PZ Cussons Plc

So, good morning everyone. Thank you to those who have joined us in person and to those of you who have dialed in. Today, Sarah and I will update you on our results for the first half of the year and progress against our strategy. As usual, I'll give some initial thoughts on our overall progress. Sarah will take you through the financials and then I'll provide some more detail on our strategic progress. And as ever, there'll be plenty of time for Q&A at the end. First, though, let me spend a moment to provide an overview of where we are on our journey to transform PZ Customs, a journey which began nearly three years ago with the rollout of a new strategy, a new purpose and new values. When I compare PZ Customs today to the PZ Customs of three or more years ago, then it's clear we have made good underlying progress, building a business better able to navigate the external challenges we encounter. We've injected new capabilities and bolstered leadership throughout the organisation, renewing our ambition and creating a bias to action, making progress on many fronts. This progress is perhaps best demonstrated by the sustained performance of our business and brands in Australia and New Zealand over the past couple of years, and more recently by the turnaround of our UK personal care business, now delivering growth in market share, in revenue and in profitability in the first half, including the return to growth of Carex in our second quarter. However, despite this progress, there have clearly been some material external developments in recent months, even recent weeks. We have flagged before that there would be an impact of last June's Naira devaluation to our reported results. And today is the first set of results that we are reporting that cover the period of the devaluation, including a significant statutory FX-related loss. In addition, the devaluation has had a significant impact on shopper habits in Nigeria too. We may have seen an inflation peak of 10% here in the UK, but inflation ended 2023 at nearly 30% in Nigeria, imposing huge pressure on consumers and our teams working to serve them. But one thing we hope you would recognise is that when there are challenges, we face into them. We managed through the volatility as well as taking the steps where possible to mitigate the underlying causes. In keeping with this approach, we've made both corporate and operational interventions to sustain the business in Nigeria, absorbing the shocks of devaluation as far as possible. Our teams have worked tirelessly to improve sourcing of US dollars, meaning that not only has the Nigerian business become self-funding, but that we can also reduce the group's gross borrowings by repatriating cash to the UK. Also, as you know from our previous announcements, we have made an offer to take our listed subsidiary in Nigeria private. As and when that transaction completes, it will help us set up the business for long-term success. However, the magnitude of the devaluation means that these self-help measures can only go so far. With the FX losses reported today, as well as the continued uncertainty over the macroeconomic outlook in Nigeria, the Board has resolved to reduce our interim dividend to protect EPS cover and retain sufficient flexibility to reinvest back behind the growth of the business. To be clear, the Board's decision to reduce the dividend is solely linked to Nigeria, and were it not for the devaluation, EPS would have been up around 9%. Elsewhere in Pisa and Cousins, our beauty division has been underperforming, most notably on Sanctuary Spa and Saint-Tropez. We noted earlier in the year that the market has been soft, but even with a soft market, our performance has not met our expectations. We're already intervening to address the underlying issues – and I'll cover the details later in the presentation. All that said, while we know there is much more work to do, we remain confident in the long-term potential of the business. We have a portfolio of strong brands operating in attractive market segments. With that, I'll hand over to Sarah.

Thanks Jonathan, and good morning everyone. I'm going to share a summary of the first half results, walk you through the key movements year on year at a group level and then by segment, and finish with the outlook for the full financial year. Before I go into the detail, I think it's worth recognising that we have talked previously about the increasing consistency of our earnings. I'm going to spend a fair bit of time covering the impact of the devaluation of the Naira on our reported results. It has represented a significant headwind for us and so warrants that level of focus. But it should not cloud the fact that outside Nigeria, the picture is of further strategic progress. With the more typical ebbs and flows of a branded goods business operating in multiple global geographies against a volatile consumer backdrop. So let me talk you through the key lines. Revenue declined by £60 million, the vast majority of which was attributable to the Naira devaluation which occurred in June of last year and subsequently, where there has been a persistent depreciation of the currency and last week a further devaluation. On a like-for-like basis, this is the group's ninth quarter of consecutive revenue growth, and at constant currency, operating profit in the first half grew 17%. Profit before tax declined 24% as a result of the lower operating profit at prevailing rates of exchange, as well as a higher interest charge, as we repatriate cash from Nigeria to the UK. Earnings per share fell by less than that amount, by 16%. The cushioning being a result of a lower group tax rate at 20% by virtue of the FX-induced statutory loss in Nigeria and a lower non-controlling interest there. As Jonathan mentioned, in light of the devaluation of the Naira, and now that the financial impacts have more fully crystallised, the Board has determined it prudent to reduce the interim dividend. We target an EPS cover of around two times to balance the deployment of capital between immediate returns to shareholders and to invest to drive the future growth of the business and manage risk. Clearly, this move will further improve our cash position, although with headroom already well over £100 million and with the maturities on our borrowing facilities recently extended, earnings cover was the board's key consideration. Free cash flow was higher than the previous year, but net debt has naturally increased significantly due to the lower sterling value of the trapped Nigeria cash balance after the devaluation last year, before which time it had become difficult for multinationals to repatriate cash. As usual, I focused here on the figures adjusted to exclude the impact of material and one-off largely non-cash items to provide a clearer view of the business's underlying operations. However, given the impact of the Naira devaluation on the quantum of those one-off adjusting items in this set of results, let me walk you through the breakdown. The 5.5 million cash restructuring costs relate to the various previously announced transformation projects underway across the group, in supply chain, in finance and in HR, much of which have a direct financial payback, as we discussed before, beyond the broader operational simplification and risk management benefits. 24.4 million relates to an impairment of Sanctuary Spa, Jonathan will talk more about the drivers of this later and what we have done to start building back from what has been a period of disappointing commercial execution. The impairment does represent an underperformance of the brand since our prelims in September, but also the application of some different technical methodologies by our new auditors, PwC, with which we have sought to fully align. Annual impairment testing is, of course, the accounting alternative to a more straight-line amortisation method to gradually reduce any brand values carried on the balance sheet. £88 million relates to foreign exchange losses incurred upon the revaluation of primarily US dollar trade payables in our Nigeria business. And at the same time, the fall in the value of Naira denominated assets owed to the group by the local business, such as dividend and royalty payments. It's worth noting that the reduction in the sterling equivalent cash balance is not shown as an operating loss, but rather goes directly to reserves. And so the full impact of the Naira devaluation has been to reduce our net assets by 35%. or £149 million. So let's look now at the revenue in more detail. The first bar rebases the prior year revenue to this year's FX rates, with a movement of £64 million, and we provide more of a breakdown in the appendix. Like-for-like revenue growth in the half was 2.2%, driven mainly by a continued strong trading performance in Africa. Europe and America has declined due to the underperformance in beauty. We have, though, seen a very encouraging return to growth for UK personal care, and Charles Farm continues to perform very well. Asia-Pac is once again a tale of two markets, with ANZ up and Indonesia down. And finally, the central revenue shown here is due to the closure and outsourcing of our internal fragrance house, an action we took last year as part of our broader supply chain simplification and optimisation efforts. Turning to operating profit, we're reporting a higher level of absolute profitability and an improved margin in each of our three regions on a constant currency basis. Europe and Americas and Asia-Pac have also expanded their gross margins, with a broadly unchanged gross margin position in Africa, as we took pricing action in response to the significant currency-related cost inflation there. Central costs increased now that we no longer capture the revenue associated with our in-house fragrance business, with the better overall economics of our new outsourced model instead reported in our regional results. And we elected to protect investment in people and strategic capabilities such as digital, despite ongoing salary inflation in the UK. the constant currency growth in operating profit of 17% was offset by a £7 million adverse FX movement, of which £6 million was attributable to the devaluation of the Naira. So let me now give a little more detail on each of our three regional segments. Firstly, Europe and Americas. As you'll be aware, our Europe and Americas business has historically been comprised of two business units – what we call UK Personal Care, Carex, Original Source and Imperial Leather, and Beauty, which is mainly Sanctuary Spa and Saint-Tropez, plus the smaller hair brands of Charles Worthington and Fudge. The performance of these two business units has diverged materially in the first half, with UK Personal Care up strongly and Beauty in decline. Childs Farm continues to perform in line with our expectations, being on track to deliver very strong double-digit revenue growth and to move into a position of profitability for the first time this year. Despite the reduction in revenue, profit and margin was up, albeit, you will recall, from an unusually low base in the prior year. This was primarily the result of good gross margin improvements in UK personal care, benefiting from both pricing and portfolio mix interventions and a smaller but more profitable Christmas gifting season for Sanctuary Spa. Moving on to Asia-Pac, performance here has also differed markedly within the region, very much reflecting the trading environment in the different markets. In ANZ, we've delivered continued revenue growth, Morning Fresh continues to grow strongly, benefiting from the launch into the auto-dishwash segment last year. But the standout performer has been Radiant, a laundry detergent portfolio brand which has recently moved up from being the sixth largest player in the category to third, on the back of its launch of capsules. In Indonesia, revenue has declined, with consumer spending under pressure and increased intensity of competition. We have good plans in place for the second half and into FY25, driving more competitive price promotional activity on baby wipes and accelerating some tailored consumer-led innovation in the very highly penetrated and widely distributed subcategory of telon oil, a warming oil used by over 80% of Indonesian parents. And together, these actions will allow Customs Baby to reach new consumers in new shopping outlets. We're therefore more confident in the outlook for Indonesia and expect to return to growth over the coming months. Margin improved due to favourable product mix and lower freight costs in ANZ, plus tight cost control within the Asia manufacturing hub. Finally, moving to Africa, reported revenue declined by 32% as a result of the Naira devaluation, but increased 17% on a constant currency basis. The Nigerian consumer has so far been resilient to the challenging economic environment, with our strong brands able to grow revenue primarily through price and mix. We've executed 12 rounds of price increases in Nigeria in the first half of the year and more since. That said, the continued progress to expand the distribution of our brands to support volume is also helping, as Jonathan will come on to explain. Overall margin improved due to the determined pricing interventions in our core hygiene, baby and beauty business, but also a resilient performance in electricals where we continue to focus on profitability and a strong profit contribution from our Wilmar joint venture. Turning now to cash flow and the balance sheet. Our focus in recent months has been on reducing gross debt through the sourcing of US dollars to support trading in Nigeria, allowing us to repatriate cash to the UK. We're pleased with progress here. as after years of putting money into Nigeria, we have so far this year been able to take capital that is surplus to local operational requirements out to ultimately be able to deploy elsewhere in the business. Whilst underlying liquidity in the Nigerian forex market remains very tight, and so the exchange rate's volatile, with the Naira continuing to depreciate, the cash repatriation has been achieved through significantly increasing the number of counterparties that we're able to work with to obtain hard currency. So the table on the slide shows the as-reported balance sheet at June 2023 in the first column, and then adjusted for today's exchange rates, detailing the more than 100 million adverse movement in cash as a result of the Naira movement. Since then, in the six months to December 2023, we've actively reduced our Naira cash balance by £21 million, which in conjunction with moving other local cash surpluses to the UK, had reduced our gross debt by £26 million, with headroom up to £105 million. And today, the headroom on our £325 million borrowing facility is higher still, at £116 million, so up more than 50% so far this financial year. Despite the inevitable uncertainty over the FX market dynamics in Nigeria, and so exchange rates, we expect our gross borrowing at the end of this financial year to have reduced further. I should though stress that balance sheet, asset and liability forecasts especially, are particularly uncertain, given the FX rate is of course taken at a single point in time, rather than smoothed over a period, as for the income statement, as was the case with the material downward movement of the Naira on the final day of this half-year reporting period, back in December. Finally, turning to outlook. We have this morning provided some more explicit guidance for FY24 operating profit, which we expect to range between £55 and £60 million. At the midpoint, this is around £7 million lower than consensus estimates at the time of our prelims in September and is driven by further Naira movements. Most recently, we saw a 30% fall in the official rate last week, effectively a second devaluation down to the prevailing rates at which corporates have been securing the majority of their currency needs. So this will impact the translation of local currency earnings and cash into sterling. But while it is difficult to precisely predict the impacts on consumer sentiment and trading conditions, the fact that we have already been pricing to the higher unofficial rates for a number of months gives us some confidence. The overall reduction in the value of the Naira since the start of our financial year now stands at around 70%. And as we've said before, a 10% move in the Naira is around a 3 million impact to annualised operating profit. We didn't provide guidance on items below operating profit at the FY23 full-year results in September, given the material degree of uncertainty in Nigeria. That uncertainty remains today, but with higher interest costs offset by a lower tax rate. So the overall shape of interest, tax and non-controlling interest in half one is a good indicator of the full year outlook for the flow down of operating profit to earnings per share. And each of these three elements will in some way be a function of our Nigerian businesses trading performance, FX market movements and the pace at which we can repatriate cash. Notwithstanding the near-term uncertainty, we remain confident that the long-term prospects for Nigeria are more positive as a result of the new administration's economic ambitions and that the overall consumer opportunity is as strong as ever, on which our now stronger brands can continue to capitalise. And with that, I'll hand back to Jonathan to provide an update on strategic progress, both in Nigeria and elsewhere in the group.

Thank you, Sarah. As Sarah has laid out, the financial impact of the devaluation on our reported numbers is clear, and we'll be ready to take any questions on the impact and ongoing volatility at the end. We've been working hard in recent months to navigate that volatility, but there is, of course, only so much within our gift. However, in this section, you're going to hear fewer references to movements in foreign exchange and more about the things that we can control, how our teams are building brands to serve consumers and to do it better than the competition. Before I start, two things to note with regard to this title slide. Firstly, this is the new generation of imperial leather bottle appearing in stores near you soon. It represents the next phase of the relaunch that we have talked to you about before. The new bottle will improve shelf presence. It's wider, it's taller, as well as more elegant. And it will improve value for money perceptions. For those of you in the room, there's one outside. For those of you online, please go buy one, and we thank you for your custom. Secondly, this is in fact an image generated by artificial intelligence. So I mention this because with the help of our new Chief Information Officer, Jawad Zalavia, who joined us last year, we've taken some big strides forward with AI. We've created a dedicated AI hub for our teams with toolkits, training, and a clear usage policy. Our marketing teams are using AI-generated images and copy online already, and we are only scratching the surface when it comes to productivity gains too. No doubt more on this in the future. Now moving on, you should all be familiar with the next slide. It summarises our strategy in its simplest terms, 10 words. A strategy that has guided our overall choices for the last three years. And as we came into this financial year, FY24, we added some specific near-term priorities to focus the organisation on, and we set these out to you back in September. As a reminder, they were first and foremost to continue to simplify and strengthen Nigeria. Second, return our overall UK business to sustainable profit. Number three, drive further expansion in and from the core. And finally, continuing to transform the group's capabilities. So let me report back on progress against these priorities. Starting with Nigeria. We've already referred to the improvements in US dollar sourcing that have reduced the risk of our continued Naira exposure and helped reduce gross borrowing. Actions that have helped absorb the shocks of devaluation as far as possible. We're progressing with our transaction to delist and buy out the minority shareholders of PZ Customs Nigeria, PLC, As I said at the time of our full year results, more than a legal or a financial technicality, we see this as a significant intervention in the market, simplifying and strengthening the business we have in Nigeria while providing improved financial returns for the group. And on the ground, there's lots of good work going on as we focus on what we can control. In addition to the inevitable rounds of pricing required in such an inflationary environment, the team have been using our route-to-market strengths to drive deeper numeric distribution in direct coverage, rather than relying on wholesalers to extend our reach, giving us more influence over which SKUs make it onto the shelves in the different types of stores and channels that exist across Nigeria. As a result, we've seen significant growth in both Stella and Customs Baby, for example, each growing revenue double digits through a combination of price mix and volume growth. Stella is a very strong portfolio skincare brand and is on track to be the largest brand in terms of net sales in our family care business in Nigeria this year. We've been growing volumes through deeper distribution and the communication of wider usage occasions for the brand. And Cussons Baby has driven awareness and demand through its hospital programme. We've been partnering with hospitals across the country to help engage and educate more than 800,000 new and soon-to-be mums and medical professionals around the country. It's not just these brands, but our entire portfolio that has benefited from increased distribution, helping us mitigate the unavoidable price elasticity given the level of pricing that has been required to protect margins. We've moved from around 66,000 directly covered stores two years ago to over 120,000 today, with ambitions of exceeding 200,000 in the coming year or two. With better shelf presence and activation in more stores, we maximise our chances of being the preferred brand for our target shopper as they are forced to make choices on how to spend their limited income. So look, while obviously recognising the near-term risks in Nigeria, and understandably so, the longer-term opportunity still remains for a leading player in the market with operational know-how and strong brands built upon decades of experience. From Nigeria, let's turn to our number two priority, the UK. And in the personal care business, I'm pleased to report a turnaround in performance with growth in market share, revenue and profitability. There's been no silver bullet, but the drivers of this have been emblematic of the wider group changes. In addition to renewed leadership, we have adopted a disciplined focus on building back basic executional capabilities. What does this look like in practice? Well, it means better marketing and communications, be it digital or traditional media, to set our brands apart in a crowded marketplace, growing our distribution with more SKUs across more retail customers, and improving innovation, both customer-driven quick turnaround activity, as well as building the pipeline for bigger launches in the future. For the eagle-eyed amongst you who noticed the cover slide of this presentation, you'll have seen our first ever multi-brand full gondola end display in Sainsbury's. It's live now in 250 stores across the UK, and it's a really good example of our step up in execution. And the result of this work? Well, having seen share losses across the portfolio as a whole since COVID, with Carex and Imperial Leather very soft quarter after quarter, we've turned a corner. Now, with several months of growth, each of our brands, including Carex, grew in Q2 in volume and value sales. In fact, original source volumes are up close to 50% in the first half. I'll talk later about the role of revenue growth management, but the improvements here have driven a £2 million annualised increase in gross profit, supporting a 290 basis points margin expansion. But looking beyond the numbers, there is real momentum in the business and renewed ambition. So from that renewed momentum of UK personal care, we move now to beauty, which has underperformed our expectations. Firstly, though, it's important to note that the brands are strong. Saint-Tropez in the US, for example, is by some margin the market leader in prestige self-tanning. We have enviable distribution with highly sought-after listings. Our brand equity measures are strong and we effectively define that segment in the US. Similarly for Sanctuary Spa, it's had a tough backdrop during the cost of living crisis and a declining bathing category, but it has a distinctive positioning in both the affordable indulgence at home and gifting segments of the market. Nonetheless, performance has simply not been where it needs to be. In part, each of the brands have had their own challenges in recent months. Cost of living crisis for Sanctuary Spa, an over-reliance on concentrated distribution for Saint-Tropez in the U.S., But actually, we also believe that there are some deeper-rooted executional issues. In-store presence has been inconsistent. The innovation pipeline has not been strong enough. And the bundling of our limited portfolio of brands into a standalone beauty business, separate from our other geographic business units, has created a complexity that has not offset the benefit of the sharper focus. So to address these issues, we've taken action. we've made a fundamental change to our organisational structure as we reorganise and simplify our UK business, whilst also strengthening our overall group brand building and innovation capabilities. Firstly, we have appointed one leader across the combined business in the UK versus the previously separate UK personal care and UK beauty set-up. These business units have historically had two leadership, two commercial and two support teams. meaning we were duplicating a lot of work, everything from engaging with customers through to paying suppliers. The change will drive significantly greater scale, faster decision-making, with one team and, importantly, one face to the customer as we share best practice and pool our understanding of retail customers, consumers and categories. Secondly, more broadly than just the UK, we're continuing to strengthen our brand-building capabilities. Some of you will have met Paul Yochum at our Child's Farm investor event. Paul has been responsible for Child's Farm since the acquisition and for our new business development activities over the last couple of years. In his new role of Chief Growth and Marketing Officer, Paul and his team are increasing our focus on brand strategy and planning, consumer insights, innovation and marketing capability. We have a unique portfolio footprint, and we're going to use that to our advantage, leveraging the benefits of a small central team whilst retaining the local insights and brand-building teams in the market. Paul will also be responsible for overseeing our growth markets, importantly including the U.S. business, with returning Santa Fe to growth high on his agenda, and he'll be there before the end of this month. So moving on to our third priority, an update on progress expanding in and beyond the core in new geographies and adjacent categories. Child's Farm continues to perform well and we expect revenue to be up over 20% this year as Paul and the team take it from strength to strength. Beyond growth in the UK, there's been good progress in Germany, building on some quick wins in Austria and also on Amazon in the US where we are building early sales momentum and awareness. And this comes on top of launches in the past year of Imperial Leather in Thailand and Morning Fresh Auto Edition Australia, both shifting our footprint into growing markets or categories where we have a right to win given our existing positions. These are all important seeds to be planting now to deliver accelerated growth in the future. We have more to come here and we have greater confidence in the roadmap and innovation pipeline given the organisation changes I mentioned a moment ago. Finally, a good example of where we've been building group-wide capabilities is in revenue growth management, or RGM. As with certain other areas of the business, a healthy mix of strategy and street fighting has helped us move from straight pricing actions in the early phase of the recent commodity and freight cost pressures to more sophisticated promotional optimisation and the evolution of our pack price architecture. Take the example of the UK. We've invested in developing a stronger RGM muscle to execute our strategy over the coming years, building the analytical toolkit to improve RGM activity and ROI across the group, whilst at the same time creating the right digital, expandable platform to host the tools. We've rolled this out in the UK already and will reach other markets in due course. And in terms of the shorter-term street fighting, we've been using RGM to optimise FY24 performance as well, whether that be on original source promotions in one of our top four retailers in the UK or the Carex extra-large refill distribution for discounters, together delivering over 2 million annualised gross profit improvement as a result in personal care. And I should say that it's absolutely not just a UK-focused initiative. Our ANZ team has established a strong track record of RGM initiatives to drive the business, for example, driving price mix and volume growth on both morning fresh and radiant brands in our first half. The opportunity for us, as ever, is to combine best practice with the local insight and nuance that only our in-market teams can bring. So in summary, I would leave you with the same four messages that I began with. Firstly, we're continuing to make steady underlying progress, as demonstrated by the turnaround in the UK business and the sustained performance in ANZ. Secondly, the impact of the Naira devaluation has been significant, creating a large statutory loss, rebasing our earnings to a materially lower level and leading us to reduce our interim dividend. but we are navigating through the challenges and the interventions we have already taken, both locally and at a corporate level, have helped absorb at least some of the impact. Thirdly, we're addressing the challenges in beauty head-on, as we know there is more to do. We're simplifying the UK structure while creating the platform to strengthen brand building and growth capabilities more broadly. And finally, most importantly, given the strength of our brands and the markets and categories in which they operate, we continue to be confident about the longer-term potential for PZ Cussons. And with that, Sarah and I would be delighted to take your questions. And I think we'll start with questions from the room. But to make sure people who aren't in the room can hear you, we're going to impose a microphone on you. So just give a moment for the microphone to appear and let us know what's on your minds.

Morning. Matthew Webb from Investec. A few questions, please, mainly on Nigeria, I'm afraid. As always, there's that sort of tension between the fact that the Nigerian consumer has proved to be very resilient up to this point, or certainly in the first half, and the sort of caution about the potential impact of all the economic challenges. I mean, should we take it from the fact that clearly the group profit guidance now is that much lower that you are a bit concerned about the ability to pass on the full impact through the transaction effect in terms of higher pricing, given the ability of the Nigerian consumer to stomach those sorts of price increases? That's the first question. Then just a technical one. I think you disclosed that you had – was it 77 million of cash in sterling terms in Nigeria at the beginning of December? I know you have been continuing to try to take money out. I just wonder whether you've got an updated figure on that. And then third and final question on the piece of Wilmar contribution. I think you said it was particularly strong. I just wonder what was driving that, whether any sort of funnies in there and what the outlook for that might be in the rest of the year. Thank you.

So why don't I take definitely the first. I'll give the second to Sarah. Maybe you do a double act on the third. All right. So I have the slight advantage of having been in Lagos less than two weeks ago. Right. So to give you the on the ground insight. And the first thing to say to all of you is it is a remarkable dynamic in the Nigerian economy that the population remains resilient come what may. And that is over decades, by the way. I don't just mean recent weeks or months. And what we have seen is executed through often smart price mix management as much as just straight pricing. We have seen, if you like, a mitigated price elasticity where we have had to execute pricing. but benefiting from the strength of some of our brand equities in Nigeria. So we have not yet seen a cataclysmic drop-off in demand in response to the sticker shock. We are very aware that there is always a risk, but we have not got there yet, and we will continue to try to be informed and insightful in as and how we execute our pricing to minimise the elasticity. The reality is we've taken 20% plus pricing year-to-go in terms of price mix, but we're seeing a mid-single-digit volume elasticity. Right. Negatively. So that is an indication of some strength in our in our brands. One of the things I would say to you is actually it's also where some fleet of foot marketing insights can be beneficial. What we're seeing is people are spending obviously very constrained disposable income. They're spending more on food and less on everything else. So on everything else, they're trying to get more out of what they're doing, right? So one thing they used to buy previously to do one job, they're now looking for it to do multiple jobs. So we're actually getting good pickup where we are positioning our products to not only wash your dishes, but maybe wash your floor or maybe do your hands as well as your clothes. So you can see how we can actually make sure there's a virtue in some of the benefits that we offer. The other thing, just to give you some reassurance, that it's the official rate that's dropped in the last week dramatically due to the different calculation of the NAFEM rate. We have been working to price against our sourcing rate, which has been at a higher rate for some time. Therefore, it's not as if we have now got to execute a sudden sticker shock of the change in the official rate. So just to give you some reassurance, we have already been taking some of that pain already.

Good. So, Matthew, let me talk a little bit about the current Naira cash balance and our prediction to the end of this year. So that 77 million that you rightly referenced includes having repatriated about 15 million to the UK in the first half of this year. We've actually done another 15 million across December and January. So I think about the guidance we gave at the time of the AGM in November of between 30 to 50. I think we feel very confident about the low end of that range. We are working towards the upper end of the range. And actually, it's not a question of illiquidity now. So the number of sources that we're able to use to secure dollars is... is wider and larger than it was before the devaluation. And interestingly, to Jonathan's point, that last week was actually a mechanical devaluation of the official down to the prevailing rate. It was done with an intent to get more liquidity back into the formal markets. And actually, I think I'm right to say we've seen the highest level of formal FX trading in the Nigerian market since before COVID. So very early days. We've got self-help measures to allow us to access currency via a variety of sources. The more that the CBN can do to improve that macroeconomic environment and market, the more we can benefit.

Shall I answer on Wilmar or did you want to ask a supplementary one? No, no. Right, so let me go on Wilmar. So as I referred to just now, we're seeing changes in consumer spending habits, right? And without getting too philosophical for you on Maslow's hierarchy of needs, you know what? You look after food and housing first and then you'll worry about other things, right? And we're absolutely seeing that. So spend on food up, spend on all other categories down. Devon Kings, which is our main cooking oil brand, number one brand in the market, very well placed to be able to serve consumers as they're looking for spending a little bit more on food, as I said, but trying to make sure it will do the job that they're asking it for. And as an example, whether it's literally the cash-strapped consumer that can only afford to buy enough liquid in what we call a pillow pack, imagine a tiny little sachet, versus going all the way through to the highest spending middle class consumer where we sell it in jerry cans. We have the full pack price architecture for the disposable income of the consumer. But just to bring it home to us as a reality, when I went six months ago, that little pillow pack was selling for 60 naira. When I went two weeks ago, it was selling for 100 naira. So we've had to literally change the artwork on the pack to be able to still hit a critical price point, but it's a much higher price point. Yet the consumer has to cook. So we are using, if you like, the agility in our operation to be able to respond to consumer habits, but still making sure our brand is within reach when they need it.

Thank you. Can I just ask one follow-up, actually, just as it occurs to me? On the tax rate, presumably the fact that Nigeria is going to decline significantly as a proportion of the group will have some implications for the group tax rate. I imagine that's probably quite uncertain at this point, but can you give any guidance for this year and next?

It is quite uncertain, but let me do what I can. So you saw us reporting for the first half an effective tax rate of 20% on an adjusted basis, down from 26% in the prior year period. And I think that 20% is a good outlook for this year, trending up to a more normalised 22% to 24% over the medium term.

Thank you.

Morning. Thanks, Damian McNeill from Numis. Another question on Nigeria, please. I think you sort of... More of a sort of an update on where the business is in terms of achieving its leadership position in the country and how the competition is reacting and whether you're leading the competition in these price rises. Just perhaps some insight into that, please. And then on beauty... What are the sort of the long term prospects for that business and what gives you the confidence that we are going to see that recovery in the second half and beyond?

So why don't I pick both of those up, right? So first of all, on the Nigerian business. So there are lots of dynamics underway in the marketplace in Nigeria. You have, on the one hand, incredibly agile local players who are often more nimble than some of the bigger, slower multinationals. And you have some of the bigger, slower multinationals – I'm not putting us in that camp, clearly – who are beginning to look at their own operations and wondering how are they going to sustain – Maybe they don't have some of the scale advantages that we have or the know-how that we've had in the past, given the decades of experience we have. So actually what we're seeing is, to some extent, Unilever and Procter & Gamble beginning to think about changing their route to market, maybe relying more on an import model, which will force them to have to carry a heavier premium in the market, opportunity for us to fly below those prices. But equally, where we have maybe some of our more agile local competitors, where we are seeking to lead in the market, to answer your question very specifically, Damien, but we do so when we can justify the premium. So a really good example is Morning Fresh, right? Morning Fresh was a great performer in the first half. Customs Baby would be the same in Nigeria, right? And that's because they are delivering benefits and strong performance versus some of the local players who can be up to 30% or 40% cheaper. So we're seeing that on the case of... in the case of washing up liquid, that we're charging quite a premium, and to some extent we need to, to protect our margin integrity, but actually we're also making sure the product delivers, and we're continuing to innovate, and we're continuing to support and activate the brands, so that we also stay stop of mind. And as I said earlier, so far we are managing to walk that tightrope of minimal price elasticity, whilst also ensuring we're landing the pricing in line with the sourcing rate, which, as I said, was already somewhat higher than the official rate. Beauty. So I can remember when we first set out the strategy that's been guiding us for the last three years. Hygiene, baby and beauty are all very large, growing, but actually structurally attractive categories. And I think you could argue at the moment that beauty is even more so than it might have been four or five years ago. It's shown remarkable resilience. Yes, there are different manufacturers with ups or downs, but as a totality... beauty is still a really interesting and attractive market for us to play in or category for us to play in. So then it comes down to have we got a right to win, right? And that's why I spent a little bit of time talking about the strength of the two brands where we have seen some executional issues, so Sanctuary Spa and especially Saint-Tropez in the U.S., where we fundamentally believe we have a right to win with the strength of the equities of the brands. We know that we need to, if you like, polish up some of our executional capabilities, some of that being in-store execution, quite a lot of it being are we really developing a multi-year pipeline of news and innovation? Because ultimately the beauty category relies on news almost like a fashion category. Even if actually 80% of the sales are still on the same thing that were there last season, you need to be able to sprinkle some gold dust on the top. And actually, it's reassuring, therefore, that next Monday, February the 12th, we will be activating our new Ashley Graham Santa Fe campaign on both sides of the Atlantic. For those of you that don't know Ashley Graham, she is a highly followed influencer model entrepreneur who lands extremely well with our target consumer on both sides of the Atlantic. And we've got some fantastic new creative material that will be going out as of Monday. So we're still very confident that we will see an improvement in beauty. As to which month, which quarter, because you said in the second half, we'll let you know when we've seen it, but we're all over driving it at the moment.

Okay, thank you.

Let's just check. Okay, no one else putting their hand up in the room. Let me just check, Simon. Okay. We think there could be a voice coming from another place. We're going to wait and see. Wait for the words of wisdom on high. If we don't like the question, we'll just pull the line.

Thank you, Jonathan. If you'd like to ask a question and you've joined us on the telephone line, please press star followed by one on your telephone keypad. If you feel your question has been answered at any time, please press star two to withdraw it. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. That's star followed by one on your telephone keypad.

Okay, I think I scared them off with my quip. Okay, I will not use humour again in such serious circumstances. So look, if that's enough questions that we're going to get in the plenary forum, obviously we're around a little bit and we're happy to meet and talk over the coming days. What I would just close with doing is just really trying to set out that we see a business that's full of opportunities. We also clearly have our issues. We're not trying to duck those issues. All we can do is get on with dealing with the issues that are in front of us, whether they were of our making or beyond our control. But our job is to deal with them and ultimately to deliver shareholder value. And that's what we're here to do. Thank you very much.