27th Feb 2006 07:02
Bunzl PLC27 February 2006 Monday 27 February 2006 PRELIMINARY RESULTS FOR YEAR ENDED 31 DECEMBER 2005 Bunzl plc, the international distribution and outsourcing Group, today announcesits annual results for the year ended 31 December 2005. The results from continuing operations were: • Revenue up 20% to £2,924.4 million • Operating profit before intangible amortisation up 20% to £203.4 million • Profit before tax and intangible amortisation up 16% to £192.6 million • Profit before tax up 12% to £176.7 million • Earnings per share up 15% to 35.4p • Adjusted earnings per share* up 21% to 38.7p • Dividend for the year up 18% to 15.7p Other highlights of the year include: • Successful demerger of Filtrona • Michael Roney appointed Chief Executive • £270 million of annualised revenue added as a result of 2005 acquisitions • Operating cash flow 97% of operating profit before intangible amortisation Commenting on today's results, Anthony Habgood, Chairman of Bunzl, said: "This excellent set of results is our first since the successful demerger ofFiltrona and the appointment of Mike Roney as Chief Executive. They show theunderlying strength of our business both overall and in each of the geographicregions in which we compete. They also once again clearly demonstrate theability of Bunzl to grow successfully." Michael Roney, Chief Executive of Bunzl, said: "It is very encouraging to lead a business that has performed so well and I amexcited about our potential as we move forward. Our relatively small marketpenetration in many sectors should provide both organic and acquisition growthopportunities through the use of our successful business model." Enquiries: Bunzl plc FinsburyMichael Roney, Chief Executive Roland RuddBrian May, Finance Director Morgan BoneTel: 020 7495 4950 Tel: 020 7251 3801 * Before the effect of intangible amortisation CHAIRMAN'S STATEMENT In early June, shareholders of Bunzl received shares in Filtrona plc as ourmanufacturing operations were successfully demerged. We wish Filtrona everysuccess as a separate quoted entity. The continuing operations of Bunzl are nowan international, value-added distribution and outsourcing Group and I amdelighted to be able to report excellent results from our newly focusedorganisation. As well as being successful and effecting the demerger ofFiltrona, 2005 was also a busy year in other respects. Acquisition growthcontinued with activity principally in the US, Central Europe, the Netherlandsand Australia, Michael Roney took the role of Chief Executive in November andthe Group was reorganised into four regions - North America, UK & Ireland,Continental Europe and Australasia. Accounting Standards The results are stated under IFRS and are, therefore, for continuing operations.Filtrona's contribution to profits is included as a single line net of interest,tax and the costs of effecting the demerger and presented as discontinuedoperations. Earnings per share are also on a continuing operations basis and thedividend represents a dividend on continuing operations. Filtrona plc is payingits shareholders a full dividend covering the whole twelve month periodincluding the five months under Bunzl's ownership. The segment analysis reflectsthe new organisation structure. Results from continuing operations Revenue rose 20% to £2,924.4 million as our international regions benefited froma combination of organic growth and significant acquisition activity. Withoperating profit before intangible amortisation up 20% to £203.4 million,earnings per share rose 15% to 35.4p while adjusted earnings per share, aftereliminating the effect of intangible amortisation, rose 21% to 38.7p. Results from discontinued operations While underlying trading in Filtrona was good in the five months under Bunzl'sownership, after deducting costs of the demerger the profit after intangibleamortisation, interest and tax was £4.2 million compared to £35.7 million forthe twelve months in 2004. Dividend The Board is recommending an 18% increase in the final dividend to 10.8p. Thisbrings the total dividend for the year to 15.7p, an increase of 18%.Shareholders will again have the opportunity to participate in our dividendreinvestment plan. The Board Since the interim statement there have been a number of changes to the Board. On1 November, Michael Roney, who had been a non-executive director since 2003, wasappointed Chief Executive of the Group after a comprehensive search using anexternal consultancy. A truly international businessman, he was most recentlyCEO of Goodyear Dunlop Tires Europe BV, a highly successful joint venture ownedby Goodyear and Sumitomo Rubber based in Brussels. At the end of the year PatDyer retired after having been Chairman from 1993 to 1996 and then DeputyChairman until the demerger of Filtrona in June 2005. On 1 January 2006, BrianMay, who had been Finance Director designate since June, joined the Board asFinance Director. His previous role was as Finance Director of our growing andsuccessful European and Australasian businesses. Also on 1 January, PeterJohnson, Chairman of Inchcape plc, joined the Board as an independentnon-executive director. His experience of distribution and international marketswill be of great value to us going forward. Finally on 31 January, DavidWilliams, Finance Director until the end of 2005, retired after reaching hisnormal retirement age and having served as a director for over 14 years. I wishMike and Brian every success in their new roles and welcome Peter to the Board.I would also like to thank Pat and David for the highly significantcontributions they have each made to Bunzl over many years. They had key rolesduring Bunzl's historical development and were both critical to its success.They leave with our gratitude and best wishes for the future. Continuing 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 North America, Europe andAustralasia. Expanding our geographic spread, increasingly co-ordinating ourprocurement and international sourcing and continually redefining and deepeningour commitment to our customers and markets have been important ongoing elementsof our success. Investment Over the years we have steadily made investments that reflect our strategy andimprove the capital base of the Group. In order to meet our growth targets wehave expanded warehouses and opened new ones. Upgrading our computer systems isan ongoing task as we seek to improve our current facilities and smoothlyintegrate the new businesses into the Group's operations. These systems remaincritical to our ability to serve our customers in the most efficient andappropriate manner. We are convinced that our modern systems are a source ofheightened advantage that enable us to manage our business in a way that willallow us to provide leadership in the marketplace. Employees Worldwide our employees continue to be in the forefront of providing excellentcustomer service and liaison with our suppliers. We rely on their continuingdiligence and efforts to maintain Bunzl's reputation with all our businesscontacts. As ever, we are genuinely grateful for the loyalty and hard work ofall our employees. This year in particular our US employees displayedextraordinary dedication despite the devastation caused by the severehurricanes. Though many of them faced personal loss of property theynevertheless ensured that our customers' needs in the Southeast continued to beserviced throughout a very difficult period. Their efforts in particular arehugely appreciated. CHIEF EXECUTIVE'S REVIEW Operating performance of continuing operations In my first set of results since becoming Chief Executive, I am pleased toreport that the Group achieved excellent results across all its business areasin 2005. In this review references to operating profit are to operating profitbefore intangible amortisation. The improved performance was a reflection ofgood organic growth and the successful integration of acquisitions. Overallrevenue was up 20% and operating profit increased 20%. Operating profit marginincreased from 6.9% to 7.0%. In North America revenue rose 18% with operatingprofit increasing by 10%, largely as a consequence of the lower marginacquisitions made in 2005. UK & Ireland showed a revenue increase of 4% whileoperating profit rose 10%. In Continental Europe we experienced a 59% increasein revenue with operating profit up 89% driven by the sizeable acquisition ofGroupe Pierre Le Goff in 2004 and major improvements in our other businesses.Australasia showed revenue growth of 34% and operating profit improvement of31%.Adjusted earnings per share, after eliminating the effect of intangibleamortisation, were 38.7p, an increase of 21%, while basic earnings per sharewere 35.4p, a rise of 15%. Return on average operating capital rose from 59.3%to 61.4% and, after acquisition expenditures of £124 million, our strongoperating cash flow resulted in a drop in gearing from 83.6% to 77.2%. Acquisitions The Group spent £124 million on acquisitions during 2005 with the majority ofthe investment being made in the US. We also added businesses in theNetherlands, Central Europe and Australia. In total these acquisitions will addabout £270 million to annualised revenue. Since the year end we have announcedfurther acquisitions in the UK and the US. In January 2005 we completed the acquisition of Gelpa, a distributor principallysupplying the retail and food processor sectors with packaging and consumablesin the Netherlands, thereby extending our product range and customer base inBenelux. Gelpa is based in Arnhem and had revenue of €43 million in 2003.Following the acquisition of Beltex in late 2004 we continued our expansion intoCentral Europe with the acquisition of Tecep in early July. Tecep has operationsin Hungary, Czech Republic, Slovakia, Romania and Poland, primarily serving theretail, foodservice, catering and food processor markets with packaging suppliesand catering and food processing equipment and had revenue of €41 million in2004. In July we also purchased Sanicare, strengthening our growing position in thehealthcare sector in Australia and New Zealand. Based in New South Wales,Sanicare supplies disposable products principally into the healthcare sector andhad revenue of A$22 million in the year ended April 2005. Our momentum of acquisitions in 2004 in North America continued in 2005 as webrought significant new businesses into the Group. These acquisitionsstrengthened our position in the redistribution,non-food retail, healthcare and industrial markets and provide us withopportunities to develop further into these markets as well as enhance ourposition in the traditional grocery market. In September we completed the acquisition of SOFCO based in New York State withrevenue of $175 million in 2004. SOFCO distributes disposable supplies to anumber of sectors including grocery, foodservice and healthcare. At the end ofSeptember we purchased A W Mendenhall based in Chicago with revenue of $98million in 2004. Mendenhall serves the redistribution sector principallysupplying foodservice, janitorial, industrial packaging and disposable productsin the Midwest. In October we strengthened our position in the non-food retailsector with the purchase of Retail Resources, a business providing distributionservices to retail stores across the US including store supplies such ascheckout and merchandise bags, jan/san items, labels, boxes and other paperproducts as well as specialised expense control systems. Retail Resources hadrevenue of $29 million in 2004 and is based in New York. We also acquired thegrocery and food processor distribution business of Weiss Brothers in October.The business is based in West Point, Pennsylvania and had revenue of $42 millionin 2004. In January 2006 we announced the acquisition of Midshires, a UK vending businesswith revenue in 2005 of £12 million, and Master Craft, a US business servicingthe redistribution and foodservice sectors, with revenue of $11 million in 2005. Organisation In November we reorganised the Group into four business areas; North America, UK& Ireland, Continental Europe and Australasia. This change reflects thesignificant growth in these areas and will allow the management in eachgeography to drive organic growth, integrate acquisitions and evaluateacquisition opportunities. The creation of a Group purchasing position willenable us to source our products in a more effective manner and shareinformation seamlessly among the business areas. This key function will workclosely with the businesses to ensure that our customers have access to the bestproducts globally to meet their needs. Prospects In spite of rising interest rates and an upward and volatile trend in commodityprices, the world economies performed reasonably well in 2005. The input priceson plastic resin based products experienced upward movement in the latter partof 2005 since when they have remained firm. We expect North America to continueto grow due to acquisitions in addition to the normal levels of organic growth.While the recently acquired businesses have had the initial effect of loweringour margins, we believe that our management initiatives will have a positiveimpact in 2006 and beyond. We are pleased that our previously stated strategy togrow in the jan/san, food processor, redistribution, convenience store andnon-food retail markets is bearing fruit as we see our revenue breakdownreflecting higher growth in these areas. Our broad group of businesses in the UK& Ireland move confidently into 2006 after a strong performance in 2005.Continued growth combined with ongoing sales mix improvements should enhance thetop line while cost savings and efficiency improvements should benefit profits.The significant growth in revenue and profits for Continental Europe in 2005,principally bolstered by a major 2004 acquisition, will return in 2006 to morenormal growth levels. All of our businesses have developed plans to improvetheir operations including the upgrading of our IT systems in France and CentralEurope which was part of the integration plans when the acquisitions were made.We expect Australasia to see another year of good progress with higher thanGroup average growth driven both organically and by acquisitions. While thisbusiness area is not as large as the others, it is showing a lot of promise asit develops a broad footprint in the grocery, healthcare, foodservice, foodprocessor and safety sectors. A more focused outsourcing Group that has recently been reorganised into fourbusiness areas moves forward with a heightened sense of confidence. We arefortunate to have experienced management in each area who have clear strategiesand have demonstrated their ability to execute their plans. Consequently we haveevery expectation that we will be able to advance organically bolstered by ourexisting acquisition momentum while keeping our eyes open to new opportunitiesto grow our business successfully. North America A combination of organic growth and acquisitions grew revenue by 18% to £1,665.2million while operating profit rose by 10% to £116.0 million. We successfullyintegrated the acquisitions made during the fourth quarter of 2004 and announcedfour further acquisitions in 2005; SOFCO, A W Mendenhall, Retail Resources andWeiss Brothers. Though these new businesses came into the Group with on averagelower margins, we have confidence in our integration and cost rationalisationplans which are currently being executed. These additions reflect our strategyto reorientate our business mix towards the higher growth and higher potentialsectors of redistribution, jan/san, food processor, non-food retail andconvenience stores. Our grocery business, which is the largest of our customer categories, continuedto perform well. Revenue, while ahead of 2004 both organically and throughincremental acquisitions, decreased as a proportion of the total due principallyto our strategy of concentrating our growth and acquisition activities in theother sectors. Rising fuel costs, increased regulation on drivers' hours of work and greatertraffic congestion has provided additional stimulus to the growth of theredistribution sector. Our recent acquisitions, particularly A W Mendenhall inChicago, have broadened our geographic coverage and improved our ability toservice customers in this sector. Our low cost and highly efficient operatingplatform offers an economic solution to both our customers and suppliers. Webelieve that our potential in this sector will continue to grow as our supplierssee the value of redistribution. Although the processor business felt the effects of the various bans on US beefthroughout the world, it had another year of sound growth in most categories. Aswe continue to demonstrate to our customers the value in the "one stop shop"concept, we are able to increase the breadth of items we sell while helping themcontrol their operating costs and working capital. The successful integration of TSN, which we acquired in October 2004, providesus with opportunities to sell disposable packaging and jan/san products inaddition to selected retail items into the growing convenience store sector. Webelieve this will grow in direct correlation with the expansion in size of theconvenience stores as they begin to compete with grocery stores and fast foodrestaurants. The acquisition of Retail Resources in October will allow us to grow faster inthe non-food retail sector. Our logistics platform can provide customers anopportunity to increase the number of packaging items without increasing theirinvestment in inventory. We believe that the expense management system offeredby Retail Resources is unique and provides our customers with a management toolenabling them to manage and control their expenses in every store. Our importprogram can also provide packaging solutions to these customers that will reduceoperating expenses without a reduction in quality. 2005 provided plenty of operating challenges and one of those was thesignificant increase in fuel costs. As a result, our management carried out acomplete analysis of our transport operations to mitigate the cost impact. Were-examined routes, improved our drivers' education programs and implemented newvehicle tracking technology to monitor trucks en route. Furthermore theutilisation of enterprise systems and metrics helped customers and suppliers toclearly identify operating costs while increasing internal effectiveness. On a more sombre note, it would be hard to overestimate the havoc wreaked by thehurricanes Katrina, Rita and Wilma and the positive response by our employees tothese events. These hurricanes not only created operational challenges for us,our customers and suppliers, but also directly impacted the lives of many of ouremployees. Due to their determination, commitment and hard work we continued toservice our customers and through teamwork, flexibility and our common ITplatform all their needs were met, often by shifting the work among our branchnetwork. These difficult times tested our operational capabilities but webelieve that our performance has strengthened our relationships with both ourcustomers and suppliers. We continue to invest in technology and our new e-commerce supply chaininitiative is increasing sales by providing added value to our customers.Self-service features include internet based 24/7 access to electronic orderingwith other features including inventory and pricing information, order anddelivery status and customer history. Training and technical support fromexperienced personnel is also provided to our customers. In order to meet the demands of an evolving marketplace we implemented a new VIP(value, integrity and performance) sales training and development initiative.The program is customised to our needs and enables our sales professionals tolearn and apply state-of-the-art sales techniques and tools. The program contentincludes sales maximisation, sales strategies, communicating effectively,successful sales calls, negotiation skills, responding to customers needs,understanding buyer motivations and handling queries. This comprehensive coursewill be attended by all of our sales personnel and a select group of othermanagers. Our private label program, Prime Source, continues to grow as we add more itemsand offer our customers a less costly alternative without sacrificing quality.This program has expanded significantly again in 2005 as we broadened ourproduct offering and increased our international sourcing. A Shanghai warehouseconsolidates many of the Chinese sourced products and allows for efficientdelivery even to our smaller warehouse locations. Despite rising costs of both fuel and employee benefits, we believe that we havemanaged our cost platform effectively and are confident that the improvements toour IT capabilities, facilities, logistics platform, supply chain and deliveryroutes will contribute to long term efficiency gains and lead to an even morecompetitive cost base in the future. We are also confident that, as we deepenour ties with both our customers and suppliers, we will continue to provide aproduct and consolidation service offering that is of the highest level in themarket. UK & Ireland Since our first acquisition in the UK in 1993, our UK and Ireland business hasexpanded to provide a wide range of consumables into a broad range of customersectors. During 2005 the business continued to develop with revenue increasingby 4% to £664.2 million and operating profit by 10% to £56.1 million. This increase has been predominantly organic with sales growth coming from newcontract wins and range extensions, particularly from businesses adding productsavailable from other Bunzl operations. In addition to revenue growth, profit hasbeen enhanced through increased efficiencies from rationalisation andimprovement in our operations which more than offset increases in fuel and rawmaterial prices. The Horeca (hotel, restaurant and catering) markets remain challenging with ongoing consolidation and customers deferring non-essentialspend. Sales growth was underpinned by the full year impact of significantcontract wins in the hotel, restaurant and pub sectors in the second half of2004. We also won and fulfilled contracts to supply light and heavy equipmentfor the fit out of two new sports stadiums in England and Wales. Operationallywe introduced our standard IT system into the catering equipment business whichnow allows the increasing number of customers we serve with both disposables andequipment to receive consistent management information. In a difficult high street environment, our retail supplies business, whichprovides goods not for resale, grew through a combination of new contract wins,notably a three year contract with a leading high street retailer, and by addingnew ranges to existing customers. Our approach with new ranges and services isto prove the concept with one customer and then proceed to offer it to others.Within the healthcare market, increased imports and budgetary pressures withinthe NHS resulted in price deflation in examination gloves. Shermond maintainedits sales momentum through sales of new products in other categories and gainedoperating efficiencies from the reorganisation of the supply chain in 2004. Overall sales were flat within our cleaning and safety business followingrationalisation of the cleaning and hygiene branch network. The subsequentreduction in operating costs more than offset the reduction in local salesaround the closed branches and we still have a national network capable ofservicing contracts anywhere in the UK. Greenham continued to develop businesswith local authorities and construction companies. Increased importing via ourNational Distribution Centre and sales of own label products offset pricingpressures, while operating costs and working capital remained tightlycontrolled. Within Ireland we continue to develop. Our largest area, the catering suppliesbusiness, benefited from new hotel construction activity driven by availablecapital allowances. We were also successful in winning new public sectoraccounts in our cleaning supplies business. We continue to grow our two smallersectors, safety and retail, by leveraging our resources in the UK, an approachthat the new regional structure will facilitate. Within the vending business, the market trend away from customers purchasingmachines to having operating companies such as Bunzl charge for them as part ofa fee, left overall revenue level with the previous year. However account winsin the hotel and retail sectors means a higher proportion of the sales isrepeatable ongoing contracted business. This, together with good cost control,improved profitability. Across the UK and Ireland we will maintain our segmental focus. The marketoriented businesses will provide that focus while we will leverage our overallscale where appropriate to gain competitive advantage and increased efficiencieswhile sharing best practices. Continental Europe We successfully achieved substantial growth in both revenue and operating profitin 2005. Our top line increased 59% to £490.0 million and operating profit rose89% to £37.9 million. This was driven by the impact of a full year of tradingfrom Groupe Pierre Le Goff, acquired in May 2004, as well as from furtheracquisitions in 2005 and some strong performances from the existing businesses.With increasing oil prices and higher costs of raw materials, all of ourbusinesses have had to place a greater amount of effort into gross marginmanagement and tight control of operating costs. In a period of challenging economic conditions in France, our cleaning andhygiene business has delivered a robust performance whilst our personalprotection equipment/safety products business has outperformed the market.Throughout the year we have reorganised the operational infrastructure of thebusinesses at Groupe Pierre Le Goff, with the merging of a number of the smalleroperating units to create operating efficiencies and improve service. Thisreorganisation programme will continue throughout 2006. An IT systemimplementation commenced at the end of 2005 in the cleaning and hygiene businessand this will harness further synergies throughout the business. In January 2005 we completed the acquisition of Gelpa in the Netherlands whichhas provided us with a route into the retail and food processor sectors. Indifficult market conditions the business has integrated well with our existingoperations. The two businesses have achieved synergies enabling them to exceedour expectations in 2005. In similarly difficult market conditions, our German business has developed itsnational accounts program as more customers realise the benefits which derivefrom our strong operating platform. This, combined with ongoing cost control,has been a key driver in delivering profitable organic growth. Following its relocation to a purpose built warehouse in 2005, our businesssupplying retailers in Denmark has taken advantage of a stronger operatingplatform to offer an improved service to our customers.This has enabled the business to perform ahead of expectations and also sets a good base for further positive development in 2006. The operations at MultiLine,our business supplying Horeca customers in Denmark, continue to prosper, partlyaided by a significant contract win in the second half of the year. 2005 was the first full year of our activities in Central Europe. Our Beltexbusiness, a distributor of cleaning and safety products, has taken advantage ofgrowth in industrial activity in the region. With operations in Hungary andRomania the business has performed well ahead of our expectations. Our positionin Central Europe was strengthened by the acquisition of Tecep in July. Tecep isa leading distributor of packaging supplies and catering and food processorequipment to the retail, food service, catering and food processor markets,largely in Hungary and the Czech Republic but also throughout Central Europe. Weare gaining synergies in a number of areas and at the same time investing in theIT systems to create further operating efficiencies. We continued to expand our geographic footprint in 2005 and we remain optimisticabout further expansion through acquisitions. Reorganising Continental Europeinto a separate business area will enable us to put the focus and resourcesbehind the pursuit of these additional opportunities. Australasia The combination of acquisitions in late 2004 and mid 2005, as well as organicgrowth in the underlying business, contributed to an increase of 34% in revenueto £105.0 million and 31% in operating profit to £8.4 million. The business strategy is for continued development of our consolidationplatform, providing a greater offering to our new and existing customers. Thiswill gain momentum through the development of acquisition opportunities withinour core markets. In July we completed the acquisition of Sanicare which expands our position andproduct offering into the healthcare sector and compliments our growing positionwithin aged care in the region. In addition the clinical expertise within thisbusiness creates opportunity to expand into other healthcare markets with awider range of disposable consumables and leverage our position in the UKhealthcare sector. Our principal business completed the successful integration of acquisitions madein 2004 as well as winning new contracts within our targeted growth sectors,including healthcare, industrial, safety and catering. Lesnie's continued tofocus on developing core business within the food processor markets. During 2005we introduced a range of specialised production consumables to complement ouralready strong position with specialist equipment into this sector. The businesshas added resource to drive growth within these markets and this will continuethroughout 2006. Our strong growth and leadership in the marketplace creates opportunities forpurchasing synergies and the ability to leverage our global sourcing to improveour competitive position. We will continue to invest in our business through theestablishment of new warehouses and the upgrading of existing facilities andfurther enhancement to our IT systems. All of these many initiatives will enableus to continually improve our customer service offering which is the principaldriver of our strong growth in this market. CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2005 2005 2004Continuing operations Notes £m £m Growth--------------------------------------------------------------------------------RevenueExisting businesses 2,808.3 2,438.5Acquisitions 116.1-------------------------------------------------------------------------------- 2 2,924.4 2,438.5 20%-------------------------------------------------------------------------------- Operating profit before intangible amortisationExisting businesses 199.0 168.9Acquisitions 4.4--------------------------------------------------------------------------------Operating profit before intangible amortisation 2 203.4 168.9 20%--------------------------------------------------------------------------------Intangible amortisation (15.9) (7.8)--------------------------------------------------------------------------------Operating profit 187.5 161.1 16%Finance income 3 22.0 17.0Finance cost 3 (32.8) (19.9)--------------------------------------------------------------------------------Profit before income tax 176.7 158.2 12%--------------------------------------------------------------------------------Profit before income tax and intangible amortisation 192.6 166.0 16%--------------------------------------------------------------------------------Income tax - UK (8.7) (6.9)Income tax - Overseas (48.0) (45.6)--------------------------------------------------------------------------------Profit for the year 120.0 105.7-------------------------------------------------------------------------------- Discontinued operationsProfit for the year 6 4.2 35.7--------------------------------------------------------------------------------Total profit for the year 124.2 141.4-------------------------------------------------------------------------------- Attributable to:Equity holders of the Company 123.6 140.2Minority interests 0.6 1.2--------------------------------------------------------------------------------Total profit for the year 124.2 141.4-------------------------------------------------------------------------------- Earnings per share of the total profit forthe year attributable to the Company's equity holders--------------------------------------------------------------------------------Basic 36.5p 40.7p--------------------------------------------------------------------------------Diluted 36.3p 40.5p-------------------------------------------------------------------------------- Earnings per share of the profit for the year fromcontinuing operations attributable to the Company's equity holders--------------------------------------------------------------------------------Basic 7 35.4p 30.7p 15%--------------------------------------------------------------------------------Diluted 7 35.2p 30.5p-------------------------------------------------------------------------------- Dividends per share 5 15.7p 13.3p 18%-------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE FOR THE YEAR ENDED 31 DECEMBER 2005 2005 2004 £m £mProfit for the year 124.2 141.4 Actuarial loss on pension schemes (27.3) (13.3)Deferred taxation on actuarial loss 8.4 4.0Currency translation differences arising in year+ 8.1 0.4Movement of cash flow hedging reserve 1.6--------------------------------------------------------------------------------Net expense recognised directly in equity (9.2) (8.9)--------------------------------------------------------------------------------Total recognised income for the year 115.0 132.5--------------------------------------------------------------------------------Adoption of IAS 32 and IAS 39* (1.3)-------------------------------------------------------------------------------- 113.7 132.5 Attributable to: Equity holders of the Company 114.1 131.6Minority interests 0.9 0.9--------------------------------------------------------------------------------Total recognised income for the year 115.0 132.5 + Currency translation differences for 2005 of £8.1m are net of losses of £15.7mtaken to equity as a result of designated effective net investment hedges. * IAS 32 ('Financial Instruments: Disclosure and Presentation') and IAS 39('Financial Instruments: Recognition and Measurement') were adopted by the Groupon 1 January 2005 resulting in a cashflow hedging reserve of £(1.3)m beingrecognised in the opening balance sheet. As at 31 December 2005 the amountrecognised in equity was £0.3m and the movement in the year was £1.6m. CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2005 2005 2004 £m £m--------------------------------------------------------------------------------AssetsProperty, plant and equipment 69.8 218.4Intangible assets 695.5 636.1Derivative assets 4.8Deferred tax assets 22.2 14.8--------------------------------------------------------------------------------Total non-current assets 792.3 869.3 Inventories 272.3 275.2Income tax receivable 2.5 3.1Trade and other receivables 470.7 465.4Derivative assets 0.9Cash and cash equivalents 53.7 107.7--------------------------------------------------------------------------------Total current assets 800.1 851.4--------------------------------------------------------------------------------Total assets 1,592.4 1,720.7 EquityShare capital 111.4 112.5Share premium 112.8 88.3Merger reserve 2.5 -Capital redemption reserve 8.6 5.3Cash flow hedging reserve 0.3Translation reserve 8.5 0.7Retained earnings 216.3 278.1--------------------------------------------------------------------------------Total equity attributable to the Company's equity holders 460.4 484.9Minority interests - 3.9--------------------------------------------------------------------------------Total equity 460.4 488.8 Liabilities Interest bearing loans and borrowings 339.7 290.2Retirement benefit obligations 60.0 70.5Other payables 1.5 7.6Provisions 38.3 30.3Deferred tax liabilities 79.3 79.8--------------------------------------------------------------------------------Total non-current liabilities 518.8 478.4 Bank overdrafts 17.0 43.2Interest bearing loans and borrowings 52.5 179.5Income tax payable 40.8 54.4Trade and other payables 497.6 469.3Provisions 5.3 7.1--------------------------------------------------------------------------------Total current liabilities 613.2 753.5--------------------------------------------------------------------------------Total liabilities 1,132.0 1,231.9--------------------------------------------------------------------------------Total equity and liabilities 1,592.4 1,720.7-------------------------------------------------------------------------------- CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2005 2005 2004 Notes £m £mCash flow from operating activities of continuingoperationsProfit before income tax 176.7 158.2Adjustments for non-cash items:Depreciation 13.6 12.9Intangible amortisation 15.9 7.8Share option charge 3.6 2.8Other 0.9 (0.7)Working capital movement (11.4) (11.0)Finance income (22.0) (17.0)Finance cost 32.8 19.9Special pension contribution (3.3) -Employee trust shares (2.7) (9.8)Other cash movements (6.4) (7.2)--------------------------------------------------------------------------------Cash inflow from operating activities of continuingoperations 197.7 155.9Cash inflow from operating activities of discontinuedoperations 6 2.2 64.1Income tax paid of continuing operations (56.7) (50.3)Income tax paid of discontinued operations 6 (2.8) (14.9) --------------------------------------------------------------------------------Net cash inflow from operating activities 140.4 154.8 Investing activities of continuing operationsInterest received 11.8 7.1Purchase of property, plant and equipment (11.4) (11.4)Sale of property, plant and equipment 0.8 3.2Purchase of businesses (124.4) (234.2)Disposal of businesses - 8.0Demerger of business 115.4 -Other investment cash flows 0.7 1.9--------------------------------------------------------------------------------Cash outflow from investing activities of continuingoperations (7.1) (225.4)Cash outflow from investing activities of discontinuedoperations 6 (12.3) (56.0)--------------------------------------------------------------------------------Cash outflow from investing activities (19.4) (281.4) Financing activities of continuing operationsInterest paid (20.2) (9.7)Dividends paid (57.8) (54.4)(Decrease)/increase in short term loans (102.2) 135.2Increase in long term loans 37.8 24.6Decrease in finance leases (0.3) (0.2)Shares issued for cash 26.6 4.9Purchase of own shares - (58.6)--------------------------------------------------------------------------------Cash (outflow)/inflow from financing activities ofcontinuing operations (116.1) 41.8Cash(outflow)/inflow from financing activities ofdiscontinued operations 6 (35.1) 11.9--------------------------------------------------------------------------------Cash(outflow)/inflow fromfinancing activities (151.2) 53.7 Exchange gain/(loss) on cash and cash equivalents ofcontinuing operations 2.1 (1.3)Exchange gain on cash and cash equivalents ofdiscontinued operations 6 0.3 0.4--------------------------------------------------------------------------------Net exchange gain/(loss) on cash and cash equivalents 2.4 (0.9) Decrease in cash and cash equivalents (27.8) (73.8)-------------------------------------------------------------------------------- Cash and cash equivalents at start of year 64.5 138.3--------------------------------------------------------------------------------Increase/(decrease) in cash and cash equivalents ofcontinuing operations 19.9 (79.3)(Decrease)/increase in cash and cash equivalents ofdiscontinued operations 6 (47.7) 5.5--------------------------------------------------------------------------------Cash and cash equivalents at end of year 8 36.7 64.5-------------------------------------------------------------------------------- Notes 1. Basis of preparation This financial information has been prepared in accordance with InternationalFinancial Reporting Standards ('IFRS') adopted for use in the EU and theinterpretations issued by the International Accounting Standards Board. TheGroup has decided to adopt early the amendment issued in December 2004 to IAS 19'Employee Benefits - Actuarial Gains and Losses, Group Plans and Disclosure'. Aspermitted by IFRS 1, the Company adopted IAS 32 'Financial Instruments:Disclosure and Presentation' and IAS 39 'Financial Instruments: Recognition andMeasurement' prospectively from 1 January 2005. Therefore, prior to 31 December2004, the Company continued to account for financial instruments using theaccounting polices previously applied under UK Generally Accepted AccountingPractices ('UK GAAP'). Bunzl plc's 2005 Annual Report will be despatched to shareholders at the end ofMarch 2006. The financial information set out does not constitute the company'sstatutory accounts for the year ended 31 December 2005 but is derived from thoseaccounts. Statutory accounts for 2005 will be delivered to the Registrar ofCompanies following the Company's Annual General Meeting which will be held on17 May 2006. The auditors have reported on those accounts; their reports wereunqualified and did not contain statements under Section 237 (2) or (3) of theCompanies Act 1985. The comparative figures for the year ended 31 December 2004 are not theCompany's statutory accounts for the financial year. Those accounts, which wereprepared under UK GAAP, have been reported on by the Company's auditors anddelivered to the Registrar of Companies. The report of the auditors wasunqualified, did not include references to any matters to which the auditorsdrew attention by way of emphasis without qualifying their reports and did notcontain statements under Section 237 (2) or (3) of the Companies Act 1985. The figures for the year ended 31 December 2004 are derived from the '2004Preliminary IFRS Financial Statements' which were issued in a press release on29 April 2005, a copy of which can be found on the Company's website(www.bunzl.com). This included income statement, balance sheet and cash flowreconciliations, as well as details of the accounting policies applied inrestating the financial statements for the year ended 31 December 2004 and as at1 January 2005. Some adjustments, none of which materially impact the previouslypublished statements, have been made to reflect reclassifications and clarifyinterpretation of accounting standards. 2. Segment analysis North UK & Continental America Ireland Europe Australasia Corporate TotalYear ended 31 December 2005 £m £m £m £m £m £m----------------------------------------------------------------------------------------------------ContinuingoperationsRevenue 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----------------------------------------------------------------------------------------------------Intangible amortisation (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 before income tax 176.7Profit before income tax and intangible amortisation 192.6----------------------------------------------------------------------------------------------------Income tax (56.7)----------------------------------------------------------------------------------------------------Profit for the year 120.0---------------------------------------------------------------------------------------------------- North UK & Continental America Ireland Europe Australasia Corporate TotalYear ended 31 December 2004 £m £m £m £m £m £m----------------------------------------------------------------------------------------------------Continuing operationsRevenue 1,412.9 638.9 308.3 78.4 2,438.5---------------------------------------------------------------------------------------------------- Operating profit/(loss)before intangible amortisation 105.1 51.2 20.1 6.4 (13.9) 168.9---------------------------------------------------------------------------------------------------- Intangible amortisation (0.4) (0.2) (7.1) (0.1) - (7.8)Operating profit/(loss) 104.7 51.0 13.0 6.3 (13.9) 161.1Finance income 17.0Finance cost (19.9)----------------------------------------------------------------------------------------------------Profit before income tax 158.2----------------------------------------------------------------------------------------------------Profit before income tax and intangible amortisation 166.0----------------------------------------------------------------------------------------------------Income tax (52.5)----------------------------------------------------------------------------------------------------Profit for the year 105.7---------------------------------------------------------------------------------------------------- 3. Finance income/(cost) 2005 2004 £m £m--------------------------------------------------------------------------------Deposits 11.8 8.2Expected return on pension scheme assets 10.2 8.8--------------------------------------------------------------------------------Finance income 22.0 17.0-------------------------------------------------------------------------------- Loans and overdrafts (22.5) (10.4)Interest charge on pension scheme liabilities (10.3) (9.5)--------------------------------------------------------------------------------Finance cost (32.8) (19.9)-------------------------------------------------------------------------------- 4. Income tax A taxation charge of 32% (2004: 33.3%) has been provided on the profit onunderlying operations excluding the impact of intangible amortisation of £15.9m(2004: £7.8m) and related deferred tax of £4.9m (2004: £2.8m). Including theimpact of intangible amortisation and related deferred tax, the overall rate is32.1% (2004: 33.2%). The taxation charge of 32% is higher than the nominal UKrate of 30% principally because most of the Group's operations are in countrieswith higher tax rates. 5. Dividends Per share Total -------------------------------------------------------- 2005 2004 2005 2004 £m £m--------------------------------------------------------------------------------------2003 final 8.25p 37.02004 interim 4.15p 18.52004 final 9.15p 39.32005 interim 4.9p 16.5-------------------------------------------------------------------------------------- 14.05p 12.4p 55.8 55.5-------------------------------------------------------------------------------------- The 2005 final dividend of 10.8p per share will be paid on 3 July 2006 toshareholders on the register on 5 May 2006. Total dividends for the year to which they relate: Per share ---------------- 2005 2004------------------------------------------------------------------------------Interim 4.9p 4.15pFinal 10.8p 9.15p------------------------------------------------------------------------------- 15.7p 13.3p------------------------------------------------------------------------------- 6. Discontinued operations Following the demerger of Filtrona on 6 June 2005, this business has beenpresented as 'discontinued operations' in accordance with IFRS 5 'Non-currentAssets Held for Sale and Discontinued Operations'. There is no impact on theprior period financial statements other than a change in the presentation ofFiltrona's results and cash flows as discontinued operations. Income statement 2005* 2004 £m £m--------------------------------------------------------------------------------Revenue 209.9 477.5--------------------------------------------------------------------------------Operating profit before intangible amortisation anddemerger costs 25.8 54.5Intangible amortisation (0.4) (0.7)Demerger costs (17.3) ---------------------------------------------------------------------------------Operating profit 8.1 53.8Finance income 3.4 8.0Finance cost (4.8) (9.9)--------------------------------------------------------------------------------Profit before income tax 6.7 51.9Income tax (2.5) (16.2)--------------------------------------------------------------------------------Profit for the period 4.2 35.7-------------------------------------------------------------------------------- * Represents the five months trading under the Company's ownership. Profit from discontinued operations for the period to 6 June 2005 of £4.2m (yearended 31 December 2004: £35.7m) comprised North America £8.2m (2004: £14.6m), UK& Ireland £2.2m (2004: £7.9m), Continental Europe £4.1m (2004: £3.2m) and restof the world £4.9m (2004: £10.0m). In the period to 6 June 2005, £15.2m ofdemerger costs (net of tax) were also incurred. Cash flow statement 2005 2004 £m £m-------------------------------------------------------------------------------Profit before income tax 6.7 51.9Adjustments for non-cash items: Depreciation 8.9 20.1 Intangible amortisation 0.4 0.7 Share option charge 0.5 1.1 Other (0.5) 4.8Working capital movement (11.7) (14.2)Finance income (3.4) (8.0)Finance cost 4.8 9.9Special pension contribution (1.5) -Other cash movements (2.0) (2.2)-------------------------------------------------------------------------------Cash inflow from operating activities 2.2 64.1Income tax paid (2.8) (14.9)-------------------------------------------------------------------------------Net cash (outflow)/inflow from operating activities (0.6) 49.2Net cash outflow from investing activities (12.3) (56.0)Net cash (outflow)/inflow from financing activities (35.1) 11.9Exchange gain on cash and cash equivalents 0.3 0.4-------------------------------------------------------------------------------Net (decrease)/increase in cash and cash equivalents (47.7) 5.5------------------------------------------------------------------------------- The cash flow presented for discontinued operations includes demerger costs of£17.3m. The net assets of Filtrona that were demerged were £122.4m. As thedivestment was accounted for as a demerger in the form of a dividend in specie,there was no gain or loss recognised in the income statement. 7. Earnings per share 2005 2004 £m £m-----------------------------------------------------------------------------Continuing operationsProfit for the year attributable to the Company 120.0 105.7Adjustment 11.0 5.0-----------------------------------------------------------------------------Adjusted profit 131.0 110.7-----------------------------------------------------------------------------Discontinued operationsProfit for the year attributable to discontinuedoperations (net of minority interests) 3.6 34.5----------------------------------------------------------------------------- Basic weighted average ordinary shares in issue (million)+ 338.8 344.6Dilutive effect of employee share plans (million)+ 1.7 1.3------------------------------------------------------------------------------Diluted weighted average ordinary shares (million)+ 340.5 345.9------------------------------------------------------------------------------Continuing operationsBasic earnings per share 35.4p 30.7p------------------------------------------------------------------------------Adjustment 3.3p 1.4p-------------------------------------------------------------------------------Adjusted earnings per share* 38.7p 32.1p------------------------------------------------------------------------------Diluted basic earnings per share 35.2p 30.5p------------------------------------------------------------------------------Discontinued operationsBasic earnings per share 1.1p 10.0p------------------------------------------------------------------------------Diluted basic earnings per share 1.1p 10.0p------------------------------------------------------------------------------ + The weighted average number of shares has been adjusted for the shareconsolidation on 6 June 2005, as approved by shareholders at an ExtraordinaryGeneral Meeting on 2 June 2005, when the ordinary shares of 25p wereconsolidated on a 7 for 9 basis into ordinary shares of 321/7p. Figures for theprior year have been restated accordingly. * 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. 8. Cash and cash equivalents and net debt 2005 2004 £m £m------------------------------------------------------------------------------Cash at bank and in hand 48.4 78.4Short term deposits repayable on demand - 8.8Overdrafts (17.0) (43.2)-------------------------------------------------------------------------------Cash 31.4 44.0Short term deposits repayable in less than 3 months 5.3 20.5-------------------------------------------------------------------------------Cash and cash equivalents 36.7 64.5-------------------------------------------------------------------------------Current liabilities - interest bearing loans andborrowings (52.5) (179.5)-------------------------------------------------------------------------------Non-current liabilities - interest bearing loans andborrowings (339.7) (290.2)-------------------------------------------------------------------------------Net debt (355.5) (405.2)------------------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Bunzl