Interim Results
Bunzl PLC
29 August 2000
INTERIM RESULTS FOR SIX MONTHS TO 30 JUNE 2000
Bunzl plc, the international Group supplying business to business
consumables, today announces its interim results for the six months ended 30
June 2000.
* Sales and operating profit up 16% to £1,165.7 million and £86.1 million
respectively
* Operating profit on continuing operations before goodwill up 22% to £88.7
million on sales up 21% to £1,165.7 million
* Profit before tax and goodwill up 17% to £83.8 million
* Another period of outstanding growth for Outsourcing Services with sales up
26% and profits up 29%
* £35 million spent on acquisitions in the period plus Greenham and Allegro
since the half year bring total to around £115 million
* Adjusted earnings per share up 16% to 11.8p
Commenting on today's results, Anthony Habgood, Chairman of Bunzl, said:
'Once again I am pleased to announce excellent Group figures reflecting in
particular another outstanding set of results in Outsourcing Services and a
very strong performance in Plastics. The year has also seen considerable
acquisition activity with around £115 million spent to date enhancing and
developing our businesses.
Our ability to deliver good organic growth combined with the impact of
acquisitions allows us to look forward to the continued success of the Group.'
Enquiries:
Bunzl plc Finsbury
Anthony Habgood, Chairman Roland Rudd
David Williams, Finance Director Morgan Bone
Tel: 020 7495 4950 Tel: 020 7251 3801
RESULTS
Operating profit rose 16% to £86.1 million (1999 : £74.0 million) on sales
also up 16% to £1,165.7 million (1999 : £1,007.6 million). Profit from
continuing operations before goodwill amortisation rose by 22% to £88.7
million (1999 : £72.7 million) on sales up 21% to £1,165.7 million (1999 :
£960.5 million) as good organic volume growth was supplemented by the effect
of recent acquisitions, price inflation and a somewhat stronger US dollar.
After goodwill amortisation, profit on continuing operations rose 20% to
£86.1 million (1999 : £71.5 million). Higher interest charges resulted in
profit before tax being 15% higher at £81.2 million (1999 : £70.7 million).
Earnings per share rose 12% to 11.2p (1999 : 10.0p) while adjusted earnings
per share after eliminating goodwill amortisation rose 16% to 11.8p (1999 :
10.2p)
Continuing spend on acquisitions exceeded cash generated by operations
resulting in net debt rising from £100.0 million in December 1999 to £125.5
million. Gearing at 34.4% was slightly higher than in December 1999 (30.7%).
DIVIDEND
The Board has decided to increase the dividend to 3.05p (1999 : 2.75p).
Eligible shareholders will again be able to participate in our dividend
reinvestment plan introduced in 1999.
ACQUISITIONS
The cost of acquisitions made during the period was £35 million. This
included the purchase of Davidson Plastics in January and of Shermond in
April. Davidson is a profile extrusion operation based in the US Pacific
North West which has enhanced our overall position in that business. Shermond
specialises in the supply of gloves and other disposable products to the
healthcare and hygiene sectors and complements our existing Outsourcing
Services business in the UK.
In July Bunzl acquired Greenham Trading for £76 million. Greenham is
primarily involved in the distribution of supplies including cleaning and
hygiene, personal protection and construction consumables. Based in the UK
with operations also in Denmark, Ireland and Germany, it significantly
enhances our strong position in cleaning and hygiene supplies and develops
our growing business in personal protection products. Complementing the
acquisition of Greenham, Bunzl has also recently acquired Allegro which is a
leading distributor of cleaning and hygiene supplies in Ireland. Allegro had
net assets of £0.4 million at 31 May 2000.
PROSPECTS
Strong organic volume growth in our major businesses, combined with the
successful integration of acquisitions, has once again enabled us to drive
the Company forward.
First half average prices were above the comparable period last year,
although in certain plastic based products in the US inflationary pressures
appear to be easing somewhat.
Average prices should, however, be higher this year than last.
We are confident in our ability to continue to deliver good volume growth and
this, linked to acquisitions, allows us to look forward to the continued
success of the Group.
OPERATING REVIEW
Increases in sales and operating profit before goodwill amortisation on
continuing operations of 21% and 22% respectively and an improvement in the
mix of our businesses caused an increase in Group margin from 7.5% to 7.6%
and in Group return on capital employed from 34.3% to 37.6%. Outsourcing
Services in both North America and Europe performed extremely well as did
Plastics which also showed strong organic growth supplemented by acquisition
activity.
OUTSOURCING SERVICES
Operating across North America, Europe and Australia, Bunzl is the leading
supplier of a range of business to business consumable products including
outsourced food packaging, disposable supplies and cleaning and hygiene
products for supermarkets, caterers, hotels, contract cleaners and other
industrial users.
Our largest and most successful business area achieved an outstanding set of
results with profits up 29% on sales up 26%. Good underlying organic growth,
a small favourable currency movement, rising prices and the successful
integration of acquisitions combined to cause the sales increase. With
continuing excellent control of operating costs and acquisitions also
contributing, the margin rose from 6.8% to 7.0%.
North America: Prices continued to rise throughout the period as the higher
cost of oil and pulp fed through to product prices. Period on period
inflation therefore impacted the sales growth.
We have had continued success in growing the business organically. The main
drivers of this growth have been our customers' preference for outsourcing
supplies, consumer trends towards certain product categories such as Takeout
Foods and the extension of our focus to include customer groups such as food
processors. Our competitive prices and efficient service have given us
preferred supplier status in those areas where we have or are developing
specialist knowledge.
Continued growth of electronic ordering and increased efficiencies through
centralisation aided a further fall in operating costs in proportion to
sales. Low costs and efficient operations remain vital ingredients in our
ability to provide our customers with efficient service.
Europe: Strong organic growth continued during the period as our customers
increased the use of outsourcing and one stop shopping. Good performance in
the Netherlands and Germany further established our position in those
markets. In the UK, our catering, cleaning and hygiene and retail businesses
all grew very satisfactorily with retail being particularly buoyant.
In April we acquired Shermond which specialises in the supply of gloves and
other disposable products. Its focus on the healthcare sector strengthens our
existing capability in that area and provides us with further growth
opportunities.
Our more recent acquisition of Greenham extends our product range and
enhances our presence in the UK and Germany, gives us a business in Denmark
and, when combined with the purchase of Allegro, also provides a strong
position in Ireland. With significant operations in the UK, Germany, Benelux,
Denmark and Ireland, our position as the logical partner for key
international customers and suppliers has been strengthened and provides us
with a good base for future growth.
FILTRONA
Filtrona is the world's leading supplier of outsourced cigarette filters
especially for the growing low tar market while Supastrip is the leading
brand of self-adhesive tear tape. We are also the world's leading supplier of
ink reservoirs and certain other bonded fibre products.
Profits rose 5% on sales up 7%. Strong performance of the overall filters,
fibres and tear tape business was partially offset by weaker results from our
small instrumentation operation as the cigarette industry cut back on capital
expenditure in the first half.
Our new outsourcing venture for Bigott, B.A.T's subsidiary in Venezuela,
which was opened in mid 1999 operated well throughout the period and our
Asian operations performed particularly strongly. The tear tape business was
also significantly up on last year as more customers converted to self
adhesive tear tape and as a result of the brand security and promotion
opportunities that tear tape offers.
Our new plant in Richmond, Virginia is nearing completion and will be
operational in the second half. It will provide us with an up-to-date
facility for producing fibres and special filters, finishing tear tape and
pursuing attractive new market opportunities particularly for fibre products.
A new coater for tear tape in the UK was formally commissioned in March and
has considerably increased our capacity to meet the strongly growing demand
for our value-added products. Developments of special filters continue to be
encouraging particularly in Eastern Europe where both carbon dual filters and
other interesting new products, such as oval filters, are increasingly in
demand.
PAPER DISTRIBUTION
Bunzl is one of the largest independent fine paper merchants in the UK and
Ireland, distributing a wide range of high quality printing, writing and
copier papers primarily to printers.
Profits rose 4% and sales were up 8% as price increases supplemented a modest
rise in the amount of paper distributed. Prices began to rise in late 1999
and have continued to do so in 2000 driven by pulp prices, which have also
continued to rise, and by the lack of new paper making capacity coming on
stream. These price increases appear to have reduced the growth of UK market
volumes, particularly as the continuing weakness of the euro has kept prices
of paper in mainland Europe below those in the UK.
The market has continued to consolidate with the acquisition of Modo by
Metsa-Serla being the latest of a number of mill-driven mergers which have
affected the structure of the UK fine paper distribution market. Our focus on
broad stock holding, rapid response and value-added service has continued to
differentiate our approach to the market. This differentiation and the growth
of new products such as digital papers have resulted in the continued success
of this business.
PLASTICS
Bunzl is a world leader in plastic caps and plugs for protecting engineering
products in manufacture or transit. We are also a leading extruder of custom
plastic profiles for a range of uses including transport, lighting and
retail.
Operating profit increased 28% on sales up 29% as all parts of the business
increased both sales and profits and acquisitions also contributed to an
excellent overall result. The caps and plugs business on both sides of the
Atlantic improved results significantly and, despite the strength of the
dollar and the pound, export sales grew well. The consolidation of Moss's
manufacturing and warehousing onto a single site is nearing completion and
benefits are starting to flow through.
Improved results also came from the extrusion business in the US and Europe.
The US result was supplemented by the acquisition of Davidson in Seattle in
January. A new venture in Monterrey has been opened initially to serve our
lighting customers in Mexico and our facility in the Netherlands has been
extended to allow for increased demand especially for scanning profiles into
the retail market. Morane, our UK extrusion lamination business, continued to
increase sales and profits in the first half.
In Brazil, where we have just been awarded a major new contract with one of
our multinational customers, we had an excellent increase in both sales and
profits as we continued to win business in an increasingly buoyant economy.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Six months to Six months to Year to
30.6.00 30.6.99 31.12.99
£m £m £m
Sales
Existing 1,155.3 960.5 2,066.5
businesses
Acquisitions 10.4
______________________________________________
Continuing 1,165.7 960.5 +21% 2,066.5
operations
Discontinued - 47.1 62.1
operation ______________________________________________
Total sales 1,165.7 1,007.6 +16% 2,128.6
______________________________________________
Operating profit
Existing 85.2 71.5 154.8
businesses
Acquisitions 0.9
______________________________________________
Continuing 86.1 71.5 +20% 154.8
operations
Discontinued - 2.5 3.2
operations ______________________________________________
Total operating 86.1 74.0 +16% 158.0
profit
Profit on sale of - - 0.2
discontinued ______________________________________________
operations
Profit on ordinary 86.1 74.0 158.2
activities before
interest
Net interest payable (4.9) (3.3) (7.7)
______________________________________________
Profit on ordinary 81.2 70.7 +15% 150.5
activities before
taxation
Profit before taxation,
goodwill amortisation
and exceptional items 83.8 71.9 +17% 153.5
Taxation on profit on (29.7) (25.5) (56.2)
ordinary activities ______________________________________________
Profit on ordinary 51.5 45.2 94.3
activities after
taxation
Profit attributable (0.4) (0.1) (0.6)
to minorities ______________________________________________
Profit for the period 51.1 45.1 93.7
Dividends paid (14.0) (12.5) (38.0)
and proposed ______________________________________________
Retained profit 37.1 32.6 55.7
for the period ______________________________________________
Earnings per share 11.2p 10.0p +12% 20.7p
______________________________________________
Adjusted earnings 11.8p 10.2p +16% 21.6p
per share ______________________________________________
Diluted earnings 11.1p 9.9p 20.5p
per share ______________________________________________
Dividends per share 3.05p 2.75p +11% 8.3p
______________________________________________
CONSOLIDATED BALANCE SHEET
30.6.00 30.6.99 31.12.99
£m £m £m
Fixed assets
Intangible assets - goodwill 108.3 65.7 82.9
Tangible fixed assets 198.2 178.5 176.5
Associated undertakings 13.9 13.7 13.7
Investments 11.9 10.0 9.6
______________________________________________
332.3 267.9 282.7
Current assets
Stocks 187.8 168.8 181.3
Debtors: amounts receivable 362.0 333.8 344.1
within one year
Debtors: amounts receivable
after more than one year 16.6 13.0 15.5
Investments 7.8 10.7 11.7
Cash at bank and in hand 28.6 23.7 24.5
______________________________________________
602.8 550.0 577.1
Current liabilities (443.5) (343.4) (362.4)
______________________________________________
Net current assets 159.3 206.6 214.7
______________________________________________
Total assets less current 491.6 474.5 497.4
liabilities
Creditors: amounts falling
due after more than one year (79.3) (130.2) (120.9)
Provisions for liabilities (44.9) (47.0) (49.0)
and charges ______________________________________________
Net assets 367.4 297.3 327.5
______________________________________________
Capital and reserves
Called up share capital 114.6 113.7 114.3
Other reserves 250.4 181.9 211.3
______________________________________________
Shareholders' funds: equity 365.0 295.6 325.6
interests
Minority equity interests 2.4 1.7 1.9
______________________________________________
367.4 297.3 327.5
______________________________________________
CONSOLIDATED CASH FLOW STATEMENT
Six months to Six months to Year to
30.6.00 30.6.99 31.12.99
£m £m £m
Total operating profit 86.1 74.0 158.0
Adjustments for 15.0 10.4 27.2
non-cash items
Working capital (16.1) 1.3 (11.2)
movements
Other cash movements (3.5) (0.7) (5.9)
______________________________________________
Net cash inflow from 81.5 85.0 168.1
operating activities
Net cash outflow for
returns on investments (6.4) (8.2) (9.7)
and servicing of
finance
Tax paid (21.7) (21.4) (45.1)
Net cash outflow for (21.9) (21.9) (44.7)
capital expenditure
Purchase of businesses (34.0) (34.8) (60.1)
Sale of businesses - 5.8 23.3
Other acquisition and (2.2) (3.0) (1.7)
disposal cashflows
Equity dividends paid (12.5) (11.3) (33.3)
______________________________________________
Net cash outflow (17.2) (9.8) (3.2)
before financing
Management of liquid 0.1 5.3 5.7
resources
Net cash inflow from 14.2 7.2 4.9
financing
______________________________________________
(Decrease)/increase in (2.9) 2.7 7.4
cash ______________________________________________
Reconciliation of net
cash flow to movement
in net debt
(Decrease)/increase in (2.9) 2.7 7.4
cash in the period
Decrease in debt due 1.3 - 1.3
within one year
(Increase)/decrease in (12.3) (6.8) 2.6
debt due after one year
Decrease in current (0.1) (5.3) (5.7)
asset investments
Exchange and other (11.5) (6.6) (5.0)
movements ______________________________________________
Movement in net debt (25.5) (16.0) 0.6
in the period
Opening net debt (100.0) (100.6) (100.6)
______________________________________________
Closing net debt (125.5) (116.6) (100.0)
______________________________________________
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Six months to Six months to Year to
30.6.00 30.6.99 31.12.99
£m £m £m
Profit for the period 51.1 45.1 93.7
Currency translation 0.3 (5.6) (6.7)
differences on foreign
currency net investments ______________________________________________
Total recognised gains 51.4 39.5 87.0
and losses for the ______________________________________________
period
ANALYSIS OF SALES AND OPERATING PROFIT
Sales Operating profit
Six Six Year to Six Six Year to
months months months months
to to to to
30.6.00 30.6.99 31.12.99 30.6.00 30.6.99 31.12.99
£m £m £m £m £m £m
Continuing operations
Outsourcing 807.2 642.3 1,422.7 56.2 43.6 103.3
Services
Filtrona 105.3 98.6 203.7 15.5 14.8 28.8
Paper 153.0 141.8 283.7 10.0 9.6 17.5
Distribution
Plastics 100.2 77.8 156.4 13.6 10.6 21.4
Goodwill (2.6) (1.2) (3.2)
Corporate (6.6) (5.9) (13.0)
activities _______________________________________________________________
1,165.7 960.5 2,066.5 86.1 71.5 154.8
Discontinued - 47.1 62.1 - 2.5 3.2
operations _______________________________________________________________
Total 1,165.7 1,007.6 2,128.6 86.1 74.0 158.0
_______________________________________________________________
Notes
Basis of preparation
The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's 1999 statutory accounts, except as
noted below, and was approved by the Board on 29 August 2000.
The Accounting Standards Board issued FRS15 - 'Tangible Fixed Assets' in
February 1999 and the Group has adopted the requirements of this Standard
from 1 January 2000. As permitted under the transitional provisions of FRS
15, the valuations of land and buildings have not been and will not be
updated.
The figures for the six months to 30 June 2000 and 30 June 1999 are unaudited
and do not constitute statutory accounts. However, the auditors have carried
out a review of the figures to 30 June 2000 and their report is set out
below. The figures for the year to 31 December 1999 are taken from the
statutory accounts which have been filed with the Registrar of Companies. The
auditors' report on those accounts was unqualified and did not contain any
statement under Section 237 of the Companies Act 1985.
Adjusted earnings per share
Basic and diluted earnings per share are calculated using a weighted average
number of shares of 455.3m and 459.6m respectively (1999: 451.6m and 455.3m).
Adjusted earnings per share is based on earnings of £53.7m (1999: £46.3m),
being the earnings for the six months to 30 June 2000 excluding the goodwill
amortisation charge of £2.6m (1999: 1.2m).
Taxation
A taxation charge of 35.5% (1999: 35.5%) on the profit on underlying
operations excluding goodwill amortisation has been provided based on the
estimated effective rate of taxation for the year, the UK taxation charge
being £3.9m (1999: £5.2m).
Dividends
An interim dividend of 3.05p per share has been declared and will be paid on
3 January 2001 to shareholders on the register on 24 November 2000.
Independent review report by KPMG Audit Plc to Bunzl plc
Introduction - We have been instructed by the company to review the
financial information set out in the Consolidated Profit and Loss Account,
Consolidated Balance Sheet, Consolidated Cash Flow Statement, Consolidated
Statement of Total Recognised Gains and Losses, Analysis of Sales and
Operating Profit and Notes. We have read the other information contained in
the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
Directors' responsibilities - The interim report, including the financial
information contained therein, is the responsibility of, and has been
approved by, the directors. The Listing Rules of the Financial Services
Authority require that the accounting policies and presentation applied to
the interim figures should be consistent with those applied in preparing the
preceding annual accounts except where they are to be changed in the next
annual accounts, in which case any changes, and the reasons for them, are to
be disclosed.
Review work performed - We conducted our review in accordance with guidance
contained in Bulletin 1999/4 'Review of interim financial information' issued
by the Auditing Practices Board. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review is substantially
less in scope than an audit performed in accordance with Auditing Standards
and therefore provides a lower level of assurance than an audit. Accordingly
we do not express an audit opinion on the financial information.
Review conclusion - On the basis of our review we are not aware of any
material modifications that should be made to the financial information as
presented for the six months ended 30 June 2000.
KPMG Audit Plc
Chartered Accountants
London
29 August 2000
Latest directors dealings
- 53 minutes ago Big Yellow Group
- 1 hour ago Smith & Nephew
- 1 hour ago Pennon Group
- 1 hour ago Pennon Group
- 1 hour ago Xaar