REG - PZ CUSSONS PLC - Half-year Report
09/02/2022 07:00
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RNS Number : 0854B PZ CUSSONS PLC 09 February 2022
9 February 2022
LIKE FOR LIKE REVENUE GROWTH IN Q2 AND MARGINS MAINTAINED
DESPITE SIGNIFICANT COST INFLATION
INTERIM ANNOUNCEMENT OF RESULTS FOR THE HALF YEAR TO 30 NOVEMBER 2021
PZ Cussons plc ("PZ Cussons" or the "Group") today issues Interim Results for
the half year ended 30 November 2021.
Alternative performance measures (Restated)*
Half year to Half year to Variance % Like for like Variance %((1))
30 November 2021 30 November 2020
Revenue from continuing operations £283.7m £312.9m (9.3)% (2.0)%
Adjusted operating profit from continuing operations ((2)) £32.9m £36.4m (9.6)%
Adjusted profit before tax from continuing ((2)) operations £32.0m £34.9m (8.3)%
Adjusted basic EPS from continuing operations ((2)) 5.64p 6.67p (15.4)%
Net debt ((3)) £(10.5)m £(18.2)m
Statutory measures
Revenue from continuing operations £283.7m £312.9m (9.3)%
Operating profit from continuing operations £36.0m £33.9m +6.2%
Profit before tax from continuing operations £35.1m £32.4m +8.3%
Profit after tax from continuing operations £28.6m £24.9m +14.9%
Loss after tax from discontinued operations £(0.7)m £(10.7)m (93.5)%
Profit after tax £27.9m £14.2m +96.5%
Basic earnings per share (EPS) 6.14p 3.42p +79.5%
Interim dividend per share 2.67p 2.67p Flat
(1) Like for like revenue growth adjusts for constant currency and
excludes the impact of continuing operations disposals (five:am)
(2) Adjusted profit measures reflect the statutory profit equivalents as
adjusted only for the removal of adjusting items, which are detailed in note 4
(3) Net debt is defined as cash, short-term deposits & current asset
investments, less bank overdrafts & borrowings, but excludes IFRS16 lease
liabilities (note 11)
* The results for the half year to 30 November 2020 have been restated to
reflect the prior year adjustments and accounting treatment amendments in the
full year accounts for FY21. Further details are set out in note 2.
Commenting today, Jonathan Myers (CEO) said:
"We have seen continued progress against both our new strategy and our pursuit
of sustainable, profitable revenue growth. The Q1 revenue decline was driven
primarily by Carex lapping unprecedented demand for Hygiene products at the
peak of the COVID-19 pandemic in the prior year. The business returned to
revenue growth in Q2 with our core Baby and Beauty categories growing revenue
in the first half overall. Revenue from Must Win Brands, excluding Carex, grew
+10% and the overall business showed strong underlying momentum when comparing
the results to the equivalent period two years ago. Continued Price / Mix
improvements helped strengthen gross margin in the first half of the year,
allowing us to increase Media & Consumer investment behind our brands and
maintain our operating margin. These results demonstrate our ability to use
the strength of our brands to protect margins in the face of cost headwinds.
Beyond our financial performance, we made continued progress against our
strategy: Building brands for life. Today and for future generations. We have
introduced new talent as we continue to strengthen our Executive Leadership
Team and rolled out a new set of values to underpin our drive to build a
stronger performance culture. At the same time we remain on track to simplify
our Nigeria operations, realising value through the sale of some of our
residential properties, and we are strengthening our sustainability plans on
our path to B-Corp certification. The disposals of our Food & Nutrition
businesses, the Nutricima milk business in Nigeria in FY21 and the five:am
yoghurt business in Australia in FY22 demonstrate our determination to
optimise our portfolio, explaining the temporary complexity in our alternative
performance measures.
The Board has approved an interim dividend, maintained in line with the prior
year, of 2.67p, reflecting our confidence in the underlying business momentum
but also recognising that challenges remain for the second half. Commodity and
freight costs show no sign of abating in the near term and we continue to
anticipate cost pressures into FY23. Our focus is on both protecting our
margins but also continuing to invest in the business, to secure future growth
and build the capabilities we need to deliver against our strategy."
Financial Highlights
Alternative performance measures
Unless otherwise stated, in the following section, all references to revenue
are in line with the alternative performance measure for revenue above; that
is, on a like for like basis which adjusts for constant currency and excludes
the impact of continuing operations disposals (five:am). See page 4 for a
quantification of the impact of constant currency and disposals. All other
metrics are not adjusted for constant currency or disposals.
Gross margin is defined as gross profit divided by statutory revenue. Adjusted
operating margin is defined as adjusted operating profit from continuing
operations divided by statutory revenue. Must Win Brands are defined on page
10 of our Annual Report and Financial Statements 2021.
See page 6 for a reconciliation of alternative performance measures by
segment.
· A return to mid-single digit revenue growth in Q2, following the
Q1 decline, limited first half revenue decline to -2%. First half revenue is
up +13% when comparing to the equivalent period two years ago
· H1 revenue was up in both our core categories of Beauty (+21%)
and Baby (+1%). Hygiene was down -12% but, excluding Carex, grew +6%. Carex
declined against the peak of the COVID-19 pandemic but has gained significant
share in a now larger UK hand hygiene category
· H1 revenue decline in Europe was offset by strong growth in
Africa, in conjunction with improved profitability. Asia revenue held flat,
despite COVID-19 restrictions in Indonesia, as we targeted the higher margin
Baby sub-categories
· Revenue from Must Win Brands declined -11%. Excluding Carex, they
grew +10% in aggregate, with each of the brands in growth
· Despite significant commodity, freight cost and FX headwinds,
gross margin increased +40bps. Price / Mix improvements and continued strong
Beauty momentum together more than offset the cost pressures
· After increased brand investment, adjusted operating margin was
maintained in line with the prior period, at 11.6%
· Adjusted profit before tax from continuing operations of £32.0m
was -8% lower, reflecting the normalised demand in the UK hand hygiene
category and the impact of the five:am disposal, partially offset by a lower
interest charge
· Adjusted basic earnings per share from continuing operations of
5.64 pence was -15% lower than the prior period, reflecting the decline in
adjusted profit before tax from continuing operations and a higher share of
profit owed to minority interests
· The balance sheet continues to strengthen with net debt((3)) of
£(10.5)m versus £(30.7)m at the start of the FY22 financial year, with
undrawn financing facilities at 30 November 2021 of £219m
Statutory measures
· Revenue decline of -9% versus the prior period is predominantly
due to the disposal of the non-core five:am yoghurt business in Australia and
normalised demand for hand hygiene products in the UK
· Profit before tax from continuing operations of £35.1m was +8%
higher than the prior period, largely as a result of the net income from
adjusting items in this period compared to a net charge in the prior period
· Adjusting items in the period were a net income before tax of
£3.1m predominantly driven by the profit on disposal of residential
properties in Nigeria as part of the Nigeria Simplification project
· The loss from discontinued operations in the period (£0.7m)
relates to the historical disposal of Minerva and in the prior period
(£10.7m) is primarily related to the disposal of the loss-making non-core
Nutricima business in Nigeria
· Profit after tax of £27.9m is nearly double the prior period
(£14.2m) largely due to the impact of discontinued operations
The Board has approved an interim dividend, maintained in line with the prior
year, of 2.67p. This reflects our confidence in the underlying business
momentum but also recognises that we, like other consumer goods companies,
continue to navigate uncertainty in the still volatile inflationary
environment.
Outlook
Despite the backdrop of a volatile inflationary environment, with cost
pressures accelerating, we expect to deliver adjusted profit before tax from
continuing operations for FY22 within the current range of consensus
estimates. Revenue Growth Management and cost mitigation initiatives are
enabling us to continue to invest in the business for the long term.
For further enquiries, please contact
Investors Sarah Pollard, PZ Cussons plc - Chief 0161 435 1000
Financial Officer
Media Tim Linacre / Guy Scarborough / 020 7457 2020
Bryn Woodward - Instinctif
Investor and Analyst conference call
PZ Cussons' management will host a webcast for analysts and investors at
9.30am to present the results and provide the opportunity for Q&A.
The presentation slides to accompany the conference call are available to
download from the website at www.pzcussons.com (http://www.pzcussons.com) .
The interim dividend will be paid on Thursday 7 April 2022 to shareholders on
the register at the close of business on Friday 11 March 2022.
Business Review
The following performance commentary is presented on a continuing operations
basis.
Unless otherwise stated, in the following section, all references to revenue
are in line with the alternative performance measure for revenue above; that
is, on a like for like basis which adjusts for constant currency and excludes
the impact of continuing operations disposals (five:am). See page 4 for a
quantification of the impact of constant currency and disposals. All other
metrics are not adjusted for constant currency or disposals. Adjusted
operating profit is presented on the basis explained on page 1.See page 6 for
a reconciliation of alternative performance measures by segment.
Europe & the Americas Highlights
· Strong demand for our Beauty brands was driven by successful
marketing activation, increased distribution and promotional efficiency. This
was offset by lower demand for Hygiene products since the height of the
pandemic
· Revenue decline of -19% was driven by Carex, up against the peak
of the COVID-19 pandemic. Hand hygiene demand has normalised off the peak now
restrictions have eased, but new consumer habits mean both the liquid hand
wash and sanitiser gel categories are at higher levels than pre-pandemic. In
addition, continued brand investment has enabled Carex to strengthen its
market-leading position in the UK hand hygiene category, taking approximately
4ppts of share (IRI, 26 weeks ending 27 November 2021)
· Original Source returned to revenue growth and gained market
share, following the introduction of the 'I'm Plant Based' range in addition
to growth on the core product portfolio following the successful 'Force of
Nature' through-the-line campaign and improvements in product formulation
· Imperial Leather revenue declined, facing increased competition
in the shower segment. It gained share however in the overall UK Washing &
Bathing category, driven by bar soap and handwash. Work is progressing on a
major repositioning of the Imperial Leather brand, with the launch planned for
FY23
· Sanctuary Spa revenue grew strongly, thanks to a new consumer
insight through-the-line campaign. St.Tropez momentum continued, with revenue
growth in both the US and UK, with favourable product mix. Both brands
successfully de-seasonalised the brands, beyond gifting and peak spring /
summer season, respectively
· Operating profit of £19.6m, -28% versus the prior period, with
revenue decline in Hygiene and growth in Beauty
Asia Pacific Highlights
· Asia Pacific revenue grew +0.3%. Cussons Baby in Indonesia was
flat, despite pandemic restrictions severely impacting retail channels.
Cussons Baby maintained a market-leading position, with a share of
approximately 25%, and also saw significant Price / Mix improvements both from
a focus on driving the growth of the more profitable segments within the Baby
category and price increases
· Revenue in Australia / New Zealand was held back by Q1 supply
issues on Rafferty's Garden, which are now resolved. Morning Fresh revenue
grew, despite being up against high consumption at the peak of the COVID-19
pandemic in the prior year, and gained over 4ppts of share of the Australia
dishwash category (up to 47% Nielsen Australia Grocery Scan 26 weeks to 30
November 2021)
· Adjusted operating profit of £10.9m declined -7%, with improved
underlying margins offset by the disposal of five:am
· Operating profit of £12.8m was +15% up on the prior period,
including £1.9m of adjusting items related to the profit on disposal of
five:am and compensation received from the Australian Competition &
Consumer Commission relating to a historical legal claim
Africa Highlights
· Revenue grew by +22%, reflecting growth across all of Nigeria,
Kenya and Ghana
· The Must Win Brands of Morning Fresh, Premier / Joy and Cussons
Baby all grew revenue by double-digits versus the prior period. Revenue from
Portfolio Brands, including Electricals, was also up. Premier / Joy both
increased their market share positions and Morning Fresh maintained its
market-leading position, with a share of 58% (Nielsen MAT period ended 30
November 2021)
· Price increases across all product categories offset significant
input cost inflation arising from commodities, freight and forex
· Our Palm Oil joint venture, PZ Wilmar, improved profitability
compared to the prior period through expanded distribution and successful
pricing activity
· Adjusted operating profit of £8.4m was +£6.1m versus the prior
period as a result of higher revenues, reduced overheads and a stronger
contribution from PZ Wilmar
· Operating profit of £10.1m, +£9.3m versus the prior period,
reflects a net credit of £3.8m recorded within adjusting items relating to
the Nigerian Simplification programme, the credit being driven by profits on
disposal of some residential properties. Total adjusting items are a net
£1.7m credit
Central
· Adjusted operating loss of £(6.0)m compares to £(4.9)m in the
prior period, driven by adverse foreign exchange impacts
· Overheads were broadly flat, as we maintained investment in
strategic capabilities
· Operating loss of £(6.5)m further includes £(0.5)m of adjusting
items in relation to the disposal of five:am, recycling of foreign exchange on
quasi-equity loans and the derecognition of intangible assets related to cloud
computing
Basis of Preparation
The accounting policies applied in our interim financial statements are
consistent with those of the annual financial statements for the year ended 31
May 2021, apart from a change to the accounting policy in relation to cloud
computing costs. See note 2 for further detail. The Directors continue to
adopt the going concern basis in preparing the accounts on the basis that the
Group's strong liquidity position is sufficient to meet the Group's forecasted
funding needs, including those modelled in a downside case.
The discontinued operations for the 6 months to 30 November 2021 represent the
resolution of a purchase price adjustment associated with Minerva, the Group's
Greek operations disposed of in FY20. The discontinued operations presented in
the comparative periods, include Nutricima Ltd as the assets of this business
were disposed of on 28 September 2020.
On 4 June 2021, the Group completed the sale of the assets associated with
five:am, our yoghurt business in Australia. On this date, the control of the
assets passed to the acquirer, Barambah Organics. In line with IFRS 5
'Non-Current Assets Held for Sale and Discontinued Operations', the results of
five:am have not been reported within discontinued operations in these
financial statements as the disposal of five:am did not represent a disposal
of a major line of business or an exit from a geographical area of operation.
In our financial statements we use alternative performance measures ('APMs')
that are not recognised under IFRS. The Group believes that these measures are
not considered to be a substitute for, or superior to, IFRS measures. These
metrics are used to allow the readers of the financial statements to obtain a
consistent comparison of the performance of the Group by adjusting for certain
items which, if included, could distort the understanding of the Group's
performance and comparability between periods. The adjustments made to obtain
the APMs are detailed within the notes to the financial statements which
allows a reader to form their own judgement on the trends, performance and
position of the Group with the additional information provided. The same
measures are used by management for planning, budgeting and reporting purposes
and for the internal assessment of operating performance across the Group. The
APMs are not defined by IFRS and therefore may not be directly comparable with
other companies' APMs. The adjusted items accounting policy was adopted for
the previous year end results and represents a change from the Group's
previous practice of reporting exceptional items. It will be adopted on a
consistent basis for the purposes of the half year and full year reporting
going forward. Where relevant, comparative IFRS measures have also been
presented.
Adjusted results are presented having removed the impact of adjusting items
which, in the financial year to date, include: items related to the Nigeria
Simplification project; the profit on disposal of five:am; the recycling of
accumulated foreign exchange losses due to a decision in the period to repay
an intercompany quasi-equity loan; income received in settlement of an
historical Australian Competition & Consumer Commission case; and the
derecognition of amounts capitalised as intangible fixed assets in prior
periods that related to cloud computing arrangements and which following the
IFRIC agenda decision issued in March 2021 have been derecognised, in line
with the Group's revised accounting policy. Further detail on adjusting items
is available in note 4.
The adjusted and statutory results for the current period are presented with
variances to prior period results and as variances between the current and
prior period on a like for like basis which adjusts for constant currency and
the impact of disposals (five:am). The constant currency impact has been
derived by retranslating the prior period result using reported year foreign
currency exchange rates. The translational impact was a £11.2 million loss on
revenue, a £(0.8) million loss on adjusted operating profit and a £(0.5)
million loss on reported operating profit. Five:am revenue was £8.1m in the
prior period.
As a business we continue to make decisions on a geographic basis, and the
information reviewed by the Chief Operating Decision Maker is based on a
geographic segmentation of the business. Therefore, the financial performance
discussed below is focused on the performance of the key regions. Further
detail on the segmental performance is detailed in note 3 to the Financial
Statements.
Financial Review
The statutory profit after tax of £27.9m compares to £14.2m in the prior
period. The results for the 6 months ended 30 November 2021 include £3.5m of
net income from adjusting items, including profits on disposal of Nigerian
residential properties of £11.2m, whereas the prior period included net
adjusting costs of £(9.7)m predominantly related to the loss on disposal of
Nutricima, the Group's milk business in Nigeria. Basic earnings per share were
6.14p (2020: 3.42p).
Adjusted profit before tax from continuing operations was £32.0m, a decline
of -8.3% compared to last year driven by the reduction in revenue which was
predominantly due to the decline seen in the UK business and the impact of the
disposal of five:am. Statutory profit before tax was £35.1m, +8.3% compared
to last year, with the decline in revenue offset by the net income from
adjusting items.
Revenue, at £283.7m, declined -9.3% compared to the prior period with decline
across Europe & the Americas and Asia Pacific partially offset by growth
in Africa. The growth in Africa was due to growth in our key Must Win Brands
and Portfolio Brands, including Electricals. The decline in Asia Pacific was
largely driven by the disposal of five:am. The revenue decline in Europe was
due to the decline of Carex, which is compared to the peak demand from
COVID-19 in Q1 FY21. On a constant currency basis and excluding the impact of
five:am disposal, Asia Pacific revenue was flat compared to the prior period
and Group revenue was -2.0% below the prior period.
Gross profit of £109.9m was -8.3% lower than the prior period with
improvement in gross margin, at 38.7%, compared to 38.3% in the prior period.
This was due to Price / Mix improvements and strong performance in our Beauty
business offsetting input cost inflation in the first half.
Net finance costs of £0.9m (2020: £1.5m) were lower than the prior period,
reflecting higher cash balances and lower borrowings as a result of positive
operating cash flow and proceeds from the disposals of the residential
properties in Nigeria, and five:am.
Adjusted profit before tax from continuing operations, at £32.0m, (2020:
£34.9m) reflected the reduced revenue across Europe & the Americas and
Asia Pacific, despite improved gross margins and reduced finance costs.
Statutory profit before tax of £35.1m compared favourably to £32.4m in the
prior period.
The effective tax rate on adjusted profit before tax was 21.6% (2020: 22.6%).
The effective tax rate on statutory profit before tax was 18.5% (2020: 23.1%).
The reduction in statutory effective tax rate is due to a deferred tax release
linked to the disposal of five:am, which is disclosed within adjusting items.
Adjusted earnings per share from continuing operations of 5.64p (2020: 6.67p)
decreased by -15.4% as a result of the lower adjusted profit after tax.
Statutory earnings per share from continuing operations of 6.31p (2020: 5.98p)
increased as a result of the higher statutory profit after tax.
In the half year to 30 November 2021 the Group recognised adjusting items
which aggregated to a net credit, after tax, of £3.5m. Further detail is
available in note 4. £2.8m of net income after tax was recognised in relation
to the Nigeria Simplification project; within this, £11.2m related to profit
on disposal of residential properties, offset by £(7.4)m recognised on the
impairment of factory assets and associated engineering spare parts held in
inventory, together with a net tax charge of £1.0m. Additionally, the Group
recognised an adjusting item representing £2.5m of profit after tax linked to
the disposal of five:am, the Group's Australian yoghurt business. A further
£(1.6)m of costs were recognised due to the recycling of historical foreign
exchange losses following a decision in the period to repay a quasi-equity
loan held the Group's Ghana subsidiary. Additionally, the Group recognised
£1.0m income after tax due to the receipt of a compensation payment from the
Australian Competition & Consumer Commission related to a historical case.
The Group has also recognised a £(1.2)m loss after tax related to the
derecognition of amounts capitalised as intangible fixed assets in prior
periods that related to cloud computing arrangements and which, following the
IFRIC agenda decision issued in March 2021, have been derecognised in line
with the Group's revised accounting policy.
The £(0.7)m loss from discontinued operations in the period related
predominantly to the resolution of a purchase price adjustment in relation to
the historical Minerva disposal. In the prior period, the loss from
discontinued operations was £(10.7)m which was predominantly related to the
loss on disposal of Nutricima, the Group's Nigerian milk business. Further
detail is available within note 16.
Total profit for the period was £27.9m, compared to £14.2m in the prior
period. In broad terms, this reflects the loss on disposal of Nutricima
recognised in the prior period and the net income recognised in the current
year from the disposal of five:am and the Nigerian residential properties.
Statutory earnings per share of 6.14p (2020: 3.42p) increased compared to the
prior period due to the increase in statutory profit, as described above.
Net debt, defined as cash, short-term deposits and current asset investments,
less bank overdrafts and borrowings and excluding IFRS 16 lease liabilities,
at £10.5m (November 2020: £18.2m, May 2021: £30.7m), reduced due to
operating cash inflows, alongside the proceeds from the disposals of the
Nigerian residential properties and five:am. The draw down on our £325m
credit facility was marginally lower than last year; we had headroom at 30
November 2021 of £219m (2020: £217m).
Total free cash flow, defined as cash generated from operations less capital
expenditure, was £20.3m (2020: £31.6m). Working capital has increased since
the start of the financial year with a net outflow of £(14.6)m. Inventory
levels increased largely because of the traditional seasonality in Africa
ahead of the peak dry season and also impacted by higher commodity costs,
although this was largely offset by increased payables. Debtors also
increased, with closing balances higher because of improved Q2 trading,
particularly in our Beauty and Africa businesses.
Our balance sheet remains strong with net assets of £417.1m as at 30 November
2021 (November 2020: £413.9m, May 2021: £381.8m). The Group is funded by a
£325 million Revolving Credit Facility committed until 28 November 2023, with
£219m in headroom as at 30 November 2021.
The Group's three UK pension schemes have an aggregate pension accounting
surplus under IAS 19 of £41.2m, after the restriction due to asset ceiling
(2020: £35.8m). The overseas schemes reported a deficit of £9.3m (2020:
£7.6m).
Related parties
Related party disclosures are given in note 14.
Principal risks and uncertainties facing the Group
Our principal risks and uncertainties are explained in more detail in note 19
and remain as stated on page 54 of our 2021 Annual Report and Financial
Statements which is available on our website at www.pzcussons.com
(http://www.pzcussons.com) .
Business Performance: Regional Performance
Revenue from continuing operations (£m) 2021 2020 Variance % Like for like
(restated)* variance %((1))
Europe & the Americas 95.1 117.1 (18.8)% (18.5)%
Asia Pacific 84.4 95.9 (12.0)% +0.3%
Africa 102.2 94.9 +7.7% +22.1%
Central 2.0 5.0 (60.0)% (61.2)%
283.7 312.9 (9.3)% (2.0)%
Adjusted operating profit/(loss) from continuing operations((2)) (£m) 2021 2020 Variance %
(restated)*
Europe & the Americas 19.6 27.3 (28.2)%
Asia Pacific 10.9 11.7 (6.8)%
Africa 8.4 2.3 +265.2%
Central (6.0) (4.9) (22.4)%
32.9 36.4 (9.6)%
Operating profit/(loss)((2)) from continuing operations (£m) 2021 2020 Variance %
(restated)*
Europe & the Americas 19.6 27.2 (27.9)%
Asia Pacific 12.8 11.1 +15.3%
Africa 10.1 0.8 +1162.5%
Central (6.5) (5.2) (25.0)%
36.0 33.9 +6.2%
( )
(1) Like for like revenue variance is calculated at constant
currency and excludes the impact of disposals. See page 4 for further
information
(2) Adjusting items before tax (2021: income £3.1m; 2020: expense
£2.5m) are detailed in note 4.
* The results for the half year to 30 November 2020 have been
restated to reflect prior year adjustments. Further details are set out in
note 2.
The following performance commentary is presented on a continuing operations
basis.
Unless otherwise stated, in the following section, all references to revenue
are in line with the alternative performance measure for revenue above; that
is, on a like for like basis which adjusts for constant currency and excludes
the impact of disposals that are not treated as discontinued operations
(five:am). All other metrics are not adjusted for constant currency or
disposals. See page 4 for a quantification of the impact of constant currency
and disposals. Adjusted operating profit is presented on the basis explained
on page 1.
Europe & the Americas
Revenue, at £95.1m, declined -18.5% versus the prior period with a decline in
adjusted operating profit to £19.6m (2020: £27.3m).
In comparison to the prior period, UK Personal Care revenue declined, driven
by reduced demand for hand hygiene products as the UK laps the peak demand of
the COVID-19 pandemic. The category has normalised at levels higher than
before the pandemic.
Carex has driven the decline versus the prior period. The brand successfully
maintained its number 1 position in the combined hand hygiene category,
increasing its share of both liquid handwash (up to 41%, IRI 26 weeks ending
27 November 2021) and hand sanitiser (up to 26%, IRI 26 weeks ending 27
November 2021). This was achieved in the face of ongoing demand volatility, a
resurgence of private label products and increased competition from new
entrants as well as existing category players.
Original Source revenue grew versus the prior period and increased its market
share of the shower category to 7.7% (Kantar, value share, 24 weeks to 28
November 2021) due to the successful introduction of the 'I'm Plant Based'
range and the growth of its core proposition after the success of the new
'Force of Nature' through-the-line campaign which grew brand awareness,
penetration and share.
Imperial Leather revenue declined versus the prior period as the brand lost
out to strong competition in the shower segment. Despite this, the brand
gained 1ppt of share within the overall UK Washing & Bathing category
(Kantar, value share, 24 weeks to 28 November 2021) driven by gains in the bar
soap and hand wash segments. Work is progressing on a major repositioning of
the Imperial Leather brand, with the launch planned for FY23.
There was strong revenue growth from Beauty, most notably St.Tropez in both
the US and UK where we have seen a category recovery post pandemic, continued
online revenue growth and successful de-seasonalisation. The brand gained
share in both markets. Fudge also performed well with the recovery of the
professional haircare market and implementation of a new distribution
strategy.
Sanctuary Spa maintained its momentum from FY21 despite a reduction in
category demand post COVID-19 lockdowns, gaining approximately 5ppts of market
share (Kantar World Panel MAT period ended 27 November 2021). The brand's
biggest-ever campaign launch successfully aligned with the broader consumer
trend of 'self-care'.
Adjusted operating profit from continuing operations for the region declined
due to revenue performance in the UK, offset by Beauty performance. Operating
profit was £19.6m (2020: £27.2m), in line with adjusted operating profit.
Asia Pacific
Revenue, at £84.4m, grew by +0.3%, with adjusted operating profit of £10.9m
(2020: £11.7m).
Cussons Baby in Indonesia was flat, with growth in the higher margin
categories of oils, cologne, liquid wash and hair lotion but this was offset
by the choice to protect margin in the more highly-promoted wipes category.
The brand continued to gain share in the higher margin segments of focus such
as cologne and hair lotion (Nielsen, Scantrack November 2021).
In Australia / New Zealand, revenue growth in the key Home Care brands of
Morning Fresh and Radiant was achieved despite the high consumption in the
prior year during COVID-19 lockdowns. Morning Fresh continues to go from
strength to strength as the number 1 brand in the manual dishwash segment,
with share increased by 4ppts (up to 47%, Nielsen Australia Grocery Scan 26
weeks to 30 November 2021) on the back of portfolio development, continued
marketing investment and increased ranging with retailers. The Beauty category
rebounded strongly from the pandemic, with both St.Tropez and Fudge in
double-digit revenue growth. Offsetting this were declines in Rafferty's
Garden, which retained its clear category leadership, with a 29% share
(Nielsen Australia Grocery Scan 26 weeks to 30 November 2021) in baby food,
despite temporary wet food pouch supply shortages in Q1, and also the reduced
ranging of our Reflect laundry brand in New Zealand.
Adjusted operating profit from continuing operations of £10.9m (2020:
£11.7m) declined -2.7%. The key driver of this was the disposal of five:am,
partially offset by improved margins from Price / Mix. Revenue Growth
Management initiatives included the Radiant brand restage and a combination of
price increases and promotional plan optimisations across the Rafferty's
Garden portfolio, Beauty momentum in Australia and growth in the higher margin
Baby segments in Indonesia.
Operating profit was £12.8m (2020: £11.1m), ahead of adjusted results due to
the inclusion of the profit on disposal of five:am, which is classified as an
adjusting item. See note 4 for further details.
Africa
Revenue of £102.2m was up +22.1% versus the prior period with our Personal
Care, Home Care and Electricals categories all in growth. We experienced
double-digit revenue growth in all Nigerian Must Win Brands as well as our
larger Portfolio brands, including Stella, Canoe and Robb.
Market-leading Morning Fresh, with its 58% share in Nigeria (Nielsen MAT
period ended 30 November 2021), successfully grew value share, but with a
marginal decline in volume share as we increased price to protect margins.
Cussons Baby gained both volume and value share. Premier both grew revenue and
gained share (Nielsen MAT period ended 30 November 2021), helped by the
Premier Cool national consumer promotion as well as a more strategic approach
to trade promotions. The performance was also supported by improved instore
visibility and NPD launches. Electricals showed strong double-digit revenue
growth with price increases across our core ranges of freezers, generators,
washing machines and fridges offsetting volume decline.
Adjusted operating profit from continuing operations of £8.4m (2020: £2.3m)
increased as a result of the profitable revenue growth across all business
units and an increase in the profit contribution from our Palm Oil joint
venture, PZ Wilmar.
Statutory operating profit was £10.1m (2020: £0.8m) due to the profit on
disposal of some residential properties in Nigeria, partially offset by costs
incurred as part of the Nigeria Simplification project. See note 4 for further
details.
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited (Restated)* Audited
Unaudited
Half year to Half year to Year to
30 November 2021 30 November 2020 31 May 2021
Business performance excluding adjusting items Statutory results for the half year Business performance excluding adjusting items Statutory results for the half year Business performance excluding adjusting items Statutory results for the half year
Adjusting items Adjusting items Adjusting items
(note 4) (note 4) (note 4)
Note £m £m £m £m £m £m £m £m £m
Continuing operations
Revenue 3 283.7 - 283.7 312.9 - 312.9 603.3 - 603.3
Cost of sales (173.8) - (173.8) (193.1) - (193.1) (366.4) - (366.4)
Gross profit 109.9 - 109.9 119.8 - 119.8 236.9 - 236.9
Selling and distribution costs (44.5) - (44.5) (49.0) - (49.0) (100.3) - (100.3)
Administrative expenses (36.6) 3.1 (33.5) (36.7) (2.5) (39.2) (71.2) (5.4) (76.6)
Share of results of joint ventures 4.1 - 4.1 2.3 - 2.3 5.6 - 5.6
Operating profit 32.9 3.1 36.0 36.4 (2.5) 33.9 71.0 (5.4) 65.6
Finance income 0.7 - 0.7 0.5 - 0.5 1.5 - 1.5
Finance costs (1.6) - (1.6) (2.0) - (2.0) (3.9) - (3.9)
Net finance costs 5 (0.9) - (0.9) (1.5) - (1.5) (2.4) - (2.4)
Profit before taxation 32.0 3.1 35.1 34.9 (2.5) 32.4 68.6 (5.4) 63.2
Taxation 7 (6.9) 0.4 (6.5) (7.9) 0.4 (7.5) (14.4) (13.8) (28.2)
Profit for the period from continuing operations
25.1 3.5 28.6 27.0 (2.1) 24.9 54.2 (19.2) 35.0
Discontinued operations 16
Profit/(Loss) from discontinued operations (0.7) - (0.7) (3.1) (7.6) (10.7) (5.3) (46.3) (51.6)
Profit for the period 24.4 3.5 27.9 23.9 (9.7) 14.2 48.9 (65.5) (16.6)
Attributable to:
Owners of the Parent 22.9 2.8 25.7 24.8 (10.5) 14.3 49.6 (66.2) (16.6)
Non-controlling interests 1.5 0.7 2.2 (0.9) 0.8 (0.1) (0.7) 0.7 -
24.4 3.5 27.9 23.9 (9.7) 14.2 48.9 (65.5) (16.6)
Basic EPS from continuing operations 9 5.64 0.67 6.31 6.67 (0.69) 5.98 13.12 (4.75) 8.37
(p
)
Diluted EPS from continuing operations (p) 9 5.61 0.67 6.28 6.67 (0.69) 5.98 13.10 (4.75) 8.35
Basic EPS (p) 9 5.47 0.67 6.14 5.93 (2.51) 3.42 11.85 (15.82) (3.97)
Diluted EPS (p) 9 5.44 0.67 6.11 5.93 (2.51) 3.42 11.84 (15.80) (3.96)
*The results for the half year to 30 November 2020 have been restated to
reflect prior year adjustments. Further details are set out in note 2.
The notes on pages 13 to 28 are an integral part of these condensed
consolidated interim financial statements.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited (Restated)* Audited
Half year to Unaudited Year to
30 November Half year to 31 May
2021 30 November 2021
2020
£m £m £m
Profit / (loss) for the period / year 27.9 14.2 (16.6)
Other comprehensive income / (expense)
Items that will not be reclassified to profit or loss
Re-measurement of post-employment obligations (note 12) 11.8 (2.6) (9.5)
Deferred tax gain / (loss) on re-measurement of post-employment benefit (2.2) 0.5 2.4
obligations
Total items that will not be reclassified to profit or loss 9.6 (2.1) (7.1)
Items that may be subsequently or have been reclassified to profit or loss
Exchange differences on translation of foreign operations 7.7 (13.8) (31.9)
Deferred tax on foreign exchange related to quasi-equity loans - - 1.4
Cash flow hedges - fair value loss in period / year 0.7 (0.7) (0.6)
Cost of hedging reserve 0.1 - 0.2
Recycle of foreign exchange equity reserves on repayment of quasi-equity loans 1.5 - -
Recycle of foreign exchange equity reserves on disposals (0.2) 7.5 39.9
Recycle of equity reserves on disposal of subsidiary 0.3 - -
Total items that may subsequently be or have been reclassified to profit or 10.1 (7.0) 9.0
loss
19.7 (9.1) 1.9
Other comprehensive income / (expense) for the period / year
Total comprehensive income / (expense) for the period / year 47.6 5.1 (14.7)
Attributable to:
Owners of the Parent 44.1 7.2 (9.7)
Non-controlling interests 3.5 (2.1) (5.0)
*The results for the half year to 30 November 2020 have been restated to
reflect prior year adjustments. Further details are set out in note 2.
The notes on pages 13 to 28 are an integral part of these condensed
consolidated interim financial statements.
(Restated)*
CONDENSED CONSOLIDATED BALANCE SHEET Unaudited Unaudited Audited
30 November 2021 30 November 2020 31 May
2021
Notes £m £m £m
Assets
Non-current assets
Goodwill, software and other intangible assets 6 293.8 303.5 297.5
Property, plant and equipment 6 85.3 102.1 91.5
Long term right of use assets 15 11.3 11.8 11.7
Net investments in joint ventures 40.7 40.0 34.2
Deferred taxation assets 5.9 16.9 5.9
Tax receivable 1.7 4.3 1.7
Retirement benefit surplus 12 45.9 40.4 33.6
484.6 519.0 476.1
Current assets
Inventories 109.2 92.2 91.1
Trade and other receivables 130.1 110.7 110.7
Derivative financial asset 13 1.2 0.8 1.0
Current tax receivable 14.4 10.2 14.2
Current asset investments 11 0.3 0.3 0.3
Cash and short-term deposits 11 95.3 89.5 87.0
350.5 303.7 304.3
Assets held for sale 0.7 - 7.6
Total assets 835.8 822.7 788.0
Equity
Share capital 4.3 4.3 4.3
Capital redemption reserve 0.7 0.7 0.7
Hedging reserve 0.4 (0.7) (0.4)
Currency translation reserve (79.7) (104.8) (87.4)
Other reserve (37.1) (38.1) (39.1)
Retained earnings 505.0 529.4 483.7
Attributable to owners of the Parent 393.6 390.8 361.8
Non-controlling interests 23.5 23.1 20.0
Total equity 417.1 413.9 381.8
Liabilities
Non-current liabilities
Borrowings 11 106.0 108.0 118.0
Other payables 0.5 0.6 0.3
Long term lease liability 15 7.5 9.2 8.7
Deferred taxation liabilities 76.0 67.0 75.2
Retirement & other long-term employee benefit obligations 12 14.0 12.2 12.9
204.0 197.0 215.1
Current liabilities
Overdrafts 11 0.1 - -
Trade and other payables 171.4 166.6 150.9
Short-term lease liability 15 3.7 2.9 3.1
Derivative financial liabilities 13 1.1 1.2 0.7
Current taxation payable 37.6 38.0 35.2
Provisions 0.8 3.1 0.7
214.7 211.8 190.6
Liabilities directly associated with assets held for sale - - 0.5
Total liabilities 418.7 408.8 406.2
Total equity and liabilities 835.8 822.7 788.0
*The results for the half year to 30 November 2020 have been restated to
reflect prior year adjustments. Further details are set out in note 2.
The notes on pages 13 to 28 are an integral part of these condensed
consolidated interim financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to owners of the Parent
Currency Capital Non
Share translation redemption Retained Other Hedging controlling
capital reserve reserve Earnings reserve reserve interests Total
£m £m £m £m £m £m £m £m
At 1 June 2020 (restated)* 4.3 (100.5) 0.7 530.3 (39.0) - 25.4 421.2
Profit for the period - - - 14.3 - - (0.1) 14.2
Other comprehensive (expense)/income for the period - (4.3) - (2.1) - (0.7) (2.0) (9.1)
Total comprehensive (expense)/income for the period - (4.3) - 12.2 - (0.7) (2.1) 5.1
Transactions with owners:
Ordinary dividends - - - (13.1) - - - (13.1)
Acquisition of non-controlling interests - - - - - - (0.2) (0.2)
Share based payments charges - - - - 0.9 - - 0.9
Total transactions with owners recognised directly in equity - - - (13.1) 0.9 - (0.2) (12.4)
At 30 November 2020 (restated)* 4.3 (104.8) 0.7 529.4 (38.1) (0.7) 23.1 413.9
At 1 June 2020 (restated)* 4.3 (100.5) 0.7 530.3 (39.0) - 25.4 421.2
Loss for the year - - - (16.6) - - - (16.6)
Other comprehensive income/(expense) for the year - 13.1 - (5.7) (0.1) (0.4) (5.0) 1.9
Total comprehensive income/(expense) for the year - 13.1 - (22.3) (0.1) (0.4) (5.0) (14.7)
Transactions with owners:
Ordinary dividends - - - (24.3) - - - (24.3)
Non-controlling interests dividend paid - - - - - - (0.2) (0.2)
Acquisition of non-controlling interests - - - - - - (0.2) (0.2)
Total transactions with owners recognised directly in equity - - - (24.3) - - (0.4) (24.7)
At 31 May 2021 4.3 (87.4) 0.7 483.7 (39.1) (0.4) 20.0 381.8
At 1 June 2021 4.3 (87.4) 0.7 483.7 (39.1) (0.4) 20.0 381.8
Profit for the period - - - 25.7 - - 2.2 27.9
Other comprehensive income for the period - 7.7 - 9.9 - 0.8 1.3 19.7
Total comprehensive income for the period - 7.7 - 35.6 - 0.8 3.5 47.6
Transactions with owners:
Ordinary dividends - - - (14.3) - - - (14.3)
Share based payments charges - - - - 2.0 - - 2.0
Total transactions with owners recognised directly in equity - - - (14.3) 2.0 - - (12.3)
At 30 November 2021 4.3 (79.7) 0.7 505.0 (37.1) 0.4 23.5 417.1
*The results for the half year to 30 November 2020 have been restated to
reflect prior year adjustments. Further details are set out in note 2.
The notes on pages 13 to 28 are an integral part of these condensed
consolidated interim financial statements.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited (Restated)* Audited
Unaudited
Half year to Half year to Year to
30 November 2021 30 November 2020 31 May
2021
Notes £m £m £m
Cash flows from operating activities
Cash generated from operations 10 25.0 34.0 73.4
Taxation paid (5.9) (11.3) (20.0)
Interest paid 5 (1.4) (2.0) (2.9)
Net cash generated from operating activities 17.7 20.7 50.5
Cash flows from investing activities
Interest income 5 0.7 0.3 1.2
Investment income - 0.2 0.3
Purchase of property, plant and equipment and software 6 (4.7) (2.4) (8.9)
Cash flow from sale of assets 12.6 - 0.1
Cash flow from disposal of companies & businesses((1)) 16 & 17 6.4 17.1 16.2
Repayment of loans by joint ventures 1.8 - 3.4
Funding provided to joint venture - - (9.6)
Net cash used in investing activities 16.8 15.2 2.7
Cash flows from financing activities
Dividends paid to non-controlling interests - - (0.2)
Dividends paid to Company shareholders 8 (14.3) - (24.3)
Acquisition of non-controlling interests - (1.1) (1.1)
Repayment of capital element of leases 15 (1.9) (1.5) (4.0)
Repayment of loan facility 11 (12.0) (19.0) (9.0)
Net cash used in financing activities (28.2) (21.6) (38.6)
Net increase in cash and cash equivalents 11 6.3 14.3 14.6
Cash and cash equivalents at the beginning of the period 11 87.0 77.5 77.5
Effect of foreign exchange rates 11 1.9 (2.3) (5.1)
Cash and cash equivalents at the end of the period 11 95.2 89.5 87.0
*The results for the half year to 30 November 2020 have been restated to
reflect prior year adjustments. Further details are set out in note 2.
((1)) Includes £7.2 million cash inflow in relation to the disposal of
Five:am and £0.8m cash outflow in respect of Minerva
The notes on pages 13 to 28 are an integral part of these condensed
consolidated interim financial statements.
1. Basis of preparation
The Company is a public limited company incorporated and domiciled in England.
It has a primary listing on the London Stock Exchange. The address of its
registered office is shown on page 31.
These condensed consolidated interim financial statements for the six months
ended 30 November 2021, which have been reviewed, not audited, have been
prepared in accordance with the Disclosure and Transparency Rules (DTR) of the
Financial Conduct Authority and in accordance with IAS 34, 'Interim Financial
Reporting' as adopted by the UK. The condensed consolidated interim financial
statements should be read in conjunction with the annual financial statements
for the year ended 31 May 2021 which have been prepared in accordance with UK
adopted international accounting standards, including International Accounting
Standards (IAS) and interpretations issued by the International Financial
Reporting Standard Interpretations Committee (IFRS IC).
The condensed consolidated interim financial statements for the period ended
30 November 2021 do not constitute statutory accounts within the meaning of
section 434 of the Companies Act 2006.
The financial information set out in this statement relating to the year ended
31 May 2021 does not constitute statutory accounts for that year. Full audited
statutory accounts of the Group in respect of that financial year were
approved by the Board of Directors on 30 September 2021 and have been
delivered to the Registrar of Companies. The report of the auditors on these
statutory accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain a statement under section 498 of the Companies
Act 2006.
These condensed consolidated interim financial statements were approved for
issue on 8 February 2022.
Judgements and estimates
The preparation of condensed consolidated interim financial statements
requires management to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from these
estimates.
In preparing these condensed consolidated interim financial statements, the
significant judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the same as those
that applied to the annual financial statements for the year ended 31 May
2021.
Going concern basis
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Business
Review. The financial position of the Group and liquidity position are also
described within the Financial Position section of that review.
After making enquiries and having considered the availability of resources,
the Directors consider it appropriate to continue to adopt the going concern
basis in preparing the condensed consolidated interim financial statements.
2. Accounting policies
The accounting policies are consistent with those of the annual financial
statements for the year ended 31 May 2021 except as described below. Taxes on
income in the interim periods are accrued using the tax rate that would be
applicable to expected total annual profit or loss before tax.
The Group has applied the following standards and amendments for the first
time for the annual reporting period commencing 1 June 2021:
· Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 -
Interest Rate Benchmark Reform - Phase 2; and
· Amendments to IFRS 16 - COVID-19 Related Rent Concessions.
The adoption of these amendments did not have any impact on the current period
or any prior period and is not likely to affect future periods. Certain new
accounting standards and interpretations have been published that are not
mandatory for the 31 May 2022 reporting period and have not been early adopted
by the Group. The Group will undertake an assessment of the impact of these
new standards and interpretations in due course.
The Group has reviewed the April 2021 IFRIC agenda decision regarding the
treatment of costs related to cloud computing. The Group has implemented an
amended accounting policy based on the guidance published within the IFRIC
agenda decision and this policy will be described fully within the full year
financial statements for the year ended 31st May 2022. The Group has conducted
analysis to identify those projects that, in light of the agenda decision,
would have been recognised directly as expenses, rather than capitalised as
intangible assets, related to cloud computing. The Group does not consider the
impact to historic periods to be material and does not intend to make any
adjustment to those periods related to this accounting policy adoption. The
Group has instead derecognised the brought forward capitalised costs that were
previously held within intangible assets, which total £1.5m, and recorded
these as expenses in the income statement in the period ended 30 November
2021. Given its nature and magnitude, the amount is disclosed as an adjusting
item.
Restatement due to prior year adjustments
As documented in the 2021 annual financial statements, during the year ended
31 May 2021, management identified a number of errors relating to prior
periods. Accordingly, prior year adjustments were made, which are summarised
below; further details of which can be found in note 1 of the 2021 Annual
Report and Financial Statements.
Corrections were made to the previously disclosed split of the income
statement amounts between 'continuing' and 'discontinued operations', along
with reclassifications between 'cash generated from operating activities' and
'investing activities' all related to the treatment of the disposal of
Nutricima, which completed in September 2020.
Corrections were made in relation to investment properties in Ghana that had
not been correctly recorded in the Group's accounts, nor had the subsequent
disposal of one of these properties been correctly recorded.
In addition to the prior year adjustments summarised above, in the
consolidated cash flow statement in the interim financial statements for the
period ending 30 November 2020, cash outflows of £1.1m relating to the
acquisition of non-controlling interests were incorrectly presented within
investing activities. These should have been presented within financing
activities, and a correction has been made in these financial statements in
that regard.
The impacts of these prior year adjustments have been reflected and results
restated for the period ended 30 November 2020. See table below for details:
30 Nov 2020
£m
As previously reported Reclassification between Continuing and Discontinued Operations Reclassification between Cash Generated from Operating Activities and Reclassification between Cash used in investing activities and financing Recognition of investment property Disposal of investment property As restated
Investing Activities activities
Consolidated Income Statement
Continuing Operations
Administrative expenses (35.3) (3.9) - - - - (39.2)
Operating profit 37.8 (3.9) - - - - 33.9
Profit before tax 36.3 (3.9) - - - - 32.4
Taxation (7.9) 0.4 - - - - (7.5)
Profit/(Loss) from continuing operations 28.4 (3.5) - - - - 24.9
(Loss)/Profit from discontinued operations (14.2) 3.5 - - - - (10.7)
Profit attributable to owners of the parent 14.3 - - - - - 14.3
Consolidated Cash Flow Statement
Cash generated from operations 35.4 - (1.4) - - - 34.0
Net cash generated from operating activities 22.1 - (1.4) - - - 20.7
Proceeds from sale of assets 15.7 - (15.7) - - - -
Cash flow from disposal of companies & businesses - - 17.1 - - - 17.1
Acquisition of non-controlling interests (1.1) - - 1.1 - - -
Net cash generated from investing activities 12.7 - 1.4 1.1 - - 15.2
Acquisition of non-controlling interests - - - (1.1) - - (1.1)
Net cash used in financing activities (20.5) - - (1.1) - - (21.6)
Net increase/(decrease) in cash and cash equivalents 14.3 - - - - - 14.3
Balance Sheet
Property plant and equipment 97.1 - - - 5.1 (0.1) 102.1
Deferred tax liability (65.9) - - - (1.3) 0.2 (67.0)
Current tax payable (38.1) - - - - 0.1 (38.0)
Currency reserves (104.6) - - - (0.4) 0.2 (104.8)
Retained earnings 525.2 - - - 4.2 - 529.4
Reserves attributable to owners of the parent 386.8 - - - 3.8 0.2 390.8
3. Segmental analysis
The segmental information presented in this note is consistent with management
reporting provided to the Executive Leadership Team ('ELT'), which is the
Chief Operating Decision Maker ('CODM'). The CODM reviews the Group's internal
reporting in order to assess performance and allocate resources and has
determined the operating segments based on these reports 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 any
adjusting items. Revenues and operating profit of the Europe & the
Americas and Asia Pacific segments arise from the sale of Hygiene, Beauty and
Baby products. Revenue and operating profit from the Africa segment also arise
from the sale of Hygiene, Beauty and Baby products as well as Electrical
products. The Central segment refers to the activities in terms of revenue of
our in-house fragrance house and in terms of cost of expenditure associated
with the Global headquarters and above market functions net of recharges to
our regions. The prices between Group companies for intra-group sales of
materials, 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.
Business segments
Half year to 30 November 2021 Europe & the Americas Asia Africa Central Eliminations Total
£m Pacific
£m £m £m £m £m
Gross segment revenue 97.0 86.8 102.2 40.5 (42.8) 283.7
Inter segment revenue (1.9) (2.4) - (38.5) 42.8 -
Revenue 95.1 84.4 102.2 2.0 - 283.7
Segmental operating profit before adjusting items and share of results of 19.6 10.9 4.3 - 28.8
joint ventures
(6.0)
Share of results of joint ventures - - 4.1 - - 4.1
Segmental operating profit before adjusting items 19.6 10.9 8.4 - 32.9
(6.0)
Adjusting Items - 1.9 1.7 (0.5) - 3.1
Segmental operating profit 19.6 12.8 10.1 (6.5) - 36.0
Finance income 0.7
Finance cost (1.6)
Profit before taxation 35.1
Half year to 30 November 2020 Europe & the Americas Asia Africa Central Eliminations Total
(restated)* £m Pacific
£m £m £m £m £m
Gross segment revenue 119.2 100.1 94.9 30.2 (31.5) 312.9
Inter segment revenue (2.1) (4.2) - (25.2) 31.5 -
Revenue 117.1 95.9 94.9 5.0 - 312.9
Segmental operating profit before adjusting items and share of results of 27.3 11.7 - - 34.1
joint ventures
(4.9)
Share of results of joint ventures - - 2.3 - - 2.3
Segmental operating profit before adjusting items 27.3 11.7 2.3 - 36.4
(4.9)
Adjusting Items (0.1) (0.6) (1.5) (0.3) - (2.5)
Segmental operating profit 27.2 11.1 0.8 (5.2) - 33.9
Finance income 0.5
Finance cost (2.0)
Profit before taxation 32.4
*The results for the half year ended 30 November 2020 have been restated to
reflect prior year adjustments. Further details are set out in note 2.
Year to 31 May 2021 Europe & the Americas Asia Africa Central Eliminations Total
£m Pacific
£m £m £m £m £m
Gross segment revenue 220.9 194.5 192.6 50.9 (55.6) 603.3
Inter segment revenue (4.0) (7.3) - (44.3) 55.6 -
Revenue 216.9 187.2 192.6 6.6 - 603.3
Segmental operating profit before adjusting items and share of results of 52.1 20.7 5.1 - 65.4
joint ventures
(12.5)
Share of results of joint ventures - - 5.6 - - 5.6
Segmental operating profit before adjusting items 52.1 20.7 10.7 - 71.0
(12.5)
Adjusting Items (1.1) 0.1 (1.7) (2.7) - (5.4)
Segmental operating profit 51.0 20.8 9.0 (15.2) - 65.6
Finance income 1.5
Finance cost (3.9)
Profit before taxation 63.2
The Group analyses its net revenue by the following categories:
Unaudited Audited
Unaudited
Half year to Half year to Year to
30 November 2021 30 November 2020 31 May
2021
£m £m £m
Hygiene 147.4 174.5 322.4
Baby 50.1 52.2 100.0
Beauty 38.6 32.3 74.1
Electricals 42.8 38.6 79.4
Other 4.8 15.3 27.4
283.7 312.9 603.3
4. Adjusting items
Adjusting Taxation Adjusting
Half year to 30 November 2021 items before £m items after
taxation taxation
£m £m
Adjusting items included within continuing operations:
Profit on disposal of five:am (0.8) (1.7) (2.5)
Nigeria Simplification (3.8) 1.0 (2.8)
Recycling of foreign exchange on quasi-equity loans 1.5 0.1 1.6
Compensation from Australian Competition & Consumer Commission (1.5) 0.5 (1.0)
Derecognition of capitalised costs related to cloud computing arrangements 1.5 (0.3) 1.2
Total adjusting items (3.1) (0.4) (3.5)
Adjusting Taxation Adjusting
Half year to 30 November 2020 (restated)* items before £m items after
taxation taxation
£m £m
Adjusting items included within continuing operations:
Group strategy project 2.5 (0.4) 2.1
2.5 (0.4) 2.1
Adjusting items included within discontinued operations:
Loss on disposal of Nutricima 8.9 (1.3) 7.6
8.9 (1.3) 7.6
Total adjusting items 11.4 (1.7) 9.7
Adjusting Taxation Adjusting
Year to 31 May 2021 items before £m items after
taxation taxation
£m £m
Adjusting items included within continuing operations:
Group and regional restructuring 2.8 (0.5) 2.3
Impact of classification of five:am assets as held for sale (1.2) 0.3 (0.9)
Nigeria Simplification 3.8 (0.2) 3.6
UK tax rate change - deferred tax impact - 14.2 14.2
5.4 13.8 19.2
Adjusting items included within discontinued operations:
Loss on disposal of Nutricima 40.7 5.2 45.9
Disposal of Luksja brand 0.4 - 0.4
41.1 5.2 46.3
Total adjusting items 46.5 19.0 65.5
*The results for the half year to 30 November 2020 have been restated to
reflect prior year adjustments. Further details are set out in note 2.
Explanation of adjusting items
Half year to 30 November 2021
The Group incurred net income before tax of £3.1 million from adjusting items
as follows:
Profit on disposal of five:am - continuing operations
On 4 June 2021, PZ Cussons plc completed the sale of the assets associated
with five:am, which was the Group's yoghurt business in Australia. On this
date, the control of the assets passed to the acquirer, Barambah Organics.
Proceeds for the sale were £7.2m. The pre-tax profit recognised on disposal
was £0.8m and the post-tax profit was £2.5m. This profit is stated after
accounting for the recycling to the profit and loss account of historical
accumulated foreign exchange losses of £0.4m that were initially recorded
directly in equity, and the release of the £1.2m deferred tax liability
associated with the disposed brand. See note 17 for a full breakdown of this
value. The results of five:am have not been reported within discontinued
operations in the FY22 or FY21 results as five:am does not represent a
disposal of a major line of business or an exit from a geographic area of
operation as per IFRS 5.32.
Nigeria Simplification - continuing operations
£3.8m of net income before tax was recognised relating to the Nigeria
Simplification project. The amount comprises £11.2m of profit on disposal of
a number of residential properties in Nigeria as well as £7.4m of costs
related to the impairment of factory assets and associated engineering spares
held in inventory. These assets relate to product categories that are being
reduced as part of the Group's simplification strategy.
Recycling of foreign exchange losses - continuing operations
£1.5m of costs were recognised related to the recycling of accumulated
historical foreign exchange losses following a decision taken in the period to
repay the intercompany quasi-equity loan between PZ Cussons Ghana Ltd and PZ
Cussons Holdings Ltd.
Compensation from Australian Competition & Consumer Commission -
continuing operations
In the period the Group received a payment of £1.5m from the Australian
Competition & Consumer Commission as compensation towards legal costs
incurred by the Group in a successful defence of a legal case related to
competition in the laundry market in Australia dating from 2008-2009.
Derecognition of capitalised costs related to cloud computing arrangements -
continuing operations
The Group has reviewed the April 2021 IFRIC agenda decision regarding the
treatment of costs related to cloud computing. The net book value of those
costs, as at 30th November 2021, was £1.5m. The Group has derecognised these
brought forward capitalised costs, that were previously held within intangible
assets, and recorded these as expenses in the income statement for the period
ended 30 November 2021. The impact of this derecognition has been disclosed as
an adjusting item due its nature and magnitude, in line with the Group's
adjusting items policy. Please see note 6 for further information.
Half year to 30 November 2020
The Group recognised pre-tax adjusting items of £11.4 million as follows:
- Costs of £8.9m in relation to the loss on disposal of the assets
of the Nutricima business. Sales proceeds were in line with the net book value
of the assets, with the loss arising as a result of recycling of the currency
reserve associated with these assets to the income statement.
- Costs of £2.5 million relating to the Group Strategy Project to
realign the organisation design to create a more effective operating model in
line with our strategy to support the organisation. These costs largely
reflect the expansion of this project to include the simplification of our
Nigerian operations.
Year to 31 May 2021
The Group recognised pre-tax adjusting items of £46.5 million (£5.4m from
continuing operations, £41.1m from discontinued) as follows:
- Group and regional restructuring (cost of £2.8 million);
- Impact of classification of five:am assets as held for sale (income
of £1.2 million);
- Nigeria Simplification (cost of £3.8 million);
- Loss on disposal of Nutricima assets (cost of £40.7 million); and
- Disposal of Luksja brand (cost of £0.4 million).
5. Net finance costs
Continuing Operations Unaudited Unaudited Audited
Half year to Half year to Year to
30 November 2021 30 November 2020 31 May 2021
£m £m £m
Interest receivable on cash deposits 0.5 0.2 0.9
Interest receivable on defined benefit pension scheme 0.2 0.3 0.6
Interest income 0.7 0.5 1.5
Interest payable on bank loans and overdrafts (0.9) (0.8) (1.2)
Interest payable to external third parties (0.2) (0.2) (0.5)
Interest payable on defined benefit pension scheme - - (0.6)
Interest expense on lease liabilities (0.2) (0.7)
(1.0)
Finance costs related to revolving credit facility (0.3) (0.3) (0.6)
Finance costs (1.6) (2.0) (3.9)
Net finance costs (0.9) (1.5) (2.4)
6. Property, plant and equipment and intangible assets
Goodwill, software and other
intangible assets (Restated)*
Property, plant and equipment
£m £m
Opening net book amount as at 1 June 2020 304.4 112.3
Additions 0.7 1.7
Acquisition of non-controlling interest 0.9 -
Depreciation - (6.0)
Amortisation (3.1) -
Impairment - (0.2)
Currency retranslation 0.6 (5.7)
Closing net book amount as at 30 November 2020 303.5 102.1
Opening net book amount as at 1 June 2021 297.5 91.5
Additions 1.3 3.4
Disposals - (1.5)
Transfers between asset classification 0.1 (0.1)
Depreciation - (4.6)
Amortisation (3.4) -
Impairment - (6.4)
Derecognition of capitalised costs related to cloud computing arrangements (1.5) -
(see note 4)
Currency retranslation (0.2) 3.0
Closing net book amount as at 30 November 2021 293.8 85.3
*The results for the half-year to 30 November 2020 have been restated to
reflect prior year adjustments. Further details are set out in note 2.
Goodwill, software and other intangible assets comprise goodwill of £43.3
million (30 November 2020: £43.6 million), software of £29.9 million (30
November 2020: £32.6 million), the majority of which relates to the
implementation and associated costs of the SAP project and other intangible
assets of £220.6 million (30 November 2020: £227.3 million) relating to the
Group's acquired brands.
Goodwill and other intangible assets (which include the Group's acquired
brands), have all arisen from previous business combinations and all have
indefinite useful lives and, in accordance with IAS36, are subject to annual
impairment testing at the year end date, or more frequent testing if there are
indicators of impairment. The method used is as follows:
· Intangible assets (including goodwill) are allocated to
appropriate cash-generating units (CGUs) based on the smallest identifiable
group of assets that generate cash inflows independently in relation to the
specific intangible/goodwill.
· The recoverable amounts of the CGUs are estimated as the higher
of an asset's fair value less costs of disposal and its value in use. Value in
use is determined through calculations that use cash flow projections from
approved budgets and plans over a period of five years which are then
extrapolated beyond the five-year period based on estimated long-term growth
rates.
As at 30 November 2021, management did not identify any indicators of
impairment nor of reversal of previously recorded impairment provisions. As a
result, no full impairment review has been performed.
Capital commitments
At 30 November 2021, the Group had entered into commitments for the
acquisition of property, plant and equipment amounting to £1.0m (30 November
2020: £2.3 million). At 30 November 2021, the Group's share in the capital
commitments of joint ventures was £nil (30 November 2020: £nil).
7. Tax
Continuing Operations
Unaudited (Restated)* Audited
Unaudited
Half year to Half year to Year to
30 November 2021 30 November 2020 31 May
2021
£m £m £m
United Kingdom 2.7 7.7 22.3
Overseas 3.8 (0.2) 5.9
6.5 7.5 28.2
Income tax income on discontinued operations is £nil for half year to 30
November 2021 (30 November 2020: £1.3m income, 31 May 2021: £4.7m expense)
Income tax expense is recognised based on management's best estimate of the
annual tax rate expected for the full financial year. The estimated average
annual tax rate to be used for the year ending 31 May 2022, before adjusting
items, is 22.0% (the tax rate for the half year ended 30 November 2020 was
24.8%) and the effective tax rate to be used, post-adjusting items, is 18.9%
(30 November 2020: 30.0%).
The calculation of the Group's total tax charge necessarily involves a degree
of estimation and judgement in respect of certain items whose tax treatment
cannot be finally determined until resolution has been reached with the
relevant tax authority or, as appropriate, through a formal legal process. At
30 November 2021, the Group had contingent liabilities of £27m in respect of
such uncertain tax positions (31st May 2021 - £26m), which are in relation to
claims and assessments in two of our overseas markets. In these markets there
is a history of large claims being received which are considered to have
little or no basis, and ultimately result in immaterial cash outflows, but
which take time to conclude. Whilst the Group considers that there is a low
possibility of any material outflow as a result of these claims, they have
been disclosed as contingent liabilities in accordance with IAS37.
8. Dividends
An interim dividend of 2.67p per share for the half year to 30 November 2021
(2020: 2.67p) has been approved by the board totalling £11.2 million (2020:
£11.2 million) and is payable on Thursday 7 April 2022 to shareholders on the
register at the close of business on Friday 11 March 2022. This interim
dividend has not been recognised in this half yearly report as it was declared
after the end of the reporting period. The proposed final dividend for the
year ended 31 May 2021 of 3.42p per share, totalling £14.3 million, was
approved by shareholders at the Annual General Meeting of the Company and paid
on 30 November 2021.
9. Earnings per share
Basic earnings per share and diluted earnings per share are calculated by
dividing profit for the period attributable to owners of the Parent by the
following weighted average number of shares in issue:
30 November 2021 30 November 31 May
Number 2020 2021
000
Number Number
000
000
Basic weighted average 418,456 418,385 418,402
Diluted weighted average 420,456 418,398 419,016
The difference between the average number of Ordinary Shares and the basic
weighted average number of Ordinary Shares represents the shares held by the
Employee Share Option Trust, whilst the difference between the basic and
diluted weighted average number of shares represents the dilutive effect of
the Deferred Annual Share Bonus Scheme, Executive Share Option Schemes and the
Performance Share Plan (together the 'share incentive plans'). The average
number of shares is reconciled to the basic and diluted weighted average
number of shares below:
30 November 2021 30 November 31 May
Number 2020 2021
000
Number Number
000
000
Average number of ordinary shares in issue during the year 428,725 428,725 428,725
Less: weighted average number of shares held by Employee Share Option Trust (10,269) (10,340) (10,323)
Basic weighted average shares in issue during the year 418,456 418,385 418,402
Dilutive effect of share incentive plans 2,000 13 614
Diluted weighted average shares in issue during the year 420,456 418,398 419,016
Total earnings per share
(Restated*)
30 November 2021 30 November 31 May
£ 2020 2021
£ £
Profit/(loss) after tax attributable to owners of the parent 25.7 14.3 (16.6)
Adjusting items after taxation, attributable to owners of the parent (2.8) 10.5 66.2
Adjusted profit after tax attributable to owners of the parent 22.9 24.8 49.6
(Restated*)
30 November 2021 30 November 31 May
pence 2020 2021
pence pence
Basic earnings/(loss) per share 6.14 3.42 (3.97)
Impact of adjusting items (0.67) 2.51 15.82
Adjusted basic earnings per share 5.47 5.93 11.85
Diluted earnings/(loss) per share 6.11 3.42 (3.96)
Impact of adjusting items (0.67) 2.51 15.80
Adjusted diluted earnings per share 5.44 5.93 11.84
*The results for the half year ended 30 November 2020 have been restated to
reflect prior year adjustments. Further details are set out in note 2.
From continuing operations
(Restated*)
30 November 2021 30 November 31 May
£ 2020 2021
£ £
Profit after tax from continuing operations attributable to owners of the 26.4 25.0 35.0
parent
Adjusting items after taxation, attributable to owners of the parent (2.8) 2.9 19.9
Adjusted profit after tax attributable to owners of the parent 23.6 27.9 54.9
(Restated*)
30 November 2021 30 November 31 May
pence 2020 2021
pence pence
Basic earnings per share 6.31 5.98 8.37
Impact of adjusting items (0.67) 0.69 4.75
Adjusted basic earnings per share 5.64 6.67 13.12
Diluted earnings per share 6.28 5.98 8.35
Impact of adjusting items (0.67) 0.69 4.75
Adjusted diluted earnings per share 5.61 6.67 13.10
*The results for the half year ended 30 November 2020 have been restated to
reflect prior year adjustments. Further details are set out in note 2.
From discontinued operations
(Restated*)
30 November 2021 30 November 31 May
£ 2020 2021
£ £
Loss after tax from discontinued operations attributable to owners of the (0.7) (10.7) (51.6)
parent
Adjusting items after taxation, attributable to owners of the parent - 7.6 46.3
Adjusted profit/(loss) after tax attributable to owners of the parent (0.7) (3.1) (5.3)
(Restated*)
30 November 2021 30 November 31 May
pence 2020 2021
pence pence
Basic loss per share (0.17) (2.56) (12.33)
Impact of adjusting items - 1.82 11.06
Adjusted basic earnings/(loss) per share (0.17) (0.74) (1.27)
Diluted loss per share (0.17) (2.56) (12.31)
Impact of adjusting items - 1.82 11.05
Adjusted diluted earnings/(loss) per share (0.17) (0.74) (1.26)
*The results for the half year ended 30 November 2020 have been restated to
reflect prior year adjustments. Further details are set out in note 2.
10. Reconciliation of profit before tax to cash generated from
operations
Unaudited (Restated)* Audited
Unaudited
Half year to Half year to Year to
30 November 2021 30 November 2020 31 May
2021
£m £m £m
Profit before tax from continuing operations 35.1 32.4 63.2
Loss before tax from discontinued operations (0.7) (12.0) (46.9)
Profit before tax 34.4 20.4 16.3
Adjustment for net finance costs (note 5) 0.9 1.5 2.4
Operating profit 35.3 21.9 18.7
Depreciation (note 6 & 15) 6.3 8.0 14.3
Amortisation (note 6) 3.4 3.1 6.3
Impairment of tangible and intangible assets 6.4 0.2 0.5
Impairment reversal on intangible assets reclassified as held for sale - - (1.5)
Impairment of equity investment in joint venture - - 2.2
(Profit) / loss on sale of assets (11.1) (0.2) 0.4
(Profit) / loss on disposal of companies & businesses (1.7) 8.8 40.7
Derecognition of capitalised costs related to cloud computing arrangements 1.5 - -
Other recycling of foreign exchange losses 1.5 - 0.6
Difference between pension charge and cash contributions 0.1 - 0.5
Share based payment charges 2.0 0.9 -
Share of results from joint ventures (4.1) (2.3) (5.6)
Operating cash flows before movements in working capital 39.6 40.4 77.1
Movements in working capital:
Inventories (14.8) 8.8 2.2
Trade and other receivables (16.6) (10.0) (5.9)
Trade and other payables 16.8 (5.3) 1.3
Provisions - 0.1 (1.3)
Cash generated from operations 25.0 34.0 73.4
*The results for the half year ended 30 November 2020 have been restated to
reflect prior year adjustments. Further details are set out in note 2.
11. Net debt reconciliation
Group net debt, which is an alternative performance measure, comprises the
following:
Audited Unaudited Unaudited Unaudited Unaudited
1 June 2021 Cash flow Foreign exchange Other 30 November 2021
movements
£m £m £m £m £m
Cash at bank and in hand 79.4 12.6 1.6 - 93.6
Short term deposits 7.6 (6.2) 0.3 - 1.7
Overdrafts - (0.1) - - (0.1)
Cash and cash equivalents 87.0 6.3 1.9 - 95.2
Current asset investments 0.3 - - - 0.3
Loans due over one year (118.0) 12.0 - - (106.0)
Net debt (30.7) 18.3 1.9 - (10.5)
Loans due over one year include the Group's main borrowing facility which was
renewed during the year ended 31 May 2019. This is provided by a syndicate of
lenders in the form of a £325m Revolving Credit Facility committed until 28
November 2023. The Group also has access to uncommitted working capital
facilities amounting to £98.2m.
Overdrafts do not form part of the Group's main borrowing facility and only
arise as part of the Group's composite banking arrangements with key banking
partners. Under the terms of this arrangement, cash and overdraft balances
recognised by the Overdraft's Obligor Group are considered as one cash pool
with the net position being monitored by the Directors and Lenders.
12. Retirement benefits & other long-term employee obligations
The Group operates retirement benefit schemes for its UK and certain overseas
subsidiaries. These obligations have been measured in accordance with IAS 19
'Employee Benefits (revised)' and are as follows:
Unaudited Audited
Unaudited
30 November 2021 30 November 2020 31 May
2021
£m £m £m
UK schemes in surplus 104.4 98.2 87.2
UK schemes in deficit (4.7) (4.6) (4.5)
Restriction due to asset ceiling (58.5) (57.8) (53.6)
Net UK position 41.2 35.8 29.1
Overseas schemes (9.3) (7.6) (8.4)
31.9 28.2 20.7
The Group has four main defined benefit schemes which are based and
administered in the UK and are closed to future accrual and new entrants.
The key financial assumptions (applicable to all UK schemes) applied in the
actuarial review of the pension schemes have been reviewed in the preparation
of these interim condensed consolidated financial statements and amended where
appropriate from those applied at 31 May 2021. The key assumptions made were:
Unaudited Unaudited Audited
Half year to Half year to Year to
30 November 2021 30 November 2020 31 May
2021
% per annum % per annum % per annum
Rate of increase in retirement benefits in payment 3.35% 2.80% 3.05%
Discount rate 1.60% 1.55% 1.95%
Inflation assumption 3.50% 2.95% 3.20%
The movement during the period in the UK schemes is broken down as follows:
Unaudited
Unaudited
30 November 2021 30 November 2020
£m £m
Retirement benefit surplus as at 1 June 29.1 38.4
Net pension interest income 0.2 0.3
Past service cost - (0.2)
Administration expenses paid by the schemes - (0.2)
Contributions paid - -
Employer direct benefit payments 0.1 0.1
Remeasurement loss due to changes in financial assumptions (28.5) (10.5)
Gain on scheme assets (excluding interest income) 44.6 3.8
Changes in asset ceiling (including interest) (4.3) 4.1
Retirement benefit surplus as at 30 November 41.2 35.8
13. Financial risk management and financial instruments
The Group's operations expose it to a variety of financial risks including
foreign currency risk, credit risk, liquidity risk and interest rate risk. The
Group's treasury policy addresses issues of liquidity, funding and investment
as well as currency, credit, liquidity and interest rate risks.
The condensed consolidated interim financial statements do not include all the
financial risk management information and disclosures required in the annual
financial statements. This information and related disclosures are presented
in the Group's annual financial statements as at 31 May 2021. There have been
no significant changes to risk management policies or processes since the year
end.
i) Fair value estimation
The Group holds a number of financial instruments that are held at fair value
within the condensed consolidated interim financial statements. In deriving
the fair value, the derivative financial instruments are classified as level
1, level 2 or level 3 dependent on the valuation method applied in determining
their fair value.
The different levels are defined as follows:
Level
1 Quoted prices (unadjusted) in active markets for identical assets or
liabilities.
2 Inputs other than quoted prices included within level 1 that are observable
for the asset or liability, either directly (prices) or indirectly (derived
from prices).
3 Inputs for the assets and liabilities that are not based on observable market
data (unobservable inputs).
The financial instruments held at fair value by the Group relate to foreign
currency forward contracts used as derivatives for hedging. For both the six
months ended 30 November 2021 and 30 November 2020 and the year ended 31 May
2021 the assets and liabilities arising from foreign currency forward
contracts have been classified as level 2. The fair value of these instruments
at each of the period ends was:
Unaudited Unaudited Audited
Half year to Half year to Year to
30 November 2021 30 November 2020 31 May
2021
£m £m £m
Assets
Foreign currency forward contracts 1.2 0.8 1.0
Liabilities
Foreign currency forward contracts 1.1 1.2 0.7
There have been no transfers between level 1 and 2 in any period.
The fair value of the following financial assets and liabilities approximates
to their carrying amount:
· Trade receivables and other receivables
· Cash and cash equivalents
· Trade and other payables
· Borrowings
ii) Fair value measurement
Level 2 trading and hedging derivatives comprise forward foreign currency
exchange contracts. The fair value of forward foreign currency exchange
contracts is determined using forward currency exchange rates quoted in an
active market at the Balance Sheet date. The Group has considered but deemed
the impact of discounting level 2 derivatives that mature in the next 12
months as generally insignificant.
14. Related party transactions
PZ Wilmar Limited and PZ Wilmar Food Limited
The following related party transactions were entered into by the above
subsidiary companies during the year under the terms of a joint venture
agreement with Singapore based Wilmar International Limited. The assets,
liabilities and undertakings of PZ Wilmar Food Limited were merged into PZ
Wilmar Limited in March 2021 and therefore this has been reflected in the
values given below:
- At 30 November 2021 the outstanding loan balance receivable from PZ
Wilmar Limited was £37.5 million (30 November 2020: £37.3 million PZ Wilmar
Limited and £7.7m PZ Wilmar Food Ltd). These receivables relate to long term
loan investments that have been made by both joint venture partners and are
presented as part of the Group's net investment in its joint venture. These
loans are non-interest bearing, repayable following a notice period of 12
months and are not secured.
- At 30 November 2021 the outstanding current loan balance receivable
from PZ Wilmar Limited was £7.2 million (30 November 2020: £nil). These
loans are interest bearing, repayable on demand and not secured.
- At 30 November 2021 the outstanding trade receivable balance from PZ
Wilmar Limited was £2.2 million (30 November 2020: £1.2 million and PZ
Wilmar Food Limited £nil).
All trading balances will be settled in cash. There were no provisions for
doubtful related party receivables at 30 November 2021 (30 November 2020:
£nil) and no charge to the income statement in respect of doubtful related
party receivables (30 November 2020: £nil).
15. IFRS 16 'Leases'
The Group has lease contracts for various items of property, vehicles and
other equipment used in its operations. Leases of property generally have
lease terms between 3 and 12 years, while motor vehicles and other equipment
generally have lease terms between 1 and 4 years.
The Group also has certain leases of vehicles with lease terms of 12 months or
less and leases of equipment with low-value. The Group applies the 'short-term
lease' and 'lease of low-value assets' recognition exemptions for these
leases.
Set out below are the carrying amounts of right-of-use assets recognised and
the movements during the period:
Land & buildings Cars Other equipment Total
£m £m £m £m
As at 1 June 2021 10.3 1.2 0.2 11.7
Additions - 1.0 - 1.0
Depreciation (1.4) (0.2) (0.1) (1.7)
Currency translation 0.2 0.1 - 0.3
As at 30 Nov 2021 9.1 2.1 0.1 11.3
Set out below are the carrying amounts of lease liabilities and the movements
during the period:
Lease liability Total
£m
As at 1 June 2021 11.8
Additions 0.9
Accretion of interest 0.2
Payments (1.9)
Currency translation 0.2
As at 30 Nov 2021 11.2
Current liabilities 3.7
Non-current liabilities 7.5
Total lease liabilities 11.2
The following are the amounts recognised in profit or loss:
Unaudited Unaudited
Half Year to 30 November 2021 Half Year to 30 November 2020
£m
£m
Depreciation expense of right-of-use assets 1.7 1.6
Interest expense on lease liabilities 0.2 0.7
Expense relating to short term or low-value assets 0.1 0.1
Total amount recognised in profit or loss 2.0 2.4
16. Discontinued operations
On 18 March 2020, the Group exchanged contracts for the sale of the assets
associated with Nutricima Ltd, which carried out the Group's Food &
Nutrition operations in Africa. The sale completed on 28 September 2020, on
which date control of the assets passed to the acquirer. The assets included
in the sale were land & buildings and plant & machinery of the
Nutricima factory, intellectual property relating to the brands of Nutricima
and the inventory holding of Nutricima on the date of disposal. Following
completion of the sale, Nutricima Ltd ceased to make commercial sales, but
final business activities, such as collection of remaining debtors and
settlement of liabilities continued until May 2021.
On 28 August 2019, the Group entered into a sale agreement to dispose of
Minerva S.A., which carried out the Group's Food & Nutrition operations in
Greece as part of the Europe & the Americas regional segment. The disposal
was completed on 30 September 2019, on which date control of Minerva S.A.
passed to the acquirer. As part of the sale agreement, the Group agreed to
reimburse an amount of consideration, £0.8m, if certain subsidies were not
received by Minerva. The date for receipt of the grants has passed and as
such, the Group has made the relevant settlements. This amount is shown in
discontinued operations within the half year to 30 November 2021.
The results of the discontinued operations, which have been included in the
consolidated income statement, were as follows:
Unaudited (Restated)* Audited
Unaudited
30 November 2021 30 November 2020 31 May
2021
£m £m £m
Revenue - 2.5 2.4
Expenses (0.7) (5.6) (8.2)
Loss before tax (0.7) (3.1) (5.8)
Attributable tax income - - 0.5
(0.7) (3.1) (5.3)
Adjusting items (note 4)
Costs of liquidation following disposal of Luksja - - (0.4)
Loss on disposal of discontinued operations - (8.9) (40.7)
Attributable tax income/(expense) - 1.3 (5.2)
- (7.6) (46.3)
Net loss attributable to discontinued operations (0.7) (10.7) (51.6)
(attributable to owners of the Company)
*The results for the half year ended 30 November 2020 have been restated to
reflect prior year adjustments. Further details are set out in note 2.
The cash flows that are attributable to the activities of the discontinued
operations are as follows:
Unaudited (Restated)* Audited
Unaudited
30 November 2021 30 November 2020 31 May
2021
£m £m £m
Net cash used in operating activities (0.2) (5.2) (7.5)
Net cash (used in) / generated from investing activities (0.8) 17.3 16.0
Net cash used in financing activities - - -
Net (decrease) / increase in cash and cash equivalents (1.0) 12.1 8.5
*The results for the half year ended 30 November 2020 have been restated to
reflect prior year adjustments. Further details are set out in note 2.
17. Disposal of five:am
As referred to in note 4 'Adjusting items', on 4 June 2021 the Group disposed
of the assets associated with five:am. The assets and liabilities that were
disposed of were as follows:
30 Nov 2021
£m
Property, plant and equipment (0.4)
Inventories (0.7)
Attributable intangible assets (5.9)
Right of use assets (0.2)
Lease liabilities 0.2
Employee provisions 0.5
Deferred tax liability 1.8
Total net assets disposed of (4.7)
Cash consideration 7.2
Historical foreign exchange reserves recycled on disposal
- Relating to intangible assets (0.4)
- Relating to deferred tax on intangible assets 0.6
Other disposal costs (0.2)
Profit on disposal 2.5
18. Seasonality
Certain business units have a degree of seasonality with the biggest factors
being the weather and Christmas. However, no individual reporting segment is
seasonal as a whole and therefore no further analysis is provided.
19. Principal risks and uncertainties
PZ Cussons has over 130 years of trading history with a long standing
tradition of sustainable growth in our key regions of Europe, Africa and Asia.
Our in-depth local understanding, strong brand position and robust
infrastructure within these markets, allied to a strong Group balance sheet,
enable us to withstand short to medium-term political and financial
instabilities that may adversely impact the Group.
The Group's risk management framework is explained on page 54 of our 2021
Annual Report and Financial Statements which is available on our website at
www.pzcussons.com (http://www.pzcussons.com) . The Board assumes overall
accountability for the management of risk whilst the Audit & Risk
Committee continues to monitor and review the effectiveness of the Group's
risk management and internal control systems. The Executive Leadership Team
ensures that the risk management framework is embedded and operates throughout
the Group and regularly reviews both the regional and consolidated risk
registers, verifying appropriate mitigation activities are operating
effectively.
The identified principal risks are considered unchanged from those outlined on
pages 59 to 61 of our 2021 Strategic Report. These are: pandemic, consumer,
customer and economic trends, IT and information security, sustainability and
environment, legal and regulatory compliance, talent retention and
development, business transformation, health & safety, supply chain and
logistics and treasury and tax.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that these condensed consolidated interim financial
statements have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', and that the interim management
report includes a fair review of the information required by DTR 4.2.7 and DTR
4.2.8, namely:
· an indication of important events that have occurred during the
first six months and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
· material related-party transactions in the first six months and
any material changes in the related-party transactions described in the last
annual report.
The Directors of PZ Cussons plc are listed on page 31. A list of current
Directors is maintained on the PZ Cussons plc website.
By order of the Board
Mr K Massie
Company Secretary
8 February 2022
INDEPENDENT REVIEW REPORT TO PZ CUSSONS PLC
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
November 2021 which comprises the consolidated income statement, the
consolidated balance sheet, the consolidated statement of changes in equity,
the cash flow statement and related notes 1 to 19. We have read the other
information contained in the half-yearly financial report and considered
whether it contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the group will be
prepared in accordance with United Kingdom adopted international accounting
standards. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with United
Kingdom adopted International Accounting Standard 34, "Interim Financial
Reporting".
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Financial
Reporting Council for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and consequently does
not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 November 2021 is not prepared, in
all material respects, in accordance with United Kingdom adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Use of our report
This report is made solely to the company in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity"
issued by the Financial Reporting Council. Our work has been undertaken so
that we might state to the company those matters we are required to state to
it in an independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the company, for our review work, for this report, or for the
conclusions we have formed.
Deloitte LLP
Statutory Auditor
Manchester, UK
9 February 2022
Directors
Chair
C Silver *
Chief Executive
J Myers
Chief Financial Officer
S Pollard
J Townsend *
J Nicolson *
D Kucz *
K Bashforth *
J Sodha *
V Juarez *
* Non-executive
Secretary
K Massie
Registered Office
Manchester Business Park
3500 Aviator Way
Manchester
M22 5TG
Registered number
Company registered number 00019457
Registrars
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
Website
www.pzcussons.com
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