Final Results
Bunzl PLC
25 February 2008
Monday 25 February 2008
PRELIMINARY RESULTS FOR YEAR ENDED 31 DECEMBER 2007
AND ACQUISITIONS IN BRAZIL AND EUROPE
Bunzl plc, the international distribution and outsourcing Group, today announces
its annual results for the year ended 31 December 2007. The results were:
• Revenue £3,581.9 million (2006: £3,333.2 million), up 12% at constant
exchange rates
• Operating profit before intangible amortisation £242.9 million (2006:
£226.3 million), up 12% at constant exchange rates
• Operating profit £218.5 million (2006: £206.4 million), up 11% at constant
exchange rates
• Profit before tax and intangible amortisation £215.5 million (2006:
£209.6 million), up 8% at constant exchange rates
• Profit before tax £191.1 million (2006: £189.7 million), up 6% at constant
exchange rates
• Adjusted earnings per share* 45.1p (2006: 41.7p), up 13% at constant
exchange rates
• Earnings per share 39.8p (2006: 37.8p), up 10% at constant exchange rates
• Dividend for the year up 10% to 18.7p
Other highlights include:
• Improved operating margin* of 6.9% at constant exchange rates excluding
acquisitions
• £197 million spent on acquisitions
• Key acquisitions of King Benelux, Irish Merchants and Coffee Point
• Entry into Spain and Belgium
• Acquisition into the large and rapidly growing Brazilian market announced
today
* before intangible amortisation
Commenting on today's results, Anthony Habgood, Chairman of Bunzl, said:
'These results demonstrate Bunzl's strength in its markets and our ability to
take advantage of growth opportunities both in existing and new geographies.
They position us well for the future.'
Michael Roney, Chief Executive of Bunzl, said:
'Bunzl had a successful 2007 due to organic growth and strong performance from
acquisitions and we are excited about recent developments, especially the entry
into the promising Brazilian market. The continued strengthening of the Group
gives us confidence that our business will continue to grow successfully.'
Bunzl also today announces that it has completed three further acquisitions.
The Company has recently acquired Prot Cap Artigos para Protecao Industrial Ltda
and its subsidiaries from Everaldo Baldin and Leonardo Baldin. Based in Sao
Paulo with 7 branches throughout Brazil, Prot Cap is a leading national supplier
of personal protection equipment to the industrial, processor, construction,
retail and mining sectors. Revenue in the year ended December 2007 was R$118
million (£35 million) and gross assets acquired are estimated to be R$41 million
(£12 million).
At the end of January Bunzl acquired Gunter Guest Supplies GmbH & Co KG from
Dietmar Lillig. The business, which is based in Bremen, Germany, supplies guest
amenity products to hotels throughout Europe and had revenue of €9 million in
the year ended December 2007. Gross assets acquired are estimated to be €4
million.
Finally, in December the Company purchased Rafferty Hospitality Products Limited
from Jim and Mary Rafferty. Based in Newry, Northern Ireland, Rafferty is
engaged in the supply of guest amenity products to hotels throughout Ireland.
Revenue in the year ended October 2007 was £9 million and gross assets acquired
are estimated to be £6 million.
Commenting on these acquisitions, Michael Roney, Chief Executive of Bunzl, said:
'The acquisition of Prot Cap is an exciting development for us. It is in line
with our strategy of expanding into new geographic areas and represents our
first move into the large and rapidly growing Brazilian market where we see
opportunities to develop further. It has an excellent reputation for both
quality and service and we are delighted to welcome the management and staff to
the Group.
Together, the businesses of Rafferty and Gunter Guest Supplies will allow us to
expand further our offering of guest amenity and other related products into the
hotel sector. They complement and strengthen our existing business in this
market and are already integrating well. We also welcome them to Bunzl.'
Enquiries:
Bunzl plc Tulchan
Michael Roney, Chief Executive David Allchurch
Brian May, Finance Director Stephen Malthouse
Tel: 020 7495 4950 Tel: 020 7353 4200
Note:
A webcast of today's presentation to analysts will be available on www.bunzl.com
by 1.30pm today
CHAIRMAN'S STATEMENT
AS A CLEARLY FOCUSED ORGANISATION BUNZL HAS CONTINUED TO GROW STRONGLY IN ITS
CHOSEN MARKETS
Taking advantage of growth opportunities in existing and new geographies, Bunzl
produced another good set of results driven both organically and by acquisition
activity. All four business areas were ahead of 2006 in both revenue and profits
in local currencies. Overall revenue rose to £3,581.9 million (2006: £3,333.2
million), an increase of 12% at constant exchange rates. Operating profit before
intangible amortisation was £242.9 million (2006: £226.3 million), also up 12%
at constant exchange rates. Earnings per share were 39.8p (2006: 37.8p), an
increase of 10% at constant exchange rates, and adjusted earnings per share,
after eliminating the effect of intangible amortisation, were 45.1p (2006:
41.7p), 13% ahead at constant exchange rates. Adverse currency translation
movements, especially the US dollar, reduced Group growth rates by 5% while, if
recent spot rates prevail, the translation effect of both the US dollar and the
euro will have a positive impact going forward.
Dividend
The Board is recommending a 10% increase in the final dividend to 12.9p. This
brings the total dividend for the year to 18.7p, an increase of 10%.
Shareholders will again have the opportunity to participate in our dividend
reinvestment plan.
Share buy back
During the year the Company conducted an on market share buy back programme
under which 14.2 million shares were bought into treasury for a total
consideration of £100 million.
Delisting from the New York Stock Exchange
In June the Company delisted its American Depositary Shares (ADSs) from the New
York Stock Exchange and ended the registration of its securities under the
Securities Exchange Act of 1934. The Board believed that the administrative
burden and costs associated with the ADSs and the Exchange Act registration
outweighed the benefits to the Company and its shareholders.
Board
Bunzl's Board was further strengthened by the appointment of David Sleath as a
non-executive director in September. Currently Group Finance Director of SEGRO
plc, the European industrial property Group, David was formerly a Partner and
Head of Audit and Assurance for the Midlands region of Arthur Andersen and
subsequently became Finance Director of Wagon plc. He has a strong finance
background and broad international experience and has added further depth to the
independent element of our Board.
Strategy
Bunzl is continuing to pursue a strategy of focusing on its strengths and
consolidating the markets in which it competes. Through the pursuit of this
strategy we have built leading positions in a number of business sectors in the
Americas, Europe and Australasia. In 2007 we further extended our business
coverage with acquisitions that took us significantly deeper into our chosen
markets in the Netherlands and Ireland, gave us a substantial position in
Belgium and continued to consolidate our more established markets elsewhere.
Redefining and deepening our commitment to customers and markets, extending our
business into new geographies and expanding and co-ordinating our procurement
and international sourcing remain important elements of our strategy.
Investment
Both organic growth and acquisitions require investment in the business to
expand and enhance its asset base. We have steadily extended and improved our
warehouses and opened new ones. Systems are 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 maintain our leadership in the marketplace. We
therefore continuously upgrade our systems as we integrate new businesses into
the Group's operations, increase functionality and enhance customer service.
Environment and climate change
Awareness of the environment and considering how to reduce our impact on it is
not new for Bunzl nor is it a passing phase. Our environmental programmes have
been in place for over five years and we consistently review and seek to improve
our performance in this area. During the year we have particularly focused on
educating our employees and informing our customers on environmental issues
including how Bunzl can both reduce its own environmental impact and encourage
sustainability by providing environmentally friendly products and services. In
addition, during 2007 Bunzl provided support to a number of environmental
projects which included funding the London Remade Local Authority Network
meetings, which promote recycling activities, as well as providing funding for a
school and two educational centres to purchase wind turbines to provide them
with renewable energy.
Employees
Our employees' dedication, commitment and approach to their work remain key
strengths. Across the world we are reliant on them to provide a high level of
customer care which adds value to our service offering. Bunzl's reputation and
spirit is shaped by the sustained relationships our employees forge with all our
stakeholders. We are grateful for all the hard work and effort that everyone has
shown this year in continuing to grow the business successfully.
CHIEF EXECUTIVE'S REVIEW
Operating Performance
The strong momentum from previous years continued in 2007 as we had another
successful year due to a combination of organic growth, good performance from
acquisitions made in 2006 and increased acquisition spend. Although some
currencies were marginally stronger than in 2006, the translation effect of the
weaker US dollar resulted in overall currency movements significantly reducing
the reported growth rates of revenue and operating profit. The operations,
including the relevant growth rates, are therefore reviewed below at constant
exchange rates to remove the distorting translation impact of these currency
movements and, unless stated otherwise, in this review references to operating
profit are to operating profit before intangible amortisation. Changes in the
level of revenue and profits at constant exchange rates have been calculated by
retranslating the results from 2006 at the average exchange rates used for 2007.
Overall revenue was £3,581.9 million (2006: £3,333.2 million) and operating
profit was £242.9 million (2006: £226.3 million), in each case up 12% at
constant exchange rates. While the reported operating profit margin was steady
at 6.8%, the margin, excluding the impact of currency exchange and acquisitions,
moved up to 6.9%. At constant exchange rates revenue in North America rose by 5%
and operating profit increased 2%, with the lower level of profit increase
largely due to the impact of lower margin acquisitions. UK & Ireland showed a
28% increase in revenue and a 25% rise in operating profit resulting from good
organic growth and the positive impact of recent acquisitions. In Continental
Europe revenue and operating profit increased by 12% and 21% respectively at
constant exchange rates due to good organic growth, continued improvement in
operating margins and the positive impact of current year acquisitions. At
constant exchange rates the Rest of the World experienced a 10% increase in both
revenue and operating profit.
Adjusted earnings per share, after eliminating the effect of intangible
amortisation, were 45.1p (2006: 41.7p), an increase of 13% at constant exchange
rates, while basic earnings per share were 39.8p (2006: 37.8p), an increase of
10% at constant exchange rates. Return on average operating capital remained
consistently high at 60.9%. After expenditure on acquisitions and the share buy
back, partly offset by strong operating cash flow, net debt increased by £236.9
million to £667.6 million resulting in a net debt to EBITDA ratio of 2.5 and
interest cover of 9 times.
Acquisitions
Spend on acquisitions rose to £197 million, primarily as a result of a major
expansion in the Benelux, four noteworthy investments in the UK and Ireland, an
entry into the promising Spanish market and two further acquisitions in North
America. As a result we not only expanded the Group into new countries but also
extended our product offering and customer base in our existing operations.
In January we announced two acquisitions in North America. Tec Products, a New
Jersey based redistribution business with revenue of $14 million in 2006, is
principally engaged in the supply of jan/san and associated products while
Westgate, also a New Jersey based redistribution business with revenue of $18
million in 2006, supplies personal protection equipment in the eastern US and
Canada.
We entered the exciting, and so far unconsolidated, Spanish market in February
with our acquisition of Iberlim, a cleaning and hygiene business based near
Barcelona with 2006 revenue of €9 million. In August we acquired King Benelux,
with pro forma revenue in 2006 of €125 million, which is principally engaged in
the distribution of products to the healthcare and contract cleaning sectors in
the Netherlands and the foodservice, retail and healthcare sectors in Belgium.
This company is an excellent addition to our successful business in the
Netherlands and also provides a significant business in Belgium.
We announced in August the first of four UK & Ireland acquisitions with the
purchase of Coffee Point, a London based business engaged in the sale and
operation of vending machines and associated services for a broad customer base.
This business, with revenue of £45 million in the year ended March 2007,
substantially increased the size of our vending business to the point that we
are now the largest vending operator in the UK. In October we completed the
acquisition of Irish Merchants, a business based in Dublin with revenue of €45
million in the year ended March 2007, which is involved in the distribution of
foodservice disposables, janitorial supplies and beverage systems to the horeca,
healthcare and retail sectors throughout Ireland. The acquisition of this
company, which was formerly associated with King Benelux, is a good strategic
fit as it significantly increases the size of our business in Ireland and
strengthens our position there. Finally, in December we acquired Care Shop, a
Bolton based business which is a leading national supplier of consumables to the
independent care and nursing homes market and which had revenue of £19 million
in the year ended March 2007, and Rafferty, a distributor of guest amenity
products to hotels throughout Ireland with revenue of £9 million in the year
ended October 2007.
Since the year end we have announced two further acquisitions. Gunter Guest
Supplies was acquired in January. Based in Bremen, Germany, it supplies guest
amenity products to hotels throughout Europe and had revenue of €9 million in
2007. In February we purchased Prot Cap, a leading national supplier of personal
protection equipment based in Sao Paulo, which represents our first move into
the large and rapidly growing Brazilian market. It had revenue in 2007 of R$118
million.
Prospects
The strong performance of the Group has continued into 2008 due to good organic
growth bolstered by the positive impact from acquisitions. Despite the current
uncertainties in the wider economic environment, the combination of firm product
prices, especially in paper, and new customer wins is supporting our underlying
growth rates in the coming period.
In North America we believe that our business model, which sells a high
proportion of our products to food related sectors, is resilient and should
develop well. In addition the acquisitions made in previous periods are
continuing to improve their profitability.
We anticipate that the UK & Ireland business will continue to experience high
growth rates driven by good organic growth resulting from new customer gains and
the integration of acquisitions made in the second half of last year. The
synergies arising from the acquisitions of Coffee Point and Irish Merchants are
already being realised.
In Continental Europe the broad based good organic growth across the business
area and the operational improvements made in France should continue to bolster
our results moving forward. The integration of King Benelux is ongoing and
progressing well and Iberlim, our entry into Spain, is trading ahead of
expectations.
In the Rest of the World, our larger businesses in Australasia are performing
well and we expect improved results from our smaller healthcare business. Our
latest acquisition, Prot Cap in Brazil, will positively impact this year's
results.
The continued strengthening of the Group in the international markets in which
we compete and the opportunity for further growth through acquisitions, give us
confidence that the prospects are good and that our business will continue to
grow successfully.
North America
Against a background of more difficult business conditions, at constant exchange
rates revenue rose 5% to £1,839.0 million and operating profit by 2% to £123.3
million.
Slower economic growth and competitive pressures, particularly in the grocery
and foodservice sectors, impacted our results compared to the strong performance
in 2006. Additionally, some of our recent lower margin acquisitions are taking
longer to meet revenue expectations following the restructurings implemented to
build long term profitable growth. However, these acquisitions are now
positioned well for the future.
In January we completed the acquisition of Tec Products, which is principally
engaged in the supply of jan/san and associated products through distributors,
and of Westgate, which is a supplier of personal protection equipment through
distributors in the eastern US and Canada. These, together with the four
acquisitions announced in 2006, have been successfully transferred onto our
common IT platform and have begun to realise the efficiencies gained by the
conversion and as a result of integration of the businesses into our established
operations. All of these acquisitions were redistribution companies focused on
the foodservice, jan/san and safety sectors.
Our grocery business remains our largest sector and, while pricing pressures
persist as the industry continues to consolidate, our national coverage is
second to none and we continue to win new business. Our sourcing expertise and
logistics platform uniquely position us to be able to respond to the different
needs of our major customers and provide them with competitive advantage in
their markets.
As part of the establishment of R3, a separate organisation to lead our sales
and marketing in redistribution, we have committed resources and personnel both
to our foodservice redistribution business and to develop further the jan/san
business. This sector allows us to increase our penetration into existing
customers with new products as well as providing an opportunity for potential
new customers. We continue to invest in new marketing tools, inventory, training
and programmes that will enhance our capabilities and we have taken steps to
adapt our operating model to the needs of these customers who traditionally have
different service requirements.
The food processor business has shown good growth due to increased customer
awareness about worker and food safety practices and consumer demands for
products that require more innovative packaging solutions. The increased demand
for fresh cut produce provides us with opportunities to sell our value-added
programmes to both current and new customers.
The convenience store sector continues to be attractive as the organic growth in
smaller format stores is outpacing the growth seen in larger outlets. We operate
from highly efficient and large warehouses and are consistently increasing the
breadth of our product offering to serve our customers better in this sector.
Our recently acquired safety businesses represent a significant growth
opportunity as the operating platform has started to drive efficiencies in the
warehouse, enabling us to service better the customers and to expand our product
offering. Imported products purchased jointly with our European safety
businesses and plans to expand our private label programme in this sector will
allow us to access a wider range of products and improve margins.
Our Retail Resources business has provided new growth for us in the non-food
retail sector. Their unique operating supply management programme, combined with
our national platform and common IT system, has allowed us to gain business in
some new retail areas. The key to this success has been our ability to help
manage store operating supply costs together with the ability to provide high
rates of on time deliveries. We plan to expand this programme to our grocery
customers and any other end user customers that require this supply management
service.
We continued to invest in the training of our personnel. Following the
completion of our VIP (value, integrity and performance) training programme over
the last two years, we have initiated a new sales automation programme enabling
our general managers and sales managers to track the results of such training
and the progress of each sales representative. Additionally, we have launched an
e-learning programme that contains training modules for all areas of the
business allowing employees to train on site and update their skills for
enhanced job performance. This also includes best practice training in areas
such as inventory control, purchasing and health and safety. Our people continue
to be one of the greatest strengths of our business.
Finally, we have continued to roll out our radio frequency warehouse system,
improve our truck routing and improve the efficiencies of our facilities.
UK & Ireland
The benefits of operational initiatives undertaken in 2006, good organic growth
and the impact of the full year effect of 2006 acquisitions and acquisitions in
2007 resulted in revenue increasing 28% to £994.3 million and operating profit
up 25% to £74.5 million.
The hotel, restaurant and catering (horeca) business had a strong year as we
benefited from the operational restructuring undertaken, and the new business
won, in 2006. We renewed our largest customer contract and broadened the range
that we supply to a leading restaurant chain. Our ability to provide national
accounts with both catering disposables and catering equipment enabled us to win
new customers in the hotel, restaurant and pub sectors. At a regional level we
reorganised the salesforce in order to be more responsive to local customers.
During the year we piloted new vehicle routing and loading software and have
started the roll out to all branches which will help us to improve our fuel and
vehicle efficiency.
Our retail supplies business had another successful year. We renewed our second
largest customer contract and also won new business with a major supermarket
chain. Following the opening of the Manchester warehouse extension in the second
half of 2006, we reviewed the warehouse layout and procedures and have
implemented a number of productivity improvements within the operation. We also
benefited from the full annual impact of Keenpac, which we acquired in December
2006 and provides us with expertise in the paper bag and luxury packaging
sectors. The business has traded in line with expectations with new business won
from leading supermarket and luxury brand customers.
The cleaning and safety business continued to deliver growth. Greenham
successfully retained a large government sector contract that demonstrated the
ability of Bunzl to provide a consolidated delivery of a broad range of
products. We also added new customers in the construction and utilities markets.
The cleaning and hygiene business extended contracts with two national contract
cleaners and introduced a new own label chemical range which has been accredited
with the EU Eco-label. We successfully rolled out a new computer system into the
cleaning and hygiene business and created a new website that has generated
encouraging levels of internet sales.
Our vending business grew significantly in scale with the acquisition in August
of Coffee Point. This has made us the market leader in the UK hot beverage
vending market. The integration is ongoing with trading in line with our plan
and we have already combined the salesforces and merged a number of the branches
where overlaps existed. We are implementing a new computer system that will
result in additional efficiencies.
In Ireland, our existing businesses performed well with growth in the horeca,
cleaning and safety and retail businesses. The acquisition of Irish Merchants in
October increases our overall scale in Ireland and strengthens our position in
the horeca, healthcare and retail sectors. Its product range and focus on
customer service fit well with our existing operations and we expect to gain
economies of scale and purchasing benefits in 2008.
Our healthcare business grew significantly due principally to the first full
year impact of Southern Syringe, the healthcare consumables business acquired in
2006. Southern Syringe has progressed ahead of plan as we reviewed existing
contracts and implemented our operational procedures, resulting in improved
operating margins, and we believe that we now have a solid base from which to
grow this business. The Shermond business won new contracts for its nitrile
gloves and retained its position on the NHS contract for gloves. In December we
announced the acquisition of Care Shop, a leading distributor to the independent
care and nursing homes sector, which provides us with a strong platform to
develop our offering into this part of the healthcare market.
Continental Europe
At constant exchange rates revenue increased by 12% to £616.0 million and
operating profit rose 21% to £50.0 million as continued strong organic sales and
profit growth was complemented by the acquisitions of both King Benelux and
Iberlim. Improved profitability also resulted from better purchasing, higher
imports from low cost countries, tight cost control and operating efficiency
gains.
In France, our cleaning and hygiene business grew revenue in difficult market
conditions, with most growth again coming from larger national accounts. Better
margin management, substantially higher sales of our own brand range of
products, Techline, and ongoing cost control helped profits to improve. The roll
out of the new IT system continues and is progressing well. Our French personal
protection equipment business saw a small reduction in revenue as particularly
strong sales of avian influenza related products did not repeat in 2007.
Nevertheless, the business managed to improve its margin and lower its costs to
produce a significant improvement in profits.
In the Benelux, the newly acquired King Benelux business has performed ahead of
expectations and considerable synergies are already being delivered. We have
implemented a new ERP system in the Belgian business with the Dutch business to
follow later this year. Warehouse rationalisation in Belgium will also lead to
further operating efficiencies. In the Netherlands, our existing retail business
saw strong revenue growth from both existing and new customers as well as
product range extension. Good margin management and cost efficiencies have
resulted in substantial profit growth. Our horeca business also achieved
substantial sales growth from new account wins.
In Germany, despite the loss of part of the business with a large customer and
the absence of the exceptional revenue from the 2006 FIFA World Cup, good sales
growth was achieved. Margin pressure and higher transport costs were partially
offset by operating efficiencies.
In Denmark, our retail business continued to grow revenue and at the same time
improve its profitability as a change in business mix resulted in lower sales of
lower margin products. A customer lost in 2006 was regained and better
purchasing also improved the results. Costs remained well controlled leading to
another year of strong profit growth. Our Danish horeca business generated
strong growth. As the business is reaching full capacity following rapid
expansion in recent years, a new warehouse to provide increased capacity will be
opened by the end of 2008.
Growth has remained strong in central Europe. In Romania we have relocated to
larger warehouses in Bucharest to cater for further anticipated strong growth.
The retail business across the region improved its margin despite pricing
pressures and benefited from further economies of scale and from its new ERP
system while our cleaning and hygiene business grew revenues strongly following
a restructuring of its salesforce to improve focus and sales efficiency. The
increased scale of the business has led to greater cost efficiencies.
We acquired Iberlim at the end of February. Specialising in cleaning and hygiene
products, it serves customers in Spain from one site near Barcelona. Performance
to date has been ahead of expectations and the business represents a good
platform from which to pursue further growth in Iberia.
Rest of the World
Benefiting from the full year impact of acquisitions made in 2006 combined with
continued strong organic growth across the region, at constant exchange rates
the Australasia business increased both revenue and operating profit by 10% to
£132.6 million and £10.8 million respectively.
Our largest business experienced strong organic growth and significant
improvement in profitability by providing consolidation supply solutions to
their customers across the core sectors of healthcare, industrial, horeca and
retail throughout Australia and New Zealand. In addition our catering equipment
consumables business based in Queensland has complemented our offer by providing
a wider range of products to existing customers and creating opportunities to
develop in new markets.
Our food processor supplies businesses delivered strong growth over the previous
year. The two businesses are evolving into one complementary focused food
processor supplies business creating an excellent platform for continued growth.
We have invested in additional key sales development resources to capitalise on
new business opportunities and infrastructure to support future growth.
Our specialist healthcare business had a difficult year but has taken steps to
improve operational performance and is now well positioned to develop in the
growing aged care sector. We are rolling out an electronic ordering system to
their customer base which delivers efficiencies by simplifying the ordering
process and enhancing access to information online.
To support the growth of the Australasia business and to enable it to operate in
a more efficient manner, we continue to invest in IT initiatives that will bring
benefits to both our customers and suppliers. In 2007 we introduced RF scanning
technology into our largest business with excellent results. This process
increases accuracy and in turn enhances our customer satisfaction by reducing
credits, as well as improving the order picking process. We plan to roll the
programme out into the branch network throughout 2008.
In February 2008 we acquired Prot Cap, a leading national supplier of personal
protection equipment based in Sao Paulo, which represents our first move into
the large and rapidly growing Brazilian market. Its results will be reported
within the Rest of the World business area.
Consolidated income statement
for the year ended 31 December 2007
Growth
Actual Constant
2007 2006 exchange exchange
Notes £m £m rates rates
-------------------- ------- ---------- ---------- -------- --------
Revenue 2 3,581.9 3,333.2 7% 12%
-------------------- ------- ---------- ---------- -------- --------
-------------------- ------- ---------- ---------- -------- --------
Operating profit before
intangible
amortisation 242.9 226.3 7% 12%
-------------------- ------- ---------- ---------- -------- --------
Intangible amortisation (24.4) (19.9)
-------------------- ------- ---------- ---------- -------- --------
Operating profit 2 218.5 206.4 6% 11%
Finance income 3 21.1 19.6
Finance cost 3 (48.5) (36.3)
-------------------- ------- ---------- ---------- -------- --------
Profit before income tax 191.1 189.7 1% 6%
-------------------- ------- ---------- ---------- -------- --------
Profit before income tax
and intangible
amortisation 215.5 209.6 3% 8%
-------------------- ------- ---------- ---------- -------- --------
UK income tax (4.4) (9.1)
Overseas income tax (56.6) (51.2)
-------------------- ------- ---------- ---------- -------- --------
Total income tax 4 (61.0) (60.3)
-------------------- ------- ---------- ---------- -------- --------
Profit for the year
attributable to the
Company's equity holders 130.1 129.4 1% 5%
-------------------- ------- ---------- ---------- -------- --------
Earnings per share
attributable to the
Company's equity holders
Basic 5 39.8p 37.8p 5% 10%
-------------------- ------- ---------- ---------- -------- --------
Diluted 5 39.6p 37.5p 6% 10%
-------------------- ------- ---------- ---------- -------- --------
Dividend per share 6 18.7p 17.0p 10%
-------------------- ------- ---------- ---------- -------- --------
Consolidated statement of recognised income and expense
for the year ended 31 December 2007
2007 2006
£m £m
------------------------------- ----------- ----------
Profit for the year 130.1 129.4
Actuarial gain on pension schemes 10.3 17.4
Deferred tax on actuarial gain (3.0) (5.5)
Currency translation differences arising in year* 8.1 (7.1)
Loss recognised in cash flow hedge reserve (1.1) (0.3)
Movement from cash flow hedge reserve to income
statement 0.3 (0.3)
------------------------------- ----------- ----------
Net income recognised directly in equity 14.6 4.2
------------------------------- ----------- ----------
Total recognised income for the year attributable to
the Company's equity holders 144.7 133.6
------------------------------- ----------- ----------
*Currency translation differences for 2007 of £8.1m (2006: £(7.1)m) are net of
losses of £32.3m (2006: gains of £17.6m) taken to equity as a result of
designated effective net investment hedges.
Consolidated balance sheet
at 31 December 2007
2007 2006
£m £m
-------------------------------- ----------- ----------
Assets
Property, plant and equipment 91.0 74.3
Intangible assets 990.3 776.7
Derivative assets 11.3 5.4
Deferred tax assets 0.5 4.1
-------------------------------- ----------- ----------
Total non-current assets 1,093.1 860.5
Inventories 331.6 290.8
Income tax receivable 4.4 2.7
Trade and other receivables 575.4 521.2
Derivative assets 1.5 0.1
Cash and deposits 76.0 49.0
-------------------------------- ----------- ----------
Total current assets 988.9 863.8
-------------------------------- ----------- ----------
Total assets 2,082.0 1,724.3
-------------------------------- ----------- ----------
Equity
Share capital 112.4 112.0
Share premium 124.6 119.8
Merger reserve 2.5 2.5
Capital redemption reserve 8.6 8.6
Cash flow hedge reserve (1.1) (0.3)
Translation reserve 9.5 1.4
Retained earnings 219.7 244.0
-------------------------------- ----------- ----------
Total equity attributable to the Company's equity 476.2 488.0
holders
Liabilities
Interest bearing loans and borrowings 656.4 456.9
Retirement benefit obligations 13.2 37.5
Other payables 10.6 5.6
Provisions 50.6 44.6
Deferred tax liabilities 92.3 73.0
-------------------------------- ----------- ----------
Total non-current liabilities 823.1 617.6
Bank overdrafts 20.3 23.9
Interest bearing loans and borrowings 79.4 4.3
Income tax payable 60.5 58.4
Trade and other payables 611.8 524.5
Derivative liabilities 1.5 0.7
Provisions 9.2 6.9
-------------------------------- ----------- ----------
Total current liabilities 782.7 618.7
-------------------------------- ----------- ----------
Total liabilities 1,605.8 1,236.3
-------------------------------- ----------- ----------
Total equity and liabilities 2,082.0 1,724.3
-------------------------------- ----------- ----------
Consolidated cash flow statement
for the year ended 31 December 2007
2007 2006
£m £m
------------------------------ ----------- ----------
Cash flow from operating activities
Profit before income tax 191.1 189.7
Adjustments for non-cash items:
depreciation 15.9 14.6
intangible amortisation 24.4 19.9
share based payments 4.8 3.0
Working capital movement 13.5 (20.0)
Finance income (21.1) (19.6)
Finance cost 48.5 36.3
Provisions and pensions (9.0) (5.7)
Special pension contribution (9.5) (5.0)
Other (0.6) 1.0
------------------------------ ----------- ----------
Cash generated from operations 258.0 214.2
Income tax paid (65.1) (40.5)
------------------------------ ----------- ----------
Cash inflow from operating activities 192.9 173.7
------------------------------ ----------- ----------
Cash flow from investing activities
Interest received 5.3 8.5
Purchase of property, plant and equipment (19.9) (15.8)
Sale of property, plant and equipment 3.3 4.3
Purchase of businesses (191.7) (156.7)
Other - (1.0)
------------------------------ ----------- ----------
Cash outflow from investing activities (203.0) (160.7)
------------------------------ ----------- ----------
Cash flow from financing activities
Interest paid (33.6) (24.9)
Dividends paid (56.2) (53.3)
Increase/(decrease) in short term loans 34.9 (28.5)
Increase in long term loans 192.1 141.4
Net proceeds from employee shares 1.0 5.2
Purchase of own shares into treasury (100.0) (63.1)
------------------------------ ----------- ----------
Cash inflow/(outflow) from financing activities 38.2 (23.2)
------------------------------ ----------- ----------
Exchange gain/(loss) on cash and cash equivalents 2.5 (1.4)
Increase/(decrease) in cash and cash equivalents 30.6 (11.6)
------------------------------ ----------- ----------
Cash and cash equivalents at start of year 25.1 36.7
------------------------------ ----------- ----------
Increase/(decrease) in cash and cash equivalents 30.6 (11.6)
------------------------------ ----------- ----------
Cash and cash equivalents at end of year 55.7 25.1
------------------------------ ----------- ----------
Notes
1. Basis of preparation
The consolidated financial statements for the year ended 31 December 2007 have
been approved by the directors and 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.
Bunzl plc's 2007 Annual Report will be despatched to shareholders at the end of
March 2008. The financial information set out herein does not constitute the
Company's statutory accounts for the year ended 31 December 2007 but is derived
from those accounts. Statutory accounts for 2007 will be delivered to the
Registrar of Companies following the Company's Annual General Meeting which will
be held on 14 May 2008. 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 2006 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 Rest of the
America Ireland Europe World Corporate Total
Year ended 31 £m £m £m £m £m £m
December 2007
-------------------- --------- --------- --------- --------- --------- ---------
Revenue 1,839.0 994.3 616.0 132.6 3,581.9
-------------------- --------- --------- --------- --------- --------- ---------
-------------------- --------- --------- --------- --------- --------- ---------
Operating profit/
(loss) before
intangible
amortisation 123.3 74.5 50.0 10.8 (15.7) 242.9
-------------------- --------- --------- --------- --------- --------- ---------
Intangible
amortisation (5.8) (3.0) (14.5) (1.1) - (24.4)
-------------------- --------- --------- --------- --------- --------- ---------
Operating profit/
(loss) 117.5 71.5 35.5 9.7 (15.7) 218.5
Finance income 21.1
Finance cost (48.5)
-------------------- --------- --------- --------- --------- --------- ---------
Profit before income
tax 191.1
-------------------- --------- --------- --------- --------- --------- ---------
Profit before income
tax and intangible
amortisation 215.5
-------------------- --------- --------- --------- --------- --------- ---------
Income tax (61.0)
-------------------- --------- --------- --------- --------- --------- ---------
Profit for the year 130.1
-------------------- --------- --------- --------- --------- --------- ---------
North UK & Continental Rest of the
Year ended 31 America Ireland Europe World Corporate Total
December 2006 £m £m £m £m £m £m
-------------------- --------- --------- --------- --------- --------- ---------
-------------------- --------- --------- --------- --------- --------- ---------
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
-------------------- --------- --------- --------- --------- --------- ---------
3. Finance income/(cost)
2007 2006
£m £m
---------------------------- --------- --------
Deposits 0.7 1.2
Interest income from foreign exchange contracts 4.8 6.2
Expected return on pension scheme assets 14.2 11.6
Other finance income 1.4 0.6
--------------------------- --------- --------
Finance income 21.1 19.6
--------------------------- --------- --------
Loans and overdrafts (34.9) (22.4)
Interest expense from foreign exchange contracts (0.6) (0.3)
Interest charge on pension scheme liabilities (12.6) (12.0)
Fair value loss on US dollar bond (7.1) (5.4)
Fair value gain on interest rate swaps 7.1 5.4
Other finance expense (0.4) (1.6)
--------------------------- --------- ---------
Finance cost (48.5) (36.3)
--------------------------- --------- ---------
4. Income tax
A tax charge at a rate of 31.6% (2006: 32.0%) has been provided on the profit
before tax and intangible amortisation. Including the impact of intangible
amortisation of £24.4m (2006: £19.9m) and the related deferred tax of £7.1m
(2006: £6.7m), the overall tax rate is 31.9% (2006: 31.8%).
5. Earnings per share
2007 2006
£m £m
--------------------------- --------- --------- ---------
Profit for the year 130.1 129.4
Adjustment 17.3 13.2
--------------------------- --------- --------- ---------
Adjusted profit* 147.4 142.6
--------------------------- --------- --------- ---------
Basic weighted average ordinary shares in issue (million) 326.9 342.1
Dilutive effect of employee share plans 1.8 2.6
(million) --------- --------- ---------
---------------------------
Diluted weighted average ordinary shares 328.7 344.7
(million) --------- --------- ---------
---------------------------
Basic earnings per share 39.8p 37.8p
Adjustment 5.3p 3.9p
--------------------------- --------- --------- ---------
Adjusted earnings per share* 45.1p 41.7p
--------------------------- --------- --------- ---------
Diluted basic earnings per share 39.6p 37.5p
--------------------------- --------- --------- ---------
* Adjusted profit and adjusted earnings per share exclude the charge for
intangible amortisation and the related deferred tax. This adjustment removes a
non-cash charge which is not taken into account by management when assessing the
underlying performance of the businesses.
6. Dividends
Per share Total
-------- -------- -------- --------
2007 2006
2007 2006 £m £m
------------------------- -------- -------- -------- --------
2005 final 10.8p 36.5
2006 interim 5.3p 17.6
2006 final 11.7p 38.6
2007 interim 5.8p 18.6
------------------------- -------- -------- -------- --------
Total 17.5p 16.1p 57.2 54.1
------------------------- -------- -------- -------- --------
The 2007 final dividend of 12.9p per share will be paid on 3 July 2008 to
shareholders on the register on 9 May 2008.
Total dividends for the year to which they relate are:
Per share
-------- --------
2007 2006
------------------------------ -------- --------
Interim 5.8p 5.3p
Final 12.9p 11.7p
------------------------------ -------- --------
Total 18.7p 17.0p
------------------------------ -------- --------
7. Cash and cash equivalents and net debt
2007 2006
£m £m
--------------------------- --------- ---------
Cash at bank and in hand 69.0 45.2
Short term deposits repayable in less than three months 7.0 3.8
---------------------------------- --------- ---------
Cash and deposits 76.0 49.0
Bank overdrafts (20.3) (23.9)
--------------------------- --------- ---------
Cash and cash equivalents 55.7 25.1
--------------------------- --------- ---------
Interest bearing loans and borrowings
Current liabilities (79.4) (4.3)
Non-current liabilities (656.4) (456.9)
Derivative asset - fair value of interest rate
swaps hedging fixed interest rate borrowings 12.5 5.4
--------------------------- --------- ---------
Net debt (667.6) (430.7)
--------------------------- --------- ---------
This information is provided by RNS
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