Final Results

McBride PLC 08 September 2005 8 September 2005 McBRIDE PLC Preliminary Announcement for the year ended 30 June 2005 McBride supplies over 1.2 billion Private Label Household and Personal Care products each year to Europe's leading retailers. Highlights of the full year are as follows: • Group turnover grew 7.1% on last year to £537.1 million (2004: £501.3m) • Group operating profit was up 2.3% at £31.1 million (2004: £30.4m) • Group operating profit, before goodwill amortisation and exceptional items *, was £35.0 million (2004: £35.1m) • Operating cash flow remained strong at £27.5 million (2004: £35.6m)**. Net debt was reduced £7.0 million to £24.4 million • Basic earnings per share increased 0.2p to 11.6p. Excluding goodwill and exceptional items*, it was 13.3p, down 0.2p (2004: 13.5p) • Final dividend proposed of 3.3p, up 17.9%, making a total of 4.8p, up 20.0% (2004: 4.0p) • Return on average capital employed (pre exceptional items) continued to improve to 27.7% (2004: 25.4%) * Pre tax exceptional costs were £3.0 million (2004: £3.3m) and goodwill amortisation was £0.9 million (2004: £1.4m). ** Based on net cash flow before financing, dividends and APL acquisition, and excluding £3.7 million exceptional costs in 2005 (2004: £nil) Miles Roberts, Chief Executive, commented: 'These results have been achieved in challenging market conditions and demonstrate the underlying strength of our business. Initiatives continue to be launched to further improve our competitiveness and more are planned. Since the year end trading has been in line with our expectations and we anticipate the first half outturn being in line with that of the second half of the year just ended. As a number of these efficiency and growth initiatives are only now taking effect, we anticipate these measures beginning to benefit the second half performance.' For further information please contact: McBride plc Miles Roberts, Chief Executive 01494 60 70 50 Financial Dynamics 020 7831 3113 Andrew Dowler OVERVIEW • Sales to the UK increased 8.0% to £227.4 million, including a first time Aerosol Products Limited ('APL') contribution. Operating profit, excluding £2.3 million exceptionals, grew 12.8% to £19.4 million due to APL, with operating efficiencies plus volume growth offsetting selling price deflation and higher input costs. • Sales to Continental Europe continued to grow strongly, up 5.6% to £302.8 million. Operating profit, excluding £0.7 million exceptionals, deteriorated 10.9% to £14.7 million due largely to the combined impact of selling price deflation and higher input costs. • Return on average capital employed excluding exceptionals, continued to improve to 27.7% from 25.4% reflecting a continuing focus on asset utilisation. Results for the year showed a solid performance that was broadly flat versus last year. This performance was achieved against the backdrop of a very tough market environment throughout Europe characterised by a combination of continued selling price deflation and higher input costs impacted by the current high price of oil affecting material, energy and distribution costs across the industry. Actions taken to offset these adverse cost influences have included growing sales and cost savings at the same time as improving operational efficiency. During the year it was announced that the factory in Bampton, England would be closed with production moving to the APL site at Hull. The result of this closure will be to improve the cost base through the sharing of overheads and improve asset utilisation. Further reviews of the asset base are continuing. Particular focus is being given to improving the results of the Continental European operations, an area of substantial opportunity for the Group. Management has been changed and strengthened, and the early signs are encouraging. The Group continues to put significant energy and management focus into maintaining the cash generation capability of the business. This has led to a further lowering of the Group's net debt to £24.4 million. SHAREHOLDER RETURNS The Board is recommending a final dividend of 3.3 pence per share to be paid on 25th November 2005. The total dividend will be 4.8 pence per share; a 20% increase over last year. Subject to market conditions the Board intends to continue the share repurchase programme initiated early in the year ending 30 June 2005. STRATEGY McBride plc comprises three operating divisions, McBride UK, McBride Continental Europe (CE) and McBride International, the performance and review of each business unit is reported separately below. Recently a complete review was initiated of the individual business unit plans. This review will include a comprehensive study / audit of each business in term of markets, customers, products, operations, suppliers and competitors to provide a clear understanding of the core competitive strengths of the business and underpin the strategy for growth. An update to shareholders will be given in due course. THE BOARD After the year-end on 12th July 2005 it was announced that Mike Handley had stepped down as Chief Executive and resigned as a Director of the Company with immediate effect to pursue other opportunities. He has been succeeded as Chief Executive by Miles Roberts, previously the Group Finance Director. The process of recruiting a new Finance Director is underway. CURRENT TRADING AND OUTLOOK These results have been achieved despite very challenging market conditions, and demonstrate the underlying strength of our business. Many actions have been launched to further improve our competitiveness and more are planned. Since the year end trading has been in line with our internal budget and is consistent with the performance in the second half of the year just ended. As many of the efficiency and sales growth projects start to take effect we should see further progress in the Group for the year as a whole. REVIEW OF OPERATIONS The Group employs over 4,000 people throughout Europe. Our reputation for Private Label development, speed of response and supply chain expertise arises from the combination of the size and scale of our manufacturing assets and the experience and skills of our people. The business currently has 15 sites in 6 countries; 6 in the UK, at Barrow, Burnley, Bradford, Middleton and Hull plus Bampton in Devon whose closure was announced in June 2005. On the Continent, McBride has 3 factories in Belgium, 3 factories in France, and 1 factory in Italy, Spain and Poland. Production technology of the business includes laundry powders, liquid tablets and sachets, household cleaners in a range of formats, personal care products and aerosols. This year £17.5 million of capital was invested in our operations compared with £17.3 million in 2003-04, the investment was targeted towards cost reduction projects as well as some capacity expansion. UK Market The UK Household products market is relatively mature, although there has been slow but steady volume growth in our Household Private Label sector over the past 3 years as consumers continue to realise the value for money of supermarket private labels and retailers act to increase their profit mix. In the 12 months ending 30th June 2005, Household products were 34.5% of this market by volume and 23.7% by value. Personal Care is a more fashion orientated and fragmented market with a high level of branded emotional attraction. However, after some years of slow decline, we now see the Private Label position stabilising and demonstrating volume growth of 2.6% in the last 12 months. Sales Our market has been relatively static but exceptionally competitive over the last few years and in 2004 / 05 both Household and Personal Care Private Label products suffered price deflation. However, the Private Label sector market volume growth and our own ability to support our customers' promotional sales volumes were reflected in our Household sales volume growth of 4.5% and Personal Care liquids volume growth of 4%. We also successfully implemented during the year a Personal Care product strategy to develop and supply premium products, such as designer haircare products, to our major supermarket customers. These products added some value back into the market and were just a small example of an extremely important part of our business; that is our ability to devise a product strategy and then to develop and launch the products efficiently and at a fast pace. This product development capability not only relies upon the individual skills of our people but also on our own internal processes which have been developed and improved over many years. Operations As a Private Label company a major key business goal is that of 'Customer Service'. We continually strive to improve our internal processes to meet the ever-increasing demands of our customers. In our increasingly competitive market it is essential that our operations not only fully support our customer service objective but also are as effective and efficient as we can economically achieve. There is no doubt that our investment in enterprise-wide systems implemented over the past few years has greatly improved our ability to control our operational processes and achieve major cost improvements. When we assess any improvements our goal is always 'Best Value' and this goal also drives our investment policy. Our capital investments over the last 12 months have therefore included both capacity enhancing investments as well as those aimed at cost reduction. These investments together with the operational improvements and very tight control of overheads have allowed us to mitigate the effect of the increased raw materials prices we have experienced over the last 12 months. During last year we invested approximately £4.5 million in successful cost reduction projects including end of line automation projects at our Middleton, Bradford, and Burnley Sites. At Barrow, our Textile Wash Powder Site, an investment in a new state-of-the-art filling line has reduced our waste levels and unit labour cost whilst improving line efficiencies. CONTINENTAL EUROPE (CE) Market The Private Label market in Continental Europe has continued to expand over the past year with growth rates varying from 2% to 10% per year, depending on the country and category. CE holds an important share in many countries in Continental Europe, in particular in France the Group's second largest market after the UK. Latest information from the Private Label Manufactures Association (PLMA) for 2003-04 illustrates the strong growth of Private Label, especially in France for Household products, up 10.4% and double digit growth of Personal Care products in Belgium, France, Netherlands and Italy. CE is well positioned to continue to benefit from these growing markets. Sales The year as a whole has been one of growth but the European market remains very competitive. This growth has been built on our product innovation, low cost base and focus on customer service. Going forward, CE needs to build its market position in each country and further improve its competitiveness. France continues to be McBride CE's largest market with retail sales up 4.9% over last year. Sales increases were realised in Belgium, Germany and The Netherlands. Sales in Italy and Spain suffered slight declines. Over the year sales of household products grew by 3.9% in value. Contributing to this growth were textile washing products up 7.8% with textile washing liquid products underpinning this growth. Other product sectors which performed well included automatic machine dishwashing products and household cleaners. In Personal Care we have continued to build on recents trends with an 11.1% value growth with haircare and liquid hand soap sectors performing well. Operations In order to stay competitive we have heavily invested in our key production facilities, with several capacity enhancements, production efficiency improvements and expansion of our specialised blow moulding facilities. Site rationalisation has resulted in increased efficiencies and better specialist support for our customers in professional well-structured sites. The business has continued to invest in automation. Major investments were blow moulding in Belgium and Spain, and end of line automation in Belgium and Italy. However despite these initiatives the combination of selling price deflation and adverse material prices impacted on our margins. The new management team has the objective to improve CE's competitiveness to meet the continuing challenging market conditions. INTERNATIONAL Market McBride International has responsibility for all markets outside the pre May 2004 EU territories with the majority of its sales, nearly 80%, in Central & Eastern Europe ('CEE'), the core of which is in Poland. CEE is incorporated within Continental Europe in the segmental analysis tables. Rest of World covers all markets outside Europe. There are either sales offices or local distributors in the majority of CEE countries supporting sales efforts in the region. The new accession states added a further 75 million consumers to the existing 378 million of the EU. The candidate markets of Romania, Bulgaria and Turkey will add a further 100 million consumers. Expansion by West European multinational retailers into CEE has been extensive and already consolidation of the sectors is underway. Over the last year the market has started to see the development of the discount chains into the region. All of these factors have contributed to the growing demand from retailers in the region for Private Label products. All category Private Label share in CEE has grown substantially by 153% between 2000 and 2003 compared with 20% in the Top 5 European countries. Private Label household products grew 150% with Personal Care Private Label growth of over 200% in these countries. Sales In line with increasing demand for Private Label and value for money products in CEE we have seen strong growth in our core countries of Poland, Hungary and the Czech Republic with sales up 13.6%, 22.0% and 14.3% respectively. Nearly every major supermarket chain operating in CEE has products supplied by McBride International, amounting to over 400 private label contracts, which is a great success. A joint approach between the UK and Polish marketing teams, with input from the Czech Republic and Hungarian sales managers was undertaken for the development of 2 new brand ranges, Blick for Household products and Avea in the Personal Care sector. This development has resulted in new customer gains for McBride Poland in the Nordic and Baltic states, CEE, Russia and the CIS states. The Russian market is expected to grow significantly during the next few years and to start to capture this opportunity a new distributor has been appointed. Operations The product range offered from our factory in Poland has been expanded during the year to include textile washing powders and cream cleaner products. Investment in our Polish factory has been substantial and it now employs nearly 200 people, which has resulted in strong local and export sales growth. FINANCIAL REVIEW These results reflect an ongoing focus on cost, operational improvements, asset utilisation and cash generation, which have enabled the Group to mitigate the effects of selling price deflation and high material input costs. Profit after tax, excluding exceptional items, improved slightly to £22.7 million (2004: £22.6m). Operating cash flow, excluding exceptionals, remained strong at £27.5 million. Return on average capital employed, excluding exceptionals, continued to increase to 27.7% (2004: 25.4%) reflecting improved asset utilisation resulting from tight control of capital expenditure and also tight control of working capital. Turnover improved over the previous year by £35.8 million to £537.1 million including a £26.4 million first time contribution from APL. The 1.9% turnover improvement excluding APL was driven by a 3.4% increase in core Private Label business partially offset by lower contract manufacturing sales. In terms of geographic split the core business growth is led by Continental Europe, up 5.4%, with UK up 0.7%. There was no significant currency impact year on year as average exchange rates were broadly the same. Group operating profit, before exceptional items and goodwill amortisation reduced slightly to £35.0 million (2004: £35.1m) with volume growth, operational efficiencies and reduced overheads largely offsetting selling price deflation and higher material input costs. The UK's results improved due to the inclusion of APL for the first time and margin levels were maintained. CE's operating profit fell in both absolute and margin terms. The Group's net interest expense, excluding its share of the APL joint venture interest, increased from £0.7 million in 2004 to £1.3 million. External interest expense has continued to fall reflecting lower debt levels and further improved borrowing margins. However this improvement was more than offset by a reduction in interest income due to the consolidation of APL. At the pre-tax level the APL joint venture broke even for the period prior to it becoming a subsidiary on 6 September 2004. The £9.2 million taxation charge for the year represents a 30.0% effective rate based on profit before tax excluding goodwill amortisation. The improvement on the prior year (2004: 31.8%) primarily resulted from the utilisation of losses. The level of capital expenditure level remained fairly flat at £17.5 million (2004: £17.3m). Included in the year's total spend was £1.8 million following the closure of the Breda plant and transfer of its production to other Group sites. The underlying cash generation in the year remained strong with operating cash flow - excluding financing, APL acquisition, dividends and £3.7 million exceptional costs - at £27.5 million. This result included a continuing improvement in working capital. Exceptional costs incurred in the year included all the £3.3 million 2004 Breda site closure exceptional item and £0.4 million of this year's £3.0 million exceptional item. The capital expenditure level remained below depreciation. Outflows included £2.8 million (net of £0.2m cash acquired) re the APL acquisition and £5.6 million on the share repurchase programme (net of shares issued for cash). The net debt level reduced £7.0 million in the year to £24.4 million. Aerosol Products Limited acquisition (APL) The Group acquired the remaining 50% equity interest in APL on 6 September 2004 for £1.0 million generating £1.1 million of goodwill on acquisition. In addition the £2.0 million consideration in respect of the June 2002 financial restructure, deferred until July 2005, was brought forward and settled. Operating Exceptional Items There were £3.0 million of pre-tax operating exceptional costs in the year. £1.3 million of this relates to the closure of the production plant at Bampton, Devon and transfer of those activities to Hull, reflecting the continuing Group focus on underperforming assets. The closure and transfer will be completed by the end of December 2005. The remaining £1.7 million exceptional cost relates to a Group wide rationalisation exercise, £1.0 million in the UK and £0.7 million in Continental Europe, mainly in Italy. The £3.0 million total charge relates mainly to redundancy costs. Breda Plant Closure status All the £3.3 million 2004 exceptional charge relating to the closure of the Breda plant and transfer of its business to other Group locations was spent during the year. The total project capital expenditure was £5.3 million, slightly above the £5.0 million planned. Property disposal proceeds, estimated at £1.0 million, are still expected in 2005/6. International Financial Reporting Standards (IFRS) The Group is required to prepare its financial statements for the year ended 30 June 2006 and all subsequent periods in accordance with International Financial Reporting Standards ('IFRS'). This will require an opening balance sheet as at 30 June 2004 to be prepared under IFRS together with a full profit and loss account, balance sheet and cash flow statement for the year ended 30 June 2005 for comparative purposes. The Group intends to announce the financial impact of the IFRS restatement on the year ended 30 June 2005 in November 2005, in advance of announcing its first IFRS results for the six months ended 31 December 2005. The review of the impact of the change to IFRS has continued during the year including restating the 30 June 2004 balance sheet. The principal areas in which the adoption of IFRS is expected to impact the Group's financial statements continue to be pensions, goodwill, financial instruments, deferred tax, leases and the presentation of dividends. Pension Accounting The Group has continued to account for pensions in accordance with Statement of Accounting Practice 24 (SSAP 24). An updated actuarial valuation of the UK defined benefit scheme was carried out as at 1 January 2005 with the deficit for past service liabilities being reduced to £1.5 million from the £4.0 million deficit valuation carried out the previous year. Under SSAP 24 this liability will be recovered over 12 years which is the average remaining service life of the current members. Under FRS 17 rules, the valuation of the scheme at 30 June 2005 showed assets amounting to £47.9 million (2004 - £39.0m) and the liabilities to £59.0 million (2004 - £49.0m) leaving a shortfall of £7.8 million after deferred tax. The reasons for the difference with SSAP 24 are a different valuation date and approach. Share Repurchases Following on from the statement made by the chairman in last year's Annual Report about the intention to buy back Company shares, 6,125,000 shares were repurchased during the year including 1,525,000 shares which were held as treasury shares at 30 June 2005 to be used for the anticipated exercise of SAYE share options soon after the year end. The remaining 4,600,000 shares were repurchased for cancellation. There were also 5,032,029 shares issued in order to satisfy the exercise of employee share options in the year. The number of issued ordinary shares therefore reduced in the year from 177,809,468 to 176,716,497. Earnings per Share and Dividends The weighted average number of shares in issue during the year was 177,122,822 (2004: 177,666,200). Earnings per share continued to rise to 11.6p, up 1.8% on 2004. The proposed final dividend payable on 25 November 2005 is 3.3p, up 17.9% on 2004. This final dividend together with the interim dividend brings the full year to 4.8p, a 20% increase on 2004. CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 30 June 2005 Pre Post Pre Post exceptional Exceptional exceptional exceptional Exceptional exceptional items items items items items items 2005 2005 2005 2004 2004 2004 Note £m £m £m £m £m £m Turnover Group and share of joint venture 539.5 - 539.5 517.8 - 517.8 Less: share of joint venture's turnover (2.4) (2.4) (16.5) - (16.5) Group turnover 2 537.1 - 537.1 501.3 - 501.3 Cost of sales (348.4) - (348.4) (309.5) - (309.5) Gross profit 188.7 188.7 191.8 - 191.8 Distribution costs (34.0) - (34.0) (32.3) - (32.3) Administrative costs Before goodwill amortisation (119.7) (3.0) (122.7) (124.4) (3.3) (127.7) Goodwill amortisation (0.9) - (0.9) (1.4) - (1.4) Administrative costs including goodwill amortisation (120.6) (3.0) (123.6) (125.8) (3.3) (129.1) Group operating profit 2 34.1 (3.0) 31.1 33.7 (3.3) 30.4 Share of joint venture's operating 0.1 - 0.1 0.8 - 0.8 profit Total operating profit: Group and share of joint venture 34.2 (3.0) 31.2 34.5 (3.3) 31.2 Group interest receivable 1.4 - 1.4 1.8 - 1.8 Group interest payable and similar charges (2.7) - (2.7) (2.5) - (2.5) Share of joint venture's interest payable and similar charges (0.1) - (0.1) (0.3) - (0.3) Profit on ordinary activities before taxation 32.8 (3.0) 29.8 33.5 (3.3) 30.2 Group tax on profit on ordinary (10.1) 0.9 (9.2) (10.9) 1.0 (9.9) activities Profit on ordinary activities after taxation 22.7 (2.1) 20.6 22.6 (2.3) 20.3 Equity minority interest (0.1) - (0.1) (0.1) - (0.1) Profit for the year 22.6 (2.1) 20.5 22.5 (2.3) 20.2 Dividends paid and proposed (8.5) - (8.5) (7.1) - (7.1) Retained profit for the year 14.1 (2.1) 12.0 15.4 (2.3) 13.1 Earnings per ordinary share (pence) Basic 11.6 11.4 Diluted 11.1 10.9 Basic before goodwill amortisation and operating exceptional items 13.3 13.5 Dividend per share (pence) 4.8 4.0 All Group results relate to continuing operations. BALANCE SHEET at 30 June 2005 Group Group Company Company 2005 2004 2005 2004 £m £m £m £m Fixed assets Intangible assets 7.8 7.6 - - Tangible assets 130.1 124.6 0.1 0.1 Investments - - 164.8 164.7 Total fixed assets 137.9 132.2 164.9 164.8 Current assets Stocks 41.3 38.8 - - Debtors 106.3 114.9 54.3 43.8 Cash at bank and in hand 0.3 0.2 - - 147.9 153.9 54.3 43.8 Creditors: amounts falling due within one year (155.4) (151.0) (51.4) (42.4) Net current (liabilities) / assets (7.5) 2.9 2.9 1.4 Total assets less current liabilities 130.4 135.1 167.8 166.2 Creditors: amounts falling due after more than one year (20.7) (28.1) - - Provisions for liabilities and charges (12.4) (14.1) - - Investment in joint venture Share of gross assets - 3.9 - - Share of gross liabilities - (5.1) - - Net investment in joint venture - (1.2) - - Net assets 97.3 91.7 167.8 166.2 Capital and reserves Called up share capital 17.7 17.8 17.7 17.8 Share premium account 141.8 139.4 141.8 139.4 Capital redemption reserve 0.6 - 0.6 - Profit and loss account (63.0) (65.5) 7.7 9.0 Equity shareholders' funds 97.1 91.7 167.8 166.2 Equity minority interest 0.2 - - - Total capital employed 97.3 91.7 167.8 166.2 These financial statements were approved by the Board of Directors on 7th September 2005 and were signed on its behalf by:- M W ROBERTS Director CONSOLIDATED CASH FLOW STATEMENT for the year ended 30 June 2005 2005 2005 2004 2004 Note £m £m £m £m Net cash inflow from operating activities 3 51.1 62.4 Returns on investments and servicing of finance (2.6) 1.0 Taxation (7.2) (10.6) Net cash flow after taxation and finance costs 41.3 52.8 Cash expenditure on fixed assets (17.5) (17.3) Disposal of fixed assets - 0.1 Net cash outflow on capital expenditure (17.5) (17.2) APL acquisition / deferred consideration payment 4 (2.8) - Equity dividends paid (7.6) (7.3) Cash inflow before financing 13.4 28.3 Ordinary shares repurchased less issued for cash (5.6) - Movement in debt and lease financing (8.6) (26.8) Net cash outflow from financing (14.2) (26.8) (Decrease) / increase in cash in the year (0.8) 1.5 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT for the year ended 30 June 2005 2005 2004 £m £m (Decrease) / increase in cash in the year (0.8) 1.5 Cash outflow from movement in debt 8.2 26.4 Movement on finance leases 0.4 0.4 Change in net debt resulting from cash flows 7.8 28.3 Lease financing acquired with subsidiary (0.3) - Other new lease financing (0.1) - Translation differences (0.4) 1.4 Movement in net debt in the year 7.0 29.7 Net debt at the beginning of the year (31.4) (61.1) Net debt at the end of the year (24.4) (31.4) CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the year ended 30 June 2005 2005 2004 £m £m Profit for the financial year 20.5 20.2 Unrealised foreign currency differences (0.2) (0.1) Total recognised gains and losses for the financial year 20.3 20.1 RECONCILIATION OF MOVEMENTS IN CONSOLIDATED SHAREHOLDERS' FUNDS for the year ended 30 June 2005 2005 2004 Note £m £m Profit for the financial year 20.5 20.2 Equity dividends (8.5) (7.1) Retained profit for the financial year 12.0 13.1 Ordinary shares repurchased less issued - share capital 5 (0.1) - Ordinary shares repurchased less issued - reserves 5 (6.3) 0.1 Unrealised foreign currency differences (0.2) (0.1) Opening equity shareholders' funds 91.7 78.6 Closing shareholders' funds 97.1 91.7 NOTES TO THE FINANCIAL STATEMENTS 1) Exchange rates The exchange rates against sterling used for the periods were as follows: 2005 2004 Average rate: Euro 1.46 1.46 Polish Zloty 6.14 6.75 Czech Koruna 44.86 47.09 Hungarian Forint 361.3 375.9 2005 2004 Closing rate: Euro 1.48 1.49 Polish Zloty 5.99 6.70 Czech Koruna 44.51 47.45 Hungarian Forint 365.7 373.8 2) Segmental Information 2005 2004 £m £m Turnover by destination is analysed by geographical area as follows: UK 227.4 210.5 Continental Europe 302.8 286.7 Rest of world 6.9 4.1 Group turnover 537.1 501.3 Share of joint venture's turnover 2.4 16.5 Turnover by destination 539.5 517.8 2005 2004 £m £m Turnover by geographical origin is analysed as follows: UK 241.8 216.6 Continental Europe 295.3 284.7 Group turnover 537.1 501.3 Share of joint venture's turnover 2.4 16.5 Turnover by origin 539.5 517.8 2005 2004 £m £m Turnover by class of business is analysed as follows: Household products 441.0 432.0 Personal care products 96.1 69.3 Group turnover 537.1 501.3 Share of joint venture's turnover 2.4 16.5 Turnover by class of business 539.5 517.8 2005 2004 £m £m Operating profit by geographical origin is analysed as follows: UK - pre exceptional items 19.4 17.2 Continental Europe - pre exceptional 14.7 16.5 items Exceptional items (3.0) (3.3) Group operating profit 31.1 30.4 Non operating items - 0.5 Net interest payable (1.3) (0.7) Profit on ordinary activities before tax 29.8 30.2 The UK business includes total goodwill amortisation of £0.7 million (2004 - £1.2 million). The Continental Europe business includes goodwill amortisation of £0.2 million (2004 - £0.2 million). The £3.0 million exceptional items is comprised of £2.3 million UK and £0.7million Continental Europe (2004 - £3.3 million, all Continental Europe). 2005 2004 £m £m Operating profit by class of business is analysed as follows: Household products - pre exceptional 26.2 29.3 items Personal care products - pre exceptional 7.9 4.4 items Exceptional items (3.0) (3.3) Group operating profit 31.1 30.4 Non-operating items - 0.5 Net interest payable (1.3) (0.7) Profit on ordinary activities before tax 29.8 30.2 The household products business includes goodwill amortisation of £0.9 million (2004 - £1.4 million). The £3.0 million exceptional items (2004 - £3.3 million) all relate to the household products segment. 2005 2004 £m £m Non-operating items consist of the following: Share of joint venture's operating profit 0.1 0.8 Share of joint venture's interest payable and similar charges (0.1) (0.3) Total non-operating items before tax - 0.5 Share of joint venture's tax charge on ordinary activities - - Total non-operating items after tax - 0.5 2005 2004 £m £m Net assets by geographical origin are analysed as follows: UK 54.9 60.8 Continental Europe 83.5 78.5 Total operating assets and liabilities 138.4 139.3 Non-operating liabilities (41.1) (47.6) Net assets 97.3 91.7 Non operating liabilities include cash less short and long-term borrowings, provisions for liabilities and charges and dividends. It is not possible to provide a meaningful 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. 3) Reconciliation of operating profit to operating cash flow Pre Post Pre Post exceptional Exceptional exceptional exceptional Exceptional exceptional items items items items items items 2005 2005 2005 2004 2004 2004 £m £m £m £m £m £m Group operating profit 34.1 (3.0) 31.1 33.7 (3.3) 30.4 Depreciation 18.6 18.6 18.5 - 18.5 Goodwill amortisation 0.9 - 0.9 1.4 - 1.4 loss on disposal of fixed assets 0.1 0.1 - - - Movement in stock (1.1) (1.1) 1.3 - 1.3 Movement in debtors 9.6 9.6 (3.7) - (3.7) Movement in creditors (7.4) (0.7) (8.1) 11.2 3.3 14.5 Cash flow from operating activities 54.8 (3.7) 51.1 62.4 - 62.4 The £3.7 million exceptional items outflow includes the £3.3 million 2004 profit and loss charge, all of which was incurred this year, and £0.4 million of this year's £3.0 million profit and loss charge. 4) Aerosol Products Limited The Group acquired the remaining 50% equity interest of Aerosol Products Limited on 6 September 2004. Previously it was a 50% joint venture partner and since then it has been consolidated as a 100% subsidiary. The consideration was £1.0 million. In addition an early payment was made of the £2.0 million deferred consideration from the financial restructuring in 2002. The £2.8 million net outflow on the cash flow statement includes £0.2 million cash acquired on the acquisition. 5) Movements on share capital and reserves During the year the Company issued 5,032,029 shares to satisfy the exercise of employee share options and also repurchased 6,125,000 shares. Of the repurchases, 4,600,000 were for cancellation and 1,525,000 to be held as treasury shares for the expected future exercise of other share options. The net impact of these issues and repurchases on share capital and reserves is shown in the table below. £m Capital redemption reserve 0.6 Share premium account 2.4 Profit and loss account (9.3) (6.3) Called up share capital (0.1) Notes: 1 The financial information set out above does not constitute the company's statutory accounts for the years ended 30 June 2005 or 2004 but is derived from those accounts. Statutory accounts for 2004 have been delivered to the Registrar of Companies. Accounts for 2005 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 The Group announced on 23 June 2005 its intention to close the production plant in Bampton, UK and transfer those activities to the Aerosol Products Limited's site in Hull. The Devon site will continue to be used for sales and marketing activities. A provision for costs of £1.3 million has been charged to the profit and loss account. An additional £1.7 million provision has also been charged relating to a Group wide rationalisation exercise, £1.0 million in the UK and £0.7 million in Continental Europe. The £3.0 million total pre-tax charge is accounted for as an operating exceptional item. 3 The Annual Report for 2005 will be issued to shareholders on 29 September 2005 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 Monday 31 October 2005. 4 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 177,122,822 (2004 - 177,666,200). 5 If approved at the Annual General Meeting on 31 October 2005; the final dividend of 3.3p per share will be paid on 25 November 2005 to shareholders on the register at 28 October 2005. This information is provided by RNS The company news service from the London Stock Exchange

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