26th Feb 2007 07:02
Bunzl PLC26 February 2007 PRELIMINARY RESULTS FOR YEAR ENDED 31 DECEMBER 2006 Monday 26 February 2007 Bunzl plc, the international distribution and outsourcing Group, today announcesits annual results for the year ended 31 December 2006. The results were: • Revenue up 14% to £3,333.2 million • Operating profit before intangible amortisation up 11% to £226.3 million • Profit before tax and intangible amortisation up 9% to £209.6 million • Profit before tax up 7% to £189.7 million • Earnings per share+ up 7% to 37.8p • Adjusted earnings per share+* up 8% to 41.7p • Dividend for the year up 8% to 17.0p • Return on average operating capital 61.7% Acquisition highlights of the year include: • £390 million of annualised revenue added • Entry into North American safety products redistribution • Addition of major UK distributor in healthcare disposables • Significant international expansion in non-food retail Commenting on today's results, Anthony Habgood, Chairman of Bunzl, said: "Bunzl has produced another good set of results as we have once againdemonstrated growth through continually redefining and deepening our commitmentto customers, consolidating the markets in which we compete and expanding ourgeographic coverage." Michael Roney, Chief Executive of Bunzl, said: "I am pleased to report a strong 2006 operating performance, organic revenuegrowth of 5% and higher acquisition spend of £162 million. This gives us aplatform and momentum for our international growth which will be supported bycontinued focus on operational improvements and increased internationalsourcing." Enquiries:Bunzl plc FinsburyMichael Roney, Chief Executive Roland RuddBrian May, Finance Director Mark HarrisTel: 020 7495 4950 Gordon Simpson Tel: 020 7251 3801+ From continuing operations* Before the effect of intangible amortisation Note:A webcast of today's presentation to analysts will be available on www.bunzl.comby 2.00pm today CHAIRMAN'S STATEMENT In its first full year as a focused distribution and outsourcing company, Bunzlproduced another set of good results driven both by organic and acquisition-ledgrowth. All four business areas were ahead of 2005 in both revenue and profits.Overall revenue rose 14% to £3,333.2 million. Operating profit before intangibleamortisation was up 11% to £226.3 million, earnings per share from continuingoperations rose 7% to 37.8p, while adjusted earnings per share from continuingoperations, after eliminating the effect of intangible amortisation, rose 8% to41.7p. Adverse currency translation movements, especially the US dollar, reducedGroup growth rates by between 1% and 1.5%. Dividend The Board is recommending an 8% increase in the final dividend to 11.7p. Thisbrings the total dividend for the year to 17.0p, an increase of 8%. Shareholderswill again have the opportunity to participate in our dividend reinvestmentplan. Share buy back During the second half the Company conducted a limited on market share buy backprogramme under which 9.1 million shares were bought into treasury for a totalconsideration of £63.1 million. Strategy For many years we have pursued a strategy of focusing on our strengths andconsolidating the markets in which we compete. Through the pursuit of thisstrategy we have built leading positions in a number of business sectors inNorth America, Europe and Australasia. In 2006 we further extended our businesscoverage with acquisitions that took us further into safety products in NorthAmerica, medical supplies in the UK and non-food retail internationally as wellas continuing to consolidate our more established markets. Continuallyredefining and deepening our commitment to customers and markets, as well asextending our business into new geographies, remain important elements of ourstrategy as we continue to expand and increasingly co-ordinate our procurementand international sourcing. Investment Over time we have steadily invested to reflect our growth strategy and enhancethe capital base of the Group. In order to meet our targets we have expanded andimproved warehouses and opened new ones. Upgrading our computer systems is anongoing task as we integrate new businesses into the Group's operations and toenhance customer service. Systems remain critical to our ability to serve ourcustomers in the most efficient and appropriate manner and we are convinced thatour modern systems are a source of heightened advantage that enable us to manageour business in a way that will allow us to maintain our leadership in themarketplace. Employees As a service oriented company we continue to rely on the quality and efficiencyof our employees across the world. We very much appreciate their hard work andloyalty which are key to the ongoing growth and success of Bunzl. One of ourcompetitive advantages is our ability to integrate newly acquired businesseseffectively. Our success in this area is very much due to the adaptability ofour employees and their willingness to assist in the integration of businessesbuilding on the strengths of both parties. Everyone's efforts are greatlyappreciated. CHIEF EXECUTIVE'S REVIEW Operating performance The strong performance of the Group continued in 2006 with good results beingbolstered by an increased level of acquisition activity. The successfuloperating performance was a reflection of solid organic growth and the improvedperformance of acquisitions completed in the previous year. In this reviewreferences to operating profit are to operating profit before intangibleamortisation. Overall revenue was up 14% and operating profit rose by 11%. Although operatingprofit margin declined from 7.0% to 6.8%, principally due to the effect of lowermargin acquisitions made in 2006, Group margin, excluding the impact of currencyexchange and acquisitions, moved up from 6.9% to 7.1%. Our specialist knowledgeand experience in providing cost effective outsourcing solutions led tounderlying volume growth as we continued to offer innovative supply programmesto add value for new and existing customers. In North America revenue rose by14% with operating profit increasing 13%. UK & Ireland showed a 17% increase inrevenue and a 6% rise in operating profit, with the reduction in business areamargin resulting from the Southern Syringe acquisition which is operating atmargins below the business area average. In Continental Europe we saw an 11%revenue increase with operating profit up 8%. Australasia experienced a 12%increase in revenue and a 14% improvement in operating profit. Adjusted earnings per share from continuing operations, after eliminating theeffect of intangible amortisation, were 41.7p, an increase of 8%, while basicearnings per share from continuing operations were 37.8p, a rise of 7%. Returnon average operating capital continued at a consistently high level, improvingmarginally to 61.7%. After acquisition expenditure of £162 million, a sharebuy back of £63 million and a strong operating cash flow, net debt increased by£80.4 million to £430.7 million resulting in a net debt to EBITDA ratio of 1.8times. Acquisitions The Group spent £162 million on acquisitions during the year, principally as aresult of a strong expansion in the UK, three noteworthy investments in NorthAmerica in the second half and one acquisition each in Continental Europe andAustralasia. The businesses acquired extended our product offering and customerbase in our existing operations and also expanded the Group into new marketsectors. In total these acquisitions will add about £390 million to annualisedrevenue. In January we completed the acquisition of Midshires, a UK vending business withrevenue in 2005 of £12 million, and Master Craft, a US redistribution businessservicing the foodservice sector with revenue of $11 million in 2005. In Aprilwe announced two additional acquisitions as we expanded further in Australasiaand France. Allcare, with revenue of A$23 million in the year ended June 2005,is principally engaged in the distribution of personal protection equipment anddisposable products to food processors in Australia. Picardie Hygiene, withrevenue of €10 million in 2005, distributes cleaning and hygiene products innortheast France. In July we acquired Southern Syringe, a business based in London involved in thesale and distribution throughout the UK of healthcare related consumables to avariety of end users including the NHS, private hospitals and nursing homes.Revenue in 2005 was £182 million. This acquisition significantly expands ourposition in the growing healthcare consumables market. We announced two further acquisitions in North America in August. Morgan Scott,a Toronto based business with revenue in 2005 of C$66 million, is engaged in thedistribution of jan/san and foodservice disposable products in eastern Canada.We also purchased United American Sales, a redistribution business based in Ohiowith revenue in 2005 of $58 million supplying personal protection equipment tothe industrial and construction markets. The acquisition of Cole Harford, aKansas City based business with revenue in 2005 of $64 million, was announced inOctober. It is a redistributor principally engaged in the supply of foodserviceand jan/san disposable products. These three acquisitions are excellentadditions to our successful and growing business in North America. In December we completed the purchase of Keenpac, a UK based business withrevenue in 2005 of £74 million. Keenpac is involved in the supply of qualityretail packaging principally in the UK and the US but also in France, Italy,Switzerland, Hong Kong and Australia. Products, which are predominantly sourcedfrom Asia, include bags and boxes for a variety of customers including luxurybrands and high street retailers. This excellent international company willsignificantly expand our sales of non-food retail supplies, extend our sourcingcapabilities and provide an opportunity to develop our business in countrieswhere we do not currently have a presence. Prospects Although interest rates moved upwards in the main economies of the world,economic growth continued and the Group showed its international strength withgood increases in revenue and operating profit in all four business areas. Oiland natural gas prices were volatile during the year and the input prices onplastic resin and pulp based products experienced upward pressure in the firstpart of 2006, remained relatively firm for the second half and have entered 2007with mixed trends. Although the strengthening of sterling in 2006 only had amarginally negative effect on the full year, if exchange rates hold at theirpresent levels the translation impact on the 2007 results will be moresignificant. North America is continuing to progress well due to the impact of acquisitionsand normal levels of organic growth. The acquisitions made in 2005 at lowermargins showed considerable improvement in 2006 and we expect that positivetrend to continue, combined with the contribution from acquisitions completed in2006. Our business in the UK & Ireland was broadened further through twosignificant acquisitions which will lead to a large increase in revenue in 2007.Southern Syringe should show some incremental improvement in 2007 as the plannedintegration progresses. Furthermore the combination of improved momentum fromthe second half of 2006 and the addition of the earnings enhancing acquisitionof Keenpac in December is providing an encouraging start to the current year.Good organic growth in Continental Europe should continue in 2007. Though thereare still some margin pressures in our French business we remain confident thatour operational initiatives will have the desired positive impact. Australasia,supported by improved results in the latter part of 2006 and the better thanexpected performance from recent acquisitions, is also performing well. The success of our first full year as a focused distribution and outsourcingGroup gives us confidence in our international growth plan, both organically andby acquisition. This will be supported by continued focus on operationalimprovements and increased international sourcing. As a result we believe thatthe prospects are good and that our business will continue to grow successfully. North America As a result of good organic growth and acquisitions, revenue increased by 14% to£1,896.8 million and operating profit by 13% to £131.2 million. Underlying volume growth continued to reflect our customers preference to buytheir requirements from us, often on a totally outsourced basis, in order toreduce their costs of sourcing products that they need to run their businessesbut do not actually sell themselves. Our focus continued on finding solutionsfor them to generate additional sales and operational efficiencies. The acquisitions completed during 2005 were all transferred onto our IT systemduring the year and were successfully integrated into our existing operations.In addition we announced four further acquisitions in 2006. All operate inbusiness sectors other than supermarket, which historically has accounted forthe largest proportion of our sales. This is in line with our strategy toacquire companies that will expand our presence in sectors with higher growthpotential. Our redistribution business continued to grow and strong acquisitions haveenhanced our business development in this area. Morgan Scott expanded ourpresence in eastern Canada, particularly in the jan/san and foodservice sectors.United American Sales has given us the opportunity to enter the redistributionsector for personal protection equipment which is a growing area and complementsour safety supplies businesses in Europe. Cole Harford, a significantfoodservice and jan/san redistribution company, reinforces our position,particularly in the midwest and southwest. As a result of our growing redistribution business, we announced a new andseparate organisation to lead our sales and marketing efforts in this area.Strategically we believe it is wise to separate our customers between thosewhere we sell products directly for use in their own businesses and those of ourredistribution business where we sell primarily to other distributors forsubsequent resale. The primary objective is to grow more rapidly in thisstrategic sector of our business. We will accomplish this by better penetratingcurrent customers, developing national opportunities, expanding into new sectorslike personal protection equipment and by working more closely with oursuppliers to increase the volume of goods sold through redistribution. Due tothe increased costs of distribution, warehousing and working capitalrequirements, the demand for an efficient method of redistribution is continuingto expand. In an effort to drive further organic sales growth and increase margin, wecontinue to make significant investments in our employees through trainingprogrammes and new marketing tools. The VIP (value, integrity and performance) sales training and developmentprogramme has proven to be an effective tool for our sales team. It is designedto give employees the basic selling tools to help them identify opportunities toenhance margin and increase sales. All General Managers, Sales Managers andSales Representatives completed this three day programme in 2006. Our goal is toexpand VIP to other operational areas of the business in an effort to enhanceour exceptional customer service. We also experienced organic growth through deeper penetration of existingcustomers, particularly with jan/san products. Our marketing efforts haveexpanded to provide our salesforce with new and improved tools to increase theirproductivity and level of success. A new 300 page catalogue contains informationon more than 5,000 jan/san and foodservice items for our redistributionbusiness. Available in both hard copy and electronic formats, the catalogue hasan easy-to-customise cover that customers can adapt to their particularbusiness. Portable marketing tools have also been introduced including one which containseffective sales presentations, valuable product information and training aidswhich give the sales team the necessary resources for improved results. Our e-commerce initiatives continue to increase sales. The catalogue forredistribution became available online during the year, adding a convenientordering alternative for this customer base. Both our direct and redistributioncustomers have the added value of internet access for inventory information,pricing, order and delivery status and much more. Technology continues to be a significant area of investment. Sixteen warehousesare now equipped with radio frequency scan-based equipment for receiving,put-away and picking of inventory and we plan to extend this programmethroughout the business. The system has resulted in greater efficiency, reducedcosts and improved customer service. Due to increased picking and invoicingaccuracy, credits have been reduced significantly in terms of dollars andtransactions. These improvements have led to increased customer satisfaction andgreater efficiencies in our warehouses. We continue to source an increasing amount of products from suppliers overseas.Our import activities extend globally, primarily in Asia. Two warehouses inShanghai consolidate many locally sourced products which enable us to deliveritems directly to our facilities in the quantities they require. Our business inAustralasia has also recently joined this import programme. As fuel costs rose in 2006, we proactively took measures to reduce consumptionand thereby minimise their impact on operating costs. We continue to expand ouronboard tracking system that monitors and records vital information such as roadspeed, idle running time and distance travelled. This provides warehousemanagement the means to analyse route dynamics in order to improve productivity.A truck driver safety programme has also been developed, focusing on accidentprevention. The commitment and hard work of our entire team allows us to provide productsand services of the highest quality. We will continue to enhance all aspects ofour business to build on the strong foundation our customers and suppliers havecome to expect. UK & Ireland After a relatively slow start to the year, trading conditions improved in thesecond half when we also made two significant acquisitions in Southern Syringeand Keenpac. Although revenue increased by 17% to £774.6 million, operatingprofit rose less, by 6% to £59.7 million, due to the impact of the lower marginSouthern Syringe acquisition, with the underlying business area margin slightlyahead. We successfully managed the impact of higher commodity and energy inputprices into our supply chain and continued to increase efficiencies within ourinfrastructure. Our hotel, restaurant and catering (horeca) businesses had a challenging year.In the face of tougher market conditions we maintained our margin, rationalisedour distribution network by closing two smaller warehouses and restructured oursalesforce to reduce our operating costs. This, together with significantcontract wins in the public sector, hotel and care home markets at the end of2006, leaves the business well positioned for 2007. The retail supplies business maintained its momentum from 2005. We successfullyextended the range of products into existing customers and we also implemented acontract to supply a national chain of petrol forecourts which took us into anew market sector. In the second half we opened an extension to our Manchesterwarehouse to handle this growth. The acquisition in December of Keenpac, whichspecialises in added value premium packaging, will provide opportunities tocross sell both businesses' services particularly to the non-food retailers. The cleaning and safety businesses performed well. While business with ourmanufacturing customers declined, sales elsewhere developed as we won somesignificant public sector and construction accounts. The businesses successfullyrenewed a number of contracts extending them to sole supply status and secured along term national contract with a leading contract cleaner. We opened a newbranch in Essex, which has successfully won new business, and released capacityin London to allow sales growth there. Additional ranges were sourced from theFar East and we reduced our operating costs by creating a new business unit inSwansea, which combined two existing operations, to focus on supplying nationalpersonal protection equipment and workwear contracts. We made an important move within the healthcare market with the acquisition ofSouthern Syringe in July. This provides us with a significant presence in thehealthcare consumables distribution market where it offers a one stop shop forboth the NHS and private hospitals and complements our existing Shermondbusiness. We have started to introduce our processes and systems which will helpto raise the operating margins. Despite the NHS budget deficits seen at thebeginning of the year and the volatile price of latex throughout 2006, Shermondmaintained its position and we made good progress with new product ranges. In Ireland our business saw good growth as the catering supplies sector remainedbuoyant, although favourable tax allowances for hotel construction are nowending, and we won new contracts in the cleaning, safety and retail sectors. Weintegrated our cleaning and safety sites in Dublin to increase efficiencies andappointed a new general manager to run this combined business. During the year the vending business integrated the Midshires acquisition madein January. This improved the depth of our national coverage, strengthening ourposition in the Midlands. We retained a number of leading contracts and alsoextended our presence within the retail sector. To improve efficiencies werationalised the number of sites and opened new warehouses in Loughborough,Newton Aycliffe and East Grinstead. Going forward, the acquisitions of Southern Syringe and Keenpac reinforce ourmarket focus and will allow us to strengthen our consolidation offer in the UKand Ireland by providing our existing product ranges to new markets while alsoextending new product ranges into our existing businesses. Continental Europe Revenue increased by 11% to £544.7 million and operating profit rose by 8% to£40.9 million as our business delivered strong organic growth in both revenueand profits. Raw material prices increased throughout 2006 creating marginpressure within all areas of the business. The French cleaning and hygiene business saw revenue growth in a challengingeconomic environment. This sales growth was principally driven by our ability toserve national customers, aided by the establishment of a national accountsteam. This was supported by the acquisition of Picardie Hygiene announced inApril which strengthened our position in northeast France. Techline, our ownbrand range of products, was successfully launched during the year but thebenefits achieved were not sufficient to offset fully the combined impact ofprice pressure and a changing customer mix which led to a decline in margin. Theinvestment in IT continued with the new ERP system on track to be rolled out byearly 2008. Our other French business that supplies personal protectionequipment and safety products performed well. This was achieved through strongorganic sales growth from a number of large accounts as well as from localcustomers. In the Netherlands our retail business had a very strong first full year underBunzl's ownership through good organic growth. A focus on product innovationdrove sales growth with new contract wins and range extensions with existingcustomers. Good margin management and cost control helped profit to growsubstantially. The retail business successfully rebranded itself under the Bunzlname to continue its integration with our business supplying horeca customers inthe Netherlands. Our horeca business also delivered profitable growth throughincreased sales following a large contract win in the latter part of the yearand improved sales to the hotel sector. In Germany we continued to grow our national accounts business but alsodeveloped our regional sales and benefited from business related to the FIFAWorld Cup. This strong organic sales growth and good cost control resulted in agood increase in profitability. Our retail business in Denmark had another excellent year, delivering profitablegrowth ahead of our expectations. An improvement in margins and ongoing costcontrol helped drive this positive result. Our business supplying horecacustomers also continued to prosper. A significant contract win at the end of2005 and the successful introduction of a food solutions product range providedstrong organic sales growth and contributed to a higher level of profitability. In central Europe, our retail business performed well and was ahead ofexpectations following its first full year of trading since it was acquired inJuly 2005. The business supplies packaging and equipment to retail customersthroughout the principal countries of central Europe. Sales have increasedfollowing the opening of a number of supermarkets in the region and costs arewell controlled. Our business supplying cleaning and safety products has alsoperformed ahead of expectations, principally due to organic sales growth fromnew and existing customers in both Hungary and Romania. We are investing in ITthroughout central Europe in order to build a platform that can readily benefitfrom further growth in these emerging markets. Australasia A combination of organic growth and the impact of acquisitions contributed torevenue growth of 12% to £117.1 million and a 14% increase in operating profitto £9.6 million. The underlying growth rate was lower than in 2005 principallydue to weaker performance by our businesses in the first half. However thebusiness area experienced stronger profit growth in the second half of the yearwhich creates a solid base leading into 2007. Our largest business continues to grow satisfactorily and consolidate itsposition within its core sectors of healthcare, industrial, horeca and retail.The business will benefit from additional contract wins made during the secondhalf of the year. We also established a new distribution facility in New Zealandduring 2006 which is developing well and provides the platform for strongerorganic growth in this region. Our food processor supplies business experiencedgood revenue and profit growth in Australia although this was partly offset by adecline in the New Zealand business. Our specialist healthcare business had anexcellent year with strong revenue and profit growth. We continued in our strategy to acquire quality businesses within core marketsectors including the purchase in April of Allcare, a distributor of personalprotection equipment and disposable products. It has a strong positionnationally with major food processors and creates synergies for consolidation ofsimilar product categories within our existing portfolio. The business area continued to invest in new infrastructure, upgrading existingfacilities and further enhancing our IT systems. Our focus to improve customerservice resulted in initiatives to streamline our operating platform and driveefficiencies to offset cost increases. During the year we launched an internetordering platform to complement our existing e-business facilities withcustomers and suppliers. This new facility will enhance our service offering bysimplifying order placement and improving visibility for information andreporting requirements to our customers. CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006 2006 2005Continuing operations Notes £m £m Growth--------------------------------------------------------------------------------Revenue 2 3,333.2 2,924.4 14%================================================================================Operating profit before intangible 2 226.3 203.4 11%amortisation --------------------------------------------------------------------------------Intangible amortisation (19.9) (15.9)--------------------------------------------------------------------------------Operating profit 206.4 187.5 10%Finance income 3 19.6 22.0Finance cost 3 (36.3) (32.8)--------------------------------------------------------------------------------Profit before income tax 189.7 176.7 7%--------------------------------------------------------------------------------Profit before income tax and intangibleamortisation 209.6 192.6 9%--------------------------------------------------------------------------------UK income tax (9.1) (8.7)Overseas income tax (51.2) (48.0)--------------------------------------------------------------------------------Total income tax (60.3) (56.7)--------------------------------------------------------------------------------Profit for the year 129.4 120.0-------------------------------------------------------------------------------- Discontinued operationsProfit for the year - 4.2--------------------------------------------------------------------------------Total profit for the year 129.4 124.2================================================================================ Attributable to:Equity holders of the Company 129.4 123.6Minority interests - 0.6--------------------------------------------------------------------------------Total profit for the year 129.4 124.2-------------------------------------------------------------------------------- Earnings per share attributable to the Company'sequity holders================================================================================Basic 37.8p 36.5p================================================================================Diluted 37.5p 36.3p================================================================================ Earnings per share from continuing operationsattributable to the Company's equity holders================================================================================Basic 6 37.8p 35.4p 7%================================================================================Diluted 6 37.5p 35.2p================================================================================ ================================================================================Dividend per share 5 17.0p 15.7p 8%================================================================================ CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE FOR THE YEAR ENDED 31 DECEMBER 2006 2006 2005 £m £m--------------------------------------------------------------------------------Profit for the year 129.4 124.2Actuarial gain/(loss) onpension schemes 17.4 (27.3)Deferred tax on actuarial(gain)/loss (5.5) 8.4Currency translationdifferences arising in year* (7.1) 8.1(Loss)/gain recognised in cashflow hedge reserve (0.3) 0.3Movement from cash flow hedgereserve to income statement (0.3) 1.3--------------------------------------------------------------------------------Net income/(expense)recognised directly in equity 4.2 (9.2)--------------------------------------------------------------------------------Total recognised income forthe year 133.6 115.0================================================================================ Attributable to:Equity holders of the Company 133.6 114.1Minority interests - 0.9--------------------------------------------------------------------------------Total recognised income forthe year 133.6 115.0================================================================================ *Currency translation differences for 2006 of £(7.1)m (2005: £8.1m) are net ofgains of £17.6m (2005: £(15.7)m) taken to equity as a result of designatedeffective net investment hedges. CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2006 2006 2005 Notes £m £m--------------------------------------------------------------------------------AssetsProperty, plant and equipment 74.3 69.8Intangible assets 776.7 695.5Derivative assets 5.4 4.8Deferred tax assets 4.1 22.2--------------------------------------------------------------------------------Total non-current assets 860.5 792.3 Inventories 290.8 272.3Income tax receivable 2.7 2.5Trade and other receivables 521.2 470.7Derivative assets 0.1 0.9Cash and deposits 7 49.0 53.7--------------------------------------------------------------------------------Total current assets 863.8 800.1--------------------------------------------------------------------------------Total assets 1,724.3 1,592.4================================================================================ EquityShare capital 112.0 111.4Share premium 119.8 112.8Merger reserve 2.5 2.5Capital redemption reserve 8.6 8.6Cash flow hedge reserve (0.3) 0.3Translation reserve 1.4 8.5Retained earnings 244.0 216.3--------------------------------------------------------------------------------Total equity 488.0 460.4 LiabilitiesInterest bearing loans and borrowings 7 456.9 339.7Retirement benefit obligations 37.5 60.0Other payables 5.6 1.5Provisions 44.6 38.3Deferred tax liabilities 73.0 79.3--------------------------------------------------------------------------------Total non-current liabilities 617.6 518.8 Bank overdrafts 7 23.9 17.0Interest bearing loans and borrowings 7 4.3 52.5Income tax payable 58.4 40.8Trade and other payables 524.5 497.6Derivative liabilities 0.7 -Provisions 6.9 5.3--------------------------------------------------------------------------------Total current liabilities 618.7 613.2--------------------------------------------------------------------------------Total liabilities 1,236.3 1,132.0--------------------------------------------------------------------------------Total equity and liabilities 1,724.3 1,592.4================================================================================ CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006 2006 2005 Notes £m £m--------------------------------------------------------------------------------Cash flow from operating activities of continuingoperationsProfit before income tax 189.7 176.7Adjustments for non-cash items: Depreciation 14.6 13.6 Intangible amortisation 19.9 15.9 Share option charge 3.0 3.6 Other 1.0 (1.0)Working capital movement (20.0) (11.4)Finance income (19.6) (22.0)Finance cost 36.3 32.8Provisions and pensions (5.7) (4.5)Special pension contribution (5.0) (3.3)--------------------------------------------------------------------------------Cash generated from continuing operations 214.2 200.4Cash generated from discontinued operations - 2.2Income tax paid of continuing operations (40.5) (56.7)Income tax paid of discontinued operations - (2.8)--------------------------------------------------------------------------------Cash inflow from operating activities 173.7 143.1 Cash flow from investing activities of continuingoperationsInterest received 8.5 11.8Purchase of property, plant and equipment (15.8) (11.4)Sale of property, plant and equipment 4.3 0.8Purchase of businesses (156.7) (124.4)Other investment cash flows (1.0) 0.7--------------------------------------------------------------------------------Cash outflow from investing activities ofcontinuing operations* (160.7) (122.5)Cash outflow from investing activities ofdiscontinued operations - (12.3)--------------------------------------------------------------------------------Cash outflow from investing activities (160.7) (134.8) Cash flow from financing activities of continuingoperationsInterest paid (24.9) (20.2)Dividends paid (53.3) (57.8)Decrease in short term loans (28.5) (44.6)Increase in long term loans 141.4 95.3Net proceeds from employee shares 5.2 23.9Purchase of own shares into treasury (63.1) ---------------------------------------------------------------------------------Cash outflow from financing activities ofcontinuing operations* (23.2) (3.4)Cash outflow from financing activities ofdiscontinued operations - (35.1)--------------------------------------------------------------------------------Cash outflow from financing activities (23.2) (38.5) Exchange (loss)/gain on cash and cashequivalents of continuing operations (1.4) 2.1Exchange gain on cash and cash equivalents ofdiscontinued operations - 0.3--------------------------------------------------------------------------------Exchange (loss)/gain on cash and cashequivalents (1.4) 2.4 Decrease in cash and cash equivalents (11.6) (27.8)================================================================================ Cash and cash equivalents at start of year 36.7 64.5--------------------------------------------------------------------------------(Decrease)/increase in cash and cashequivalents of continuing operations (11.6) 19.9Decrease in cash and cash equivalents ofdiscontinued operations - (47.7)--------------------------------------------------------------------------------Cash and cash equivalents at end of year 7 25.1 36.7================================================================================ * The cash flow statement for the year ended 31 December 2005 has beenre-presented - see Note 1. Notes 1. Basis of preparation The consolidated financial statements for the year ended 31 December 2006 havebeen prepared in accordance with International Financial Reporting Standards asadopted by the EU including interpretations issued by the InternationalAccounting Standards Board. The consolidated financial statements have beenprepared under the historical cost convention, with the exception of certainitems which are measured at fair value. The demerger of Filtrona changed the financing structure of the Group withFiltrona assuming £115.4m of the Group's net debt at demerger on 6 June 2005.This change to the Group's funding structure was previously presented in the2005 Cash Flow Statement as an inflow within investing activities with acorresponding decrease in loans shown within financing activities. Thisdisclosure was considered helpful as it highlighted the impact of the demergeron the funding structure of the ongoing Bunzl Group. As there was no impact oncash and cash equivalents, the 2005 Cash Flow Statement has been re-presented toexclude this impact of the demerger from both investing and financingactivities. Bunzl plc's 2006 Annual Report will be despatched to shareholders at the end ofMarch 2007. The financial information set out herein does not constitute theCompany's statutory accounts for the year ended 31 December 2006 but is derivedfrom those accounts. Statutory accounts for 2006 will be delivered to theRegistrar of Companies following the Company's Annual General Meeting which willbe held on 16 May 2007. The auditors have reported on those accounts; theirreport was unqualified and did not contain statements under Section 237 (2) or(3) of the Companies Act 1985. The comparative figures for the year ended 31 December 2005 are not theCompany's statutory accounts for the financial year but are derived from thoseaccounts which have been reported on by the Company's auditors and delivered tothe Registrar of Companies. The report of the auditors was unqualified and didnot contain statements under Section 237 (2) or (3) of the Companies Act 1985. 2. Segment analysis North UK & ContinentalYear ended 31 America Ireland Europe Australasia Corporate TotalDecember 2006 £m £m £m £m £m £m=============================================================================================== Continuing operationsRevenue 1,896.8 774.6 544.7 117.1 3,333.2----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Operating profit/(loss)before intangibleamortisation 131.2 59.7 40.9 9.6 (15.1) 226.3-----------------------------------------------------------------------------------------------Intangible amortisation (4.8) (0.8) (13.3) (1.0) - (19.9)-----------------------------------------------------------------------------------------------Operating profit/(loss) 126.4 58.9 27.6 8.6 (15.1) 206.4Finance income 19.6Finance cost (36.3)-----------------------------------------------------------------------------------------------Profit beforeincome tax 189.7-----------------------------------------------------------------------------------------------Profit before income tax and intangible amortisation 209.6-----------------------------------------------------------------------------------------------Income tax (60.3)-----------------------------------------------------------------------------------------------Profit for the year 129.4=============================================================================================== North UK & ContinentalYear ended 31 America Ireland Europe Australasia Corporate TotalDecember 2005 £m £m £m £m £m £m=============================================================================================== Continuing operationsRevenue 1,665.2 664.2 490.0 105.0 2,924.4----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Operating profit/(loss)before intangible amortisation 116.0 56.1 37.9 8.4 (15.0) 203.4-----------------------------------------------------------------------------------------------Intangibleamortisation (2.4) (0.3) (12.6) (0.6) - (15.9)-----------------------------------------------------------------------------------------------Operating profit/(loss) 113.6 55.8 25.3 7.8 (15.0) 187.5Finance income 22.0Finance cost (32.8)-----------------------------------------------------------------------------------------------Profit beforeincome tax 176.7-----------------------------------------------------------------------------------------------Profit before income tax and intangibleamortisation 192.6-----------------------------------------------------------------------------------------------Income tax (56.7)-----------------------------------------------------------------------------------------------Profit for the year 120.0=============================================================================================== 3. Finance income/(cost) 2006 2005Continuing operations £m £m--------------------------------------------------------------------------------Deposits 1.2 1.6Interest income from foreign exchange contracts 6.2 10.1Foreign exchange gains 0.4 -Expected return on pension scheme assets 11.6 10.2Other finance income 0.2 0.1--------------------------------------------------------------------------------Finance income 19.6 22.0================================================================================ Bank loans and overdrafts (22.4) (20.4)Interest expense from foreign exchange contracts (0.3) (0.3)Interest charge on pension scheme liabilities (12.0) (10.3)Other finance expense (1.6) (1.8)--------------------------------------------------------------------------------Finance cost (36.3) (32.8)================================================================================ 4. Income tax for continuing operations A tax charge of 32.0% (2005: 32.0%) has been provided on the profit before taxand intangible amortisation. Including the impact of intangible amortisation of£19.9m (2005: £15.9m) and the related deferred tax of £6.7m (2005: £4.9m), theoverall tax rate is 31.8% (2005: 32.1%). The tax charge of 32.0% is higher thanthe nominal UK rate of 30.0% principally because most of the Group's operationsare in countries with higher tax rates. 5. Dividends Per share Total ----------------------------------------------- 2006 2005 2006 2005 £m £m--------------------------------------------------------------------------------2004 final 9.15p 39.32005 interim 4.9p 16.52005 final 10.8p 36.52006 interim 5.3p 17.6--------------------------------------------------------------------------------Total 16.1p 14.05p 54.1 55.8================================================================================ The 2006 final dividend of 11.7p per share will be paid on 2 July 2007 toshareholders on the register on 4 May 2007. Total dividends for the year to which they relate are: Per share ---------------------------- 2006 2005--------------------------------------------------------------------------------Interim 5.3p 4.9pFinal 11.7p 10.8p--------------------------------------------------------------------------------Total 17.0p 15.7p================================================================================ 6. Earnings per share 2006 2005 £m £m================================================================================Continuing operationsProfit for the year attributable to the Company 129.4 120.0Adjustment 13.2 11.0--------------------------------------------------------------------------------Adjusted profit 142.6 131.0================================================================================Discontinued operationsProfit for the year attributable to discontinuedoperations (net of minority interests) - 3.6================================================================================ Basic weighted average ordinary shares in issue (million) 342.1 338.8Dilutive effect of employee share plans (million) 2.6 1.7--------------------------------------------------------------------------------Diluted weighted average ordinary shares (million) 344.7 340.5================================================================================ Continuing operationsBasic earnings per share 37.8p 35.4p--------------------------------------------------------------------------------Adjustment 3.9p 3.3p--------------------------------------------------------------------------------Adjusted earnings per share* 41.7p 38.7p--------------------------------------------------------------------------------Diluted basic earnings per share 37.5p 35.2p================================================================================Discontinued operationsBasic earnings per share - 1.1p--------------------------------------------------------------------------------Diluted basic earnings per share - 1.1p================================================================================ * Adjusted earnings per share excludes the charge for intangible amortisationand the related deferred tax. This adjustment removes a non-cash charge which isnot used by management to assess the underlying performance of the businesses. 7. Cash and cash equivalents and net debt 2006 2005 £m £m================================================================================Cash at bank and in hand 45.2 48.4Short term deposits repayable in less than three months 3.8 5.3--------------------------------------------------------------------------------Cash and deposits 49.0 53.7Bank overdrafts (23.9) (17.0)--------------------------------------------------------------------------------Cash and cash equivalents 25.1 36.7-------------------------------------------------------------------------------- Interest bearing loans and borrowingsCurrent liabilities (4.3) (52.5)Non-current liabilities (456.9) (339.7)Derivative asset - fair value ofinterest rate swaps 5.4 5.2--------------------------------------------------------------------------------Net debt (430.7) (350.3)================================================================================ Net debt includes the fair value of interest rate swaps hedging fixed interestrate borrowings. Net debt at 31 December 2005 has been re-presented on a consistent basis. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Bunzl