Final Results
C&C Group Plc
09 May 2007
C&C GROUP PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 28 FEBRUARY 2007
Dublin, London, 9 May, 2007: C&C Group plc ('C&C' or the 'Group'), a leading
manufacturer, marketer and distributor of branded beverages in Ireland and the
UK, today announced its results for the year ended 28 February 2007.
Financial Highlights
• Revenue (i) growth of 27% to €981.4 million.
• Operating Profit (i) growth of 77% to €212.6 million.
• Operating Margin increase of 6.1 percentage points to 21.7%.
• Adjusted EPS growth of 84% to 54.9 cent; basic EPS of 63.8 cent.
• Final proposed dividend of 15 cent per share; total dividend of 27 cent
per share - an increase of 80%.
• €150 million share buy-back announced.
• Free cash flow of €71 million before disposal of Snacks division (30% of
EBITDA).
• Net debt reduced by €78 million to €305 million.
Operating Highlights
• Achieved national distribution for Magners in Great Britain - delivering a
GB On Trade LAD(ii) market share of 1.7% (iii) and turnover weighted
distribution of 67% (iii).
• Cider manufacturing capability transformed by major capital investment
programme.
• Increased Bulmers' market share of the Irish LAD market by 50 bps to
10.5%.(iv)
• Tullamore Dew volume depletions (v) increased by 16%.
• Soft Drinks operating margin increased by 1.5 percentage points to 8.3%.
(i) Comparisons are for continuing operations before exceptional items and
are on a constant currency basis.
(ii) Long Alcohol Drinks (Beer, Cider, RTD's).
(iii) Moving Annual Total (MAT) to Jan 2007 per A.C. Nielsen.
(iv) Revenue Commissioners (Cider/Beer)
(v) Defined as sales by distributors to customers.
Performance Highlights
Maurice Pratt, C&C Group Chief Executive Officer commented, "C&C is pleased to
report continuing earnings growth and progress against all financial measures.
We will continue to invest in the sustainable growth opportunities presented by
Magners, Bulmers, and Tullamore Dew".
Investors and analysts Irish Media International Media
Mark Kenny/Jonathan Neilan Paddy Hughes/Ann-Marie Curran Edward Orlebar
K Capital Source Drury Communications M Communications
Tel: +353 1 631 5500 Tel: +353 1 260 5000 Tel: +44 207 153 1523
Email: c&cgroup@kcapitalsource.com Email: phughes@drurycom.com Email: orlebar@mcomgroup.com
Full year results for the year ended 28 February 2007
C&C is reporting Operating Profit of €212.6 million, an increase of 77%(i) on
the previous year. The outcome represents adjusted earnings per share of 54.9
cent for the year ended 28 February 2007. Free cash flow of €71.1 million was
generated in the period before disposal proceeds from the sale of the Snacks
division. C&C's strategy is to maintain profitable growth through brand
management expertise by generating and exploiting higher margin growth
opportunities for Cider both in Ireland and internationally and for Spirits &
Liqueurs internationally. This, in turn, supports strong cash generation
capability and a progressive dividend policy.
Dividends
Subject to shareholder approval, the proposed final dividend of 15 cent per
share will be paid on 17 July 2007 to ordinary shareholders registered at the
close of business on 18 May 2007. This dividend is subject to Irish Dividend
Withholding Tax (where applicable). The Group's full year dividend will,
therefore, amount to 27 cent per share, an increase of 80% on the previous year.
A scrip dividend alternative will be available.
Disposal
C&C completed the disposal of its snacks subsidiary, Tayto Crisps Limited, on
21st September 2006 for a net consideration of €59.8 million. The proceeds
arising from this disposal were utilised to reduce debt.
Capital Structure
C&C's business has strong underlying cash flow capability and strong cash
conversion. Given these business characteristics and its debt levels, C&C
intends to return cash, surplus to the Group's current requirements to
shareholders as part of a capital management programme, by means of its
on-market share repurchase authority. While this authority is in respect of
approximately 10% of the Company's issued share capital, the aggregate amount of
funds expected to be available for return is €150 million, being the approximate
amount of retained income since the Group's Initial Public Offering in May 2004.
At the current market price of €12.60 this would represent approximately 4% of
the existing issued share capital of the Company.
Any share buy backs effected will be implemented in accordance with the
provisions of the repurchase authority received at last year's annual general
meeting (to be renewed at the annual general meeting in 2007); the requirements
of the Listing Rules of the Irish Stock Exchange; and, where the Board
determines that they are in the best interests of the Company and its
shareholders as a whole. The Company does not expect to commence to repurchase
any shares until June, 2007. The Company's Irish stockbrokers, Davy, will
conduct the share repurchases. Shares repurchased will be cancelled immediately
on acquisition.
Capacity Expansion & Capital Expenditure
C&C's net capital expenditure for 2006/07 was €79.4 million and comprised gross
capital expenditure of €93.4 million and asset disposals of €14.0 million. This
expenditure included an €80 million investment in the expansion of cider
manufacturing capacity in Clonmel. The first phase of capacity expansion was
completed in May 2006 on time and within budget. The Group has now commenced a
second phase of capacity expansion which will involve capital expenditure of
approximately €160 million in the 2007/08 fiscal year. This increased capacity
will start to come on stream from May 2007 and provide C&C with cider
manufacturing and bottling capacity for approximately 500 million litres
annually which is more than double 2006/07 sales volume.
(i) Comparisons are for continuing operations before exceptional items and are
on a constant currency basis.
Outlook - Investing for Sustainable Growth
C&C's primary focus in 2007/08 will be to capitalise fully on the opportunities
for Magners in all trade channels in Great Britain and to deliver further market
share gains for Bulmers in Ireland. This will be supported by increased
manufacturing capacity coming on stream and increased marketing investment.
In addition, looking to the medium term, the Group is now assessing the
prospects for Magners in Europe by carrying out structured market tests in Spain
(Barcelona) and Germany (Munich). It is expected that it will be October 2007
before any initial conclusion can be drawn as to Magners' prospects in these
markets.
C&C reiterates its current expectation that Operating Profit growth for the year
to February 2008 will be in the range of 15-25%. A pre-price increase sell-in in
February 2007 on the Group's cider brands restricted sales in March 2007.
Allowing for this, fiscal year 2007/08 to date is in line with this expectation.
OPERATIONS REVIEW
Summary
On a comparable basis,(i) Revenue and Operating Profit increased by 27% and 77%
respectively.
This principally reflects growth in the Cider division arising from the
excellent performance of Magners in Great Britain and Bulmers' continuing
out-performance of the Irish LAD Market. Operating profit margin increased by
6.1 percentage points which reflects the strong growth in the high margin Cider
division. Operating margins increased in the Cider and the Soft Drinks divisions
but declined in the Spirits & Liqueurs and Distribution divisions.
Summary Group income statement (before exceptional items)
Year ended Year ended Year ended
28 February 2006 28 February 2006
28 February 2007 Constant Currency
Revenue €m 981.4 769.3 770.7
Growth % 27.6 27.3
Operating Profit €m 212.6 119.6 120.0
Growth 77.8 77.2
Operating Profit Margin % 21.7 15.5 15.6
Net Finance Charges €m (14.4) (18.6)
Taxation €m (22.5) (8.5)
Discontinued Operation €m 3.5 4.3
Profit attributable to €m 179.2 96.8
equity shareholders
Growth % 85.1
Profit attributable to ordinary shareholders increased by 85% in the year. In
addition to Operating Profit growth, this increase reflects a decline in
interest charges arising from a reduction in the level of debt over the period.
The effective tax rate in the period increased from 8.4% to 11.4% due to a
higher proportion of net income being subject to UK corporation tax rates and
the abnormally low effective rate in 2006/07.
(i) Comparisons are based on continuing operations before exceptional items
and on a constant currency basis.
DIVISIONAL REVIEW - CIDER
Year ended Year ended Year ended Growth
28 February 2007 28 February 2006 28 February 2006 Year-on-Year
€m €m (constant currency) (constant
currency)
€m %
Revenue 517.9 278.4 278.8 85.8
Operating Profit 178.9 85.3 85.4 109.5
Operating Margin % 34.5 30.6 30.6
Revenue for the Cider division of €517.9 million represents an 85.8% increase on
2006 and reflects an 82% increase in sales volume. Operating Profit increased by
109% to €178.9 million against €85.4 million in 2006. Operating margin, at
34.5%, increased by 3.9 percentage points year-on-year.
The performance of Magners in the year reflects the success of the national
roll-out in Great Britain which commenced in March 2006. At 31 January 2007,
Magners had achieved 1.7% MAT(i) share of Great Britain on-trade LAD(ii) market
and a turnover-weighted distribution of 67%(i). Performance in the first half
of the financial year was enhanced by exceptional summer weather. The brand was
constrained during the year by an inability to supply elements of the Great
Britain market due to insufficient manufacturing capacity at critical periods.
Overall volume growth for the brand was 232%.
Magners continued to show strong growth in Northern Ireland in the period
recording a volume increase of 16% and its share of the on-trade LAD market
increased in the year from 6.4% to 7.5%.
In relation to Bulmers, the overall Irish LAD market increased by 0.5%(iii) in
the year comprising a decline of 2.5%(i) in the on-trade and growth of 15% in
the off-trade (i). Sales volume of the Bulmers cider brand increased by 6% on
the prior year and continued to increase its share of the overall LAD market.
Bulmers' share of the on-trade LAD market increased from 10.0% to 10.6% in the
period while its share of the off-trade LAD market increased from 7.2% to 7.9%
(i).
The increase in the operating margin of the Cider division reflects the scale of
growth in revenue. Marketing investment increased by 89% and, as a percentage of
revenue, increased by 0.2 percentage points year-on-year.
(i) AC Nielsen
(ii) Market statistics refer to volume
(iii) Revenue Commissioners
DIVISIONAL REVIEW - SPIRITS & LIQUEURS
Year ended Year ended Year ended Growth
28 February 2007 28 February 2006 28 February 2006 Year-on-Year
€m €m (constant currency) (constant
currency)
€m %
Revenue 79.1 68.8 69.2 14.3
Operating Profit 17.7 16.3 16.6 6.6
Operating Margin % 22.4 23.7 24.0
Revenue for the Spirits & Liqueurs division of €79.1 million represents a 14.3%
increase on 2006 levels. Operating Profit increased 6.6% to €17.7 million
against €16.6 million in 2006. Operating margin, at 22.4%, decreased by 1.6
percentage points year-on-year.
Overall volume shipments increased 11% in the period. It is estimated that
depletions growth in the period was approximately 9%.
C&C's premium Irish whiskey brand Tullamore Dew performed particularly well with
shipment growth of 21% and depletions growth of 16% in the year. Volume gains
were achieved across a wide number of markets in Europe and in the US.
Shipments of C&C's Irish cream liqueur brand, Carolans, increased by 7% in the
period. The brand performed well across a range of markets, and showed strong
recovery in North America, its principal market. Depletions growth in the period
was 8%.
The decrease in operating margin for the division mainly reflects a
profit-neutral restructuring in the pricing/marketing investment arrangements
with new distributors who were appointed in January 2006.
DIVISIONAL REVIEW - SOFT DRINKS
Year ended Year ended Year ended Growth
28 February 2007 28 February 2006 28 February 2006 Year-on-Year
€m €m (constant currency) (constant
currency)
€m %
Revenue 185.2 187.6 187.8 (1.4)
Operating Profit 15.3 12.7 12.7 20.5
Operating Margin % 8.3 6.8 6.8
Revenue for the Soft Drinks division of €185.2 million represents a 1.4% decline
on 2006 levels. Operating Profit increased to €15.3 million from €12.7 million
in 2006. Operating margin, at 8.3%, increased by 1.5 percentage points
year-on-year.
The decrease in Revenue in the division reflects the loss of the Danone water
brands in November 2005. On a like-for-like basis, revenue increased by 3.9% in
the year. At the start of the year C&C set an objective to stabilise performance
within the soft drinks business with the appointment of new leadership. The
2006/07 financial performance has exceeded that objective.
The Soft Drinks market(i) grew by 3.7% in the year reflecting, continued strong
growth in bottled water, sport and energy drinks and cordials and a broadly flat
carbonates market. C&C volumes in the Republic of Ireland declined by 2.7% in
the period. Excluding the impact of the loss of the Danone brands, volumes in
the Republic of Ireland increased by 3.9% in the year.
The increase in operating margins from February 2006 to February 2007 reflected
the mix benefit of a strong volume performance in the licensed channel and a
reduction in marketing expenditure.
(i) Carbonated soft drinks/bottled water volumes for Republic of Ireland per
Canadean
DIVISIONAL REVIEW - DISTRIBUTION
Year ended Year ended Year ended Growth
28 February 2007 28 February 2006 28 February 2006 Year-on-Year
€m €m (constant currency) (constant
currency)
€m %
Revenue 199.2 234.5 234.9 (15.2)
Operating Profit 0.7 5.3 5.3 (86.8)
Operating Margin % 0.4 2.3 2.2
Revenue for the Distribution division of €199.2 million represents a 15.2%
decline on 2006 levels. Operating Profit declined by 86.8% to €0.7 million
compared to €5.3 million in 2006.
Operating margin at 0.4% fell by 1.8 percentage points year-on-year.
The decline in Revenue and Operating Profit was mainly due to the loss of the
Allied Domecq brands; weaker demand for premium wines; and a reduced margin on
LAD agency brands.
The agency for the Fosters wine brands ceased from January 2007, but this had no
material impact on the results for the year.
FINANCE REVIEW
Cash Flow
Free cash flow of €71.1m represented 30% of EBITDA compared with 62% in the year
ended 28 February 2006. This performance reflected a significant investment in
both Working Capital and Fixed Assets in the Cider division to support sales
volume growth.
A summary Cash Flow for the year ended 28 February 2007 is set out below:
Year ended Year ended
28 February 2007 28 February 2006
€m €m
Operating Profit (i) 216.4 124.7
Depreciation 21.4 19.6
EBITDA 237.8 144.3
Share Based Employee Benefits 4.3 1.1
Pension Prepayment (6.0) (0.4)
Net Capital Expenditure (79.4) (9.9)
Working Capital (47.3) (9.8)
Operating Cash Flow 109.4 125.3
Re-Organisation Costs - (10.9)
Net Finance Charges (13.9) (17.5)
Taxation Payments (24.4) (8.0)
Free Cash Flow (FCF) 71.1 88.9
FCF/EBITDA 30% 62%
(i) Before exceptional items.
Working Capital
The cash outflow on working capital was driven by increased investment in the
Cider division on foot of the expansion of Magners' volumes. The increase
reflects higher levels of fresh apple juice stock for anticipated volume growth
and a build up of finished goods stocks in advance of increased production
capacity coming on stream in 2007/08.
Net Capital Expenditure
Net capital expenditure for the period of €79.4 million comprised gross capital
expenditure of €93.4 million and asset disposals of €14.0 million. The gross
spend included expenditure of €80 million on Cider capacity. This spend
represents the first phase of manufacturing capacity expansion which was
completed in May 2006 and the commencement of the second phase of expansion
which is currently under way. Disposals related to the sale of surplus warehouse
capacity.
Finance Charges
The reduction in finance charges reflects the reduced debt levels resulting from
positive cashflows (€17.9 million) and proceeds from the disposal of the Snacks
division (€59.8 million).
The interest rate payable on debt averaged 4% for the year, which was in line
with the average rate for year ended 28 February 2006.
Future interest rate exposure is partially hedged at the following interest
rates (excluding margin):
Fiscal year 2008 €200 million hedged at 3.3%
Fiscal year 2009 €100 million hedged at 3.1%
Fiscal year 2010 €100 million hedged at 3.1%
Fiscal year 2011 €50 million hedged at 3.5%
Taxation
The tax charge for the year represents an effective tax rate on profit before
exceptional items of 11.4%. The excess over 10% (the effective rate in Ireland)
is principally due to a portion of Magners' profits being subject to higher UK
tax rates.
The prior year effective tax rate of 8.4% includes the write back of provisions
no longer required.
Net Debt
Net debt at 28 February 2007 was €305.4 million, which was €77.7 million lower
than at the beginning of the year. The movement is analysed as follows:
€m
Free Cash Flow in period 71.1
Dividends (54.7)
Disposal of Snacks division 59.8
Other 1.5
Reduction in Net Debt 77.7
Debt Ratios are as follows:
(i) Net Debt to EBITDA 1.3
(ii) Net Debt to EV(i) 8%
Foreign Exchange
Exchange rate movements in the year positively affected Operating Profit by €0.4
million. This arises from transaction exposures in the Spirits & Liqueurs and
Cider divisions for the US Dollar and the Canadian Dollar (€0.3 million) and
Sterling (€0.1 million).
Pensions
Pension fund deficits, calculated in accordance with the relevant accounting
standards, amounted to €42.8 million (net of deferred tax of €8.7 million) on
the balance sheet at 28 February 2007. The most recent actuarial valuations at
1 January 2006 showed a deficit in the group schemes on an ongoing funding basis
of €22 million.
(i) Enterprise value
Comparative reporting
Profits for each division in the Operating and Financial Review are shown at
constant exchange rates for transactions in relation to the Spirits and Liqueurs
and Cider divisions; and for translation in relation to the Group Sterling
denominated subsidiaries. The reconciliation to reported figures is outlined
below.
FX FX Transaction Year ended
Previously Translation 28 Feb '06
Reported Comparative
Year ended
28 Feb'06
€m €m €m €m
Revenue
Cider 278.4 0.1 0.3 278.8
Spirits & liqueurs 68.8 - 0.4 69.2
Soft drinks & snacks 187.6 0.2 - 187.8
Distribution 234.5 0.4 - 234.9
Total 769.3 0.7 0.7 770.7
Operating Profit
Cider 85.3 - 0.1 85.4
Spirits & liqueurs 16.3 - 0.3 16.6
Soft drinks & snacks 12.7 - - 12.7
Distribution 5.3 - - 5.3
Total 119.6 0.0 0.4 120.0
Special note regarding forward-looking information
Some statements in this Announcement are forward-looking. They represent our
expectations for our business, and involve risks and uncertainties. We have
based these forward-looking statements on our current expectations and
projections about future events. We believe that our expectations and
assumptions with respect to these forward-looking statements are reasonable.
However, because they involve known and unknown risks, uncertainties and other
factors, which are in some cases beyond our control, our actual results or
performance may differ materially from those expressed or implied by such
forward-looking statements.
Group income statement
For the year ended 28 February 2007
Year ended 28 February 2007 Year ended 28 February 2006
Before Before
exceptional Exceptional exceptional Exceptional
items items Total items items Total
€m €m €m €m €m €m
Revenue 981.4 - 981.4 769.3 - 769.3
Operating costs (768.8) (8.3) (777.1) (649.7) 2.8 (646.9)
Operating profit 212.6 (8.3) 204.3 119.6 2.8 122.4
Finance income 1.9 - 1.9 0.9 - 0.9
Finance costs (16.3) - (16.3) (19.5) - (19.5)
Profit before tax 198.2 (8.3) 189.9 101.0 2.8 103.8
Income tax expense (22.5) - (22.5) (8.5) (0.3) (8.8)
Profit from continuing 175.7 (8.3) 167.4 92.5 2.5 95.0
activities
Discontinued operation
Profit from discontinued 3.5 37.3 40.8 4.3 (3.5) 0.8
operation
Profit for the year 179.2 29.0 208.2 96.8 (1.0) 95.8
attributable to equity
shareholders
Basic earnings per share 63.8c 29.6c
(cent)
Diluted earnings per share 62.9c 29.4c
(cent)
Continuing operations
Basic earnings per share 51.3c 29.4c
(cent)
Diluted earnings per share 50.6c 29.2c
(cent)
Group statement of recognised income and expense
For the year ended 28 February 2007
2007 2006
€m €m
Income and expense recognised directly in equity:
Exchange difference arising on the net investment in 0.2 0.4
foreign operations
Movement in cashflow hedging reserve 3.8 2.4
Deferred tax liability on cashflow hedges (0.4) (0.2)
Actuarial profit/(loss) on defined benefit pension 1.5 (6.1)
schemes
Deferred tax on defined benefit pension schemes 0.5 1.5
Total income and expense recognised directly in equity 5.6 (2.0)
208.2 95.8
Profit attributable to equity shareholders
Total recognised income and expense for the year 213.8 93.8
attributable to equity shareholders
Group balance sheet
As at 28 February 2007
2007 2006
€m €m
ASSETS
Non-current assets
Goodwill 426.9 461.9
Property, plant & equipment 212.4 134.1
Derivative financial assets 3.7 1.0
Deferred tax 8.7 9.1
651.7 606.1
Current assets
Inventories 97.8 55.1
Trade & other receivables 138.8 114.0
Derivative financial assets 2.3 -
Cash & cash equivalents 40.7 44.5
Assets held for resale - 6.8
279.6 220.4
TOTAL ASSETS 931.3 826.5
EQUITY
Share capital 3.3 3.3
Share premium 32.8 18.6
Other reserves 33.1 26.0
Retained income 315.3 171.2
Total equity 384.5 219.1
LIABILITIES
Non-current liabilities
Interest bearing loans & borrowings 316.1 407.6
Derivative financial liabilities - 0.7
Retirement benefit obligations 51.5 58.9
Provisions 1.3 1.9
Deferred tax 5.0 5.7
373.9 474.8
Current liabilities
Interest bearing loans & borrowings 30.0 20.0
Derivative financial liabilities 4.2 2.5
Trade & other payables 132.5 102.7
Current tax liabilities 6.2 7.4
172.9 132.6
Total liabilities 546.8 607.4
TOTAL EQUITY & LIABILITIES 931.3 826.5
Group cash flow statement
For the year ended 28 February 2007
2007 2006
€m €m
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year 208.2 95.8
Finance income (1.9) (0.9)
Finance costs 16.3 19.5
Income tax expense 23.0 8.9
Depreciation of property, plant & equipment 21.4 19.6
Profit on disposal of property, plant & equipment (4.6) (6.6)
Profit on disposal of subsidiary (32.9) -
Goodwill impairment 8.3 -
Charge for share-based employee benefits 4.3 1.1
Contributions paid less pensions charged to profit (6.0) (0.4)
236.1 137.0
Increase in inventories (43.5) (5.6)
Increase in trade & other receivables (31.4) (17.9)
Increase in trade & other payables 27.6 10.8
188.8 124.3
Interest received 1.9 0.9
Interest paid and similar costs (15.8) (18.4)
Income taxes paid (24.4) (8.0)
Net cash inflow from operating activities 150.5 98.8
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant & equipment (93.4) (24.7)
Sale of property, plant & equipment 14.0 14.8
Proceeds on disposal of subsidiary 59.8 -
Net cash outflow from investing activities (19.6) (9.9)
CASH FLOWS FROM FINANCING ACTIVITIES
Shares issued on exercise of share options 2.0 -
Bank loans repaid (82.0) (40.0)
Issue costs paid - (0.5)
Dividends paid (54.7) (29.9)
Net cash outflow from financing activities (134.7) (70.4)
Net (decrease)/increase in cash & cash equivalents (3.8) 18.5
Cash & cash equivalents at beginning of year 44.5 26.0
Cash & cash equivalents at end of year 40.7 44.5
Reserves
Group Share Share Capital Capital Cashflow Share- Currency Retained Total
Redemption Hedging based Translation
Capital Premium Reserve Payments Earnings
Reserve Reserve Reserve Reserve
€m €m €m €m €m €m €m €m €m
At 1 March 2005 3.2 3.4 0.3 24.9 (3.7) 0.6 0.2 125.2 154.1
Total recognised income - - - - 2.2 - 0.4 91.2 93.8
and expense for the year
Dividend on ordinary 0.1 15.2 - - - - - (45.2) (29.9)
shares
Equity settled shared - - - - - 1.1 - - 1.1
based payments
At 28 February 2006 3.3 18.6 0.3 24.9 (1.5) 1.7 0.6 171.2 219.1
Total recognised income - - - - 3.4 - 0.2 210.2 213.8
and expense for the year
Dividend on ordinary - 12.2 - - - - - (66.9) (54.7)
shares
Exercised share options - 2.0 - - - (0.8) - 0.8 2.0
Equity settled share - - - - - 4.3 - - 4.3
based payments
At 28 February 2007 3.3 32.8 0.3 24.9 1.9 5.2 0.8 315.3 384.5
NOTE TO THE PRELIMINARY ANNOUNCEMENT
1. Basis of preparation
The Group and individual financial statements of the Company are prepared on the
historical cost basis and the measurement at fair value of derivative financial
instruments, pension obligations and share based payments. The accounting
policies have been applied consistently by Group entities and for all periods
presented. The financial statements are presented in euro millions to one
decimal place.
The preparation of financial statements in conformity with IFRS requires the use
of certain critical accounting estimates. In addition, it requires management
to exercise judgment in the process of applying the Group and Company accounting
policies. The areas involving a high degree of judgment or complexity, or areas
where assumptions and estimates are significant to the financial statements,
relate primarily to accounting for defined benefit pension schemes, financial
instruments, share-based payments, provisions, goodwill impairment and deferred
tax and are documented in the relevant accounting policies and notes. The
estimates and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgments about
carrying values of assets and liabilities that are not readily apparent from
other sources. The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision affects only that period or in
the period of the revision and future periods if the revision affects both
current and future periods.
2. Exceptional items
2007 2006
€m €m
Reorganisation costs - 9.2
(Profit) on disposal of property, plant & equipment (4.6) (6.6)
Pension credit - (1.2)
(Profit) on disposal of subsidiary (32.9) -
Impairment of goodwill 8.3 -
(29.2) 1.4
Allocated to discontinued operations 37.5 (4.2)
Total 8.3 (2.8)
The taxation implication of the exceptional items is a charge of €0.2m to
discontinued operations (2006: €0.4m credit to discontinued operations) with no
impact on continuing operations.
(a) Reorganisation costs
The reorganisation costs in the prior year related mainly to redundancy
costs arising on the outsourcing of production in the Snacks division.
(b) Profit on disposal of property, plant & equipment
The profit on disposals relate to the disposal of property arising from
reorganisations in operations.
(c) Pension credit
The exceptional credit of €1.2m arose as a result of the reduction in
employee numbers following the outsourcing of production in the Snacks
division.
(d) Profit on disposal of subsidiary
An agreement was signed for the disposal of Tayto Crisps Limited and its
subsidiary companies on 5 July 2006, which was subsequently ratified by the
Competition Authority on 4 September 2006, for a gross consideration
of €62.3m. The transaction was completed on 21 September 2006 and the
proceeds arising from the disposal were applied towards debt reduction. A
profit on the disposal of €32.9m was realised.
(e) Impairment of goodwill
The loss of the former Allied Domecq brands and certain wine agencies
resulted in an impairment of goodwill in the Distribution division and
consequently the write off of €8.3m of the carrying value of goodwill
attributed to this division.
3. Segmental Reporting
Segmental information is presented in respect of the Group's continuing business
and geographical segments. The primary format, of business divisions is based
on the Group's management and internal reporting structure and reflects the
dominant source and nature, risks and returns arising from the Group's business.
The Group analyses its business into four main divisions as follows: -
(i) Cider
This division includes all Group cider products, with Bulmers in the
Republic of Ireland and Magners in all other markets being the two main
brands involved.
(ii) Spirits & Liqueurs.
This division consists of four brands: Tullamore Dew; Carolans Irish Cream;
Franjelico Liqueur; and Irish Mist Liqueur, all of which are owned by the
Group and are marketed internationally.
(iii) Soft Drinks
This division includes all the Group's non-alcoholic soft drinks and water
products that are sold in Ireland and Northern Ireland.
(iv) Distribution
This division consists of distribution of wine and spirits, agency
products, and the wholesaling of beer products to the licenced trade in
both Ireland and Northern Ireland.
The analysis by division includes both items directly attributable to a
division and those that can be allocated on a reasonable basis.
Unallocated items comprise mainly retirement benefit obligations,
borrowings and certain exceptional expense items.
(a) Class of business analysis
2007 2006
Operating Operating
Revenue profit Assets Liabilities Revenue profit Assets Liabilities
€m €m €m €m €m €m €m €m
Cider 517.9 178.9 633.2 (75.7) 278.4 85.3 462.6 (42.3)
Spirits & Liqueurs 79.1 17.7 72.2 (18.1) 68.8 16.3 75.8 (12.3)
Soft Drinks 185.2 15.3 123.1 (34.4) 187.6 12.7 164.7 (40.1)
Distribution 199.2 0.7 47.4 (16.8) 234.5 5.3 68.8 (23.0)
Total before 981.4 212.6 875.9 (145.0) 769.3 119.6 771.9 (117.7)
exceptional items
Un-allocated items:
Exceptional items - (8.3) - - - 2.8 - -
Financial - - 6.0 (4.2) - - 1.0 (3.2)
Liabilities
Retirement benefit
obligations - - 8.7 (51.5) - - 9.1 (58.9)
Group net - - 40.7 (346.1) - - 44.5 (427.6)
borrowings
981.4 204.3 931.3 (546.8) 769.3 122.4 826.5 (607.4)
(b) Geographical analysis of revenue, assets and liabilities by country of operation
2007 2006
Revenue Assets Liabilities Revenue Assets Liabilities
€m €m €m €m €m €m
Ireland 844.9 841.1 (132.3) 630.2 729.5 (102.9)
Rest of the world 136.5 34.8 (12.7) 139.1 42.4 (14.8)
Total before unallocated 981.4 875.9 (145.0) 769.3 771.9 (117.7)
items
(c) Geographical analysis of revenue by country of destination
2007 2006
€m €m
Ireland 473.7 493.1
UK 419.0 203.0
Rest of Europe 45.6 35.5
North America 35.1 32.4
Rest of the world 8.0 5.3
Total before 981.4 769.3
exceptional items
4. Earnings per ordinary share
2007 2006
€m €m
Earnings as reported 208.2 95.8
Adjustments for exceptional items net of tax (29.0) 1.0
Earnings adjusted for exceptional items 179.2 96.8
Number Number
'000 '000
Number of shares at beginning of year 325,204 321,130
Shares issued in lieu of dividend 1,592 4,074
Shares issued in respect of options exercised 773 -
Number of shares at end of year 327,569 325,204
Weighted average number of ordinary share 326,517 323,253
Adjustment for the effect of conversion of options 4,609 2,357
Weighted average number of ordinary shares including options 331,126 325,610
Basic earnings per share Cent Cent
Basic earnings per share - cent 63.8 29.6
Adjusted basic earnings per share - cent 54.9 29.9
Diluted earnings per share
Diluted earnings per share - cent 62.9 29.4
Adjusted diluted earnings per share - cent 54.1 29.7
Continuing Operations
€m €m
Earnings from continuing operations - as reported 167.4 95.0
Adjustments for exceptional items net of tax 8.3 (2.5)
175.7 92.5
Basic earnings per share Cent Cent
Basic earnings per share - cent 51.3 29.4
Adjusted basic earnings per share - cent 53.8 28.6
Diluted earnings per share
Diluted earnings per share - cent 50.6 29.2
Adjusted diluted earnings per share - cent 53.1 28.4
Discontinued Operations
€m €m
Earnings from discontinued operations - as reported 40.8 0.8
Adjustments for exceptional items net of tax (37.3) 3.5
3.5 4.3
Basic earnings per share Cent Cent
Basic earnings per share - cent 12.5 0.2
Adjusted basic earnings per share - cent 1.1 1.3
Diluted earnings per share
Diluted earnings per share - cent 12.3 0.2
Adjusted diluted earnings per share - cent 1.1 1.3
5. Analysis of net debt
Group 28 February Non-cash 28 February
2006 Cash flow Changes 2007
€m €m €m €m
Bank loans 427.6 (82.0) 0.5 346.1
Cash at bank and in hand (44.5) 3.8 - (40.7)
383.1 (78.2) 0.5 305.4
6. Dividends
2007 2006
€m €m
Dividends Paid
27.7 24.1
Final: paid 8.5c per ordinary share in July 2006 (2006: 7.5c paid in July
2005)
Interim: paid 12.0c per ordinary share in December 2006 (2006: 6.5c paid in 39.2 21.1
December 2005)
Total equity dividends 66.9 45.2
Settled as follows:
Paid in cash 54.7 29.9
Scrip dividend 12.2 15.3
66.9 45.2
The directors have proposed a final dividend of 15.0 cent per share, which is
subject to shareholder approval at the AGM, giving a total dividend for the year
of 27.0 cent per share.
Dividends declared after the balance sheet date are not recognised as a
liability at the balance sheet date.
This information is provided by RNS
The company news service from the London Stock Exchange
Monday, 20th May 2024
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