Interim Results
McBride PLC
07 February 2008
McBride plc
7 February 2008
McBride plc, Europe's leading supplier of private label household and personal
care products, announces its Half Year Report for the six months ended 31
December 2007
• Revenue up 23% to £342.9m (2006: £278.2m) driven by recent
acquisitions
• Adjusted operating profit was £16.0m (2006: £16.4m)(1); reported
operating profit was £13.5m (2006: £16.3m)
• Adjusted basic earnings per share were 5.6 pence (2006: 6.3p) (1);
reported basic earnings per share were 4.6 pence (2006: 6.3p)
• Interim dividend per share maintained at 1.7 pence (2006: 1.7p)
• Net debt of £102.6m as at 31 December 2007, an increase of £21.7m in
the six month period
(1) Adjusted operating profit and adjusted basic earnings per share are
calculated before amortisation of intangible assets and exceptional items
Miles Roberts, Chief Executive, commented:
'We have experienced, mainly in the second quarter of the first half,
unprecedented increases in our raw material costs. These cost increases have
been partially mitigated by continuing improvements in operational efficiencies,
purchasing and value engineering. Additionally, we have been discussing price
increases with our customers and, to date, a significant proportion of these
cost increases have been recovered. The inevitable time lag between cost and
selling price increases has impacted margins.
Trading since the end of December has been in line with our expectations. The
Board recognises that the Company still needs to fully mitigate its cost
pressures and the measures it has taken to secure the necessary cost recoveries
are well in hand'.
For further information please contact:
McBride plc 01494 607050
Miles Roberts, Chief Executive
Stuart Miller, Interim Finance Director
Financial Dynamics 020 7831 3113
Andrew Dowler
McBride is Europe's leading provider of Private Label Household and Personal
Care products, supplying over 1.3 billion products each year to Europe's leading
retailers. It employs over 5,000 people in 11 European countries. For more
information, visit www.mcbride.co.uk
Overview
Overall the group delivered a resilient performance in the face of unprecedented
increases in raw materials costs and competitive trading conditions in the two
main household products markets in the UK and France.
• Recovery of increased raw materials costs through selling price
increases commenced and continues into the second half
• Continue to seek opportunities to improve efficiencies and ensure the
optimum asset base for the Group's future development
• Recent acquisitions deliver good trading performance
• Total revenue up 23% to £342.9m (2006: £278.2m). Organic(1) revenue
declined 1% with personal care growing 6%
• Adjusted Group operating profit was £16.0m (2006: £16.4m), reflecting
increased raw materials costs partially mitigated by operational efficiencies,
purchasing savings and the contribution from recent acquisitions
• In the UK, total revenue was up 13% to £151.8m (2006: £134.6m).
Adjusted operating profit declined 26% to £9.2m (2006: £12.4m)
• The Western Continental Europe business delivered a resilient
performance, with total revenue up 36% to £188.2m (2006: £138.3m), reflecting
strong contributions from recent acquisitions. Adjusted operating profit
improved 59% to £6.2m (2006: £3.9m) driven by the recent acquisitions
• Eastern Continental Europe is continuing to benefit from buoyant
trading conditions with revenues up 38% to £16.3m (2006: £11.8m) and adjusted
operating profit up 25% to £1.0m (2006: £0.8m)
(1) Organic refers to the results of underlying businesses at constant currency,
excluding the effect of acquisitions
Current trading and outlook
Trading since the end of December has been in line with our expectations
although the second half remains challenging.
We will continue to make McBride a more robust business by rigorous execution in
our existing businesses and increasing our exposure to more attractive product
categories and geographies.
UK business review
The UK household products market is relatively mature with modest overall growth
in value terms driven by innovation and momentum in selected product categories
such as automatic dishwashing and air care. Private label has maintained a
market share of around 20% in recent years with actual Private Label sales
declining by 2% in the period to December 2007.
In personal care, the total UK market grew by 5% in value in the year to
December 2007 whilst private label grew well ahead of the market. Product
categories showing good growth were skin care, liquid soap, mouthwash and
deodorants. Private label's value share of the market was 19% in the year to
December 2007.
McBride's UK business increased total revenue by 13% to £151.8m (2006: £134.6m)
driven by the contribution from the recent acquisitions of Henkel's UK private
label household products business and Darcy Industries as well as organic growth
of 8% in personal care.
Adjusted operating profit declined by 26% reflecting material cost inflation. To
counter the cost inflation, we have commenced various initiatives to improve
performance including achieving operational efficiencies, rationalisation and
obtaining price increases from our customers.
(Source of market data: McBride estimates based on Taylor Nelson Sofres retail
selling price data)
Western Continental Europe business review
France is McBride's largest market in Western Continental Europe. The overall
household products and personal care markets have continued their recent trend
of modest growth. In the year to November 2007 these markets recorded 1% growth
and 1% decline respectively. However, private label has continued its recent
outperformance against the overall market, recording 6% and 4% growth in
household products and personal care respectively in the year to November 2007.
Growth in household products, for both the overall market and private label, was
concentrated in categories such as washing up liquid, automatic dishwashing
products and air care. In addition, private label performed well in a weak
overall laundry market. In personal care, the market has been driven by strong
performances in bath and shower products, soap products and deodorants.
In Italy, McBride's second largest market in Western Continental Europe, the
total household products market has been growing at an annual rate of 3-4% over
the last 2 years. Growth in the overall market has been driven particularly by
the laundry liquid and automatic dishwashing product categories. Private label
has shown consistent value growth in recent years and its growth has accelerated
recently, from 2% in the year to December 2006 to 6% in the year to December
2007 driven by strong performances in laundry liquid, up 25%, washing up liquid,
up 11%, and household cleaners, up 5%.
McBride's third largest market in Western Continental Europe, Spain, has also
continued its recent strong growth with the household products market delivering
overall growth of 6% and private label growth of 7% in the year to December
2007. This growth was driven by strong performances in categories such as
laundry liquid, automatic dishwashing products, household cleaners and air care.
McBride's Western Continental Europe business increased total sales by 36% to
£188.2m (2006: £138.3m) reflecting the contribution of the acquisitions of
Henkel's private label household products business in Continental Europe and
Dasty Italia. Dasty Italia has performed particularly well, capitalising on
strong market conditions in Italy. Personal care as well as household products
in Italy and Spain continued to deliver good organic growth but our main French
household products business experienced difficult trading conditions. Underlying
organic revenue reduced 1% reflecting a 2% decline in household and 6% growth in
personal care.
Adjusted operating profit increased by 59% reflecting the contribution from the
acquisitions of Henkel's private label business in Western Europe and Dasty
Italia. The acquisitions bring significant additional strength to the business
with their strong positioning in two of our growth product categories -
automatic dishwashing and household cleaners. In addition, we have continued to
make progress in improving the operational and financial performance of the
underlying business. Nevertheless recent raw materials cost inflation has made
it necessary to obtain price increases from customers.
(Source of market data: IRI retail selling price data with data for Italy for
the whole market and for France and Spain including supermarkets and
hypermarkets but not the hard discount sector)
Eastern Continental Europe business review
The household and personal care markets of Eastern Continental Europe have
demonstrated dynamic growth in recent years. This attractive environment is
expected to remain in place for the foreseeable future, supported by a positive
macro-economic outlook, growing consumer affluence and the rapid expansion of
discounters and international retailers in the region.
McBride recently enhanced the resources committed to this business with the
appointment of a new senior management team. The process of strengthening the
business continues with the aim of this region becoming a more significant
contributor to overall Group performance. We are already seeing the expected
benefits from this investment with strong organic revenue growth delivered in
the period.
As well as driving further expansion of our core Eastern Continental Europe
business in Poland, we have started to see increased activity further east and
south across the region.
Total revenue in Eastern Continental Europe increased 38% to £16.3m (2006:
£11.8m). Adjusted operating profit increased 25% with the benefits of strong
revenue growth offsetting higher raw material costs and investment in people.
Group financial review
Revenue
Group revenue increased 23% to £342.9m (2006: £278.2m), with the acquisitions of
Dasty Italia, Henkel's European private label household products business and
Darcy contributing substantially the whole increase. There was a favourable 1%
exchange rate impact from the strengthening Euro which was offset by a 1%
reduction in organic revenues. The reduction in organic revenues reflects a 3%
decline in household products and a 6% increase in personal care.
UK revenues increased 13% to £151.8m (2006: £134.6m), with 15% (£20.2m) from
acquisitions and a 2% organic reduction. Western Continental Europe's revenues
improved 36% to £188.2m (2006: £138.3m), representing a 35% first time
contribution from acquisitions and 2% exchange benefit partially offset by a 1%
reduction in organic, primarily French household. Eastern Continental Europe's
revenues improved 38% to £16.3m (2006: £11.8m), reflecting increases in both
household and personal care.
Operating profit
Group operating profit, before amortisation of intangible assets and exceptional
items ('adjusted operating profit'), declined 2% to £16.0m (2006: £16.4m). The
operating margin reduced from 5.9% to 4.7% reflecting a significant increase in
materials, fuel and other input costs, and higher administrative costs mainly
due to acquisitions, partially offset by operational efficiencies and purchasing
savings.
Administrative costs, before amortisation of intangible assets and exceptional
items, increased 28% to £74.2m (2006: £57.9m), with 18% of the increase from
acquisitions and 2% from exchange rate movements. The remaining 8% reflects both
volume increases generated from other bolt on acquisitions made in 2006/07,
mainly in the UK, and an increasing focus on product development.
UK adjusted operating profit declined 26% to £9.2m (2006: £12.4m) and the
operating margin declined from 9.2% to 6.1%. In Western Continental Europe,
adjusted operating profit increased 59% to £6.2m (2006: £3.9m) and the margin
improved from 2.8% to 3.3%, helped by an above average return from the Dasty
acquisition. In Eastern Continental Europe, adjusted operating profit improved
25% to £1.0m (2006: £0.8m) although the margin reduced from 6.8% to 6.1%,
impacted by high material costs.
Finance costs
Net finance costs increased to £2.3m (2006: £0.7m) reflecting primarily an
increased interest expense arising from higher debt levels to fund the
acquisitions completed in 2007.
Exceptional items and amortisation of intangible assets
There was a £1.7m pre-tax operating exceptional charge to the income statement
in the period related to redundancy programmes in the UK, of £1.0m and Western
Continental Europe, of £0.7m. There was a £0.8m amortisation of intangible
assets charge in the period.
Profit before tax and tax charge
Adjusted profit before tax declined 13% to £13.7m (2006: £15.7m). Reported
profit before tax declined 28% to £11.2m (2006: £15.6m). The effective tax rate
reduced to 27% (2006: 28%). Adjusted profit after tax declined 12% to £10.0m
(2006: £11.3m).
Earnings per share and dividend
Reported basic earnings per share were 4.6p (2006: 6.3p) and diluted earnings
per share were 4.5p (2006: 6.1p). Adjusted basic and diluted earnings per share,
calculated before amortisation of intangible assets and exceptional items, were
5.6p (2006: 6.3p) and 5.5p (2006: 6.2p) respectively. The weighted average
number of shares in the period used in calculating basic and diluted earnings
per share was 180.0m (2006: 177.1m) and 181.6m (2006: 180.8m) respectively.
An interim dividend of 1.7p per share (2006: 1.7p) will be paid on 23 May 2008
to shareholders on the register on 25 April 2008.
Cash flow and net debt
Net cash generated from operations, excluding cashflows relating to exceptional
items, was £14.6m (2006: £22.3m). The reduced cash flows reflect primarily some
significant non-recurring payables.
The group's overall net cash flow during the period was also affected by
increased interest costs related to the additional debt used to finance recent
acquisitions and cash outflows relating to exceptional items. These factors
combined with the translational impact of the stronger Euro on Euro debt,
resulted in net debt increasing to £102.6m from £80.9m at 30 June 2007.
Balance sheet
Net assets were marginally higher at 31 December 2007 at £121.1m compared to
£120.3m at 30 June 2007.
The pre-tax, before amortisation of intangible assets and exceptional items,
return on average capital employed declined from 24.6% to 15.1% reflecting lower
profitability as well as higher capital employed following acquisitions
completed in the last 12 months.
Responsibility Statement
We confirm that to the best of our knowledge:
• The condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the EU;
• The interim management report includes a fair review of the
information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication
of important events that have occurred during the first six months of the
financial year 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 year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so.
The Board
The Board of Directors that served during the six months to 31 December 2007 and
their respective responsibilities can be found on pages 26 and 27 of the McBride
plc Annual Report and Accounts 2007.
By order of the Board
6 February 2008
INDEPENDENT REVIEW REPORT TO MCBRIDE 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 31
December 2007 which comprises the consolidated income statement, consolidated
balance sheet, consolidated cash flow statement, consolidated statement of
recognised income and expense and the related explanatory 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.
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Disclosure
and Transparency Rules ('the DTR') of the UK's Financial Services Authority ('
the UK FSA'). Our review has been undertaken so that we might state to the
company those matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company for our review work, for
this report, or for the conclusions we have reached.
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 DTR of the UK FSA.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the EU. The condensed set of
financial statements included in this half-yearly financial report has been
prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the
EU.
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.
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 UK. 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 31 December 2007 is not prepared, in all
material respects, in accordance with IAS 34 as adopted by the EU and the DTR of
the UK FSA.
KPMG Audit Plc
Chartered Accountants
8 Salisbury Square
London EC4Y 8BB
6 February 2008
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 June 2007
Note £m £m £m
Revenue 3 342.9 278.2 592.0
Cost of sales (230.0) (185.0) (393.0)
Gross profit 112.9 93.2 199.0
Distribution costs (22.7) (18.9) (39.7)
Administrative costs:
Before amortisation of intangible assets and
exceptional items (74.2) (57.9) (124.8)
Amortisation of intangible assets (0.8) (0.1) (0.5)
Exceptional items 4 (1.7) - (2.1)
Administrative costs including amortisation of
intangible assets and exceptional items (76.7) (58.0) (127.4)
Operating profit 3 13.5 16.3 31.9
Operating profit before amortisation of intangible
assets and exceptional items 16.0 16.4 34.5
Financial income 3.2 2.4 4.8
Financial expenses (5.5) (3.1) (7.2)
Net financing costs (2.3) (0.7) (2.4)
Profit before tax 11.2 15.6 29.5
Taxation 5 (3.0) (4.4) (8.2)
Profit for the period 3 8.2 11.2 21.3
Attributable to:
Equity holders of the parent 8.2 11.1 21.2
Minority interest - 0.1 0.1
Profit for the period 8.2 11.2 21.3
Earnings per ordinary share (pence) 6
Basic 4.6 6.3 11.9
Diluted 4.5 6.1 11.7
Dividends
Paid in period (£m) 7.0 6.2 9.2
Paid in period (pence per share) 3.9 3.5 5.2
Proposed (£m) 3.1 3.0 6.9
Proposed (pence per share) 1.7 1.7 3.9
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
as at as at as at
31 Dec 2007 31 Dec 2006 30 June 2007
Note £m £m £m
Non-current assets
Intangible assets 41.2 17.1 41.1
Property, plant and equipment 175.2 128.8 164.3
Other non-current assets 0.5 0.5 0.5
Deferred tax 0.5 4.6 2.6
217.4 151.0 208.5
Current assets
Inventories 60.8 48.9 59.7
Trade and other receivables 130.0 104.8 130.7
Cash and cash equivalents 3.3 2.8 6.6
Assets classified as held for sale 1.3 - 1.3
195.4 156.5 198.3
Total assets 3 412.8 307.5 406.8
Current liabilities
Interest bearing loans and borrowings 19.4 2.6 9.9
Trade and other payables 159.7 145.0 173.1
Current tax payable 1.8 2.9 1.9
Provisions 2.0 0.6 2.0
182.9 151.1 186.9
Non-current liabilities
Interest bearing loans and borrowings 86.5 25.3 77.6
Pensions and other post-employment benefits 8.1 14.4 8.9
Provisions 0.9 0.7 1.6
Deferred tax 13.3 7.1 11.5
108.8 47.5 99.6
Total liabilities 3 291.7 198.6 286.5
Net assets 121.1 108.9 120.3
Equity
Issued share capital 18.0 17.8 17.8
Share premium account 143.0 141.8 141.8
Other reserves 1.3 (0.9) (0.2)
Retained earnings (41.2) (50.4) (39.1)
Total equity attributable to equity holders of the parent 121.1 108.3 120.3
Minority interest - 0.6 -
Total equity and reserves 10 121.1 108.9 120.3
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 June 2007
Note £m £m £m
Profit before tax 11.2 15.6 29.5
Net financing costs 2.3 0.7 2.4
Pre-tax exceptional charge in the period 1.7 - 2.1
Share based payments - - 0.2
Profit on sale of property, plant and equipment - (0.1) (0.1)
Depreciation 10.3 8.3 17.2
Amortisation of intangible assets 0.8 0.1 0.5
26.3 24.6 51.8
Decrease/(increase) in receivables 9.5 - (3.8)
Decrease/(increase) in inventories 2.0 (7.6) (7.1)
(Decrease)/increase in payables (23.2) 5.3 8.6
Cash outflow in respect of exceptional items (2.0) (0.5) (1.7)
Cash generated from operations 12.6 21.8 47.8
Interest paid (6.8) (1.1) (3.3)
Taxation paid (2.2) (2.4) (6.3)
Net cash from operating activities 3.6 18.3 38.2
Cash flows from investing activities
Proceeds from sale of land and buildings - 0.1 0.1
Acquisition of property, plant and equipment (13.4) (8.0) (19.8)
Acquisition of intangible assets - - (0.2)
Acquisition of businesses, net of cash acquired (0.1) (2.7) (57.8)
Acquisition of minority interest - - (1.7)
Interest received 0.1 1.3 1.3
Net cash used in investing activities (13.4) (9.3) (78.1)
Cash flows from financing activities
Proceeds from issue of share capital 1.5 0.7 0.7
Repurchase of own shares (1.4) - -
Increase in/(repayment of) borrowings 8 9.3 (0.6) 49.3
Payment of finance lease liabilities (0.5) (0.2) (0.7)
Dividends paid (7.0) (6.2) (9.2)
Net cash generated from/(used in) financing
activities 1.9 (6.3) 40.1
Net (decrease)/increase in cash and cash equivalents (7.9) 2.7 0.2
Cash and cash equivalents at start of period (1.0) (1.3) (1.3)
Effect of exchange rate fluctuations on cash held 0.1 (0.1) 0.1
Cash and cash equivalents at end of period (8.8) 1.3 (1.0)
Reconciliation of cash and cash equivalents per the balance sheet and cash flow statement
Cash and cash equivalents per the balance sheet 3.3 2.8 6.6
Overdrafts (12.1) (1.5) (7.6)
Cash and cash equivalents per the cash flow (8.8) 1.3 (1.0)
statement
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
Unaudited Unaudited Audited
6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 June 2007
Note £m £m £m
Foreign exchange translation differences 10.3 (1.0) (1.1)
Net (loss)/gain on hedge of net investment in foreign
subsidiaries
(9.6) 0.9 0.8
Cash flow hedge reserve movement 9 1.1 (0.3) (0.3)
Tax on items above taken directly to equity (0.3) - 0.1
Actuarial (loss)/gain net of deferred tax - (0.3) 3.1
Income and expense recognised directly in equity 1.5 (0.7) 2.6
Profit for the period 8.2 11.2 21.3
Total recognised income and expense for the period 9.7 10.5 23.9
Attributable to:
Equity shareholders of the parent 9.7 10.4 23.8
Minority interest - 0.1 0.1
9.7 10.5 23.9
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1) Basis of preparation
This Half Year Report has been prepared in accordance with the Disclosure and Transparency Rules of the United
Kingdom Financial Services Authority. The Half Year Report has been prepared in accordance with IAS 34 'Interim
Financial Reporting' and on the basis of the accounting policies and the recognition and measurement
requirements of IFRS applied in the financial statements at 30 June 2007 and those standards that have been
endorsed and will be applied at 30 June 2008. This report should be read in conjunction with the financial
statements for the year ended 30 June 2007.
The results for each half-year are unaudited and do not represent the Group's statutory accounts. The
comparative figures for the financial year ended 30 June 2007 are not the Group's statutory accounts for that
financial year. Those accounts have been reported on by the Group's auditors and delivered to the registrar of
companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain
a statement under section 237 (2) or (3) of the Companies Act 1985. Comparative figures for the periods ended
31 December 2006 and 30 June 2007 have been restated so as to be consistently presented with those of the
period end.
The interim financial statements were approved by the Board on 6 February 2008.
2) Change in accounting standards
IFRS 7 Financial Instruments - Disclosures and the Amendment to IAS 1 Presentation of Financial Statements:
Capital Disclosures will both be effective for the Group's 2008 financial statements. Disclosures about the
significance of financial instruments on the Group's financial position and performance and qualitative and
quantitative disclosures on the nature and extent of risks as required by IFRS 7 and capital disclosures as
required by IAS 1 will be given in the annual financial statements.
3) Segment information
Segment information is presented below in respect of the Group's geographic and business segments. The
primary format, geographic segments, is based on the Group's operating divisions and internal reporting
structure. Transfer prices between segments are set on an arm's length basis. Segment revenue and profit
include transfers between segments which are eliminated on consolidation.
Geographic segments
United Kingdom Western Continental Europe
6 months to 6 months to Year ended 6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 Jun 2007 31 Dec 2007 31 Dec 2006 30 Jun 2007
£m £m £m £m £m £m
External revenue 149.2 133.6 274.5 178.1 133.1 292.8
Inter-segment revenue 2.6 1.0 2.6 10.1 5.2 11.4
Total segment revenue 151.8 134.6 277.1 188.2 138.3 304.2
Segment profit pre
amortisation of intangible
assets 9.2 12.4 24.5 6.2 3.9 10.4
Amortisation of intangible
assets (0.3) (0.1) (0.2) (0.5) - (0.2)
Segment profit 8.9 12.3 24.3 5.7 3.9 10.2
Eastern Continental Europe Elimination
6 months to 6 months to Year ended 6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 Jun 2007 31 Dec 2007 31 Dec 2006 30 Jun 2007
£m £m £m £m £m £m
External revenue 15.6 11.5 24.7 - - -
Inter-segment revenue 0.7 0.3 0.3 (13.4) (6.5) (14.3)
Total segment revenue 16.3 11.8 25.0 (13.4) (6.5) (14.3)
Segment profit pre
amortisation of intangible
assets 1.0 0.8 1.5 - - (0.1)
Amortisation of intangible
assets - - (0.1) - - -
Segment profit 1.0 0.8 1.4 - - (0.1)
Total
6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 Jun 2007
£m £m £m
External revenue 342.9 278.2 592.0
Inter-segment revenue - - -
Total segment revenue 342.9 278.2 592.0
Segment profit pre
amortisation of intangible assets 16.4 17.1 36.3
Amortisation of intangible assets (0.8) (0.1) (0.5)
Segment profit 15.6 17.0 35.8
Corporate costs * (0.4) (0.7) (1.8)
Exceptional items (see note 4) (1.7) - (2.1)
Operating profit 13.5 16.3 31.9
Net financing costs (2.3) (0.7) (2.4)
Taxation (3.0) (4.4) (8.2)
Profit for the period 8.2 11.2 21.3
* Corporate costs relate primarily to head office costs that are not reallocated to one of the geographic
segments.
3) Segment information (continued)
United Kingdom Western Continental Europe
6 months to 6 months to Year ended 6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 Jun 2007 31 Dec 2007 31 Dec 2006 30 Jun 2007
£m £m £m £m £m £m
Segment assets 152.1 127.3 155.4 239.5 161.1 231.9
Segment liabilities (74.3) (73.5) (74.8) (124.0) (82.9) (110.9)
Capital expenditure 5.6 3.7 9.1 7.4 3.0 9.2
Amortisation and depreciation 4.2 3.8 7.7 6.6 4.3 9.5
Eastern Continental Europe Corporate
6 months to 6 months to Year ended 6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 Jun 2007 31 Dec 2007 31 Dec 2006 30 Jun 2007
£m £m £m £m £m £m
Segment assets 19.5 13.3 15.8 1.7 5.8 3.7
Segment liabilities* (6.1) (3.4) (5.0) (87.3) (38.8) (95.8)
Capital expenditure* 0.4 1.3 1.7 - - -
Amortisation and depreciation 0.3 0.3 0.5 - - -
* Corporate liabilities include external debt and tax liabilities. Capital expenditure includes property,
plant and equipment and intangible assets.
Total
6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 Jun 2007
£m £m £m
Segment assets 412.8 307.5 406.8
Segment liabilities (291.7) (198.6) (286.5)
Capital expenditure 13.4 8.0 20.0
Amortisation and depreciation 11.1 8.4 17.7
Business segments
Household Personal Care
6 months to 6 months to Year ended 6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 Jun 2007 31 Dec 2007 31 Dec 2006 30 Jun 2007
£m £m £m £m £m £m
Segment revenue 281.6 221.3 476.9 61.3 56.9 115.1
Segment profit pre
amortisation of intangible
assets 12.4 12.2 26.9 4.0 4.9 9.4
Amortisation of intangible
assets (0.8) (0.1) (0.4) - - (0.1)
Segment profit 11.6 12.1 26.5 4.0 4.9 9.3
3) Segment information (continued)
Total
6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 Jun 2007
£m £m £m
Segment revenue 342.9 278.2 592.0
Segment profit pre
amortisation of intangible assets 16.4 17.1 36.3
Amortisation of intangible assets (0.8) (0.1) (0.5)
Segment profit 15.6 17.0 35.8
Corporate costs* (0.4) (0.7) (1.8)
Exceptional items (see note 4) (1.7) - (2.1)
Operating profit 13.5 16.3 31.9
* Corporate costs related primarily to head office costs that are not allocated to one of the business
segments
Household Personal Care
6 months to 6 months to Year ended 6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 Jun 2007 31 Dec 2007 31 Dec 2006 30 Jun 2007
£m £m £m £m £m £m
Segment assets 340.4 231.5 327.2 70.7 70.2 75.9
Capital expenditure* 8.5 6.0 12.9 4.9 2.0 7.1
* Capital expenditure includes property, plant and equipment and intangible assets
Corporate Total
6 months to 6 months to Year ended 6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 Jun 2007 31 Dec 2007 31 Dec 2006 30 Jun 2007
£m £m £m £m £m £m
Segment assets 1.7 5.8 3.7 412.8 307.5 406.8
Capital expenditure* - - - 13.4 8.0 20.0
* Capital expenditure includes property, plant and equipment and intangible assets
External revenue by destination
Segmental information is also presented below in respect of external revenue by
destination. Revenue to Switzerland which was previously included as revenue to
Rest of World has been reclassified in this period, and for comparative periods,
as revenue to Western Continental Europe.
United Kingdom Western Continental Europe
6 months to 6 months to Year ended 6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 Jun 2007 31 Dec 2007 31 Dec 2006 30 Jun 2007
£m £m £m £m £m £m
External revenue by
destination 142.7 126.8 261.0 171.6 130.1 284.5
Eastern Continental Europe and Rest of Total
World
6 months to 6 months to Year ended 6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 Jun 2007 31 Dec 2007 31 Dec 2006 30 Jun 2007
£m £m £m £m £m £m
External revenue by
destination 28.6 21.3 46.5 342.9 278.2 592.0
4) Exceptional items
The Group presents certain items as 'exceptional'. These are items which, in
management's judgement, need to be disclosed by virtue of their size or
incidence in order to obtain a proper understanding of the financial
information.
There was a £1.7m pre-tax operating exceptional charge to the income statement
in the period relating to redundancy programmes at both UK and Western
Continental Europe divisions.
There was a £2.1m pre-tax operating exceptional charge to the income statement
in the year ended 30 June 2007 relating to the incremental costs of integrating
the recently acquired businesses of Dasty Italia S.p.A, Henkel's European
Private Label household products businesses and other acquisitions, and Sanmex
International acquired in 2006. This includes disruption costs, asset write-offs
and consultant costs.
In terms of segment analysis in Note 3, the exceptional charge relates to the UK
£1.0m (30 June 2007: £0.8m), Western Continental Europe £0.7m (30 June 2007:
£0.8m) and Corporate £nil (30 June 2007: £0.5m), on a geographic basis, and
household £1.6m (30 June 2007: £1.6m), personal care £0.1m (30 June 2007: £nil)
and Corporate £nil (30 June 2007: £0.5m) on a business basis.
5) Taxation
The £3.0m tax charge for the half year ended 31 December 2007 (2006: £4.4m) consists of £1.4m (2006: £3.3m) of
UK tax and £1.6m (2006: £1.1m) of overseas tax. The Group's consolidated effective tax rate for the half year
ended 31 December 2007 was 27% (2006: 28%).
6) Earnings per ordinary share
Basic earnings per ordinary share is calculated on profit after tax and minority interest, attributable to
equity holders of the parent, divided by the weighted average number of ordinary shares in issue during the
period in accordance with IAS 33.
6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 Jun 2007
Total earnings (£m) a 8.2 11.1 21.2
Weighted average number of ordinary shares b 179,960,782 177,144,652 177,405,917
Basic earnings per share (pence) a/b 4.6 6.3 11.9
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue
on assumption of conversion of all dilutive ordinary shares. The Company has three categories of potentially
dilutive ordinary shares: share options issued whose exercise price is less than the average price of the
Company's ordinary shares during the period, share awards with no option price and shares allocated to an
approved Save As You Earn scheme.
6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 Jun 2007
Weighted average number of ordinary shares (million) b 180.0 177.1 177.4
Effect of dilutive share options (million) 0.3 0.3 0.3
Effect of dilutive share awards (million) 1.1 0.7 0.8
Effect of dilutive SAYE scheme shares (million) 0.2 2.7 2.7
c 181.6 180.8 181.2
Diluted earnings per share (pence) a/c 4.5 6.1 11.7
6) Earnings per ordinary share (continued)
Adjusted basic earnings per share applies to earnings excluding exceptional items and amortisation of intangible
assets since the directors consider that this gives additional information as to the underlying performance of
the Group.
6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 Jun 2007
£m £m £m
Earnings used to calculate basic and diluted EPS a 8.2 11.1 21.2
Exceptional items after tax 1.2 - 1.5
Amortisation of intangible assets after tax 0.6 0.1 0.4
Earnings before exceptional items and amortisation of
intangible assets
d 10.0 11.2 23.1
Adjusted basic earnings per share (pence) d/b 5.6 6.3 13.0
Adjusted diluted earnings per share (pence) d/c 5.5 6.2 12.7
The 2006 restatement relates to the adjustment to earnings for amortisation of intangible assets not previously
included.
7) Reconciliation of net cash flow to movement in net debt
6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 June 2007
£m £m £m
(Decrease)/increase in cash and cash equivalents in the (7.9) 2.7 0.2
period
Cash (inflow)/outflow from movement in debt (9.3) 0.6 (49.3)
Movement on finance leases 0.5 0.2 0.7
Change in net debt resulting from cash flows (16.7) 3.5 (48.4)
Lease financing acquired with subsidiary - - (1.2)
Loans acquired with subsidiaries - - (2.9)
Translation differences (5.0) 0.5 0.7
Movement in net debt in the period (21.7) 4.0 (51.8)
Net debt at the beginning of the period (80.9) (29.1) (29.1)
Net debt at the end of the period (102.6) (25.1) (80.9)
8) Increase in/(repayment of) borrowings
The net amounts drawn down and repaid during the period were £14.1m (2006: £1.0m) and £4.8m (2006: £1.6m)
respectively.
9) Cash flow hedges
During the period, the effective portion of changes in the fair value of cash flow hedges was £0.9m (2006:
£0.2m loss). The net difference in changes in fair value of cash flow hedges transferred to the income
statement was £0.2m (2006: £0.1m loss).
10) Fair values on acquisition of Henkel's European Private Label household products businesses
On 13 April 2007, the Group acquired all of the shares of Chemolux S.a.r.l. and the business and assets of
Henkel's UK Private Label household products business. As a result of the proximity of the acquisition date to
the 30 June 2007 year end, the fair value of the Henkel identifiable assets and liabilities were prepared on a
provisional basis. In accordance with IFRS 3 Business Combinations, management has one year from the date of
acquisition to finalise these fair values.
11) Reconciliation of movement in equity and reserves
Issued Share Total equity
share premium and
Other Retained Minority
capital account reserves earnings Total interest reserves
£m £m £m £m £m £m £m
At 1 July 2006 17.7 141.8 (0.8) (55.2) 103.5 0.4 103.9
Profit for the period - - - 11.1 11.1 0.1 11.2
Movement in cash flow
hedge - - (0.3) - (0.3) - (0.3)
Actuarial loss net of
deferred tax - - - (0.3) (0.3) - (0.3)
Foreign exchange
translation differences - - (1.0) - (1.0) 0.1 (0.9)
Net gain on hedge of net
investment in foreign
subsidiaries - - 0.9 - 0.9 - 0.9
Treasury shares issued
to satisfy employee
share option exercises* 0.1 - - 0.7 0.8 - 0.8
Equity dividends - - - (6.2) (6.2) - (6.2)
Other movements - - 0.3 (0.5) (0.2) - (0.2)
At 31 December 2006 17.8 141.8 (0.9) (50.4) 108.3 0.6 108.9
Profit for the period - - - 10.1 10.1 - 10.1
Actuarial gain net of
deferred tax - - - 3.4 3.4 - 3.4
Foreign exchange
translation differences - - (0.1) - (0.1) (0.1) (0.2)
Net loss on hedge of net
investment in foreign
subsidiaries - - (0.1) - (0.1) - (0.1)
Equity dividends - - - (3.0) (3.0) - (3.0)
Acquisition of minority
interest - - 1.2 - 1.2 (0.5) 0.7
Other movements - - (0.3) 0.8 0.5 - 0.5
At 30 June 2007 17.8 141.8 (0.2) (39.1) 120.3 - 120.3
Profit for the period - - - 8.2 8.2 - 8.2
Movement in cash flow
hedge - - 1.1 - 1.1 - 1.1
Foreign exchange
translation differences - - 10.3 - 10.3 - 10.3
Net loss on hedge of net
investment in foreign
subsidiaries - - (9.6) - (9.6) - (9.6)
Own shares acquired and
held as Treasury shares** (0.1) - 0.1 (1.4) (1.4) - (1.4)
Shares issued to satisfy
employee share option
exercises*** 0.3 1.2 - - 1.5 - 1.5
Equity dividends - - - (7.0) (7.0) - (7.0)
Tax on items taken
directly to equity - - (0.3) (1.9) (2.2) - (2.2)
Other movements - - (0.1) - (0.1) - (0.1)
At 31 December 2007 18.0 143.0 1.3 (41.2) 121.1 - 121.1
* 1.0 million ordinary 10p shares were issued out of Treasury for a
consideration of £0.7m in order to satisfy the exercise of employee share
options.
** 0.8 million ordinary 10p shares were repurchased by the Company for £1.4m to
be held as Treasury Shares for the expected future exercise of employee share
options.
*** 3.3 million ordinary 10p shares were issued for £1.5m to satisfy the Save As
You Earn savings scheme that matured in August 2007.
Financial calendar for the year ending 30 June 2008
Dividends
Interim Announcement 7 February 2008
Payment 23 May 2008
Final Announcement September 2008
Payment November 2008
Results
Interim Announcement 7 February 2008
Preliminary statement for full year Announcement September 2008
Report and Accounts Circulated September 2008
Annual General Meeting To be held October 2008
Exchange rates
The exchange rates used for conversion to sterling were as follows:
6 months to 6 months to Year ended
31 Dec 2007 31 Dec 2006 30 June 2007
Average rate:
Euro 1.44 1.48 1.48
Polish Zloty 5.38 5.77 5.74
Czech Koruna 39.6 41.7 41.8
Hungarian Forint 364.6 396.6 384.2
Closing rate:
Euro 1.36 1.48 1.49
Polish Zloty 4.90 5.68 5.59
Czech Koruna 36.2 40.9 42.7
Hungarian Forint 344.2 373.1 365.0
This information is provided by RNS
The company news service from the London Stock Exchange
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