Interim Results
C&C Group Plc
10 October 2007
C&C GROUP PLC
INTERIM RESULTS
FOR SIX MONTHS ENDED 31 AUGUST 2007
Dublin, London, 10 October 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 announces its interim results for the six months ended 31 August,
2007.
Financial & Operating Overview
Financial Review (i)
> Revenue (ii) for the period was flat at €375.6 million
> Operating profit (ii) was €67.9 million for the period - a decline of 33%
> Adjusted basic EPS down 39% at 17.5 cent
> Interim dividend unchanged at 12.0 cent per share
> Net debt reduced by 31% (€93.6 million) since 28 February 2007 to
€211.8 million
Operating Review
> The Group's branded cider volumes declined by 1%
> Magners volume increased by 2% year on year and in Great Britain On-Trade
distribution was 66% in July 2007 compared with 67% in February 2007
> Volume for the Group's Irish whiskey brand, Tullamore Dew, grew by 22%
> Marketing investment(ii) for the period increased by 50%
> Cider manufacturing capacity expansion programme completed
> Completion of the disposal of the Group's soft drinks division and
related assets to Britvic plc.
Maurice Pratt, Group Chief Executive Officer, commented "the financial
performance reflects a number of factors such as exceptionally poor summer
weather; increased competition; and additional costs in marketing and cider
manufacturing capacity. C&C has conducted an extensive review of its performance
and market position and has taken certain corrective steps which will extend in
the coming months to a broader series of measures to sharpen its competitive
capability and to implement a comprehensive restructuring and cost reduction
programme. These measures are intended to restore growth in revenue and
operating margin in 2008/09 and beyond".
(i) Comparisons exclude exceptional items and unless otherwise stated are
in comparison with H1 2006/07
(ii) Continuing operations
(iii) "LAD" refers to Long Alcohol Drinks
(iv) Unless otherwise stated all market statistics are per A.C. Nielsen
(v) Premium cider in Great Britain is measured as Magners and HP Bulmers
combined
(vi) "MAT" refers to Moving Annual Total
__________________________________________________________________________________________________________
Investors and analysts Irish Media International Media
__________________________________________________________________________________________________________
Mark Kenny or Jonathan Neilan Paddy Hughes Edward Orlebar or Charlotte Kirkham
K Capital Source Drury Communications M Communications
Tel: +353 1 631 5500 Tel: +353 1 260 5000 Tel: +44 207 153 1523/1531
Email :c&cgroup@kcapitalsource.com Email: phughes@drurycom.com Email: orlebar@mcomgroup.com
kirkham@mcomgroup.com
__________________________________________________________________________________________________________
Summary results for six months ended 31 August 2007
C&C is reporting operating profit for continuing operations before exceptional
items of €67.9 million and adjusted earnings per share for the Group of 17.5
cent for the six months ended 31 August 2007.
This decline in operating profit of 33% is in line with the guidance given in
the Group's trading update issued on 31 July 2007. This is due to a combination
of a sales volume decline in the Group's Cider division, increased marketing
investment and the cost of the additional manufacturing capacity. The sales
volume outcome was due principally to a decline in the Irish cider market, due
to poor weather, and a loss of share in the On-Trade cider market in Great
Britain.
Free Cash Flow (FCF) in the period fell to €3.8 million as a result of reduced
profits and the high level of capital expenditure on cider manufacturing
capacity expansion. The full cider expansion plan has been reduced from an
original €200 million programme to €115 million, most of which will be spent in
the current fiscal year. The resulting drop in capital expenditure in 2008/09
and beyond will result in a high FCF conversion providing the Group with a
strengthened financial position.
European Market Tests
In the period to 31 August 2007, C&C commenced a structured test to assess the
prospects for its Magners cider brand in Spain and Germany. The conclusion from
the test is that there is a consumer opportunity in both markets but significant
challenges to its realisation. C&C plans to remain in both markets and formulate
a revised approach, in light of results to date, for 2008/09.
Disposal
On 29 August 2007, the Group completed the disposal of its Soft Drinks division
and related assets (Republic of Ireland Wholesaling) to Britvic plc, for a
consideration of €249.2 million. This gave rise to an exceptional gain in the
period of €141.3 million.
Shareholder Returns
The Group will pay an unchanged interim dividend for the period of 12 cent per
share. The interim dividend will be paid on 12 December 2007 to shareholders on
the Group's register at the close of business on 19 October 2007. A scrip
dividend option will also be available. The Group also expects to maintain its
final dividend at last year's level.
As previously stated C&C intends to return part of the proceeds of the Soft
Drinks disposal to shareholders by way of an on-market share buyback programme.
The timing and amount of this programme are under review.
Outlook
C&C expects that the current underlying trend in the premium cider category in
Great Britain - low growth due to a loss in recruitment arising from poor summer
weather - and a decline in market share, will lead to a high single-digit
percentage decline in Cider revenue in the second half year in comparison with
the second half of 2006/07. This expectation is a substantial improvement on the
quarter ended 31 August 2007. Taking account of cost reduction measures already
in place this should lead to a small improvement in operating margin in the
Cider division compared with the first half year. The Spirits & Liqueurs
division is expected to see a continuation of good revenue growth although
margins will reduce as a result of increased marketing investment and rising raw
material costs.
C&C's research confirms that the premium cider category in Great Britain, is now
a firmly established part of the LAD(iii) market and the Group is confident that
the category has good growth prospects.
Looking beyond the current fiscal year, therefore, C&C's principal focus will be
on driving this growth in Great Britain through consumer marketing while at the
same time implementing a range of measures to enhance its competitive position.
C&C is also at an advanced stage in the preparation of a comprehensive
restructuring and cost reduction plan across the Group. Following internal
consultation, details of the cost reduction, anticipated savings and the
resulting exceptional charge to be taken in the year ending 28 February 2008,
will be announced by the end of November 2007.
Principal Risks and Uncertainties
Under the Transparency (Directive 2004/109/EC) Regulations 2007 the Group is
required to give a description of the principal risks and uncertainties it
faces.
These risks and uncertainties are as follows:
• The Group faces strong competition in its various markets and if it fails
to compete successfully, market share and profitability may decline.
• Consumer preferences may change and demand for existing products may
decline (as a result of poor weather or otherwise) or be replaced by
other products which the Group does not produce, and as a result, sales
volumes and profitability may be volatile or decline.
• The Group may not be able to fulfil the demand for its products due to
circumstances such as the loss of a production or storage facility or
disruptions to its supply chains. This would affect sales volumes and
profitability.
• The Group may be adversely affected by government regulations including
possible changes in excise duty on cider in the UK and Ireland and
restrictions on alcohol advertising.
• The Group may be adversely affected by changes in foreign currency
exchange rates and higher interest rates.
• The Group is subject to stringent environmental, health and safety and
food safety laws and regulations which could result in increased compliance
or remediation costs which would adversely affect profitability.
• The Group could be subject to accidental, natural or malicious
contamination of its products, which could result in the recall of the
Groups' products, damage to its brands and falls in demand for its
products.
OPERATIONS REVIEW
Summary
Revenue for continuing operations of €375.6 million for the 6 months ended 31
August 2007 was marginally below the prior year. Operating profit for continuing
operations before exceptional items declined by 32.6% and operating margin
dropped 8.7 percentage points.
The revenue decline reflects a virtually flat outcome for the Cider division as
a result of poor weather and increased competition; good growth in Spirits &
Liqueurs; and a decline in Distribution as a result of the loss of certain wine
agencies.
The decline in operating margin reflects significantly increased marketing
expenditure in both the Cider and Spirits & Liqueurs divisions and the higher
costs associated primarily with the manufacturing capacity increase in the
Group's Cider division.
Summary Group Income Statement (before exceptional items)
Six months ended Six months ended
31 August 2007 31 August 2006
€m €m
Revenue 375.6 376.5
Operating Profit before exceptional items 67.9 100.8
Operating Profit Margin before exceptional items 18.1% 26.8%
Net finance charges (8.6) (7.8)
Income tax expense (7.1) (11.2)
Profit from Continuing Operations 52.2 81.8
Discontinued Operations 4.8 11.7
Total Profit before exceptional items 57.0 93.5
Total Profit before exceptional items decreased by 39% in the period. In
addition to the decline in operating profit in continuing operations, the
decrease reflects the impact of a profit decline in discontinued operations and
an increase in finance costs.
Divisional Review: Cider
Six months ended Six months ended Growth
31 August 2007 31 August 2006 Year-on-Year
€m €m
Revenue 272.7 269.5 1.2%
Operating Profit 57.5 90.0 (36.1%)
Operating margin 21.1% 33.4%
Revenue for the Cider division of €272.7 million represents a 1.2% increase on
2006 and reflects a 2% decline in sales volume. Operating profit declined by
36.1% to €57.5 million compared to €90.0 million in 2006. Operating margin, at
21.1%, declined by 12.3 percentage points year-on-year.
Volume for the Group's international cider brand, Magners, grew by 2% in the
half year and volumes for the Group's Irish cider brand, Bulmers, declined by
7%. This reflects the extremely poor weather in Great Britain and Ireland and
also increased competition in the premium cider category in Great Britain.
In Great Britain, which is Magners' principal market, the On-Trade LAD market
declined by 5.7% in the 5 months to 31 July 2007 while Magners' MAT(vi) market
share increased from 1.7% to 1.9% over the period (Source: AC Neilsen).
Premium cider's share of total cider (On-Trade) fell slightly in the 5 months to
31 July 2007 compared with the 6 months to 28 February 2007 to approximately 28%
due to a decline of approximately 18% in July reflecting the unusually poor
weather. Magners' market share of the premium cider category declined from 90%
in the 6 months to 28 February 2007 to 80% in the 5 months ended 31 July 2007 as
a result of heavy price-led competition. Notwithstanding the market share loss,
the Magners brand showed its resilience in maintaining its overall distribution
broadly in line with the February 2007 level and its significantly superior rate
of sale compared to its main competitor (Source: AC Nielsen).
In the Republic of Ireland the overall beer/cider market declined by 1.6% in the
5 months to 31 July 2007 while Bulmers' MAT(vi) market share declined from 10.5%
to 10.2% over the period (Source: Revenue Commissioners).
The decline in operating margin reflects the weak volume performance combined
with substantially higher manufacturing and marketing costs. Marketing costs
increased by 53% with increases in Great Britain, Ireland and in the European
test markets. Manufacturing cost increases predominately arose from increasing
manufacturing capacity.
Divisional Review: Spirits & Liqueurs
Six months ended Six months ended Growth
31 August 2007 31 August 2006 Year-on-Year
€m €m
Revenue 41.0 36.1 13.6%
Operating Profit 9.2 9.8 (6.1%)
Operating margin 22.4% 27.1%
Revenue for the Spirits & Liqueurs division of €41.0 million represents a 13.6%
increase on 2006 levels. Operating profit declined 6.1% to €9.2 million against
€9.8 million in 2006. Operating margin, at 22.4%, declined by 4.7 percentage
points year-on-year.
Overall volume shipments increased 8% in the period. It is estimated that
depletions growth in the period was 7%. Within this overall depletions
performance, Tullamore Dew continued to show exceptionally strong growth while
Carolans and Frangelico were weak.
The decline in operating margin reflects the substantially higher investment in
marketing costs principally in support of Tullamore Dew which is expected to
boost its long term growth rate. Investment in marketing increased by 51% in
the period.
Divisional Review: Distribution (ii)
Six months ended Six months ended Growth
31 August 2007 31 August 2006 Year-on-Year
€m €m
Revenue 61.9 70.9 (12.7%)
Operating Profit 1.2 1.0 20.0%
Operating margin 1.9% 1.4%
Revenue for the Distribution division of €61.9 million represents a 12.7%
decline on 2006 levels. Operating profit increased by 20% to €1.2 million
compared to €1.0 million in 2006.
Operating margin at 1.9% increased by 0.5 percentage points year-on-year.
The decline in revenue reflects the loss of the Fosters Group wine brands in the
period while focus on improving margins has benefited operating profit in the
period.
FINANCE REVIEW
Cash Flow
Free cash flow before soft drinks disposal proceeds, for the six months ended 31
August 2007, amounted to €3.8 million compared to €81.6 million in the
corresponding prior period. The reduced cashflow is driven by the combination of
lower profits and higher capital spend. Capital expenditure in the period
amounted to €61.4 million compared with €31.9 million in the same period last
year. The main component of expenditure in the period related to the expansion
of cider manufacturing facilities.
Finance Costs
Finance costs for the half year at €8.6 million were €0.8 million higher than in
the corresponding prior period, reflecting the impact of higher interest rates
and the write-off of issue costs arising from debt refinancing in May 2007.
The Group has hedged a portion of its net debt for the next four years at base
rates ranging from 3.5% to 4.5%. The hedged amounts range from €250 million for
2007/08 to €50 million for 2011/12.
Interest for the six month period to 31 August 2007 was covered 13 times by
EBITDA.
Share Buyback Programme
The company commenced a share buyback programme on 18 June 2007 and repurchased
12.1 million shares at an average price of €9.38 up to 31 July 2007 when the
programme was suspended due to exceptional volatility in the share price during
that period.
Net Debt
Net debt at 31 August 2007 amounted to €211.8 million, which is €93.6 million
lower than at 28 February 2007.
Movement in net debt was as follows:
€m
Net debt at 1 March 2007 305.4
Free cash flow in period (3.8)
Dividends paid 45.1
Own shares acquired 114.8
Net disposal proceeds from sale of Soft Drinks business (248.1)
Other (1.6)
Net debt at 31 August 2007 211.8
Refinancing of Debt Facility
In May 2007 the Group refinanced its bank debt to capitalise both on its
improved financial position and favourable market conditions.
Under the terms of the refinancing, the Group replaced its existing €348 million
debt facility with a new five year revolving debt facility of €600 million.
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.
Statement of the directors in respect of the half-yearly financial report
We confirm our responsibility for the half yearly financial statements and that
to the best of our knowledge:
• the condensed set of financial statements comprising the condensed income
statement, the condensed statement of recognised income and expense, the
condensed balance sheet and the related notes have been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the EU;
• the interim management report includes a fair review of the information
required by:
(a) Regulation 7(2) of the Transparency (Directive 2004/109/EC) Regulations
2007, being an indication of important events that have occurred during the
first six months of the financial year and their impact on the condensed
set of financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
(b) Regulation 7(3) of the Transparency (Directive 2004/109/EC) Regulations
2007, being related party transactions that have taken place in the first
six months of the current financial year and that have materially affected
the financial position or performance of the entity during that period;
and any changes in the related party transactions described in the last
annual report that could do so.
The Group's auditors have not reviewed these condensed financial statements.
On behalf of the Board
T. O'Brien M. Pratt
Chairman Chief Executive Officer 10 October 2007
Group condensed income statement
for the six months ended 31 August 2007
Six months ended 31 August 2007 Six months ended 31 August 2006
Before Before
exceptional Exceptional exceptional Exceptional
items items Total items items Total
€m €m €m €m €m €m
Revenue 375.6 - 375.6 376.5 - 376.5
Operating costs (307.7) - (307.7) (275.7) (8.3) (284.0)
_________________________________________________________________________________
Operating profit 67.9 - 67.9 100.8 (8.3) 92.5
Finance income 1.0 - 1.0 0.8 - 0.8
Finance costs (9.6) - (9.6) (8.6) - (8.6)
_________________________________________________________________________________
Profit before tax 59.3 - 59.3 93.0 (8.3) 84.7
Income tax expense (7.1) - (7.1) (11.2) - (11.2)
_________________________________________________________________________________
Profit from continuing operations 52.2 - 52.2 81.8 (8.3) 73.5
Discontinued operations
Profit from discontinued
operations 4.8 141.3 146.1 11.7 4.1 15.8
_________________________________________________________________________________
Profit for the period attributable
to equity shareholders 57.0 141.3 198.3 93.5 (4.2) 89.3
_________________________________________________________________________________
Earnings per share
Basic earnings per share (cent) 61.0 27.4
Diluted earnings per share (cent) 60.3 27.1
Continuing operations
Basic earnings per share (cent) 16.1 22.6
Diluted earnings per share (cent) 15.9 22.3
Group condensed statement of recognised income and expense
for the six months ended 31 August 2007
31 August 31 August
2007 2006
€m €m
INCOME AND EXPENSE RECOGNISED DIRECTLY IN EQUITY:
Exchange difference arising on the net investment in foreign
operations - 0.4
Movement in cashflow hedging reserve 0.9 0.8
Deferred tax liability on cashflow hedges (0.1) (0.1)
Actuarial gain on defined benefit pension schemes 32.8 1.8
______________________________________________
Deferred tax on defined benefit pension schemes (4.3) 0.3
Total income and expense recognised directly in equity 29.3 3.2
Profit attributable to equity shareholders 198.3 89.3
______________________________________________
Total recognised income and expense for the period attributable to
equity shareholders 227.6 92.5
______________________________________________
Group condensed balance sheet
as at 31 August 2007
31-Aug-07 31-Aug-06 28-Feb-07
Notes (audited)
€m €m €m
ASSETS
Non-current assets
Goodwill 394.7 453.6 426.9
Property, plant & equipment 6 200.5 152.1 212.4
Derivative financial assets 2.8 - 3.7
Retirement benefit asset 2.0 - -
Deferred tax - 8.9 8.7
______________________________________________
600.0 614.6 651.7
______________________________________________
Current assets
Inventories 89.5 56.2 97.8
Trade & other receivables 123.2 191.6 138.8
Derivative financial assets 3.4 - 2.3
Cash & cash equivalents 78.0 97.3 40.7
______________________________________________
294.1 345.1 279.6
______________________________________________
TOTAL ASSETS 894.1 959.7 931.3
______________________________________________
EQUITY
Share capital 9 3.2 3.3 3.3
Share premium 9 40.5 27.5 32.8
Reserves 9 30.7 27.7 33.1
Retained earnings 9 381.7 235.1 315.3
Total equity 456.1 293.6 384.5
LIABILITIES
Non-current liabilities
Interest bearing loans & borrowings 7 289.8 392.8 316.1
Derivative financial liabilities 0.6 0.1 -
Retirement benefit obligations - 55.2 51.5
Provisions 0.6 1.7 1.3
Deferred tax 3.6 5.3 5.0
______________________________________________
294.6 455.1 373.9
______________________________________________
Current liabilities
Interest bearing loans & borrowings 7 - 25.0 30.0
Derivative financial liabilities 3.2 1.7 4.2
Trade & other payables 128.5 163.7 132.5
Current tax liabilities 11.7 20.6 6.2
______________________________________________
143.4 211.0 172.9
______________________________________________
Total liabilities 438.0 666.1 546.8
______________________________________________
TOTAL EQUITY & LIABILITIES 894.1 959.7 931.3
______________________________________________
Group cash flow statement
for the six months ended 31 August 2007
6 months ended 6 months ended
31 August 2007 31 August 2006
€m €m
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the period attributable to equity shareholders 198.3 89.3
Finance income (1.0) (0.8)
Finance costs 9.6 8.6
Income tax expense 7.9 12.7
Depreciation of property, plant & equipment 14.5 11.1
Impairment of goodwill - 8.3
Profit on disposal of property, plant & equipment - (4.6)
Profit on disposal of subsidiaries (141.3) -
Charge for equity settled share-based employee benefits 1.1 0.8
Contributions paid less pensions charged to profit (2.7) (2.0)
______________________________________________
86.4 123.4
Increase in inventories (10.4) (1.1)
Increase in trade & other receivables (36.8) (79.9)
Increase in trade & other payables 33.9 64.4
______________________________________________
73.1 106.8
Interest received 1.0 0.8
Interest paid (7.7) (8.3)
Income tax (paid) / refunded (1.2) 0.2
______________________________________________
Net cash inflow from operating activities 65.2 99.5
______________________________________________
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant & equipment (61.4) (31.9)
Sale of property, plant & equipment - 14.0
Net proceeds on disposal of subsidiaries 248.1 -
______________________________________________
Net cash inflow / (outflow) from investing activities 186.7 (17.9)
______________________________________________
CASH FLOWS FROM FINANCING ACTIVITIES
Shares issued on exercise of share options 3.6 1.0
Bank loans repaid (597.0) (10.0)
New bank loans drawn down net of issue costs paid 538.7 -
Shares purchased under share buyback programme (114.8) -
Dividends paid (45.1) (19.8)
______________________________________________
Net cash outflow from financing activities (214.6) (28.8)
______________________________________________
Net increase in cash & cash equivalents 37.3 52.8
Cash & cash equivalents at beginning of period 40.7 44.5
______________________________________________
Cash & cash equivalents at end of period 78.0 97.3
______________________________________________
Notes to the interim results
for the six months ended 31 August 2007
1. Basis of preparation
The interim accounts, which are abridged and unaudited, have been prepared in
accordance with International Financial Reporting Standard, IAS34 Interim
Financial Reporting.
The same accounting policies and methods of computation are followed in these
financial statements as were applied in the consolidated financial statements
for the year ended 28 February 2007 and as those expected to apply for the
financial year to 29 February 2008.
The preparation of financial statements in conformity with IFRSs requires the
use of certain critical accounting estimates and judgements. The areas involving
a high degree of judgement 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. 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 judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources.
The income tax expense for the six-month period is calculated by applying the
directors' best estimate of the annual effective tax rate to the profit for the
period.
The Board approved the interim results on 10 October 2007.
2. Segmental analysis
Segmental information is presented below in respect of the Group's continuing
business segments, which are the primary basis of segment reporting. The
business segment reporting format reflects the Group's management and internal
reporting structure and reflects the dominant source and nature of risks and
returns arising from the Group's business.
During the six months ended 31 August 2007, the Group disposed of its soft
drinks manufacturing and distribution business and certain related operations
that had previously been reported within the distribution segment (see note 4).
The reported segmental figures have been amended to exclude discontinued
operations.
The analysis by segment includes both items directly attributable to a segment
and those that can be allocated on a reasonable basis.
The Group analyses its business into three main segments as follows: -
(i) Cider
This segment 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 segment consists of four brands, viz. Tullamore Dew, Carolans Irish Cream,
Frangelico Liqueur and Irish Mist Liqueur, all of which are owned by the Group
and are marketed internationally.
(iii) Distribution
This segment consists of distribution of wine and spirits and agency products in
both the Republic of Ireland and Northern Ireland and wholesaling to the
licensed trade in Northern Ireland.
Six months ended 31 August Six months ended 31 August
2007 2006
Class of business analysis Revenue *Net result Revenue *Net result
€m €m €m €m
______________________________________________________
Cider 272.7 57.5 269.5 90.0
Spirits & Liqueurs 41.0 9.2 36.1 9.8
Distribution 61.9 1.2 70.9 1.0
______________________________________________________
375.6 67.9 376.5 100.8
______________________________________________________
*Net result represents profit before finance costs and exceptional items.
Cyclicality of interim results
Operating profit for continuing operations for the 6 months period to 31 August
2006 represented 50.5% of the full year profits.
3. Income tax charge
Interim period income tax is accrued based on the estimated average annual
effective income tax rate of 12% (6 months ended 31 August 2006: 11.5%).
4. Discontinued operations
On 21 September 2006 and 29 August 2007, the Group completed the sale of its
Snacks and Soft Drinks businesses respectively. These businesses are presented
as discontinued operations for all periods presented and are shown separately
from continuing operations.
Results of discontinued operations
29 August 2007 31 August 2006
€m €m
_______________________________________
Revenue 130.8 155.6
Expenses (125.2) (142.9)
Exceptional items - 4.6
_______________________________________
Results from discontinued operations before tax 5.6 17.3
Income tax expense (0.8) (1.5)
_______________________________________
Results from discontinued operations (net of income tax) 4.8 15.8
Gain on sale of discontinued operations 145.8 -
Capital Gains Tax arising on sale of discontinued operations (4.5) -
_______________________________________
Profit from discontinued operations (net of tax) 146.1 15.8
_______________________________________
Cash flows from discontinued activities
29 August 2007 31 August 2006
€m €m
Net cash from operating activities (0.8) 23.8
Net cash from investing activities 246.1 8.5
Net cash from financing activities* (20.0) (23.0)
_______________________________________
Net cash (used in)/derived from discontinued operations 225.3 9.3
_______________________________________
_______________________________________
Depreciation 4.6 5.3
_______________________________________
Capital expenditure (2.0) (3.4)
_______________________________________
* intragroup dividend
Effect of disposal on financial position of the Group
29 August 2007 31 August 2006
€m €m
_______________________________________
Property, plant & equipment 57.1 60.0
Goodwill 32.2 58.9
Inventories 18.5 17.2
Trade & other receivables 52.2 60.0
Cash & cash equivalents - 9.6
Deferred tax liabilities 2.9 2.7
Trade & other payables (49.9) (63.2)
Provisions (0.9) (1.2)
Retirement benefit obligations (18.0) (19.4)
_______________________________________
Net assets and liabilities disposed of 94.1 124.6
_______________________________________
Consideration received in cash 249.2 -
Disposal expenses (14.3) -
_______________________________________
234.9 -
Foreign currency reserve movement on disposal 0.5 -
_______________________________________
Profit arising on disposal of subsidiaries 141.3 -
5. Earnings per ordinary share
Six months ended 31 Six months ended 31
August 2007 August 2006
€m €m
Earnings as reported 198.3 89.3
Adjustments for exceptional items, net of tax (141.3) 4.2
____________________________________________
Earnings adjusted for exceptional items 57.0 93.5
____________________________________________
'000 '000
Number of shares at beginning of period 327,569 325,204
Shares issued in lieu of dividend 327 1,236
Shares issued in respect of options exercised 1,482 380
Own shares acquired (12,100) -
____________________________________________
Number of shares at end of period 317,278 326,820
____________________________________________
Weighted average number of ordinary shares 325,089 325,841
Adjustment for the effect of conversion of options 3,572 3,796
____________________________________________
Weighted average number of ordinary shares, including options 328,661 329,637
Basic earnings per share Cent Cent
Basic earnings per share - cent 61.0 27.4
Adjusted basic earnings per share - cent 17.5 28.7
Diluted earnings per share
Diluted earnings per share - cent 60.3 27.1
Adjusted diluted earnings per share - cent 17.3 28.4
Continuing Operations
€m €m
Earnings from continuing operations - as reported 52.2 73.5
Adjustments for exceptional items, net of tax - 8.3
____________________________________________
Earnings adjusted for exceptional items 52.2 81.8
Basic earnings per share Cent Cent
Basic earnings per share - cent 16.1 22.6
Adjusted basic earnings per share - cent 16.1 25.1
Diluted earnings per share
Diluted earnings per share - cent 15.9 22.3
Adjusted diluted earnings per share - cent 15.9 24.8
Discontinued Operations
€m €m
Earnings from discontinued operations - as reported 146.1 15.8
Adjustments for exceptional items, net of tax (141.3) (4.1)
____________________________________________
Earnings adjusted for exceptional items 4.8 11.7
Basic earnings per share Cent Cent
Basic earnings per share - cent 44.9 4.8
Adjusted basic earnings per share - cent 1.5 3.6
Diluted earnings per share
Diluted earnings per share - cent 44.5 4.8
Adjusted diluted earnings per share - cent 1.5 3.5
6. Property, plant & equipment
Acquisitions and disposals
During the six months ended 31 August 2007, the Group acquired assets with a
cost of €61.4 million (six months ended 31 August 2006: €31.9 million).
Assets with a net book value of €57.1 million were disposed of during the six
months ended 31 August 2007 (six months ended 31 August 2006: €6.8 million),
including assets disposed of through sale of discontinued operations (see
note 4) of €57.1 million (2006: nil).
Capital commitments
During the six months ended 31 August 2007, the Group entered into contracts to
purchase property, plant and equipment that were outstanding at the period end
totalling €30 million (31 August 2006: €25 million).
7. Details of Borrowing
31 August 2007 28 February 2007 31 August 2006
€m €m €m
Maturity analysis
Current
0-1 year - 30.0 25.0
______________________________________________________
- 30.0 25.0
Non-current
1-2 years - 30.0 30.0
2-3 years - - 15.0
3-4 years - 286.1 -
4-5 years 289.8 - 347.8
______________________________________________________
289.8 316.1 392.8
Unamortised issue costs of €1.2 million (2006: €2.2million) have been netted
against outstanding bank loans repayable between 2 and 5 years.
8. Analysis of net debt
Cash & cash Bank loans due Bank loans due Net debt
equivalents within one year after one year
€m €m €m €m
At 31 August 2006 (97.3) 25.0 392.8 320.5
At 1 March 2007 (40.7) 30.0 316.1 305.4
__________________________________________________________________________
At 31 August 2007 (78.0) - 289.8 211.8
__________________________________________________________________________
During the period, the Group negotiated a new long-term bank debt facility in
the amount of €600 million, of which €540 million was drawn down. The proceeds
were used to repay the existing bank loan of €348 million and to meet short-term
expenditure needs. Disposal proceeds from the sale of the soft drinks division
of €249 million were received during the period from Britvic plc and were used
to repay debt. The new bank loan is structured as a five year revolving loan
bearing interest at market rates, a portion of which has been converted to fixed
rates using interest rate swaps.
9. Reserves
Reserves
_________________________________________________
Share Share Capital Cashflow Shares to Currency Retained 2006
capital premium reserve* hedging be issued translation income Total
reserve reserve reserve
€m €m €m €m €m €m €m €m
Group
At 28 February 2006 3.3 18.6 25.2 (1.5) 1.7 0.6 171.2 219.1
Total recognised income
and expense for the period - - - 0.7 - 0.4 91.4 92.5
Dividend on ordinary shares - 7.9 - - - - (27.7) (19.8)
Exercise of share options - 1.0 - - (0.2) - 0.2 1.0
Equity settled share based
payments - - - - 0.8 - - 0.8
____________________________________________________________________________________________
At 31 August 2006 3.3 27.5 25.2 (0.8) 2.3 1.0 235.1 293.6
____________________________________________________________________________________________
Reserves
________________________________________________
Share Share Capital Cashflow Shares to Currency Retained 2007
capital premium reserve* hedging be issued translation income Total
reserve reserve reserve
€m €m €m €m €m €m €m €m
Group
At 31 August 2006 3.3 27.5 25.2 (0.8) 2.3 1.0 235.1 293.6
Total recognised income
and expense for the period - - - 2.7 - (0.2) 118.8 121.3
Dividend on ordinary shares - 4.3 - - - - (39.2) (34.9)
Exercise of share options - 1.0 - - (0.6) - 0.6 1.0
Equity settled share based
payments - - - - 3.5 - - 3.5
____________________________________________________________________________________________
At 28 February 2007 3.3 32.8 25.2 1.9 5.2 0.8 315.3 384.5
____________________________________________________________________________________________
Reserves
_______________________________________________
Share Share Capital Cashflow Shares to Currency Retained 2007
capital premium reserve* hedging be issued translation income Total
reserve reserve reserve
€m €m €m €m €m €m €m €m
Group
At 28 February 2007 3.3 32.8 25.2 1.9 5.2 0.8 315.3 384.5
Total recognised income
and expense for the period - - - 0.8 - - 226.8 227.6
Foreign currency reserve
movement on disposal - - - - - (0.5) - (0.5)
Dividend on ordinary shares - 4.1 - - - - (49.2) (45.1)
Exercise of share options - 3.6 - - (3.6) - 3.6 3.6
Own shares acquired ** (0.1) - 0.1 - - - (114.8) (114.8)
Equity settled share based
payments - - - - 0.8 - - 0.8
___________________________________________________________________________________________
At 31 August 2007 3.2 40.5 25.3 2.7 2.4 0.3 381.7 456.1
___________________________________________________________________________________________
* the capital reserve includes a capital redemption reserve of €0.4 million
(2006: €0.3 million).
** the company acquired 12.1 million of its own shares at an average share price
of €9.38.
Capital redemption reserve and capital reserves
These reserves arose on the conversion of preference shares into share capital
of the Company, and other changes and reorganisations of the Group's capital
structure in prior years, and reserves arising in the current period in relation
to the purchase of the company's own shares. These reserves are not
distributable.
Cashflow hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change
in the fair value of cash flow hedging instruments related to hedged
transactions that have not yet occurred.
Share based payment reserve
This reserve comprises amounts expensed in the Income Statement in connection
with share option grants falling within the scope of IFRS 2 Share-based Payment
less any exercises or lapses of such share options.
Currency translation reserve
The translation reserve comprises all foreign exchange differences from 1 March
2004, arising from the translation of the net assets of the Group's non-euro
denominated operations, including the translation of the profits of such
operations from the average exchange rate for the year to the exchange rate at
the balance sheet date, as well as from the translation of liabilities that
hedge those net assets, where applicable.
10. Dividend
During the interim period, a dividend of 15 cent (2006: 12 cent) per share was
paid to the shareholders. An interim dividend of 12 cent per share is proposed
on 317,323,315 ordinary shares amounting to €38.1 million.
Dividends declared after the balance sheet date are not recognised as a
liability at the balance sheet date.
12. Related Parties
Transactions with key management personnel
For the purposes of the disclosure requirements of IAS 24 Related Party
Disclosures, the Group has defined the term "key management personnel", as its
executive and non-executive directors.
Key management personnel receive compensation in the form of short-term employee
benefits, post-employment benefits and equity compensation benefits. Key
management personnel received total compensation of €2.7 million for the six
months ended 31 August 2007 (six months ended 31 August 2006: €2.7 million)
13. Balance Sheet as at 28 February 2007
The balance sheet presented for 28 February 2007 on page 14 does not represent
but has been extracted from the statutory consolidated financial statements of
the Group. These statutory consolidated financial statements were prepared
separately and attached to the annual return filed in the Companies Registration
Office on 29 May 2007. The Group's auditors issued an unqualified audit opinion
on those consolidated financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 17th May 2024
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