RNS Number:5226P
PZ CUSSONS PLC
09 September 2003
9th September 2003
PZ CUSSONS PLC
PRELIMINARY ANNOUNCEMENT
Highlights
* Operating profits increased by 16.9% to #54.7m from #46.8m
* Net investment losses of #3.5m against income of #2.4m, as a result of
the decline in the value of the equity investment portfolio
* Pre-tax profits increased by 4.0% to #51.2m from #49.2m
* Diluted earnings per share increased by 9.4% to 71.18p from 65.09p
* A net funds position of #72.1m after spending #11.3m on the purchase of
Original Source and #17.6m on the share buy back programme
* Dividend increase for year proposed of 10.5% to 29.00p from 26.25p
Performance by region
Turnover (#m) Operating
profit (#m)
2003 2002 2003 2002
Europe 204.0 194.8 24.2 20.4
Africa 145.3 150.5 22.8 19.5
Asia 116.6 95.4 7.7 6.9
------- ------- ------- -------
465.9 440.7 54.7 46.8
======= ======= ======= =======
The focus on increasing operating margins and pursuing growth in all units
formed the basis of the improved results. This improvement has been achieved
despite the strength of sterling against the dollar and the naira, the impact of
which has been to reduce turnover by #30m and profitability by #2.9m, largely in
the African region. Property sales profits of #2.8m have largely negated the
increased insurance costs previously reported of #3m. Insurance costs are now
moving down to more normal levels.
Europe
Turnover and profitability have continued to improve in the UK. The relaunch of
the major brand, Imperial Leather, in 2001, emphasising lather delivery, has
continued with new innovative products, in particular the new Bathtime range.
2004 should see Imperial Leather sales increasing by more than one third from
the relaunch. The Carex range has also achieved growth. Both brands have been
supported by television advertising and other avenues of communication including
sampling, poster, magazine and radio campaigns. Imperial Leather successfully
sponsored the 2002 Manchester Commonwealth Games for which the UK subsidiary has
received a number of industry awards. In late September 2002, the Original
Source brand was purchased and to date sales have exceeded expectations. The
range is now being extended to include Foamburst shower products and soap.
Poland continues to be a difficult market, however the relaunch of the major
brands, in particular the detergent brand 'E' and the personal wash brand
Luksja, together with the strengthening of the marketing and sales teams, are
now resulting in much improved performance.
The Greek subsidiary again achieved increases in turnover and profitability with
the Minerva and Horio olive oil ranges performing strongly.
Africa
Sales and profits continued to move strongly forward in Nigeria although these
improvements were restricted in sterling by the weakening of the naira by more
than 20% in the year. The naira has now been relatively stable since August
2002. The elections in 2003 have seen the reappointment of President Obasanjo's
civilian government and despite certain isolated disturbances, on the whole
progress continues to be made in the economy, resulting in improved consumer
spending power. Investment in the Nigerian factories continued with capacity at
the detergent and soap factories being expanded. The new HPZ refrigerator and
air conditioner factory was successfully completed and projects to manufacture
white detergent powder and a new feminine hygiene range at the Ikorodu site are
now fully operational.
The results for Ghana and Kenya are similar to last year. The sale of
non-operational properties in Cameroun resulted in profits of #2.4m.
Asia
The region has continued to achieve significant growth and profit increases,
although at a lower rate than last year, with margins reducing as a result of
large increases in raw material prices, in particular palm oil.
The expansion programme in Indonesia has resulted in greater factory capacity
and considerable progress with the ongoing strategy of increasing distribution
and introducing new extensions to the successful brand ranges of Cussons Baby,
Kids and Sweet Seventeen.
In Australia sales of the principal brands Radiant, Morning Fresh and Imperial
Leather have been strong and profitability has continued to improve.
Sales growth in Thailand whose major brand is Imperial Leather soap, slowed in
the second half and margins suffered from high palm oil prices.
The Middle East maintained its profitability despite the instability in the
region, and China incurred losses although somewhat lower than in 2002.
Investments
As indicated previously, the overall fall in world stock markets impacted
significantly in the first half of the year and resulted in losses of #3.6m on
the portfolio. Recent months have seen an increase in value of the portfolio.
Purchase of own shares
The company has continued to purchase its own shares in the market with the
objective of improving earnings per share. During the year 1,025,000 ordinary
shares and 1,175,000 'A' ordinary shares were purchased at a total cost of
#17.6m. It is proposed to ask shareholders for authority to purchase up to a
further 10% of the ordinary and 'A' ordinary shares now in issue, together with
the non-equity preference share capital.
Dividend
The board is recommending a dividend increase of 10.5% for the year.
Outlook
PZ Cussons maintains a strong balance sheet with adequate funds to finance
planned opportunities for growth. The focus continues to be to improve operating
profitability and to pursue growth in all units, in particular:
* the UK, with the expansion of the Imperial Leather range and the development of Original Source
* Nigeria, with the increased factory capacity and the new feminine hygiene range, and
* Indonesia, with new products in the Cussons Baby and Kids ranges.
PZ CUSSONS PLC
Consolidated profit and loss account for the year to 31st May 2003
2003 2002
#000 #000
-------------------------------------------------------------------------------------
Turnover 465,878 440,720
-------------------------------------------------------------------------------------
Operating profit 54,691 46,794
Net interest payable / investment income (3,541) 2,380
-------------------------------------------------------------------------------------
Profit on ordinary activities before taxation 51,150 49,174
Taxation on profit on ordinary activities (16,839) (16,285)
-------------------------------------------------------------------------------------
Profit on ordinary activities after taxation 34,311 32,889
Equity minority interests (3,758) (3,794)
-------------------------------------------------------------------------------------
Profit for the financial year 30,553 29,095
Preference dividends (770) (770)
-------------------------------------------------------------------------------------
Profit attributable to ordinary capital 29,783 28,325
Ordinary dividends (11,559) (10,840)
-------------------------------------------------------------------------------------
Profit for the financial year retained 18,224 17,485
=====================================================================================
Basic earnings per ordinary share 71.90p 65.50p
Diluted earnings per ordinary share 71.18p 65.09p
Dividend for the year per ordinary share 29.00p 26.25p
The results for both years arise from continuing operations
PZ CUSSONS PLC
Balance sheets as at 31st May 2003
The group Parent company
2003 2002 2003 2002
#000 #000 #000 #000
-------------------------------------------------------------------------------------
Fixed assets
Intangible assets 10,261 - - -
Goodwill 933 988 - -
Negative goodwill (2,258) (2,388) - -
-------------------------------------------------------------------------------------
(1,325) (1,400) - -
Tangible assets 149,933 158,821 - -
Investments:
Subsidiary companies - - 112,740 94,730
Other investments 209 - 209 -
-------------------------------------------------------------------------------------
159,078 157,421 112,949 94,730
-------------------------------------------------------------------------------------
Current assets
Stocks 122,515 118,956 - -
Debtors falling due within
one year 60,387 50,810 55,292 65,801
Debtors falling due after one
year 6,254 8,220 1,520 1,656
Investments 69,663 106,757 33,954 44,478
Cash at bank and in hand 17,690 10,975 3 27
-------------------------------------------------------------------------------------
276,509 295,718 90,769 111,962
Creditors - amounts falling
due within one year (114,257) (112,873) (69,791) (62,891)
-------------------------------------------------------------------------------------
Net current assets 162,252 182,845 20,978 49,071
-------------------------------------------------------------------------------------
Total assets less current
liabilities 321,330 340,266 133,927 143,801
Creditors - amounts falling
due after one year (16,531) (19,578) (7,774) (8,391)
Provisions for liabilities
and charges (15,520) (15,846) - -
-------------------------------------------------------------------------------------
Net assets 289,279 304,842 126,153 135,410
=====================================================================================
Capital and reserves
Equity ordinary share capital 4,073 4,293 4,073 4,293
Non-equity preference share
capital 7,898 7,898 7,898 7,898
-------------------------------------------------------------------------------------
Total called up share capital 11,971 12,191 11,971 12,191
Reserves attributable to equity
interests:
Capital redemption reserve 671 451 671 451
Revaluation reserve 33,460 37,303 - -
Profit and loss account 205,158 211,173 113,511 122,768
-------------------------------------------------------------------------------------
Total shareholders' funds 251,260 261,118 126,153 135,410
Equity minority interests 38,019 43,724 - -
-------------------------------------------------------------------------------------
289,279 304,842 126,153 135,410
=====================================================================================
PZ CUSSONS PLC
Group cash flow statement
2003 2002
#000 #000
-------------------------------------------------------------------------------------
Cash flow from operating activities 45,438 35,036
Returns on investments and servicing of finance (6,425) (545)
Taxation (15,911) (16,026)
Capital expenditure and financial investment (24,469) (11,720)
Acquisitions and disposals - (708)
Equity dividends paid (11,105) (10,464)
-------------------------------------------------------------------------------------
Cash outflow before use of liquid resources and financing (12,472) (4,427)
Management of liquid resources 34,141 24,060
Financing (19,174) (19,106)
-------------------------------------------------------------------------------------
Increase in cash in the period 2,495 527
=====================================================================================
Reconciliation of net cash flow to movement in net funds
2003 2002
#000 #000
-------------------------------------------------------------------------------------
Increase in cash in the period 2,495 527
Cash outflow from financing 1,390 6,162
Cash inflow from management of liquid resources (34,141) (24,060)
-------------------------------------------------------------------------------------
Change in net funds resulting from cash flows (30,256) (17,371)
Currency retranslation (1,047) (80)
-------------------------------------------------------------------------------------
Movement in net funds in the period (31,303) (17,451)
Opening net funds 103,410 120,861
-------------------------------------------------------------------------------------
Closing net funds 72,107 103,410
=====================================================================================
PZ CUSSONS PLC
Group cash flow statement continued
Analysis of net funds
At 31st May Cash Exchange At 31st May
2002 flow difference 2003
#000 #000 #000 #000
-------------------------------------------------------------------------------------
Cash in hand and at bank 10,975 6,773 (58) 17,690
Overdrafts (10,368) (4,278) 1,636 (13,010)
-------------------------------------------------------------------------------------
2,495
Loans due within one year (3,954) 1,390 328 (2,236)
Deposits 80,387 (22,226) (2,939) 55,222
Other current asset investments 26,370 (11,915) (14) 14,441
-------------------------------------------------------------------------------------
(34,141)
-------------------------------------------------------------------------------------
103,410 (30,256) (1,047) 72,107
=====================================================================================
Statement of total recognised gains and losses
2003 2002
#000 #000
-------------------------------------------------------------------------------------
Profit for the financial year 30,553 29,095
Currency retranslation (10,507) 554
Deficit on revaluation - (4,932)
-------------------------------------------------------------------------------------
Total recognised gains and losses for the year 20,046 24,717
=====================================================================================
PZ CUSSONS PLC
NOTES
1 Segmental reporting
Third party Profit before
turnover taxation
2003 2002 2003 2002
#000 #000 #000 #000
-------------------------------------------------------------------------------------
Geographical areas - by origin
Europe 204,019 194,827 24,183 20,387
Africa 145,294 150,536 22,763 19,522
Asia 116,565 95,357 7,745 6,885
-------------------------------------------------------------------------------------
465,878 440,720 54,691 46,794
Investment income (317) 4,444
Interest payable (3,224) (2,064)
-------------------------------------------------------------------------------------
51,150 49,174
=====================================================================================
2 AGM and dividend
The board is recommending a final dividend of 21.50p per share which, together
with the interim dividend of 7.50p gives a total distribution of 29.00p, an
increase of 10.5% over the total of 26.25p last year.
The date of the annual general meeting has been fixed for Monday November 3rd
2003 and dividend warrants in respect of the proposed final dividend, subject to
shareholders' approval, will be posted on that day to members on the register at
5.00 pm on 3rd October 2003.
3 Basis of accounts
The 2003 results are an abridged version of the statutory accounts for the year
ended 31st May 2003 which have been approved by the board of directors and which
carry an unqualified audit report. The 2002 results are an abridged version of
the statutory accounts for the year ended 31st May 2002 which carry an
unqualified audit report and which have been filed with the Registrar of
Companies. Neither accounts contain a statement in respect of s.237(2) or (3) of
the Companies Act 1985.
Enquiries 9th September 2003
PZ Cussons Plc
0161 491 8000 Graham Calder
(Between 9.00 am and 5.15 pm) Finance Director
This information is provided by RNS
The company news service from the London Stock Exchange
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