Interim Results
Paterson Zochonis PLC
12 February 2002
PATERSON ZOCHONIS plc
INTERIM ANNOUNCEMENT
Highlights
* Operating profits have increased by 22.7% to £21.2m from
£17.3m
* Net investment income has dropped to £1.3m from £4.8m with
losses being incurred on the equity investment portfolio in the
first half year
* Pre-tax profits have increased to £22.5m from £22.1m
* Net funds have decreased to £97.1m from £120.9m at 31st May
2001 with £11.8m being spent on the share buy back programme in
the period
* Diluted earnings per share increased by 9.1% to 30.80p from
28.24p at 30th November 2000
* The interim dividend has been raised by 7.7% to 7.00p per
share from 6.50p per share
Europe
In the UK, the relaunch of the Imperial Leather range has
continued, with an extensive media campaign which in 2002 will
focus around the Manchester Commonwealth Games. The range has
been extended with the introduction of Imperial Leather Shower
Bars, Foamburst Foaming Handwash, and Foamburst Scent-sations
Shower Gel. The Carex range has also been expanded with Gentle
Foaming Handwash and Family Soft Wipes. Profitability has
improved as these new products are brought to market and the
factory efficiency programme progresses.
Eastern Europe has had a difficult period, particularly in Poland
where the market remains extremely competitive. The strategy of
support and development of the major brands continues, whilst a
restructuring of the sales and distribution divisions is put in
place.
Greece has had a strong performance with sales and profits up on
the previous year.
Asia
Overall profitability in the region has increased significantly.
Indonesia has achieved substantial growth which has been won
through its strategy of developing the distribution network and
creating new extensions to the already successful brand ranges.
Investment is being made to increase the capacity of the Jakarta
factory.
Thailand and Australia have both improved turnover and
profitability.
The two smaller units have had contrasting results with China
continuing to incur losses and the Middle East seeing an
improvement in profit.
Africa
The progress being made by the civilian government in Nigeria is
leading to much improved consumer spending power and in recent
months a relatively stable currency. Our subsidiary has performed
strongly in this market with sharp rises in turnover and
profitability. This growth, as expected, necessitated an increase
in capital expenditure to improve the capacity of our factories.
Investment has also been necessary to finance working capital,
particularly the relatively long stock cycle.
The results in the other African units, Ghana, Kenya and Cameroun
are similar to last year.
PATERSON ZOCHONIS plc
Investments
The overall fall in world stock markets impacted on investment
income in the first half. Although the equity exposure was
reduced to £12.5m from £23.6m, losses of £0.6m were suffered
against profits of £3.1m last year. There are indications of
improvement in 2002. The low level of interest rates has also
impacted adversely on deposit income.
Purchase of own shares
The company has continued successfully to purchase its own shares
in the market with the objective of improving earnings per share.
In the six months to 30th November, 1,303,000 ordinary and
1,154,000 'A' ordinary shares were purchased at a total cost of
£11.8m.
Dividends
An interim dividend of 7.00p per share for the half-year to 30th
November 2001 (2000 - 6.50p) has been declared, payable on 8th
April 2002 to ordinary and 'A' ordinary shareholders on the
register on 8th March 2002.
£000 £000
Profit for the period 13,957
Dividends:
Preference shares
7.5% cumulative (29)
10% cumulative (356)
------- (385)
Ordinary and 'A' ordinary shares
Interim at 7.00p (2,987)
Adjustment for May 2001 proposed final
at 17.25p on cancelled shares 357
-------
Profit retained £10,942
________
Proposed change of name
Following the purchase of Cussons Group in 1975, the PZ Group has
grown its original base in Africa to cover the Far East, the
Middle East and Eastern Europe, where generally it is known as
Cussons. It has also traditionally operated as Cussons in the UK,
Australia and Kenya. The board now proposes that the group should
be renamed PZ Cussons Plc with effect from 31st May 2002, to unify
all its companies with one identity and at the same time to
modernise the corporate image. An EGM will be held on 11th March
2002 at which the holders of ordinary voting shares will be asked
to approve the change to the name of the company.
Outlook
The company maintains a strong balance sheet with adequate funds
to finance the opportunities for growth. The strength of the
financial position also gives the flexibility to purchase its own
shares and to invest in any suitable acquisition or joint venture
in its target markets.
The focus remains to improve operating profitability and to pursue
growth in all its units, in particular Nigeria and Indonesia.
12th February 2002
PATERSON ZOCHONIS plc
Consolidated Profit and Loss Account for the half year to 30th November 2001
Half-year Half-year
to 30th to 30th Year to
November November 31st May
2001 2000 2001
£000 £000 £000
Turnover £212,798 £200,220 £406,062
________ ________ ________
Operating profit 21,242 17,317 36,859
Net investment income /
interest payable 1,285 4,819 6,935
-------- -------- --------
Profit before taxation 22,527 22,136 43,794
Taxation
United Kingdom (2,943) (3,210) (3,864)
Overseas (4,288) (3,849) (9,700)
------- ------- -------
(7,231) (7,059) (13,564)
------- ------- -------
Profit after taxation 15,296 15,077 30,230
Equity minority interests (1,339) (1,291) (2,973)
------- ------- -------
Profit attributable to
members of the company 13,957 13,786 27,257
Dividends (3,015) (3,469) (11,628)
------- ------- -------
Profit for the period
retained £10,942 £10,317 £15,629
_______ _______ _______
Basic earnings per
ordinary and 'A'
ordinary share of 10p 30.98p 28.24p 56.32p
Diluted earnings per
ordinary and 'A'
ordinary share of 10p 30.80p 28.24p 56.12p
Dividend per ordinary
and 'A' ordinary
share of 10p 7.00p 6.50p 23.75p
PATERSON ZOCHONIS plc
Consolidated Balance Sheet for the half year to 30th November 2001
30th 30th
November November 31st May
2001 2000 2001
(restated) (restated)
£000 £000 £000
Fixed assets
Intangible assets
Goodwill 497 525 511
Negative goodwill (2,454) (2,541) (2,519)
------- -------- -------
(1,957) (2,016) (2,008)
Tangible assets 159,589 175,409 167,849
Investments 542 - -
------- -------- -------
158,174 173,393 165,841
------- -------- -------
Current assets
Stocks 109,245 98,244 92,066
Debtors 63,077 63,511 59,594
Investments 103,488 107,788 131,290
Cash at bank and in hand 9,187 11,729 8,586
------- -------- -------
284,997 281,272 291,536
Creditors (due within one year)
Bank loans and overdrafts (15,529) (17,899) (19,015)
Others (93,060) (89,979) (100,327)
------- -------- -------
(108,589) (107,878) (119,342)
------- -------- -------
Net current assets 176,408 173,394 172,194
------- -------- -------
Total assets less current
liabilities 334,582 346,787 338,035
Creditors (due after one year) (18,921) (20,149) (19,206)
Provisions for liabilities and
charges (14,872) (12,733) (14,948)
------- -------- -------
Net assets £300,789 £313,905 £303,881
________ ________ ________
Capital and reserves
Equity ordinary share capital 4,309 4,744 4,555
Non-equity preference share capital 7,898 7,898 7,898
------- -------- -------
Total called up share capital 12,207 12,642 12,453
Reserves attributable to equity
interests 243,372 254,955 248,502
------- -------- -------
Total shareholders' funds 255,579 267,597 260,955
Equity minority interests 45,210 46,308 42,926
------- -------- -------
£300,789 £313,905 £303,881
________ ________ ________
PATERSON ZOCHONIS plc
Group Cash Flow Statement for the half year to 30th November 2001
Half-year Half-year
to 30th to 30th Year to
November November 31st May
2001 2000 2001
£000 £000 £000
Cash flow from operating activities 6,156 26,665 66,705
Returns on investments and servicing of
finance 577 4,675 5,067
Taxation (5,320) (5,630) (14,454)
Capital expenditure and financial
investment (5,178) (3,592) (4,773)
Acquisitions and disposals (708) 1,283 1,488
Equity dividends paid (7,479) (7,283) (10,305)
------ ------ ------
Cash (outflow) / inflow before use of
liquid resources and financing (11,952) 16,118 43,728
Management of liquid resources 27,937 (4,959) (29,649)
Financing (11,221) (5,642) (14,561)
------ ------ ------
Increase / (decrease) in cash in the
period £4,764 £5,517 £(482)
______ _______ ______
Reconciliation of net cash flow to
movement in net funds
Increase / (decrease) in cash in the
period 4,764 5,517 (482)
Cash (inflow) / outflow from financing (552) 5,642 6,723
Cash (inflow) / outflow from management
of liquid resources (27,937) 4,959 29,649
------ ------ ------
Change in net funds resulting from cash
flows (23,725) 16,118 35,890
Currency retranslation 10 (123) (652)
------ ------ ------
Movement in net funds in the period (23,715) 15,995 35,238
Opening net funds 120,861 85,623 85,623
------ ------ ------
Closing net funds £97,146 £101,618 £120,861
______ _______ ______
Reconciliation of operating profit to
operating cash flows
Operating profit 21,242 17,317 36,859
Amortisation of goodwill (51) (18) (70)
Depreciation and adjustments on
disposals 8,779 8,528 13,932
Provisions (190) 1,001 4,647
Stocks (16,457) (4,347) (3,645)
Debtors (2,301) (4,421) 98
Creditors (4,866) 8,605 14,884
------ ------ ------
Net cash flow from operating activities £6,156 £26,665 £66,705
______ _______ ______
PATERSON ZOCHONIS plc
Group Cash Flow Statement continued
Analysis of net funds
At 31st At 30th
May Cash Exchange November
2001 flow difference 2001
£000 £000 £000 £000
Cash in hand and at bank 8,586 603 (2) 9,187
Overdrafts (8,837) 4,161 (55) (4,731)
-------
4,764
Loans due within one year (10,178) (552) (68) (10,798)
Deposits 107,658 (16,953) 135 90,840
Other current asset
investments 23,632 (10,984) - 12,648
-------
(27,937)
------- ------- ------- -------
£120,861 £(23,725) £10 £97,146
________ ________ ________ ________
Statement of Total Recognised Gains and Losses
Half-year Half-year
to 30th to 30th Year to
November November 31st May
2001 2000 2001
(restated) (restated)
£000 £000 £000
Profit for the period 13,957 13,786 27,257
Currency retranslation 465 725 (3,707)
Deficit on revaluation (note 1) (5,010) - -
Prior year adjustment (note 2) - (768) (768)
------ ------ ------
Total recognised gains and losses
for the period £9,412 £13,743 £22,782
______ _______ _______
Reconciliation of Movement in Shareholders' Funds
Half-year Half-year
to 30th to 30th Year to
November November 31st May
2001 2000 2001
(restated) (restated)
£000 £000 £000
Total recognised gains and losses
for the period 9,412 13,743 22,782
Dividends (3,015) (3,469) (11,628)
Purchase of own shares (11,773) - (7,522)
------ ------ ------
Net (decrease) / increase in
shareholders' funds (5,376) 10,274 3,632
Opening shareholders' funds 260,955 257,323 257,323
------ ------ ------
Closing shareholders' funds £255,579 £267,597 £260,955
_______ _______ _______
PATERSON ZOCHONIS plc
NOTES
1.In accordance with the requirements of Financial Reporting
Standard 15, 'Tangible Fixed Assets', an interim valuation of the
group's main properties was carried out at 30th November 2001 by
independent property consultants. The valuation resulted in a net
charge against revaluation reserves of £5,010,000 and a
corresponding reduction in the carrying value of the assets.
2.A prior year adjustment of £768,000 has been made in respect
of additional deferred tax provided on the adoption of Financial
Reporting Standard 19, 'Deferred Tax'. In addition, deferred tax
assets and liabilities previously shown net are now included in
debtors or provisions as appropriate. Comparative figures have
been restated accordingly. The implementation of FRS 19 had no
material effect on the profit and loss account in either the
current or the prior year, consequently prior year taxation
charges have not been restated.
3.The half-year figures are unaudited. The figures for the
year ended 31st May 2001 are an abridged statement of the group
audited accounts for that year. The audited accounts, containing
an unqualified audit report, have been delivered to the Registrar
of Companies.
Enquires 12th February 2002
Paterson Zochonis plc
0161 491 8000 Graham Calder
(Between 9.00 am and 5.15 pm) Finance Director
Weber Shandwick / Square Mile Terry Garrett / Josh Royston
020 7950 2800
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