RNS Number:1035N
IWP International PLC
03 July 2003
IWP INTERNATIONAL PLC
PRELIMINARY ANNOUNCEMENT
RESULTS FOR YEAR ENDED 31 MARCH 2003
Embargoed for release 08.00 3 July 2003
Enquiries Joe Moran,
Chief Executive
IWP International Plc
Tel: +353 1 6611 958 (2:00 - 4:00 p.m.)
CHIEF EXECUTIVE'S COMMENTARY
The year just completed was one of the most difficult years in IWP's history.
Our Operating Profit on ordinary activities of Euro15.8m (pre-goodwill) is
overshadowed by the exceptional loss on disposals of Euro27.1m, the costs of
business closure of Euro7.2m and other restructuring charges of Euro23.5m. Clearly
because of these exceptional losses the year was particularly disappointing.
However, the completion in September of our Household disposal allowed us
restructure our debt portfolio and reduce very dramatically overall debt levels.
It was imperative in the present environment that our debt levels be
substantially reduced. In addition our residual investment in the Household
business of some Euro35.0m in the form of a 12% deep discount bond and a 35% equity
interest will, I am convinced, allow us to share in future upside from that
business.
Unfortunately as we entered the second half of our year we suffered from
significantly weakened performances in certain of our Personal Care companies
but particularly in our Dutch business Royal Sanders. A review of its activities
and the subsequent review of the activities of our other major Personal Care
businesses led us to initiate a particularly significant restructuring
programme. In the Dutch business it resulted in the closure of its Head Office
and centralisation of the business at its manufacturing base in Vlijmen. We also
moved the management of the Prestige Fragrance brands (principally Van Gils), to
our UK Fine Fragrances Company, which specialises solely on brands, thereby
enabling us to ensure enhanced profit delivery. All of this has resulted in a
charge of Euro13.9m, an unpalatable number, but one that was necessary in order
that the business be brought back to its core and that we reach the point where
it can deliver, on a sustainable basis, profits and cash for the Group.
Following this we completed further rationalisation in the UK where we exited
the manufacturing of aerosols and completed a significant cost reduction
programme in our UK Colour Cosmetics business. These activities have resulted in
almost 250 redundancies in the UK and whilst this process is completing at this
time we will see the benefit in the second half of the current year. In total
these costs amounted to some Euro7.2m in terms of business closure costs and Euro1.5m
in reorganisation cost which principally resulted from asset write-downs and
redundancy costs.
Consistent with our objective of reducing debt we are re-evaluating costs at all
levels within the Company - both at Operational and Head Office level, and in a
similar way we are proposing a final dividend of 0.75c, bringing the total for
the year to 3.00c as against last year's 9.0c. This reduction is regrettably
necessary in view of the very disappointing outcome for the year.
The current year will be a difficult one but having taken all necessary steps we
believe we have a platform established to deliver our realistic operational
targets, which will lead to future profitable growth.
Joe Moran
Chief Executive
OPERATIONAL & FINANCIAL REVIEW
Fragrances & Haircare
Our Fine Fragrance business had another good performance this year with a strong
delivery of both profits and cash in the period. Its Jerome Russell brand
continues to deliver innovative product concepts to the market, which have
resulted in increased distribution and improved brand performance. The stable of
other brands, including our female fragrance brands Tweed, Lace, Chique, Panache
and White Satin, have continued to perform well and met our expectations.
During the period the business also moved from its old property to a
significantly larger distribution facility to accommodate the expansion of its
activity. The business has almost trebled its turnover and profitability over
the past five years and thus outgrown its old infrastructure. Fine Fragrances is
now a significant part of the IWP business with a reasonably predictable and
stable earnings stream, managed by a highly professional and competent
management team and we are confident that these strong performances will
continue.
Colour Cosmetics
Our Collection 2000 brand continues to gain market share. Over the past five
years the brand has grown at an average rate of 21%. While clearly this growth
rate is not sustainable in the very long term we believe that there is
significant further potential for the brand going forward in both the UK and key
export markets. However on the export side, the Constance Carroll brand did not
perform strongly.
The appointment of a new Managing Director in the second half gave us the
opportunity to carry out a detailed review of the business and as a result we
have exited our aerosol business and significantly reduced the workforce at our
Skelmersdale facility. This rationalisation has obviously been painful for both
the management and staff at the site but it was necessary to ensure the
continued competitiveness of the facility. It will deliver significant cost
savings. This improvement in the cost base and the sharper focus being brought
to the sales initiatives should allow the performance of our cosmetics business
to improve consistently once the short term issues associated with the
redundancy programme, which completes this month, are behind us.
Royal Sanders Toiletries
We have indicated previously the trading difficulties that Royal Sanders
experienced in the year under review. The business lost money during the period
on an operational basis and incurred significant exceptional charges. The major
restructuring now completed has allowed the cost base issue to be addressed and
the new Managing Director and his team have, through their various initiatives
over the last six months, begun to deliver volume growth. The initial signs for
the current year are encouraging. While it is still too early to predict with
great confidence, the most likely outcome for the year should be a positive cash
and profit performance.
OPERATIONAL & FINANCIAL REVIEW (CONTINUED)
UK & USA Gifts Business
Our North American toiletries business has completed its exit from manufacturing
and local assembly activities following the closure this year of our Montreal
plant. This business now fully outsources its manufacturing activity which
allows the local management focus on the value added aspect associated with the
design and creativity which were the original hallmarks of this business. This
market segment is competitive and margins are tight and tend to follow very
closely the economic fortunes of the economies in which they operate. Thus given
the current malaise of the US economy the business has a number of difficult
issues to cope with, which this year's restructuring should help address.
Polish Retail & Distribution Activity
Polbita continued to have a difficult time last year. Its losses were in excess
of our expectations and the market remains depressed. However we have completed
our change in the management team of that business, which has taken almost two
years to see through, with the appointment of a new Managing Director. In
addition the confirmed entry by Poland into the EU in May 2004 should be a real
boost for the economy and our prospects therein.
Dutch Specialised Plastics Business
Putzfeld had a strong year and its performance is now back on track. This high
margin niche business is an attractive profit and cash generator.
Household Business
Our Household division, as you are aware, was sold during the year and in effect
it contributed to our performance in two ways. For almost half a year (up to its
disposal date on 11th September 2002) it was a subsidiary and for the other part
of the year an associate. Its performance during the entire year was very
satisfactory. The business, with its high quality hands-on management, is
performing well.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended 31 March 2003
2003 2002
Euro'000 Euro'000 Euro'000 Euro'000
Notes Exceptional Total Total
Items
Turnover
Continuing operations 221,003 - 221,003 265,342
Discontinued operations 140,068 - 140,068 312,306
-------- -------- -------- --------
1 361,071 - 361,071 577,648
Cost of sales (263,137) - (263,137) (416,090)
-------- -------- -------- --------
Gross profit 97,934 - 97,934 161,558
-------- -------- -------- --------
Operating Expenses
Goodwill amortisation (2,340) - (2,340) (4,032)
Reorganisation costs and - (23,528) (23,528) (7,600)
other items
Other (84,447) - (84,447) (128,329)
-------- -------- -------- --------
(86,787) (23,528) (110,315) (139,961)
-------- -------- -------- --------
Operating Profit/(Loss)
Continuing operations 5,062 (23,528) (18,466) 10,055
Discontinued operations 6,085 - 6,085 11,542
-------- -------- -------- --------
Group Operating Profit/
(Loss) 11,147 (23,528) (12,381) 21,597
-------- -------- -------- --------
Share of Associate - 2,289 - 2,289 -
Operating Profit
-------- -------- -------- --------
Total Operating Profit/
(Loss) 13,436 (23,528) (10,092) 21,597
-------- -------- -------- --------
--------------------------------- -------- -------- -------- --------
Amount of Proceeds - (27,142) (27,142) 2,141
(under)/over Net Book
Value
Goodwill previously - (29,077) (29,077) (9,388)
written off to reserves
------------------------ -------- -------- -------- --------
Loss on sale of - (56,219) (56,219) (7,247)
subsidiaries
Loss on Closure of - (7,249) (7,249) (10,153)
activity
Group Interest Payable (6,388) - (6,388) (11,963)
Share of Associate -
Interest Payable (2,684) - (2,684) -
-------- -------- -------- --------
Profit/(Loss) Before 4,364 (86,996) (82,632) (7,766)
Taxation
Group Taxation 2 (1,519) 8,224 6,705 (2,195)
Share of Associate - Tax
Charge (322) - (322) -
-------- -------- -------- --------
Profit/(Loss) After 2,523 (78,772) (76,249) (9,961)
Taxation
Dividends - paid 4 (1,648) - (1,648) (3,309)
Dividends - proposed 4 (554) - (554) (3,622)
-------- -------- -------- --------
Profit/(Loss) retained in
the financial year 321 (78,772) (78,451) (16,892)
-------- -------- -------- --------
Adjusted earnings per
share (Euro cent) 3 6.51 - 6.51 22.15
-------- -------- -------- --------
Basic earnings/(loss) per
share (Euro cent) 3 3.38 (105.50) (102.12) (13.21)
-------- -------- -------- --------
Diluted earnings/(loss) 3
per share (Euro cent) 3.38 (105.50) (102.12) (13.21)
-------- -------- -------- --------
Signed on behalf of the Board
P J Moran
B Byrne
Directors
3 July 2003
CONSOLIDATED BALANCE SHEET
31 March 2003
Notes 2003 2002
Euro'000 Euro'000
Fixed assets
Intangible Assets 16,774 70,465
Tangible Assets 5 40,811 112,982
Financial Assets 35,753 1,562
-------- --------
93,338 185,009
-------- --------
Current assets
Stocks 45,367 97,559
Debtors 35,111 108,743
Cash at bank and in hand 7,891 17,073
-------- --------
88,369 223,375
Creditors - Amounts falling due within one
year
Other creditors (59,942) (128,902)
-------- --------
Net current assets 28,427 94,473
-------- --------
Total assets less current liabilities 121,765 279,482
-------- --------
Creditors - Amounts falling due after more than
one year
Other long term creditors (3,958) (10,745)
Finance debt (104,999) (192,893)
-------- --------
(108,957) (203,638)
Provision for liabilities and charges
Deferred taxation - (3,268)
-------- --------
12,808 72,576
-------- --------
Capital and reserves including non-equity
interests
Called up share capital 12,427 12,427
Share premium 142,947 142,947
Other reserves (10,991) (2,096)
Profit and loss account - after elimination of
goodwill (131,575) (80,702)
-------- --------
Total shareholders' funds 12,808 72,576
-------- --------
Analysis of shareholders' funds
Equity 12,738 72,506
Non equity 70 70
-------- --------
12,808 72,576
-------- --------
Signed on behalf of the Board
P J Moran
B Byrne
Directors
3 July 2003
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 March 2003
Notes 2003 2002
Euro'000 Euro'000
Net cash inflow from operating activities 6 12,173 24,165
--------- ---------
Returns on investments and servicing of finance
Interest paid (11,468) (14,343)
Non-equity dividends paid (8) (15)
--------- ---------
(11,476) (14,358)
Taxation (817) (5,629)
Net Capital Expenditure (8,932) (13,878)
Acquisitions and disposals
Purchase of subsidiaries - (1,969)
Proceeds from sale of subsidiaries 94,587 7,784
Earn out payments on previous acquisitions (1,975) (2,521)
--------- ---------
92,612 3,294
--------- ---------
Equity dividends paid (5,261) (7,437)
--------- ---------
Cash inflow/(outflow) before financing 78,299 (13,843)
--------- ---------
Financing
Issue of share capital - 141
Purchase of own shares (1,500) (28)
(Decrease)/Increase in Long Term Borrowing (87,894) 3,228
--------- ---------
Net cash (outflow)/ inflow from financing (89,394) 3,341
--------- ---------
Decrease in cash in the year (11,095) (10,502)
--------- ---------
Reconciliation of net cash flow to movements in net debt
2003 2002
Euro'000 Euro'000
Decrease in cash in the year (11,095) (10,502)
Cash outflow/(inflow) from decrease/(increase) in debt
financing 87,894 (3,228)
--------- ---------
Change in net debt resulting from cash flows 76,799 (13,730)
Translation adjustment 1,913 (606)
--------- ---------
Movement in net debt in the year 78,712 (14,336)
Net debt at 1 April (175,820) (161,484)
--------- ---------
Net debt at 31 March (97,108) (175,820)
--------- ---------
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Year ended 31 March 2003
2003 2002
Euro'000 Euro'000
Loss after taxation (76,249) (9,961)
Currency translation adjustment (8,618) (87)
--------- ---------
Total recognised losses relating to the year (84,867) (10,048)
--------- ---------
NOTE OF HISTORICAL COST PROFITS AND LOSSES
The difference between the reported results and those calculated on an
unmodified historical cost basis is not material.
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
Year ended 31 March 2003
2003 2002
Euro'000 Euro'000
Loss after taxation (76,249) (9,961)
Dividends (2,202) (6,931)
Currency translation adjustment (8,618) (87)
Share capital issued - 141
Other Reserves disposed with subsidiaries (277) -
Goodwill released to profit and loss account 29,078 9,388
Purchase of treasury shares (1,500) (28)
--------- ---------
Net decrease in shareholders' funds (59,768) (7,478)
Shareholders' funds at 1 April 72,576 80,054
--------- ---------
Shareholders' funds at 31 March 12,808 72,576
--------- ---------
NOTES
Year ended 31 March 2003
1 Segmental Analysis
2003 2002
Turnover Euro'000 Euro'000
Business Sector
Personal Care and Cosmetics 141,341 157,745
Household Products 136,074 295,916
Distribution and Labels 83,656 123,987
--------- ---------
361,071 577,648
--------- ---------
Geographical analysis by origin
Republic of Ireland - 5,847
United Kingdom 179,389 290,080
Continental Europe 168,200 264,085
Rest of World 13,482 17,636
--------- ---------
361,071 577,648
--------- ---------
Geographical analysis by destination
Republic of Ireland 2,098 10,052
United Kingdom 130,959 213,924
Continental Europe 181,238 277,389
Rest of the World 46,776 76,283
--------- ---------
361,071 577,648
--------- ---------
2003 2002
Group Operating Profit before goodwill & exceptional Euro'000 Euro'000
items
Business Sector
Personal Care and Cosmetics 7,120 13,240
Household Products 6,055 15,939
Distribution and labels 312 4,050
--------- ---------
13,487 33,229
--------- ---------
NOTES (Continued)
Year ended 31 March 2003
2 Taxation
The Group Corporation Tax charge for the year is calculated on the profit before
tax adjusted for goodwill amortisation at the effective rate of 21.4% (2002:
21.5%)
3 Earnings per Ordinary Share
2003 2002
Adjusted
----------
Profit after taxation before exceptional items and 4,863 16,703
goodwill amortisation for adjusted earnings per share
calculation (Euro'000)
Weighted average number of ordinary share in issue 74,665,835 75,391,269
-------- --------
Adjusted earnings per share (Euro cent) 6.51 22.15
-------- --------
Basic
-------
Loss after taxation and loss for basic loss per share (76,249) (9,961)
calculation (Euro '000)
Weighted average number of ordinary shares in issue 74,665,835 75,391,269
-------- --------
Basic loss per share (Euro cent) (102.12) (13.21)
-------- --------
Diluted
---------
Loss after taxation and loss for diluted loss per (76,249) (9,961)
share calculation (Euro '000)
Weighted average number of ordinary shares for 74,665,835 75,428,176
calculation of diluted earnings per share
-------- --------
Diluted loss per share (Euro cent) (102.12) (13.21)
-------- --------
Reconciliation of adjusted earnings
2003 2002
Per share Earnings Per share Earnings
Euro cent Euro'000 Euro cent Euro'000
Loss after tax (102.12) (76,249) (13.21) (9,961)
Exceptional items 105.50 78,772 30.01 22,632
Goodwill amortisation 3.13 2,340 5.35 4,032
--------- ----------- ----------- -----------
Adjusted earnings 6.51 4,863 22.15 16,703
--------- ----------- ----------- -----------
NOTES (Continued)
Year ended 31 March 2003
4 Dividends
2003 2002
Euro'000 Euro'000
Ordinary shares:
Interim paid - 2.25 cent per share (2002: 4.2 cent) 1,663 3,172
Final proposed - 0.75 cent per share (2002: 4.8 cent) 554 3,622
--------- ---------
- 3.0 cent per share (2002: 9.0 cent) 2,217 6,794
(Over) /Under provision of prior year dividend (23) 129
12% cumulative preference shares 8 8
--------- ---------
2,202 6,931
--------- ---------
Subject to Shareholder approval at the Annual General Meeting on 30 September
2003 the final dividend 0.75 cent per share will be posted on 17 October 2003 to
shareholders on the register at 3 October 2003.
5 Tangible fixed assets - movement in the year
Freehold land Short Leasehold Plant and Total
And buildings land and equipment
buildings
Euro'000 Euro'000 Euro'000 Euro'000
Cost or valuation
At 1 April 2002 57,978 4,800 198,008 260,786
Additions 392 1,103 8,794 10,289
Disposals (405) (444) (8,940) (9,789)
Write down (217) - (2,900) (3,117)
Sold on disposal of (35,357) (1,918) (115,683) (152,958)
subsidiaries
Currency translation (1,386) (325) (8,004) (9,715)
adjustment ---------- ------------ ---------- ---------
At 31 March 2003 21,005 3,216 71,275 95,496
---------- ------------ ---------- ---------
Depreciation
At 1 April 2002 17,082 2,804 127,918 147,804
Charge for the year 1,402 275 11,189 12,866
Disposals (55) (161) (7,785) (8,001)
Sold on disposal of (12,535) (1,346) (78,590) (92,471)
subsidiaries
Currency translation (94) (180) (5,239) (5,513)
adjustment ---------- ------------ ---------- ---------
At 31 March 2003 5,800 1,392 47,493 54,685
---------- ------------ ---------- ---------
Net book amount
At 31 March 2003 15,205 1,824 23,782 40,811
---------- ------------ ---------- ---------
At 31 March 2002 40,896 1,996 70,090 112,982
---------- ------------ ---------- ---------
NOTES (Continued)
Year ended 31 March 2003
6 Reconciliation of (loss)/profit before interest and tax to
net cash inflow from operating activities
2003 2002
Euro'000 Euro'000
Operating (Loss)/profit (12,381) 21,597
Loss on closure of activity (7,249) (4,963)
Loss/(Profit) on Disposal of Fixed Assets 374 (559)
Depreciation 12,866 19,492
Amortisation of Intangibles 2,987 4,082
Write down of Fixed Assets 3,117 -
Decrease/(Increase) in debtors 14,438 (7,490)
Decrease/(Increase) in stocks 9,937 (3,278)
Decrease in creditors (11,916) (4,716)
--------- ---------
Net Cash inflow from operating activities 12,173 24,165
--------- ---------
7 Nature of Financial Information
The financial information presented above is based on the full accounts of the
Group for the year ended 31 March 2003 on which the auditors have given an
unqualified report. The full accounts have not yet been filed with the Registrar
of Companies.
This information is provided by RNS
The company news service from the London Stock Exchange
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