Final Results
McBride PLC
09 September 2004
9 September 2004
McBRIDE PLC
Preliminary Announcement for the year ended 30 June 2004
McBride supplies over 20 million Private Label household and personal care
products each week to Europe's leading retailers.
Highlights of the full year are as follows:
• Group turnover was £501.3 million, up 3.0% on last year
• Group operating profit was £30.4 million, up £0.7 million (2.4%)
• Group operating profit was £35.1 million, up £4.0 million (12.9%),
before £3.3 million exceptional item* and £1.4 million goodwill
• Profit before tax was £33.5 million, up £7.3 million (27.9%), before
£3.3 million exceptional item*
• Net debt reduced £29.7 million to £31.4 million at 30 June 2004
• Basic Earnings Per Share increased 1.2p (11.8%) to 11.4p, excluding
goodwill and exceptional item*, it was 13.5p, up 2.5p (22.7%)
• Final dividend proposed of 2.8p, up 33.3%, making a total of 4.0p, up
37.9%
• After the year end the Group acquired the remaining equity interests
in Aerosol Products Limited, from its joint venture partners
• The Board will request approval at the AGM to repurchase up to 10% of
its issued ordinary share capital
* relates to a factory closure in Breda, The Netherlands
Mike Handley, Chief Executive, commented:
'These results again demonstrate the continuing strength of McBride. Whilst
market conditions remain competitive, sales gains in Continental Europe and
continuing operational improvements across the Group have improved
profitability. Cashflow is strong and a substantial reduction in debt has again
been achieved. Since the year end, trading has been satisfactory.'
For further information please contact:
McBride plc
Mike Handley, Chief Executive 01494 60 70 50
Miles Roberts, Finance Director
Financial Dynamics 020 7831 3113
Andrew Dowler
Overview
• Sales to Continental Europe continued to grow strongly, up 5.8% to
£286.7 million. Operating profits, excluding £3.3 million
exceptionals, improved 27.9% to £16.5 million.
• Sales to UK reduced 0.8% to £210.5 million reflecting some price
deflation offset by volume growth. Operating profits however grew
2.4% to £17.2 million due to the ongoing focus on cost efficiencies
and working capital management.
• To improve overall capacity utilisation and operating efficiency, the
factory in Breda, The Netherlands is being closed with production
transferring to other plants. There is a £3.3 million operating
exceptional item for closure costs.
Strategy
The Group has continued to build on the excellent progress achieved during the
last 3 years delivering further sales and profit growth. This is especially
pleasing in a year when the industry has experienced more than its usual
competitive pressures.
Our commitment to innovative solutions across all facets of the business has
again ensured success. The strength of our business emanates from the
consistency and relevance of our strategy: focus on Private Label household and
personal care, innovate, support and develop with our major customers, emphasis
on customer service and maintaining industry leading management skills and
experience. All elements of the strategy have contributed to this year's strong
performance.
Dividend
McBride plc is committed to making progressive, sustainable increases to the
dividend, taking account of the medium-term requirements of the business.
Accordingly the Board is recommending a final dividend of 2.8p per share to be
paid on 26 November 2004. The total dividend will be 4.0p per share, a 37.9%
increase over last year.
Share Repurchase
In addition to the increased dividend, the Board is seeking approval from
Shareholders to buy back up to 10% of the share capital of the Company. This
will avoid the risk of any dilution in earnings per share as a result of the
exercising of employee share options.
Board
The Company has undertaken a thorough review of all aspects of Corporate
Governance including the recent changes to the UK Combined Code. The membership
of the Board and Board Committees and their terms of reference have been
comprehensively reviewed and updated where necessary.
The contractual notice period for all executive directors has been amended to 1
year. All non-executives will be subject to annual re-election by shareholders
at the AGM whilst the executive directors will be subject to re-election at 2
yearly intervals
Aerosol Products Limited (APL)
Following substantial operational and financial restructuring in June 2002, APL
has improved its financial performance. The Group's share of APL's pre-tax
profit was £0.5 million (2003: £0.1million). On 6th September 2004 the Group
acquired the entire equity interests of its joint venture partners in APL for a
consideration of £1.0 million. In addition, the June 2002 restructuring deferred
£2.0 million of consideration until July 2005; this payment has been brought
forward to 6th September 2004.
Outlook
These results again demonstrate the continuing strength of McBride. Whilst
market conditions remain competitive, sales gains in Continental Europe and
continuing operational improvements across the Group have improved
profitability. Cashflow is strong and a substantial reduction in debt has again
been achieved. Since the year end, trading has been satisfactory.
Overview of Performance
It is pleasing to report another year of growth in sales, profits and cash
generation resulting in the Group's net debt falling by almost 50% to £31.4
million. The focus on exploiting the growth of Private Labels in the recently
enlarged EU market, maintaining private label leadership in the UK, and
improving our operational cost base have all contributed to this excellent
performance. These results are particularly pleasing against the background of
intense retail competition and price focus in all markets.
Overall sales for the Group were £501.3 million compared with £486.8 million for
the previous year which have been restated in line with FRS 5. Sales growth of
3.0% was driven by our Continental European business, which reported local sales
of over €400 million for the first time. The strong performance of our
Continental European business now means that sales outside the UK account for
58% of Group turnover. This growth was underpinned once again by a good
performance in France assisted by strong growth from our Italian business.
McBride is also expanding its sales in both the Nordic countries and the large
German Private Label market, where it has a sales office. It is also pleasing
that the investments made in our manufacturing facility in Poland since it was
acquired in 1998, combined with our existing facilities throughout the Group,
have improved McBride's ability to compete effectively in terms of quality and
price into these markets, and the accession countries of Central Europe.
UK sales by destination at £210.5 million were broadly in line with last year's
£212.1 million reflecting real volume growth offset by selling price deflation.
At £35.1million, the Group's operating profit, before £1.4 million goodwill
amortisation and £3.3 million exceptional item, was up 12.9%. The Group's
continuing focus on variable and fixed costs led to improved operational
effectiveness and asset utilisation enabling McBride to counteract adverse
pressures on selling prices. The record sales of our European business also
underpinned its operating profit of £16.5 million (excluding £3.3 million
exceptional item) from £12.9 million last year, an increase of 27.9 %.
One of the most significant achievements of the Group's performance since
December 2000 has been cash generation and the dramatic lowering of net debt.
This has been achieved by focus on cash management and teamwork throughout the
business. Interest charges have been reduced significantly by improved treasury
management and the lower level of debt, which stood at £31.4 million at June
2004 compared with £61.1 million in June 2003.
Capital expenditure increased to £17.3 million (2003: £10.6 million) with
investments following the closure of the Estaimpuis Industrial and Institutional
factory and its conversion to a household facility, the closure of the Breda
factory in The Netherlands and expenditure at Ieper and Estaimpuis to facilitate
the transfer of its production, plus tablet capacity expansion in Barrow and
Moyaux.
Private Label increased its market share in six of the seven core European
markets according to The PLMA's (Private Label Manufacturers Association) 2004
International Private Label Yearbook. The UK is still the largest market in
Europe for Private Label with over 40% volume share across all grocery
categories. A separate review of the Nordic markets showed Private Label gains
in all countries.
The key factors that are influencing Private Label growth include retailer
concentration and expansion across borders, the growth of the hard discount
format and the expansion of the full service hypermarket across Europe. The new
accession countries of Central and Eastern Europe, Poland, Czech Republic and
Hungary are among the fastest growing Private Label markets according to AC
Neilsen.
The enlargement of the EU on May 1st 2004 added 75 million new consumers in the
accession countries to the existing 378 million consumers providing exciting
opportunities for McBride to support Private Label growth. McBride regards this
enlarged market as an exciting opportunity to support its major customers as
they develop and expand their retail estates
In the more mature UK market consumers are still attracted to the quality and
value proposition of Private Label. Volume sales and market share across many
categories continues to grow although price competitiveness among retailers and
its deflationary effect has caused some loss of value share in many sectors.
Overall Private Label remains a growth sector of the European retail grocery
market and those categories like household and personal care have even more
development potential in the longer term because the Private Label share of
these categories lags behind the all commodity share in the vast majority of
countries.
UK
The recently restructured UK retail grocery market continues to be very
competitive as the top 4 retailers compete for market share. As a number of
major retailers have entered and are developing the growing convenience sector,
the availability of their Private Label ranges is expanding to more consumers.
Whilst the household Private Label share lags behind the all commodity share its
volume share reached 34% in May 2004 which means UK consumers buy the Private
Label option in 1 in every 3 purchases. The shelf price deflation referred to
above, however, resulted in a slight value share reduction from 23.6% to 23.2%.
Both laundry products and machine dish wash enjoyed between 1% and 2% volume
growth and in the latter category Private Label now accounts for more than half
of all sales in the UK. In laundry and household cleaner new product
development, McBride continues to lead the field; successfully launching a new
laundry sachet concept with unique tamper evident packaging, fruit extract based
cleaners as well as a new dishwashing spray incorporating McBride's powerblaster
formulation.
Keeping pace with the changing retail environment our Clean 'n Fresh range of
household and laundry products was successfully launched into the independent
convenience sector resulting in an 11.3% sales uplift in the year.
Another first for McBride UK, was the use of regional TV advertising for the
Surcare Sensitive range of laundry products. In the UK 75% of women believe they
have sensitive skin and Surcare is the strongest brand in this niche sector.
Sales of Surcare in 2003/04 were up 25% on the previous year and the range was
extended into personal care
The UK personal care business had another successful year growing sales and
profits in the face of continuing competitive pressure. Initiatives with both
Private Label and brand developments including the extension of Surcare resulted
in a number of contract gains for the business.
Continental Europe
Our Continental European (McBride CE) sales are centred on the core Western
European members of the EU primarily France, Spain, Italy, The Netherlands,
Belgium and Germany, as well as Poland. The headquarters are based in Belgium on
the French border and the production sites are in France, Belgium, Spain and
Italy.
The core markets display all the same competitive features as the UK with the
added dimension of a much more developed hard discount sector. The dual dynamic
of hard discount store openings and multiple retail consolidation has put in
place all the key factors that facilitate Private Label growth i.e. big
retailers, simplified fascias, centralised sourcing, distribution and range
control. Against this background all commodity Private Label and in particular
household and personal care continue to increase market share.
In almost every European country Private Label increased its market share in the
last 12 months according to research by AC Nielsen on behalf of the PLMA
The CE team in McBride continues to work assiduously on broadening and deepening
its relationships with Continental Europe's leading retailers. Working together
to improve the Private Label offering in household and personal care products
throughout Europe continues to be mutually beneficial for our retail customers
and McBride. An essential part of customer focus is our commitment to
maintaining its competitive cost structure and, as a result, the underperforming
production units in Belgium and The Netherlands were closed in the period.
McBride CE sales reached a record Euro 400 million in the year for the first
time with our Belgian factory at Ieper reporting record sales of over Euro 100
million driven by the buoyancy of the Private Label market in Europe. Overall
reported sales by destination in Continental Europe were £286.7 million (£271.0
million) up 5.8%, with sales in local currency up 1.7%.
Intersilesia's sales were up 0.9% in local currency on the previous year
resulting from the combination of a highly competitive Polish market compensated
by the successful development of our Polish factory as the manufacturing hub for
Central Europe. The company is successfully gaining business not only in
adjacent Central European markets but also in Scandinavia and the Baltic
countries. Our steady progress in building a sustainable business platform in
Hungary and the Czech Republic continues with sales growth of 33% in Hungary and
17% in the Czech Republic.
International - Rest of World
McBride International has responsibility for all markets outside the pre May
2004 EU territories with the majority of its sales in Central & Eastern Europe,
the core of which is Intersilesia in Poland. Rest of World covers all markets
outside Europe. As part of our development strategy for Central and Eastern
Europe, McBride it at advanced stage of opening a sales office in Moscow having
recently established a local subsidiary McBride Russia Ltd to build on our
existing position in the growing Russian market.
Recent successes for Private Label contracts have been gained in both Denmark
and Norway with further business from our Polish factory assisting the
development in the region.
Against the backdrop of a strong Euro and sterling it is pleasing to report that
McBride International were still able to deliver an 10.8% increase in sales.
Operations
A key element which sets McBride apart from its peer group Private Label
competitors is the quality and scale of its manufacturing asset base throughout
Europe comprising a network of 15 factories, in 6 countries including the APL
joint venture in the UK. This strength is becoming increasingly recognised by
our customers especially given our reputation for Private Label development,
speed of response and expertise in supply chain and manufacturing.
During the year the closure of our Dutch factory was announced. The closure of
the factory and transfer of production to more cost-effective sites within the
Group was achieved without disruption to the service and products delivered to
our customers.
As reported in last year's Annual Report, the Industrial and Institutional
products factory on the Estaimpuis site in Belgium was closed during the year
and a modern household cleaner and toilet care production facility has been
created in the existing buildings of the old factory. This major project was
excellently and professionally managed on time and within budget.
Production sites are focussed on product technologies and we have therefore have
2 laundry powder factories, 2 aerosol factories, 2 personal care factories and 9
household liquids factories. The number of household liquids sites is a direct
consequence of the need to avoid the transport costs of shipping products over
large distances.
This year £17.3 million of capital was invested in the business compared to
£10.6m in 2002-03. The increase was in part driven by the need for new capacity
in areas such as PET bottles in Europe, and autodishwashing tablets but a
certain proportion related to capacity additions required to enable the transfer
of production from the Breda to other factories in the Group.
The Group is continuing to identify areas for improving operational performance.
Our continuing focus on asset utilisation, line productivity and efficiency
through inter-site comparisons and benchmarks enables us to continue to attack
our cost base. The Group believes it will be able to further improve throughput
providing opportunities to reduce the asset base of the company whilst at all
times ensuring that customer service levels are not compromised.
Our information systems and collaborative working with customers and suppliers
has enabled stock levels to be lowered despite increases in sales turnover and
volume whilst maintaining customer service.
Financial Review
The continuing focus on operational efficiencies, asset utilisation and cash
generation are reflected in the results for the year. Profit before tax,
excluding the £3.3 million exceptional item, improved to £33.5 million ( 2003:
£26.2 million), net debt reduced to £31.4 million (2003: £61.1 million) whilst
the pre-tax return on average capital employed increased from 19.6% to 22.9%,
and to 25.4% excluding exceptional item. This focus, particularly on
underperforming assets, has resulted in the closure of the production facility
based in Breda, The Netherlands. This closure which will be completed before
December 2004 is in addition to shutting the Industrial and Institutional
Products (I&I) factory in Belgium during the current year.
Turnover improved over the previous year by £14.5 million to £501.3 million
including £9.2 million relating to favourable currency movements. At constant
exchange rates, turnover grew by 1%; this reflects the growth in the core
Private Label business by 2.2% partly offset by lower contract manufacturing
sales resulting from the closure of the unprofitable I&I business. The
components of the growth in the core business were the continuing increase in
Continental European sales, up 5.9%, partially offset by a decline in UK sales
of 2.2%, largely the effect of price deflation.
Group operating profit, before exceptional items and goodwill amortisation,
improved to £35.1 million (2003: £31.1million) due to an improved Gross Profit,
from higher sales, and broadly flat overheads.
On a yearly average basis, the Euro appreciated 4% against Sterling from the
year ending June 2003 to the year ending June 2004. The effect of this stronger
Euro on the consolidated operating profit is not significant since the
favourable impact of the translation into Sterling of the Continental European
activities is largely offset by an adverse impact on UK operations which incurs
some Euro denominated costs.
The Group's net interest receivable was £1.8 million (2003: £0.6 million). This
improvement mainly resulted from higher receipts from Aerosol Products Limited,
the Group's joint venture, following its improved financial performance.
Interest payable fell to £2.5 million ( 2003: £4.2 million) largely due to lower
levels of net debt, improved borrowing margins and the benefit from the
interest differential on forward contracts taken out to hedge the Group's net
asset exposure against movements in certain foreign currency exchange rates.
The contribution from Aerosol Products Limited improved to £0.5 million (2003
£0.1 million).
The taxation charge for the year of £9.9 million equates to a 31.8% effective
tax rate based on profit before tax excluding goodwill and the joint venture
contribution. This rate reflects the mix of mainstream tax rates applying
throughout the Group.
The weighted average number of shares in issue during the year was 177,666,200.
Earnings per share was 11.4p, up 11.8% on 2003 which itself had risen 46.3% on
the previous year (excluding 2002 goodwill write-off). EPS, before exceptional
items and goodwill amortisation, improved by 22.7% to 13.5p (2003: 11.0p).
As anticipated in last year's Annual Report, capital expenditure has risen to
£17.3 million (2003 restated - £10.6 million). However, the increase includes
£3.5 million relating to the closure of the Breda plant; the underlying level of
expenditure is in line with the average for the previous three years and remains
substantially below depreciation as asset utilisation is improved.
Net debt continued to reduce significantly during the year, from £61.1 million
at June 2003 to £31.4 million at this year end, in spite of an increased
dividend and higher capital expenditure. Net working capital levels continued to
reduce reflecting the continuing improvement in stock management and better
supplier payment terms partly offset by an increase in debtors.
Gearing, interest cover and Net Debt / EBITDA ratios all continued to improve
this year on 2003, to 34% (2003 - 78%), 43.4x (2003 - 8.3x) and 0.62 (restated
2003 - 1.13 ).
To align with FRS 5 - Application note G, which was issued in November 2003,
turnover is now stated net of sales discounts and rebates. Previously these
were accounted for within administrative costs. Prior periods have been
restated with the impact on 2003 being a £18.2 million reduction in turnover
from £505.0 million to £486.8 million. There is no impact on operating profit.
A further accounting policy change relates to fixed assets where ancillary
moulding equipment is now accounted for as a fixed asset, having previously been
treated as stock which was amortised, with the charge included in administrative
costs. Prior periods have been restated with the impact on the 2003 Balance
Sheet being a net tangible fixed asset increase and associated stock decrease of
£2.2 million. There is no impact on operating profit.
Breda Plant Closure
A one-off exceptional charge of £3.3 million, relating to redundancy costs, has
been included in this year's results although the payments will not be made
until after June 2004. Additionally, capital expenditure of £5.0 million will be
incurred, relating to the production transfer, of which £3.5 million was spent
by June 2004. £1.0 million of property disposal proceeds are expected in 2005/6.
International Financial Reporting Standards (IFRS)
The Group is required under European legislation to prepare their consolidated
financial statements in accordance with IFRS for accounting periods beginning on
or after 1 January 2005. The adoption of IFRS will first apply to the Group's
financial statements for the year ending 30 June 2006.
A project team has been set up to achieve a smooth transition to IFRS. A high
level review of the differences between IFRS and current accounting policies has
been performed, and the impacts of convergence are currently being reviewed.
The wider implementation aspects are also being assessed, including how changes
resulting from IFRS will be communicated to the market.
The key impact areas on net profit and shareholders' funds, based on the work to
date, are expected to be due to differences in accounting for deferred tax,
pensions, research and development, share based payments, goodwill and fixed
assets. The presentation of the Group's financial statements, along with the
disclosures will also be affected.
Pension Accounting
The Group continues to account for pensions in accordance with Statement of
Accounting Practice 24 (SSAP 24). An actuarial valuation of the UK defined
benefit scheme as at 31 March 2003 was undertaken in the year; this showed a
deficit of £4.0 million to cover liabilities resulting from past service. Under
SSAP 24 this liability will be recovered over 13 years which is the average
remaining service life of the current members. The Company contribution rate for
future service will not change from that incurred over the last few years.
Under FRS17 rules, the valuation of the scheme at June 2004 showed gross assets
amounting to £39.0 million (2003 - £32.9 million) and the liabilities to £49.0
million (2003 - £47.7 million) leaving a shortfall of £7.0 million (2003 - £10.4
million) after taxation. Some of the reasons for the difference with SSAP 24
include different valuation dates and assumptions for the discount rate used to
calculate scheme liabilities.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30 June 2004
Post
Pre exceptional
Exceptional Exceptional items Restated
items items total total
2004 2004 2004 2003
Note £m £m £m £m
Turnover
Continuing operations and share of joint 517.8 - 517.8 501.9
venture
Less: share of joint venture's turnover (16.5) - (16.5) (15.1)
Group turnover 2 501.3 - 501.3 486.8
Cost of sales (309.5) - (309.5) (299.9)
Gross profit 191.8 - 191.8 186.9
Distribution costs (32.3) - (32.3) (31.2)
Administrative costs
Before goodwill amortisation (124.4) (3.3) (127.7) (124.6)
Goodwill amortisation (1.4) - (1.4) (1.4)
Administrative costs including goodwill (125.8) (3.3) (129.1) (126.0)
amortisation
Group operating profit 2 33.7 (3.3) 30.4 29.7
Share of joint venture's operating profit 0.8 - 0.8 0.5
Profit on ordinary activities before 34.5 (3.3) 31.2 30.2
interest
Group interest receivable and similar 1.8 - 1.8 0.6
income
Group interest payable and similar (2.5) - (2.5) (4.2)
charges
Share of joint venture's interest payable (0.3) - (0.3) (0.4)
and similar charges
Profit on ordinary activities before 33.5 (3.3) 30.2 26.2
taxation
Group tax on profit on ordinary (10.9) 1.0 (9.9) (7.9)
activities
Profit on ordinary activities after 22.6 (2.3) 20.3 18.3
taxation
Equity minority interest (0.1) - (0.1) (0.1)
Profit for the year 22.5 (2.3) 20.2 18.2
Dividends proposed (7.1) - (7.1) (5.2)
Retained profit for the year 15.4 (2.3) 13.1 13.0
Earnings per ordinary share (pence)
Basic 11.4 10.2
Diluted 10.9 10.1
Basic before goodwill amortisation and 13.5 11.0
operating exceptional items
Dividend per share (pence) 4.0 2.9
All Group results relate to continuing
operations.
BALANCE SHEET
at 30 June 2004
Restated
Group Group Company Company
2004 2003 2004 2003
£m £m £m £m
Fixed assets
Intangible assets 7.6 9.0 - -
Tangible assets 124.6 128.3 0.1 0.1
Investments - - 164.7 165.0
Total fixed assets 132.2 137.3 164.8 165.1
Current assets
Stocks 38.8 41.1 - -
Debtors 114.9 114.7 43.8 15.2
Cash at bank and in hand 0.2 0.7 - -
153.9 156.5 43.8 15.2
Creditors: amounts falling due within one year (151.0) (148.4) (42.4) (8.8)
Net current assets 2.9 8.1 1.4 6.4
Total assets less current liabilities 135.1 145.4 166.2 171.5
Creditors: amounts falling due after more than one year (28.1) (57.2) - (5.7)
Provisions for liabilities and charges (14.1) (7.9) - -
Investment in joint venture
Share of gross assets 3.9 3.4 - -
Share of gross liabilities (5.1) (5.1) - -
Net investment in joint venture (1.2) (1.7) - -
Net assets 91.7 78.6 166.2 165.8
Capital and reserves
Called up share capital 17.8 17.8 17.8 17.8
Share premium account 139.4 139.3 139.4 139.3
Profit and loss account (65.5) (78.5) 9.0 8.7
Equity shareholders' funds 91.7 78.6 166.2 165.8
Equity minority interest - - - -
Total shareholders funds 91.7 78.6 166.2 165.8
These financial statements were approved by the Board of Directors on 8th September 2004 and were signed on its
behalf by:-
M HANDLEY
M W ROBERTS
Directors
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 June 2004
Restated Restated
2004 2004 2003 2003
Note £m £m £m £m
Net cash inflow from operating activities 3 62.4 63.0
Returns on investments and servicing of finance 1.0 (4.3)
Taxation (10.6) (6.9)
Operating cash flow after taxation and finance costs 52.8 51.8
Capital expenditure
Cash expenditure on fixed assets (17.3) (10.6)
Disposal of fixed assets 0.1 0.3
Net cash outflow on capital expenditure (17.2) (10.3)
Equity dividends paid (7.3) (3.7)
Cash inflow before financing 28.3 37.8
Financing (26.8) (33.7)
Increase in cash in the year 1.5 4.1
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
for the year ended 30 June 2004
2004 2003
£m £m
Increase in cash in the year 1.5 4.1
Cash outflow from movement in debt 26.4 33.3
Movement on finance leases 0.4 0.4
Change in net debt resulting from cash flows 28.3 37.8
Translation differences 1.4 (4.0)
Movement in net debt in the year 29.7 33.8
Net debt at the beginning of the year (61.1) (94.9)
Net debt at the end of the year (31.4) (61.1)
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 30 June 2004
2004 2003
£m £m
Profit for the financial year 20.2 18.2
Unrealised foreign currency differences (0.1) 1.2
Total recognised gains and losses 20.1 19.4
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 30 June 2004
Group Group
2004 2003
£m £m
Profit for the financial year 20.2 18.2
Equity dividends (7.1) (5.2)
Retained profit 13.1 13.0
Unrealised foreign currency differences (0.1) 1.2
Increase in share premium 0.1 -
Opening equity shareholders' funds 78.6 64.4
Closing shareholders' funds 91.7 78.6
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1) Exchange rates
The exchange rates against sterling used for the periods were as follows:
Average rate: 2004 2003
Euro 1.46 1.52
Polish Zloty 6.75 6.29
Czech Koruna 47.09 47.05
Hungarian Forint 375.9 371.0
2004 2003
Closing rate:
Euro 1.49 1.44
Polish Zloty 6.70 6.44
Czech Koruna 47.45 45.39
Hungarian Forint 373.8 382.6
2) Segmental Information
Restated
2004 2003
£m £m
Turnover by destination is analysed by geographical area as follows
UK 210.5 212.1
Continental Europe 286.7 271.0
Rest of world 4.1 3.7
Group turnover 501.3 486.8
Share of joint venture's turnover 16.5 15.1
Turnover by destination 517.8 501.9
Turnover by geographical origin is analysed as follows
UK 216.6 219.4
Continental Europe 284.7 267.4
Group turnover 501.3 486.8
Share of joint venture's turnover 16.5 15.1
Turnover by origin 517.8 501.9
Turnover by class of business is analysed as follows
Household products 432.0 418.7
Personal care products 69.3 68.1
Group turnover 501.3 486.8
Share of joint venture's turnover 16.5 15.1
Total turnover by class of business 517.8 501.9
2) Segmental Information continued
2004 2003
£m £m
Operating profit by geographical origin is analysed as follows
UK 17.2 16.8
Continental Europe - pre exceptional item 16.5 12.9
Exceptional item (3.3) -
Continental Europe - post exceptional 13.2 12.9
item
Group operating profit 30.4 29.7
Non-operating items 0.5 0.1
Net interest payable (0.7) (3.6)
Profit on ordinary activities before tax 30.2 26.2
The UK business includes total goodwill amortisation of £1.2 million (2003 - £1.2 million)
The Continental Europe business includes goodwill amortisation of £0.2 million (2003 - £0.2 million).
2004 2003
£m £m
Operating profit by class of business is analysed as
follows
Household products - pre exceptional item 29.3 25.5
Exceptional item (3.3) -
Household products - post exceptional 26.0 25.5
item
Personal care products 4.4 4.2
Group operating profit 30.4 29.7
Non-operating items 0.5 0.1
Net interest payable (0.7) (3.6)
Profit on ordinary activities before tax 30.2 26.2
The household products business includes goodwill amortisation of £1.4 million (2003 - £1.4 million).
2004 2003
£m £m
Non-operating items consist of the
following:
Share of joint venture's operating profit 0.8 0.5
Share of joint venture's interest payable and similar (0.3) (0.4)
charges
Total non-operating items before tax 0.5 0.1
Share of joint venture's tax charge on ordinary - -
activities
Total non-operating items after tax 0.5 0.1
2004 2003
£m £m
Net assets by geographical origin are analysed as
follows:
UK 60.8 68.9
Continental Europe 78.5 83.9
Total operating assets and liabilities 139.3 152.8
Non-operating liabilities (47.6) (74.2)
Net assets 91.7 78.6
Non operating liabilities include cash less short and long-term borrowings, provisions for liabilities and
charges and dividends.
It is not possible to provide an analysis of the net assets by class of business as a number of the Group's operating
sites manufacture both Private Label household and personal care products.
During the year the accounting policy for the treatment of sales discounts and rebates has been amended.
Prior period figures have been restated to reflect this change resulting in a revenue reduction of £18.2m for
2003. There is no impact on Group operating profit.
3) Reconciliation of operating profit to operating
cashflow
Pre
exceptional
Exceptional Post
exceptional
items items items Restated
2004 2004 2004 2003
£m £m £m £m
Group operating profit 33.7 (3.3) 30.4 29.7
Depreciation 18.5 - 18.5 22.9
Goodwill amortisation 1.4 - 1.4 1.4
Loss on disposal of fixed assets - - - 0.1
Movement in stock 1.3 - 1.3 6.1
Movement in debtors (3.7) - (3.7) 1.4
Movement in creditors 11.2 3.3 14.5 1.4
Cashflow from operating activities 62.4 - 62.4 63.0
. Notes:
1 The financial information set out above does not constitute the company's statutory accounts for the years
ended 30 June 2004 or 2003 but is derived from those accounts. Statutory accounts for 2003 have been delivered to
the Registrar of Companies. Accounts for 2004 will be delivered in due course. The auditors have reported on
those accounts; their reports were unqualified and did not contain a statement under section 237(2) or (3) of the
Companies Act 1985
2 During the year the accounting policy for the treatment of sales discounts and rebates has been amended.
Discounts and rebates have in 2004 been accounted for as a reduction in revenue, having been previously treated as
an administrative cost. This accounting treatment is consistent with FRS 5 - Application Note G (issued November
2003) and in the directors' opinion more fairly reflects the nature of these transactions. 2003 figures have been
restated to reflect this change resulting in a revenue reduction of £18.2 million. There is no impact on operating
profit.
3 During the year the accounting policy for the treatment of ancillary moulding capital equipment has been
amended. This has in the current year, been accounted for as a fixed asset, having been previously treated as
stock which was amortised, with the charge included in administrative costs. In the directors' opinion this
accounting treatment more fairly reflects the nature of these transactions. 2003 figures have been restated to
reflect this change resulting in a tangible fixed asset increase and associated stock decrease of £2.2 million,
depreciation increase of £1.0 million and capital expenditure increase of £1.8 million. There is no impact on
operating profit.
4 Share of joint venture. On 5 November 1999 a joint venture, Aerosol Products Ltd was set up from the Hull site
of Robert McBride Limited and the Thetford site of Nichol Beauty Products Limited. Its results are included in
compliance with FRS 9 - Associates and joint ventures.
5 The Group announced on 23 April 2004 that it was closing its Breda production plant in The Netherlands and
transferring those activities to other Group locations. Grada B.V., which operates from Breda will continue as a
selling company. The £3.3 million pre-tax exceptional cost relates to the Breda plant closure.
6 The Annual Report for 2004 will be issued to shareholders on 27th September 2004 and will be available from
the Company Secretary at the Company's Registered Office, McBride House, Penn Road, Beaconsfield, Buckinghamshire
HP9 2FY; the Annual General Meeting will be held on Tuesday 2nd November 2004.
7 The calculation of earnings per share is based on the profit on ordinary activities after taxation and
minority interest divided by the average number of shares in issue during the year of 177,666,200 (2003 -
177,639,197).
8 If approved at the Annual General Meeting on 2 November 2004, the final dividend of 2.8p per share will be
paid on 26 November 2004 to shareholders on the register at 29 October 2004.
This information is provided by RNS
The company news service from the London Stock Exchange
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