REG - PZ CUSSONS PLC - Half Yearly Report - Part 2
Released: 26/01/2010
- Part 2: For the preceeding part double click [ID:nRSZ1004Ga]
2009 (30 November 2008: 1.185p) has been declared
totalling £8.3 million (30 November 2008: £5.1 million) and is payable on 1 April 2010 to ordinary shareholders on the
register on 26 February 2010. This interim dividend has not been recognised in this half yearly report. The proposed final
dividend for the year ended 31 May 2009 of 4.085p per share, totalling £17.5 million, was approved by shareholders at the
annual general meeting of the company and paid on 7 October 2009.
10. Earnings per share
Basic earnings per share and diluted earnings per share are calculated by dividing profit for the period by the following
weighted average number of shares in issue:
Unaudited Unaudited Audited
Half-year to 30 November 2009 Half-year to 30 November 2008 Year to31 May 2009
Basic weighted average (000) 427,253 426,665 426,212
Diluted weighted average (000) 431,686 428,699 429,064
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 performance share plan. The basic and diluted
earnings per share for the period are as follows:
Unaudited Unaudited Audited
Half-year to 30 November 2009 Half-year to 30 November 2008 Year to31 May 2009
Basic earnings per share:
- Adjusted basic earnings per share 6.74p 5.25p 12.39p
- Exceptional items - (0.35)p (0.75)p
- Basic earnings per share 6.74p 4.90p 11.64p
Diluted earnings per share:
- Adjusted diluted earnings per share 6.67p 5.23p 12.31p
- Exceptional items - (0.35)p (0.75)p
- Diluted earnings per share 6.67p 4.88p 11.56p
11. Reconciliation of profit before taxation to cash generated from operations
Unaudited Unaudited Audited
Half-year to 30 November 2009 Half-year to 30 November 2008 Year to31 May 2009
£m £m £m
Profit before taxation 44.7 34.8 84.4
Adjustment for finance costs 0.2 2.1 1.8
Operating profit 44.9 36.9 86.2
Depreciation 9.0 8.7 17.5
Loss/(profit) on sale of tangible fixed assets (0.2) (0.3) 1.0
Difference between pension charge and cash contributions (1.4) (1.3) (2.6)
Share of result from joint ventures (0.8) 1.3 4.1
Share based payments 1.1 0.6 1.3
Operating cash flows before movements in working capital 52.6 45.9 107.5
Movements in working capital:
Inventories (16.5) (29.9) 7.0
Receivables (14.9) (12.7) (2.0)
Payables 29.4 33.3 30.7
Provisions 0.9 0.7 2.0
Cash generated from operations 51.5 37.3 145.2
12. Net funds reconciliation
Group net funds comprises the following:
Audited Unaudited Unaudited Unaudited Unaudited
1 June 2009 Cash flow Foreign Exchange Non cash items 30 November 2009
£m £m £m £m £m
Cash at bank and in hand 38.9 1.5 1.1 - 41.5
Overdrafts (1.4) (4.8) - - (6.2)
Short term deposits 45.3 (4.1) 1.1 - 42.3
Cash and cash equivalents 82.8 (7.4) 2.2 - 77.6
Current asset investments 0.3 - - - 0.3
Bank loans less than 1 year (15.0) 7.5 - (7.5) (15.0)
Bank loans greater than 1 year (44.9) - - 7.5 (37.4)
Net funds 23.2 0.1 2.2 - 25.5
13. Retirement Benefits
The Group operates retirement benefit schemes for most of its UK and overseas subsidiaries. These obligations have been
measured in accordance with IAS 19 and are as follows:
Unaudited Unaudited Audited
30 November 2009 30 November 2008 31 May 2009
£m £m £m
UK schemes in surplus 27.2 15.8 20.6
UK schemes in deficit (49.1) (36.9) (24.9)
Overseas schemes (6.1) (5.1) (4.7)
(28.0) (26.2) (9.0)
The Group has three main defined benefit schemes which are based and administered in the UK and are now closed to future
accrual.
The amounts recognised in the balance sheet in relation to these UK schemes are determined as follows:
Unaudited Unaudited Audited
30 November 2009 30 November 2008 31 May 2009
£m £m £m
Present value of scheme liabilities (250.8) (210.6) (196.1)
Fair value of scheme assets 228.9 189.5 191.8
Retirement benefit deficit (21.9) (21.1) (4.3)
The key financial assumptions applied in the actuarial review of the pension schemes have been reviewed in the preparation
of these interim accounts and amended where appropriate. The principal assumptions made were:
Unaudited Unaudited Audited
Half-year to 30 November 2009 Half-year to 30 November 2008 Year to31 May 2009
% per annum % per annum % per annum
Rate of increase in salaries 4.40 4.00 4.50
Rate of increase in retirement benefits in payment 3.40 3.00 3.50
Discount rate 5.50 6.00 7.00
Inflation assumption 3.40 3.00 3.50
The last triennial actuarial valuations of the schemes administered in the UK were performed by independent professional
actuaries at 1 June 2006.
The movement during the period is as follows:
Unaudited
£m
Retirement benefit deficit as at 1 June 2009 (4.3)
Expected return on scheme assets 6.1
Interest cost (6.8)
Employer contributions 2.1
Actuarial loss (19.0)
Retirement benefit deficit as at 30 November 2009 (21.9)
The total income statement charge of £0.7 million has been recognised within administrative expenses.
14. Acquisitions
On 5 November 2009, the Group, through its subsidiary The Sanctuary at Covent Garden Ltd, acquired the entire share capital
of Body Experience Ltd, a company registered in the UK whose principal activity is the provision of spa services. The
consideration was £0.8 million and provisional goodwill arising on the acquisition was £0.2 million.
Throughout the period from 1 June 2009 to 30 November 2009, the Group has acquired additional share capital of its existing
subsidiary PZ Cussons Nigeria Plc, increasing the Group's stake from 64% to 65%. The consideration for these additional
shares was £3.4 million and goodwill arising on the acquisition was £1.6 million.
15. Related party transactions
The following related party transactions were entered into by subsidiary companies during the period under the terms of a
joint venture agreement with Glanbia Plc.
At 30 November 2009 the outstanding balance receivable from Milk Ventures (UK) Ltd was £23.8 million (31 May 2009: £23.8
million). There were no outstanding balances payable to Milk Ventures (UK) Ltd (31 May 2009: nil).
The Group sourced and then sold fixed assets and raw materials to Nutricima Ltd to the value of £11.0 million (30 November
2008: £26.9 million). At 30 November 2009 the amount outstanding from Nutricima Ltd was £1.1 million (31 May 2009: £8.5
million).
PZ Cussons Nigeria Plc distributed goods on behalf of Nutricima Ltd to the value of £25.5 million (30 November 2008: £28.4
million). The amount outstanding from Nutricima Ltd at 30 November 2009 was £1.9 million (31 May 2009: £2.7 million). All
trading balances will be settled in cash.
There were no provisions for doubtful related party receivables at 30 November 2009 (31 May 2009: nil) and no charge to the
income statement in respect of doubtful related party receivables (30 November 2008: nil).
16. Seasonality
Certain individual 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.
17. Principal risks and uncertainties
The principal risks affecting the Group and measures taken to reduce these risks are explained in detail on pages 24 and 25
of our 2009 Annual Report which is available on our website at www.pzcussons.com. The risks were categorised as market
risk, financial risk and operational risk and are summarised as follows:
Market risks identified are: political and economic stability due to substantial operations in emerging markets; demand
risk arising from changes in consumer preferences and the competitive environment in which the Group operates; and raw
material risk relating to price and supply fluctuations in raw materials used in production.
The major financial risk identified is foreign currency and treasury risk due to the international nature of the Group.
Operational risks identified are: the ability to retain and recruit the right calibre of people at all levels; and
reputational risk as a result of failure to meet safety, social, environmental and ethical standards in all operations and
activities.
The Group Risk Committee is responsible for ensuring where possible actions are taken to manage and mitigate the risks
identified.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors' confirm that this condensed consolidated interim financial information has been prepared in accordance with
IAS 34 as adopted by the European Union 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 are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The
current Directors are listed at the end of this announcement.
By order of the Board
Brandon Leigh
Finance Director
26 January 2010
INTERIM REVIEW REPORT TO PZ CUSSONS PLC
Introduction
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 2009, which comprises the Consolidated Balance Sheet, the Consolidated Income
Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the
Consolidated Statement of Cash Flows, and related notes. 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 and Transparency Rules of the
United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by
the European Union. The condensed set of financial statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European
Union.
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. This report, including the conclusion, has been prepared for and only for
the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other
purpose. We do not, in producing this report, 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.
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 Auditing Practices Board
for use in the United Kingdom. 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 Ireland)
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 2009 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLPChartered Accountants26 January 2010Manchester
Directors
Chairman
A J Green
Deputy Chairman
A G Calder
Chief Executive
G A Kanellis
J A Arnold *
C G Davis
R J Harvey * (appointed 1 January 2010)
S J N Heale *
B H Leigh
D W Lewis *
J Pantelireis
J T J Steel *
* Non-executive
Secretary
S P Plant
Registered Office
PZ Cussons House
Bird Hall Lane
Stockport SK3 0XN
Registered number
Company registered number 19457
Registrars
Computershare Investor Services PLC
PO Box 82
The Pavilions
Bridgwater Road
Bristol BS99 7NH
Website
www.pzcussons.com
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The company news service from the London Stock Exchange