Final Results
Bunzl PLC
26 February 2007
PRELIMINARY RESULTS FOR YEAR ENDED 31 DECEMBER 2006
Monday 26 February 2007
Bunzl plc, the international distribution and outsourcing Group, today announces
its annual results for the year ended 31 December 2006. The results were:
• Revenue up 14% to £3,333.2 million
• Operating profit before intangible amortisation up 11% to £226.3 million
• Profit before tax and intangible amortisation up 9% to £209.6 million
• Profit before tax up 7% to £189.7 million
• Earnings per share+ up 7% to 37.8p
• Adjusted earnings per share+* up 8% to 41.7p
• Dividend for the year up 8% to 17.0p
• Return on average operating capital 61.7%
Acquisition highlights of the year include:
• £390 million of annualised revenue added
• Entry into North American safety products redistribution
• Addition of major UK distributor in healthcare disposables
• Significant international expansion in non-food retail
Commenting on today's results, Anthony Habgood, Chairman of Bunzl, said:
'Bunzl has produced another good set of results as we have once again
demonstrated growth through continually redefining and deepening our commitment
to customers, consolidating the markets in which we compete and expanding our
geographic coverage.'
Michael Roney, Chief Executive of Bunzl, said:
'I am pleased to report a strong 2006 operating performance, organic revenue
growth of 5% and higher acquisition spend of £162 million. This gives us a
platform and momentum for our international growth which will be supported by
continued focus on operational improvements and increased international
sourcing.'
Enquiries:
Bunzl plc Finsbury
Michael Roney, Chief Executive Roland Rudd
Brian May, Finance Director Mark Harris
Tel: 020 7495 4950 Gordon Simpson
Tel: 020 7251 3801
+ From continuing operations
* Before the effect of intangible amortisation
Note:
A webcast of today's presentation to analysts will be available on www.bunzl.com
by 2.00pm today
CHAIRMAN'S STATEMENT
In its first full year as a focused distribution and outsourcing company, Bunzl
produced another set of good results driven both by organic and acquisition-led
growth. All four business areas were ahead of 2005 in both revenue and profits.
Overall revenue rose 14% to £3,333.2 million. Operating profit before intangible
amortisation was up 11% to £226.3 million, earnings per share from continuing
operations rose 7% to 37.8p, while adjusted earnings per share from continuing
operations, after eliminating the effect of intangible amortisation, rose 8% to
41.7p. Adverse currency translation movements, especially the US dollar, reduced
Group growth rates by between 1% and 1.5%.
Dividend
The Board is recommending an 8% increase in the final dividend to 11.7p. This
brings the total dividend for the year to 17.0p, an increase of 8%. Shareholders
will again have the opportunity to participate in our dividend reinvestment
plan.
Share buy back
During the second half the Company conducted a limited on market share buy back
programme under which 9.1 million shares were bought into treasury for a total
consideration of £63.1 million.
Strategy
For many years we have pursued a strategy of focusing on our strengths and
consolidating the markets in which we compete. Through the pursuit of this
strategy we have built leading positions in a number of business sectors in
North America, Europe and Australasia. In 2006 we further extended our business
coverage with acquisitions that took us further into safety products in North
America, medical supplies in the UK and non-food retail internationally as well
as continuing to consolidate our more established markets. Continually
redefining and deepening our commitment to customers and markets, as well as
extending our business into new geographies, remain important elements of our
strategy as we continue to expand and increasingly co-ordinate our procurement
and international sourcing.
Investment
Over time we have steadily invested to reflect our growth strategy and enhance
the capital base of the Group. In order to meet our targets we have expanded and
improved warehouses and opened new ones. Upgrading our computer systems is an
ongoing task as we integrate new businesses into the Group's operations and to
enhance customer service. Systems remain critical to our ability to serve our
customers in the most efficient and appropriate manner and we are convinced that
our modern systems are a source of heightened advantage that enable us to manage
our business in a way that will allow us to maintain our leadership in the
marketplace.
Employees
As a service oriented company we continue to rely on the quality and efficiency
of our employees across the world. We very much appreciate their hard work and
loyalty which are key to the ongoing growth and success of Bunzl. One of our
competitive advantages is our ability to integrate newly acquired businesses
effectively. Our success in this area is very much due to the adaptability of
our employees and their willingness to assist in the integration of businesses
building on the strengths of both parties. Everyone's efforts are greatly
appreciated.
CHIEF EXECUTIVE'S REVIEW
Operating performance
The strong performance of the Group continued in 2006 with good results being
bolstered by an increased level of acquisition activity. The successful
operating performance was a reflection of solid organic growth and the improved
performance of acquisitions completed in the previous year. In this review
references to operating profit are to operating profit before intangible
amortisation.
Overall revenue was up 14% and operating profit rose by 11%. Although operating
profit margin declined from 7.0% to 6.8%, principally due to the effect of lower
margin acquisitions made in 2006, Group margin, excluding the impact of currency
exchange and acquisitions, moved up from 6.9% to 7.1%. Our specialist knowledge
and experience in providing cost effective outsourcing solutions led to
underlying volume growth as we continued to offer innovative supply programmes
to add value for new and existing customers. In North America revenue rose by
14% with operating profit increasing 13%. UK & Ireland showed a 17% increase in
revenue and a 6% rise in operating profit, with the reduction in business area
margin resulting from the Southern Syringe acquisition which is operating at
margins below the business area average. In Continental Europe we saw an 11%
revenue increase with operating profit up 8%. Australasia experienced a 12%
increase in revenue and a 14% improvement in operating profit.
Adjusted earnings per share from continuing operations, after eliminating the
effect of intangible amortisation, were 41.7p, an increase of 8%, while basic
earnings per share from continuing operations were 37.8p, a rise of 7%. Return
on average operating capital continued at a consistently high level, improving
marginally to 61.7%. After acquisition expenditure of £162 million, a share
buy back of £63 million and a strong operating cash flow, net debt increased by
£80.4 million to £430.7 million resulting in a net debt to EBITDA ratio of 1.8
times.
Acquisitions
The Group spent £162 million on acquisitions during the year, principally as a
result of a strong expansion in the UK, three noteworthy investments in North
America in the second half and one acquisition each in Continental Europe and
Australasia. The businesses acquired extended our product offering and customer
base in our existing operations and also expanded the Group into new market
sectors. In total these acquisitions will add about £390 million to annualised
revenue.
In January we completed the acquisition of Midshires, a UK vending business with
revenue in 2005 of £12 million, and Master Craft, a US redistribution business
servicing the foodservice sector with revenue of $11 million in 2005. In April
we announced two additional acquisitions as we expanded further in Australasia
and France. Allcare, with revenue of A$23 million in the year ended June 2005,
is principally engaged in the distribution of personal protection equipment and
disposable products to food processors in Australia. Picardie Hygiene, with
revenue of €10 million in 2005, distributes cleaning and hygiene products in
northeast France.
In July we acquired Southern Syringe, a business based in London involved in the
sale and distribution throughout the UK of healthcare related consumables to a
variety of end users including the NHS, private hospitals and nursing homes.
Revenue in 2005 was £182 million. This acquisition significantly expands our
position in the growing healthcare consumables market.
We announced two further acquisitions in North America in August. Morgan Scott,
a Toronto based business with revenue in 2005 of C$66 million, is engaged in the
distribution of jan/san and foodservice disposable products in eastern Canada.
We also purchased United American Sales, a redistribution business based in Ohio
with revenue in 2005 of $58 million supplying personal protection equipment to
the industrial and construction markets. The acquisition of Cole Harford, a
Kansas City based business with revenue in 2005 of $64 million, was announced in
October. It is a redistributor principally engaged in the supply of foodservice
and jan/san disposable products. These three acquisitions are excellent
additions to our successful and growing business in North America.
In December we completed the purchase of Keenpac, a UK based business with
revenue in 2005 of £74 million. Keenpac is involved in the supply of quality
retail packaging principally in the UK and the US but also in France, Italy,
Switzerland, Hong Kong and Australia. Products, which are predominantly sourced
from Asia, include bags and boxes for a variety of customers including luxury
brands and high street retailers. This excellent international company will
significantly expand our sales of non-food retail supplies, extend our sourcing
capabilities and provide an opportunity to develop our business in countries
where we do not currently have a presence.
Prospects
Although interest rates moved upwards in the main economies of the world,
economic growth continued and the Group showed its international strength with
good increases in revenue and operating profit in all four business areas. Oil
and natural gas prices were volatile during the year and the input prices on
plastic resin and pulp based products experienced upward pressure in the first
part of 2006, remained relatively firm for the second half and have entered 2007
with mixed trends. Although the strengthening of sterling in 2006 only had a
marginally negative effect on the full year, if exchange rates hold at their
present levels the translation impact on the 2007 results will be more
significant.
North America is continuing to progress well due to the impact of acquisitions
and normal levels of organic growth. The acquisitions made in 2005 at lower
margins showed considerable improvement in 2006 and we expect that positive
trend to continue, combined with the contribution from acquisitions completed in
2006. Our business in the UK & Ireland was broadened further through two
significant acquisitions which will lead to a large increase in revenue in 2007.
Southern Syringe should show some incremental improvement in 2007 as the planned
integration progresses. Furthermore the combination of improved momentum from
the second half of 2006 and the addition of the earnings enhancing acquisition
of Keenpac in December is providing an encouraging start to the current year.
Good organic growth in Continental Europe should continue in 2007. Though there
are still some margin pressures in our French business we remain confident that
our operational initiatives will have the desired positive impact. Australasia,
supported by improved results in the latter part of 2006 and the better than
expected performance from recent acquisitions, is also performing well.
The success of our first full year as a focused distribution and outsourcing
Group gives us confidence in our international growth plan, both organically and
by acquisition. This will be supported by continued focus on operational
improvements and increased international sourcing. As a result we believe that
the prospects are good and that our business will continue to grow successfully.
North America
As a result of good organic growth and acquisitions, revenue increased by 14% to
£1,896.8 million and operating profit by 13% to £131.2 million.
Underlying volume growth continued to reflect our customers preference to buy
their requirements from us, often on a totally outsourced basis, in order to
reduce their costs of sourcing products that they need to run their businesses
but do not actually sell themselves. Our focus continued on finding solutions
for them to generate additional sales and operational efficiencies.
The acquisitions completed during 2005 were all transferred onto our IT system
during the year and were successfully integrated into our existing operations.
In addition we announced four further acquisitions in 2006. All operate in
business sectors other than supermarket, which historically has accounted for
the largest proportion of our sales. This is in line with our strategy to
acquire companies that will expand our presence in sectors with higher growth
potential.
Our redistribution business continued to grow and strong acquisitions have
enhanced our business development in this area. Morgan Scott expanded our
presence in eastern Canada, particularly in the jan/san and foodservice sectors.
United American Sales has given us the opportunity to enter the redistribution
sector for personal protection equipment which is a growing area and complements
our safety supplies businesses in Europe. Cole Harford, a significant
foodservice and jan/san redistribution company, reinforces our position,
particularly in the midwest and southwest.
As a result of our growing redistribution business, we announced a new and
separate organisation to lead our sales and marketing efforts in this area.
Strategically we believe it is wise to separate our customers between those
where we sell products directly for use in their own businesses and those of our
redistribution business where we sell primarily to other distributors for
subsequent resale. The primary objective is to grow more rapidly in this
strategic sector of our business. We will accomplish this by better penetrating
current customers, developing national opportunities, expanding into new sectors
like personal protection equipment and by working more closely with our
suppliers to increase the volume of goods sold through redistribution. Due to
the increased costs of distribution, warehousing and working capital
requirements, the demand for an efficient method of redistribution is continuing
to expand.
In an effort to drive further organic sales growth and increase margin, we
continue to make significant investments in our employees through training
programmes and new marketing tools.
The VIP (value, integrity and performance) sales training and development
programme has proven to be an effective tool for our sales team. It is designed
to give employees the basic selling tools to help them identify opportunities to
enhance margin and increase sales. All General Managers, Sales Managers and
Sales Representatives completed this three day programme in 2006. Our goal is to
expand VIP to other operational areas of the business in an effort to enhance
our exceptional customer service.
We also experienced organic growth through deeper penetration of existing
customers, particularly with jan/san products. Our marketing efforts have
expanded to provide our salesforce with new and improved tools to increase their
productivity and level of success. A new 300 page catalogue contains information
on more than 5,000 jan/san and foodservice items for our redistribution
business. Available in both hard copy and electronic formats, the catalogue has
an easy-to-customise cover that customers can adapt to their particular
business.
Portable marketing tools have also been introduced including one which contains
effective sales presentations, valuable product information and training aids
which give the sales team the necessary resources for improved results.
Our e-commerce initiatives continue to increase sales. The catalogue for
redistribution became available online during the year, adding a convenient
ordering alternative for this customer base. Both our direct and redistribution
customers have the added value of internet access for inventory information,
pricing, order and delivery status and much more.
Technology continues to be a significant area of investment. Sixteen warehouses
are now equipped with radio frequency scan-based equipment for receiving,
put-away and picking of inventory and we plan to extend this programme
throughout the business. The system has resulted in greater efficiency, reduced
costs and improved customer service. Due to increased picking and invoicing
accuracy, credits have been reduced significantly in terms of dollars and
transactions. These improvements have led to increased customer satisfaction and
greater efficiencies in our warehouses.
We continue to source an increasing amount of products from suppliers overseas.
Our import activities extend globally, primarily in Asia. Two warehouses in
Shanghai consolidate many locally sourced products which enable us to deliver
items directly to our facilities in the quantities they require. Our business in
Australasia has also recently joined this import programme.
As fuel costs rose in 2006, we proactively took measures to reduce consumption
and thereby minimise their impact on operating costs. We continue to expand our
onboard tracking system that monitors and records vital information such as road
speed, idle running time and distance travelled. This provides warehouse
management the means to analyse route dynamics in order to improve productivity.
A truck driver safety programme has also been developed, focusing on accident
prevention.
The commitment and hard work of our entire team allows us to provide products
and services of the highest quality. We will continue to enhance all aspects of
our business to build on the strong foundation our customers and suppliers have
come to expect.
UK & Ireland
After a relatively slow start to the year, trading conditions improved in the
second half when we also made two significant acquisitions in Southern Syringe
and Keenpac. Although revenue increased by 17% to £774.6 million, operating
profit rose less, by 6% to £59.7 million, due to the impact of the lower margin
Southern Syringe acquisition, with the underlying business area margin slightly
ahead. We successfully managed the impact of higher commodity and energy input
prices into our supply chain and continued to increase efficiencies within our
infrastructure.
Our hotel, restaurant and catering (horeca) businesses had a challenging year.
In the face of tougher market conditions we maintained our margin, rationalised
our distribution network by closing two smaller warehouses and restructured our
salesforce to reduce our operating costs. This, together with significant
contract wins in the public sector, hotel and care home markets at the end of
2006, leaves the business well positioned for 2007.
The retail supplies business maintained its momentum from 2005. We successfully
extended the range of products into existing customers and we also implemented a
contract to supply a national chain of petrol forecourts which took us into a
new market sector. In the second half we opened an extension to our Manchester
warehouse to handle this growth. The acquisition in December of Keenpac, which
specialises in added value premium packaging, will provide opportunities to
cross sell both businesses' services particularly to the non-food retailers.
The cleaning and safety businesses performed well. While business with our
manufacturing customers declined, sales elsewhere developed as we won some
significant public sector and construction accounts. The businesses successfully
renewed a number of contracts extending them to sole supply status and secured a
long term national contract with a leading contract cleaner. We opened a new
branch in Essex, which has successfully won new business, and released capacity
in London to allow sales growth there. Additional ranges were sourced from the
Far East and we reduced our operating costs by creating a new business unit in
Swansea, which combined two existing operations, to focus on supplying national
personal protection equipment and workwear contracts.
We made an important move within the healthcare market with the acquisition of
Southern Syringe in July. This provides us with a significant presence in the
healthcare consumables distribution market where it offers a one stop shop for
both the NHS and private hospitals and complements our existing Shermond
business. We have started to introduce our processes and systems which will help
to raise the operating margins. Despite the NHS budget deficits seen at the
beginning of the year and the volatile price of latex throughout 2006, Shermond
maintained its position and we made good progress with new product ranges.
In Ireland our business saw good growth as the catering supplies sector remained
buoyant, although favourable tax allowances for hotel construction are now
ending, and we won new contracts in the cleaning, safety and retail sectors. We
integrated our cleaning and safety sites in Dublin to increase efficiencies and
appointed a new general manager to run this combined business.
During the year the vending business integrated the Midshires acquisition made
in January. This improved the depth of our national coverage, strengthening our
position in the Midlands. We retained a number of leading contracts and also
extended our presence within the retail sector. To improve efficiencies we
rationalised the number of sites and opened new warehouses in Loughborough,
Newton Aycliffe and East Grinstead.
Going forward, the acquisitions of Southern Syringe and Keenpac reinforce our
market focus and will allow us to strengthen our consolidation offer in the UK
and Ireland by providing our existing product ranges to new markets while also
extending new product ranges into our existing businesses.
Continental Europe
Revenue increased by 11% to £544.7 million and operating profit rose by 8% to
£40.9 million as our business delivered strong organic growth in both revenue
and profits. Raw material prices increased throughout 2006 creating margin
pressure within all areas of the business.
The French cleaning and hygiene business saw revenue growth in a challenging
economic environment. This sales growth was principally driven by our ability to
serve national customers, aided by the establishment of a national accounts
team. This was supported by the acquisition of Picardie Hygiene announced in
April which strengthened our position in northeast France. Techline, our own
brand range of products, was successfully launched during the year but the
benefits achieved were not sufficient to offset fully the combined impact of
price pressure and a changing customer mix which led to a decline in margin. The
investment in IT continued with the new ERP system on track to be rolled out by
early 2008. Our other French business that supplies personal protection
equipment and safety products performed well. This was achieved through strong
organic sales growth from a number of large accounts as well as from local
customers.
In the Netherlands our retail business had a very strong first full year under
Bunzl's ownership through good organic growth. A focus on product innovation
drove sales growth with new contract wins and range extensions with existing
customers. Good margin management and cost control helped profit to grow
substantially. The retail business successfully rebranded itself under the Bunzl
name to continue its integration with our business supplying horeca customers in
the Netherlands. Our horeca business also delivered profitable growth through
increased sales following a large contract win in the latter part of the year
and improved sales to the hotel sector.
In Germany we continued to grow our national accounts business but also
developed our regional sales and benefited from business related to the FIFA
World Cup. This strong organic sales growth and good cost control resulted in a
good increase in profitability.
Our retail business in Denmark had another excellent year, delivering profitable
growth ahead of our expectations. An improvement in margins and ongoing cost
control helped drive this positive result. Our business supplying horeca
customers also continued to prosper. A significant contract win at the end of
2005 and the successful introduction of a food solutions product range provided
strong organic sales growth and contributed to a higher level of profitability.
In central Europe, our retail business performed well and was ahead of
expectations following its first full year of trading since it was acquired in
July 2005. The business supplies packaging and equipment to retail customers
throughout the principal countries of central Europe. Sales have increased
following the opening of a number of supermarkets in the region and costs are
well controlled. Our business supplying cleaning and safety products has also
performed ahead of expectations, principally due to organic sales growth from
new and existing customers in both Hungary and Romania. We are investing in IT
throughout central Europe in order to build a platform that can readily benefit
from further growth in these emerging markets.
Australasia
A combination of organic growth and the impact of acquisitions contributed to
revenue growth of 12% to £117.1 million and a 14% increase in operating profit
to £9.6 million. The underlying growth rate was lower than in 2005 principally
due to weaker performance by our businesses in the first half. However the
business area experienced stronger profit growth in the second half of the year
which creates a solid base leading into 2007.
Our largest business continues to grow satisfactorily and consolidate its
position within its core sectors of healthcare, industrial, horeca and retail.
The business will benefit from additional contract wins made during the second
half of the year. We also established a new distribution facility in New Zealand
during 2006 which is developing well and provides the platform for stronger
organic growth in this region. Our food processor supplies business experienced
good revenue and profit growth in Australia although this was partly offset by a
decline in the New Zealand business. Our specialist healthcare business had an
excellent year with strong revenue and profit growth.
We continued in our strategy to acquire quality businesses within core market
sectors including the purchase in April of Allcare, a distributor of personal
protection equipment and disposable products. It has a strong position
nationally with major food processors and creates synergies for consolidation of
similar product categories within our existing portfolio.
The business area continued to invest in new infrastructure, upgrading existing
facilities and further enhancing our IT systems. Our focus to improve customer
service resulted in initiatives to streamline our operating platform and drive
efficiencies to offset cost increases. During the year we launched an internet
ordering platform to complement our existing e-business facilities with
customers and suppliers. This new facility will enhance our service offering by
simplifying order placement and improving visibility for information and
reporting requirements to our customers.
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2006
2006 2005
Continuing operations Notes £m £m Growth
--------------------------------------------------------------------------------
Revenue 2 3,333.2 2,924.4 14%
================================================================================
Operating profit before intangible 2 226.3 203.4 11%
amortisation
--------------------------------------------------------------------------------
Intangible amortisation (19.9) (15.9)
--------------------------------------------------------------------------------
Operating profit 206.4 187.5 10%
Finance income 3 19.6 22.0
Finance cost 3 (36.3) (32.8)
--------------------------------------------------------------------------------
Profit before income tax 189.7 176.7 7%
--------------------------------------------------------------------------------
Profit before income tax and intangible
amortisation 209.6 192.6 9%
--------------------------------------------------------------------------------
UK income tax (9.1) (8.7)
Overseas income tax (51.2) (48.0)
--------------------------------------------------------------------------------
Total income tax (60.3) (56.7)
--------------------------------------------------------------------------------
Profit for the year 129.4 120.0
--------------------------------------------------------------------------------
Discontinued operations
Profit for the year - 4.2
--------------------------------------------------------------------------------
Total profit for the year 129.4 124.2
================================================================================
Attributable to:
Equity holders of the Company 129.4 123.6
Minority interests - 0.6
--------------------------------------------------------------------------------
Total profit for the year 129.4 124.2
--------------------------------------------------------------------------------
Earnings per share attributable to the Company's
equity holders
================================================================================
Basic 37.8p 36.5p
================================================================================
Diluted 37.5p 36.3p
================================================================================
Earnings per share from continuing operations
attributable to the Company's equity holders
================================================================================
Basic 6 37.8p 35.4p 7%
================================================================================
Diluted 6 37.5p 35.2p
================================================================================
================================================================================
Dividend per share 5 17.0p 15.7p 8%
================================================================================
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
FOR THE YEAR ENDED 31 DECEMBER 2006
2006 2005
£m £m
--------------------------------------------------------------------------------
Profit for the year 129.4 124.2
Actuarial gain/(loss) on
pension schemes 17.4 (27.3)
Deferred tax on actuarial
(gain)/loss (5.5) 8.4
Currency translation
differences arising in year* (7.1) 8.1
(Loss)/gain recognised in cash
flow hedge reserve (0.3) 0.3
Movement from cash flow hedge
reserve to income statement (0.3) 1.3
--------------------------------------------------------------------------------
Net income/(expense)
recognised directly in equity 4.2 (9.2)
--------------------------------------------------------------------------------
Total recognised income for
the year 133.6 115.0
================================================================================
Attributable to:
Equity holders of the Company 133.6 114.1
Minority interests - 0.9
--------------------------------------------------------------------------------
Total recognised income for
the year 133.6 115.0
================================================================================
*Currency translation differences for 2006 of £(7.1)m (2005: £8.1m) are net of
gains of £17.6m (2005: £(15.7)m) taken to equity as a result of designated
effective net investment hedges.
CONSOLIDATED BALANCE SHEET
AT 31 DECEMBER 2006
2006 2005
Notes £m £m
--------------------------------------------------------------------------------
Assets
Property, plant and equipment 74.3 69.8
Intangible assets 776.7 695.5
Derivative assets 5.4 4.8
Deferred tax assets 4.1 22.2
--------------------------------------------------------------------------------
Total non-current assets 860.5 792.3
Inventories 290.8 272.3
Income tax receivable 2.7 2.5
Trade and other receivables 521.2 470.7
Derivative assets 0.1 0.9
Cash and deposits 7 49.0 53.7
--------------------------------------------------------------------------------
Total current assets 863.8 800.1
--------------------------------------------------------------------------------
Total assets 1,724.3 1,592.4
================================================================================
Equity
Share capital 112.0 111.4
Share premium 119.8 112.8
Merger reserve 2.5 2.5
Capital redemption reserve 8.6 8.6
Cash flow hedge reserve (0.3) 0.3
Translation reserve 1.4 8.5
Retained earnings 244.0 216.3
--------------------------------------------------------------------------------
Total equity 488.0 460.4
Liabilities
Interest bearing loans and borrowings 7 456.9 339.7
Retirement benefit obligations 37.5 60.0
Other payables 5.6 1.5
Provisions 44.6 38.3
Deferred tax liabilities 73.0 79.3
--------------------------------------------------------------------------------
Total non-current liabilities 617.6 518.8
Bank overdrafts 7 23.9 17.0
Interest bearing loans and borrowings 7 4.3 52.5
Income tax payable 58.4 40.8
Trade and other payables 524.5 497.6
Derivative liabilities 0.7 -
Provisions 6.9 5.3
--------------------------------------------------------------------------------
Total current liabilities 618.7 613.2
--------------------------------------------------------------------------------
Total liabilities 1,236.3 1,132.0
--------------------------------------------------------------------------------
Total equity and liabilities 1,724.3 1,592.4
================================================================================
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2006
2006 2005
Notes £m £m
--------------------------------------------------------------------------------
Cash flow from operating activities of continuing
operations
Profit before income tax 189.7 176.7
Adjustments for non-cash items:
Depreciation 14.6 13.6
Intangible amortisation 19.9 15.9
Share option charge 3.0 3.6
Other 1.0 (1.0)
Working capital movement (20.0) (11.4)
Finance income (19.6) (22.0)
Finance cost 36.3 32.8
Provisions and pensions (5.7) (4.5)
Special pension contribution (5.0) (3.3)
--------------------------------------------------------------------------------
Cash generated from continuing operations 214.2 200.4
Cash generated from discontinued operations - 2.2
Income tax paid of continuing operations (40.5) (56.7)
Income tax paid of discontinued operations - (2.8)
--------------------------------------------------------------------------------
Cash inflow from operating activities 173.7 143.1
Cash flow from investing activities of continuing
operations
Interest received 8.5 11.8
Purchase of property, plant and equipment (15.8) (11.4)
Sale of property, plant and equipment 4.3 0.8
Purchase of businesses (156.7) (124.4)
Other investment cash flows (1.0) 0.7
--------------------------------------------------------------------------------
Cash outflow from investing activities of
continuing operations* (160.7) (122.5)
Cash outflow from investing activities of
discontinued operations - (12.3)
--------------------------------------------------------------------------------
Cash outflow from investing activities (160.7) (134.8)
Cash flow from financing activities of continuing
operations
Interest paid (24.9) (20.2)
Dividends paid (53.3) (57.8)
Decrease in short term loans (28.5) (44.6)
Increase in long term loans 141.4 95.3
Net proceeds from employee shares 5.2 23.9
Purchase of own shares into treasury (63.1) -
--------------------------------------------------------------------------------
Cash outflow from financing activities of
continuing operations* (23.2) (3.4)
Cash outflow from financing activities of
discontinued operations - (35.1)
--------------------------------------------------------------------------------
Cash outflow from financing activities (23.2) (38.5)
Exchange (loss)/gain on cash and cash
equivalents of continuing operations (1.4) 2.1
Exchange gain on cash and cash equivalents of
discontinued operations - 0.3
--------------------------------------------------------------------------------
Exchange (loss)/gain on cash and cash
equivalents (1.4) 2.4
Decrease in cash and cash equivalents (11.6) (27.8)
================================================================================
Cash and cash equivalents at start of year 36.7 64.5
--------------------------------------------------------------------------------
(Decrease)/increase in cash and cash
equivalents of continuing operations (11.6) 19.9
Decrease in cash and cash equivalents of
discontinued operations - (47.7)
--------------------------------------------------------------------------------
Cash and cash equivalents at end of year 7 25.1 36.7
================================================================================
* The cash flow statement for the year ended 31 December 2005 has been
re-presented - see Note 1.
Notes
1. Basis of preparation
The consolidated financial statements for the year ended 31 December 2006 have
been prepared in accordance with International Financial Reporting Standards as
adopted by the EU including interpretations issued by the International
Accounting Standards Board. The consolidated financial statements have been
prepared under the historical cost convention, with the exception of certain
items which are measured at fair value.
The demerger of Filtrona changed the financing structure of the Group with
Filtrona assuming £115.4m of the Group's net debt at demerger on 6 June 2005.
This change to the Group's funding structure was previously presented in the
2005 Cash Flow Statement as an inflow within investing activities with a
corresponding decrease in loans shown within financing activities. This
disclosure was considered helpful as it highlighted the impact of the demerger
on the funding structure of the ongoing Bunzl Group. As there was no impact on
cash and cash equivalents, the 2005 Cash Flow Statement has been re-presented to
exclude this impact of the demerger from both investing and financing
activities.
Bunzl plc's 2006 Annual Report will be despatched to shareholders at the end of
March 2007. The financial information set out herein does not constitute the
Company's statutory accounts for the year ended 31 December 2006 but is derived
from those accounts. Statutory accounts for 2006 will be delivered to the
Registrar of Companies following the Company's Annual General Meeting which will
be held on 16 May 2007. The auditors have reported on those accounts; their
report was unqualified and did not contain statements under Section 237 (2) or
(3) of the Companies Act 1985.
The comparative figures for the year ended 31 December 2005 are not the
Company's statutory accounts for the financial year but are derived from those
accounts which have been reported on by the Company's auditors and delivered to
the Registrar of Companies. The report of the auditors was unqualified and did
not contain statements under Section 237 (2) or (3) of the Companies Act 1985.
2. Segment analysis
North UK & Continental
Year ended 31 America Ireland Europe Australasia Corporate Total
December 2006 £m £m £m £m £m £m
===============================================================================================
Continuing operations
Revenue 1,896.8 774.6 544.7 117.1 3,333.2
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
Operating profit/(loss)
before intangible
amortisation 131.2 59.7 40.9 9.6 (15.1) 226.3
-----------------------------------------------------------------------------------------------
Intangible amortisation (4.8) (0.8) (13.3) (1.0) - (19.9)
-----------------------------------------------------------------------------------------------
Operating profit/(loss) 126.4 58.9 27.6 8.6 (15.1) 206.4
Finance income 19.6
Finance cost (36.3)
-----------------------------------------------------------------------------------------------
Profit before
income tax 189.7
-----------------------------------------------------------------------------------------------
Profit before income
tax and intangible
amortisation 209.6
-----------------------------------------------------------------------------------------------
Income tax (60.3)
-----------------------------------------------------------------------------------------------
Profit for the year 129.4
===============================================================================================
North UK & Continental
Year ended 31 America Ireland Europe Australasia Corporate Total
December 2005 £m £m £m £m £m £m
===============================================================================================
Continuing operations
Revenue 1,665.2 664.2 490.0 105.0 2,924.4
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
Operating profit/(loss)
before intangible
amortisation 116.0 56.1 37.9 8.4 (15.0) 203.4
-----------------------------------------------------------------------------------------------
Intangible
amortisation (2.4) (0.3) (12.6) (0.6) - (15.9)
-----------------------------------------------------------------------------------------------
Operating profit/(loss) 113.6 55.8 25.3 7.8 (15.0) 187.5
Finance income 22.0
Finance cost (32.8)
-----------------------------------------------------------------------------------------------
Profit before
income tax 176.7
-----------------------------------------------------------------------------------------------
Profit before income
tax and intangible
amortisation 192.6
-----------------------------------------------------------------------------------------------
Income tax (56.7)
-----------------------------------------------------------------------------------------------
Profit for the year 120.0
===============================================================================================
3. Finance income/(cost)
2006 2005
Continuing operations £m £m
--------------------------------------------------------------------------------
Deposits 1.2 1.6
Interest income from foreign exchange contracts 6.2 10.1
Foreign exchange gains 0.4 -
Expected return on pension scheme assets 11.6 10.2
Other finance income 0.2 0.1
--------------------------------------------------------------------------------
Finance income 19.6 22.0
================================================================================
Bank loans and overdrafts (22.4) (20.4)
Interest expense from foreign exchange contracts (0.3) (0.3)
Interest charge on pension scheme liabilities (12.0) (10.3)
Other finance expense (1.6) (1.8)
--------------------------------------------------------------------------------
Finance cost (36.3) (32.8)
================================================================================
4. Income tax for continuing operations
A tax charge of 32.0% (2005: 32.0%) has been provided on the profit before tax
and intangible amortisation. Including the impact of intangible amortisation of
£19.9m (2005: £15.9m) and the related deferred tax of £6.7m (2005: £4.9m), the
overall tax rate is 31.8% (2005: 32.1%). The tax charge of 32.0% is higher than
the nominal UK rate of 30.0% principally because most of the Group's operations
are in countries with higher tax rates.
5. Dividends
Per share Total
-----------------------------------------------
2006 2005
2006 2005 £m £m
--------------------------------------------------------------------------------
2004 final 9.15p 39.3
2005 interim 4.9p 16.5
2005 final 10.8p 36.5
2006 interim 5.3p 17.6
--------------------------------------------------------------------------------
Total 16.1p 14.05p 54.1 55.8
================================================================================
The 2006 final dividend of 11.7p per share will be paid on 2 July 2007 to
shareholders on the register on 4 May 2007.
Total dividends for the year to which they relate are:
Per share
----------------------------
2006 2005
--------------------------------------------------------------------------------
Interim 5.3p 4.9p
Final 11.7p 10.8p
--------------------------------------------------------------------------------
Total 17.0p 15.7p
================================================================================
6. Earnings per share
2006 2005
£m £m
================================================================================
Continuing operations
Profit for the year attributable to the Company 129.4 120.0
Adjustment 13.2 11.0
--------------------------------------------------------------------------------
Adjusted profit 142.6 131.0
================================================================================
Discontinued operations
Profit for the year attributable to discontinued
operations (net of minority interests) - 3.6
================================================================================
Basic weighted average ordinary shares in issue (million) 342.1 338.8
Dilutive effect of employee share plans (million) 2.6 1.7
--------------------------------------------------------------------------------
Diluted weighted average ordinary shares (million) 344.7 340.5
================================================================================
Continuing operations
Basic earnings per share 37.8p 35.4p
--------------------------------------------------------------------------------
Adjustment 3.9p 3.3p
--------------------------------------------------------------------------------
Adjusted earnings per share* 41.7p 38.7p
--------------------------------------------------------------------------------
Diluted basic earnings per share 37.5p 35.2p
================================================================================
Discontinued operations
Basic earnings per share - 1.1p
--------------------------------------------------------------------------------
Diluted basic earnings per share - 1.1p
================================================================================
* Adjusted earnings per share excludes the charge for intangible amortisation
and the related deferred tax. This adjustment removes a non-cash charge which is
not used by management to assess the underlying performance of the businesses.
7. Cash and cash equivalents and net debt
2006 2005
£m £m
================================================================================
Cash at bank and in hand 45.2 48.4
Short term deposits repayable in less than three months 3.8 5.3
--------------------------------------------------------------------------------
Cash and deposits 49.0 53.7
Bank overdrafts (23.9) (17.0)
--------------------------------------------------------------------------------
Cash and cash equivalents 25.1 36.7
--------------------------------------------------------------------------------
Interest bearing loans and borrowings
Current liabilities (4.3) (52.5)
Non-current liabilities (456.9) (339.7)
Derivative asset - fair value of
interest rate swaps 5.4 5.2
--------------------------------------------------------------------------------
Net debt (430.7) (350.3)
================================================================================
Net debt includes the fair value of interest rate swaps hedging fixed interest
rate borrowings. Net debt at 31 December 2005 has been re-presented on a
consistent basis.
This information is provided by RNS
The company news service from the London Stock Exchange
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