25th Feb 2008 07:00
Bunzl PLC25 February 2008 Monday 25 February 2008 PRELIMINARY RESULTS FOR YEAR ENDED 31 DECEMBER 2007 AND ACQUISITIONS IN BRAZIL AND EUROPE Bunzl plc, the international distribution and outsourcing Group, today announcesits annual results for the year ended 31 December 2007. The results were: • Revenue £3,581.9 million (2006: £3,333.2 million), up 12% at constant exchange rates • Operating profit before intangible amortisation £242.9 million (2006: £226.3 million), up 12% at constant exchange rates • Operating profit £218.5 million (2006: £206.4 million), up 11% at constant exchange rates • Profit before tax and intangible amortisation £215.5 million (2006: £209.6 million), up 8% at constant exchange rates • Profit before tax £191.1 million (2006: £189.7 million), up 6% at constant exchange rates • Adjusted earnings per share* 45.1p (2006: 41.7p), up 13% at constant exchange rates • Earnings per share 39.8p (2006: 37.8p), up 10% at constant exchange rates • Dividend for the year up 10% to 18.7p Other highlights include: • Improved operating margin* of 6.9% at constant exchange rates excluding acquisitions • £197 million spent on acquisitions • Key acquisitions of King Benelux, Irish Merchants and Coffee Point • Entry into Spain and Belgium • Acquisition into the large and rapidly growing Brazilian market announced today * before intangible amortisation Commenting on today's results, Anthony Habgood, Chairman of Bunzl, said: "These results demonstrate Bunzl's strength in its markets and our ability totake advantage of growth opportunities both in existing and new geographies.They position us well for the future." Michael Roney, Chief Executive of Bunzl, said: "Bunzl had a successful 2007 due to organic growth and strong performance fromacquisitions and we are excited about recent developments, especially the entryinto the promising Brazilian market. The continued strengthening of the Groupgives us confidence that our business will continue to grow successfully." Bunzl also today announces that it has completed three further acquisitions. The Company has recently acquired Prot Cap Artigos para Protecao Industrial Ltdaand its subsidiaries from Everaldo Baldin and Leonardo Baldin. Based in SaoPaulo with 7 branches throughout Brazil, Prot Cap is a leading national supplierof personal protection equipment to the industrial, processor, construction,retail and mining sectors. Revenue in the year ended December 2007 was R$118million (£35 million) and gross assets acquired are estimated to be R$41 million(£12 million). At the end of January Bunzl acquired Gunter Guest Supplies GmbH & Co KG fromDietmar Lillig. The business, which is based in Bremen, Germany, supplies guestamenity products to hotels throughout Europe and had revenue of €9 million inthe year ended December 2007. Gross assets acquired are estimated to be €4million. Finally, in December the Company purchased Rafferty Hospitality Products Limitedfrom Jim and Mary Rafferty. Based in Newry, Northern Ireland, Rafferty isengaged in the supply of guest amenity products to hotels throughout Ireland.Revenue in the year ended October 2007 was £9 million and gross assets acquiredare estimated to be £6 million. Commenting on these acquisitions, Michael Roney, Chief Executive of Bunzl, said: "The acquisition of Prot Cap is an exciting development for us. It is in linewith our strategy of expanding into new geographic areas and represents ourfirst move into the large and rapidly growing Brazilian market where we seeopportunities to develop further. It has an excellent reputation for bothquality and service and we are delighted to welcome the management and staff tothe Group. Together, the businesses of Rafferty and Gunter Guest Supplies will allow us toexpand further our offering of guest amenity and other related products into thehotel sector. They complement and strengthen our existing business in thismarket and are already integrating well. We also welcome them to Bunzl." Enquiries: Bunzl plc TulchanMichael Roney, Chief Executive David AllchurchBrian May, Finance Director Stephen MalthouseTel: 020 7495 4950 Tel: 020 7353 4200 Note: A webcast of today's presentation to analysts will be available on www.bunzl.comby 1.30pm today CHAIRMAN'S STATEMENT AS A CLEARLY FOCUSED ORGANISATION BUNZL HAS CONTINUED TO GROW STRONGLY IN ITSCHOSEN MARKETS Taking advantage of growth opportunities in existing and new geographies, Bunzlproduced another good set of results driven both organically and by acquisitionactivity. All four business areas were ahead of 2006 in both revenue and profitsin local currencies. Overall revenue rose to £3,581.9 million (2006: £3,333.2million), an increase of 12% at constant exchange rates. Operating profit beforeintangible amortisation was £242.9 million (2006: £226.3 million), also up 12%at constant exchange rates. Earnings per share were 39.8p (2006: 37.8p), anincrease of 10% at constant exchange rates, and adjusted earnings per share,after eliminating the effect of intangible amortisation, were 45.1p (2006:41.7p), 13% ahead at constant exchange rates. Adverse currency translationmovements, especially the US dollar, reduced Group growth rates by 5% while, ifrecent spot rates prevail, the translation effect of both the US dollar and theeuro will have a positive impact going forward. Dividend The Board is recommending a 10% increase in the final dividend to 12.9p. Thisbrings the total dividend for the year to 18.7p, an increase of 10%.Shareholders will again have the opportunity to participate in our dividendreinvestment plan. Share buy back During the year the Company conducted an on market share buy back programmeunder which 14.2 million shares were bought into treasury for a totalconsideration of £100 million. Delisting from the New York Stock Exchange In June the Company delisted its American Depositary Shares (ADSs) from the NewYork Stock Exchange and ended the registration of its securities under theSecurities Exchange Act of 1934. The Board believed that the administrativeburden and costs associated with the ADSs and the Exchange Act registrationoutweighed the benefits to the Company and its shareholders. Board Bunzl's Board was further strengthened by the appointment of David Sleath as anon-executive director in September. Currently Group Finance Director of SEGROplc, the European industrial property Group, David was formerly a Partner andHead of Audit and Assurance for the Midlands region of Arthur Andersen andsubsequently became Finance Director of Wagon plc. He has a strong financebackground and broad international experience and has added further depth to theindependent element of our Board. Strategy Bunzl is continuing to pursue a strategy of focusing on its strengths andconsolidating the markets in which it competes. Through the pursuit of thisstrategy we have built leading positions in a number of business sectors in theAmericas, Europe and Australasia. In 2007 we further extended our businesscoverage with acquisitions that took us significantly deeper into our chosenmarkets in the Netherlands and Ireland, gave us a substantial position inBelgium and continued to consolidate our more established markets elsewhere.Redefining and deepening our commitment to customers and markets, extending ourbusiness into new geographies and expanding and co-ordinating our procurementand international sourcing remain important elements of our strategy. Investment Both organic growth and acquisitions require investment in the business toexpand and enhance its asset base. We have steadily extended and improved ourwarehouses and opened new ones. Systems are 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 maintain our leadership in the marketplace. Wetherefore continuously upgrade our systems as we integrate new businesses intothe Group's operations, increase functionality and enhance customer service. Environment and climate change Awareness of the environment and considering how to reduce our impact on it isnot new for Bunzl nor is it a passing phase. Our environmental programmes havebeen in place for over five years and we consistently review and seek to improveour performance in this area. During the year we have particularly focused oneducating our employees and informing our customers on environmental issuesincluding how Bunzl can both reduce its own environmental impact and encouragesustainability by providing environmentally friendly products and services. Inaddition, during 2007 Bunzl provided support to a number of environmentalprojects which included funding the London Remade Local Authority Networkmeetings, which promote recycling activities, as well as providing funding for aschool and two educational centres to purchase wind turbines to provide themwith renewable energy. Employees Our employees' dedication, commitment and approach to their work remain keystrengths. Across the world we are reliant on them to provide a high level ofcustomer care which adds value to our service offering. Bunzl's reputation andspirit is shaped by the sustained relationships our employees forge with all ourstakeholders. We are grateful for all the hard work and effort that everyone hasshown this year in continuing to grow the business successfully. CHIEF EXECUTIVE'S REVIEW Operating Performance The strong momentum from previous years continued in 2007 as we had anothersuccessful year due to a combination of organic growth, good performance fromacquisitions made in 2006 and increased acquisition spend. Although somecurrencies were marginally stronger than in 2006, the translation effect of theweaker US dollar resulted in overall currency movements significantly reducingthe reported growth rates of revenue and operating profit. The operations,including the relevant growth rates, are therefore reviewed below at constantexchange rates to remove the distorting translation impact of these currencymovements and, unless stated otherwise, in this review references to operatingprofit are to operating profit before intangible amortisation. Changes in thelevel of revenue and profits at constant exchange rates have been calculated byretranslating the results from 2006 at the average exchange rates used for 2007. Overall revenue was £3,581.9 million (2006: £3,333.2 million) and operatingprofit was £242.9 million (2006: £226.3 million), in each case up 12% atconstant exchange rates. While the reported operating profit margin was steadyat 6.8%, the margin, excluding the impact of currency exchange and acquisitions,moved up to 6.9%. At constant exchange rates revenue in North America rose by 5%and operating profit increased 2%, with the lower level of profit increaselargely due to the impact of lower margin acquisitions. UK & Ireland showed a28% increase in revenue and a 25% rise in operating profit resulting from goodorganic growth and the positive impact of recent acquisitions. In ContinentalEurope revenue and operating profit increased by 12% and 21% respectively atconstant exchange rates due to good organic growth, continued improvement inoperating margins and the positive impact of current year acquisitions. Atconstant exchange rates the Rest of the World experienced a 10% increase in bothrevenue and operating profit. Adjusted earnings per share, after eliminating the effect of intangibleamortisation, were 45.1p (2006: 41.7p), an increase of 13% at constant exchangerates, while basic earnings per share were 39.8p (2006: 37.8p), an increase of10% at constant exchange rates. Return on average operating capital remainedconsistently high at 60.9%. After expenditure on acquisitions and the share buyback, partly offset by strong operating cash flow, net debt increased by £236.9million to £667.6 million resulting in a net debt to EBITDA ratio of 2.5 andinterest cover of 9 times. Acquisitions Spend on acquisitions rose to £197 million, primarily as a result of a majorexpansion in the Benelux, four noteworthy investments in the UK and Ireland, anentry into the promising Spanish market and two further acquisitions in NorthAmerica. As a result we not only expanded the Group into new countries but alsoextended our product offering and customer base in our existing operations. In January we announced two acquisitions in North America. Tec Products, a NewJersey based redistribution business with revenue of $14 million in 2006, isprincipally engaged in the supply of jan/san and associated products whileWestgate, also a New Jersey based redistribution business with revenue of $18million in 2006, supplies personal protection equipment in the eastern US andCanada. We entered the exciting, and so far unconsolidated, Spanish market in Februarywith our acquisition of Iberlim, a cleaning and hygiene business based nearBarcelona with 2006 revenue of €9 million. In August we acquired King Benelux,with pro forma revenue in 2006 of €125 million, which is principally engaged inthe distribution of products to the healthcare and contract cleaning sectors inthe Netherlands and the foodservice, retail and healthcare sectors in Belgium.This company is an excellent addition to our successful business in theNetherlands and also provides a significant business in Belgium. We announced in August the first of four UK & Ireland acquisitions with thepurchase of Coffee Point, a London based business engaged in the sale andoperation of vending machines and associated services for a broad customer base.This business, with revenue of £45 million in the year ended March 2007,substantially increased the size of our vending business to the point that weare now the largest vending operator in the UK. In October we completed theacquisition of Irish Merchants, a business based in Dublin with revenue of €45million in the year ended March 2007, which is involved in the distribution offoodservice disposables, janitorial supplies and beverage systems to the horeca,healthcare and retail sectors throughout Ireland. The acquisition of thiscompany, which was formerly associated with King Benelux, is a good strategicfit as it significantly increases the size of our business in Ireland andstrengthens our position there. Finally, in December we acquired Care Shop, aBolton based business which is a leading national supplier of consumables to theindependent care and nursing homes market and which had revenue of £19 millionin the year ended March 2007, and Rafferty, a distributor of guest amenityproducts to hotels throughout Ireland with revenue of £9 million in the yearended October 2007. Since the year end we have announced two further acquisitions. Gunter GuestSupplies was acquired in January. Based in Bremen, Germany, it supplies guestamenity products to hotels throughout Europe and had revenue of €9 million in2007. In February we purchased Prot Cap, a leading national supplier of personalprotection equipment based in Sao Paulo, which represents our first move intothe large and rapidly growing Brazilian market. It had revenue in 2007 of R$118million. Prospects The strong performance of the Group has continued into 2008 due to good organicgrowth bolstered by the positive impact from acquisitions. Despite the currentuncertainties in the wider economic environment, the combination of firm productprices, especially in paper, and new customer wins is supporting our underlyinggrowth rates in the coming period. In North America we believe that our business model, which sells a highproportion of our products to food related sectors, is resilient and shoulddevelop well. In addition the acquisitions made in previous periods arecontinuing to improve their profitability. We anticipate that the UK & Ireland business will continue to experience highgrowth rates driven by good organic growth resulting from new customer gains andthe integration of acquisitions made in the second half of last year. Thesynergies arising from the acquisitions of Coffee Point and Irish Merchants arealready being realised. In Continental Europe the broad based good organic growth across the businessarea and the operational improvements made in France should continue to bolsterour results moving forward. The integration of King Benelux is ongoing andprogressing well and Iberlim, our entry into Spain, is trading ahead ofexpectations. In the Rest of the World, our larger businesses in Australasia are performingwell and we expect improved results from our smaller healthcare business. Ourlatest acquisition, Prot Cap in Brazil, will positively impact this year'sresults. The continued strengthening of the Group in the international markets in whichwe compete and the opportunity for further growth through acquisitions, give usconfidence that the prospects are good and that our business will continue togrow successfully. North America Against a background of more difficult business conditions, at constant exchangerates revenue rose 5% to £1,839.0 million and operating profit by 2% to £123.3million. Slower economic growth and competitive pressures, particularly in the groceryand foodservice sectors, impacted our results compared to the strong performancein 2006. Additionally, some of our recent lower margin acquisitions are takinglonger to meet revenue expectations following the restructurings implemented tobuild long term profitable growth. However, these acquisitions are nowpositioned well for the future. In January we completed the acquisition of Tec Products, which is principallyengaged in the supply of jan/san and associated products through distributors,and of Westgate, which is a supplier of personal protection equipment throughdistributors in the eastern US and Canada. These, together with the fouracquisitions announced in 2006, have been successfully transferred onto ourcommon IT platform and have begun to realise the efficiencies gained by theconversion and as a result of integration of the businesses into our establishedoperations. All of these acquisitions were redistribution companies focused onthe foodservice, jan/san and safety sectors. Our grocery business remains our largest sector and, while pricing pressurespersist as the industry continues to consolidate, our national coverage issecond to none and we continue to win new business. Our sourcing expertise andlogistics platform uniquely position us to be able to respond to the differentneeds of our major customers and provide them with competitive advantage intheir markets. As part of the establishment of R3, a separate organisation to lead our salesand marketing in redistribution, we have committed resources and personnel bothto our foodservice redistribution business and to develop further the jan/sanbusiness. This sector allows us to increase our penetration into existingcustomers with new products as well as providing an opportunity for potentialnew customers. We continue to invest in new marketing tools, inventory, trainingand programmes that will enhance our capabilities and we have taken steps toadapt our operating model to the needs of these customers who traditionally havedifferent service requirements. The food processor business has shown good growth due to increased customerawareness about worker and food safety practices and consumer demands forproducts that require more innovative packaging solutions. The increased demandfor fresh cut produce provides us with opportunities to sell our value-addedprogrammes to both current and new customers. The convenience store sector continues to be attractive as the organic growth insmaller format stores is outpacing the growth seen in larger outlets. We operatefrom highly efficient and large warehouses and are consistently increasing thebreadth of our product offering to serve our customers better in this sector. Our recently acquired safety businesses represent a significant growthopportunity as the operating platform has started to drive efficiencies in thewarehouse, enabling us to service better the customers and to expand our productoffering. Imported products purchased jointly with our European safetybusinesses and plans to expand our private label programme in this sector willallow us to access a wider range of products and improve margins. Our Retail Resources business has provided new growth for us in the non-foodretail sector. Their unique operating supply management programme, combined withour national platform and common IT system, has allowed us to gain business insome new retail areas. The key to this success has been our ability to helpmanage store operating supply costs together with the ability to provide highrates of on time deliveries. We plan to expand this programme to our grocerycustomers and any other end user customers that require this supply managementservice. We continued to invest in the training of our personnel. Following thecompletion of our VIP (value, integrity and performance) training programme overthe last two years, we have initiated a new sales automation programme enablingour general managers and sales managers to track the results of such trainingand the progress of each sales representative. Additionally, we have launched ane-learning programme that contains training modules for all areas of thebusiness allowing employees to train on site and update their skills forenhanced job performance. This also includes best practice training in areassuch as inventory control, purchasing and health and safety. Our people continueto be one of the greatest strengths of our business. Finally, we have continued to roll out our radio frequency warehouse system,improve our truck routing and improve the efficiencies of our facilities. UK & Ireland The benefits of operational initiatives undertaken in 2006, good organic growthand the impact of the full year effect of 2006 acquisitions and acquisitions in2007 resulted in revenue increasing 28% to £994.3 million and operating profitup 25% to £74.5 million. The hotel, restaurant and catering (horeca) business had a strong year as webenefited from the operational restructuring undertaken, and the new businesswon, in 2006. We renewed our largest customer contract and broadened the rangethat we supply to a leading restaurant chain. Our ability to provide nationalaccounts with both catering disposables and catering equipment enabled us to winnew customers in the hotel, restaurant and pub sectors. At a regional level wereorganised the salesforce in order to be more responsive to local customers.During the year we piloted new vehicle routing and loading software and havestarted the roll out to all branches which will help us to improve our fuel andvehicle efficiency. Our retail supplies business had another successful year. We renewed our secondlargest customer contract and also won new business with a major supermarketchain. Following the opening of the Manchester warehouse extension in the secondhalf of 2006, we reviewed the warehouse layout and procedures and haveimplemented a number of productivity improvements within the operation. We alsobenefited from the full annual impact of Keenpac, which we acquired in December2006 and provides us with expertise in the paper bag and luxury packagingsectors. The business has traded in line with expectations with new business wonfrom leading supermarket and luxury brand customers. The cleaning and safety business continued to deliver growth. Greenhamsuccessfully retained a large government sector contract that demonstrated theability of Bunzl to provide a consolidated delivery of a broad range ofproducts. We also added new customers in the construction and utilities markets.The cleaning and hygiene business extended contracts with two national contractcleaners and introduced a new own label chemical range which has been accreditedwith the EU Eco-label. We successfully rolled out a new computer system into thecleaning and hygiene business and created a new website that has generatedencouraging levels of internet sales. Our vending business grew significantly in scale with the acquisition in Augustof Coffee Point. This has made us the market leader in the UK hot beveragevending market. The integration is ongoing with trading in line with our planand we have already combined the salesforces and merged a number of the brancheswhere overlaps existed. We are implementing a new computer system that willresult in additional efficiencies. In Ireland, our existing businesses performed well with growth in the horeca,cleaning and safety and retail businesses. The acquisition of Irish Merchants inOctober increases our overall scale in Ireland and strengthens our position inthe horeca, healthcare and retail sectors. Its product range and focus oncustomer service fit well with our existing operations and we expect to gaineconomies of scale and purchasing benefits in 2008. Our healthcare business grew significantly due principally to the first fullyear impact of Southern Syringe, the healthcare consumables business acquired in2006. Southern Syringe has progressed ahead of plan as we reviewed existingcontracts and implemented our operational procedures, resulting in improvedoperating margins, and we believe that we now have a solid base from which togrow this business. The Shermond business won new contracts for its nitrilegloves and retained its position on the NHS contract for gloves. In December weannounced the acquisition of Care Shop, a leading distributor to the independentcare and nursing homes sector, which provides us with a strong platform todevelop our offering into this part of the healthcare market. Continental Europe At constant exchange rates revenue increased by 12% to £616.0 million andoperating profit rose 21% to £50.0 million as continued strong organic sales andprofit growth was complemented by the acquisitions of both King Benelux andIberlim. Improved profitability also resulted from better purchasing, higherimports from low cost countries, tight cost control and operating efficiencygains. In France, our cleaning and hygiene business grew revenue in difficult marketconditions, with most growth again coming from larger national accounts. Bettermargin management, substantially higher sales of our own brand range ofproducts, Techline, and ongoing cost control helped profits to improve. The rollout of the new IT system continues and is progressing well. Our French personalprotection equipment business saw a small reduction in revenue as particularlystrong sales of avian influenza related products did not repeat in 2007.Nevertheless, the business managed to improve its margin and lower its costs toproduce a significant improvement in profits. In the Benelux, the newly acquired King Benelux business has performed ahead ofexpectations and considerable synergies are already being delivered. We haveimplemented a new ERP system in the Belgian business with the Dutch business tofollow later this year. Warehouse rationalisation in Belgium will also lead tofurther operating efficiencies. In the Netherlands, our existing retail businesssaw strong revenue growth from both existing and new customers as well asproduct range extension. Good margin management and cost efficiencies haveresulted in substantial profit growth. Our horeca business also achievedsubstantial sales growth from new account wins. In Germany, despite the loss of part of the business with a large customer andthe absence of the exceptional revenue from the 2006 FIFA World Cup, good salesgrowth was achieved. Margin pressure and higher transport costs were partiallyoffset by operating efficiencies. In Denmark, our retail business continued to grow revenue and at the same timeimprove its profitability as a change in business mix resulted in lower sales oflower margin products. A customer lost in 2006 was regained and betterpurchasing also improved the results. Costs remained well controlled leading toanother year of strong profit growth. Our Danish horeca business generatedstrong growth. As the business is reaching full capacity following rapidexpansion in recent years, a new warehouse to provide increased capacity will beopened by the end of 2008. Growth has remained strong in central Europe. In Romania we have relocated tolarger warehouses in Bucharest to cater for further anticipated strong growth.The retail business across the region improved its margin despite pricingpressures and benefited from further economies of scale and from its new ERPsystem while our cleaning and hygiene business grew revenues strongly followinga restructuring of its salesforce to improve focus and sales efficiency. Theincreased scale of the business has led to greater cost efficiencies. We acquired Iberlim at the end of February. Specialising in cleaning and hygieneproducts, it serves customers in Spain from one site near Barcelona. Performanceto date has been ahead of expectations and the business represents a goodplatform from which to pursue further growth in Iberia. Rest of the World Benefiting from the full year impact of acquisitions made in 2006 combined withcontinued strong organic growth across the region, at constant exchange ratesthe Australasia business increased both revenue and operating profit by 10% to£132.6 million and £10.8 million respectively. Our largest business experienced strong organic growth and significantimprovement in profitability by providing consolidation supply solutions totheir customers across the core sectors of healthcare, industrial, horeca andretail throughout Australia and New Zealand. In addition our catering equipmentconsumables business based in Queensland has complemented our offer by providinga wider range of products to existing customers and creating opportunities todevelop in new markets. Our food processor supplies businesses delivered strong growth over the previousyear. The two businesses are evolving into one complementary focused foodprocessor supplies business creating an excellent platform for continued growth.We have invested in additional key sales development resources to capitalise onnew business opportunities and infrastructure to support future growth. Our specialist healthcare business had a difficult year but has taken steps toimprove operational performance and is now well positioned to develop in thegrowing aged care sector. We are rolling out an electronic ordering system totheir customer base which delivers efficiencies by simplifying the orderingprocess and enhancing access to information online. To support the growth of the Australasia business and to enable it to operate ina more efficient manner, we continue to invest in IT initiatives that will bringbenefits to both our customers and suppliers. In 2007 we introduced RF scanningtechnology into our largest business with excellent results. This processincreases accuracy and in turn enhances our customer satisfaction by reducingcredits, as well as improving the order picking process. We plan to roll theprogramme out into the branch network throughout 2008. In February 2008 we acquired Prot Cap, a leading national supplier of personalprotection equipment based in Sao Paulo, which represents our first move intothe large and rapidly growing Brazilian market. Its results will be reportedwithin the Rest of the World business area. Consolidated income statementfor the year ended 31 December 2007 Growth Actual Constant 2007 2006 exchange exchange Notes £m £m rates rates-------------------- ------- ---------- ---------- -------- --------Revenue 2 3,581.9 3,333.2 7% 12%-------------------- ------- ---------- ---------- -------- -------- -------------------- ------- ---------- ---------- -------- --------Operating profit beforeintangible amortisation 242.9 226.3 7% 12%-------------------- ------- ---------- ---------- -------- -------- Intangible amortisation (24.4) (19.9)-------------------- ------- ---------- ---------- -------- --------Operating profit 2 218.5 206.4 6% 11%Finance income 3 21.1 19.6Finance cost 3 (48.5) (36.3)-------------------- ------- ---------- ---------- -------- --------Profit before income tax 191.1 189.7 1% 6%-------------------- ------- ---------- ---------- -------- --------Profit before income taxand intangible amortisation 215.5 209.6 3% 8%-------------------- ------- ---------- ---------- -------- -------- UK income tax (4.4) (9.1)Overseas income tax (56.6) (51.2)-------------------- ------- ---------- ---------- -------- --------Total income tax 4 (61.0) (60.3)-------------------- ------- ---------- ---------- -------- --------Profit for the yearattributable to the Company's equity holders 130.1 129.4 1% 5%-------------------- ------- ---------- ---------- -------- -------- Earnings per shareattributable to theCompany's equity holdersBasic 5 39.8p 37.8p 5% 10%-------------------- ------- ---------- ---------- -------- --------Diluted 5 39.6p 37.5p 6% 10%-------------------- ------- ---------- ---------- -------- -------- Dividend per share 6 18.7p 17.0p 10%-------------------- ------- ---------- ---------- -------- -------- Consolidated statement of recognised income and expensefor the year ended 31 December 2007 2007 2006 £m £m------------------------------- ----------- ----------Profit for the year 130.1 129.4 Actuarial gain on pension schemes 10.3 17.4Deferred tax on actuarial gain (3.0) (5.5)Currency translation differences arising in year* 8.1 (7.1)Loss recognised in cash flow hedge reserve (1.1) (0.3)Movement from cash flow hedge reserve to income statement 0.3 (0.3)------------------------------- ----------- ----------Net income recognised directly in equity 14.6 4.2------------------------------- ----------- ----------Total recognised income for the year attributable tothe Company's equity holders 144.7 133.6------------------------------- ----------- ---------- *Currency translation differences for 2007 of £8.1m (2006: £(7.1)m) are net oflosses of £32.3m (2006: gains of £17.6m) taken to equity as a result ofdesignated effective net investment hedges. Consolidated balance sheetat 31 December 2007 2007 2006 £m £m-------------------------------- ----------- ----------AssetsProperty, plant and equipment 91.0 74.3Intangible assets 990.3 776.7Derivative assets 11.3 5.4Deferred tax assets 0.5 4.1-------------------------------- ----------- ----------Total non-current assets 1,093.1 860.5 Inventories 331.6 290.8Income tax receivable 4.4 2.7Trade and other receivables 575.4 521.2Derivative assets 1.5 0.1Cash and deposits 76.0 49.0-------------------------------- ----------- ----------Total current assets 988.9 863.8-------------------------------- ----------- ----------Total assets 2,082.0 1,724.3-------------------------------- ----------- ---------- EquityShare capital 112.4 112.0Share premium 124.6 119.8Merger reserve 2.5 2.5Capital redemption reserve 8.6 8.6Cash flow hedge reserve (1.1) (0.3)Translation reserve 9.5 1.4Retained earnings 219.7 244.0-------------------------------- ----------- ----------Total equity attributable to the Company's equity 476.2 488.0holders LiabilitiesInterest bearing loans and borrowings 656.4 456.9Retirement benefit obligations 13.2 37.5Other payables 10.6 5.6Provisions 50.6 44.6Deferred tax liabilities 92.3 73.0-------------------------------- ----------- ----------Total non-current liabilities 823.1 617.6 Bank overdrafts 20.3 23.9Interest bearing loans and borrowings 79.4 4.3Income tax payable 60.5 58.4Trade and other payables 611.8 524.5Derivative liabilities 1.5 0.7Provisions 9.2 6.9-------------------------------- ----------- ----------Total current liabilities 782.7 618.7-------------------------------- ----------- ----------Total liabilities 1,605.8 1,236.3-------------------------------- ----------- ----------Total equity and liabilities 2,082.0 1,724.3-------------------------------- ----------- ---------- Consolidated cash flow statementfor the year ended 31 December 2007 2007 2006 £m £m------------------------------ ----------- ----------Cash flow from operating activitiesProfit before income tax 191.1 189.7Adjustments for non-cash items:depreciation 15.9 14.6intangible amortisation 24.4 19.9share based payments 4.8 3.0Working capital movement 13.5 (20.0)Finance income (21.1) (19.6)Finance cost 48.5 36.3Provisions and pensions (9.0) (5.7)Special pension contribution (9.5) (5.0)Other (0.6) 1.0------------------------------ ----------- ----------Cash generated from operations 258.0 214.2Income tax paid (65.1) (40.5)------------------------------ ----------- ----------Cash inflow from operating activities 192.9 173.7------------------------------ ----------- ---------- Cash flow from investing activitiesInterest received 5.3 8.5Purchase of property, plant and equipment (19.9) (15.8)Sale of property, plant and equipment 3.3 4.3Purchase of businesses (191.7) (156.7)Other - (1.0)------------------------------ ----------- ----------Cash outflow from investing activities (203.0) (160.7)------------------------------ ----------- ---------- Cash flow from financing activitiesInterest paid (33.6) (24.9)Dividends paid (56.2) (53.3)Increase/(decrease) in short term loans 34.9 (28.5)Increase in long term loans 192.1 141.4Net proceeds from employee shares 1.0 5.2Purchase of own shares into treasury (100.0) (63.1)------------------------------ ----------- ----------Cash inflow/(outflow) from financing activities 38.2 (23.2)------------------------------ ----------- ---------- Exchange gain/(loss) on cash and cash equivalents 2.5 (1.4) Increase/(decrease) in cash and cash equivalents 30.6 (11.6)------------------------------ ----------- ---------- Cash and cash equivalents at start of year 25.1 36.7------------------------------ ----------- ----------Increase/(decrease) in cash and cash equivalents 30.6 (11.6)------------------------------ ----------- ----------Cash and cash equivalents at end of year 55.7 25.1------------------------------ ----------- ---------- Notes 1. Basis of preparation The consolidated financial statements for the year ended 31 December 2007 havebeen approved by the directors and prepared in accordance with InternationalFinancial Reporting Standards as adopted by the EU including interpretationsissued by the International Accounting Standards Board. The consolidatedfinancial statements have been prepared under the historical cost convention,with the exception of certain items which are measured at fair value. Bunzl plc's 2007 Annual Report will be despatched to shareholders at the end ofMarch 2008. The financial information set out herein does not constitute theCompany's statutory accounts for the year ended 31 December 2007 but is derivedfrom those accounts. Statutory accounts for 2007 will be delivered to theRegistrar of Companies following the Company's Annual General Meeting which willbe held on 14 May 2008. 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 2006 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 & Continental Rest of the America Ireland Europe World Corporate TotalYear ended 31 £m £m £m £m £m £mDecember 2007 -------------------- --------- --------- --------- --------- --------- ---------Revenue 1,839.0 994.3 616.0 132.6 3,581.9-------------------- --------- --------- --------- --------- --------- --------- -------------------- --------- --------- --------- --------- --------- --------- Operating profit/(loss) beforeintangibleamortisation 123.3 74.5 50.0 10.8 (15.7) 242.9-------------------- --------- --------- --------- --------- --------- --------- Intangibleamortisation (5.8) (3.0) (14.5) (1.1) - (24.4)-------------------- --------- --------- --------- --------- --------- --------- Operating profit/(loss) 117.5 71.5 35.5 9.7 (15.7) 218.5Finance income 21.1Finance cost (48.5)-------------------- --------- --------- --------- --------- --------- --------- Profit before income tax 191.1-------------------- --------- --------- --------- --------- --------- --------- Profit before income tax and intangibleamortisation 215.5-------------------- --------- --------- --------- --------- --------- --------- Income tax (61.0)-------------------- --------- --------- --------- --------- --------- --------- Profit for the year 130.1-------------------- --------- --------- --------- --------- --------- --------- North UK & Continental Rest of the Year ended 31 America Ireland Europe World Corporate Total December 2006 £m £m £m £m £m £m-------------------- --------- --------- --------- --------- --------- --------- -------------------- --------- --------- --------- --------- --------- --------- Revenue 1,896.8 774.6 544.7 117.1 3,333.2-------------------- --------- --------- --------- --------- --------- --------- Operating profit/(loss) beforeintangibleamortisation 131.2 59.7 40.9 9.6 (15.1) 226.3-------------------- --------- --------- --------- --------- --------- --------- Intangibleamortisation (4.8) (0.8) (13.3) (1.0) - (19.9)-------------------- --------- --------- --------- --------- --------- --------- Operatingprofit/(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 intangibleamortisation 209.6-------------------- --------- --------- --------- --------- --------- --------- Income tax (60.3)-------------------- --------- --------- --------- --------- --------- --------- Profit for theyear 129.4-------------------- --------- --------- --------- --------- --------- --------- 3. Finance income/(cost) 2007 2006 £m £m---------------------------- --------- --------Deposits 0.7 1.2Interest income from foreign exchange contracts 4.8 6.2Expected return on pension scheme assets 14.2 11.6Other finance income 1.4 0.6--------------------------- --------- --------Finance income 21.1 19.6--------------------------- --------- -------- Loans and overdrafts (34.9) (22.4)Interest expense from foreign exchange contracts (0.6) (0.3)Interest charge on pension scheme liabilities (12.6) (12.0)Fair value loss on US dollar bond (7.1) (5.4)Fair value gain on interest rate swaps 7.1 5.4Other finance expense (0.4) (1.6)--------------------------- --------- ---------Finance cost (48.5) (36.3)--------------------------- --------- --------- 4. Income tax A tax charge at a rate of 31.6% (2006: 32.0%) has been provided on the profitbefore tax and intangible amortisation. Including the impact of intangibleamortisation of £24.4m (2006: £19.9m) and the related deferred tax of £7.1m(2006: £6.7m), the overall tax rate is 31.9% (2006: 31.8%). 5. Earnings per share 2007 2006 £m £m--------------------------- --------- --------- ---------Profit for the year 130.1 129.4Adjustment 17.3 13.2--------------------------- --------- --------- ---------Adjusted profit* 147.4 142.6--------------------------- --------- --------- --------- Basic weighted average ordinary shares in issue (million) 326.9 342.1Dilutive effect of employee share plans 1.8 2.6(million) --------- --------- ------------------------------------Diluted weighted average ordinary shares 328.7 344.7(million) --------- --------- ------------------------------------ Basic earnings per share 39.8p 37.8pAdjustment 5.3p 3.9p--------------------------- --------- --------- ---------Adjusted earnings per share* 45.1p 41.7p--------------------------- --------- --------- ---------Diluted basic earnings per share 39.6p 37.5p--------------------------- --------- --------- --------- * Adjusted profit and adjusted earnings per share exclude the charge forintangible amortisation and the related deferred tax. This adjustment removes anon-cash charge which is not taken into account by management when assessing theunderlying performance of the businesses. 6. Dividends Per share Total -------- -------- -------- -------- 2007 2006 2007 2006 £m £m------------------------- -------- -------- -------- --------2005 final 10.8p 36.52006 interim 5.3p 17.62006 final 11.7p 38.62007 interim 5.8p 18.6------------------------- -------- -------- -------- --------Total 17.5p 16.1p 57.2 54.1------------------------- -------- -------- -------- -------- The 2007 final dividend of 12.9p per share will be paid on 3 July 2008 toshareholders on the register on 9 May 2008. Total dividends for the year to which they relate are: Per share -------- -------- 2007 2006------------------------------ -------- --------Interim 5.8p 5.3pFinal 12.9p 11.7p------------------------------ -------- --------Total 18.7p 17.0p------------------------------ -------- -------- 7. Cash and cash equivalents and net debt 2007 2006 £m £m--------------------------- --------- ---------Cash at bank and in hand 69.0 45.2Short term deposits repayable in less than three months 7.0 3.8---------------------------------- --------- ---------Cash and deposits 76.0 49.0Bank overdrafts (20.3) (23.9)--------------------------- --------- ---------Cash and cash equivalents 55.7 25.1--------------------------- --------- --------- Interest bearing loans and borrowingsCurrent liabilities (79.4) (4.3)Non-current liabilities (656.4) (456.9)Derivative asset - fair value of interest rateswaps hedging fixed interest rate borrowings 12.5 5.4--------------------------- --------- ---------Net debt (667.6) (430.7)--------------------------- --------- --------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Bunzl