Full year Group revenues of £705.2 million were £24.3 million (3.6%) higher than the revenues reported for the prior year, aided by the translation effect of a strong Euro. On a constant currency basis, sales were lower by £44.5 million (5.9%), with Household sales lower by 5.8% and Personal Care & Aerosols (PCA) lower by 6.3%.
This time last year, the Group reported it had completed the exercise to reduce the levels of complexity in our customer and product portfolio (our "customer choices" project), the impact of which would reduce revenues on an annualised basis by approximately £20.0 million. This initiative commenced in the second half year of the previous financial year such that in the twelve months to 30 June 2017, the project lowered revenues by £16 million, equating to approximately 2.1% of the year-on-year reduction in Group sales (at constant currency).
Excluding "customer choices", overall volumes were lower by a
further 2.8% across the Group as some of our markets became
The Group remained disciplined in its approach to margin management ensuring its sales mix provides a solid platform for future profitable growth. Price pressure remained a feature in the year with 0.7% of the year-on-year revenue decline a result of lower item prices.
Full year adjusted operating profit was £41.5 million (2016:
£36.2m) with adjusted operating profit margin increasing to 5.9%
(2016: 5.3%), showing good progress towards our 7.5% ambition.
Based on full year adjusted operating profit return on capital
employed ratio (ROCE) improved to 27.7% (2016: 23.4%) firmly within
our 25%-30% ambition.
On a constant currency basis, adjusted operating profit improved by 0.2% or £0.1 million. When adjusting for the impact of various hedging activities underlying adjusted operating profit improved by £3.5 million or 8.5%.
In the year to June 2017, raw material prices increased by approximately 2.2%. Of this, 1.2% was driven by foreign exchange and the impact of weaker Sterling and a strong US Dollar. The Group was favourably hedged for approximately 65% of the foreign exchange impact through the year.
These cost increases, both pricing and currency, were more impactful in the second half year. Underlying raw material prices have steadied in recent months however the outlook is for some further increases, including the impact of weaker Sterling.
Supply chain and overhead efficiency initiatives enabled by our 'Manufacturing our Future' strategy underpinned our financial results and more than offset the loss of margin from reduced revenues and raw material price. Our focus on delivering scale advantage through manufacturing and cost leadership delivered supply chain saving initiatives of £10.9 million while overhead saving initiatives, some of which were announced in previous years, delivered a further £9.8 million in the year.
The usual lower second half sales run rate combined with the raw material cost and currency impact mentioned above, led to a weaker second half profit performance when compared to our first six months of the year.
Full year operating profit increased by £6.9 million to £39.8 million (2016: £32.9m). This includes an exceptional charge of £1.0 million (2016: £2.4m) primarily due to the restructuring of our Poland factory (£0.9m) and additional charges in relation to our ongoing Italian factory legal case (£0.2m).
Cash management in the year was strong with cash generated from operations before exceptional items of £63.3 million (2016: £52.5m). Capital expenditure cash flow increased during the year to £17.7 million (2016: £12.8m) as our capital plans gain momentum and we continue with our expected £100 million capital expenditure objective over four years.
Exceptional items amounted to £14.0 million (2016: £2.4m), the cash impact of which was £13.2 million (2016: £4.2m) primarily reflecting the debt refinancing of the Group and the restructuring of our Poland factory. The £13.0 million relating to refinancing was matched by a £11.3 million inflow in working capital from settlement of associated forward derivatives.
Net cash flow before payments to shareholders was £27.8 million (2016: £19.7m). Cash payments made to shareholders during the year amounted to £6.6 million (2016: £5.8m). consequently, year end net debt decreased to £75.7 million (2016: £90.9m) comprising a strong net cash flow of £21.2 million reduced by £6.0 million of translation impact as a result of the weaker Sterling exchange rates on Euro and US Dollar denominated borrowings.
The Group's balance sheet remains robust with net assets of £64.2 million (2016: £69.1m). Gearing improved further to 50% (2016: 59%) and the debt cover ratio fell to 1.2x (2016: 1:7x).