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Operator: Good morning or good afternoon all, and welcome to the PZ Cussons Half Year Results Call. My name is Adam, and I'll be your operator today. [Operator Instructions] I will now hand the floor to CEO, Jonathan Myers, to begin. So Jonathan, please go ahead when you're ready.
Jonathan Myers: Thanks, Adam, and good morning, everyone, and thank you for dialing in to our first half results presentation of PZ Cussons financial year 2026. I'll start off with an overview of our performance and provide color on some of the drivers behind it and how we are moving to be a more focused and more resilient business. I'll then hand over to Sarah to take us through a review of the financials before we finish with some time for your questions. As many of you will be aware and hopefully are joining, we are hosting a capital markets event this afternoon in London, which is intended to address many of the questions that may be on your mind about the future of PZ Cussons. So this morning, we'd like to focus on questions relating to today's results and this financial year, leaving the topics of strategy and future plans to this afternoon. So let's get going with the results we announced this morning then. Overall, we delivered a strong financial performance in the first half of the year with broad-based growth and a healthy balance of price/mix and volume. I'll come on to more on this in just a moment. In December, we announced the conclusion of the strategic review of our Africa operation following our announcements earlier in the year regarding the renewed strategy for St.Tropez as part of our portfolio for the future. I'll provide an update on St.Tropez in the coming minutes. But the consequent sale of our share in the PZ Wilmar joint venture to Wilmar, along with the ongoing disposal of other noncore assets in Africa and Asia, has resulted in a significantly strengthened balance sheet and in PZ becoming a more focused and more resilient business. While all of this was in play, we have also worked hard to reduce our cost base and expect to deliver GBP 5 million to GBP 10 million of savings in FY '26, in line with previous guidance. Combined with the overall business performance to date and our outlook for the remainder of FY '26, we are increasing our operating profit guidance for the full year. Let me say a little bit more now about our overall business performance. We have delivered broad-based growth across our 3 reporting regions, each of our 4 lead markets of the U.K., Australia, Indonesia and Nigeria, and each of our top 10 brands in those markets. Obviously, we're pleased with this momentum, but we know we still have much more to do, especially translating our increasingly exciting multiyear growth plans into sustained in-market performance year in, year out. Coming back to our first half performance though, it's worth calling out that our revenue growth of 9.5% is balanced between price and volume, including in Nigeria where volume has returned to growth after several rounds of pricing that has initially knocked volume into decline. You'll hear a lot more about our African business later today. So let me give you a couple of examples outside Africa of what has been driving the momentum elsewhere. In the U.K., Sanctuary Spa grew double digits through the half, driven by a record Christmas gifting period, during which revenue was up more than 30%. We've been learning and optimizing our plans each year. This year, we shipped 98% of our Christmas packs before December and have more than doubled Christmas gifting as a revenue building block in our annual plan versus just 2 years ago. For example, it was one of the leading gifting brands in the Golden Gifting Quarter in Sainsbury's this year, beating Lynx, Nivea and Dove, and nearly doubling sales versus last year. We've gone beyond with just Sanctuary Spa this year and successfully expanded gifting to Original Source, Imperial Leather and Cussons Creations as well, playing at more price points, pushing higher and lower, and driving more displays in store. As you can imagine, we're already well on with finalizing plans with retailers for Christmas 2026. And all I'll say is look out for the GBP 100 Sanctuary Spa gift pack. Moving to Australia now, whether it's the new and improved auto dish format for Morning Fresh or a new flavor for Rafferty's Garden, innovation has played an important part in driving revenue growth on our top 3 brands, with each brand growing market share over the last 12 months. And the good news is we're growing share in categories that are also finally back in value growth in the latest quarter after a prolonged period of the Aussie shopper feeling the pinch. Beyond our top 3 brands, we have also used pack format and variant innovation on Original Source to launch a 1-liter pump pack onto shelves. In Australia, the U.K.'s market-leading 250 ml size that is common in our bathrooms is regarded as a travel size or something thrown into the gym bag. Instead, the market is in larger packs often with pumps. So rather than shipping sizes shoppers don't always want halfway around the world from our U.K. factory, we're now manufacturing a consumer-preferred pack size in a format with a pump from our Indonesian factory alongside Morning Fresh for the Australian market. Add all of this progress together, the ANZ business delivered its third consecutive quarter of revenue growth. Let me come back to action to strengthen our balance sheet and focus our business. We've made good progress over the past 5 years in reshaping the portfolio with the exit from noncore businesses along with the sale of surplus nonoperating assets. Most notably in this reporting period, we announced the sale of our 50% stake in PZ Wilmar, our noncore Nigerian joint venture. To date, we've received GBP 48.5 million of cash proceeds with a small additional amount from ancillary land assets expected shortly. This has delivered a material improvement in our credit metrics. Sarah will talk you through. In June, we confirmed our decision to retain St.Tropez and set a new strategic direction for the business. You didn't see St.Tropez amongst the top 10 brands on the chart just now. And that's because the seasonality of the sunless tanning category dragged the absolute revenue down and St.Tropez falls just outside our top 10 when looking at our first half in isolation. It didn't grow overall revenue in the half, very much highlighting the work in progress to turn the brand around. But we did grow plus 12% in the U.S. as the transition to The Emerson Group went smoothly, and we started to see some renewed traction with our retail partners. We clearly have more to do elsewhere where revenue is down over 30%. This was in part due to high levels of inventory coming into the year. We're already reducing that inventory as we move through this year, and then the need was to win back retail support for the brand. Still too early to call the season yet, but we're seeing strong support plans agreed for the new innovation this summer and the special packs and activation plans to support the 30th anniversary of the brand. For example, the latest shelf reset of merchandising material in boots has seen a return to retail sales growth since the change was made just a few weeks ago. Suffice to say, there will be much more to come on St.Tropez as we move through the season. And with that, I'll hand over to Sarah to take us through the financials.
Sarah Pollard: Thanks, Jonathan, and good morning, everyone. I'm going to take you through the PZ financial performance for the first half of FY '26, starting with a summary of the key group metrics, then moving on to the detail in each geographic region before covering cash flow and net debt and finally, our guidance for the full year. Unless otherwise stated, the numbers I will refer to are on an adjusted basis. So turning first to the headlines. Group revenue increased to GBP 269 million, up from GBP 249 million in the prior year period. On a like-for-like basis, revenue grew 9.5%, reflecting broad-based growth across each of our 3 reporting segments, each of our 4 lead markets and each of our top 10 brands. Adjusted operating profit increased to GBP 36 million, up from GBP 27 million last year, a 240 basis point improvement in margin. There is no profit contribution from the disposed PZ Wilmar edible oils joint venture in this half numbers. So if we also exclude it from the comparative period, operating profit increased from GBP 22 million to GBP 36 million. Of this GBP 14 million improvement, around GBP 6 million is the result of FX revaluation gains on U.S. dollar-denominated balance sheet liabilities in Nigeria, resulting from the appreciation of the naira in this first half as compared to the currency's sharp decline in the first 6 months of FY '25. On a statutory basis, operating profit was GBP 40 million as well as gains recognized on surplus nonoperating asset sales and a book loss in half one on the Wilmar proceeds received in that period. This figure also includes FX gains on the group's historical equity-like capital loans to its Nigerian subsidiaries, previously accounted for in the balance sheet. Consistent with the change in accounting treatment for FY '25, during the strategic review of our African businesses when the naira was depreciating in value, they are now shown on the face of the income statement, but to date adjusted out by virtue of them being deemed to be short term in nature. Adjusted profit before tax increased to GBP 30 million, up from GBP 20 million last year due to a reduction in the interest charge as well as the improvement in operating profit. Adjusted earnings per share was 4.37p compared to [Audio Gap] percent lower than the growth in profit before tax due to a higher group tax charge and minority interest leakage in Nigeria. The higher tax is due to 2 factors and is now more representative of the rates going forward. Firstly, the geographic mix of profits with more coming from Nigeria where the tax rate has normalized now that we have moved past the statutory losses experienced since the 2023 currency devaluation when only a nominal amount of tax was payable. It's also explained by the disposal of PZ Wilmar, which has always been equity accounted, meaning we reported our 50% share of the joint venture's post-tax profit into operating profit rather than the associated tax charge being recorded separately in the group's tax line. A dividend per share of 1.5p is unchanged from last year. Free cash flow was GBP 23 million, which when combined with cash proceeds from disposals during the period, resulted in a significant reduction in net debt down to GBP 84 million. The group revenue bridge shows an adverse foreign exchange impact of GBP 4 million relating to the depreciation of the Australian dollar and the Indonesian rupiah. The Nigerian naira appreciated in the period. As usual, these FX movements and the corresponding impact on revenue are shown in the appendix to this presentation. We delivered like-for-like revenue growth in each of the 3 reporting segments, which I will come on to in a moment. On a continuing operations basis, excluding PZ Wilmar from the base period, adjusted operating profit margin increased 430 basis points. Gross margin declined due to geographic mix as Nigeria with a structurally lower margin grew revenue faster than other parts of the group. The majority of the overall operating margin improvement was from a reduction in overhead. This was a combination of the FX revaluation gains on balance sheet liabilities in Africa plus group-wide cost savings. And in addition, marketing investment was, as we had planned, lower as a percentage of revenue, but this will reverse in the second half of the year. So turning now to the regions. Revenue in Europe and Americas increased to GBP 102.5 million with like-for-like growth of 1.7%. We saw growth across most of our brands, including 30% growth in Sanctuary Spa from a successful Christmas gifting range. This was despite challenging trading generally as the U.K. market remains highly competitive, something showing no immediate signs of impact. St.Tropez revenue declined 11% overall. And excluding this brand, overall growth in the region would have been 3%. Adjusted operating profit increased by GBP 2 million, reflecting the integration of the Childs Farm business as well as marketing investments weighted to half 2. In APAC, revenue was GBP 88 million, a growth of 5.2% on a like-for-like basis, but flat in reported currency with the Australian dollar and Indonesian rupiah depreciating against sterling. As Jonathan mentioned, we're encouraged by the Australian share gains in categories which are back in growth and with the 9% like-for-like revenue growth in Indonesia. Adjusted operating profit, however, declined GBP 1 million, including some legacy VAT charges in our smaller Asian businesses. African revenues increased to GBP 79 million. Like-for-like growth was 28% from both the annualization of pricing taken in FY '25 and the return to volume growth. We saw growth of 30% in reported currency as the naira has moved from a period of stability to now appreciating in value. This afternoon, Awie will take you through the team's plans to grow the business over and above the passing on of inflation, which in Nigeria continues to moderate to now around 15%. Removing the PZ Wilmar JV contribution from the FY '25 base, operating profit grew by GBP 7.6 million. Of this, as I mentioned, GBP 6 million was due to FX revaluation gains on balance sheet liabilities denominated in U.S. dollars as a result of the naira strength versus its depreciation in the prior year period. And whilst the first half margin of 14% does also include the carryover benefits of prior year pricing whereas half 2 will not, assuming the naira rates remains unchanged from current levels and assuming no change in underlying business performance, low to mid-teen margins should be sustainable going forward. Our current treatment of these FX revaluation impact is consistent with prior periods when the naira was depreciating. You'll recall we took a significant exceptional charge in FY '24 due to Forex losses related to legacy liabilities built up over many, many years prior to the devaluation when it was not possible for U.K. corporates to legitimately access the U.S. dollars required to settle such liabilities and repatriate the cash. The headline gains I'm describing today relate to liabilities incurred as part of recent trading, exactly as we got the FX losses from in-year operational liabilities in the prior FY '24 and FY '25 financial years where we executed multiple rounds of price increases to protect local profitability. Finally, turning to what we call the central reporting segment, essentially an internal cost center. The first half of FY '26 has seen a GBP 4.6 million reduction in the adjusted loss we report here, partly due to favorable intercompany FX movements from the naira and partly due to people cost savings and process efficiencies, reducing the external audit fees. We plan to review our presentation of these central costs in future reporting periods to better isolate the true corporate overhead from costs directly attributable to other parts of the business. The higher statutory loss represents the disposal of the PZ Wilmar JV, reflecting the receipt of only some of the total cash proceeds in the first half of the year. Turning now to the balance sheet. Leverage has reduced further from both free cash flow generation and disposal proceeds. Free cash flow was GBP 23 million after the seasonal working capital cash outflow from our half 1 reporting date falling immediately before peak trading periods in both Nigeria and the U.K. Christmas gifting. Both the high inventory and debtor positions typically unwind during our third quarter. CapEx was low at GBP 1 million due to the phasing of a number of projects, but we anticipate full year investments to be more in line with normal levels. The half 1 cash flow includes GBP 3.6 million of cash adjusting items, primarily relating to costs associated with the concluded strategic review. Beyond these drivers was a GBP 2.6 million cash add-back representing share-based executive compensation schemes and noncash pension charges. We received a total of GBP 27.6 million of cash proceeds from asset sales in the period. This comprised GBP 15.8 million gross proceeds from the sale of surplus nonoperating assets in Africa and Asia, and GBP 11.8 million from the initial completion steps of the PZ Wilmar disposal. This resulted in reported net debt down GBP 84 million with net leverage of 1.1x. As one of our new guardrails to better protect the business from future adverse currency impacts, the capital allocation policy we are announcing today now defines our leverage metric as net debt, excluding any cash balances held in Nigeria. And on this more conservative basis, would have been 1.4x at the end of the first half. The timing of the receipt of the Wilmar cash proceeds has been split across a number of individual components with consideration received for our equity holding, the repayment of loans and also some additional assets in the transaction perimeter. Since the end of November 2025, we have since received a further GBP 37 million from Wilmar, giving a pro forma half 1 net debt position of GBP 48 million and leverage below 1x. As we noted in this morning's release, trading to the end of January has continued in line with our expectations. And this slide provides updated guidance on some key items, including an overall increase in full year operating profit up to a range of between GBP 53 million and GBP 57 million compared to GBP 50 million to GBP 55 million previously. This guidance does imply a year-on-year decline in profit in half 2, a phasing profile that we signaled in our AGM trading update in November, largely attributable to the timing of marketing investments with a significant step-up in spend in the second half. We've also provided firm full year guidance on leverage given the progress to date, and we expect to end the year at the lower end of our new capital allocation policy range. Today will be the last time I present the PZ Cussons results. And so I would like to thank colleagues for their unwavering support, our advisers for their wise counsel and during some challenging times, and to wish external stakeholders all the very best for the future. I'm pleased and proud to be leaving the business in better financial shape and with a more encouraging outlook. And with that, I'll hand back to Jonathan.
Jonathan Myers: Thanks, Sarah. So we can turn the microphone over to you now. And as I mentioned at the beginning, ideally, let's keep the questions focused to this set of results, and we'll happily answer questions on the broader strategy and future plans at our event this afternoon. So Adam, I think it's over to you.
Operator: [Operator Instructions] And our first question comes from Matthew Webb from Investec.
Matthew Webb: I've got a few questions. Maybe I'll do them one by one. The first is on Indonesia where I see there's been both some social unrest and economic instability. And I think Moody's has downgraded the outlook for the country recently. I just wondered whether you're seeing any impact of that on trading and also whether that's changing how you think about how you run that business, how you invest in that country? That's my first question.
Sarah Pollard: Matthew, it's a good question. Maybe if I talk to some of the financial aspects, and then I'll hand over to Jonathan on some of the commercial trading points. So Matthew, you're referring, of course, to the Moody's downgrade in terms of the nation's overall outlook. Indonesia, of course, is an emerging market, markets which bring some inherent volatility. I think what I would do though in terms of financial perspective is to maybe talk a little bit about Indonesia and our business there, which is, first and foremost, to say, for us, it's a structurally advantaged business. We are in the baby toiletries business where there are still 4 million to 5 million newborn babies born every year. It's a high-margin business for us, and Jonathan will elaborate on some of the characteristics of our business there. But the reason I say that is it's highly cash generative for us. We don't have local borrowings. Whilst the currency is coming under some pressure, the ForEx markets work relatively rational so we can both better hedge against any local exposures, but also repatriate cash in an efficient way. So I think as distinct from some of the challenges we've had in Nigeria, we would describe it as a lower risk profile for PZ Cussons. We are ever vigilant to make sure we can generate the hard currency returns that our shareholders demand. Jonathan, do you want to talk a little bit more about that one.
Jonathan Myers: Let me take that a couple of things. So the first is just in terms of social unrest, Matthew, we have not seen disruption as a result of that. We have seen a little bit of disruption in Indonesia in the recent months, but actually much more of it related to flooding, particularly in the north of the country where some of our distributors, some of our retail partners, in fact, 1 or 2 of our employees were impacted. But we haven't seen anything impacting our business as a result of social unrest. Now if I come a little bit to where you were poking in the latter part of the question about how do we think about our risk appetite in the business, well actually, one of the first things that we are working on is how do we reduce our reliance on one brand. We're very exposed to Cussons Baby. We're very pleased with the progress of Cussons Baby. But we're working hard in the background on which will be the #2 or #3 brand, and in the coming months, we will update you on that. But actually, the risk mitigation and appetite assessment goes a bit beyond that because as we'll talk this afternoon, we have a significant manufacturing facility in Tangerang, which is the suburb of Jakarta, not only manufactures all our products for Indonesia and Southeast Asia, but it also produces all of our Morning Fresh for Australia. So in a sense, the good news that we'll talk about this afternoon is that we refer to a blended supply chain where we intentionally invest for scale in our own facilities, but we also have a good network of third-party manufacturers who give us not only agility, but in this case, also give us alternatives for business continuity such that if we were to encounter challenges, we would have alternative routes. And really, I know you hear a bit more about this afternoon about how we're thinking about our risk appetite in Nigeria and how we're putting in place together with the team in Lagos some guardrails to help us manage and mitigate that risk. We're going to be adopting that kind of framework to our business in Indonesia as well, which is we regard as a very positive and healthy way to address and manage our risk appetite as it translates into future projects and future investments. So it's on our radar screens. We are not overly concerned, but we are far from complacent. So happily, we'll talk more maybe late this afternoon about that as well.
Matthew Webb: Excellent. Thank you. And my second question is sort of slightly technical one. The GBP 6 million FX benefit in Nigeria, am I right in thinking that that's sort of a swing rather than a GBP 6 million benefit all in this year as it were? And if so, whether it's possible to sort of break out to what extent that's a credit this year versus a debit last year, if I've understood that correctly.
Sarah Pollard: Matthew, let me try on obviously one of my favorite topics. So is the GBP 6 million, if you like, what does it relate to? And what can we expect going forward? So it's real to the extent any income statement is a change between 2 balance sheet dates, and the accounting is entirely consistent with that, which we followed previously. It does, as you say, reflect a base year impact in terms of the steep naira depreciation of the first half of last year versus the relative stability of this half year. So that GBP 6 million year-on-year swing is a GBP 2 million credit this year versus a GBP 4 million debit last year. I think what I would have you think about is 2 things. One is it's a proxy for the overall economic environment, i.e., the naira stabilizing signifies an environment in which our brands can generate meaningful and sustainable value for us. But what you probably shouldn't do is expect another GBP 2 million or GBP 6 million necessarily in the second half of the year because, of course, those liabilities on the balance sheet are something that we have already and are looking to continue to extinguish because it's volatility either on the up or the down, but it's not helping. So we are going through a very determined program to recapitalize our local Nigerian subsidiaries and extinguish those liabilities. Matthew, if that helps.
Operator: Our next question comes from Damian McNeela from Deutsche Bank.
Damian McNeela: Just on the guidance, sort of following up from Matthew's question. What is -- or what is included in terms of FX gains, if any, in the second half to get to your increased guidance, is the first question.
Sarah Pollard: Good question. Let me try and characterize the guidance more broadly and then laser in on the specific question. So we sit here with a little over 3 months of the financial year left to go. So I would say we have a good line of sight into the year-end. But of course, still some things left to navigate, most notably some volatility in the naira, but also, as Jonathan talked to in terms of St.Tropez, we have our first big U.S. season since deciding to keep the brand, which, of course, has a range of outcomes. We're expecting positive outcomes, but there is a range of outcomes on what is a relatively very profitable brand for us. The overall guidance includes FX as we see it today, is how I'd answer the question in the broadest terms, that it doesn't include another GBP 2 million credit relating to those first half balance sheet liabilities, mainly because I can't be certain the rates will hold, but actually because we are going through the process of extinguishing those balance sheet liabilities, which have in the past been a hurt, have in the first half been a help, neither of which is particularly helpful. So we are going with our local Nigerian Board colleagues through a series of steps to extinguish those liabilities, be they write-offs, be they debt to equity, be they rights issues, various capitalization steps to effectively reduce the sensitivity in our P&L to movement in the naira, which if you remember maybe 18 months ago was something like every 100 moves between the naira and the U.S. dollar was giving us something like GBP 8 million of P&L sensitivity. That number today is closer to only GBP 4 million. So in any 1-year period, probably about GBP 2 million of a translation impact and GBP 2 million from that balance sheet effect. The latter, we are trying to extinguish for us all. So it doesn't assume another GBP 2 million help in the second half of the year.
Damian McNeela: Okay. That's pretty clear, I think. And just carrying on with the Africa theme, I don't know whether you will touch on it later this afternoon, but is there an updated position on how you view the minorities of PZ's Nigeria?
Jonathan Myers: We'll talk a lot about Africa this afternoon, Damian. We are not spending a lot of time on the -- if you like, the ownership structure of our operations in Nigeria. We're talking a little bit more about the resilience and underlying performance of the business. We have what we have, which is a listed entity of which we are very clearly the majority shareholder. We have an awful lot of retail minority shareholders, and at the moment, we are making that work for us.
Sarah Pollard: And Damian, you might be referring to 2, 2.5 years ago where we contemplated buying out our minorities and delisting. We may contemplate something similar again and consider it as we would any allocation of surplus capital to any acquisition of an earnings stream. We consider, as we do, that Nigeria brings with it a bright future. We may choose to put some capital down to acquire 100% of those future earnings because as you rightly, I think, are pointing out, our operating profit down to earnings per share experiences some leakage as a result.
Damian McNeela: Yes. Yes. Okay. That's very clear. And then if I may, one last one. U.K. performance in core washing and bathing looks to be pretty solid. Can you give an update or sort of some background color on the competitive environment and what your market share gains have been across the period, please?
Jonathan Myers: Yes. So let me do that, Damian. I think the word you use there is the perfect articulation. We have a solid performance. We're really pleased with the financial delivery of our U.K. business, at least as we have benefited from some real structural P&L improvements as we -- you remember, we combined it with our previous beauty business. We have integrated it with our European setup. And we have also integrated into it more fully our Childs Farm business, which for the first 2 or 3 years of our ownership, we kind of kept at arm's length. So we now have a very strong financial structure, which will give us the ability to invest sufficient marketing money to ensure that we are nourishing and nurturing our brand for the future, which is a good thing because we're going to need it, right, because the market is not getting any less competitive. In general, without overdoing the hackneyed phrase, we continue to see the bifurcation of the U.K. shopper. We have an awful lot of people hunting for value and looking for cheap lookalikes or private label or going down to the discounters. Equally, we have people who are willing to splurge on small luxuries. You only have to look at some of our Christmas gift sets from the price points that were considered just on our business but alone more broadly. And you continue to see that very, you like, dynamic but value-focused shopper environment. Within washing and bathing, we see 2 things. We continue to see scale players, most notably Unilever, really fighting to try and make their brands justify the price they're asking. So they do have a higher value share than us and they charge a higher price per mill. So that's something we need to make sure if we want to, our brands can do. And I'm sure you would have seen the Unilever-Dove sponsorship of Bridgerton recently as an example of we can never rest on our laurels the big multinationals. But actually, as recently as our Board meeting just yesterday, we were reviewing exactly the competitive nature of the U.K. modern bathing market. And the real change in the last 12 to 24 months has been the growth and acceleration of the explosion of Gen Z or Gen Alpha start-up brands, which are getting on to the shelf maybe 3, 6, 12 months disrupting and either surviving or dying quickly or being replaced. So it is really competitive. We have grown share in some subcategories of washing and bathing. We have not yet really nailed shower, which is why this afternoon you will hear a little bit more about what we're doing on the shower category, in particular to try and make sure that both Imperial Leather and Original Source are firing on all cylinders. So we are not complacent.
Operator: The next question comes from Sahill Shan from Singer Capital Markets.
Sahill Shan: Good set of numbers, good share price reaction. Three questions from me. Can I just start with the dividend? So optically improved balance sheet, EBIT guidance raised. Just help me understand the rationale for holding the dividend flat. And does that sort of reflect some prudence ahead of investment in H2? Or does it signal a more cautious stance on cash generation?
Sarah Pollard: Sahill, let me take that question. Thank you for your interest in PZ Cussons. So you may also have seen this morning, we put out a short RNS ahead of our Capital Markets Day this afternoon where we set out a new capital allocation policy, essentially inking in what we consider to be a prudent leverage range. We're then going on to say use of surplus capital will first and foremost be focused on a progressive ordinary dividend policy, then with any bolt-on M&A opportunities and more one-off returns to shareholders being considered alongside each other. So in the first half of this year, we have reported 12% increase in earnings -- as we look ahead to the full year, a little bit as I touched on in terms of the structural dynamics of our Nigerian growth that acts as a slight tether to our overall earnings per share outlook for the full year. And therefore, we felt it was prudent to not increase the dividend on the first half of the year. But through the cycle, you will hear us talking about this afternoon a very clear and confident commitment to a progressive dividend policy by which we define it as an absolute increase over time. So I think more to come, Sahill, is how I would answer your question.
Sahill Shan: Good answer. Clear. Second question, Africa earnings. So I think I heard this correctly, but strip out the GBP 6 million FX, how should I be thinking about the underlying run rate margin in Nigeria? Are we looking at around mid-teens sustainable on a normalized basis, absent currency headwinds going forward over the short to medium term?
Sarah Pollard: Sahill, another good question. Let me see if I can give another good answer. So I think you should be thinking about the 14% as being coming together of a number of positive factors, some beyond our control, many, many within our control. So we are very, very proud of having over the last 5 years, moved that business from a position of local currency loss to local currency profitability. So we are benefiting from the carryover of pricing that was necessary and successful through the significant inflation that we saw during the devaluation whilst also continuing to invest behind their brands so they remain relevant to consumers and therefore, a very pleasing return to volume growth in the first half of this year. So I think the 14.7% is a little on the upside of what I would suggest is a sustainable range going forward. Low to mid-teens through the cycle is probably a better proxy.
Sahill Shan: Got it. Clear. Final one for me. So a central piece. So in the U.S., you saw, I think I read 12% growth under The Emerson partnership. Rest of the world remains weak. Looking forward then, what does success look like over the next 12, 18 months? Is it revenue stabilization, margin improvement or both?
Jonathan Myers: Great question. So you're absolutely right. So as part of the U.S. transition where we changed our operating model, partly the simplification of our business, which was part of what we set out at a very macro level of the company to do, so we closed up our own shop and we moved to a really credible go-to-market operator called The Emerson Group. And thanks to a lot of hard internal work, we managed a smooth transition from setup A to setup B. But more importantly, Emerson has fantastic access to retailers in the U.S. from ULTA and Sephora towards the top end of beauty right through to Target, Walmart, CVS and Walgreens. So we have not only seen a -- we haven't dropped the ball in the transition, we have also begun to see good traction as we have reengaged with some of the retailers that I mentioned just now. So in effect, the double-digit declines that we saw in the previous year in the U.S., we have now reverted to double-digit gains. The issues more broadly in the short term, and I'll come to your question on what does the success look like. The short-term issues elsewhere has been more a question of burning through some quite high inventories, most notably actually with Amazon in the U.K. where we saw at their behest some very strong demand as we ended last year. And the good news is our revenue performance is worse than their EPOS or retail sales performance, which is a clear indication that we are burning through the inventory. In fact, we're seeing quarterly sequential improvements in our numbers outside the U.S. So when it comes to what is successful, the first thing is we want to see progress in the coming season. It's a really seasonal business, right? After 7 months of our financial year, we would normally only expect to have shipped 1/3 of our St.Tropez revenue. So it's a little bit like an ice cream company waiting for the good weather, right? So we are very confident that we've got good plans for this year. We have new product innovation. We have special packs to celebrate 30th anniversary of St.Tropez. And we're also seeing some good traction, as I mentioned, with some of the retailers where we are re-engaging with more positive intent, most notably goods in the U.K. where we've seen a return to their retail sales or EPOS growth. So we will have an indication of this year of have we seen good revenue and are we tracking through the year on a quarterly basis back to the revenue growth. More broadly though, we want to see next season, which will be the season when a lot of the work on this year's innovation behind the scenes will then hit the ground that we've been working very collaboratively with retailers so that we then see really what is the first full year of both Emerson in action, our innovation in action and our activation in action. And we will constantly be looking forward to absolutely revenue growth and over time, also profitability improvement as we step up our investments to ensure we get a good return on the marketing required in a brand at that time. So we have some very clear internal milestones that as a Board we are holding ourselves to, and we are working very hard to deliver them.
Operator: Our final question today is a follow-up from Matthew Webb at Investec.
Matthew Webb: I've just got 2 more, please. First, just going back to Nigeria. Obviously, price/mix was a big driver in the first half, although obviously volume is strong as well. But you've cautioned that price/mix is going to be less of a factor in the second half, but inflation is still quite high in Nigeria. I just wondered, first, whether there is still some annualization of previous price increases that will help you in H2? And also probably more importantly, what your -- what sort of price increases you're going to be taking going forward? Presumably, you will still be taking some price. That's my first question. And then the second is just on the guidance you've given on marketing being H2 weighted. Can I just be clear on that? Is that in more H2 weighted than normal? And if you could put any rough numbers on that, that would be helpful, just in terms of how we think about that very strong H1 performance and the full year guidance on operating profit.
Jonathan Myers: Yes. So let me pick that, Matthew. I'm so interested you came back for more. I thought we were off the hook, but there's no relaxing here yet, right. Let me now demonstrate we're absolutely ready for it, right? So in terms of Nigeria, so just a little bit on last year. So we took a lot of pricing. We've talked before about 20-plus rounds of pricing through the year where we saw some volume impact in the initial phases for sure we're getting elasticity when you take that much pricing. But over time, the consumer gets used to it, they're seeing a lot of inflationary pricing in the stores, right? And therefore, we have now seen in the last 2 quarters, our volume come back. As we annualize that degree of pricing, obviously, the rollover begins to work through and wear out. Our very clear intent is always to be driving revenue in line with or slightly ahead of inflation. Now how much will depend on how much we want to push pricing versus volume. But if our ambition is to drive and our intent is to drive real growth, we need to be able to demonstrate that using all levers of revenue growth management that we are nudging up not only our pricing such that we're getting in line with or ahead of inflation, but ideally also mitigating any gross margin challenges. The one thing that is important for us to stay really close to is as more benign exchange rates, particularly when it comes to sort of raw commodities, affect the ability of our competition to drop prices, what do we do. So we are working very hard on where is it right for us to spend more on marketing money in Nigeria to justify the hard won price increases that we have landed. And we're very judiciously, we're seeing our improving volume trends then coming under pressure because obviously brands are underpricing us, what would we do smartly to make sure that we're not ceding ground in terms of volume and household penetration. But we are clear that even though the pricing machine momentum will run out a little bit in terms of cycling through that historic base, our goal is to make sure that we're pricing one way or another in line with or slightly ahead of inflation. In terms of your marketing question, right? So we are very -- we've been very explicit that we will be H2 weighted, not just today, but previously. And a lot of that has to do with exactly how we expected our brand plans to fall and some of our innovations to fall. I will give you an example. Last year, we invested some St.Tropez money off season in the pursuit of trying to improve momentum. We didn't see a good return on it. So we didn't repeat it and we have intentionally back weighted our St.Tropez money, a little bit like the ice cream analogy, to make sure we're investing in the run-up to enduring the season. So that's one big driver of the H1, H2. But actually, we have also been looking at how do we step up our investment so that we are investing at competitive levels where we can be confident either of a really good rate of return because it's activity that we've invested behind before or actually where are we putting some seed money out there so that we can test and learn. And if we see something work, we can then reinvest more aggressively. Or if we see something fail, not having spent too much money on it, we can then move on to the next thing that we want to invest behind. So actually, in our second half, you'll be seeing not only more investments in our base business and here in the U.K., you'll be seeing in Imperial Leather, you'll be seeing Original Source, you'll be St.Tropez, but we are also stepping up. So for example, for the first time in many years, we'll be investing above the lines in New Zealand, not just in Australia where we've had a change of distributor, and we have seen real traction with retailers where we're building new distribution points. So we want to invest behind our brands in New Zealand. But equally, we'll be doing some of that tests and learn that I mentioned. So look out, for example, the St.Tropez on TikTok Shop in the U.K., trying to re-apply some of the phenomenal success we've seen with online marketplaces such as TikTok Shop in Indonesia, which I would say in the first half, they were -- revenues with TikTok Shop were up 60%. So what can we do in the U.K. with that? So actually, what you're going to see in the second half is our highest level of M&C in the last 4 or 5 years because we are absolutely trying to walk the talk on we're building brands and we're ready to invest behind them.
Matthew Webb: Look forward to seeing you all this afternoon.
Jonathan Myers: Great. Well, you stole my [indiscernible] actually, Matthew. I'm looking forward to seeing everyone who is coming this afternoon. So thanks to all of you for dialing in this morning. Listen, we are obviously feeling upbeat about the performance we have reported, but we're not getting carried away. Our feet are firmly on the ground. We can never give up and there's always more to do. And there are -- a little bit as we discussed with Damian, there are always new competitors coming to take our share. So there is a very healthy degree of paranoia in the business. But we are confident in our ability to drive performance and to deliver over the long term. So for those of you joining us this afternoon, we look forward to seeing you. We will be setting out a renewed strategy. We'll be updating you on our innovations and brand building, and we'll be giving you a very deep dive into our African business. So I look forward to seeing you all there. Thank you very much.
Operator: This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.