Interim Results
Bunzl PLC
29 August 2006
Tuesday 29 August 2006
INTERIM RESULTS FOR SIX MONTHS ENDED 30 JUNE 2006
AND TWO ACQUISITIONS IN NORTH AMERICA
Bunzl plc, the international distribution and outsourcing Group, today announces
its interim results for the six months ended 30 June 2006 and two significant
acquisitions in North America.
• Revenue up 17% to £1,603.2 million
• Operating profit before intangible amortisation up 14% to £104.8 million
• Profit before tax and intangible amortisation up 11% to £97.8 million
• Profit before tax up 9% to £88.1 million
• Earnings per share of continuing operations up 7% to 17.5p
• Adjusted earnings per share* up 8% to 19.3p
• Dividend up 8% to 5.3p
* before intangible amortisation
Other highlights include:
• All business areas increased revenue and profits
• Improved overall organic growth
• Acquisitions in North America of Morgan Scott and United American Sales
announced today
• Southern Syringe, a healthcare distributor in the UK, acquired in July
• 2006 acquisitions to date add annualised revenue of about £285 million
• Limited on-market share buy back
Commenting on today's results, Anthony Habgood, Chairman of Bunzl, said:
'These are a good set of results. They combine sound operating performance with
a number of acquisitions which fit closely with our stated strategy while at the
same time opening important potential development opportunities for the Group.'
Michael Roney, Chief Executive of Bunzl, said:
'These results show the good progress which we have made in the first half. Our
improved level of underlying growth and the continuing integration of
acquisitions clearly position us well for the future.'
Bunzl also today announces that it has completed two further acquisitions in
North America.
The Company has acquired the business of Morgan Scott from two privately owned
companies, Morgan Scott Inc, controlled by William O'Brien and Robert Giroux, and Morgan
Scott (Kingston) Inc, controlled by Robert Tremblay. Based in Toronto, the
business is engaged in the distribution of jan/san and foodservice disposable
products in eastern Canada. Revenue in 2005 was C$65.6 million and the gross
assets acquired are estimated to be C$19 million.
Bunzl has also purchased the business of United American Sales Inc from a
private company owned by Joseph Sodini and Timothy Homan. Based in Ohio with
facilities also in California, Nevada, Texas and Georgia, the business supplies
personal protection equipment through redistributors to the industrial and
construction markets. Revenue in 2005 was $57.7 million and the gross assets
acquired are estimated to be $15 million.
Commenting on these acquisitions, Michael Roney, Chief Executive of Bunzl, said:
'The acquisitions of Morgan Scott and United American Sales are excellent
additions to our successful and growing business in North America. Morgan Scott
will further strengthen our presence in eastern Canada, particularly in the jan/
san and foodservice sectors, while United American Sales will enable us to enter
the redistribution sector for personal protection equipment in North America and
provides an opportunity to develop further in this market.
Together with Southern Syringe, announced in July, we have now completed three
acquisitions since the end of June, each of which gives the Group exciting
opportunities to develop successfully in both existing and new sectors with
significant potential. With the acquisitions made in the first half, they will
add annualised revenue of about £285 million'.
Enquiries:
Bunzl plc Finsbury
Michael Roney, Chief Executive Roland Rudd
Brian May, Finance Director Mark Harris
Tel: 020 7495 4950 Tel: 020 7251 3801
CHAIRMAN'S STATEMENT
During our first full year as a focused, international, value-added distribution
and outsourcing Group, I am pleased to be able to report that overall trading in
the first half has continued to be strong with revenue up 17% to £1,603.2 million.
This increase was principally the result of a combination of organic growth and
acquisition activity. Currency movements, largely the dollar which, despite
currently being weaker than it was at this time last year, averaged $1.79 to
£1 during the first half compared to $1.86 in 2005, contributed about 2.5% to this
increase. Following the Group's reorganisation in November 2005 into four geographic
business areas (North America, UK & Ireland, Continental Europe and Australasia),
it is particularly pleasing that all areas showed increased revenues over the
comparable period last year.
Operating profit before intangible amortisation was up 14% to £104.8 million
with each business area also showing an increase over 2005. Profit before tax
increased 9% to £88.1 million. This was impacted by an increase of 75% in the
interest charge to £7.0 million as a result of higher interest rates,
particularly in North America, combined with a slightly higher level of debt,
and amortisation up 33% as a result of acquisition activity. With somewhat more
shares in issue, principally due to the exercise of options by Filtrona
employees following its demerger from the Group last summer, earnings per share
of continuing operations rose by 7%. Adjusted earnings per share, after
eliminating intangible amortisation, rose 8% to 19.3p.
Strategy
We are continuing to pursue our well defined strategy of focusing on our
strengths and consolidating our markets while also logically extending the
product and geographic areas in which we compete. Expanding our geographic
spread, increasingly co-ordinating our procurement and international sourcing
and continually redefining and deepening our commitment to our customers and
markets remain important ongoing elements of our success.
Dividend
The Board has decided to increase the interim dividend by 8% to 5.3p (2005:
4.9p). Shareholders will again be able to participate in our dividend reinvestment plan.
Board
On 1 January Brian May, who had been Finance Director designate since June 2005,
joined the Board as Finance Director. His previous role was as Finance Director
of our growing and successful European and Australasian businesses. Also on 1
January, Peter Johnson, Chairman of Inchcape plc, joined the Board as an
independent non-executive director. His experience of distribution and
international markets is already proving to be of value to us. Finally on 31
January, David Williams, Finance Director until the end of 2005, retired after
reaching his normal retirement age and having served as a director for over 14
years. I wish Brian every success in his new role and welcome Peter to the
Board. I would also like to thank David for his highly significant contribution
to Bunzl over many years.
CHIEF EXECUTIVE'S REVIEW
Operating performance
Revenue rose by 17% to £1,603.2 million due to a combination of improved organic
growth and the impact of acquisitions. Operating profit before intangible
amortisation of £104.8 million was 14% higher than 2005 as the acquisitions made
in the second half of 2005 at lower than average Group margins continue to be
integrated into the operations. While the overall net margin is down from 6.7%
to 6.5%, the net margin excluding the impact of acquisitions has improved
slightly.
In North America revenue rose by 24% with operating profit increasing by 18%
largely due to the impact of the lower margin acquisitions completed in the
second half of 2005. Revenue and operating profit in the UK & Ireland rose by 3%.
Continental Europe showed a 16% increase in revenue and an 11% improvement in
operating profit due to good growth from recent acquisitions at lower margins than
the business area average and a small reduction in operating returns. In Australasia
revenue increased by 19% and operating profit rose by 18%. Adjusted earnings per
share, after eliminating the effect of intangible amortisation, were 19.3p,
an increase of 8%.
Cash inflow from operations funded acquisition activity and reduced net debt
from £355.5 million at the year end to £296.6 million. With shareholders'
equity increasing to £503.6 million from £460.4 million at the year end,
gearing fell to 58.9% from 77.2%. Return on operating capital was 62.7%
compared to 62.1% in the first half of 2005 and 61.4% for the year.
Acquisitions
In 2006 we have made acquisitions in each of the business areas. Master Craft
Packaging, which serves the redistribution and foodservice sectors in
California, Oregon and Washington and had revenue of $11 million in 2005, was
purchased in January. Midshires Group, with revenue of £12 million in 2005,
provides vending services throughout central England and was acquired in late
January. In April we announced the acquisition of Picardie Hygiene, a cleaning
and hygiene distributor based in northeast France which had revenue of
€10 million in 2005, and the purchase of Allcare Disposable Products, a
distributor to food processors based in Melbourne, Australia with revenue of
A$23 million in the year to June 2005. In early July we acquired Southern
Syringe. The business, which is based in London, is 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 and had revenue
of £182 million in 2005. This important acquisition significantly expands our
position in the growing healthcare consumables market. Today we announced the
purchase of Morgan Scott and United American Sales. Based in Toronto, Morgan
Scott had revenue in 2005 of C$66 million. It is a regional distributor of jan/
san and foodservice disposable products and will further strengthen our presence
in eastern Canada. United American Sales is a redistributor based in Ohio with
revenue in 2005 of $58 million. This business is our first move into the
redistribution sector for personal protection equipment in the North American
market.
2006 acquisition activity to date will add annualised revenue of about £285
million at a total cost of £90 million.
Share buy back
We have decided to implement a limited on-market share buy back programme, such
purchases to be made subject to market conditions. This is consistent with the
Board's objective of maintaining an appropriate balance sheet structure while
continuing with our strategic priority of growing both organically and by
acquisition.
Prospects
The possibilities for growth in our sectors continue to be promising and, as we
expand both organically and through acquisitions, we will extend our coverage
and further consolidate our markets.
Revenue in North America remains strong, aided by good underlying growth
supported by upward pressure from product prices, and the impact of recently
acquired businesses. The acquisitions made in the second half of 2005, at lower
than the Group's average margins, are now largely integrated onto the Company's
IT platform and, together with the more recent acquisitions, are expected to
show benefits in future periods.
In the UK & Ireland organic growth has slowed due to weaker market conditions
and competitive pressures. Tight cost control, supported by additional operating
efficiencies, continues to offset underlying cost pressures. The recently
announced acquisition in the growing healthcare consumables market will broaden
our product offering and customer base and will give us the opportunity to
extend our business in this sector.
Revenue in Continental Europe continues to develop well due to a combination of
good organic growth across all businesses and the impact of acquisitions. While
we expect some continued margin pressure, we will reduce operating costs through
the ongoing integration of the acquisitions onto new IT platforms and further
business reorganisation. Overall we see good growth opportunities as we
consolidate our markets and extend our coverage into new countries.
The outlook for Australasia is good due to satisfactory organic growth,
increased international sourcing and the positive effect of acquisitions made
since the first half of 2005.
While the first half US dollar translation impact has been favourable compared
to 2005, if the current rate holds until the end of the year the impact on the
full year results would be slightly negative.
The combination of good organic growth, our strong positions in the markets in
which we operate, the most recent acquisitions and a promising pipeline of
opportunities give us confidence that the prospects are good and that the Group
will continue to develop satisfactorily.
North America
A combination of organic and acquisition growth contributed to dollar revenue
growth of 19% and a 14% increase in dollar operating profit. The underlying
revenue growth has improved as has the underlying margin despite rising input prices
and continued competitive pressure. All of our sectors showed good organic growth
and, while the supermarket business continues to be the largest of our customer
categories, we continue to expand our presence in a greater way in the redistribution,
food processor, non-food retail and convenience store business sectors.
Acquisitions made in 2005 were an important component of our growth and the
ongoing successful integration of SOFCO, A W Mendenhall and Retail Resources
will benefit our margins and support our growth initiatives in the key sectors
of redistribution and non-food retail. Although currently generating lower
margins, we expect to see improvement as they are all now on our IT platform and
many cost reduction initiatives have recently been implemented.
The three acquisitions made this year are exciting additions to our current
business. In January we purchased Master Craft Packaging which strengthens our
position in the redistribution and foodservice segments. Today we announced the
acquisition of Morgan Scott and United American Sales. Morgan Scott is a Toronto
based distributor of jan/san and foodservice disposable products which will
significantly grow our sales in eastern Canada. United American Sales is a
redistribution business supplying personal protection equipment into the
industrial and construction markets. This business gives us a platform to grow
in a new sector with significant potential.
In order to drive organic sales growth, we are making significant investments in
our employees. An example of this is the VIP (value, integrity, performance)
sales training and development initiative launched in the second half of 2005.
It is designed to give our sales professionals the more advanced selling tools
to help them identify opportunities to enhance margin and increase sales. All
General Managers, Sales Managers and Sales Representatives have completed this
three day programme. Our goal is to expand the VIP training to other operational
areas of the business in order to enhance our exceptional customer service.
We also anticipate organic growth through deeper penetration of existing
customers, particularly with jan/san products. A new catalogue contains
information on more than 5,000 jan/san and foodservice items for our
redistribution business. We are also working closely with suppliers to further
develop our jan/san capabilities on a national basis.
Despite higher fuel charges we continue to manage our costs effectively.
Proactive measures to minimise the impact on our cost base include modification
of truck driving behaviour and practices to improve driver safety and fuel
economy. Outbound freight costs have been kept to a minimum by implementation of
a new freight rating system. We are confident that our IT capabilities, supply
chain and delivery methods will help to decrease costs, particularly in our
recent acquisitions. In addition, we continue to strengthen our relationships
with both suppliers and customers to further enhance our competitive position.
UK & Ireland
During the first half, when both sales and operating profit grew by 3%, we
continued to implement many initiatives to grow our business and make our
operations more efficient.
The retail supplies business benefited from a new contract with a leading high
street retailer which was won during 2005. Our history of growing business with
current customers and winning new ones continued in 2006 as we moved into a new
segment with an agreement to supply a national chain of garage forecourts.
Our Manchester warehouse site is undergoing a significant expansion to handle
the growth in our retail business.
While the horeca (hotel, restaurant and catering) market has been challenging,
our business has implemented several initiatives to operate more efficiently at
lower cost that will put us in a better position for the future.
While revenue in the cleaning and safety business was flat, we saw an
improvement in operating margins. Our customer segments provided mixed results
as the sales grew to major contract cleaners and construction companies but
declined to manufacturers and smaller, local customers. At the end of the first
half we secured a long term national contract with a leading contract cleaner
and we also opened a new safety supplies branch in Essex to better serve that
local market. Margins were partly enhanced by a continuing focus on imported
products and private label sales.
In Ireland revenue in the horeca business was boosted by the continuing
investment in the hotel sector while we consolidated our cleaning and safety
businesses in Dublin to improve operating efficiencies and to maximise cross
selling opportunities.
Vending benefited from the acquisition of Midshires at the end of January. This
increased our presence in the Midlands and we have already completed the
integration of the Midshires sites with our existing locations.
While the healthcare business was impacted by the NHS budget deficits, spending
cutbacks and the rising price of latex for gloves, we made good progress by
offering new product ranges and increasing our sales of vinyl and nitrile
gloves. In early July we made an important acquisition, that of Southern Syringe
with sales of £182 million in 2005. This company has a significant presence in
the healthcare distribution market and, although currently operating at
considerably lower than the Group's average margins, will give us an opportunity
to develop successfully in this sector.
Continental Europe
Revenue increased by 16% and operating profit rose by 11% as the business
continued to develop through stronger organic growth and the impact of
acquisitions. The combination of acquisitions made at lower than the business
area average margin and a small reduction in operating returns caused a decline
in the overall margin.
In France our business has experienced satisfactory growth in spite of a
difficult market. Sales to national account cleaning and hygiene customers have
grown and this has been further supported by the acquisition of Picardie
Hygiene. Margin pressure will be partly offset through the recent introduction
of Techline, our own branded range of products, and our ongoing investment in a
new IT system. Our personal protection equipment/safety products business has
performed well principally due to strong organic growth.
In the Netherlands our retail business achieved excellent results through very
good organic growth. We have increased our range of products and greatly
benefited from significant new contracts. Our business supplying horeca
customers also delivered a strong performance largely due to organic sales
growth.
In Germany the good growth in revenue came from additional business with
national and regional accounts and from the FIFA World Cup. Strong cost control
also helped to improve profitability.
Our retail business in Denmark has exceeded expectations as strong organic
growth has been supported by ongoing cost savings. Our business supplying horeca
customers continues to prosper. A significant contract win at the end of 2005
and the introduction of a food solutions product range have helped deliver
profitable growth.
The recent acquisitions in central Europe have performed very well and have
increased our interest in emerging market opportunities. Beltex, our cleaning
and safety products business based in Hungary and acquired in November 2004,
delivered a strong performance principally due to good underlying revenue growth
and good cost control. Tecep, our retail business purchased in July 2005
covering the principal countries of central Europe, delivered better than
expected results due to increased sales of equipment and packaging to new
supermarkets in the region.
Australasia
A combination of organic and acquisition growth increased revenue and operating
profit by 19% and 18% respectively.
Our main business continues to grow organically and leverage its strong market
position as a leading consolidator within its core sectors of healthcare,
industrial, horeca and retail. We have achieved new contract wins and a new
distribution facility in New Zealand will further support our growth
initiatives.
Our specialist healthcare business, Sanicare, which was acquired in July 2005,
was successfully integrated into the Bunzl operating system in April. From July
2006 Sanicare will also operate out of the new Bunzl facility in New Zealand
which will be the platform for our business development within this region.
In April we acquired Allcare Disposable Products, which expands our position and
product offering into the food processor sector. Allcare is a recognised market
leader and the acquisition strengthens our position while creating opportunities
for wider distribution of existing product categories.
We continue to pursue initiatives to operate more efficiently at lower cost. We
have successfully conducted consolidation import trials from a warehouse in
Shanghai. The business is investing in new infrastructure along with upgrading
existing facilities and additional enhancements to our IT systems. An internet
ordering platform has been developed to complement our existing e-business
connections with customers and suppliers.
CONSOLIDATED INCOME STATEMENT
Six months Six months
to to Year to
30.6.06 30.6.05 31.12.05
Continuing operations Notes £m £m £m
--------------------------------------------------------------------------------
Revenue
Existing businesses 1,592.0 1,366.3 2,924.4
Acquisitions 11.2
--------------------------------------------------------------------------------
2 1,603.2 1,366.3 2,924.4
--------------------------------------------------------------------------------
Operating profit before intangible
amortisation
Existing businesses 103.9 91.8 203.4
Acquisitions 0.9
--------------------------------------------------------------------------------
Operating profit before
intangible amortisation 104.8 91.8 203.4
--------------------------------------------------------------------------------
Intangible amortisation (9.7) (7.3) (15.9)
--------------------------------------------------------------------------------
Operating profit 2 95.1 84.5 187.5
Finance income 3 9.5 14.2 22.0
Finance cost 3 (16.5) (18.2) (32.8)
--------------------------------------------------------------------------------
Profit before income tax 88.1 80.5 176.7
--------------------------------------------------------------------------------
Profit before income tax and
intangible amortisation 97.8 87.8 192.6
--------------------------------------------------------------------------------
UK income tax (5.3) (3.8) (8.7)
Overseas income tax (22.8) (21.8) (48.0)
--------------------------------------------------------------------------------
Total income tax 4 (28.1) (25.6) (56.7)
--------------------------------------------------------------------------------
Profit for the period 60.0 54.9 120.0
--------------------------------------------------------------------------------
Discontinued operations
Profit for the period - 4.2 4.2
--------------------------------------------------------------------------------
Total profit for the period 60.0 59.1 124.2
--------------------------------------------------------------------------------
Attributable to:
Equity holders of the Company 60.0 58.5 123.6
Minority interests - 0.6 0.6
--------------------------------------------------------------------------------
Total profit for the period 60.0 59.1 124.2
--------------------------------------------------------------------------------
Earnings per share of the total
profit for the period
attributable to the Company's
equity holders
--------------------------------------------------------------------------------
Basic 17.5p 17.4p 36.5p
--------------------------------------------------------------------------------
Diluted 17.4p 17.3p 36.3p
--------------------------------------------------------------------------------
Earnings per share of the profit
for the period from continuing
operations attributable to the
Company's equity holders
--------------------------------------------------------------------------------
Basic 6 17.5p 16.3p 35.4p
--------------------------------------------------------------------------------
Diluted 6 17.4p 16.2p 35.2p
--------------------------------------------------------------------------------
Proposed dividend per share
relating to the period 5.3p 4.9p 15.7p
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
Six months Six months
to to Year to
30.6.06 30.6.05 31.12.05
£m £m £m
--------------------------------------------------------------------------------
Profit for the period 60.0 59.1 124.2
Actuarial gain/(loss) on pension
schemes 20.0 (19.2) (27.3)
Deferred taxation on actuarial
(gain)/loss (6.2) 6.2 8.4
Currency translation differences* (3.3) 0.7 8.1
Movement of cash flow hedging
reserve (0.6) 2.1 1.6
--------------------------------------------------------------------------------
Net income/(expense) recognised
directly in equity 9.9 (10.2) (9.2)
--------------------------------------------------------------------------------
Total recognised income for the
period 69.9 48.9 115.0
--------------------------------------------------------------------------------
Adoption of IAS 32 and IAS 39 (1.3) (1.3)
--------------------------------------------------------------------------------
69.9 47.6 113.7
--------------------------------------------------------------------------------
Attributable to:
Equity holders of the Company 69.9 48.0 114.1
Minority interests - 0.9 0.9
--------------------------------------------------------------------------------
Total recognised income for the
period 69.9 48.9 115.0
--------------------------------------------------------------------------------
* Currency translation differences for the six months to 30 June 2006 of £(3.3)m
(six months to 30 June 2005: £0.7m; year to 31 December 2005: £8.1m) are net of
gains of £9.1m (six months to 30 June 2005: £2.1m; year to 31 December 2005:
losses of £15.7m) taken to equity as a result of designated effective net
investment hedges.
CONSOLIDATED BALANCE SHEET
30.6.06 30.6.05 31.12.05
£m £m £m
--------------------------------------------------------------------------------
Assets
Property, plant and equipment 72.7 64.2 69.8
Intangible assets 699.1 597.2 695.5
Derivative assets - - 4.8
Deferred tax assets 9.0 13.6 22.2
--------------------------------------------------------------------------------
Total non-current assets 780.8 675.0 792.3
Inventories 247.2 218.8 272.3
Income tax receivable 2.1 2.8 2.5
Trade and other receivables 468.4 424.3 470.7
Derivative assets 0.6 0.8 0.9
Cash and deposits 66.6 103.8 53.7
--------------------------------------------------------------------------------
Total current assets 784.9 750.5 800.1
--------------------------------------------------------------------------------
Total assets 1,565.7 1,425.5 1,592.4
--------------------------------------------------------------------------------
Equity
Share capital 111.7 110.0 111.4
Share premium 115.8 98.9 112.8
Merger reserve 2.5 - 2.5
Capital redemption reserve 8.6 8.6 8.6
Cash flow hedging reserve (0.3) 0.8 0.3
Translation reserve 5.2 1.1 8.5
Retained earnings 260.1 171.2 216.3
--------------------------------------------------------------------------------
Total equity 503.6 390.6 460.4
Liabilities
Interest bearing loans and borrowings 289.0 287.8 339.7
Retirement benefit obligations 39.9 53.2 60.0
Other payables 2.0 4.8 1.5
Derivative liabilities 2.2 - -
Provisions 34.3 31.9 38.3
Deferred tax liabilities 72.3 62.3 79.3
--------------------------------------------------------------------------------
Total non-current liabilities 439.7 440.0 518.8
Bank overdrafts 25.0 42.6 17.0
Interest bearing loans and borrowings 49.2 59.0 52.5
Income tax payable 52.0 41.8 40.8
Trade and other payables 490.2 447.4 497.6
Derivative liabilities 0.3 - -
Provisions 5.7 4.1 5.3
--------------------------------------------------------------------------------
Total current liabilities 622.4 594.9 613.2
--------------------------------------------------------------------------------
Total liabilities 1,062.1 1,034.9 1,132.0
--------------------------------------------------------------------------------
Total equity and liabilities 1,565.7 1,425.5 1,592.4
--------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT
Six months Six months
to to Year to
30.6.06 30.6.05 31.12.05
£m £m £m
--------------------------------------------------------------------------------
Cash flow from operating activities of
continuing operations
Profit before income tax 88.1 80.5 176.7
Adjustments for non-cash items:
Depreciation 7.1 6.7 13.6
Intangible amortisation 9.7 7.3 15.9
Other 3.0 (0.2) 4.5
Working capital movement (17.2) (18.3) (11.4)
Finance income (9.5) (14.2) (22.0)
Finance cost 16.5 18.2 32.8
Special pension contribution - (3.3) (3.3)
Employee trust shares 1.8 2.2 (2.7)
Other cash movements (7.3) (5.3) (6.4)
--------------------------------------------------------------------------------
Cash inflow from operating
activities of continuing operations 92.2 73.6 197.7
Cash inflow from operating
activities of discontinued
operations - 16.1 2.2
Income tax paid of continuing
operations (11.4) (31.2) (56.7)
Income tax paid of discontinued
operations - (2.8) (2.8)
--------------------------------------------------------------------------------
Cash inflow from operating
activities 80.8 55.7 140.4
Cash flow from investing activities of
continuing operations
Interest received 3.4 10.5 11.8
Purchase of property, plant and
equipment (8.0) (4.8) (11.4)
Sale of property, plant and
equipment 0.3 0.6 0.8
Purchase of businesses (24.0) (22.7) (124.4)
Demerger of business - 115.4 115.4
Other investment cash flows - (3.0) 0.7
--------------------------------------------------------------------------------
Cash (outflow)/inflow from investing
activities of continuing operations (28.3) 96.0 (7.1)
Cash outflow from investing
activities of discontinued
operations - (12.3) (12.3)
--------------------------------------------------------------------------------
Cash (outflow)/inflow from investing
activities (28.3) 83.7 (19.4)
Cash flow from financing activities of
continuing operations
Interest paid (6.0) (10.5) (20.2)
Dividends paid (16.5) (18.5) (57.8)
Increase/(decrease) in short term
loans 4.2 (87.6) (102.3)
(Decrease)/increase in long term
loans (31.9) (1.8) 37.6
Shares issued for cash 3.3 11.4 26.6
--------------------------------------------------------------------------------
Cash outflow from financing
activities of continuing operations (46.9) (107.0) (116.1)
Cash outflow from financing
activities of discontinued
operations - (35.1) (35.1)
--------------------------------------------------------------------------------
Cash outflow from financing
activities (46.9) (142.1) (151.2)
Exchange (loss)/gain on cash and
cash equivalents of continuing
operations (0.7) (0.9) 2.1
Exchange gain on cash and cash
equivalents of discontinued
operations - 0.3 0.3
--------------------------------------------------------------------------------
Net exchange (loss)/gain on cash and
cash equivalents (0.7) (0.6) 2.4
Increase/(decrease) in cash and cash
equivalents 4.9 (3.3) (27.8)
--------------------------------------------------------------------------------
Cash and cash equivalents at start
of period 36.7 64.5 64.5
--------------------------------------------------------------------------------
Increase in cash and cash
equivalents of continuing operations 4.9 30.5 19.9
Decrease in cash and cash
equivalents of discontinued
operations - (33.8) (47.7)
--------------------------------------------------------------------------------
Cash and cash equivalents at end of
period 41.6 61.2 36.7
--------------------------------------------------------------------------------
Notes
1. Basis of preparation
The figures for the six months to 30 June 2006 and 30 June 2005 are unaudited
and do not constitute statutory accounts. However, the auditors have carried out
a review of the figures to 30 June 2006 and their report is set out in the
Independent review report. The comparative figures for the year ended 31
December 2005 are not the Company's statutory accounts for the year. Those
accounts 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.
The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's 2005 statutory accounts. Some
adjustments have been made to the figures for the six months to
30 June 2005, none of which materially impact the previously published financial
information, to reflect reclassifications and interpretations of accounting
standards following the adoption of International Financial Reporting Standards
in 2005. As a result, for the six months to 30 June 2005, the intangible
amortisation charge and the related deferred tax have each reduced by £0.5m, the
basic and diluted earnings per share for the Group and for continuing operations
have each increased by 0.3p and total equity has increased by £2.3m. There has
been no change to the adjusted earnings per share for the six months to 30 June
2005 or to the financial information for the year ended 31 December 2005.
2. Segment analysis
Revenue Operating profit
--------------------------------------------------------------------------------------------
Six months Six months Six months Six months
to to Year to to to Year to
Continuing 30.6.06 30.6.05 31.12.05 30.6.06 30.6.05 31.12.05
operations £m £m £m £m £m £m
-------------------------------------------------------------------------------------------
North America 934.3 753.2 1,665.2 62.0 52.5 116.0
UK & Ireland 334.3 326.1 664.2 25.5 24.8 56.1
Continental Europe 278.3 239.8 490.0 20.9 18.8 37.9
Australasia 56.3 47.2 105.0 3.9 3.3 8.4
-------------------------------------------------------------------------------------------
1,603.2 1,366.3 2,924.4 112.3 99.4 218.4
Corporate (7.5) (7.6) (15.0)
Intangible
amortisation* (9.7) (7.3) (15.9)
--------------------------------------------------------------------------------------------
1,603.2 1,366.3 2,924.4 95.1 84.5 187.5
--------------------------------------------------------------------------------------------
* For the six months to 30 June 2006 intangible amortisation comprised North
America £2.1m, UK & Ireland £0.4m, Continental Europe £6.7m and Australasia
£0.5m. For the six months to 30 June 2005 intangible amortisation comprised
North America £0.8m, UK & Ireland £0.1m, Continental Europe £6.1m and
Australasia £0.3m. For the year to 31 December 2005 intangible amortisation
comprised North America £2.4m, UK & Ireland £0.3m, Continental Europe £12.6m and
Australasia £0.6m.
3. Finance income/(cost)
Six months to Six months to Year to
30.6.06 30.6.05 31.12.05
£m £m £m
----------------------------------------------------------------------===-------
Deposits 3.8 9.3 11.8
Expected return on pension scheme
assets 5.7 4.9 10.2
--------------------------------------------------------------------------------
Finance income 9.5 14.2 22.0
--------------------------------------------------------------------------------
Loans and overdrafts (10.7) (13.2) (22.5)
Interest charge on pension scheme
liabilities (5.8) (5.0) (10.3)
--------------------------------------------------------------------------------
Finance cost (16.5) (18.2) (32.8)
--------------------------------------------------------------------------------
4. Income tax for continuing operations
A taxation charge of 32.0% (2005: 32.0%) on the profit on underlying operations
excluding the impact of intangible amortisation of £9.7m (2005: £7.3m) and
related deferred tax of £3.2m (2005: £2.5m) has been provided based on the
estimated effective rate of taxation for the year. Including the impact of
intangible amortisation and related deferred tax, the overall tax rate is 31.9%
(2005: 31.8%).
5. Dividends
Dividends for the period in which they were declared are:
Per share Total
-----------------------------------------------------------------------------------------
Six months Six months Six months Six months
to to Year to to to Year to
30.6.06 30.6.05 31.12.05 30.6.06 30.6.05 31.12.05
£m £m £m
------------------------------------------------------------------------------------------
2004 final 9.15p 9.15p 39.3 39.3
2005 interim 4.9p 16.5
2005 final 10.8p 36.5
------------------------------------------------------------------------------------------
10.8p 9.15p 14.05p 36.5 39.3 55.8
------------------------------------------------------------------------------------------
The 2006 interim dividend of 5.3p will be paid on 2 January 2007 to shareholders
on the register on 17 November 2006.
6. Earnings per share
Six months to Six months to Year to
30.6.06 30.6.05 31.12.05
£m £m £m
Continuing operations
Profit for the period 60.0 54.9 120.0
Adjustment 6.5 4.8 11.0
--------------------------------------------------------------------------------
Adjusted profit* 66.5 59.7 131.0
--------------------------------------------------------------------------------
Discontinued operations
Profit for the period (net of
minority interests) - 3.6 3.6
--------------------------------------------------------------------------------
Basic weighted average ordinary
shares in issue (million) 343.7 336.0 338.8
Dilutive effect of employee share
plans (million) 1.5 2.2 1.7
--------------------------------------------------------------------------------
Diluted weighted average ordinary
shares (million) 345.2 338.2 340.5
--------------------------------------------------------------------------------
Continuing operations
Basic earnings per share 17.5p 16.3p 35.4p
--------------------------------------------------------------------------------
Adjustment 1.8p 1.5p 3.3p
--------------------------------------------------------------------------------
Adjusted earnings per share* 19.3p 17.8p 38.7p
--------------------------------------------------------------------------------
Diluted basic earnings per share 17.4p 16.2p 35.2p
--------------------------------------------------------------------------------
Discontinued operations
Basic earnings per share - 1.1p 1.1p
--------------------------------------------------------------------------------
Diluted basic earnings per share - 1.1p 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
30.6.06 30.6.05 31.12.05
£m £m £m
--------------------------------------------------------------------------------
Cash at bank and in hand 27.4 82.9 48.4
Short term deposits repayable on demand - 7.9 -
Bank overdrafts (25.0) (42.6) (17.0)
--------------------------------------------------------------------------------
Cash 2.4 48.2 31.4
Short term deposits repayable in less than
three months 39.2 13.0 5.3
--------------------------------------------------------------------------------
Cash and cash equivalents 41.6 61.2 36.7
--------------------------------------------------------------------------------
Current liabilities - interest bearing
loans and borrowings (49.2) (59.0) (52.5)
--------------------------------------------------------------------------------
Non-current liabilities - interest bearing
loans and borrowings (289.0) (287.8) (339.7)
--------------------------------------------------------------------------------
Net debt (296.6) (285.6) (355.5)
--------------------------------------------------------------------------------
8. Movement in reserves
Six months to Six months to Year to
30.6.06 30.6.05 31.12.05
£m £m £m
--------------------------------------------------------------------------------
Beginning of period 460.4 487.5 487.5
Total recognised income for the
period 69.9 48.9 115.0
Final dividend (36.5) (39.3) (39.3)
Interim dividend - - (16.5)
Issue of share capital 3.3 11.4 29.2
Employee trust shares 2.3 2.7 (1.1)
Share based payments 4.2 1.8 8.0
Demerger of business - (122.4) (122.4)
--------------------------------------------------------------------------------
End of period 503.6 390.6 460.4
--------------------------------------------------------------------------------
Independent review report
by KPMG Audit Plc to Bunzl plc
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2006 which comprises the Consolidated income statement,
the Consolidated statement of recognised income and expense, the Consolidated
balance sheet, the Consolidated cash flow statement and the related 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.
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the Listing
Rules of the Financial Services Authority. Our review has been undertaken so
that we might state to the Company those matters we are required to state to it
in this report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the Company for
our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which 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 any
changes, and the reasons for them, are 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
for use in the United Kingdom. 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 excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with
International Statements on Auditing (UK and Ireland) 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 2006.
KPMG Audit Plc
Chartered Accountants
London
29 August 2006
This information is provided by RNS
The company news service from the London Stock Exchange
Monday, 20th May 2024
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