Pz Cussons Regulatory News (PZC)

31 Jul 2007 07:01

PZ CUSSONS PLC31 July 2007 31st July 2007 PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR TO 31ST MAY 2007 PZ Cussons Plc, the leading international consumer products group in personaland non-personal care categories, announces its preliminary results for the yearended 31st May 2007. Results (before exceptional items1) YE YE % change 31/05/07 31/05/06 Revenue £577.9m £539.9m + 7%Operating profit £66.2m £60.2m + 10%Profit before tax £68.3m £63.6m + 7%Adjusted basic earnings per share 9.78p 8.90p + 10% Statutory resultsOperating profit £65.8m £57.8m + 14%Profit before tax £67.9m £61.2m + 11%Basic earnings per share 9.99p 8.33p + 20%Dividend per share 4.27p 3.88p + 10%Net funds2 £60.3m £51.9m + 16% 1 Exceptional items are detailed in note 2. 2 Net funds, above and hereafter, is defined as cash, short-term deposits andcurrent asset investments less borrowings. Highlights • Strong trading performance, particularly in Nigeria and all European units • Significant growth in our white goods business with Haier in Nigeria with further expansion of the product range • Significant growth in our nutrition joint venture with Glanbia in Nigeria with successful new product launches • The opening of the first Nigerian world class standard electrical retail superstore. HT Cool World opened in Lagos showcasing the range of quality 'Haier-Thermocool' brand electrical appliances • No. 1 position achieved in personal wash category in UK following successful brand renovation programme • Successful roll-out of the Charles Worthington haircare brand into the UK nationwide trade • Construction commenced of a new £26m Innovation Centre in Manchester, incorporating a liquids manufacturing facility, a Fragrance Development Centre and a Research and Development Centre • Completion of ten for one share split Commenting today, Anthony Green (Chairman) said: "2007 has been another year of considerable progress for PZ Cussons. Revenue andprofits have improved as a result of good trading performance, particularly inNigeria and the UK. In our main market Nigeria, our electrical goods andnutrition businesses have delivered strong growth in the year and continue toadd diversity to our consumer product portfolio. In the UK, our successful brandrenovation programme has given us the market leading position in the personalwash category. During the year, we have launched important new capital projects. We areincreasing manufacturing capacity in Nigeria, and have announced plans for amajor new Innovation Centre in the UK which will act as a 'Personal Wash Centreof Excellence' for the whole Group. Our focus remains on growth and margin improvement in selected markets. Overallperformance since the year end has been in line with management expectations." Press Enquiries PZ Cussons Graham Calder (Deputy Chairman) Brandon Leigh (Finance Director) Hogarth Partnership John Olsen, Sarah MacLeod, Sarah Richardson On 31st July and 1st August 2007 c/o Hogarth on 020 7357 9477.After 1st August to Graham Calder on 0161 491 8000.An analysts' presentation will be held on 31st July 2007 at 9.30am at theoffices of JP Morgan Cazenove, 20 Moorgate, London, EC2R 6DA. Overview PZ Cussons is pleased to report another year of considerable progress for thetwelve months to 31st May 2007. Profit before tax and exceptional items rose 7%to £68.3m (2006: £63.6m) on revenue up 7% to £577.9m (2006: £539.9m). Afterexceptional items reported profit before tax increased by 11% to £67.9m (2006:£61.2m). Basic earnings per share were 9.99p (2006: 8.33p). Adjusted forexceptional items, earnings per share rose 10% to 9.78p (2006: 8.90p). As at31st May 2007 the Group had net funds of £60.3m (2006: £51.9m). The board is recommending a final dividend of 3.27p per share (2006: 2.95p) togive a total dividend for the year of 4.27p per share (2006: 3.88p), a 10%increase for the year. Subject to approval at the annual general meeting, thefinal dividend will be paid on 26th September 2007 to shareholders on theregister at the close of business on 24th August 2007. Trading performance - overview Operating profit before exceptional items rose by 10% to £66.2m (2006: £60.2m)on revenue up 7% to £577.9m (2006: £539.9m). Overall, strong tradingperformance, particularly in Nigeria and in all European units, has counteredthe impact of the weak US dollar and continued increases in the price of certaincommodities. Mature markets In the European units, successful brand development has resulted in improvedmarket shares in the core product categories and consequently higher turnoverand profitability versus the prior year. In Australia, margins have beenimpacted by a highly competitive detergent market, although a strong new productpipeline provides a solid base from which to grow. Emerging markets The Group's main market, Nigeria, has continued to experience strong growth,particularly from the newer product categories of electrical goods andnutrition, although a weak US dollar has impacted sterling margins. The Group'sother key emerging market, Indonesia, has grown turnover and profitabilityversus the prior year through successful development of the babycare range. Financial position - overview The Group's balance sheet remains strong with net funds at 31st May 2007 of£60.3m (2006: £51.9m). Improvements in the Group's supply chain, particularly inNigeria, have benefited net working capital levels. This has resulted in highercash generated from operations and enabled Group net funds to be maintained at asimilar level to the prior year. Major projects Updates on major projects are as follows: In the UK, as announced last year, the Group is constructing a new, purposebuilt liquids factory to provide additional capacity to meet the long-termsupply needs of our growing UK business. In March 2007, the Group announced thatthe scope of this project was being extended to cover construction of a newInnovation Centre that will become the 'Personal Wash Centre of Excellence' forthe Group. The Centre will incorporate the new manufacturing facility, a newResearch and Development Centre and a Fragrance Development Centre. The newCentre will open in mid 2008 and costs of the total project are estimated at£26m which should largely be funded by the proceeds from the planned sale of theUK factory sites in Nottingham, Manchester and Ellesmere Port. In Nigeria, as previously announced, the current milk factory is being extendedand a second factory is planned for the manufacture of further nutritionalproducts. Construction of the current factory extension, which will providefurther capacity for the production of powdered and evaporated milk, is onschedule with the increased capacity expected to come on stream at the end of2007. The scope and design of the second factory has now been finalised andconstruction will commence later this year with completion scheduled for early2009. The Group's share of the cost of both projects will be approximately £10min aggregate. Regional reviews Performance by region Operating profit before Revenue (£m) exceptional items(1) (£m) 2007 2006 2007 2006 Africa 252.9 211.8 26.1 25.1 Asia 107.2 113.9 9.8 12.5 Europe 217.8 214.2 30.3 22.6 ------- ------- ------- -------- Total 577.9 539.9 66.2 60.2 ------- ------- ------- -------- 1 Exceptional items are detailed in note 2. Africa Overall performance in Nigeria has been strong, with limited disruption from theelection process which took place in April 2007. Revenue and profit in localcurrency showed increases over the prior year of 30% and 12% respectively. TheNigerian currency remained stable against the dollar during the year, howeverthe results are affected on translation to sterling as a result of the weakdollar. The business is separated into the following business units: • Soaps and detergents • Health and beauty • Electrical goods (HPZ, a joint venture with Haier) • Food and nutrition (Nutricima, a joint venture with Glanbia) • Supply chain and distribution Soaps and detergents performed well in the year although the market remainscompetitive with increased levels of supply and pressure on margins throughhigher commodity costs. However, brand positioning remains strong and wassupported in the year with significant new product launches including ElephantGold detergent and extensive brand renovation of all of the category leadingbrands including Zip and Jet (detergents), and Premier, Canoe and Duck (soaps).Savings from in-house power generation as a result of the investment made lastyear have helped to counter cost increases elsewhere within the business. Sales in Health and beauty grew year on year predominantly through new productlaunches such as Super Robb mentholated rub and relaunches of our existingbrands such as Venus hair relaxer. The Venus relaunch was the first productlaunch under the pan-regional project to leverage the strength of our brandsacross the African territories. A review of the portfolio of brands in thisdivision has now been concluded in order to prioritise those that will betargeted for growth in the future. These include Robb (medicaments), Venus, Joyand Carex (personal care) and Cussons Baby. During the year manufacturingoperations for this division were reviewed, resulting in the transfer ofproduction for certain products to Ghana. The electrical goods business experienced another year of significant growthwith the business strengthening its number one market position in both therefrigerator and freezer categories. Growth is also being achieved in the otherproduct categories including air conditioners, televisions, DVD players, washingmachines, dishwashers, microwave ovens and water heaters. Sales of laptopcomputers and mobile phones commenced early in the new financial year. In June2007, HPZ was proud to open a showroom in Lagos being the first 'world classstandard' electrical retail outlet of its kind to be opened in Nigeria. Named'HT Cool World', the showroom will allow the full range of electrical productsto be sold to both retail and commercial customers to complement sales throughexisting distribution channels. The joint venture with Glanbia continues to progress well with turnoverconsiderably ahead of last year following a number of successful new productlaunches including Coast milk, Nunu flavoured powdered milk and Powerfist energydrinks. While the rising cost of milk across global markets has impacted marginsin the short-term, selling prices in the Nigerian market are now moving upwards.There will be further new product launches in the new financial year and furthercapacity for existing products available at the end of 2007 on completion of thecurrent factory extension. A number of significant initiatives in Supply chain and distribution have beenrolled out in the year including: • Completion of a second phase of upgrades to the nationwide depot network • Opening of two regional distribution centres to enable faster supply to the depots and a lower stockholding at each individual depot • Expansion of the dedicated haulage fleet which now numbers in excess of sixty 'megatrucks' • Improvements to the clearing and forwarding operation to assist in the reduction of lead times of supply into Nigeria During the course of the new financial year, a wider review of the traditionalNigerian manufacturing base will be undertaken to ensure facilities areappropriately structured to cater for future growth plans. Revenue and profitability in the other African territories, Ghana and Kenya, areahead of last year mainly as a result of growth from relaunches of existingproducts and the introduction of new products, such as Nunu milk and HPZelectrical goods, which commenced sales in Ghana during the year. Asia In Australia, the market for branded detergent products has become significantlymore competitive, principally as a result of the introduction of private labelranges by the prominent retailers. Consequently sales and margins have beenimpacted by the effect of lower selling prices and additional promotionalsupport costs. A number of initiatives are being actioned in order to respond tothese market developments. Firstly, the business's extensive new productpipeline has been prioritised and a significant number of innovative newproducts are being launched across the brand portfolio of Radiant and Duo(clothes care), Morning Fresh (dishwash) and Pure (personal wash) in the earlypart of the new financial year. Secondly, cost reduction initiatives have beenaccelerated supported by a cross functional group team in order to restoremargins to previous levels. The fundamentals of the Australian business remainsound and the Group's strength of local market knowledge is expected to assistin returning this business to growth in the coming year. Sales and profitability in Indonesia improved in the year as a result ofsuccessful development of the baby range, resulting in a strengthening of thebrand's number one position in the Indonesian market. During the year, the babyrange was extended with the launch of a Baby Needs range of products includingbottles, plates and feeding spoons. The core Cussons Baby range was alsocomplemented by the launch of a basics range called Cussons Sahaja to target afurther segment of the population. Further range extensions are also planned forthe new financial year. Other brands such as Imperial Leather and CussonsExtreme continue to perform well. Improvements to the nationwide depot networkhave continued in the year with rationalisation of depot operations in Jakartanow complete. In the other Asian units, Thailand, Malaysia and the Middle East, revenue andprofitability were maintained at the previous year's level. Europe In the UK, performance has exceeded expectations as a result of a successfulprogramme of brand renovation across the portfolio, resulting in the achievementof the number one position in the personal wash category. The Imperial Leatherrange was expanded during the year with new variants and the launch of limitededition shower and bath products. Consumer loyalty to the Carex range remainshigh and growth was achieved through the introduction of new variants and a'Hand Carexperts' campaign which was run both on television and in targetedprint publications. The Original Source brand, which was completely renovatedlast year, has grown as a result of the introduction of new products such asbody scrubs and an innovative range of skin food shower and bath products. The Charles Worthington haircare brand was successfully rolled out to thenationwide trade during the year with a very positive response from both thetrade and consumers. Towards the end of the financial year, the core CharlesWorthington Results range was completely renovated with exciting new graphicsand is being supported in the new financial year with the first CharlesWorthington TV campaign. In the UK, the supply chain focus is largely on the new manufacturing facilitywhich will begin operation in mid 2008 as part of the new Innovation Centre.Negotiations for the sale of the Manchester and Ellesmere Port sites are at anadvanced stage. Completion of the sale of the Nottingham site, which is subjectto a conditional contract, is expected by the end of the 2008 calendar year.During the year, a UK restructuring programme was undertaken both to prepare forthe new Innovation Centre and as part of a wider move to build up overseasresource in areas previously supported by head office. An exceptional chargerelating to this programme has been made in the year. Sales in Poland have been strong against a competitive background with both the'E' detergent brand and Luksja personal wash brand performing well. The 'E'range was renovated in the year with new variants of both powders and fabricconditioners and was expanded into household cleaning products in the secondhalf with the launch of 'E Boom'. The Luksja range of soaps and shower gels wasalso expanded in the year and achieved market leader position based on volumeshare. During the year, the head office and warehousing site in Warsaw was soldtherefore enabling the business to operate from a reduced fixed cost base and tofocus on margin improvement initiatives at the Wroclaw factory site. Sales and profitability in Greece have improved in the year following therebranding and relaunch of the core Minerva brand. Our share of the olive oilmarket has increased and the portfolio of products has been strengthened withthe launch of a premium range of olive oil in tins. Further expansion of theproduct range continues with successful launches of Minerva So Real butter andMinerva Benecol cheese products. Exceptional items A net operating charge of £0.4m (2006: £2.4m) for exceptional items has beenmade, comprising UK restructuring costs and profit on disposal of fixed assets.Further details are given in note 2. Taxation The effective tax rate before exceptional items was in line with the previousyear at 29.0% (2006: 29.2%). Share split The share split of ten shares per one share previously in issue was approved atthe 2006 annual general meeting and therefore all figures affected have beenrestated accordingly. Outlook The Group's focus on selected markets, leading brands and first classdistribution continues to provide a clear strategy for the future. Over the nextyear, the Group will be pursuing growth in all existing businesses andinvestigating further exciting new opportunities. Nigeria remains our key market for future growth and we are encouraged by thecontinued stable economic and political climate following the recent elections. The weak dollar and continuing cost increases of a large number of the Group'skey raw materials will provide a challenge going forward, which will bemitigated by the Group focus on its margin improvement programme. The balance sheet remains strong with all projects currently being financed fromGroup net funds. Overall performance since the year end has been in line with managementexpectations. Consolidated income statement for the year to 31st May 2007 Notes Before Exceptional Total Before Exceptional Total exceptional items 2007 exceptional items 2006 items (note 2) items £m £m £m £m £m £m-------------------- ------ -------- -------- -------- -------- -------- -------Revenue 1 577.9 - 577.9 539.9 - 539.9 Cost of sales (365.9) - (365.9) (330.9) 1.0 (329.9) -------------------- ------ -------- -------- -------- -------- -------- ------- Gross profit 212.0 - 212.0 209.0 1.0 210.0 Selling and distribution expenses (86.1) - (86.1) (86.7) (0.7) (87.4) Administrative expenses (58.9) (0.4) (59.3) (62.0) - (62.0) Other costs - - - - (2.7) (2.7) Share of results of joint venture (0.8) - (0.8) (0.1) - (0.1) -------------------- ------ -------- -------- -------- -------- -------- -------Operating profit 1 66.2 (0.4) 65.8 60.2 (2.4) 57.8 Finance income 2.8 - 2.8 4.3 - 4.3 Finance costs (0.7) - (0.7) (0.9) - (0.9) -------------------- ------ -------- -------- -------- -------- -------- -------Net finance income 3 2.1 - 2.1 3.4 - 3.4 -------------------- ------ -------- -------- -------- -------- -------- -------Profit before taxation 68.3 (0.4) 67.9 63.6 (2.4) 61.2 Taxation 4 (19.8) 1.3 (18.5) (18.6) - (18.6) -------------------- ------ -------- -------- -------- -------- -------- ------- Profit for the year 48.5 0.9 49.4 45.0 (2.4) 42.6 -------------------- ------ -------- -------- -------- -------- -------- -------Attributable to: Equity holders of the parent 41.5 0.9 42.4 37.8 (2.4) 35.4 Minority interest 7.0 - 7.0 7.2 - 7.2 -------------------- ------ -------- -------- -------- -------- -------- ------- 48.5 0.9 49.4 45.0 (2.4) 42.6 -------------------- ------ -------- -------- -------- -------- -------- -------Basic EPS (p) 6 9.99 8.33 Diluted EPS (p) 6 9.89 8.23 -------------------- ------ -------- -------- -------- -------- -------- -------Adjusted basic EPS (p) 6 9.78 8.90 Adjusted diluted EPS (p) 6 9.68 8.79 -------------------- ------ -------- -------- -------- -------- -------- ------- The results shown above for both 2007 and 2006 relate to continuing operations. Consolidated balance sheet as at 31st May 2007 31st May 2007 31st May 2006 £m £m-------------------------------- ------------ -----------AssetsNon-current assetsGoodwill and other intangible assets 54.2 54.0Property, plant and equipment 143.2 140.1Investments in joint ventures (1.7) -Other investments 0.8 0.8Receivables 0.1 0.1Non-current assets held for sale 2.6 1.3Retirement benefit surplus 23.1 23.4-------------------------------- ------------ ----------- 222.3 219.7-------------------------------- ------------ -----------Current assetsInventories 150.4 142.7Receivables and prepayments 98.3 87.2Investments 12.8 2.2Cash and short-term deposits 53.3 65.8Current taxation receivable 3.7 2.7-------------------------------- ------------ ----------- 318.5 300.6-------------------------------- ------------ -----------Total assets 540.8 520.3-------------------------------- ------------ -----------LiabilitiesCurrent liabilitiesBorrowings (5.8) (14.0)Trade and other payables (95.7) (83.8)Current taxation payable (11.2) (13.3)Provisions (7.3) (1.9)-------------------------------- ------------ ----------- (120.0) (113.0)-------------------------------- ------------ -----------Non-current liabilitiesBorrowings - (2.1)Other liabilities (1.4) (3.6)Deferred tax liabilities (20.1) (24.6)UK retirement benefit obligation (37.2) (30.5)Provisions (2.7) (8.1)-------------------------------- ------------ ----------- (61.4) (68.9)-------------------------------- ------------ -----------Total liabilities (181.4) (181.9)-------------------------------- ------------ -----------Net assets 359.4 338.4-------------------------------- ------------ -----------EquityOrdinary share capital 4.3 4.3Capital redemption reserve 0.7 0.7Revaluation reserve 29.6 27.3Other reserve (3.0) (2.9)Currency translation reserve 0.9 3.3Retained earnings 279.3 259.3-------------------------------- ------------ -----------Equity attributable to equity holders of the 311.8 292.0parentEquity minority interest 47.6 46.4-------------------------------- ------------ -----------Total equity 359.4 338.4-------------------------------- ------------ ----------- Consolidated cash flow statement for the year to 31st May 2007 Year to Year to 31st May 31st May 2007 2006 £m £m------------------------------- ---------- ----------Operating activitiesCash generated from operations 58.7 35.8Taxation (19.3) (18.3)------------------------------- ---------- ----------Net cash flow from operating activities 39.4 17.5------------------------------- ---------- ---------- Investing activitiesInvestment income received 3.1 8.5Purchase of property, plant and equipment (27.5) (25.5)Sale of property, plant and equipment 12.6 10.2Purchase of intangible assets - (0.2)Proceeds from disposal of subsidiary 2.5 -Net cash balances disposed of with (1.0) (0.4)subsidiary undertakingPurchase of non-current asset investments - (0.3)(Purchase) / sale of current asset (10.4) 14.0investmentsLoans to joint ventures (0.5) -------------------------------- ---------- ----------Net cash flow from investing activities (21.2) 6.3------------------------------- ---------- ---------- Financing activitiesInterest paid (0.7) (0.9)Preference dividends paid - (0.1)Dividends paid to minority shareholders in (2.3) (2.5)subsidiary companiesPurchase of shares for ESOT (0.5) (2.6)Ordinary dividends paid (16.7) (15.2)Net decrease in short-term borrowings (1.9) (3.4)Cash received from minority shareholders in - 5.3respect of rights issueRepayment of preference share capital - (15.5)------------------------------- ---------- ----------Net cash flow from financing activities (22.1) (34.9)------------------------------- ---------- ---------- Net decrease in cash and cash equivalents (3.9) (11.1)Cash and cash equivalents at the beginning 53.9 65.4of the yearEffect of foreign exchange rates 0.1 (0.4)------------------------------- ---------- ----------Cash and cash equivalents at the end of the 50.1 53.9year------------------------------- ---------- ---------- Reconciliation of profit before tax to cash generated from operations 2007 2006 £m £m-------------------------------- ---------- --- -----------Profit before tax 67.9 61.2Adjustment for finance income (2.1) (3.4)-------------------------------- ---------- --- -----------Operating profit 65.8 57.8-------------------------------- ---------- --- -----------Depreciation and adjustments on disposals 7.3 10.1Share of results from joint ventures 0.8 -Loss on sale of operations 0.5 -Add back charge for shares purchased for ESOT 0.4 0.8Impairment of tangible fixed assets - 3.3-------------------------------- ---------- --- ----------- Operating cash flows before movements in 74.8 72.0working capitalMovements in working capital:Inventories (12.6) (14.0)Receivables (11.0) (18.2)Payables 7.2 (1.9)Provisions 0.3 (2.1)-------------------------------- ---------- --- ----------- Cash generated from operations 58.7 35.8-------------------------------- ---------- --- ----------- Consolidated statement of total recognised income and expense for the year to 31st May 2007 2007 2006 £m £m--------------------------------------- -------- --------Actuarial losses on defined benefit pension schemes (8.3) (3.8)Exchange differences on translation of foreign operations (4.0) (2.4)Taxation on items taken directly to equity 4.1 1.8 Net expense recognised directly in equity (8.2) (4.4)Profit for the year 49.4 42.6Adoption of IAS 39 - 2.0--------------------------------------- -------- -------- Total net income and expense recognised for the year 41.2 40.2--------------------------------------- -------- -------- Attributable to:Equity holders of the parent 35.9 33.2Minority interests 5.3 7.0--------------------------------------- -------- -------- NOTES 1 Segmental analysis Geographic segments 2007 Africa Asia Europe Eliminations Total £m £m £m £m £m--------------------------- -------- -------- -------- -------- -------Total gross segment revenue 252.9 120.4 372.1 (167.5) 577.9Inter segment revenue - (13.2) (154.3) 167.5 ---------------------------- -------- -------- -------- -------- ------- Revenue 252.9 107.2 217.8 - 577.9Segmental operating profit 26.1 9.8 30.3 - 66.2before exceptional itemsExceptional items (note 2) (0.5) - 0.1 - (0.4)--------------------------- -------- -------- -------- -------- ------- Segmental operating profit 25.6 9.8 30.4 - 65.8--------------------------- -------- -------- -------- -------- ------- 2006--------------------------- -------- -------- -------- -------- -------Total gross segment revenue 211.9 116.8 355.4 (144.2) 539.9Inter segment revenue (0.1) (2.9) (141.2) 144.2 ---------------------------- -------- -------- -------- -------- ------- Revenue 211.8 113.9 214.2 - 539.9Segmental operating profit 25.1 12.5 22.6 - 60.2before exceptional itemsExceptional items (0.5) (0.2) (1.7) - (2.4)--------------------------- -------- -------- -------- -------- ------- Segmental operating profit 24.6 12.3 20.9 - 57.8--------------------------- -------- -------- -------- -------- ------- Business segments Revenue by business segment 2007 2006 £m £m------------------------------------ ------------ -------------Toiletries and household 431.6 435.8Other 146.3 104.1------------------------------------ ------------ ------------- Total 577.9 539.9------------------------------------ ------------ ------------- 2 Exceptional items The Group has adopted a columnar income statement format which seeks tohighlight significant items within the Group's results for the period. Suchitems are considered by the directors to be exceptional in nature rather thanbeing representative of the underlying trading of the Group, and may includesuch items as fundamental restructuring costs, material impairments ofnon-current assets and profit or loss on disposal or termination of operations.The directors believe that the separate disclosure of these items is relevant toan understanding of the Group's financial performance. Year to 31st May 2007 Profit before Profit after taxation Taxation taxationExceptional items included Effect £m £m £mwithin operating profit: on: ---------------------------- ------- --------- -------- --------Restructuring of UK operations (5.1) 1.5 (3.6)(i)Profit on disposal of fixed 4.7 (0.2) 4.5assets (ii) ---------------------------- ------- --------- -------- --------Total (0.4) 1.3 0.9---------------------------- ------- --------- -------- -------- (i) Restructuring of UK operations A significant restructuring of the UK business, made up of redundancy and otherassociated restructuring costs. (ii) Profit on disposal of fixed assets During the year the sale of the Polish head office in Warsaw resulted in anexceptional gain on disposal of £5.2 million, while a net loss of £0.5 millionwas realised in relation to the sale of the Cameroun business, due torationalisation of the Group's smaller operations. 3 Net finance income ----------------------------------------- ------- ------- 2007 2006 £m £m----------------------------------------- ------- -------Current asset investment income:Net investment gains 0.1 2.7Interest and dividends receivable 2.7 1.6----------------------------------------- ------- ------- 2.8 4.3Interest payable on bank loans and overdrafts (0.7) (0.9)----------------------------------------- ------- ------- Total 2.1 3.4----------------------------------------- ------- ------- 4 Taxation ----------------------------------------- ------- ------- 2007 2006 £m £m----------------------------------------- ------- -------Current tax 16.8 18.1Deferred tax 1.7 0.5----------------------------------------- ------- ------- Total tax charge 18.5 18.6----------------------------------------- ------- ------- UK corporation tax is calculated at 30% (2006: 30%) of the estimated assessableprofit for the year. Taxation for other jurisdictions is calculated at the ratesprevailing in the respective jurisdictions. The tax charge for the year can be reconciled to the profit per the consolidatedincome statement as follows: 2007 2006 £m £m----------------------------------------- ------- ------- Profit before tax 67.9 61.2----------------------------------------- ------- ------- Tax at the UK corporation tax rate of 30% (2006: 30%) 20.4 18.4Tax effect of revenue / expenses that are not (taxable) / (0.4) 1.3deductible in determining taxable profitTax effect of timing differences on which deferred tax is not - (0.2)providedTax effect of utilisation of tax losses and other assets not (1.1) (0.8)recognised in deferred taxEffect of different tax rates of subsidiaries in overseas 0.4 (0.7)jurisdictionsTax effect of share of results of joint ventures 0.2 -Sale of properties (0.3) -Prior period adjustment (0.7) 0.6----------------------------------------- ------- ------- Tax charge for the year 18.5 18.6----------------------------------------- ------- ------- 5 AGM and dividend The board is recommending a dividend increase of 10.0% for the year with aproposed final dividend of 3.27p (2006: 2.95p) per share for a total of 4.27p(2006: 3.88p).The gross amount for the proposed final dividend and interimdividend is £18.1 million (2006: £16.4 million). The date of the annual general meeting has been fixed for 24th September 2007and dividend warrants in respect of the proposed final dividend, subject toshareholders' approval, will be posted on 26th September 2007 to members on theregister at 5.00 pm on 24th August 2007. 6 Earnings per share Basic earnings per share and diluted earnings per share are calculated bydividing profit for the period attributable to equity holders by the weightedaverage number of shares in issue. ----------------------------------- --------- ---------- Year ended Year ended 31st May 2007 31st May 2006*----------------------------------- --------- ---------- Basic weighted average (000) 424,343 423,750----------------------------------- --------- ---------- Diluted weighted average (000) 428,720 428,720----------------------------------- --------- ---------- The difference between the basic and diluted weighted average number of sharesrepresents the dilutive effect of the deferred annual share bonus scheme and theexecutive share option scheme. The profit attributable to equity holders for the period is as follows: 2007 2006* £m £m--------------------------------------- -------- ------- Profit attributable to ordinary equity shareholders 42.4 35.3Exceptional items (note 2) (0.9) 2.4--------------------------------------- -------- ------- Adjusted profit 41.5 37.7--------------------------------------- -------- ------- Adjusted earnings per share 2007 2006*--------------------------------------- -------- -------Basic earnings per share 9.99p 8.33pExceptional items (0.21)p 0.57p--------------------------------------- -------- ------- Adjusted basic earnings per share 9.78p 8.90p--------------------------------------- -------- ------- Diluted earnings per share 9.89p 8.23pExceptional items (0.21)p 0.56p--------------------------------------- -------- ------- Adjusted diluted earnings per share 9.68p 8.79p--------------------------------------- -------- ------- \* The comparative figures have been restated for the share split, on the basis often for one, which was approved at the last annual general meeting on 25thSeptember 2006, such that there are now ten 1p ordinary shares for every 10pordinary share previously in existence before the share split. 7 Net funds 2007 2006 £m £m--------------------------------------- ------- --------Cash at bank and in hand 21.2 25.9Deposits 32.1 39.9Current asset investments 12.8 2.2Overdrafts (3.2) (11.9)Loans due within one year (2.6) (2.1)Loans due after one year - (2.1)--------------------------------------- ------- -------- Net funds 60.3 51.9--------------------------------------- ------- -------- 8 Accounting policies The financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (IFRS) as adopted for use in the European Union(EU), including International Accounting Standards (IAS) and interpretationsissued by the International Financial Reporting Interpretations Committee(IFRIC). The financial statements have been prepared on a historical cost basis. Whilst the financial information in this preliminary announcement has beencomputed in accordance with IFRS this announcement does not itself containsufficient information to comply with IFRS. The company expects to publish fullfinancial statements that comply with IFRS on 24th August 2007. 9 Basis of financial statements The 2007 results are an abridged version of the statutory financial statementsfor the year ended 31st May 2007 which have been approved by the board ofdirectors and which carry an unqualified audit report. The 2006 results for theyear ended 31st May 2006 which were prepared in accordance with IFRS carry anunqualified audit report and have been filed with the Registrar of Companies.Neither financial statements contain a statement in respect of s.237(2) or (3)of the Companies Act 1985. Approved by the board of directors on 31st July 2007. 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