20.7)
|
-
|
73.3
|
Adjusting Items
|
(28.9)
|
2.1
|
11.1
|
2.1
|
-
|
(13.6)
|
Segmental operating profit/(loss)
|
0.4
|
29.6
|
48.3
|
(18.6)
|
-
|
59.7
|
Finance income
|
|
|
|
|
|
15.4
|
Finance expense
|
|
|
|
|
|
(13.3)
|
Profit before taxation
|
|
|
|
|
|
61.8
|
The
Group analyses its net revenue by the following
categories:
|
Unaudited
|
Unaudited
|
Audited
|
|
Half year
to
2 December
2023
|
Half year
to
3 December
2022
|
Year
to
31
May
2023
|
|
£m
|
£m
|
£m
|
Hygiene
|
153.0
|
174.0
|
334.8
|
Baby
|
55.6
|
66.1
|
123.1
|
Beauty
|
32.1
|
40.2
|
85.3
|
Electricals
|
34.3
|
52.7
|
105.4
|
Other
|
2.1
|
3.9
|
7.7
|
|
277.1
|
336.9
|
656.3
|
4.
Adjusting items
Adjusting items expense/(income),
all of which are within continuing operations, comprise:
|
Unaudited
Half year
to
2 December
2023
£m
|
Unaudited
Half year
to
3 December
2022
£m
|
Audited
Year
to
31
May
2023
£m
|
Simplification and
transformation
|
5.5
|
6.2
|
(2.9)
|
Acquisition and disposal-related
items
|
-
|
(0.2)
|
0.7
|
Impairment charge (net of impairment
reversal)
|
24.4
|
-
|
(10.1)
|
Foreign exchange losses arising on
Nigerian Naira devaluation
|
88.2
|
-
|
-
|
Foreign exchange losses arising on
Naira devaluation on joint venture
|
2.2
|
-
|
-
|
Adjusting items before taxation
|
120.3
|
6.0
|
(12.3)
|
Taxation
|
(32.5)
|
(0.1)
|
4.7
|
Adjusting items after taxation
|
87.8
|
5.9
|
(7.6)
|
Adjusting items relating to
simplification and transformation and impairment charges are
included in administration expense, and foreign exchange losses
arising on the Nigerian Naira devaluation are included in cost of
sales (£72.2 million) and administration expense (£16.0
million).
A description of the principal
adjusting items is provided below.
4.
Adjusting items (continued)
Simplification and transformation
For the half year ended 2 December
2023, these costs primarily relate to the following projects which
commenced in FY22: three-year finance transformation project, HR
simplification project and supply chain transformation project. For
the half year ended 3 December 2022, the profit on disposal of
properties in Nigeria was partially offset by costs relating to the
three-year finance transformation project, the HR simplification
project and supply chain transformation project.
Acquisition and disposal-related items
For the half year ended 2 December
2023, these costs were £nil. For the half year ended 3 December
2022, these costs relate to the Childs Farm acquisition.
Impairment charge (net of impairment
reversals)
For the half year ended 2 December
2023, this charge relates to the impairment of the Sanctuary Spa
brand. See Note 5. For the half year ended 3 December 2022, the
impairment charge was £nil.
Foreign exchange losses arising on Nigerian Naira
devaluation
For the half year ended 2 December
2023, this primarily relates to realised and unrealised foreign
exchange losses resulting from the Nigerian Naira devaluation on
USD denominated liabilities which existed at 31 May 2023. The
closing NGN/GBP rate at 2 December 2023 was 1,176 (3 December 2022:
546; 31 May 2023: 577), and the average NGN/GBP for the half year
ended 2 December 2023 was 915 (half year ended 3 December 2022:
509; year ended 31 May 2023: 536).
5.
Intangible assets
In the half year ended 2 December
2023, there was an impairment charge of £24.4 million relating to
the Sanctuary Spa brand. The recoverable amount of the brand was
determined to be £38.6 million based on a value in use calculation,
which when compared to a carrying value of £63.0 million (of which
the brand represented £58.9 million) resulted in an impairment
charge of £24.4 million. The long-term growth rate and discount
rate used in the value in use calculations were 2% and 9.0%
respectively.
In the 2023 Annual Report and
Accounts, a sensitivity analysis of a reasonably possible change in
gross margin was disclosed. In the half year ended 2 December 2023,
the performance of the Sanctuary Spa brand was below expectations,
and the aforementioned reasonably possible change, due to events
and circumstances in the period (primarily related to
unsatisfactory commercial execution) which could not have been
reasonably foreseen at 31 May 2023. Accordingly, management has
adopted a more cautious future outlook for the brand. Sensitivity
analysis has been carried out in the half year ended 2 December
2023 and a reasonably possible change where gross margin was to
decline by 100bps within the five-year forecast period would
increase the impairment charge by £2.6 million and where the
discount rate were to increase by 100bps would increase the
impairment charge by £4.9 million.
A review of impairment indicators
was undertaken for the other brands with impairment assessments
performed on St.Tropez, Charles Worthington and Childs Farm with no
impairments noted. There was only £0.1 million of headroom on the
impairment testing for the Charles Worthington brand. Sensitivity
analysis has been carried out in the half year ended 2 December
2023 and a reasonably possible change where gross margin was to
decline by 100bps within the five-year forecast period would result
in an impairment charge of £0.6 million and where the discount rate
were to increase by 100bps would result in an impairment charge of
£1.4 million.
In the half year ended 3 December
2022, the impairment charge was £nil.
6.
Capital
commitments
At 2 December 2023, the Group had
entered into commitments for the acquisition of property, plant and
equipment amounting to £0.4 million (3 December 2022: £0.9
million). At 2 December 2023, the Group's share in the capital
commitments of joint ventures was £nil (3 December 2022:
£nil).
7.
Taxation
Income tax expense is recognised on
management's best estimate of the annual tax rate expected for the
full financial year. The estimated average annual tax rate used for
the half year ended 2 December 2023, before adjusting items, is
28.9% (half year ended 3 December 2022:
22.7%) and the effective tax rate to be used on adjusted profit
before taxation is 20.3% (half year ended 3
December 2022: 26.6%).
The calculation of the Group's total
tax charge necessarily involves a degree of estimation and
judgement in respect of certain items whose tax treatment cannot be
finally determined until resolution has been reached with the
relevant tax authority or, as appropriate, through a formal legal
process. At 2 December 2023, the Group had a provision of £23.7
million, contingent liabilities of £7.4 million and contingent
assets of £2.3 million in respect of such uncertain tax positions
(31 May 2023: provision of £25.2 million, contingent liabilities of
£7.8 million and contingent assets of £2.2 million). The Group is
subject to routine tax audits in all of its operating jurisdictions
and certain assessments take place in overseas markets where there
is a history of large claims being received, albeit which are
considered to have little or no basis. Contingent liabilities are
those uncertain tax risks that the Group considers to have a
possible risk of crystallisation.
On 20 June 2023, Finance (No.2) Act
2023 was substantively enacted in the UK, introducing a global
minimum effective tax rate of 15%. The legislation implements a
domestic top-up tax and a multi-national top-up tax effective for
accounting periods on or after 31 December 2023. The Group is
assessing the impact of the new legislation which will be effective
for the Group from 1 June 2024. The Group has applied the exception
allowed by an amendment to IAS 12 Income Taxes to recognising and
disclosing information about deferred tax assets and liabilities
relating to top-up income taxes.
8.
Dividends
An interim dividend of 1.50p per
share for the half year to 2 December 2023 (3 December 2022: 2.67p)
has been declared totalling £6.3 million (3 December 2022:
£11.2 million) and is payable on 4 April 2024 to shareholders on
the register at the close of business on 8 March 2024.
The final dividend for the year
ended 31 May 2023 of 3.73p per share, totalling £15.6 million, was
approved by shareholders at the Annual
General Meeting of the Company and paid on 30 November
2023.
9. Reconciliation of
(loss)/profit before taxation to cash generated from operations
|
Unaudited
Half year
to
2 December
2023
|
Unaudited
Half year
to
3 December
2022
|
Audited
Year
to
31
May
2023
|
|
£m
|
£m
|
£m
|
(Loss)/profit before taxation
|
(94.2)
|
40.5
|
61.8
|
Net finance
expense/(income)
|
4.5
|
(1.3)
|
(2.1)
|
Operating (loss)/profit
|
(89.7)
|
39.2
|
59.7
|
Depreciation
|
5.5
|
5.2
|
12.1
|
Amortisation
|
3.6
|
3.1
|
7.0
|
Impairment of tangible and intangible
assets
|
24.4
|
0.1
|
16.5
|
Impairment reversal on intangible
assets reclassified as held for sale
|
-
|
-
|
(4.2)
|
Profit on sale of assets
|
-
|
(11.7)
|
(11.1)
|
Impairment reversal of net
investments in joint ventures
|
-
|
-
|
(2.2)
|
Difference between pension charge and
cash contributions
|
(0.3)
|
(0.3)
|
0.5
|
Share-based payment
expense
|
0.9
|
1.2
|
1.7
|
Share of results of joint
venture
|
(5.6)
|
(3.7)
|
(7.5)
|
Operating cash flows before movements in working
capital
|
(61.2)
|
33.1
|
72.5
|
Movements in working
capital:
|
|
|
|
Inventories
|
(8.8)
|
(23.5)
|
(8.4)
|
Trade and other
receivables
|
24.1
|
(13.9)
|
(13.4)
|
Trade and other payables
|
68.3
|
15.8
|
30.3
|
Provisions
|
-
|
(4.5)
|
(4.4)
|
Cash
generated from operations
|
22.4
|
7.0
|
76.6
|
10. Net debt reconciliation
Group net debt, which is an
alternative performance measure, comprises the
following:
|
Audited
At 1 June
2023
|
Unaudited
Cash
flow
|
Unaudited
Foreign
exchange
movements
|
Unaudited
Other*
|
Unaudited
At 2 December
2023
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
Cash at bank and in hand
|
127.4
|
(18.9)
|
(37.8)
|
-
|
70.7
|
Short term deposits
|
129.0
|
(11.5)
|
(60.1)
|
-
|
57.4
|
Cash
and cash equivalents
|
256.4
|
(30.4)
|
(97.9)
|
-
|
128.1
|
Current asset investments
|
0.5
|
-
|
-
|
-
|
0.5
|
Current borrowings
|
-
|
(6.4)
|
0.1
|
-
|
(6.3)
|
Non-current borrowings
|
(251.2)
|
32.0
|
-
|
0.2
|
(219.0)
|
Net
cash/(debt)
|
5.7
|
(4.8)
|
(97.8)
|
0.2
|
(96.7)
|
Lease liabilities
|
(13.0)
|
1.3
|
0.1
|
(1.5)
|
(13.1)
|
Net
debt including lease liabilities
|
(7.3)
|
(3.5)
|
(97.7)
|
(1.3)
|
(109.8)
|
* Other
includes lease additions, an increase in the lease liability
arising from the unwinding of interest element and unamortised fees
on borrowings.
During the year ended 31 May 2023,
the Group agreed a new £325 million committed credit facility which
is available for general corporate purposes. The credit facility
incorporates both a term loan and revolving credit facility (RCF)
structure, with maturity dates of up to November 2028.
Non-current borrowings as at 2 December 2023 are presented
net of £1.0 million (31 May 2023: £0.8 million) of unamortised
financing fees. As at 2 December 2023, this facility was £220
million drawn (31 May 2023: £252 million).
In addition, the Group retains other
unsecured and uncommitted facilities that are primarily used for
trade-related activities. As at 2 December 2023, these amounted to
£128.7 million (31 May 2023: £199.8 million) of which £54.4
million, or 42.0% were utilised (31 May 2023: £93.3 million or
47%).
Overdrafts do not form part of the
Group's main borrowing facility and only arise as part of the
Group's banking arrangements with key banking partners. As at 2
December 2023, there were no bank overdrafts (31 May 2023:
£nil)
11. Retirement benefits
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 financial statements and amended to reflect changes in
market conditions where appropriate from those applied at 31 May
2023. The key assumptions applied were:
|
Unaudited
|
Unaudited
|
Audited
|
|
Half year
to
2 December
2023
|
Half year
to
3 December
2022
|
Year
to
31
May
2023
|
Rate of increase in retirement
benefits in payment
|
3.00%
|
2.80%
|
2.90%
|
Discount rate
|
5.30%
|
4.45%
|
5.40%
|
Inflation assumption (RPI)
|
3.20%
|
2.95%
|
3.10%
|
12.
Financial instruments
The carrying amounts of each class
of financial instruments were:
Financial assets
|
Unaudited
Half year
to
2 December
2023
£m
|
Unaudited
Half year
to
3 December
2022
£m
|
Audited
Year
to
31
May
2023
£m
|
Derivatives designated as hedging
instruments
|
|
|
|
Forward foreign exchange
contracts
|
0.1
|
0.6
|
0.8
|
Derivatives not designated as hedging
instruments
|
|
|
|
Forward foreign exchange
contracts
|
0.1
|
3.6
|
0.2
|
Equity instruments at fair value through profit or
loss
|
|
|
|
Current asset investments
|
0.5
|
0.5
|
0.5
|
Debt
instruments at amortised cost
|
|
|
|
Cash and cash equivalents
|
128.1
|
195.8
|
256.4
|
Net trade receivables and other
receivables
|
87.8
|
106.7
|
110.3
|
Amounts owed by joint
ventures
|
0.9
|
12.3
|
2.2
|
Long-term loans owed by joint
ventures
|
34.6
|
40.6
|
40.3
|
|
252.1
|
360.1
|
410.7
|
Financial liabilities
|
Unaudited
Half year
to
2 December
2023
£m
|
Unaudited
Half year
to
3 December
2022
£m
|
Audited
Year
to
31
May
2023
£m
|
Non-current interest-bearing loans and borrowings at amortised
cost
|
|
|
|
Bank loans and borrowings
|
219.0
|
232.0
|
251.2
|
Current interest-bearing loans and borrowings at amortised
cost
|
|
|
|
Bank loans and borrowings
|
6.3
|
-
|
-
|
Derivatives designated as hedging
instruments
|
|
|
|
Forward foreign exchange
contracts
|
0.3
|
0.4
|
0.1
|
Derivatives not designated as hedging
instruments
|
|
|
|
Forward foreign exchange
contracts
|
0.1
|
0.1
|
0.4
|
Other financial liabilities at fair value through profit or
loss
|
|
|
|
Other payables
|
5.9
|
5.9
|
5.9
|
Other financial liabilities at amortised
cost
|
|
|
|
Trade and other payables
|
161.4
|
177.0
|
175.5
|
Lease liabilities
|
13.1
|
14.0
|
13.0
|
|
406.1
|
429.4
|
446.1
|
There were no transfers between Level 1, 2 and 3 during the half
year ended 2 December 2023 and the year ended 31 May
2023.
At the end of the reporting period,
the Group held the following financial assets and liabilities at
fair value:
|
Unaudited
Half year
to
2 December
2023
£m
|
Unaudited
Half year
to
3 December
2022
£m
|
Audited
Year
to
31
May
2023
£m
|
Fair value
level
|
|
£m
|
£m
|
£m
|
|
Assets held at fair value
|
|
|
|
|
Current asset investments
|
0.5
|
0.5
|
0.5
|
Level
3
|
Derivative financial
assets
|
0.2
|
4.2
|
1.0
|
Level
2
|
Liabilities held at fair value
|
|
|
|
|
Derivative financial
liabilities
|
0.4
|
0.5
|
0.5
|
Level
2
|
Other payables
|
5.9
|
5.9
|
5.9
|
Level
3
|
12.
Financial instruments (continued)
Current asset investments comprise
non-listed equity investments. A discounted cash flow methodology
is used to estimate the present value of the expected future
economic benefits to be derived from the ownership of these
investments. Derivative financial instruments comprise forward
foreign exchange contracts. Fair value is calculated using
observable market data where it is available and includes spot rate
and observable market forward points as discounted to reflect the
time value of money. Counterparty credit is monitored. No
adjustment to the fair value for credit risk is made due to
materiality. Other payables held at fair value relate to deferred
purchase consideration on the acquisition of Childs Farm which was
estimated by applying an appropriate discount rate to the expected
future payments. The key assumptions take into consideration the
probability of meeting each performance target and the discount
factor. Should the target not be met, no consideration would be
payable, and should the discount rate applied be changed, the fair
value of the deferred purchase consideration would change, however
the amount of consideration that would ultimately be paid would not
necessarily change.
The movements in the half year ended
2 December 2023 and the year ended 31 May 2023 for financial
instruments measured using Level 3 valuation methods are presented
below:
|
Unaudited
Half year
to
2 December
2023
£m
|
Audited
Year
to
31
May
2023
£m
|
|
£m
|
£m
|
Current asset investments
|
|
|
At 1 June
|
0.5
|
0.5
|
Remeasurement
|
-
|
-
|
|
0.5
|
0.5
|
|
|
|
Other payables
|
|
|
At 1 June
|
5.9
|
7.2
|
Remeasurement
|
-
|
(1.3)
|
|
5.9
|
5.9
|
Current asset investments comprise
non-listed equity investments. A discounted cash flow methodology
is used to estimate the present value of the expected future
economic benefits to be derived from the ownership of these
investments.
Other payables relate to deferred
purchase consideration on the acquisition of Childs Farm, which was
estimated by applying an appropriate discount rate to the expected
future payments. The key assumptions take into consideration the
probability of meeting each performance target and the discount
factor. Should the target not be met, no consideration would be
payable, and should the discount rate applied be changed, the fair
value of the deferred purchase consideration would change, but the
amount of consideration that would ultimately be paid would not
necessarily change. At 2 December 2023, there was no change in the
key assumptions.
For the financial assets and
liabilities not held at fair value, there was no material
difference between their carrying values and their fair values,
except for non-current borrowings which are presented net of
unamortised issuance costs of £1.0 million.
13.
Post balance sheet events
Subsequent to 2 December
2023, the Nigerian Naira exchange rate has continued to depreciate.
The NGN/GBP closing exchange rate on 31 January 2024 was 1,852
compared to a closing rate of 1,176 on 2 December 2023.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that these
condensed consolidated interim financial statements have been
prepared in accordance with UK adopted International Accounting
Standard 34 Interim Financial
Reporting and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority 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 and
accounts.
The Directors of PZ Cussons plc are
listed on page 33. A list of current Directors is maintained on the
PZ Cussons plc website.
By order of the Board
Mr K Massie
Company Secretary
6 February 2024
Independent review report to PZ
Cussons plc
Report on the condensed consolidated
interim financial statements
Our conclusion
We have reviewed PZ Cussons plc's
condensed consolidated interim financial statements (the "interim
financial statements") in the 2024 interim results of PZ Cussons
plc for the 6 month period ended 2 December 2023 (the
"period").
Based on our review, nothing has
come to our attention that causes us to believe that the interim
financial statements are not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
The interim financial statements
comprise:
· the condensed consolidated balance sheet as at
2 December 2023;
· the condensed consolidated income statement and the condensed
consolidated statement of comprehensive income for the period then
ended;
· the condensed consolidated cash flow statement for the period
then ended;
· the condensed consolidated statement of changes in equity for
the period then ended; and
· the explanatory notes to the interim financial
statements.
The interim financial statements
included in the 2024 interim results of PZ Cussons plc have been
prepared in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Basis for conclusion
We conducted our review in
accordance with International Standard on Review Engagements (UK)
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 ("ISRE (UK) 2410").
A review of interim financial information consists of making
enquiries, 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.
We have read the other information
contained in the 2024 interim results and considered whether it
contains any apparent misstatements or material inconsistencies
with the information in the interim financial
statements.
Conclusions relating to going
concern
Based on our review procedures,
which are less extensive than those performed in an audit as
described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors
have inappropriately adopted the going concern basis of accounting
or that the directors have identified material uncertainties
relating to going concern that are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410. However, future events or
conditions may cause the group to cease to continue as a going
concern.
Responsibilities for the interim
financial statements and the review
Our responsibilities and those of
the directors
The 2024 interim results, including
the interim financial statements, is the responsibility of, and has
been approved by the directors. The directors are responsible for
preparing the 2024 interim results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority. In preparing the 2024
interim results, including the interim financial statements, the
directors are responsible for assessing the group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility is to express a
conclusion on the interim financial statements in the 2024 interim
results based on our review. Our conclusion, including our
Conclusions relating to going concern, is based on procedures that
are less extensive than audit procedures, as described in the Basis
for conclusion paragraph of this report. This report, including the
conclusion, has been prepared for and only for the company for the
purpose of complying with the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority and for no other purpose. We do not, in giving this
conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent
in writing.
PricewaterhouseCoopers
LLP
Chartered Accountants
Manchester
6 February 2024
Directors
Chair
D Tyler *
Chief Executive
J Myers
Chief Financial Officer
S Pollard
K Bashforth *
V Juarez *
J Nicolson *
J Sodha *
J Townsend *
* Non-Executive
Company Secretary
K Massie
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