TIDMPZC
RNS Number : 8205N
PZ CUSSONS PLC
27 September 2023
Correction to the announcement made at 07:00 (RNS No 5993N) on
26 September 2023: The final dividend will be paid to shareholders
on the register at the close of business on 3 November 2023, not 2
November 2023 as previously announced. All other details remain
unchanged. The corrected announcement is set out below.
26 September 2023
RESULTS FOR THE YEARED 31 MAY 2023
Third year of like for like revenue growth
Continued strategic progress against a challenging external
backdrop
Jonathan Myers, Chief Executive Officer, said: "We have
delivered a third consecutive year of like for like revenue growth
and increased operating profit by over 10% since launching our
strategy nearly three years ago. We have achieved these
improvements by investing in our brands and capabilities, serving
cost-conscious consumers better with targeted innovation and
productivity initiatives helping us to reduce complexity across the
Group.
In FY23 sustained momentum in our ANZ business and the return of
the UK Personal Care business to growth by the end of the year
demonstrated our ability to improve and sustain business unit
performance even in a year when we had to absorb further
significant cost inflation.
Group performance in the new financial year has been in line
with our expectations and, with clear near-term priorities, we
expect to deliver another year of LFL revenue and strong constant
currency operating profit growth in FY24. There is more to do as we
seek to maximise the company's full potential, and there are
well-documented challenges to be navigated in Nigeria. However, we
continue to believe that we can build a higher growth, higher
margin, simpler and more sustainable business."
GBPm Adjusted Statutory
unless otherwise
stated
2023 2022 variance 2023 2022(1) variance
------- ------- --------- ------ -------- ---------
Revenue 656.3 592.8 10.7% 656.3 592.8 10.7%
------- ------- --------- ------ -------- ---------
LFL revenue growth 6.1% 2.9% n/a
------- ------- --------- ---------------------------
Operating profit 73.3 67.1 9.2% 59.7 65.8 (9.3)%
------- ------- --------- ------ -------- ---------
Operating margin 11.2% 11.3% (10)bps 9.1 % 11.1% (200)bps
------- ------- --------- ------ -------- ---------
Profit before
tax 74.1 65.8 12.6 % 61.8 64.5 (4.2)%
------- ------- --------- ------ -------- ---------
Basic earnings
per share 11.23p 12.57p (10.7)% 8.70p 11.88p (26.8)%
------- ------- --------- ------ -------- ---------
Dividend per share 6.40p 6.40p
-------------------- --------------------------- ------ -------- ---------
See page 14 for definitions of key terms and page 15 for the
reconciliation of Alternative Performance Measures to Statutory
Results
All numbers are shown based upon continuing operations, unless
otherwise stated
With the exception of LFL revenue growth, all % changes are
shown at actual FX rates
[1] FY22 restated as a result of certain prior year adjustments
- see note 1 of the consolidated financial statements for further
details
Delivering against the strategy
-- Third consecutive year of like-for-like (LFL) revenue growth.
-- Majority of Must Win Brands in growth and strong performance in Portfolio Brands.
-- A successful first full year of ownership of Childs Farm with 12% revenue growth in FY23.
-- Continued expansion from the core, with the launch of Morning
Fresh into the auto dishwash market and the geographic expansion of
Original Source and Imperial Leather.
-- Supply Chain transformation is on track, reducing complexity
across the Group and improving innovation, efficiency and
capabilities.
-- Further strengthening of the leadership team, including the
appointment of a new Chief People Officer and Chief Information
Officer as well as new local leaders for our Nigerian and
Indonesian businesses.
-- Intention to buy out the minority shareholding of PZ Cussons
Nigeria plc, and de-list, creating value for Group shareholders and
significantly simplifying and strengthening our future business in
Africa.
[2] Original Source and Imperial Leather launches took place
following the end of the FY23 financial year
Financial results
-- Reported revenue grew 10.7% as a result of LFL revenue
growth, the contribution of Childs Farm, which was acquired in
March 2022, and favourable FX movements.
-- Adjusted operating profit margin broadly flat as an 80bps
improvement in gross profit margin funded increased investment in
capabilities and offset cost inflation. Adjusted operating profit
margin improved, excluding Childs Farm.
-- Continued profitable revenue growth in Nigeria contributed to
the Group's 12.6% growth in adjusted profit before tax but the
impact of the resulting tax charge and increased non-controlling
interest led to an adjusted EPS decline of 10.7%.
-- On a statutory basis, the operating margin declined by 200bps
and EPS declined by 26.8%, reflecting a GBP16.5 million impairment
of the Sanctuary Spa brand, as well as increased investment related
to transformation.
-- Improved cash generation with free cash flow of GBP69.9
million (FY22: GBP58.0 million) primarily driven by an improvement
in working capital, resulting in a net adjusted cash position of
GBP5.7 million.
-- Increase in gross borrowings to GBP251.2 million (FY22:
GBP174.0 million) reflecting the challenges of repatriating cash
from Nigeria, where the cash balance was approximately GBP200
million.
-- Proposed final dividend unchanged versus the prior year,
reflecting the devaluation of the Naira following the year end,
which is expected to have a material adverse impact on the
near-term reported financial performance.
[3] See page 15 for definitions of key terms
Current trading and outlook
Current trading
FY24 performance to date has been in line with expectations,
with modest year on year growth in LFL revenue and a higher
operating profit margin. We have seen continued good revenue growth
in Nigeria and ANZ, a stable performance in the UK, offset by a
further decline in Indonesia.
FY24 Outlook
The macroeconomic environment in Nigeria, including the foreign
exchange market and other fiscal reforms, will be a key determinant
of our overall Group FY24 financial results. We have operational
and corporate plans in place to mitigate these challenges and are
already executing a number of these to improve the performance of
the business and to optimise the Group's cash position.
We expect to deliver a fourth consecutive year of Group LFL
revenue growth, with strong constant currency operating profit
growth, benefiting from the changes already made to strengthen the
business as well as a slightly more benign input cost environment.
We therefore expect to deliver adjusted operating profit within the
range of current market expectations. More details on the
translational impact of the recent devaluation are provided on page
13.
[4] Consensus adjusted operating profit range of GBP61.5 to
GBP68.2 million based on Bloomberg as at 21 September 2023
Announcement regarding Auditor
As previously announced, the Group has been conducting a tender
process for the role of external auditor for the financial year
ending 31 May 2024. The Group is pleased to confirm that PwC has
been selected and their appointment is expected to be proposed to
shareholders at the Annual General Meeting in November.
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, Charlie Twigg
Investor and Analyst webcast and conference call
PZ Cussons' management will host a live webcast for analysts and
institutional investors at 10.30am UKT to present the results and
provide the opportunity for Q&A. The webcast is available via
the PZ Cussons corporate website (www.pzcussons.com) and directly
at
www.investis-live.com/pzcussons/65096621673c270c0094bd37/olkkq
For those wishing to ask a question, the dial-in details are as
follows:
Dial in: +44 20 4587 0498
Access code: 256066
Notes to Editors
About PZ Cussons
PZ Cussons is a FTSE250 listed consumer goods business
headquartered in Manchester, UK. We employ nearly 3,000 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 macro-economic, 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.
This announcement contains inside information for immediate
release.
GROUP REVIEW
Introduction from our Chief Executive Officer
We are now approaching three years into our strategy and we have
continued to make good progress. We have sought to regain our focus
on the consumer while re-investing in our brands and building
capabilities. We are also being selective about where we should
play and how we can win. In doing so, we have sought to build a
higher growth, higher margin, simpler and more sustainable
business.
It is therefore encouraging that we have delivered a third
consecutive year of LFL revenue growth. Our improved gross profit
margin compared to FY22 has also allowed us to invest in marketing
and capabilities while broadly maintaining the Group's adjusted
operating profit margin. This progress has been achieved whilst
responding to the well-documented macroeconomic challenges -
absorbing for example approximately GBP80 million of inflationary
costs over the last three years whilst continuing to meet the needs
of the cost-conscious consumer. While much remains to be done, we
have made good progress to date.
On behalf of the Board, I would like to thank the PZ Cussons
teams worldwide for their continued energy and tenacity in these
challenging conditions and our suppliers and customers for their
valued partnership.
Our strategic progress: Building brands for life. Today and for
future generations.
In March 2021, we set out our new strategy: 'Building brands for
life. Today and for future generations.' We defined where we will
play, focusing on the core categories of Hygiene, Baby and Beauty
in our four priority markets of the UK, ANZ, Indonesia and Nigeria,
with a particular focus on our Must Win Brands, using the 'PZ
Cussons Growth Wheel' as our repeatable model for successful
execution. Underpinning this strategy, our growth will be enabled
by strengthening our approach to capabilities, talent and
leadership, culture and sustainability. Running through everything
we do is a drive to dramatically reduce complexity across our
business.
Our strategy is built upon attractive market and category
fundamentals. Our revenue is split approximately evenly by
developing and developed markets, allowing us to balance the
revenue growth typically seen in faster-growing markets with the
more attractive margin profiles in more established markets. Our
brands are 'locally-loved' in their respective categories -
benefitting from local consumer insight and proximity to customers
but supported by our global capabilities and efficiencies. We see
significant potential for long-term market growth with, for
example, a GBP3.5bn market opportunity in Baby personal care across
our largest markets with Nigeria and Indonesia amongst the largest
five markets globally for birth rates. Across our businesses, we
are increasingly adopting a position and mindset of a 'challenger'
- bringing scale to compete against smaller, local players and
bringing agility and strong consumer and customer understanding to
compete against larger players.
[5]Estimates based upon Euromonitor data
Our strategic progress in FY23
Throughout the year, we made good progress across the key areas
of our strategy:
#1 Build Brands: investing in our brands to drive awareness and
loyalty
Following the acquisition of Childs Farm in March 2022, we have
sought to further strengthen the brand in FY23 and, in March,
launched 'SlumberTime' - an innovative three-part range which has
been created using sleep-enhancing technology to aid the sleep of
babies as well as their parents. We have also started to accelerate
international expansion, with a launch in the US on Amazon, whilst
strengthening our existing footprint in markets such as the Middle
East. Childs Farm revenue grew 12% in FY23 and we believe we can
triple the brand's revenue over the next five years.
In February, we launched Morning Fresh, our market-leading hand
dishwash brand in Australia, into the auto dishwash category as we
seek to take our existing brands into new category adjacencies. The
auto dishwash segment is around twice the size of the hand-dishwash
segment and is growing significantly faster. Early signs are
promising, with strong feedback from key customers in
Australia.
Original Source was launched into the Spanish market for the
first time in July 2023 with a launch campaign focused on Out of
Home and social media activations. The sector in Spain is worth
around GBP300m and is Europe's third largest bath and shower gel
market, signalling the strength and ambition of the brand to
continue to grow.
In Nigeria, we launched 'Joy Black', a consumer-insight-led
innovation for the Beauty soap. Establishing a differentiated
position in the soap segment and with a campaign which speaks to
local cultural themes, results have been strong, with revenue
growth in the year of over 20%, a doubling of gross margin and an
11 percentage point increase in consumer awareness.
There remains more to be done to fully maximise the opportunity
for a number of brands however and to understand the brands'
responsiveness to promotional and marketing activity. We continue,
for example, to seek to strengthen St.Tropez's presence in the UK,
where it has underperformed compared to the US, reflecting the
brand's positioning and relative historic levels of investment.
Similarly, we have seen more challenging trading in Sanctuary Spa
where, against a difficult category backdrop, the brand's
re-staging, whilst allowing for improvements in price/mix, has
fallen short of our first-year expectations.
More broadly, we continue to strengthen brand-building
capabilities across the organisation, rolling out 3-year brand
plans for each of our markets with a focus on our Must Win Brands
and assessing opportunities for geographic and category expansion.
A number of these, such as the Morning Fresh auto dishwash launch,
have already been enacted. Brand Investment increased in FY23 and
we continue to prioritise spending on the highest-returning
brands.
[6] Euromonitor
#2 Serve consumers: winning where the consumer shops
In Nigeria, we sought to improve overall distribution and
customer service levels, in turn growing consumer penetration by
transforming our route-to-market capabilities, differentiating by
region and channel. We have increased the number of stores we serve
directly by nearly 50% compared to FY22, with priority stores,
benefiting from greater focus and a wider range of products,
increasing from 500 to 3,000.
Elsewhere, given Amazon's increasing importance and previously
unexploited opportunity, we have established a cross-category,
multi-functional, dedicated Amazon 'centre of excellence'. The team
is focused on driving optimal online performance, returns on
marketing investment and the longer-term strategy across
commercial, supply chain and marketing. We are using Amazon's vast
amount of data to glean consumer insights to better understand our
consumers and how they engage with our brands online. Online
represents 9% of revenue across the Group and we see an opportunity
for this to increase over time.
#3 Reduce complexity: simplifying our operations and portfolio
to improve returns and reduce risk
As part of our initiatives to simplify our operations, we have
been executing a number of transformational supply chain projects.
During FY23, these included outsourcing fragrance supply to third
parties, the near-shoring of our procurement function from
Singapore to Manchester, and the closure of our Thai soap factory
with corresponding outsourcing. These projects are now
well-progressed and are anticipated to achieve annualised cost
savings in the region of GBP2-3 million. Moreover, it is
anticipated that overall efficiency and capability within the
supply chain will be improved due to these initiatives.
In September 2023, we announced our intention to buy out and
de-list the minority shareholding of PZ Cussons Nigeria plc. Should
the transaction gain the necessary approvals, we anticipate that it
will significantly simplify and strengthen our business in
Africa.
#4 Develop people: investing in our teams to strengthen
capabilities
During the year, we made a number of new appointments to
strengthen organisational capabilities. As with earlier
investments, we are focused on bringing together the best external
and internal talent. In keeping with this, we hired a new Chief
People Officer and Chief Information Officer - both with strong
experience from senior positions at consumer goods companies - and
were delighted to promote internal talent to the roles of Managing
Director in Indonesia and Nigeria. For the first time in recent
history, Indonesian and Nigerian nationals are leading their
respective businesses.
Our annual engagement survey, in which 96% of employees
participated, shows evidence of the progress we are making to
strengthen our organisation and culture due to the changes and
investment in recent years. Overall engagement is at 73% - slightly
ahead of the previous year and benchmark. Particularly pleasing was
the 'motivation to go above and beyond' at 76% - an improvement on
last year's survey and six percentage points above benchmark.
Nevertheless, improvements are still being made in providing
clarity and transparency on reward and benefits and clearer career
pathways and opportunities.
#5 Grow sustainably: acting in the right way for long term
growth
We are making good progress towards becoming a more sustainable
business and environmental considerations are increasingly
considered hand-in-hand with commercial considerations, evidenced
by our continued strength in refills and the recent launch of
bio-degradable wipes in Indonesia.
Specifically, highlights of progress against the sustainability
goals which were established last year include:
- A reduction in virgin plastics in our packaging by 7.8% (vs.
2021 baseline) - an improvement from 5.1% reduction in FY22.
- A 49% reduction in waste sent to landfill (vs. 2021 baseline)
- an improvement from 20% reduction in FY22.
- An increase in certified or recycled paper to 96% (from 49% in FY22).
- Achievement of carbon neutrality in all operations outside of Africa.
However, further work remains to be done in this area, both with
respect to achieving the established targets and fully
communicating with stakeholders the progress we are making.
[7] Further detail, including TCFD required disclosures will be
provided in the FY23 Annual Report and Accounts
Serving the cost-conscious consumer
With consumer inflation rates increasing in many of our markets
throughout FY23, a key focus for our teams has been on better
serving the cost-conscious consumer. This has first and foremost
been achieved through targeting efficiencies across our supply
chain, as detailed later, reducing the need to pass through
inflation. We have, however, used innovation and our portfolio to
support the consumer at various price points.
In the UK, for example, recognising the growing importance of
the discounter channel in recent years, we developed and launched a
new Portfolio Brand, Cussons Creations, in June 2022. Set at a
value price point, this launch has allowed us to replace a number
of the Imperial Leather SKUs, which played at a similar price. The
launch has been positive, allowing us to grow the combined revenue
of Cussons Creations and Imperial Leather for the first time in
recent history, growing combined market share and distribution
points whilst positioning Imperial Leather as a more premium
brand.
In Kenya, we have taken the opportunity to relaunch Flamingo - a
Portfolio brand with a strong heritage targeting the value
consumer, which has lacked attention in recent years. As part of
the relaunch, like Imperial Leather, we have been successful in
growing the brand for the first time in several years, achieving
over 50% revenue growth as we have increased both volumes and
pricing whilst maintaining competitive pricing relative to
peers.
In Indonesia, the launch of a smaller 55ml pack size of Cussons
Baby Hair and Body Wash has allowed us to reduce the absolute price
point, enabling Indonesian parents to continue to access
high-quality bathing products for their babies despite a
significant reduction in disposable income.
Near-term priorities
As we look into FY24, we have established four priorities for
the business for the next 12 months, seeking to balance addressing
immediate challenges whilst setting the business up well for
long-term success. The priorities are:
1. Continue to simplify and strengthen our business in Nigeria.
2. Return the UK market to sustainable, profitable growth.
3. Accelerate brand growth in and beyond the core portfolio.
4. Continue to transform organisational capabilities.
In the long term, we are building a higher growth, higher
margin, simpler and more sustainable business. We maintain our LFL
revenue growth ambition of mid-single-digits and our ambition for
adjusted operating profit margins in the mid-teens.
Summary
In summary, we have continued to make good strategic progress,
with a third year of consecutive LFL revenue growth, delivering on
expectations despite the significant external challenges of cost
inflation and pressures on consumer spending. There is more to do
as we seek to maximise the company's full potential, and there are
well-documented challenges to be navigated in Nigeria. However, we
continue to believe that we can build a higher growth, higher
margin, simpler and more sustainable business.
FINANCIAL REVIEW
Overview of Group financial performance
We have delivered a solid financial performance in the context
of ongoing external volatility and uncertainty. Input cost
inflation remained high for much of the year, with approximately
GBP80 million of total inflation over the last three years, and
consumer spending remained under pressure in most of our markets.
Against this backdrop, we have managed to broadly maintain our
adjusted operating profit margin in FY23, as higher gross profits
were invested behind strategic capabilities and Brand
Investment.
Revenue grew 10.7%. This was driven by LFL revenue growth of
6.1% (GBP36.9 million), which reflected price/mix growth of 12.1%
and volume declines of 6.0%. Childs Farm, which was acquired in
March 2022, contributed GBP10.9 million to revenue growth, and
translational FX movements, reflecting a weakening of sterling
against most reporting currencies, contributed GBP15.7 million. We
saw growth in most of our Must Win Brands, with Carex, Sanctuary
Spa and Cussons Baby declining during the year. LFL revenue growth
in the fourth quarter of the year was 6.7%, driven by an 11.2%
improvement in price/mix and a 4.5% decline in volume.
Adjusted operating profit margin declined by 10bps as a
combination of successful innovation, RGM activity and productivity
initiatives drove a gross profit margin increase of 80bps, funding
investment in capabilities. Adjusted EPS declined by 10.7% as 12.6%
growth in adjusted profit before tax was more than offset by an
increased tax charge and an increased non-controlling interest,
each reflecting the growth in operating profit in our Nigerian
business. On a statutory basis, the operating margin declined
200bps due to the increased investment in transformation costs and
the impairment of Sanctuary Spa (see note 3), leading to a decline
in EPS from continuing operations of 26.8%.
Cash flow remained strong, with free cash flow of GBP69.9
million (FY22: GBP58.0 million) primarily driven by improved
working capital. Our adjusted net cash was GBP5.7 million. This
includes cash of approximately GBP200 million within Nigerian
entities which has been built up as a result of the challenges in
repatriating cash outside of the country. The Board have
recommended a final dividend of 3.73p, which is unchanged on the
prior year, reflecting the material adverse impact the devaluation
of the Naira is expected to have on the near-term reported
financial performance.
In preparing the Group financial statements for the year ended
31 May 2023, management identified prior year adjustments relating
to accounting for impairment on capitalised software in 2020 and
the acquisition of Childs Farm. These adjustments result in a
GBP0.6 million increase in total assets and a GBP0.6 million
reduction in profit for FY22. Further information on the nature of
these items is provided in note 1.
[8] Based on the 31 May 2023 balance sheet NGN/GBP rate of
NGN577
Performance by geography
Europe and the Americas (31.4% of FY23 Group revenue)
Reported
growth/ (decline)
GBPm, unless otherwise stated FY23 FY22 (%)
Revenue 205.8 193.0 6.6%
------- -------- -------------------
LFL revenue growth (0.5)% (12.3)% n/a
------- -------- -------------------
Adjusted operating profit 29.3 35.0 (16.3)%
------- -------- -------------------
Margin 14.2% 18.1% (390)bps
------- -------- -------------------
Operating profit 0.4 22.9 (98.3)%
------- -------- -------------------
Margin 0.2% 11.9% (1,170)bps
------------------------------- ------- -------- -------------------
Revenue grew 6.6%, driven by GBP10.9 million revenue
contribution from the acquisition of Childs Farm and favourable
foreign exchange movements, more than offsetting a 0.5% LFL decline
in revenue, which was driven principally by a decline in Carex. LFL
revenue growth improved materially in the second half of the year,
reflecting price/mix action taken earlier in the year and improved
volume trends in most of the brands.
The UK washing and bathing category - the largest category in
Europe and the Americas - declined in value terms by 3% in the year
as consumers sought to reduce spending against high inflation and
squeezed household budgets. Within the category, the hand hygiene
and bath segments were down, while we saw good growth in shower and
bar soap.
Reflecting these underlying trends, Sanctuary Spa saw revenue
decline as the re-staging of the brand fell below our expectations.
Carex hand sanitiser volumes fell significantly, but revenue trends
improved in the second half of the year.
We saw very strong, volume-driven revenue growth in Original
Source as it took share in the shower category. This performance
was driven by its successful '360' marketing throughout the year,
incorporating digital and out-of-home activity, building on the
success of last year's TV campaign and funded by increased overall
Brand Investment. Following the successful re-staging of Imperial
Leather, together with the launch of our new value brand Cussons
Creations, the two brands combined grew revenue compared to
Imperial Leather alone last year and represents the first year of
growth for the brand in a number of years, with gains in both
market share and distribution points.
Total St.Tropez revenue grew strongly, driven by significant
share gains in the US following a launch of the Luxe Serum
innovation in February, supported by our brand ambassador Ashley
Graham and which created a wider halo effect for the brand in the
second half of the year. The US also continued to benefit from the
distribution gains made during FY22. Trading in the UK was,
however, more challenging.
Childs Farm revenue grew 12% in the first full year of our
ownership. This has been driven by a renewed focus on the brand
proposition, innovation such as SlumberTime and increased
distribution in the UK, which has increased by over 20% since
acquisition.
Following a significant decline in the first half of the year,
the adjusted operating profit margin improved in the second half of
the year, resulting in a decline of 390bps for the year as a whole.
This reflected the full-period effect of price/mix actions taken in
the first half of the year, lower levels of cost inflation and more
normalised Brand Investment. The margin was also lower as a result
of the contribution of Childs Farm which, reflecting its investment
phase, was slightly loss-making during the year. On a statutory
basis, the operating profit margin declined by 1,170bps primarily
as a result of the Sanctuary Spa impairment.
[9] Aggregated IRI and Kantar data for the 52 weeks ended 10
June 2023
Asia Pacific (29.1% of FY23 Group revenue)
Reported
growth/ (decline)
GBPm, unless otherwise stated FY23 FY22 (%)
Revenue 190.7 173.8 9.7%
------ ------ -------------------
LFL revenue growth (%) 4.4% 3.0% n/a
------ ------ -------------------
Adjusted operating profit 27.5 20.9 31.6%
------ ------ -------------------
Margin (%) 14.4% 12.0% 240bps
------ ------ -------------------
Operating profit 29.6 37.0 (20.0)%
------ ------ -------------------
Margin (%) 15.5% 21.3% (580)bps
------------------------------- ------ ------ -------------------
Revenue grew 9.7% as a result of LFL growth of 4.4% and
favourable movements in foreign exchange. LFL revenue growth was
driven by double-digit price/mix improvements.
In Hygiene, Morning Fresh extended its leadership position in
hand dishwash in Australia with a value market share remaining
around 50% due to continued investment in brand equity and
innovation. During the year, we launched Morning Fresh into the
auto dishwash category and successfully secured distribution in the
two largest grocery retailers which together comprise approximately
80% of the market. Early market share data has been favourable and
we are building plans for further marketing activity over the
coming months. Radiant, a Portfolio Brand, also increased its
market share with very strong growth in both volume and price/mix,
with strong growth from innovation with a new capsules product.
Rafferty's Garden revenue grew double-digits with price/mix and
volume increases. The brand increased its value market share by
nearly two percentage points in the year, remaining the clear
market leader in the category.
Cussons Baby Indonesia declined as consumers reduced spending on
certain discretionary items, given the squeeze on household budgets
resulting from the government's lifting of fuel subsidies in August
2022. Revenue performance became more challenging throughout the
year as lower consumer demand resulted in gradual de-stocking.
Competition from local players intensified throughout the year,
while we elected to continue our focus on growing the higher margin
baby toiletry sub-categories such as oils, lotions and creams.
The planned reduction in low-margin, by-product sales to third
parties reduced APAC revenue growth by approximately one percentage
point.
Adjusted operating margin grew by 240bps, reflecting strong
price/mix growth and careful cost containment across the business.
On a statutory basis, margins declined by 580bps due to the
non-recurrence of profit on disposal of five:am and compensation
received from the Australian Competition & Consumer Commission
relating to a historical legal claim.
[10] Nielsen data 12 months to 15.06.23
[11] Nielsen data 12 months to 15.06.23
Africa (39.1% of FY23 Group revenue)
Reported
GBPm, unless otherwise stated FY23 FY22 growth (%)
Revenue 256.3 222.0 15.5%
------ ------ ------------
LFL revenue growth (%) 13.4% 22.3% n/a
------ ------ ------------
Adjusted operating profit 37.2 22.3 66.8%
------ ------ ------------
Margin (%) 14.5% 10.0% 450bps
------ ------ ------------
Operating profit 48.3 28.6 68.9%
------ ------ ------------
Margin (%) 18.8% 12.9% 590bps
------------------------------- ------ ------ ------------
Revenue grew 15.5%, primarily due to LFL growth of 13.4%. LFL
revenue was driven by price/mix improvements of over 20%, with
several waves of price increases throughout the year, reflecting
the inflationary environment in Nigeria and Ghana. FX movements
supported overall revenue growth, reflecting the stronger Naira for
most of the year.
Across the Nigerian portfolio, we have continued to benefit from
the transformation of our Route to Market approach in recent years.
We have sought to optimise the SKUs by region and channel, and over
the past year have increased by nearly 50% the number of stores
served directly or through our distributors.
Each of our major brands reported double-digit LFL revenue
growth. Premier and Joy each saw good growth due to innovation,
with their 'Black' variants - with natural, African ingredients and
strong links to heritage - performing particularly well. Flamingo,
an important Portfolio Brand in Kenya, also grew strongly following
a re-launch, with revenue up over 50%.
Cussons Baby grew strongly, as we continue to recruit new
parents through our programmes within hospitals, through growth in
the rapidly growing baby store channel and due to several
innovations in the wipes portfolio.
Our electricals business revenue grew over 10% on an LFL basis,
contributing revenue of GBP105.4 million. Gross margins improved as
we continued to prioritise growth in profitability over growth in
volumes. As a Portfolio Brand, we reduced our Brand Investment in
the electricals business in the year and plan to reduce this
further in FY24 to fund higher-priority brands in core
categories.
Adjusted operating profit margin grew by 450bps, representing a
third consecutive year of continued profit improvement. This was
achieved through successful price/mix improvements and a continued
focus on optimising product mix despite strong cost inflation. On a
statutory basis, the operating profit margin increased by 590bps
due to the gains on property disposals.
Other financial items
Adjusted operating profit
Adjusted operating profit for the Group was GBP73.3 million,
which compares to GBP67.1 million in the prior period (as
restated). The adjusted operating profit margin decreased by 10bps
to 11.2%. Excluding Childs Farm, the margin would have improved
compared to the prior year.
The gross profit margin increased by 80bps to 39.2%. This
reflects the benefits of productivity initiatives and price/mix
improvements, which more than offset underlying inflation in input
costs, as well as an adverse geographic mix effect, which is the
result of our lower margin business in Africa growing more strongly
than the wider Group. Brand Investment increased in FY23 but
decreased as a percentage of revenue by 20bps, reflecting a planned
normalisation of the investment in Carex. Overheads increased by
100ps as a percentage of revenue as we continue to invest in
capabilities. PZ Wilmar, our joint venture, performed strongly and
contributed GBP7.5 million to operating profit.
Adjusting items
Adjusting items in the year totalled a net expense of GBP12.3
million before tax. This included a net GBP2.9 million expense
associated with our ongoing transformation programmes and a GBP16.5
million impairment charge of the Sanctuary Spa brand offset by a
GBP4.2 million reversal of a prior period impairment of the
Rafferty's Garden brand. See note 3 for further details on
adjusting items.
After accounting for these adjusting items, operating profit
decreased 9.3% to GBP59.7 million.
Net finance costs
Adjusted net finance income was GBP0.8 million, compared to a
cost of GBP1.3 million in the prior year, as higher interest income
on Naira cash deposits more than offset an increase in interest
payable on largely-UK borrowings.
Within finance income was GBP1.3 million for the reduction in
the deferred consideration liability for the Childs Farm
acquisition, which was classified as an adjusting item.
Taxation
The tax charge on adjusted profit before tax for the year was
GBP20.1 million, representing an effective tax rate of 27.1% (FY22:
19.5%). The increase in the effective tax rate was primarily due to
the mix of profits, with Africa and Australia, each with higher tax
rates, growing faster than the wider Group. The tax charge on
statutory profit before tax was GBP15.4 million.
Profit after tax
Statutory profit for the year from continuing operations was
GBP46.4 million, compared to GBP51.4 million in the prior year.
Adjusted basic earnings per share were 11.23p compared to 12.57p in
the prior year. This represents a decline of 10.7% due primarily to
the higher tax charge and the increase in non-controlling
interests, each the result of the improved profitability in
Nigeria. Basic earnings per share for continuing operations on a
statutory basis were 8.70p compared to 11.88p.
Balance sheet and cash flow
Adjusted net cash as of 31 May 2023 was GBP5.7 million (FY22:
adjusted net debt of GBP9.8 million), including cash and cash
equivalents of just over GBP200 million denominated in Nigerian
Naira. The increase was driven principally by cash generated from
operations of GBP76.6 million, GBP14.4 million proceeds received
from the disposal of non-core assets in Nigeria, GBP11.8 million of
interest received on principally Naira-denominated deposits offset
by GBP29.4 million of dividends paid and a GBP19.3 million adverse
foreign exchange movement. Net assets of GBP422.1 million compared
to GBP448.9 million in the prior period as a result of the increase
in currency translation reserve and reduction in retained
earnings.
The Group is funded by a GBP325 million credit facility, which
was refinanced during the year with a term of up to 2028. As at 31
May 2023, the Group had drawn GBP125 million of the term loan under
the facility and GBP127 million under the revolving credit
facility, for a total of GBP252 million. At 31 May 2022, drawings
were under the previous credit facility and amounted to GBP174
million.
Total free cash flow was GBP69.9 million (FY22: GBP58.0 million)
due to an improvement in cash generated from operations, driven by
higher operating profit, and reduced working capital.
[12] Based on the balance sheet NGN/GBP rate of NGN577
Dividend
In light of the recent devaluation of the Naira, which is
expected to adversely affect the Group's financial results in FY24,
the Board is recommending a final dividend of 3.73 pence which is
unchanged on the previous year. This represents a total dividend
for FY23 of 6.40p. Subject to approval at the AGM, which will be
held on 23 November 2023, the final dividend will be paid on 30
November 2023 to shareholders on the register at the close of
business on 3 November 2023.
Foreign exchange
The general weakening of Sterling against our other currencies
resulted in a GBP15.7 million uplift to FY23 revenue, as set out
below.
% of FY23 revenue Average FX rates Revenue impact
(GBPm)
FY22 FY23
--------- --------
GBP 27% 1.00 1.00 -
------------------ --------- -------- ---------------
NGN 35% 558 536 8.0
------------------ --------- -------- ---------------
AUD 14% 1.84 1.78 2.7
------------------ --------- -------- ---------------
IDR 11% 19,331 18,174 4.7
------------------ --------- -------- ---------------
USD 7% 1.35 1.20 4.2
------------------ --------- -------- ---------------
Other 6% - - (3.9)
------------------ --------- -------- ---------------
Total 100% - - 15.7
------- ------------------ --------- -------- ---------------
[13] Table shows the impact of translating FY22 revenue at FY23
foreign exchange rates
Impact of Naira devaluation and FY24 modelling
considerations
We made an announcement on 27 June 2023 regarding impact of the
Naira devaluation which took place in June. To provide a further
illustration of this matter, we calculate that if our profits in
the year to 31 May 2023 had been translated to Sterling at the
average rate between July and August 2023 as opposed to the average
rate for FY23, the Group's adjusted operating profit would have
been GBP14.7 million lower, as detailed below.
GBPm, unless otherwise stated At reported As at July/August Difference
FX rates average rates
Group adjusted operating profit 73.3 58.6 (14.7)
------------ ------------------ -----------
Group cash and equivalents 256.4 174.6 (81.8)
------------ ------------------ -----------
Africa revenue 256.3 153.6 (102.7)
------------ ------------------ -----------
Africa adjusted operating profit 37.2 22.5 (14.7)
---------------------------------- ------------ ------------------ -----------
[14] Tables shows only the translational impact of the
devaluation of the Naira
In addition, the following effects of the devaluation of the
Naira are also expected:
-- Group net interest charge in FY24 is likely to be higher,
reflecting lower levels of interest earned in Nigeria.
-- The Group's ETR and non-controlling interest in FY24 are, all
else being equal, expected to be lower.
The recently announced offer to buy out our Nigerian entity
minorities and de-list the business there, which is subject to
approval by shareholders in the Nigerian listed entity, is expected
to benefit the Group from FY25 onwards. The transaction is expected
to provide strategic and operational benefits, as well as being
earnings accretive as a result of the reduction in the
non-controlling interest.
Further guidance on these items will be provided in due
course.
GLOSSARY
Term Definition
---------------------------------------------------------------
Adjusted net Cash, short-term deposits and current asset investments,
cash/debt less bank overdrafts and borrowings. Excludes IFRS 16
lease liabilities
---------------------------------------------------------------
B Corp A B Corp is a company that has been certified by the
non-profit organisation B Lab as meeting rigorous standards
of environmental, social and governance performance,
accountability and transparency.
---------------------------------------------------------------
Brand Investment An operating cost related to brand marketing (previously
'Media & Consumer')
---------------------------------------------------------------
EBITDA Earnings before interest, taxes, depreciation and amortisation
---------------------------------------------------------------
Employee wellbeing % 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 Free cash flow as a % of adjusted EBITDA from continuing
conversion operations
---------------------------------------------------------------
Like for like Growth on the prior year at constant currency, excluding
('LFL') 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 of Carex, Childs Farm (acquired in March
2022), Cussons Baby, Joy, Morning Fresh, Original Source,
Premier, Sanctuary Spa and St.Tropez
---------------------------------------------------------------
Portfolio Brands The brands we operate which are not Must Win Brands
---------------------------------------------------------------
PZ Cussons Growth Our 'repeatable model' for driving commercial execution,
Wheel comprising 'Consumability', 'Attractiveness', 'Shoppability'
and 'Memorability'
---------------------------------------------------------------
Revenue Growth Maximising revenue through ensuring optimised price points
Management ('RGM') across customers and channels and different product sizes
---------------------------------------------------------------
SKUs Stock keeping unit
---------------------------------------------------------------
Through the Marketing campaign incorporating both mass reach and
Line 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 financial
performance from one period to the next.
Adjusted profitability measures are reconciled to IFRS results
on the face of the consolidated income statement, with details of
adjusting items provided in note 3 to the consolidated financial
statements. Reconciliations between APMs and IFRS reported results
are set out below:
Adjusted operating profit and adjusted operating margin
2022
2023 (restated*)
GBPm GBPm
--------------------------------------------- ---- ------- -------------
Group
Operating profit from continuing operations 59.7 65.8
exclude: adjusting items 13.6 1.3
--------------------------------------------------- ------- -------------
Adjusted operating profit 73.3 67.1
Revenue 656.3 592.8
Operating margin 9.1% 11.1%
Adjusted operating margin 11.2% 11.3%
--------------------------------------------------- ------- -------------
By segment
Europe & the Americas:
Operating profit from continuing operations 0.4 22.9
exclude: adjusting items 28.9 12.1
--------------------------------------------------- ------- -------------
Adjusted operating profit 29.3 35.0
Revenue 205.8 193.0
Operating margin 0.2% 11.9%
Adjusted operating margin 14.2% 18.1%
--------------------------------------------------- ------- -------------
Asia Pacific:
Operating profit from continuing operations 29.6 37.0
exclude: adjusting items (2.1) (16.1)
--------------------------------------------------- ------- -------------
Adjusted operating profit 27.5 20.9
Revenue 190.7 173.8
Operating margin 15.5% 21.3%
Adjusted operating margin 14.4% 12.0%
--------------------------------------------------- ------- -------------
Africa:
Operating profit from continuing operations 48.3 28.6
exclude: adjusting items (11.1) (6.3)
--------------------------------------------------- ------- -------------
Adjusted operating profit 37.2 22.3
Revenue 256.3 222.0
Operating margin 18.8% 12.9%
Adjusted operating margin 14.5% 10.0%
--------------------------------------------------- ------- -------------
Central
Operating loss from continuing operations (18.6) (22.7)
exclude: adjusting items (2.1) 11.6
--------------------------------------------------- ------- -------------
Adjusted operating loss (20.7) (11.1)
--------------------------------------------------- ------- -------------
* Certain figures for the year ended 31 May 2022 have been
restated. Refer to note 1 (c) of the Group consolidated financial
statements for details.
Adjusted profit before taxation
2022
2023 (restated*)
GBPm GBPm
---------------------------------------- ---- ------ -------------
Profit before taxation from continuing
operations 61.8 64.5
exclude: adjusting items 12.3 1.3
---------------------------------------------- ------ -------------
Adjusted profit before taxation 74.1 65.8
---------------------------------------------- ------ -------------
Adjusted Earnings Before Interest Depreciation and Amortisation
("Adjusted EBITDA")
2022
2023 (restated*)
GBPm GBPm
----------------------------------------------- ---- ------ -------------
Profit before taxation from continuing
operations 61.8 64.5
(deduct)/add back: net finance (income)/costs (2.1) 1.3
add back: depreciation 12.1 12.8
add back: amortisation 7.0 7.4
add back: impairment and impairment
reversal 12.3 9.0
91.1 95.0
exclude: adjusting items** 1.3 (7.7)
----------------------------------------------------- ------ -------------
Adjusted EBITDA 92.4 87.3
----------------------------------------------------- ------ -------------
* C ertain figures for the year ended 31 May 2022 have been
restated. Refer to note 1 (c) of the Group consolidated financial
statements for details.
** Excludes adjusting items relating to depreciation,
amortisation, impairments and impairment reversals.
Adjusted earnings per share
2022
2023 (restated*)
pence pence
------------------------------------ --- ------- ------------
Total
Basic earnings per share 8.70 11.45
exclude: adjusting items 2.53 0.69
----------------------------------------- ------- ------------
Adjusted basic earnings per share 11.23 12.14
----------------------------------------- ------- ------------
Diluted earnings per share 8.67 11.38
exclude: adjusting items 2.52 0.69
----------------------------------------- ------- ------------
Adjusted diluted earnings per share 11.19 12.07
----------------------------------------- ------- ------------
From continuing operations
Basic earnings per share 8.70 11.88
exclude: adjusting items 2.53 0.69
------------------------------------- ----- -----
Adjusted basic earnings per share 11.23 12.57
------------------------------------- ----- -----
Diluted earnings per share 8.67 11.81
exclude: adjusting items 2.52 0.69
------------------------------------- ----- -----
Adjusted diluted earnings per share 11.19 12.50
------------------------------------- ----- -----
* Certain figures for the year ended 31 May 2022 have been
restated. Refer to note 1 (c) of the Group consolidated financial
statements for details.
Alternative Performance Measures (continued)
Adjusted net cash/(debt)
At At
31 May 31 May
2023 2022
GBPm GBPm
----------------------------------- -------- --------
Cash at bank and in hand 127.4 105.8
Short-term deposits 129.0 58.0
Overdrafts - (0.1)
Cash and cash equivalents 256.4 163.7
Current asset investments 0.5 0.5
Non-current borrowings (251.2) (174.0)
------------------------------------ -------- --------
Adjusted net cash/(debt) and cash
equivalents 5.7 (9.8)
------------------------------------ -------- --------
Free cash flow
2023 2022
GBPm GBPm
------------------------------------- ------ ------
Cash generated from operations 76.6 66.2
deduct: purchase of property, plant
and equipment and software (6.7) (8.2)
Free cash flow 69.9 58.0
-------------------------------------- ------ ------
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 31 MAY 2023
2023 2022 (restated)
--------------------------------- ---------------------------------
Business Business
performance performance
excluding Adjusting excluding Adjusting
adjusting items Statutory adjusting items Statutory
items (note 3) results items (note 3) results
Notes GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------------- ----- ----------- --------- --------- ----------- --------- ---------
Continuing operations
Revenue 2 656.3 - 656.3 592.8 - 592.8
Cost of sales (399.0) - (399.0) (365.3) - (365.3)
----------------------------------------- ----- ----------- --------- --------- ----------- --------- ---------
Gross profit 257.3 - 257.3 227.5 - 227.5
Selling and distribution costs (105.3) - (105.3) (90.3) - (90.3)
Administrative expenses (86.2) (13.6) (99.8) (76.7) (1.3) (78.0)
Share of results of joint ventures 7.5 - 7.5 6.6 - 6.6
----------------------------------------- ----- ----------- --------- --------- ----------- --------- ---------
Operating profit 2 73.3 (13.6) 59.7 67.1 (1.3) 65.8
----------------------------------------- ----- ----------- --------- --------- ----------- --------- ---------
Finance income 14.1 1.3 15.4 2.7 - 2.7
Finance costs (13.3) - (13.3) (4.0) - (4.0)
----------------------------------------- ----- ----------- --------- --------- ----------- --------- ---------
Net finance income/(costs) 0.8 1.3 2.1 (1.3) - (1.3)
----------------------------------------- ----- ----------- --------- --------- ----------- --------- ---------
Profit before taxation 74.1 (12.3) 61.8 65.8 (1.3) 64.5
Taxation 4 (20.1) 4.7 (15.4) (12.8) (0.3) (13.1)
----------------------------------------- ----- ----------- --------- --------- ----------- --------- ---------
Profit for the year from continuing
operations 54.0 (7.6) 46.4 53.0 (1.6) 51.4
----------------------------------------- ----- ----------- --------- --------- ----------- --------- ---------
Discontinued operations
Loss from discontinued operations - - - (1.8) - (1.8)
----------------------------------------- ----- ----------- --------- --------- ----------- --------- ---------
Profit for the year 54.0 (7.6) 46.4 51.2 (1.6) 49.6
----------------------------------------- ----- ----------- --------- --------- ----------- --------- ---------
Attributable to:
Owners of the Parent 47.0 (10.6) 36.4 50.8 (2.9) 47.9
Non-controlling interests 7.0 3.0 10.0 0.4 1.3 1.7
----------------------------------------- ----- ----------- --------- --------- ----------- --------- ---------
54.0 (7.6) 46.4 51.2 (1.6) 49.6
----------------------------------------- ----- ----------- --------- --------- ----------- --------- ---------
Earnings per share for continuing and
discontinued operations pence pence pence pence pence pence
Basic earnings per share 6 11.23 (2.53) 8.70 12.14 (0.69) 11.45
Diluted earnings per share 6 11.19 (2.52) 8.67 12.07 (0.69) 11.38
Earnings per share for continuing
operations
Basic earnings per share 6 11.23 (2.53) 8.70 12.57 (0.69) 11.88
Diluted earnings per share 6 11.19 (2.52) 8.67 12.50 (0.69) 11.81
Refer to note 1 for details of the prior year restatements.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 MAY 2023
2022
2023 (restated)
GBPm GBPm
------------------------------------------------------------------------------------------- ------ -----------
Profit for the year 46.4 49.6
Other comprehensive (expense)/income
Items that will not be reclassified subsequently to profit or loss
Remeasurement of retirement and other long-term employee benefit obligations (32.8) 37.4
Deferred tax charge on remeasurement of retirement and other long-term benefit obligations 7.4 (8.4)
----------------------------------------------------------------------------------------------- ------ -----------
Total items that will not be reclassified to profit or loss (25.4) 29.0
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations (21.7) 21.7
Cash flow hedges - fair value movements net of amounts reclassified 0.4 0.2
Reclassification of exchange differences on repayment of permanent as equity loans (net of
taxation) - (2.7)
Reclassification of reserves on disposals - 0.1
Total items that may be reclassified subsequently to profit or loss (21.3) 19.3
----------------------------------------------------------------------------------------------- ------ -----------
Other comprehensive (expense)/income for the year net of taxation (46.7) 48.3
----------------------------------------------------------------------------------------------- ------ -----------
Total comprehensive (expense)/income for the year (0.3) 97.9
----------------------------------------------------------------------------------------------- ------ -----------
Attributable to:
Owners of the Parent (6.9) 94.3
Non-controlling interests 6.6 3.6
----------------------------------------------------------------------------------------------- ------ -----------
(0.3) 97.9
---------------------------------------------------------------------------------------------- ------ -----------
Refer to note 1 for details of the prior year restatements.
CONDENSED CONSOLIDATED BALANCE SHEET
AS AT 31 MAY 2023
2022 2021
2023 (restated) (restated)
Notes GBPm GBPm GBPm
------------------------------------------------------------ ----- ------ ----------- -----------
Assets
Non-current assets
Goodwill and other intangible assets 7 312.7 333.9 293.6
Property, plant and equipment 74.3 82.9 91.5
Right-of-use assets 12.5 16.9 11.7
Net investments in joint ventures 52.0 45.4 34.2
Deferred tax assets 7.5 4.5 5.9
Current tax receivable - 1.2 1.7
Retirement benefit surplus 38.5 69.3 33.6
------------------------------------------------------------ ----- ------ ----------- -----------
497.5 554.1 472.2
------------------------------------------------------------ ----- ------ ----------- -----------
Current assets
Inventories 112.9 111.8 91.1
Trade and other receivables 119.1 105.0 110.7
Derivative financial assets 1.0 0.7 1.0
Current tax receivable 1.0 2.6 15.3
Current asset investments 0.5 0.5 0.3
Cash and cash equivalents 8 256.4 163.8 87.0
------------------------------------------------------------ ----- ------ ----------- -----------
490.9 384.4 305.4
Assets held for sale - 3.4 7.6
------------------------------------------------------------ ----- ------ ----------- -----------
490.9 387.8 313.0
------------------------------------------------------------ ----- ------ ----------- -----------
Total assets 988.4 941.9 785.2
------------------------------------------------------------ ----- ------ ----------- -----------
Equity
Share capital 4.3 4.3 4.3
Own shares (36.9) (40.0) (40.0)
Capital redemption reserve 0.7 0.7 0.7
Hedging reserve 0.2 (0.2) (0.4)
Currency translation reserve (89.0) (69.2) (87.4)
Retained earnings 511.7 528.5 478.1
Other reserves 4.6 2.9 0.9
------------------------------------------------------------ ----- ------ ----------- -----------
Attributable to owners of the Parent 395.6 427.0 356.2
Non-controlling interests 26.5 21.9 18.8
------------------------------------------------------------ ----- ------ ----------- -----------
Total equity 422.1 448.9 375.0
------------------------------------------------------------ ----- ------ ----------- -----------
Liabilities
Non-current liabilities
Borrowings 8 251.2 174.0 118.0
Other payables 4.1 4.5 0.3
Lease liabilities 11.3 14.0 8.7
Deferred tax liabilities 76.9 91.7 74.2
Retirement and other long-term employee benefit obligations 12.4 13.1 12.9
------------------------------------------------------------ ----- ------ ----------- -----------
355.9 297.3 214.1
------------------------------------------------------------ ----- ------ ----------- -----------
Current liabilities
Borrowings 8 - 0.1 -
Trade and other payables 182.2 163.9 150.9
Lease liabilities 1.7 2.9 3.1
Derivative financial liabilities 0.5 1.6 0.8
Current taxation payable 25.6 21.6 35.2
Provisions 0.4 5.6 5.6
------------------------------------------------------------ ----- ------ ----------- -----------
210.4 195.7 195.6
Liabilities directly associated with assets held for sale - - 0.5
------------------------------------------------------------ ----- ------ ----------- -----------
210.4 195.7 196.1
------------------------------------------------------------ ----- ------ ----------- -----------
Total liabilities 566.3 493.0 410.2
------------------------------------------------------------ ----- ------ ----------- -----------
Total equity and liabilities 988.4 941.9 785.2
------------------------------------------------------------ ----- ------ ----------- -----------
Refer to note 1 for details of the prior year restatements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 MAY 2023
Attributable to owners of the Parent
Capital Currency Non-
Share Own redemption Hedging translation Retained Other controlling
capital Shares reserve reserve reserve earnings reserves interests Total
Notes GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ----- ------- ------ ---------- ------- ----------- -------- -------- ----------- ------
As at 1 June
2021 - as
previously
reported 4.3 (40.0) 0.7 (0.4) (87.4) 474.6 0.9 18.8 371.5
Effect of prior
year
adjustments 1 - - - - - 3.5 - - 3.5
---------------- ----- ------- ------ ---------- ------- ----------- -------- -------- ----------- ------
As at 1 June
2021 - as
restated 4.3 (40.0) 0.7 (0.4) (87.4) 478.1 0.9 18.8 375.0
Profit for the
year - as
restated - - - - - 47.9 - 1.7 49.6
Other
comprehensive
income - - - 0.2 18.2 28.0 - 1.9 48.3
---------------- ----- ------- ------ ---------- ------- ----------- -------- -------- ----------- ------
Total
comprehensive
income for the
year - - - 0.2 18.2 75.9 - 3.6 97.9
Transactions
with owners:
Ordinary
dividends 5 - - - - - (25.5) - - (25.5)
Share-based
payment expense - - - - - - 2.0 - 2.0
Dividends
relating to
non-controlling
interests - - - - - - - (0.5) (0.5)
Total
transactions
with owners
recognised
directly in
equity - - - - - (25.5) 2.0 (0.5) (24.0)
---------------- ----- ------- ------ ---------- ------- ----------- -------- -------- ----------- ------
As at 31 May
2022 4.3 (40.0) 0.7 (0.2) (69.2) 528.5 2.9 21.9 448.9
---------------- ----- ------- ------ ---------- ------- ----------- -------- -------- ----------- ------
As at 1 June 2022 4.3 (40.0) 0.7 (0.2) (69.2) 528.5 2.9 21.9 448.9
Profit for the year - - - - - 36.4 - 10.0 46.4
Transfer between reserves 1 - - - - (1.5) 1.5 - - -
Other comprehensive (expense)/income - - - 0.4 (18.3) (25.4) - (3.4) (46.7)
Total comprehensive (expense)/income for the year - - - 0.4 (19.8) 12.5 - 6.6 (0.3)
Transactions with owners:
Ordinary dividends 5 - - - - - (26.8) - - (26.8)
Share-based payment expense - - - - - - 1.7 - 1.7
Shares issued from ESOT - 3.1 - - - (2.5) - - 0.6
Dividends relating to non-controlling interests, net
of forfeitures - - - - - - - (2.0) (2.0)
Total transactions with owners recognised directly in
equity - 3.1 - - - (29.3) 1.7 (2.0) (26.5)
------------------------------------------------------ --- ------ --- ----- ------ ------ --- ----- ------
As at 31 May 2023 4.3 (36.9) 0.7 0.2 (89.0) 511.7 4.6 26.5 422.1
------------------------------------------------------ --- ------ --- ----- ------ ------ --- ----- ------
Refer to note 1 for details of the prior year restatements.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEARED 31 MAY 2023
2023 2022
Notes GBPm GBPm
-------------------------------------------------------- ----- ------- ------
Cash flows from operating activities
Cash generated from operations 9 76.6 66.2
Interest paid (11.8) (3.5)
Taxation paid (15.6) (12.3)
Net cash generated from operating activities 49.2 50.4
-------------------------------------------------------- ----- ------- ------
Cash flows from investing activities
Interest received 11.8 2.6
Investment income received - 0.1
Purchase of property, plant and equipment and software (6.7) (8.2)
Proceeds from disposal of plant, property and equipment 14.4 18.6
Proceeds from disposal of businesses - 6.4
Acquisition of subsidiary - (33.6)
Loans advanced to joint venture (11.2) (12.6)
Loan repayments from joint venture 11.2 21.0
Net cash generated from/(used in) investing activities 19.5 (5.7)
-------------------------------------------------------- ----- ------- ------
Cash flows from financing activities
Dividends paid to Company shareholders 5 (26.8) (25.5)
Dividends paid to non-controlling interests (2.6) (0.5)
Proceeds from loans by joint venture - 0.6
Repayment of lease liabilities (2.5) (4.0)
Repayment of loans and borrowings facility 8 (205.0) -
Proceeds from loan and borrowings facility 8 283.0 56.0
Financing fees paid on committed credit facility (2.8) -
-------------------------------------------------------- ----- ------- ------
Net cash generated from financing activities 43.3 26.6
-------------------------------------------------------- ----- ------- ------
Net increase in cash and cash equivalents 112.0 71.3
Effect of foreign exchange rates 8 (19.3) 5.4
Cash and cash equivalents at the beginning of the year 8 163.7 87.0
-------------------------------------------------------- ----- ------- ------
Cash and cash equivalents at the end of the year 8 256.4 163.7
-------------------------------------------------------- ----- ------- ------
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
General information
The financial information in this announcement does not
constitute the Group's statutory accounts for the year ended 31 May
2023 or 31 May 2022. Statutory accounts for 31 May 2022 have been
delivered to the Registrar of Companies. The auditors have reported
on those accounts; their report was unqualified, did not include a
reference to any matters to which the auditors drew attention by
way of emphasis without qualifying their report and did not contain
a statement under section 498(2) or (3) of the Companies Act 2006.
The audit of the statutory accounts for the year ended 31 May 2022
is not yet complete. These accounts for the year ended 31 May 2023
will be delivered to the Registrar of Companies following the
company's annual general meeting.
1. Accounting policies
While the financial information in this preliminary announcement
has been computed in accordance with IFRS, this announcement does
not itself contain sufficient information to comply with IFRS.
The consolidated financial statements have been prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006.
The preparation of financial statements, in conformity with
IFRSs, requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenues
and expenses during the reporting year. Although these estimates
are based on management's best knowledge of the amount, event or
actions, actual results ultimately may differ from those
estimates.
The Group's business activities, together with the factors
likely to affect its future development, performance and position
will be set out in the Business Review section of the Strategic
Report in the full annual report and accounts. The financial
position of the Group and liquidity position will be described
within the Financial Review section of the Strategic Report in the
full annual report and accounts. In addition, note 17 to the
consolidated financial statements in the full annual report and
accounts includes the Group's objectives and policies for managing
its capital; its financial risk management objectives; its
exposures to market risk, credit risk and liquidity risk; and
details of its financial instruments and hedging activities.
After making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for a period of at least 12 months from the
date of approving the consolidated financial statements and that,
therefore, it is appropriate to adopt the going concern basis in
preparing the consolidated financial statements for the year ended
31 May 2023.
The consolidated financial statements have been prepared using
consistent accounting policies except as stated below.
(a) New and amended accounting standards adopted by the
Group
The following amendments to existing standards have been applied
for the first time in the year ended 31 May 2023:
-- Amendments to IAS 16 'Plant, Property & Equipment' - Proceeds before Intended Use
-- Amendments to IFRS 3 'Business Combinations' - Reference to the Conceptual Framework
-- Amendments to IAS 37 'Provisions, Contingent Liabilities and
Contingent Assets' - Onerous Contracts - Costs of Fulfilling a
Contract
-- Annual Improvements to IFRS Standards 2018-2020
-- Amendments to IAS 1 'Presentation of Financial Statements' -
Non-Current Liabilities with Covenants
The adoption of the new accounting standards and interpretations
listed above has not led to any changes to the Group's accounting
policies or had any other material impact on the financial position
or performance of the Group.
Corrections of errors
In preparing these consolidated financial statements management
identified errors relating to transactions reported in prior
periods. In accordance with IAS 8 'Accounting Policies, Changes in
Accounting Estimates and Errors' these errors have been corrected
by restatement of previously reported figures as described
below.
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 GBP6.3 million impairment charge in relation
to capitalised software. The accounting t reatment 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 GBP4.7 million as at 1 June 2021 with a corresponding
increase in the deferred tax liability of GBP1.2 million, and to
recognise a GBP0.8 million amortisation charge within previously
reported administrative expenses in the consolidated income
statement for the year ended 31 May 2022, with a corresponding
GBP0.2 million decrease in the taxation charge.
Childs Farm business combination - in March 2022, the Group
acquired Childs Farm. The non-controlling interest of GBP3.3
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 GBP3.3 million as at 31 May 2022. There is no impact on
the previously reported consolidated income statement.
The impact on the consolidated balance sheets and consolidated
income statement of restating previously reported figures for the
items described is set out in the tables below:
As Intangible
previously reported asset As
GBPm impairment restated
As at 31 May 2021 GBPm GBPm
------------------------------------- --------------------- ------------ ----------
Consolidated balance sheet
Goodwill and other intangible assets 288.9 4.7 293.6
Total assets 780.5 4.7 785.2
Retained earnings (474.6) (3.5) (478.1)
Deferred taxation liabilities (73.0) (1.2) (74.2)
Total equity and liabilities (780.5) (4.7) (785.2)
------------------------------------- --------------------- ------------ ----------
Childs
As Intangible Farm
previously reported asset business combination As
GBPm impairment GBPm restated
As at, and for the year ended, 31 May 2022 GBPm GBPm
---------------------------------------------- --------------------- ------------ --------------------- ----------
Consolidated income statement
Administrative expenses (77.2) (0.8) - (78.0)
Profit before taxation 65.3 (0.8) - 64.5
Taxation (13.3) 0.2 - (13.1)
Profit for the year from continuing operations 52.0 (0.6) - 51.4
Profit for the year 50.2 (0.6) - 49.6
Consolidated balance sheet
Goodwill and other intangible assets 333.3 3.9 (3.3) 333.9
Total assets 941.3 3.9 (3.3) 941.9
Retained earnings (525.6) (2.9) - (528.5)
Non-controlling interests (25.2) - 3.3 (21.9)
Deferred taxation liabilities (90.7) (1.0) - (91.7)
Total equity and liabilities (941.3) (3.9) 3.3 (941.9)
---------------------------------------------- --------------------- ------------ --------------------- ----------
2. 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 which include an allocation of
central revenue and costs as appropriate. The CODM considers the
business from a geographic perspective, with Europe & the
Americas, Asia Pacific, Africa and Central being the operating
segments.
In accordance with IFRS 8 'Operating Segments', the ELT has
identified these reportable segments which aggregate the Group's
trading entities by geographic location as these entities are
considered to have similar economic characteristics. The number of
countries that the Group operates in within these segments is
limited to no more than five countries per segment, which share
similar customer bases and encounter comparable micro-environmental
challenges.
The CODM assesses the performance based on operating profit
before 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 Central
segment comprises the activities of our in-house Fragrance business
and of the costs associated with the Global headquarters and above
market functions, net of recharges to our regions. Intra-Group
sales of materials and manufactured goods, and charges for
franchise fees and royalties are carried out on an arm's length
basis.
Reporting used by the CODM to assess performance does contain
information about brand-specific performance but global
segmentation between the portfolio of brands is not part of the
regular internally reported financial information.
(a) Reportable segments
Continuing operations
Europe & the Asia
Americas Pacific Africa Central Eliminations Total
2023 GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------------------------- ------------ ------- ------ ------- ------------ ------
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/(loss) before adjusting items
and share of results of joint ventures 29.3 27.5 29.7 (20.7) - 65.8
Share of results of joint ventures - - 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 costs (13.3)
-------------------------------------------------------- ------------ ------- ------ ------- ------------ ------
Profit before taxation 61.8
-------------------------------------------------------- ------------ ------- ------ ------- ------------ ------
Europe & the Asia
Americas Pacific Africa Central Eliminations Total
2022 (restated) GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------------------------------- ------------ ------- ------ ------- ------------ -----
Gross segment revenue 196.3 179.2 222.0 77.3 (82.0) 592.8
Inter-segment revenue (3.3) (5.4) - (73.3) 82.0 -
--------------------------------------------------------- ------------ ------- ------ ------- ------------ -----
Revenue 193.0 173.8 222.0 4.0 - 592.8
--------------------------------------------------------- ------------ ------- ------ ------- ------------ -----
Segmental operating profit/(loss) before adjusting items
and share of results of joint ventures 35.0 20.9 15.7 (11.1) - 60.5
Share of results of joint ventures - - 6.6 - - 6.6
--------------------------------------------------------- ------------ ------- ------ ------- ------------ -----
Segmental operating profit/(loss) before adjusting items 35.0 20.9 22.3 (11.1) - 67.1
Adjusting items (12.1) 16.1 6.3 (11.6) - (1.3)
--------------------------------------------------------- ------------ ------- ------ ------- ------------ -----
Segmental operating profit/(loss) 22.9 37.0 28.6 (22.7) - 65.8
--------------------------------------------------------- ------------ ------- ------ ------- ------------ -----
Finance income 2.7
Finance costs (4.0)
--------------------------------------------------------- ------------ ------- ------ ------- ------------ -----
Profit before taxation 64.5
--------------------------------------------------------- ------------ ------- ------ ------- ------------ -----
Refer to note 1 for details of the prior year restatements.
The Group analyses its revenue by the following categories:
2023 2022
GBPm GBPm
------------ ----- -----
Hygiene 334.8 305.9
Baby 123.1 103.4
Beauty 85.3 80.9
Electricals 105.4 91.5
Other 7.7 11.1
------------ ----- -----
656.3 592.8
------------ ----- -----
3. Adjusting items
Adjusting items income/(expense), all of which related to
continuing operations, comprised:
2023 2022
GBPm GBPm
--------------------------------------------------------------- ------ -----
Nigeria Simplification 6.8 7.8
HR Transformation (0.6) (2.9)
Finance Transformation (5.1) (0.7)
Supply Chain Transformation (4.0) (0.7)
--------------------------------------------------------------- ------ -----
(2.9) 3.5
Transaction-related income/(costs) 0.7 (1.4)
Intangible asset impairment net of impairment reversal (12.3) (3.1)
Impairment reversal of net investment in joint ventures 2.2 -
Reclassification of exchange differences on repayment of
permanent as equity loans - (1.5)
Compensation from Australian Competition & Consumer Commission - 1.5
Profit on disposal of five:am - 0.7
Derecognition of capitalised costs related to cloud computing
arrangements - (1.0)
Adjusting items before taxation (12.3) (1.3)
Taxation 4.7 (0.3)
--------------------------------------------------------------- ------ -----
Adjusting items after taxation (7.6) (1.6)
--------------------------------------------------------------- ------ -----
Adjusting items before taxation are classified within:
2023 2022
GBPm GBPm
------------------ ------- ------
Operating profit (13.6) (1.3)
Finance income 1.3 -
------------------ ------- ------
(12.3) (1.3)
------------------ ------- ------
4. Taxation
2022
2023 (restated)
GBPm GBPm
--------------------------------------------------------- ----- -----------
Current tax
UK corporation tax
- current year (2.2) 2.5
- adjustments in respect of prior years (0.3) (0.5)
- double tax relief (0.5) (1.1)
--------------------------------------------------------- ----- -----------
(3.0) 0.9
--------------------------------------------------------- ----- -----------
Overseas corporation tax
- current year 26.3 12.2
- adjustments in respect of prior years 0.8 (0.5)
--------------------------------------------------------- ----- -----------
27.1 11.7
--------------------------------------------------------- ----- -----------
Total current tax charge 24.1 12.6
--------------------------------------------------------- ----- -----------
Deferred tax
Origination and reversal of temporary timing differences (6.2) (2.7)
Adjustments in respect of prior years (2.3) 3.0
Effect of rate change adjustments (0.2) 0.1
--------------------------------------------------------- ----- -----------
Total deferred tax charge (8.7) 0.4
--------------------------------------------------------- ----- -----------
Total tax charge 15.4 13.0
Analysed as:
Tax on profit before adjusting items 20.1 12.7
Tax on adjusting items (4.7) 0.3
15.4 13.0
--------------------------------------------------------- ----- -----------
Refer to note 1 for details of the prior year restatements.
The effective tax rate in relation to continuing operations for
the year was 24.9% (2022: 20.2% as restated). Before adjusting
items, the effective tax rate was 27.1% (2022: 19.5%).
UK corporation tax is calculated at 20.0% (2022: 19.0%) of the
estimated assessable profit for the year. Taxation for other
jurisdictions is calculated at the rates prevailing in the
respective jurisdictions. The Group has chosen to use the UK
corporation tax rate for the reconciliation of the tax charge for
the year to the profit before taxation as this is the seat for the
central management and control of the Group.
2022
2023 (restated)
GBPm GBPm
----------------------------------------------------------------------- ----- -----------
Profit before tax from continuing operations 61.8 64.5
Loss before tax from discontinued operations - (1.7)
----------------------------------------------------------------------- ----- -----------
Profit before tax 61.8 62.8
----------------------------------------------------------------------- ----- -----------
Tax at the UK corporation tax rate of 20.0% (2022: 19.0%) 12.4 11.9
Adjusted for:
Effect of non-deductible expenses 2.2 6.6
Effect of non-taxable income (4.9) (10.0)
Effect of rate changes on deferred taxation (all territories) (0.5) -
Tax effect of share of results of joint ventures (2.2) (2.0)
Other taxes suffered outside of the UK 3.2 2.2
Net adjustment to amount carried in respect of uncertain tax positions (0.8) 0.2
Movements in deferred tax assets not recognised (0.6) -
Adjustments in respect of prior years (1.5) (1.2)
Differences in foreign tax rates (non-UK residents) 8.1 5.3
----------------------------------------------------------------------- ----- -----------
Tax charge for the year 15.4 13.0
----------------------------------------------------------------------- ----- -----------
Tax charge attributable to continuing operations 15.4 13.1
Tax credit attributable to discontinued operations - (0.1)
----------------------------------------------------------------------- ----- -----------
Tax charge for the year 15.4 13.0
----------------------------------------------------------------------- ----- -----------
Refer to note 1 for details of the prior year restatements.
5. Dividends
2023 2022
GBPm GBPm
------------------------------------------------------------------------------------------ ---- ----
Amounts recognised as distributions to ordinary shareholders in the year comprise:
Final dividend for the year ended 31 May 2022 of 3.73p (2022: 3.42p) per ordinary share 15.6 14.3
Interim dividend for the year ended 31 May 2023 of 2.67p (2022: 2.67p) per ordinary share 11.2 11.2
------------------------------------------------------------------------------------------ ---- ----
26.8 25.5
------------------------------------------------------------------------------------------ ---- ----
After the balance sheet date, a final dividend for the year
ended 31 May 2023 was proposed by the Directors of 3.73p per
ordinary share. This results in a total final proposed dividend of
GBP15.6 million (2022: GBP15.6 million). Subject to approval by
shareholders at the Annual General Meeting, the dividend will be
paid on 30 November 2023 to the shareholders on the register on 3
November 2023. The proposed dividend has not been included as a
liability in the consolidated financial statements as at 31 May
2023.
6. Earnings per share
Earnings per share (EPS) represents the amount of earnings
attributable to each ordinary share in issue. Basic EPS is
calculated by dividing the earnings (profit after tax attributable
to owners of the Parent) by the weighted average number of ordinary
shares in issue during the year, excluding own shares owned by
employee trusts.
For diluted EPS, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive potential
ordinary shares. The Group's dilutive potential ordinary shares
relate to awards granted under the Group's share incentive
schemes.
The average number of shares is reconciled to the basic weighted
average and diluted weighted average number of shares as set out
below:
2023 2022
number number
000 000
---------------------------------------------------------------- -------- --------
Average number of ordinary shares in issue during the year 428,725 428,725
Less: weighted average number of shares held by employee trusts (10,180) (10,249)
---------------------------------------------------------------- -------- --------
Basic weighted average shares in issue during the year 418,545 418,476
Dilutive effect of share incentive schemes 1,530 2,365
---------------------------------------------------------------- -------- --------
Diluted weighted average shares in issue during the year 420,075 420,841
---------------------------------------------------------------- -------- --------
An adjusted EPS measure is provided which calculates EPS
excluding adjusting items from profits attributable to owners of
the Parent. T he Directors believe that the separate disclosure of
adjusting items is relevant to an understanding of the Group's
financial performance, and excluding such items provides a more
meaningful basis upon which to analyse underlying business
performance and make year-on-year comparisons.
Earnings per share from continuing and discontinued
operations
2022
2023 (restated)
GBPm GBPm
------------------------------------------------------ ----- -----------
Profit after tax attributable to owners of the Parent 36.4 47.9
exclude: adjusting items (net of taxation effect) 10.6 2.9
------------------------------------------------------ ----- -----------
Adjusted profit after tax 47.0 50.8
------------------------------------------------------ ----- -----------
2022
2023 (restated)
pence pence
------------------------------------ ----- -----------
Basic earnings per share 8.70 11.45
exclude: adjusting items 2.53 0.69
------------------------------------ ----- -----------
Adjusted basic earnings per share 11.23 12.14
------------------------------------ ----- -----------
Diluted earnings per share 8.67 11.38
exclude: adjusting items 2.52 0.69
------------------------------------ ----- -----------
Adjusted diluted earnings per share 11.19 12.07
------------------------------------ ----- -----------
Refer to note 1 for details of the prior year restatements.
Earnings per share from continuing operations
2022
2023 (restated)
GBPm GBPm
----------------------------------------------------------------------- ----- -----------
Profit attributable to owners of the Parent from continuing operations 36.4 49.7
exclude: adjusting items (net of taxation effect) 10.6 2.9
----------------------------------------------------------------------- ----- -----------
Adjusted profit after tax 47.0 52.6
----------------------------------------------------------------------- ----- -----------
2022
2023 (restated)
pence pence
------------------------------------ ----- -----------
Basic earnings per share 8.70 11.88
exclude: adjusting items 2.53 0.69
------------------------------------ ----- -----------
Adjusted basic earnings per share 11.23 12.57
------------------------------------ ----- -----------
Diluted earnings per share 8.67 11.81
exclude: adjusting items 2.52 0.69
------------------------------------ ----- -----------
Adjusted diluted earnings per share 11.19 12.50
------------------------------------ ----- -----------
Refer to note 1 for details of the prior year restatements.
Earnings per share from discontinued operations
2023 2022
GBPm GBPm
--------------------------------------------------------------------------------- ----- -----
Loss after tax attributable to owners of the Parent from discontinued operations - (1.8)
--------------------------------------------------------------------------------- ----- -----
2023 2022
pence pence
------------------------- ------ ------
Basic losses per share - (0.43)
Diluted losses per share - (0.43)
------------------------- ------ ------
7. Goodwill and other intangible assets
Goodwill Software Brands Total
GBPm GBPm GBPm GBPm
-------------------------------------------------------------- -------- -------- ------ -----
Cost
As at 1 June 2021 53.9 66.0 233.2 353.1
Additions (restated) 13.5 1.4 35.5 50.4
Derecognition of capitalised costs related to cloud computing - (2.2) - (2.2)
Exchange differences 0.8 0.4 1.6 2.8
As at 31 May 2022 68.2 65.6 270.3 404.1
Additions - 2.0 - 2.0
Disposals - (0.5) - (0.5)
Transfer to property, plant and equipment - (0.4) - (0.4)
Exchange differences (1.6) (0.1) (3.1) (4.8)
As at 31 May 2023 66.6 66.6 267.2 400.4
-------------------------------------------------------------- -------- -------- ------ -----
Accumulated amortisation and impairment
As at 1 June 2021 - as reported 10.6 32.8 20.8 64.2
Effect of prior year adjustment - (4.7) - (4.7)
-------------------------------------------------------------- -------- -------- ------ -----
As at 1 June 2021 - as restated 10.6 28.1 20.8 59.5
Amortisation charge (restated) - 7.4 - 7.4
Impairment charge - - 11.6 11.6
Impairment reversal - - (8.5) (8.5)
Derecognition of amortisation related to cloud computing - (1.2) - (1.2)
Exchange differences 0.5 0.3 0.6 1.4
As at 31 May 2022 11.1 34.6 24.5 70.2
Amortisation charge - 7.0 - 7.0
Disposals - (0.5) - (0.5)
Impairment charge - - 16.5 16.5
Impairment reversal - - (4.2) (4.2)
Exchange differences (0.9) - (0.4) (1.3)
As at 31 May 2023 10.2 41.1 36.4 87.7
-------------------------------------------------------------- -------- -------- ------ -----
Net book value
As at 31 May 2023 56.4 25.5 230.8 312.7
As at 31 May 2022 (restated) 57.1 31.0 245.8 333.9
-------------------------------------------------------------- -------- -------- ------ -----
Refer to note 1 for details of the prior year restatements.
Capitalised costs and accumulated amortisation relating to cloud
computing were derecognised in 2021 following the IFRIC agenda
decision in April 2021 regarding the treatment of such costs.
Amortisation is charged to administrative expenses in the
consolidated income statement. Cumulative impairment of goodwill as
at 31 May 2023 was GBP10.2 million (2022: GBP11.1 million) and
cumulative impairment of brands as at 31 May 2023 was GBP36.4
million (2022: GBP24.5 million).
Software includes the Group's enterprise resource planning
system (SAP), and the carrying value of this asset as at 31 May
2023 is GBP20.6 million (2022: GBP25.3 million as restated), with
four years of amortisation remaining.
Other than software, intangible assets comprise goodwill and
brands. Goodwill and brands have all arisen from previous business
combinations and all have indefinite useful lives and, in
accordance with IAS 36 'Impairment of Assets', are subject to
annual impairment testing (which the Group carries out at the year
end date), or more frequently if there are indicators of
impairment. The method used for impairment testing is to allocate
assets (including goodwill and brands) to appropriate
cash-generating units (CGUs) based on the smallest identifiable
group of assets that generate independent cash inflows, and to
estimate the recoverable amounts of the CGUs as the higher of the
assets' fair values less costs of disposal and the value in use.
Value in use is determined using cash flow projections from
approved budgets and plans which are then extrapolated based on
estimated long-term growth rates applicable to the markets and
geographies in which the CGUs operate. The cash flow projections
are discounted based on a pre-tax weighted average cost of capital
for comparable companies operating in similar markets and
geographies as the Group adjusted for risks specific to the
particular CGU.
Goodwill of GBP56.4 million (2022: GBP57.1 million as restated)
comprises GBP40.4 million (2022: GBP40.4 million) in relation to
the acquisitions of the Group's Beauty brands ( Charles
Worthington, Fudge, Sanctuary Spa and St Tropez), GBP13.5 million
(2022: GBP13.5 million as restated) on the March 2022 acquisition
of Childs Farm and GBP2.5 million (2022: GBP3.2 million) in
relation to other acquisitions. Goodwill for the Beauty brands is
assessed at the group of CGUs comprising these brands (see table
below) as this represents the lowest level at which goodwill is
monitored by management.
The carrying value of goodwill and each brand is set out in the
table below. For the impairment testing of brands, each brand is
allocated to a single CGU. For the impairment testing of goodwill,
Childs Farm goodwill is allocated to the same CGU as the brand and,
as noted above, Beauty goodwill is allocated to the group of CGUs
comprising the Beauty brands :
Goodwill
Goodwill Brands (restated) Brands
2023 2023 2022 2022
GBPm GBPm GBPm GBPm
-------------------- --------- ------- ----------- ------
Charles Worthington 9.6 9.6
Fudge 24.6 24.6
Sanctuary Spa 58.9 75.4
St Tropez 58.4 58.4
Beauty 40.4 151.5 40.4 168.0
Original Source - 9.8 - 9.8
Rafferty's Garden - 34.0 - 32.5
Childs Farm 13.5 35.5 13.5 35.5
other 2.5 - 3.2 -
56.4 230.8 57.1 245.8
-------------------- --------- ------- ----------- ------
In performing the impairment testing, the Group has used the
budget and plan covering the four years ending 31 May 2027 as
described in the Long Term Viability Statement on page 69 and the
board approved CGU specific plans for a fifth year before applying
the long term growth rate. Assumptions in the budgets and plans
used for the value in use cash flow projections (for all brands
excluding Childs Farm) include future revenue volume and price
growth rates, associated future levels of marketing support, the
cost base of manufacture and supply and directly associated
overheads. These assumptions are based on historical trends and
future market expectations specific to each CGU and the markets and
geographies in which each CGU operates. Childs Farm was acquired in
March 2022, and on the business combination a fair value for the
brand of GBP35.5 million was recognised, with goodwill arising of
GBP13.5 million. Management's stated plan is to expand the brand
into international markets, and so specific assumptions on revenue
growth along with associated higher gross margins have been
applied. Revenue for Childs Farm is expected to triple over the
five years ending 31 May 2028 reflecting the growth potential in
international markets. The margin growth in international markets
compared to the UK is driven by premium product pricing perception
and lower expected promotional activity in these markets.
Management forecasts cash conversion rates (being the ratio of
operating cash flow to operating profit) based on historical
experience.
The other key assumptions applied in determining value in use
are the long-term growth rate beyond the period of the approved
budget and plan, and the discount rate to apply to the cash flow
projections, both of which are determined with reference to the
markets and geographies in which the CGU (or group of CGUs)
operates. The long-term growth rates and discount rates applied in
the value in use calculations used in impairment tests were:
Long-term Long-term Pre-tax Pre-tax
growth rate growth rate discount rate discount rate
2023 2022 2023 2022
-------------------------------------------- ----------- ----------- ------------- -------------
Charles Worthington 2.0% 1.5% 10.1% 10.1%
Fudge 2.0% 1.5% 10.7% 10.1%
Sanctuary Spa 2.0% 1.5% 10.2% 8.0%
St Tropez 2.0% 1.5% 10.4% 8.0%
Beauty group of CGUs (goodwill assessment) 2.0% 1.5% 10.4% 8.2%
Original Source 2.0% 1.5% 10.5% 8.0%
Rafferty's Garden 2.5% 2.5% 10.6% 10.0%
Childs Farm (brand and goodwill assessment) 2.0% n/a 12.2% n/a
-------------------------------------------- ----------- ----------- ------------- -------------
The results of the impairment tests as at 31 May 2023 were as
follows:
Sanctuary Spa
For the Sanctuary Spa brand, the recoverable amount of the
applicable CGU was determined to be GBP63.0 million based on a
value in use calculation which, when compared to a carrying value
of GBP79.5 million (of which the brand represented GBP75.4 million)
, resulted in an impairment charge of GBP16.5 million. The
recoverable amount reflected the challenging UK consumer and
self-care category backdrop as cost-of-living pressures mean
consumers are sensitive to price increases. Management has
determined gross margin to be the key assumption in the forecasts
for Sanctuary Spa given the factors noted above regarding consumer
price sensitivity. Sensitivity analysis has been carried out and a
reasonably possible change where gross margin was to decline by
2.5% within the five year forecast period would increase the
impairment charge by GBP8.5 million to GBP25.0 million. Conversely
should gross margins improve by 2.5% the impairment charge would
reverse by GBP8.5 million to GBP8.0 million.
Charles Worthington
For the Charles Worthington brand, the recoverable amount of the
applicable CGU which was based on a value in use calculation was
determined to be GBP11.5 million, marginally in excess of the
carrying value of GBP10.6 million (of which the brand represented
GBP9.6 million). The recoverable amount reflected slower growth on
a strong sales performance in the year ended 31 May 2023 coupled
with a recovery in margins after previous inflationary cost
increases were absorbed without passing on to consumers given price
sensitivity during the cost of living crisis.
Management have determined gross margin to be the key assumption
in the forecasts for Charles Worthington given the factors noted
above regarding consumer price sensitivity. Sensitivity analysis
has been carried out and a reasonably possible change where gross
margin was to decline by 3.0% within the five year forecast period
would result in an impairment charge of GBP1.2 million. Conversely
should gross margins improve by 3.0% an impairment reversal of
GBP3.0 million would be recorded. Management determined, therefore,
that due to the marginal headroom in the base case and a potential
reasonably possible downside leading to an impairment charge, that
it was not appropriate to reverse any of the GBP20.2 million
cumulative impairment recorded in prior years.
Management do not consider a further decline in volumes to be
reasonably possible scenario based on historic experience. However,
an increase of 20% in forecast sales within the five year forecast
period would result in a reversal of GBP5.4 million being
recorded.
Rafferty's Garden
For the Rafferty's Garden brand, the recoverable amount of the
applicable CGU was determined to be GBP44.6 million based on a
value in use calculation which, when compared to a carrying value
of GBP32.0 million (reflecting brand value of GBP29.8 million),
resulted in the reversal of a previously recognised impairment
charge of GBP4.2 million. The increase in the recoverable amount
reflected a change in the current year estimates reflecting the
upturn in the brand's performance. The reversal of the impairment
loss has not exceeded the carrying amount that would have been
determined had no impairment loss been recognised in prior
years.
Other CGUs
For the remaining CGUs, the recoverable amounts of the
respective applicable CGUs, which were determined based on value in
use calculations, exceeded the carrying values. Sensitivity
analysis on the value in use calculations did not identify
potential impairment in relation to a reasonably possible downside
in the assumptions used for the projections .
8. Cash and cash equivalents and net debt
Cash and cash equivalents include cash at bank and in hand,
short-term deposits and other highly liquid investments with
original maturities of three months or less which are readily
convertible into known amounts of cash and insignificant risk of
changes in value.
Borrowings comprise bank overdrafts and amounts drawn under the
Group's committed credit facility. Bank overdrafts are repayable on
demand and form an integral part of the Group's cash
management.
The Group defines its adjusted net debt as cash and cash
equivalents net of borrowings, and net debt as cash and cash
equivalents net of borrowings and lease liabilities.
Movements in cash and cash equivalents, adjusted net debt and
net debt were:
Foreign
1 June Net cash exchange 31 May
2022 flow movements Other 2023
GBPm GBPm GBPm GBPm GBPm
------------------------------------------------------------------------ ------- -------- --------- ----- -------
Cash at bank and in hand 105.8 31.0 (9.4) - 127.4
Short-term deposits 58.0 80.9 (9.9) - 129.0
------------------------------------------------------------------------ ------- -------- --------- ----- -------
Cash and cash equivalents reported in the consolidated balance sheet 163.8 111.9 (19.3) - 256.4
------------------------------------------------------------------------ ------- -------- --------- ----- -------
Current borrowings - bank overdrafts (0.1) 0.1 - - -
------------------------------------------------------------------------ ------- -------- --------- ----- -------
Cash and cash equivalents reported in the consolidated cash flow
statement 163.7 112.0 (19.3) - 256.4
Non-current borrowings (174.0) (77.2) - - (251.2)
Current asset investments 0.5 - - - 0.5
------------------------------------------------------------------------ ------- -------- --------- ----- -------
Adjusted net cash/(debt) (9.8) 34.8 (19.3) - 5.7
Lease liabilities (16.9) 3.0 - 0.9 (13.0)
------------------------------------------------------------------------ ------- -------- --------- ----- -------
Net debt (26.7) 37.8 (19.3) 0.9 (7.3)
------------------------------------------------------------------------ ------- -------- --------- ----- -------
As at 31 May 2023, GBP204.1 million (2022: GBP113.0 million) of
the cash and cash equivalents was held by the Group's Nigerian
subsidiaries. The increase of this amount during the year was
mainly due to the effect of the country's foreign exchange regime
where exchange rate controls impact the ability of those
subsidiaries to access foreign currency in order to settle foreign
currency liabilities. Subsequent to the year end, a policy
announcement was made by the Central Bank of Nigeria to liberalise
the foreign exchange regime, and following this announcement, the
Naira exchange rate weakened against Sterling and USD .
Bank loans and borrowings are amounts drawn under committed
facilities. During the year, the Group agreed a new GBP325 million
committed credit facility which is available for general corporate
purposes. The credit facility incorporates both a term loan, of up
to GBP125 million, with the balance as a revolving credit facility
(RCF) structure with maturity dates of up to November 2028.
Drawings under the term loan are permitted in GBP, and under the
RCF in GBP, Euros or US Dollar (USD) at interest rates at a margin
above SONIA, EURIBOR or SOFR, as applicable, of 1.30-2.10%
dependent on leverage and the attainment of specified
sustainability performance targets. Bank loans and borrowings as at
31 May 2023, which are presented net of GBP0.8 million of
unamortised financing fees, comprise GBP125.0 million of term loans
which are denominated in GBP at an interest rate, including margin,
of 5.73%, and GBP127.0 million of borrowings under the RCF which
are denominated in GBP at interest rates, including margin, at
between 5.66-5.78%.
9. Reconciliation of profit before tax to cash generated from
operations
2022
2023 (restated)
GBPm GBPm
----------------------------------------------------------------------------------- ------ -----------
Profit before tax from continuing operations 61.8 64.5
Loss before tax from discontinued operations - (1.7)
----------------------------------------------------------------------------------- ------ -----------
Profit before tax 61.8 62.8
Net finance (income)/costs (2.1) 1.3
----------------------------------------------------------------------------------- ------ -----------
Operating profit 59.7 64.1
Depreciation 12.1 12.8
Amortisation 7.0 7.4
Impairment of intangible assets and property, plant and equipment 16.5 17.5
Impairment reversal of intangible assets (4.2) (8.5)
Profit on disposal of property, plant and equipment (11.1) (14.0)
Impairment reversal of net investments in joint ventures (2.2) -
Derecognition of capitalised costs related to cloud computing arrangements - 1.0
Reclassification of exchange differences on repayment of permanent as equity loans - 1.4
Difference between pension charge and cash contributions 0.5 1.1
Profit on disposal of businesses - (1.7)
Share-based payment expense 1.7 1.9
Share of results of joint ventures (7.5) (6.6)
----------------------------------------------------------------------------------- ------ -----------
Operating cash flows before movements in working capital 72.5 76.4
Movements in working capital:
Inventories (8.4) (14.5)
Trade and other receivables (13.4) 4.0
Trade and other payables 30.3 0.4
Provisions (4.4) (0.1)
----------------------------------------------------------------------------------- ------ -----------
Cash generated from operations 76.6 66.2
----------------------------------------------------------------------------------- ------ -----------
Refer to note 1 for details of the prior year restatements.
10. Events after the reporting period
Central Bank of Nigeria announcement
In June 2023, a policy announcement was made by the Central Bank
of Nigeria to liberalise the foreign exchange regime which, as part
of a broader suite of fiscal reforms under the new government, is
designed to improve the longer-term economic prospects for the
country and remove some of the challenges faced by multi-national
companies in repatriating funds from Nigeria. Following this
announcement, the Naira exchange rate weakened against sterling and
USD.
Offer to acquire minority-held shares in PZ Cussons Nigeria
Plc
On 5 September 2023, the Group announced that it had made an
offer to acquire the 26.73% of issued share capital of PZ Cussons
Nigeria Plc held by minority-held shareholders at a value of 21 per
share, subject to prevailing market conditions, equivalent to a
total cash consideration payable of GBP22.8 million (based on a
Naira to GBP rate of 977). Funding for the transaction is expected
to come from existing Naira cash balances. The offer is subject to
the approval of the PZ Cussons Nigeria Plc board, regulatory
approvals and vote of the minority shareholders.
11. Directors' confirmations
Each of the Directors confirm that, to the best of their
knowledge:
-- The Group financial statements within the full annual report
and accounts, which have been prepared in accordance with
UK-adopted international accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit of
the Group and
-- The Strategic Report within the full annual report and
accounts includes a fair review of the development and performance
of the business and the position of the Group, together with a
description of the principal risks and uncertainties that it
faces.
Approved by the board of Directors on 26 September 2023
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END
FR GZGZLNNFGFZG
(END) Dow Jones Newswires
September 27, 2023 05:00 ET (09:00 GMT)
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