REG - PZ CUSSONS PLC - Interim Results
11/02/2025 07:15
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RNS Number : 5950W PZ CUSSONS PLC 11 February 2025
11 February 2025
RESULTS FOR THE SIX MONTHS ENDED 30 NOVEMBER 2024
Solid overall trading in UK, Indonesia and ANZ
On track to meet FY25 expectations
Jonathan Myers, Chief Executive Officer, said: "Trading has been in line with
expectations during the first half of our financial year and, together, three
of our priority markets - the UK, Indonesia and ANZ - have delivered solid
overall like for like revenue growth of 2%. New product innovation,
competitive brand activation and increased retail distribution have combined
to deliver the strongest performance in our UK business for three years,
thanks in part to particularly successful Christmas sales for Sanctuary Spa
gifting. Indonesia recorded a third consecutive quarter of growth and in ANZ
our brands have continued to grow share, albeit against a backdrop of market
softness.
Our H1 reported revenue and adjusted operating profit have continued to be
impacted by the depreciation of the Naira. The more recent stabilisation of
the exchange rate and our operational interventions on the ground have,
however, enabled us to sustain our trading momentum in the Nigerian market
whilst reducing our exposure to further currency depreciation.
We are progressing with our plans to transform our portfolio to unlock value
and reduce complexity, through the processes involving our Africa business and
the St. Tropez brand.
The trends of the first half of the year have continued into the second half,
meaning we are on track to meet FY25 profit expectations.
We remain confident in the long-term potential for PZ Cussons as a business
with stronger brands in a more focused portfolio, delivering sustainable,
profitable growth."
£m unless otherwise stated Adjusted Statutory
H1 FY25 H1 FY24 Change H1 FY25 H1 FY24 Change
Revenue 249.3 277.1 (10.0)% 249.3 277.1 (10.0)%
LFL revenue growth 7.1% 2.2% - n/a n/a n/a
Operating profit/(loss) 27.0 30.6 (11.8)% 13.4 (89.7) n.m
Operating margin 10.8% 11.0% (20)bps 5.4% (32.4)% n.m
Profit/(loss) before tax 19.8 26.1 (24.1)% 6.4 (94.2) n.m
Basic earnings per share 3.89p 4.32p (10.0)% 1.19p (10.84)p n.m
Dividend per share n/a n/a n/a 1.50p 1.50p 0.0%
See page 11 for definitions of key terms and page 12 for the reconciliation
between Alternative Performance Measures and Statutory results.
'n.m.' represents non-meaningful growth rates.
Numbers are shown based on continuing operations. With the exception of LFL
revenue growth, % changes are shown at actual FX rates.
H1 FY25 refers to the 6 months ended 30 November 2024 and H1 FY24 refers to
the 6 months ended 2 December 2023.
Summary
Financial results
· LFL revenue growth of 7.1% driven by pricing in Africa and growth in
UK and Indonesia
o Excluding Africa LFL growth revenue was 1.6% with volume growth of 2.0%.
· Reported revenue decline of 10.0% is due to the 55% depreciation in
the Nigerian Naira versus Sterling compared to the prior period (see page 10
for details on movements in FX).
· Reduction in leverage, with gross debt reduced by £14 million to
£153 million as at 30 November 2024, from £167 million as at 31 May 2024
with free cash flow of £22.7 million, an improvement on the comparative
period.
· Adjusted operating profit margin reduced by 20bps, to 10.8%, but grew
70bps if we exclude the contribution from the PZ Wilmar joint venture in
Nigeria which is equity-accounted.
· Profit before tax declined by 24.1%, reflecting the 11.8% reduction
in operating profit and increased net finance expense.
· EPS declined by 10.0% as the decline in PBT was partly offset by a
reduced effective tax rate and a smaller impact of non-controlling interests,
which are largely associated with Nigeria.
Delivery against the strategy
We are delivering against the three key priorities established for FY25:
1. Drive our businesses in the UK, Indonesia and ANZ
· UK: better execution and sharing of commercial best-practice
o Strong Christmas gifting period, with sell-out value up more than 30% year
on year, with Sanctuary Spa revenue up double-digits.
o New listings secured for the Charles Worthington and Fudge hair care
brands in Tesco and Waitrose.
o Further growth from Childs Farm, including the announcement of a Bluey(TM)
partnership with BBC Studios.
· Indonesia: continued revenue growth, and well placed to take share in
a structurally attractive market
o Third consecutive quarter of revenue growth driven by broader
distribution, optimised pricing and promotional activity and consumer-relevant
innovation launches.
· ANZ: brand strength delivering market share gains
o Market share gains in Morning Fresh, Rafferty's Garden and Radiant, partly
offsetting category softness.
2. Strengthen our brand-building capabilities and embed our new
operating model
· Organisational changes put in place during FY24 to strengthen
group-wide brand building capabilities are enabling more competitive brand
activation and strengthening our multi-year innovation pipeline:
o Childs Farm re-stage and Imperial Leather innovation launching in the
second half of FY25;
o Major new innovations for Cussons Baby (Indonesia), Original Source (UK)
and Morning Fresh (Australia), to be launched in FY26, are well-progressed;
o Improved visibility, and validation, of Group-wide 3-year innovation
plans.
· Integration of UK Personal Care and UK Beauty businesses largely
complete, with annualised savings of £3 million achieved, as well as
executional improvements due to sharing of best practice.
3. Deliver the portfolio transformation to maximise shareholder value
· The Group is progressing with plans to transform our portfolio to
unlock value and reduce complexity, through the processes involving our Africa
business and the St. Tropez brand. Further updates will be provided in due
course.
Dividend
The Board is declaring a dividend of 1.50p per share, in line with last year's
payment. The dividend will be paid on 9 April 2025 to shareholders on the
register at the close of business on 7 March 2025.
The Group's future approach to dividend policy will remain under review,
particularly in light of the ongoing portfolio transformation activity and the
Board's intent to reduce financial leverage from current levels.
Current trading and FY25 outlook
Performance to the end of January has been in line with our expectations and
we expect Group LFL revenue growth trends to continue in the balance of the
year.
In September 2024 we provided FY25 guidance for adjusted operating profit of
£47-53 million. This included an estimate, based upon prevailing foreign
exchange rates, of approximately £5 million of costs related to FX losses on
intercompany loans. These costs, which relate to our Nigerian business and are
non-cash, are now treated as an adjusting item. As a result, our adjusted
operating profit guidance for the year has been revised upwards, by £5
million, to £52-58 million.
We continue to be confident in the long-term potential for PZ Cussons as a
business with stronger brands in a more focused portfolio, delivering
sustainable, profitable growth.
For further information please contact:
Investors
Simon Whittington - IR and Corporate Development Director +44 (0) 77
1137 2928
Media
Headland PZCussons@headlandconsultancy.com
(mailto:PZCussons@headlandconsultancy.com)
+44 (0) 20 3805 4822
Susanna Voyle, Stephen Malthouse and Charlie Twigg
Investor and Analyst conference call
PZ Cussons' management will host a virtual audiocast presentation for analysts
and institutional investors at 8.30am UK time to present the results and
provide the opportunity for Q&A. Details of the presentation are as
follows:
A webcast of the presentation is available at the link below and will also be
available via our corporate website: www.pzcussons.com
(http://www.pzcussons.com) .
Audience Webcast link:
https://www.investis-live.com/pzcussons/6787d4b4995564000f8412a2/jdnh
(https://www.investis-live.com/pzcussons/6787d4b4995564000f8412a2/jdnh)
Dial in: +44 20 3936 2999 / +44 800 358 1035
Access code: 335953
Notes to Editors
About PZ Cussons
PZ Cussons is a listed consumer goods business headquartered in Manchester,
UK. We employ over 2,600 people across our operations in Europe, North
America, Asia-Pacific and Africa. Since our founding in 1884, we have been
creating products to delight, care for and nourish consumers. Across our core
categories of Hygiene, Baby and Beauty, our trusted and well-loved brands
include Carex, Childs Farm, Cussons Baby, Imperial Leather, Morning Fresh,
Original Source, Premier, Sanctuary Spa and St. Tropez. Sustainability and the
wellbeing of our employees and communities everywhere are at the heart of our
business model and strategy, and captured by our purpose: For everyone, for
life, for good.
Cautionary note regarding forward-looking statements
This announcement contains certain forward-looking statements relating to
expected or anticipated results, performance or events. Such statements are
subject to normal risks associated with the uncertainties in our business,
supply chain and consumer demand, along with risks associated with
macroeconomic, political and social factors in the markets in which we
operate. Whilst we believe that the expectations reflected herein are
reasonable based on the information we have as of the date of this
announcement, actual outcomes may vary significantly owing to factors outside
the control of the PZ Cussons Group, such as cost of materials or demand for
our products, or within our control such as our investment decisions,
allocation of resources or changes to our plans or strategy. The PZ Cussons
Group expressly disclaims any obligation to revise forward-looking statements
made in this or other announcements to reflect changes in our expectations or
circumstances. No reliance may be placed on the forward-looking statements
contained within this announcement.
GROUP REVIEW
Introduction from our Chief Executive Officer
As we launched the new strategy in 2021, we were clear that the turnaround,
and ultimately transformation, of PZ Cussons, would be a multi-year journey.
Many of the business' problems had been years in the making and would not be
fixed overnight. The subsequent single-largest devaluation in the history of
the Nigerian Naira which began in June 2023 added to our challenges,
significantly impacting the business financially and operationally.
Nevertheless, I remain pleased with the progress that has been made in a
number of areas - most notably the UK business which, after years of decline,
has recorded its strongest profit performance since FY21. With this backdrop,
and a somewhat more stable environment in Nigeria in recent months, I believe
we are now firmly in the transformation phase of our journey. We are seeking
to unlock value and reduce complexity, not only through operational
improvements and clarity of resource allocation, but through portfolio action
which will bring about a step-change in our geographic and category footprint.
In doing so, we will focus on where we can be most competitive.
To this end, as initially announced in April 2024, we are progressing with our
plans to transform our portfolio to unlock value and reduce complexity,
through the processes involving our Africa business and the St. Tropez brand.
We have also been working hard to reduce our cost base and I am pleased that
overheads, as a percentage of revenue, have already reduced by 80bps in the
first half of the year.
Our day-to-day efforts continue to be on all of our existing operations but
with a particular focus on the future to ensure we maximise the performance of
the business units that will remain as they are today. This is comprised of
the UK - which represents approximately half of the Group revenue excluding
Africa and St. Tropez, and ANZ and Indonesia which contribute most of the
remainder.
In the UK, we enjoy strong brands in the Personal Care category. These are
supported by efficient, in-house production as well as strong relationships
with our key retail customers. In the first half of the year, we have
delivered the strongest profit performance for three years, with good revenue
growth and continued improvement in profitability of Childs Farm.
With 4.5 million births a year, Indonesia remains one of most important
markets globally for Baby Personal Care - a category in which Cussons Baby is
a leading brand. Despite some macro-economic challenges, we have continued to
grow revenue in the first half of the year as a result of targeted innovation,
strengthened retail execution and a number of Revenue Growth Management
actions.
Our ANZ business similarly enjoys category-leading brands across both Home
Care and Baby Food, including a c.50% share of the Australia hand dishwash
category. Against a particularly soft market backdrop, with some channel
disruption in the period, we have once again taken share in each of our key
brands thanks to the quality of our execution.
At the same time, we are strengthening our future innovation pipeline. This
has improved in large part due to the re-organisation undertaken during FY24
that has seen us establish a dedicated, central brand-building resource
responsible for leading the development of longer-term plans.
Summary
I would like to thank my PZ Cussons colleagues across the world for their hard
work in recent months. We remain confident in the long-term potential for PZ
Cussons as a business with stronger brands in a more focused portfolio,
delivering sustainable, profitable growth.
FINANCIAL REVIEW
Overview of Group financial performance
Our reported financial performance for the six months ended 30 November 2024
continues to reflect the adverse impact of the devaluation of the Naira in
June 2023 and in the 18 months period which followed. This is the primary
driver of the reduction in revenue, adjusted operating profit and adjusted
earnings per share. On a statutory basis, many of our key metrics improved
given the comparative period included foreign exchange losses of £88.2
million related to the Naira devaluation.
Adjusted profit before tax declined by 24.1%, as a result of the depreciation
of the Naira. Adjusted earnings per share, however, declined by a smaller
amount (10.0%) due to a lower effective tax rate of 18.2%, from a statutory
loss in our Nigerian business, and by a reduction in the Sterling value of the
non-controlling interests in Nigeria. On a statutory basis, EPS was 1.19p (H1
FY24: loss of 10.84p).
Our financial leverage has increased as a result of the devaluation of the
Naira and a key focus for the Group is to reduce this. It is therefore
encouraging that gross debt once again fell during the first half of FY25, by
£14.1 million, albeit due in part to the phasing of the dividend payment
which took place in December. Notwithstanding any proceeds from our portfolio
transformation activity, we expect leverage to fall further, with continued
free cash flow supplemented by proceeds received through the sale of surplus,
non-operating assets across the Group.
The Board is declaring a dividend of 1.50p per share, in line with last year's
payment. The dividend will be paid on 9 April 2025 to shareholders on the
register at the close of business on 7 March 2025.
Performance by geography
A disaggregation of our reporting segments is provided below.
Revenue split by business unit
£m unless otherwise stated H1 FY25
UK (ex. St Tropez) 82.3
St. Tropez 9.2
Other ( 1 ) 9.5
Europe and the Americas 101.0
Indonesia 30.7
ANZ 46.1
Other ( 2 ) 10.9
APAC 87.7
Nigeria (Electricals) 18.5
Nigeria (Family Care) 28.2
Other ( 3 ) 13.9
Africa 60.6
Group 249.3
1 Includes revenue from continental Europe which is managed through
third-party distributors
2 Includes revenue from other Asia markets and non-branded revenue
3 Includes primarily revenue from Kenya and Ghana
Europe and the Americas
£m unless otherwise stated H1 FY25 H1 FY24 Growth/ (decline)
Revenue 101.0 97.2 3.9%
LFL revenue growth (%) 4.0% (1.9)% n/a
Adjusted operating profit 20.7 12.4 66.9%
Margin (%) 20.5% 12.8% 770bps
Operating profit/(loss) 19.6 (16.6) n/a
Margin (%) 19.4% (17.1)% n/a
Revenue grew 4.0% on a LFL basis, reflecting price/mix growth of 2.9% and
volume growth of 1.1%. Excluding St. Tropez, LFL revenue growth was 4.4%.
Sanctuary Spa, which grew double-digits, was a key driver of overall growth.
Although aided by a soft comparative period, we have significantly increased
our distribution points in Grocery and High Street customers, and we saw
strong sell-in towards the end of the period with a successful Christmas
gifting range. Carex grew strongly, with both volume and price/mix growth, in
part due to the ongoing successful collaboration with Magic Light Pictures -
owner of the Gruffalo intellectual property. This relationship has since
expanded and we expect this to support growth over the coming months. Gains in
distribution have also driven growth of our haircare brands - Fudge and
Charles Worthington - which secured new listings at Tesco and Waitrose.
Imperial Leather and Childs Farm recorded good growth - the latter benefiting
from in-house manufacturing which was initiated in August 2024.
Original Source declined slightly following a particularly strong comparative
period but our plans and investment support are weighted towards the second
half of our financial year. St. Tropez revenue was unchanged as a solid
performance in the UK was offset by a softer US performance where growth is
expected to be second-half weighted.
Adjusted operating profit increased to £20.7 million, with a margin of 20.5%.
This improvement was driven by the strong revenue growth and mix management
activity across our brands, as well as phasing of certain costs in our UK
business, primarily related to marketing. On a statutory basis, operating
profit was £19.6 million - an improvement from the £16.6 million loss in the
comparative period which included an impairment of the book value of Sanctuary
Spa.
Asia Pacific
£m unless otherwise stated H1 FY25 H1 FY24 Growth / (decline)
Revenue 87.7 88.8 (1.1)%
LFL revenue growth (%) (1.1)% (6.0)% n/a
Adjusted operating profit 13.1 15.7 (16.6)%
Margin (%) 14.9% 17.7% (280)bps
Operating profit 13.1 14.8 (11.5)%
Margin (%) 14.9% 16.7% (180)bps
Revenue declined 1.1% on a like for like basis reflecting growth in Indonesia,
offset by a decline in ANZ and a number of our smaller, distributor markets.
Price/mix growth was (4.2)% and volume was 3.1%. Depreciation in the
Indonesian Rupiah and Australian Dollar was offset by growth in non-branded
revenue, which is excluded from the like for like calculation, resulting in
reported revenue decline also of 1.1%.
Indonesia grew strongly in the first half of the year with Cussons Baby market
share maintained compared to other multi-national peers. Growth was in part
driven by the implementation of a new trade promotion analytics platform
during FY24 which has enabled us to optimise pricing and promotional activity
by channels and by customer, particularly in the competitive wipes segment.
Additionally, supported by rapid growth in the live-streaming sales channel,
eCommerce grew nearly 100% in H1. We are pleased with the launch in FY24 of
Cussons Baby into the warming oil segment and we continue to see meaningful
revenue growth opportunities with this innovation given our historically -
limited presence in this very large segment with an estimated 80% of mothers
purchasing the product.
Revenue in ANZ declined slightly due primarily to softer consumer spending in
our categories with cost-of-living concerns remaining relatively high. In
addition, towards the end of the period, worker strikes taking place at a
customer's distribution centres resulted in some temporary disruption to our
sales, although some of the lost revenue has been regained in the second half
of the year. Nevertheless, we continued to grow market share and
profitability, across each of our three main brands - Morning Fresh, Radiant
and Rafferty's Garden.
Adjusted operating margin declined by 280bps against a strong comparative
period, with favourable mix in ANZ and modest growth in Indonesia offset by a
reduction in profitability from our smaller Asian markets. On a statutory
basis, margin declined by 180bps, as the comparative period including certain
adjusting items related to simplification and transformation projects, now
completed.
Africa
£m unless otherwise stated H1 FY25 H1 FY24 Growth / (decline)
Revenue 60.6 90.8 (33.3)%
LFL revenue growth (%) 28.0% 17.4% n/a
Adjusted operating profit 8.7 13.7 (36.5)%
Margin (%) 14.4% 15.1% (70)bps
Operating profit/(loss) 1.6 (62.7) n/a
Margin (%) 2.6% (69.1)% n/a
Adjusted operating profit (ex. share of joint venture) 4.0 5.9 (32.2)%
Margin % 6.6% 6.5% 10bps
On a statutory basis, revenue declined by 33.3% largely because the Naira was
approximately 55% lower on average during H1 FY25 compared to the prior
period. LFL revenue growth of 28.0% was driven by further inflation-driven
price increases.
In Nigeria Family Care, LFL revenue grew over 40%, with double-digit growth
across our key Brands. Growth was driven by pricing, successfully offsetting
increased costs, with volume declines of 11%. Market shares have, overall,
been maintained due to continued growth in distribution points with 171,000
stores reached, up from 151,000 at the end of FY24. We have also delivered
successful innovation launches including Robb Extra Menthol and Joy 'Soft
Glow', and Brand activations such as Premier Cool 'Ready up your cool' and
'International Men's Day' campaigns. We also benefited from a strategic
partnership with the 'Big Brother Naija' show.
Electricals revenue was £18.5 million and grew 20% on a constant currency
basis. This was driven by continued price increases and favourable mix aided
by our energy saving innovation. Volumes declined double digits as a result of
category pressures and supply chain disruption although the latter improved
towards the end of the period.
Adjusted operating margin declined by 70bps due to a more normal level of
profit from the PZ Wilmar joint venture in Nigeria. Excluding the PZ Wilmar
income, Africa margin increased by 10bps with further pricing in our Nigerian
business more than offsetting the continued higher input costs in the first
half. On a statutory basis, the operating profit was £1.6 million compared to
a loss of £62.7 million in the comparative period which had reflected the
increase in the value of historical USD denominated liabilities in our
Nigerian subsidiaries and FX losses on the revaluation of these liabilities.
Adjusting items of £7.1 million in H1 FY25 relate primarily to FX losses
arising on loans previously classified as permanent as equity and accounted
for in reserves.
Other financial items
Adjusted operating profit
Adjusted operating profit for the Group was £27.0 million, a decrease of
£3.6 million from £30.6 million in the prior period. This was primarily
driven by a £8.3 million increase in the Europe and Americas region, offset
by a £7.6 million decrease in APAC and Africa, combined. Central costs
increased by £4.3 million due primarily to costs attributable to business
units but recorded centrally, as well as increased investment in our
brand-building capabilities and an increase in audit fees. Adjusted operating
profit margin decreased by 20bps to 10.8% but grew 70bps excluding the
contribution from the PZ Wilmar joint venture which is equity-accounted and
which had a particularly strong comparative period.
Adjusting items
Adjusting items in the period were £13.4 million before tax and primarily
relate to ongoing transformation projects and foreign exchange losses on loans
that were previously classified as permanent as equity. This compares to
adjusting items of £120.3 million in the prior period which included foreign
exchange losses arising on the Naira devaluation and an impairment charge.
After accounting for these adjusting items, the operating profit for the Group
was £13.4 million compared to an operating loss of £(89.7) million in the
prior period.
Net finance expense
Net finance expense in the period was £7.1 million compared to a net finance
expense of £4.5 million in the prior period. This was driven mainly by lower
interest income due to the successful repatriation of cash from Nigeria to the
UK, which more than offset the reduction in interest expense as a result of
lower gross borrowings.
Statutory profit before tax was £6.4 million, £100.6 million higher than the
prior period while adjusted profit before tax was £19.8 million which was
£6.3 million lower than the prior period.
Taxation
The tax charge in the period was £2.2 million compared to a tax credit of
£27.2 million in the six month period to November 2024, reflecting the
material impact of statutory FX losses suffered in Nigeria during FY24, and
the full recognition of the resulting deferred tax asset. The effective tax
rate ('ETR') on adjusted profit before tax decreased slightly to 18.2% (20.3%
in the six months to November 2024) primarily due to the treatment of certain
costs that are not tax-deductible.
Profit for the period
Profit for the period was £4.2 million which compared to a loss of £(67.0)
million in the prior period. Basic earnings per share was 1.19p compared to a
loss per share of (10.84)p in the prior period. Adjusted basic earnings per
share was 3.89p which compares to 4.32p in the prior period.
Balance sheet and cash flow
Net debt as at 30 November 2024 was £106.1 million compared to £115.3
million at 31 May 2024. The Group now has no excess cash held in Naira
following the repatriation of cash to the UK during FY24.
£m unless otherwise stated H1 FY25 FY24
Total cash 46.4 51.3
Of which Naira 15.6 17.2
Gross debt 152.5 166.6
Net debt 106.1 115.3
Balance sheet rates (NGN/GBP): 2,124 1,893
Total free cash flow was £22.7 million compared to £20.0 million in the prior period. The increase reflects primarily an improvement in working capital movements and reduction in capital expenditure, offset by lower adjusted EBITDA.
£m unless otherwise stated H1 FY25 H1 FY24
Adjusted EBITDA 33.3 39.7
Cash flow impact of adjusting items (13.6) (7.7)
Working capital movement ( 4 ) 4.6 (4.6)
Capital expenditure (1.4) (2.4)
Share of results of joint venture (2.3) (5.6)
Other 2.1 0.6
Free cash flow 22.7 20.0
Net assets increased to £244.0 million compared to £235.2 million at 31 May
2024 primarily due to a decrease in borrowings.
The Group has a £325.0 million committed credit facility which is available
for general corporate purposes. The credit facility incorporates both a term
loan, of up to £125.0 million, with the balance as a revolving credit
facility (RCF) structure. Entered into in November 2022, the term loan is a
two-year facility and the RCF a four-year facility, with both facilities
retaining two, one-year extension options, the first of which was executed in
October 2023. During the current period, management postponed the term loan
extension window from October 2024 to March 2025, allowing the portfolio
transformation projects to progress further before a decision needed to be
taken on funding facility requirements. It should be noted that current levels
of borrowing provide sufficient headroom even if the term loan was not
extended beyond its current maturity of November 2025. As at 30 November 2024,
the headroom on the committed facility was £172.0 million compared to £164.0
million at 31 May 2024.
Foreign exchange
The general appreciation of Sterling against our other currencies, and in
particularly the devaluation of the Nigerian Naira, resulted in a £46.2
million reduction to H1 FY24 revenue as set out below.
% of FY24 Average FX rates Revenue impact
revenue H1 FY25 H1 FY24 % change (£m)
GBP 33% 1.00 1.00 - -
NGN (Nigeria) 28% 2,038 915 (55)% (42.7)
AUD (Australia) 17% 1.94 1.92 (1)% (0.5)
IDR (Indonesia) 12% 20,480 19,161 (6)% (2.1)
USD (USA) 2% 1.29 1.25 (3)% (0.2)
Other 8% - - (0.7)
Total ( 5 ) 100% - - (46.2)
Given the materiality of the movement in the Nigerian Naira in recent periods,
the rates used in recent reporting periods are summarised below.
NGN/GBP FY23 FY24 H1 FY24
H1 FY25
Rate used for P&L 536 1,256 915 2,038
Rate used for balance sheet 577 1,893 1,176 2,124
4 In H1 FY24, the foreign exchange losses of £88.2 million in adjusting
items have been netted against the working capital movement line item for
improved comparison to H1 FY25.
5 Table shows the impact of translating H1 FY24 revenue at H1 FY25 foreign
exchange rates.
Glossary
Term Definition
APM Alternative performance measure
BEST values Our PZ Cussons values (Bold, Energetic, Striving and Together)
Brand Investment An operating cost related to brand marketing (previously 'Media &
Consumer')
EBITDA Earnings before interest, taxes, depreciation and amortisation
Employee wellbeing % score based upon a set of questions within our annual survey of employees
EPS Earnings per share
ETR Effective tax rate
ExCo Executive committee
Family Care Refers to our Hygiene, Baby and Beauty brands in Nigeria and Africa
Free cash flow Cash generated from operations less capital expenditure
Free cash flow conversion Free cash flow as a % of adjusted EBITDA from continuing operations
Like for like (LFL) revenue growth Growth on the prior year at constant currency, excluding unbranded sales and
the impact of disposals and acquisitions, and adjusting for the number of
reporting days in the period
Must Win Brands The brands in which we place greater investment and focus. They comprise:
Carex, Childs Farm, Cussons Baby, Joy, Morning Fresh, Original Source,
Premier, Sanctuary Spa and St.Tropez
Net debt Cash, short-term deposits and current asset investments, less bank overdrafts
and borrowings. Excludes IFRS 16 lease liabilities
Personal Care Refers to our UK business unit operating our Hygiene brands such as Carex,
Original Source and Imperial Leather
Portfolio Brands The brands we operate which are not 'Must Win Brands'
PZ Cussons Growth Wheel Our 'repeatable model' for driving commercial execution, comprising
'Consumability', 'Attractiveness', 'Shoppability' and 'Memorability'
Revenue Growth Management (RGM) Maximising revenue through ensuring optimised price points across customers
and channels and across different product sizes
SKUs Stock keeping unit
Through the Line Marketing campaign incorporating both mass reach and targeted activity
Alternative Performance Measures
The Group’s business performance is assessed using a number of alternative
performance measures (APMs). These APMs include adjusted profitability
measures where results are presented excluding separately disclosed items
(referred to as adjusting items) as we believe this provides both management
and investors with useful additional information about the Group’s
performance and supports a more effective comparison of the Group’s
financial performance from one period to the next.
Adjusted Consolidated Income Statement
Unaudited Unaudited
Half year to Half year to
30 November 2024 2 December 2023
Business performance excluding adjusting items Statutory results for the half year Business performance excluding adjusting items Statutory results for the half year
Adjusting Adjusting
items items
£m £m £m £m £m £m
Revenue 249.3 - 249.3 277.1 - 277.1
Cost of sales (145.8) - (145.8) (167.8) (72.2) (240.0)
Gross profit 103.5 - 103.5 109.3 (72.2) 37.1
Selling and distribution expense (41.6) - (41.6) (44.5) - (44.5)
Administrative expense (39.6) (11.2) (50.8) (42.0) (45.9) (87.9)
Share of results of joint venture 4.7 (2.4) 2.3 7.8 (2.2) 5.6
Operating profit/(loss) 27.0 (13.6) 13.4 30.6 (120.3) (89.7)
Finance income 2.2 0.2 2.4 8.3 - 8.3
Finance expense (9.5) - (9.5) (12.8) - (12.8)
Net finance expense (7.3) 0.2 (7.1) (4.5) - (4.5)
Net monetary gain arising from hyperinflationary economies 0.1 - 0.1 - - -
Profit/(loss) before taxation 19.8 (13.4) 6.4 26.1 (120.3) (94.2)
Taxation (3.6) 1.4 (2.2) (5.3) 32.5 27.2
Profit/(loss) for the period 16.2 (12.0) 4.2 20.8 (87.8) (67.0)
Attributable to:
Owners of the Parent 16.3 (11.3) 5.0 18.1 (63.5) (45.4)
Non-controlling interests (0.1) (0.7) (0.8) 2.7 (24.3) (21.6)
16.2 (12.0) 4.2 20.8 (87.8) (67.0)
Details of adjusting items are provided in Note 4 to the condensed consolidated interim financial statements. Reconciliations from IFRS reported results to APMs are set out below.
Alternative Performance Measures (continued)
Adjusted operating profit and adjusted operating margin
Half year to Half year to
30 November 2024 2 December 2023
£m £m
Group
Operating profit/(loss) from continuing operations 13.4 (89.7)
Exclude: adjusting items 13.6 120.3
Adjusted operating profit 27.0 30.6
Revenue 249.3 277.1
Operating margin 5.4% (32.4)%
Adjusted operating margin 10.8% 11.0%
By segment
Europe & the Americas:
Operating profit/(loss) from continuing operations 19.6 (16.6)
Exclude: adjusting items 1.1 29.0
Adjusted operating profit 20.7 12.4
Revenue 101.0 97.2
Operating margin 19.4% (17.1)%
Adjusted operating margin 20.5% 12.8%
Asia Pacific:
Operating profit from continuing operations 13.1 14.8
Exclude: adjusting items - 0.9
Adjusted operating profit 13.1 15.7
Revenue 87.7 88.8
Operating margin 14.9% 16.7%
Adjusted operating margin 14.9% 17.7%
Africa:
Operating profit/(loss) from continuing operations 1.6 (62.7)
Exclude: adjusting items 7.1 76.4
Adjusted operating profit 8.7 13.7
Revenue 60.6 90.8
Operating margin 2.6% (69.1)%
Adjusted operating margin 14.4% 15.1%
Central:
Operating loss from continuing operations (20.9) (25.2)
Exclude: adjusting items 5.4 14.0
Adjusted operating loss (15.5) (11.2)
Alternative Performance Measures (continued)
Adjusted gross profit and gross margin
Half year to Half year to
30 November 2024 2 December 2023
£m £m
Gross profit 103.5 37.1
Exclude: adjusting items - 72.2
Adjusted gross profit 103.5 109.3
Revenue 249.3 277.1
Gross margin 41.5% 13.3%
Adjusted gross margin 41.5% 39.4%
Adjusted share of results of joint venture
Half year to Half year to
30 November 2024 2 December 2023
£m £m
Share of results of joint venture 2.3 5.6
Exclude: adjusting items 2.4 2.2
Adjusted share of results of joint venture 4.7 7.8
Adjusted profit before taxation
Half year to Half year to
30 November 2024 2 December 2023
£m £m
Profit/(loss) before taxation from continuing operations 6.4 (94.2)
Exclude: adjusting items 13.4 120.3
Adjusted profit before taxation 19.8 26.1
Adjusted Earnings Before Interest Depreciation and Amortisation (Adjusted
EBITDA)
Half year to Half year to
2 December 2023
30 November 2024
£m £m
Profit/(loss) before taxation from continuing operations 6.4 (94.2)
Add back: net finance expense 7.1 4.5
Add back: depreciation 4.1 5.5
Add back: amortisation 2.1 3.6
Add back: impairment and impairment reversal - 24.4
19.7 (56.2)
Exclude: adjusting items(1) 13.6 95.9
Adjusted EBITDA 33.3 39.7
(1) Excludes adjusting items relating to impairment and finance income.
Alternative Performance Measures (continued)
Adjusted earnings per share
Half year to Half year to
30 November 2024 2 December 2023
pence pence
Basic earnings/(loss) per share 1.19 (10.84)
Exclude: adjusting items 2.70 15.16
Adjusted basic earnings per share 3.89 4.32
Diluted earnings/(loss) per share(1) 1.19 (10.84)
Exclude: adjusting items(2) 2.68 15.11
Adjusted diluted earnings per share 3.87 4.27
(
) (1 ) In the half year to 2 December 2023, the basic and diluted loss
per share are equal as a result of the Group incurring a loss for the year.
(2 ) In the half year to 2 December 2023, this includes an adjustment
of 0.13 pence per share arising from bringing the diluted loss per share in
line with the basic loss per share
as outlined above.
Free cash flow
Half year to Half year to
30 November 2024 2 December 2023
£m £m
Cash generated from operations 24.1 22.4
Deduct: purchase of property, plant and equipment and software (1.4) (2.4)
Free cash flow 22.7 20.0
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
Half year to Half year to Year to
30 November 2024 2 December 2023 31 May
2024
Notes £m £m £m
Revenue 3 249.3 277.1 527.9
Cost of sales (145.8) (240.0) (396.8)
Gross profit 103.5 37.1 131.1
Selling and distribution expense (41.6) (44.5) (82.8)
Administrative expense (50.8) (87.9) (139.3)
Share of results of joint venture 2.3 5.6 7.3
Operating profit/(loss) 3 13.4 (89.7) (83.7)
Finance income 2.4 8.3 12.2
Finance expense (9.5) (12.8) (24.2)
Net finance expense (7.1) (4.5) (12.0)
Net monetary gain/(loss) arising from hyperinflationary economies(3) 0.1 - (0.2)
Profit/(loss) before taxation 6.4 (94.2) (95.9)
Taxation 7 (2.2) 27.2 24.1
Profit/(loss) for the period/year(1) 4.2 (67.0) (71.8)
Attributable to:
Owners of the Parent 5.0 (45.4) (57.0)
Non-controlling interests (0.8) (21.6) (14.8)
4.2 (67.0) (71.8)
Earnings/(loss) per ordinary share(1)
Basic (p) 1.19 (10.84) (13.60)
Diluted (p)(2) 1.19 (10.84) (13.60)
(1) Wholly derived from continuing operations.
(2) In the half year ended 2 December 2023, the basic and diluted loss per
share are equal as a result of the Group incurring a loss for the period.
(3) Represents the hyperinflation impact in relation to Ghana.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Half year to Half year to Year to
30 November 2024 2 December 2023 31 May
2024
£m £m £m
Profit/(loss) for the period/year 4.2 (67.0) (71.8)
Other comprehensive income/(expense)
Items that will not be reclassified to income statement:
Re-measurement gain/(loss) on net retirement benefit surplus 0.3 (5.2) (6.8)
Taxation on other comprehensive income/(expense) (0.1) 1.3 1.7
Total items that will not be reclassified to income statement 0.2 (3.9) (5.1)
Items that may be subsequently reclassified to income statement:
Exchange differences on translation of foreign operations(1) 2.8 (55.6) (69.4)
Share of other comprehensive expense of joint venture accounted for using the (0.1) (8.5) (20.0)
equity method
Cash flow hedges - fair value movements net of amounts reclassified 0.6 (0.9) (0.6)
Total items that may be subsequently reclassified to income statement 3.3 (65.0) (90.0)
Other comprehensive income/(expense) for the period/year 3.5 (68.9) (95.1)
Total comprehensive income/(expense) for the period/year 7.7 (135.9) (166.9)
Attributable to:
Owners of the Parent 7.9 (100.3) (133.3)
Non-controlling interests (0.2) (35.6) (33.6)
7.7 (135.9) (166.9)
(1) Includes a hyperinflation adjustment of £0.5 million (2 December 2023:
£nil) in relation to Ghana.
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
30 November 2024 2 December 2023 31 May
2024
Notes £m £m £m
Assets
Non-current assets
Goodwill and other intangible assets 5 276.9 284.7 279.3
Property, plant and equipment 40.9 48.9 42.8
Investment properties 7.0 6.2 6.6
Right-of-use assets 8.7 11.6 10.2
Net investments in joint venture 2.3 44.5 -
Trade and other receivables 29.3 - 32.1
Deferred taxation assets 21.9 26.0 22.2
Current tax receivable - - 0.6
Retirement benefit surplus 33.1 34.2 32.1
420.1 456.1 425.9
Current assets
Inventories 78.5 91.5 68.5
Trade and other receivables 104.7 96.5 99.0
Derivative financial assets 12 0.7 1.7 -
Current taxation receivable 4.3 1.5 0.2
Current asset investments 10 - 0.5 -
Cash and cash equivalents 10 46.4 128.1 51.3
234.6 319.8 219.0
Assets held for sale 5.0 1.2 4.7
239.6 321.0 223.7
Total assets 659.7 777.1 649.6
Equity
Share capital 4.3 4.3 4.3
Treasury shares (33.0) (35.0) (34.5)
Capital redemption reserve 0.7 0.7 0.7
Hedging reserve 0.2 (0.7) (0.4)
Currency translation reserve (157.5) (139.1) (159.6)
Retained earnings 429.0 444.9 425.3
Other reserves 7.6 5.5 6.5
Attributable to owners of the Parent 251.3 280.6 242.3
Non-controlling interests (7.3) (9.1) (7.1)
Total equity 244.0 271.5 235.2
To comply with the requirements of IAS 1 Presentation of Financial Statements,
the full balances of investment properties have been restated to be presented
separately on the face of the Consolidated Balance Sheet. As at 2 December
2023, these were included within the property, plant and equipment balance
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
30 November 2024 2 December 2023 31 May
2024
Notes £m £m £m
Liabilities
Non-current liabilities
Borrowings 10 152.5 219.0 160.3
Other payables 0.7 3.5 2.6
Lease liabilities 9.1 10.6 9.7
Deferred taxation liabilities 38.7 56.4 39.8
Retirement and other long-term employee benefit obligations 12.6 12.0 12.2
213.6 301.5 224.6
Current liabilities
Borrowings 10 - 6.3 6.3
Trade and other payables 174.9 178.4 158.7
Lease liabilities 10 1.6 2.5 2.4
Derivative financial liabilities 12 0.2 0.4 0.5
Current taxation payable 24.8 15.8 21.7
Provisions 0.6 0.7 0.2
202.1 204.1 189.8
Total liabilities 415.7 505.6 414.4
Total equity and liabilities 659.7 777.1 649.6
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to owners of the Parent
Capital Currency Non-
Share Treasury redemption Hedging translation Retained Other controlling Total
capital shares reserve reserve(1) reserve earnings reserves(3) interests equity
£m £m £m £m £m £m £m £m £m
At 1 June 2023 4.3 (36.9) 0.7 0.2 (89.0) 511.7 4.6 26.5 422.1
Loss for the period - - - - - (45.4) - (21.6) (67.0)
Other comprehensive expense for the period - - - (0.9) (50.1) (3.9) - (14.0) (68.9)
Total comprehensive expense for the period - - - (0.9) (50.1) (49.3) - (35.6) (135.9)
Transactions with owners:
Ordinary dividends - - - - - (15.6) - - (15.6)
Share-based payments - - - - - - 0.9 - 0.9
Shares issued from ESOT - 1.9 - - - (1.9) - - -
Total transactions with owners recognised directly in equity - 1.9 - - - (17.5) 0.9 - (14.7)
At 2 December 2023 4.3 (35.0) 0.7 (0.7) (139.1) 444.9 5.5 (9.1) 271.5
Attributable to owners of the Parent
Capital Currency Non-
Share Treasury redemption Hedging translation Retained Other controlling Total
capital shares reserve reserve(1) reserve(2) earnings reserves(3) interests equity
£m £m £m £m £m £m £m £m £m
At 1 June 2024 4.3 (34.5) 0.7 (0.4) (159.6) 425.3 6.5 (7.1) 235.2
Profit/(loss) for the period - - - - - 5.0 - (0.8) 4.2
Other comprehensive income for the period - - - 0.6 2.1 0.2 - 0.6 3.5
Total comprehensive income/(expense) for the period - - - 0.6 2.1 5.2 - (0.2) 7.7
Transactions with owners:
Share-based payments - - - - - - 1.1 - 1.1
Shares issued from ESOT - 1.5 - - - (1.5) - - -
Total transactions with owners recognised directly in equity - 1.5 - - - (1.5) 1.1 - 1.1
At 30 November 2024 4.3 (33.0) 0.7 0.2 (157.5) 429.0 7.6 (7.3) 244.0
(1) Reserve relates to continuing hedges.
(2) Includes a cumulative hyperinflation adjustment to 30 November 2024 of
£4.1 million relating to Ghana (half year ended 2 December 2023: £nil).
(3) Other reserves relate to the Group's share-based payment schemes
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
Half year to Half year to Year to
30 November 2024 2 December 2023 31 May
2024
Notes £m £m £m
Cash flows from operating activities
Cash generated from operations 9 24.1 22.4 47.7
Interest paid (8.0) (11.4) (21.5)
Taxation paid (5.8) (10.1) (13.3)
Net cash generated from operating activities 10.3 0.9 12.9
Cash flows from investing activities
Interest received 1.3 8.3 9.0
Purchase of property, plant and equipment and software (1.4) (2.4) (6.1)
Proceeds from disposal of property, plant and equipment - 0.3 0.8
Loans repaid by joint ventures 2.5 4.8 8.7
Net cash generated from investing activities 2.4 11.0 12.4
Cash flows from financing activities
Dividends paid to Company shareholders 8 - (15.6) (21.9)
Repayment of lease liabilities (1.4) (1.1) (2.4)
Repayment of borrowings 10 (88.3) (91.9) (206.0)
Proceeds from borrowings 10 74.0 66.3 121.4
Financing fees paid on committed credit facility - - (0.8)
Net cash used in financing activities (15.7) (42.3) (109.7)
Net decrease in cash and cash equivalents 10 (3.0) (30.4) (84.4)
Effect of foreign exchange rates 10 (1.9) (97.9) (120.7)
Cash and cash equivalents at the beginning of the period/year 10 51.3 256.4 256.4
Cash and cash equivalents at the end of the period/year 10 46.4 128.1 51.3
1. Basis of preparation
PZ Cussons plc (the Company) is a public limited company incorporated in
England and Wales. In these condensed consolidated interim financial
statements (interim financial statements), 'Group' means the Company and all
its subsidiaries.
These interim financial statements for the half year ended 30 November 2024,
which have been reviewed, not audited, have been prepared in accordance with
the Disclosure Guidance and Transparency Rules (DTR) of the Financial Conduct
Authority and in accordance with IAS 34 Interim Financial Reporting as adopted
by the UK. The interim financial statements should be read in conjunction with
the annual financial statements for the year ended 31 May 2024 which have been
prepared in accordance with UK-adopted International Accounting Standards
(IAS).
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Group
Review. The financial position of the Group and liquidity position are
described within the Financial Review section. In the 2024 Annual Report and
Accounts, the Directors disclosed that, should mitigations prove insufficient,
the impact of Naira exchange rate volatility on forecast interest cover
covenant compliance represented a material uncertainty that may cast
significant doubt upon the Group's ability to continue as a going concern. In
H1 FY25, the Naira exchange rate has been more stable and the Group was not in
breach of its interest cover covenant as at 30 November 2024. Management has
prepared an updated base case forecast for the going concern period and,
consistent with the approach taken at 31 May 2024, have modelled the following
severe but plausible downside scenarios: 5% reduction in Group revenue, Group
gross margin decline of 200bps and a 10% decline in the Naira exchange rate of
USD/NGN 1,600 used in the base case forecast. None of these severe but
plausible scenarios, either separately or in combination, forecast a breach in
the interest cover covenant prior to management action and there remain
actions available to management should they be required. Therefore, while
the Group remains exposed to fluctuations in the Naira exchange rate, the
Directors have determined that this no longer represents a material
uncertainty. The Directors consider it appropriate to continue to adopt the
going concern basis in preparing the interim financial statements.
The Group's risk management framework is explained on pages 42 to 44 of our
2024 Annual Report and Accounts. The identified principal risks are considered
unchanged from those outlined on pages 45 to 50 of our 2024 Annual Report and
Accounts. These are: macro-economic and financial volatility including foreign
exchange; IT and information security; business transformation; talent
development and retention; consumer and customer trends; geopolitical
instability; legal and regulatory compliance; sustainability and the
environment; consumer safety; and supply chain and logistics. All these cover
matters in Nigeria.
Certain business units have a degree of seasonality with the biggest factors
being the weather and Christmas. However, no individual reporting segment is
seasonal as a whole and therefore no further analysis is provided.
The interim financial statements for the half year ended 30 November 2024 do
not constitute statutory accounts within the meaning of section 434 and 435 of
the Companies Act 2006. The financial information set out in this document
relating to the year ended 31 May 2024 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 18 September 2024
and have been delivered to the Registrar of Companies. The report of the
auditors on these statutory accounts was unqualified and did not contain a
statement under section 498 of the Companies Act 2006.
2. Accounting policies
The accounting policies are consistent with those of the Annual Report and
Accounts for the year ended 31 May 2024. Taxes on income in the interim
periods are accrued using the tax rate that would be applicable to the
expected total annual profit or loss before taxation.
New and amended accounting standards adopted by the Group
A number of new amendments to standards are effective from 1 January 2024 but
they do not have a material effect on the Group's financial statements:
· Classification of Liabilities as Current or Non-current and
Non-current Liabilities with Covenants (Amendments to IAS 1 Presentation of
financial statements)
· Lease Liability in a Sale and Leaseback (Amendments to IFRS 16
Leases)
· Supplier Financing Arrangements (Amendments to IAS 7 Statement of
cash flows and IFRS 7 Financial instruments)
The impact of new standards and amendments applied in the reporting period
commencing 1 June 2024 is not material.
On 23 May 2023, the International Accounting Standards Board issued
International Tax Reform Pillar Two Model Rules - Amendments to IAS 12. The
Group continues to apply the mandatory temporary exception to the accounting
for deferred taxation arising from the jurisdictional implementation of the
Pillar Two rules set out therein.
2. Accounting policies (continued)
New accounting standards and interpretations in issue but not yet effective
A number of new standards and interpretations are effective for annual periods
beginning on or after 1 January 2025 and earlier application is permitted,
however, the Group has not early adopted them in preparing these interim
financial statements:
· Lack of Exchangeability (Amendments to IAS 21 The effects of
changes in foreign exchange rates)
Judgements and estimates
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates.
In preparing these interim financial statements, the significant judgements
made by management in applying the Group's accounting policies and the key
sources of estimation uncertainty were the same as those that applied to the
annual consolidated financial statements for the year ended 31 May 2024 which
are described in note 1(d) of the 2024 Annual Report and Accounts except that
permanent as equity balances were not a significant judgement in the half year
ended 30 November 2024 due to the de-designation of all these balances as
permanent as equity in the year ended 31 May 2024.
3. Segmental analysis
The segmental information presented in this note is consistent with management
reporting provided to the Executive Committee
(ExCo) which is the Chief Operating Decision-Maker (CODM). The CODM reviews
the Group's internal reporting in order to assess performance and allocate
resources. The CODM considers the business from a geographic perspective, with
Europe & the Americas, Asia Pacific and Africa being the operating
segments. In accordance with IFRS 8 Operating Segments, the ExCo has
identified these as the reportable segments.
The CODM assesses the performance based on operating profit before adjusting
items. Revenue and operating profit of the Europe & the Americas and Asia
Pacific segments arise from the sale of Hygiene, Beauty and Baby products.
Revenue and operating profit from the Africa segment also arise from the sale
of Hygiene, Beauty and Baby products as well as Electrical products. The
prices between Group companies for intra-group sales of materials,
manufactured goods, and charges for franchise fees and royalties are on an
arm's length basis.
Central includes expenditure associated with the global headquarters and above
market functions net of recharges to our regions and in the half-year to 2
December 2023 our in-house fragrance revenue. Reporting used by the CODM to
assess performance does contain information about brand specific performance,
however global segmentation between the portfolio of brands is not part of the
regular internally reported financial information.
Business segments
Half year to 30 November 2024 (unaudited) Europe Asia
& the Americas Pacific Africa Central Eliminations Total
£m £m £m £m £m £m
Gross segment revenue 102.7 88.6 60.6 21.1 (23.7) 249.3
Inter-segment revenue (1.7) (0.9) - (21.1) 23.7 -
Revenue 101.0 87.7 60.6 - - 249.3
Segmental operating profit/(loss) before adjusting items and share of results 20.7 13.1 4.0 (15.5) - 22.3
of joint venture
Share of results of joint venture - - 4.7 - - 4.7
Segmental operating profit/(loss) before adjusting items 20.7 13.1 8.7 (15.5) - 27.0
Adjusting Items (1.1) - (7.1) (5.4) - (13.6)
Segmental operating profit/(loss) 19.6 13.1 1.6 (20.9) - 13.4
Finance income 2.4
Finance expense (9.5)
Net monetary gain arising from hyperinflationary economies 0.1
Profit before taxation 6.4
3. Segmental analysis (continued)
Half year to 2 December 2023 (unaudited) Europe Asia
& the Americas Pacific Africa Central Eliminations Total
£m £m £m £m £m £m
Gross segment revenue 99.2 92.1 90.8 22.0 (27.0) 277.1
Inter-segment revenue (2.0) (3.3) - (21.7) 27.0 -
Revenue 97.2 88.8 90.8 0.3 - 277.1
Segmental operating profit/(loss) before adjusting items and share of results 12.4 15.7 5.9 (11.2) - 22.8
of joint venture
Share of results of joint venture - - 7.8 - - 7.8
Segmental operating profit/(loss) before adjusting items 12.4 15.7 13.7 (11.2) - 30.6
Adjusting Items (29.0) (0.9) (76.4) (14.0) - (120.3)
Segmental operating (loss)/profit (16.6) 14.8 (62.7) (25.2) - (89.7)
Finance income 8.3
Finance expense (12.8)
Loss before taxation (94.2)
Year to 31 May 2024 (audited) Europe Asia
& the Americas Pacific Africa Central Eliminations Total
£m £m £m £m £m £m
Gross segment revenue 204.1 179.2 151.7 34.2 (41.3) 527.9
Inter-segment revenue (3.4) (4.0) - (33.9) 41.3 -
Revenue 200.7 175.2 151.7 0.3 - 527.9
Segmental operating profit/(loss) before adjusting items and share of results 32.6 28.0 19.6 (32.6) - 47.6
of joint venture
Share of results of joint venture - - 10.7 - - 10.7
Segmental operating profit/(loss) before adjusting items 32.6 28.0 30.3 (32.6) - 58.3
Adjusting Items (31.9) (1.0) (81.0) (28.1) - (142.0)
Segmental operating profit/(loss) 0.7 27.0 (50.7) (60.7) - (83.7)
Finance income 12.2
Finance expense (24.2)
Net monetary loss arising from hyperinflationary economies (0.2)
Loss before taxation (95.9)
The Group analyses its net revenue by the following categories:
Unaudited Unaudited Audited
Half year to Half year to Year to
30 November 2024 2 December 2023 31 May
2024
£m £m £m
Hygiene 139.4 153.0 289.1
Baby 53.2 55.6 106.9
Beauty 34.1 32.1 68.3
Electricals 18.5 34.3 56.6
Other 4.1 2.1 7.0
249.3 277.1 527.9
4. Adjusting items
Adjusting items expense/(income), all of which are within continuing
operations, comprise:
Unaudited Unaudited Audited
Half year to Half year to Year to
30 November 2024 2 December 2023 31 May
£m £m 2024
£m
Simplification and transformation(1) 6.7 5.5 10.1
Acquisition and disposal-related items(2) (0.2) - (1.4)
Impairment charge(1) - 24.4 24.4
Foreign exchange losses arising on Nigerian Naira devaluation(3) - 88.2 104.1
Foreign exchange losses arising on Naira devaluation on joint venture(4) - 2.2 3.4
Foreign exchange losses arising on loans previously classified as permanent as 4.5 - -
equity(1)
Foreign exchange losses arising on loans previously classified as permanent as 2.4 - -
equity to joint venture undertaking(4)
Adjusting items before taxation 13.4 120.3 140.6
Taxation (1.4) (32.5) (30.6)
Adjusting items after taxation 12.0 87.8 110.0
1 Included in administrative expense in the Consolidated Income Statement.
2 Included in finance income in the Consolidated Income Statement.
3 For the half year ended 30 November 2024 £nil (half year ended 2 December
2023: £72.2 million) is included in cost of sales and £nil (half year ended
2 December 2023: £16.0 million) is included in administrative expense in the
Consolidated Income Statement.
4 Included in share of results of joint venture in the Consolidated Income
Statement.
Simplification and transformation
For the half year ended 30 November 2024, these costs primarily relate to the
processes involving our Africa business and the St. Tropez brand. For the half
year ended 2 December 2023, these costs relate to the three-year finance
transformation project, the HR simplification project and supply chain
transformation project.
Acquisition and disposal-related items
For the half year ended 30 November 2024, the income relates to the
remeasurement of the deferred consideration for the Childs Farm acquisition.
For the half year ended 2 December 2023, the income was £nil.
Impairment charge (net of impairment reversals)
For the half year ended 30 November 2024, the charge was £nil. For the half
year ended 2 December 2023, the charge was related to the impairment of the
Sanctuary Spa brand.
Foreign exchange losses arising on Nigerian Naira devaluation (including on
joint venture)
For the half year ended 30 November 2024, these costs were £nil. For the half
year ended 2 December 2023, this primarily relates to realised and unrealised
foreign exchange losses resulting from the Nigerian Naira devaluation on USD
denominated liabilities which existed at 31 May 2023. The closing NGN/GBP
rate at 30 November 2024 was 2,124 (2 December 2023: 1,176; 31 May 2024:
1,893), and the average NGN/GBP for the half year ended 30 November 2024 was
2,038 (half year ended 2 December 2023: 915; year ended 31 May 2024: 1,257).
Foreign exchange losses arising on loans previously designated as permanent as
equity (including to joint venture)
For the half year ended 30 November 2024, this primarily relates to realised
and unrealised foreign exchange losses resulting from the Nigerian Naira
devaluation on loans with the joint venture undertaking and subsidiary
undertakings which were de-designated from permanent as equity in the year
ended 31 May 2024.
5. Goodwill and other intangible assets
In the half year ended 30 November 2024, the impairment charge was £nil. In
the half year ended 2 December 2023, the impairment charge was £24.4 million
relating to the Sanctuary Spa brand.
In the half year ended 30 November 2024, the value-in-use of the Rafferty's
Garden brand reduced from £38.4 million at 31 May 2024 to £35.3 million,
primarily as a result of short-term cost-of-living pressures, but continues to
exceed the carrying value of £34.4 million (31 May 2024: £34.9 million), of
which the brand represented £33.4 million (31 May 2024: £33.9 million). A
reduction of 0.2% in compound annual revenue growth rate over the five-year
plan would result in zero headroom. The same impact would be caused by a
decline of 0.2% in gross margin or an increase of 0.2% in discount rate. There
were no significant movements in the value-in-use of the other brands or
goodwill.
6. Capital commitments
At 30 November 2024, the Group had entered into commitments for the
acquisition of property, plant and equipment amounting to £0.7 million (2
December 2023: £0.4 million). At 30 November 2024, the Group's share in the
capital commitments of joint ventures was £nil (2 December 2023: £nil).
7. Taxation
Income tax expense is recognised on management's best estimate of the annual
tax rate expected for the full financial year. The effective tax rate in
relation to continuing operations for the half year ended 30 November 2024 is
33.5% (half year ended 2 December 2023: 28.9%). Before adjusting items, the
effective tax rate is 18.2% (half year ended 2 December 2023: 20.3%).
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 2024, the Group recorded a current taxation liability of £15.8
million, contingent liabilities of £18.9 million and contingent assets of
£0.5 million in respect of such uncertain tax positions (31 May 2024:
provision of £24.7 million, contingent liabilities of £14.4 million and
contingent assets of £1.2 million).
The Group is subject to routine tax audits in all of its operating
jurisdictions and certain assessments take place in overseas markets where
there is a history of large claims being received, albeit which are considered
to have little or no basis. Contingent liabilities are those uncertain tax
risks that that the Group considers to have a possible risk of
crystallisation.
On 20 June 2023, Finance (No.2) Act 2023 was substantively enacted in the UK,
introducing a global minimum tax rate of 15%. The legislation implements a
domestic top-up tax and a multi-national top-up tax effective for accounting
periods on or after 31 December 2023. As in the prior year, the Group has
applied the exception allowed by an amendment to IAS 12 Income Taxes to
recognising and disclosing information about deferred tax assets and
liabilities relating to top-up income taxes.
8. Dividends
An interim dividend of 1.50p per share for the half year to 30 November 2024
(2 December 2023: 1.50p) has been declared totalling £6.3 million (2
December 2023: £6.3 million) and is payable on 9 April 2025 to shareholders
on the register at the close of business on 7 March 2025.
After the year ended 31 May 2024, an interim dividend of 2.10p per share,
totalling £8.8 million, was approved by shareholders and paid on 4 December
2024.
9. Reconciliation of profit/(loss) before taxation to cash generated
from operations
Unaudited Unaudited Audited
Half year to Half year to Year to
30 November 2024 2 December 2023 31 May
2024
£m £m £m
Profit/(loss) before taxation 6.4 (94.2) (95.9)
Net finance expense and net monetary gain/(loss) arising from 7.0 4.5 12.2
hyperinflationary economies
Operating profit/(loss) 13.4 (89.7) (83.7)
Depreciation 4.1 5.5 10.2
Amortisation 2.1 3.6 7.1
Impairment of tangible and intangible assets - 24.4 24.4
Impairment of current asset investment - - 0.5
Profit on sale of assets - - (1.8)
Difference between pension charge and cash contributions 1.1 (0.3) 1.7
Share-based payment expense 1.1 0.9 1.9
Share of results of joint venture (2.3) (5.6) (7.3)
Operating cash flows before movements in working capital 19.5 (61.2) (47.0)
Movements in working capital:
Inventories (12.6) (8.8) 2.3
Trade and other receivables (6.0) 24.1 15.3
Trade and other payables 23.2 68.3 77.5
Provisions - - (0.4)
Cash generated from operations 24.1 22.4 47.7
10. Net debt reconciliation
Group net debt, which is an alternative performance measure, comprises the
following:
Audited Unaudited Unaudited Unaudited Unaudited
At 1 June 2024 Cash flow Foreign exchange Other(1) At 30 November 2024
movements
£m £m £m £m £m
Cash at bank and in hand 49.4 (6.3) (2.0) - 41.1
Short term deposits 1.9 3.3 0.1 - 5.3
Cash and cash equivalents 51.3 (3.0) (1.9) - 46.4
Current asset investments - - - - -
Current borrowings (6.3) 6.2 0.1 - -
Non-current borrowings (160.3) 8.0 - (0.2) (152.5)
Net debt (115.3) 11.2 (1.8) (0.2) (106.1)
Lease liabilities (12.1) 1.6 - (0.2) (10.7)
Net debt including lease liabilities (127.4) 12.8 (1.8) (0.4) (116.8)
(1) Other includes lease additions, an increase in the lease liability
arising from the unwinding of interest element and unamortised fees on
borrowings.
The Group has a £325.0 million committed credit facility which is available
for general corporate purposes. The credit facility incorporates both a term
loan, of up to £125.0 million, with the balance as a revolving credit
facility (RCF) structure. Entered into in November 2022, the term loan is a
two-year facility and the RCF a four-year facility, with both facilities
retaining two, one-year extension options, the first of which was executed in
October 2023. During the current period, management postponed the term loan
extension window from October 2024 to March 2025, allowing the processes
involving our Africa business and the St. Tropez brand to progress further
before a decision needed to be taken on the extension. It should be noted that
current levels of borrowing provide sufficient headroom even if the term loan
was not extended beyond its current maturity of November 2025.
As at 30 November 2024, the committed credit facility was £153.0 million
drawn (31 May 2024: £161.0 million) and the headroom was £172.0 million (31
May 2024: £164.0 million). Non-current borrowings as at 30 November 2024 are
presented net of £0.5 million (31 May 2024: £0.7 million) of unamortised
financing fees.
In addition, the Group retains other unsecured and uncommitted facilities that
are primarily used for trade-related activities. As at 30 November 2024, these
amounted to £140.8 million (31 May 2024: £161.6 million) of which 32.1
million, or 23% were utilised (31 May 2024: £40.3 million or 25%). Overdrafts
do not form part of the Group's main borrowing facility and only arise as part
of the Group's banking arrangements with key banking partners. As at 30
November 2024, there were no bank overdrafts (31 May 2024: £nil).
11. Retirement benefits
The key financial assumptions (applicable to all UK schemes) applied in the
actuarial review of the pension schemes have been reviewed in the preparation
of these interim financial statements and amended to reflect changes in market
conditions where appropriate from those applied at 31 May 2024. The key
assumptions applied were:
Unaudited Unaudited Audited
Half year to Half year to Year to
30 November 2024 2 December 2023 31 May
2024
Rate of increase in retirement benefits in payment
- pensions in payment 2.9% 3.0% 3.1%
- deferred pensions 2.5% 2.5% 2.7%
Discount rate 5.2% 5.3% 5.2%
Inflation assumption (RPI) 3.1% 3.2% 3.3%
12. Financial instruments
The carrying amounts of each class of financial instruments were:
Financial assets Unaudited Unaudited Audited
30 November 2024 2 December 2023 31 May
£m £m 2024
£m
Derivatives designated as hedging instruments
Forward foreign exchange contracts 0.5 0.1 -
Derivatives not designated as hedging instruments
Forward foreign exchange contracts 0.2 0.1 -
Equity instruments at fair value through profit or loss
Current asset investments - 0.5 -
Debt instruments at amortised cost
Cash and cash equivalents 46.4 128.1 51.3
Net trade receivables and other receivables 96.1 87.8 89.8
Lease receivables 1.3 - 1.3
Amounts owed by joint ventures 1.0 0.9 1.1
Long-term loans owed by joint ventures 28.0 34.6 30.6
173.5 252.1 174.1
Financial liabilities Unaudited Unaudited Audited
30 November 2024 2 December 2023 31 May
£m £m 2024
£m
Current interest-bearing loans and borrowings at amortised cost
Bank loans and borrowings - 6.3 6.3
Non-current interest-bearing loans and borrowings at amortised cost
Bank loans and borrowings 152.5 219.0 160.3
Derivatives designated as hedging instruments
Forward foreign exchange contracts 0.1 0.3 0.3
Derivatives not designated as hedging instruments
Forward foreign exchange contracts 0.1 0.1 0.2
Other financial liabilities at fair value through profit or loss
Other payables 2.3 5.9 4.5
Other financial liabilities at amortised cost
Trade and other payables 166.2 161.4 151.9
Lease liabilities 10.7 13.1 12.1
331.9 406.1 335.6
12. Financial instruments (continued)
There were no transfers between Level 1, 2 and 3 during the half year ended 30
November 2024 and the year ended 31 May 2024.
At the end of the reporting period, the Group held the following financial
assets and liabilities at fair value:
Unaudited Unaudited Audited Fair value level
30 November 2024 2 December 2023 31 May
2024
£m £m £m
Assets held at fair value
Current asset investments - 0.5 - Level 3
Derivative financial assets 0.7 0.2 - Level 2
Liabilities held at fair value
Derivative financial liabilities 0.2 0.4 0.5 Level 2
Other payables 2.3 5.9 4.5 Level 3
The following is a description of the valuation methodologies and assumptions
used for estimating the fair values:
· Current asset investments - Current asset investments comprise
non-listed equity investments. A discounted cash flow methodology is used to
estimate the present value of the expected future economic benefits to be
derived from the ownership of these investments. The fair value of current
asset investments at 30 November 2024 was £nil (31 May 2024: £nil).
· Derivative financial instruments - Derivative financial instruments
comprise forward foreign exchange contracts. Fair value is calculated using
observable market data where it is available, including spot rates and
observable forward points, as discounted to reflect the time value of money.
Counterparty credit is monitored. No adjustment to the fair value for credit
risk is made due to materiality.
· Other payables - Other payables held at fair value relate to deferred
purchase consideration on the acquisition of Childs Farm, which was estimated
by applying an appropriate discount rate to the expected future payments. The
key assumptions take into consideration the probability of meeting each
performance target and the discount factor. Should the target not be met, no
consideration would be payable, and should the discount rate applied be
changed, the fair value of the deferred purchase consideration would change,
but the amount of consideration that would ultimately be paid would not
necessarily change.
For the financial assets and liabilities not held at fair value, there was no
material difference between their carrying values and their fair values,
except for non-current borrowings which are presented net of unamortised
issuance costs of £0.5 million.
13. Post balance sheet events
Subsequent to 30 November 2024, the Nigerian Naira exchange rate has
appreciated. The NGN/GBP closing exchange rate on 31 January 2025 was 1,839
compared to a closing rate of 2,124 on 30 November 2024.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that these condensed consolidated interim financial
statements have been prepared in accordance with UK adopted International
Accounting Standard 34 Interim Financial Reporting and the Disclosure Guidance
and Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority and that the interim management report includes a fair review of the
information required by DTR 4.2.7 and DTR 4.2.8, namely:
· an indication of important events that have occurred during the
first six months and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
· material related party transactions in the first six months and
any material changes in the related party transactions described in the last
annual report and accounts.
The Directors of PZ Cussons plc are listed on page 32. A list of current
Directors is maintained on the PZ Cussons plc website.
By order of the Board
Mr K Moustafa
Company Secretary
10 February 2025
Independent review report to PZ Cussons plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed PZ Cussons plc's condensed consolidated interim financial
statements (the "interim financial statements") in the 2025 interim results of
PZ Cussons plc for the 6 month period ended 30 November 2024 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
· the condensed consolidated balance sheet as at 30 November 2024;
· the condensed consolidated income statement and the condensed
consolidated statement of comprehensive income for the period then ended;
· the condensed consolidated cash flow statement for the period then
ended;
· the condensed consolidated statement of changes in equity for the
period then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the 2025 interim results of PZ
Cussons plc have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the 2025 interim results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The 2025 interim results, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the 2025 interim results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the 2025 interim results, including
the interim financial statements, the directors are responsible for assessing
the group's ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the 2025 interim results based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Manchester
10 February 2025
Directors
Chair: D Tyler(1)
Chief Executive Officer: J Myers
Chief Financial Officer: S Pollard
K Bashforth(1)
V Juarez(1)
J Nicolson(1) (resigned 21 November 2024)
J Sodha(1)
V Ahuja(1)
(1) Non-Executive Directors
Company Secretary
K Moustafa
Registered Office
Manchester Business Park
3500 Aviator Way
Manchester
M22 5TG
Registered number
00019457
Registrars
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
Website
www.pzcussons.com
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