9th May 2007 07:01
C&C Group Plc09 May 2007 C&C GROUP PLC PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2007 Dublin, London, 9 May, 2007: C&C Group plc ('C&C' or the 'Group'), a leadingmanufacturer, marketer and distributor of branded beverages in Ireland and theUK, today announced its results for the year ended 28 February 2007. Financial Highlights • Revenue (i) growth of 27% to €981.4 million. • Operating Profit (i) growth of 77% to €212.6 million. • Operating Margin increase of 6.1 percentage points to 21.7%. • Adjusted EPS growth of 84% to 54.9 cent; basic EPS of 63.8 cent. • Final proposed dividend of 15 cent per share; total dividend of 27 cent per share - an increase of 80%. • €150 million share buy-back announced. • Free cash flow of €71 million before disposal of Snacks division (30% of EBITDA). • Net debt reduced by €78 million to €305 million. Operating Highlights • Achieved national distribution for Magners in Great Britain - delivering a GB On Trade LAD(ii) market share of 1.7% (iii) and turnover weighted distribution of 67% (iii). • Cider manufacturing capability transformed by major capital investment programme. • Increased Bulmers' market share of the Irish LAD market by 50 bps to 10.5%.(iv) • Tullamore Dew volume depletions (v) increased by 16%. • Soft Drinks operating margin increased by 1.5 percentage points to 8.3%. (i) Comparisons are for continuing operations before exceptional items and are on a constant currency basis. (ii) Long Alcohol Drinks (Beer, Cider, RTD's). (iii) Moving Annual Total (MAT) to Jan 2007 per A.C. Nielsen. (iv) Revenue Commissioners (Cider/Beer) (v) Defined as sales by distributors to customers. Performance Highlights Maurice Pratt, C&C Group Chief Executive Officer commented, "C&C is pleased toreport continuing earnings growth and progress against all financial measures.We will continue to invest in the sustainable growth opportunities presented byMagners, Bulmers, and Tullamore Dew". Investors and analysts Irish Media International Media Mark Kenny/Jonathan Neilan Paddy Hughes/Ann-Marie Curran Edward OrlebarK Capital Source Drury Communications M CommunicationsTel: +353 1 631 5500 Tel: +353 1 260 5000 Tel: +44 207 153 1523Email: c&[email protected] Email: [email protected] Email: [email protected] Full year results for the year ended 28 February 2007 C&C is reporting Operating Profit of €212.6 million, an increase of 77%(i) onthe previous year. The outcome represents adjusted earnings per share of 54.9cent for the year ended 28 February 2007. Free cash flow of €71.1 million wasgenerated in the period before disposal proceeds from the sale of the Snacksdivision. C&C's strategy is to maintain profitable growth through brandmanagement expertise by generating and exploiting higher margin growthopportunities for Cider both in Ireland and internationally and for Spirits &Liqueurs internationally. This, in turn, supports strong cash generationcapability and a progressive dividend policy. Dividends Subject to shareholder approval, the proposed final dividend of 15 cent pershare will be paid on 17 July 2007 to ordinary shareholders registered at theclose of business on 18 May 2007. This dividend is subject to Irish DividendWithholding Tax (where applicable). The Group's full year dividend will,therefore, amount to 27 cent per share, an increase of 80% on the previous year.A scrip dividend alternative will be available. Disposal C&C completed the disposal of its snacks subsidiary, Tayto Crisps Limited, on21st September 2006 for a net consideration of €59.8 million. The proceedsarising from this disposal were utilised to reduce debt. Capital Structure C&C's business has strong underlying cash flow capability and strong cashconversion. Given these business characteristics and its debt levels, C&Cintends to return cash, surplus to the Group's current requirements toshareholders as part of a capital management programme, by means of itson-market share repurchase authority. While this authority is in respect ofapproximately 10% of the Company's issued share capital, the aggregate amount offunds expected to be available for return is €150 million, being the approximateamount of retained income since the Group's Initial Public Offering in May 2004.At the current market price of €12.60 this would represent approximately 4% ofthe existing issued share capital of the Company. Any share buy backs effected will be implemented in accordance with theprovisions of the repurchase authority received at last year's annual generalmeeting (to be renewed at the annual general meeting in 2007); the requirementsof the Listing Rules of the Irish Stock Exchange; and, where the Boarddetermines that they are in the best interests of the Company and itsshareholders as a whole. The Company does not expect to commence to repurchaseany shares until June, 2007. The Company's Irish stockbrokers, Davy, willconduct the share repurchases. Shares repurchased will be cancelled immediatelyon acquisition. Capacity Expansion & Capital Expenditure C&C's net capital expenditure for 2006/07 was €79.4 million and comprised grosscapital expenditure of €93.4 million and asset disposals of €14.0 million. Thisexpenditure included an €80 million investment in the expansion of cidermanufacturing capacity in Clonmel. The first phase of capacity expansion wascompleted in May 2006 on time and within budget. The Group has now commenced asecond phase of capacity expansion which will involve capital expenditure ofapproximately €160 million in the 2007/08 fiscal year. This increased capacitywill start to come on stream from May 2007 and provide C&C with cidermanufacturing and bottling capacity for approximately 500 million litresannually which is more than double 2006/07 sales volume. (i) Comparisons are for continuing operations before exceptional items and areon a constant currency basis. Outlook - Investing for Sustainable Growth C&C's primary focus in 2007/08 will be to capitalise fully on the opportunitiesfor Magners in all trade channels in Great Britain and to deliver further marketshare gains for Bulmers in Ireland. This will be supported by increasedmanufacturing capacity coming on stream and increased marketing investment. In addition, looking to the medium term, the Group is now assessing theprospects for Magners in Europe by carrying out structured market tests in Spain(Barcelona) and Germany (Munich). It is expected that it will be October 2007before any initial conclusion can be drawn as to Magners' prospects in thesemarkets. C&C reiterates its current expectation that Operating Profit growth for the yearto February 2008 will be in the range of 15-25%. A pre-price increase sell-in inFebruary 2007 on the Group's cider brands restricted sales in March 2007.Allowing for this, fiscal year 2007/08 to date is in line with this expectation. OPERATIONS REVIEW Summary On a comparable basis,(i) Revenue and Operating Profit increased by 27% and 77%respectively. This principally reflects growth in the Cider division arising from theexcellent performance of Magners in Great Britain and Bulmers' continuingout-performance of the Irish LAD Market. Operating profit margin increased by6.1 percentage points which reflects the strong growth in the high margin Ciderdivision. Operating margins increased in the Cider and the Soft Drinks divisionsbut declined in the Spirits & Liqueurs and Distribution divisions. Summary Group income statement (before exceptional items) Year ended Year ended Year ended 28 February 2006 28 February 2006 28 February 2007 Constant Currency Revenue •m 981.4 769.3 770.7Growth % 27.6 27.3Operating Profit •m 212.6 119.6 120.0Growth 77.8 77.2Operating Profit Margin % 21.7 15.5 15.6Net Finance Charges •m (14.4) (18.6)Taxation •m (22.5) (8.5)Discontinued Operation •m 3.5 4.3Profit attributable to •m 179.2 96.8equity shareholdersGrowth % 85.1 Profit attributable to ordinary shareholders increased by 85% in the year. Inaddition to Operating Profit growth, this increase reflects a decline ininterest charges arising from a reduction in the level of debt over the period.The effective tax rate in the period increased from 8.4% to 11.4% due to ahigher proportion of net income being subject to UK corporation tax rates andthe abnormally low effective rate in 2006/07. (i) Comparisons are based on continuing operations before exceptional items and on a constant currency basis. DIVISIONAL REVIEW - CIDER Year ended Year ended Year ended Growth 28 February 2007 28 February 2006 28 February 2006 Year-on-Year •m •m (constant currency) (constant currency) •m % Revenue 517.9 278.4 278.8 85.8Operating Profit 178.9 85.3 85.4 109.5Operating Margin % 34.5 30.6 30.6 Revenue for the Cider division of €517.9 million represents an 85.8% increase on2006 and reflects an 82% increase in sales volume. Operating Profit increased by109% to €178.9 million against €85.4 million in 2006. Operating margin, at34.5%, increased by 3.9 percentage points year-on-year. The performance of Magners in the year reflects the success of the nationalroll-out in Great Britain which commenced in March 2006. At 31 January 2007,Magners had achieved 1.7% MAT(i) share of Great Britain on-trade LAD(ii) marketand a turnover-weighted distribution of 67%(i). Performance in the first halfof the financial year was enhanced by exceptional summer weather. The brand wasconstrained during the year by an inability to supply elements of the GreatBritain market due to insufficient manufacturing capacity at critical periods.Overall volume growth for the brand was 232%. Magners continued to show strong growth in Northern Ireland in the periodrecording a volume increase of 16% and its share of the on-trade LAD marketincreased in the year from 6.4% to 7.5%. In relation to Bulmers, the overall Irish LAD market increased by 0.5%(iii) inthe year comprising a decline of 2.5%(i) in the on-trade and growth of 15% inthe off-trade (i). Sales volume of the Bulmers cider brand increased by 6% onthe prior year and continued to increase its share of the overall LAD market.Bulmers' share of the on-trade LAD market increased from 10.0% to 10.6% in theperiod while its share of the off-trade LAD market increased from 7.2% to 7.9%(i). The increase in the operating margin of the Cider division reflects the scale ofgrowth in revenue. Marketing investment increased by 89% and, as a percentage ofrevenue, increased by 0.2 percentage points year-on-year. (i) AC Nielsen(ii) Market statistics refer to volume(iii) Revenue Commissioners DIVISIONAL REVIEW - SPIRITS & LIQUEURS Year ended Year ended Year ended Growth 28 February 2007 28 February 2006 28 February 2006 Year-on-Year •m •m (constant currency) (constant currency) •m % Revenue 79.1 68.8 69.2 14.3Operating Profit 17.7 16.3 16.6 6.6Operating Margin % 22.4 23.7 24.0 Revenue for the Spirits & Liqueurs division of €79.1 million represents a 14.3%increase on 2006 levels. Operating Profit increased 6.6% to €17.7 millionagainst €16.6 million in 2006. Operating margin, at 22.4%, decreased by 1.6percentage points year-on-year. Overall volume shipments increased 11% in the period. It is estimated thatdepletions growth in the period was approximately 9%. C&C's premium Irish whiskey brand Tullamore Dew performed particularly well withshipment growth of 21% and depletions growth of 16% in the year. Volume gainswere achieved across a wide number of markets in Europe and in the US. Shipments of C&C's Irish cream liqueur brand, Carolans, increased by 7% in theperiod. The brand performed well across a range of markets, and showed strongrecovery in North America, its principal market. Depletions growth in the periodwas 8%. The decrease in operating margin for the division mainly reflects aprofit-neutral restructuring in the pricing/marketing investment arrangementswith new distributors who were appointed in January 2006. DIVISIONAL REVIEW - SOFT DRINKS Year ended Year ended Year ended Growth 28 February 2007 28 February 2006 28 February 2006 Year-on-Year •m •m (constant currency) (constant currency) •m % Revenue 185.2 187.6 187.8 (1.4)Operating Profit 15.3 12.7 12.7 20.5Operating Margin % 8.3 6.8 6.8 Revenue for the Soft Drinks division of €185.2 million represents a 1.4% declineon 2006 levels. Operating Profit increased to €15.3 million from €12.7 millionin 2006. Operating margin, at 8.3%, increased by 1.5 percentage pointsyear-on-year. The decrease in Revenue in the division reflects the loss of the Danone waterbrands in November 2005. On a like-for-like basis, revenue increased by 3.9% inthe year. At the start of the year C&C set an objective to stabilise performancewithin the soft drinks business with the appointment of new leadership. The 2006/07 financial performance has exceeded that objective. The Soft Drinks market(i) grew by 3.7% in the year reflecting, continued stronggrowth in bottled water, sport and energy drinks and cordials and a broadly flatcarbonates market. C&C volumes in the Republic of Ireland declined by 2.7% inthe period. Excluding the impact of the loss of the Danone brands, volumes inthe Republic of Ireland increased by 3.9% in the year. The increase in operating margins from February 2006 to February 2007 reflectedthe mix benefit of a strong volume performance in the licensed channel and areduction in marketing expenditure. (i) Carbonated soft drinks/bottled water volumes for Republic of Ireland per Canadean DIVISIONAL REVIEW - DISTRIBUTION Year ended Year ended Year ended Growth 28 February 2007 28 February 2006 28 February 2006 Year-on-Year •m •m (constant currency) (constant currency) •m % Revenue 199.2 234.5 234.9 (15.2)Operating Profit 0.7 5.3 5.3 (86.8)Operating Margin % 0.4 2.3 2.2 Revenue for the Distribution division of €199.2 million represents a 15.2%decline on 2006 levels. Operating Profit declined by 86.8% to €0.7 millioncompared to €5.3 million in 2006. Operating margin at 0.4% fell by 1.8 percentage points year-on-year. The decline in Revenue and Operating Profit was mainly due to the loss of theAllied Domecq brands; weaker demand for premium wines; and a reduced margin onLAD agency brands. The agency for the Fosters wine brands ceased from January 2007, but this had nomaterial impact on the results for the year. FINANCE REVIEW Cash Flow Free cash flow of €71.1m represented 30% of EBITDA compared with 62% in the yearended 28 February 2006. This performance reflected a significant investment inboth Working Capital and Fixed Assets in the Cider division to support salesvolume growth. A summary Cash Flow for the year ended 28 February 2007 is set out below: Year ended Year ended 28 February 2007 28 February 2006 •m •m Operating Profit (i) 216.4 124.7Depreciation 21.4 19.6 EBITDA 237.8 144.3Share Based Employee Benefits 4.3 1.1Pension Prepayment (6.0) (0.4)Net Capital Expenditure (79.4) (9.9)Working Capital (47.3) (9.8) Operating Cash Flow 109.4 125.3Re-Organisation Costs - (10.9)Net Finance Charges (13.9) (17.5)Taxation Payments (24.4) (8.0) Free Cash Flow (FCF) 71.1 88.9 FCF/EBITDA 30% 62% (i) Before exceptional items. Working Capital The cash outflow on working capital was driven by increased investment in theCider division on foot of the expansion of Magners' volumes. The increasereflects higher levels of fresh apple juice stock for anticipated volume growthand a build up of finished goods stocks in advance of increased productioncapacity coming on stream in 2007/08. Net Capital Expenditure Net capital expenditure for the period of €79.4 million comprised gross capitalexpenditure of €93.4 million and asset disposals of €14.0 million. The grossspend included expenditure of €80 million on Cider capacity. This spendrepresents the first phase of manufacturing capacity expansion which wascompleted in May 2006 and the commencement of the second phase of expansionwhich is currently under way. Disposals related to the sale of surplus warehousecapacity. Finance Charges The reduction in finance charges reflects the reduced debt levels resulting frompositive cashflows (€17.9 million) and proceeds from the disposal of the Snacksdivision (€59.8 million). The interest rate payable on debt averaged 4% for the year, which was in linewith the average rate for year ended 28 February 2006. Future interest rate exposure is partially hedged at the following interestrates (excluding margin): Fiscal year 2008 €200 million hedged at 3.3%Fiscal year 2009 €100 million hedged at 3.1%Fiscal year 2010 €100 million hedged at 3.1%Fiscal year 2011 €50 million hedged at 3.5% Taxation The tax charge for the year represents an effective tax rate on profit beforeexceptional items of 11.4%. The excess over 10% (the effective rate in Ireland)is principally due to a portion of Magners' profits being subject to higher UKtax rates. The prior year effective tax rate of 8.4% includes the write back of provisionsno longer required. Net Debt Net debt at 28 February 2007 was €305.4 million, which was €77.7 million lowerthan at the beginning of the year. The movement is analysed as follows: •m Free Cash Flow in period 71.1Dividends (54.7)Disposal of Snacks division 59.8Other 1.5 Reduction in Net Debt 77.7 Debt Ratios are as follows: (i) Net Debt to EBITDA 1.3 (ii) Net Debt to EV(i) 8% Foreign Exchange Exchange rate movements in the year positively affected Operating Profit by €0.4million. This arises from transaction exposures in the Spirits & Liqueurs andCider divisions for the US Dollar and the Canadian Dollar (€0.3 million) andSterling (€0.1 million). Pensions Pension fund deficits, calculated in accordance with the relevant accountingstandards, amounted to €42.8 million (net of deferred tax of €8.7 million) onthe balance sheet at 28 February 2007. The most recent actuarial valuations at1 January 2006 showed a deficit in the group schemes on an ongoing funding basisof €22 million. (i) Enterprise value Comparative reporting Profits for each division in the Operating and Financial Review are shown atconstant exchange rates for transactions in relation to the Spirits and Liqueursand Cider divisions; and for translation in relation to the Group Sterlingdenominated subsidiaries. The reconciliation to reported figures is outlinedbelow. FX FX Transaction Year ended Previously Translation 28 Feb '06 Reported Comparative Year ended 28 Feb'06 •m •m •m •mRevenueCider 278.4 0.1 0.3 278.8Spirits & liqueurs 68.8 - 0.4 69.2Soft drinks & snacks 187.6 0.2 - 187.8Distribution 234.5 0.4 - 234.9 Total 769.3 0.7 0.7 770.7 Operating ProfitCider 85.3 - 0.1 85.4Spirits & liqueurs 16.3 - 0.3 16.6Soft drinks & snacks 12.7 - - 12.7Distribution 5.3 - - 5.3 Total 119.6 0.0 0.4 120.0 Special note regarding forward-looking information Some statements in this Announcement are forward-looking. They represent ourexpectations for our business, and involve risks and uncertainties. We havebased these forward-looking statements on our current expectations andprojections about future events. We believe that our expectations andassumptions with respect to these forward-looking statements are reasonable.However, because they involve known and unknown risks, uncertainties and otherfactors, which are in some cases beyond our control, our actual results orperformance may differ materially from those expressed or implied by suchforward-looking statements. Group income statement For the year ended 28 February 2007 Year ended 28 February 2007 Year ended 28 February 2006 Before Before exceptional Exceptional exceptional Exceptional items items Total items items Total •m •m •m •m •m •m Revenue 981.4 - 981.4 769.3 - 769.3 Operating costs (768.8) (8.3) (777.1) (649.7) 2.8 (646.9) Operating profit 212.6 (8.3) 204.3 119.6 2.8 122.4 Finance income 1.9 - 1.9 0.9 - 0.9Finance costs (16.3) - (16.3) (19.5) - (19.5) Profit before tax 198.2 (8.3) 189.9 101.0 2.8 103.8 Income tax expense (22.5) - (22.5) (8.5) (0.3) (8.8) Profit from continuing 175.7 (8.3) 167.4 92.5 2.5 95.0activities Discontinued operationProfit from discontinued 3.5 37.3 40.8 4.3 (3.5) 0.8operation Profit for the year 179.2 29.0 208.2 96.8 (1.0) 95.8attributable to equityshareholders Basic earnings per share 63.8c 29.6c(cent)Diluted earnings per share 62.9c 29.4c(cent) Continuing operationsBasic earnings per share 51.3c 29.4c(cent)Diluted earnings per share 50.6c 29.2c(cent) Group statement of recognised income and expenseFor the year ended 28 February 2007 2007 2006 •m •mIncome and expense recognised directly in equity:Exchange difference arising on the net investment in 0.2 0.4foreign operationsMovement in cashflow hedging reserve 3.8 2.4Deferred tax liability on cashflow hedges (0.4) (0.2)Actuarial profit/(loss) on defined benefit pension 1.5 (6.1)schemesDeferred tax on defined benefit pension schemes 0.5 1.5 Total income and expense recognised directly in equity 5.6 (2.0) 208.2 95.8 Profit attributable to equity shareholders Total recognised income and expense for the year 213.8 93.8attributable to equity shareholders Group balance sheetAs at 28 February 2007 2007 2006 •m •mASSETSNon-current assetsGoodwill 426.9 461.9Property, plant & equipment 212.4 134.1Derivative financial assets 3.7 1.0Deferred tax 8.7 9.1 651.7 606.1Current assetsInventories 97.8 55.1Trade & other receivables 138.8 114.0Derivative financial assets 2.3 -Cash & cash equivalents 40.7 44.5Assets held for resale - 6.8 279.6 220.4 TOTAL ASSETS 931.3 826.5 EQUITYShare capital 3.3 3.3Share premium 32.8 18.6Other reserves 33.1 26.0Retained income 315.3 171.2 Total equity 384.5 219.1 LIABILITIESNon-current liabilitiesInterest bearing loans & borrowings 316.1 407.6Derivative financial liabilities - 0.7Retirement benefit obligations 51.5 58.9Provisions 1.3 1.9Deferred tax 5.0 5.7 373.9 474.8 Current liabilitiesInterest bearing loans & borrowings 30.0 20.0Derivative financial liabilities 4.2 2.5Trade & other payables 132.5 102.7Current tax liabilities 6.2 7.4 172.9 132.6 Total liabilities 546.8 607.4 TOTAL EQUITY & LIABILITIES 931.3 826.5 Group cash flow statementFor the year ended 28 February 2007 2007 2006 •m •m CASH FLOWS FROM OPERATING ACTIVITIESProfit for the year 208.2 95.8Finance income (1.9) (0.9)Finance costs 16.3 19.5Income tax expense 23.0 8.9Depreciation of property, plant & equipment 21.4 19.6Profit on disposal of property, plant & equipment (4.6) (6.6)Profit on disposal of subsidiary (32.9) -Goodwill impairment 8.3 -Charge for share-based employee benefits 4.3 1.1Contributions paid less pensions charged to profit (6.0) (0.4) 236.1 137.0 Increase in inventories (43.5) (5.6)Increase in trade & other receivables (31.4) (17.9)Increase in trade & other payables 27.6 10.8 188.8 124.3 Interest received 1.9 0.9Interest paid and similar costs (15.8) (18.4)Income taxes paid (24.4) (8.0) Net cash inflow from operating activities 150.5 98.8 CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant & equipment (93.4) (24.7)Sale of property, plant & equipment 14.0 14.8Proceeds on disposal of subsidiary 59.8 - Net cash outflow from investing activities (19.6) (9.9) CASH FLOWS FROM FINANCING ACTIVITIESShares issued on exercise of share options 2.0 -Bank loans repaid (82.0) (40.0)Issue costs paid - (0.5)Dividends paid (54.7) (29.9) Net cash outflow from financing activities (134.7) (70.4) Net (decrease)/increase in cash & cash equivalents (3.8) 18.5 Cash & cash equivalents at beginning of year 44.5 26.0 Cash & cash equivalents at end of year 40.7 44.5 Reserves Group Share Share Capital Capital Cashflow Share- Currency Retained Total Redemption Hedging based Translation Capital Premium Reserve Payments Earnings Reserve Reserve Reserve Reserve •m •m •m •m •m •m •m •m •m At 1 March 2005 3.2 3.4 0.3 24.9 (3.7) 0.6 0.2 125.2 154.1Total recognised income - - - - 2.2 - 0.4 91.2 93.8and expense for the yearDividend on ordinary 0.1 15.2 - - - - - (45.2) (29.9)sharesEquity settled shared - - - - - 1.1 - - 1.1based payments At 28 February 2006 3.3 18.6 0.3 24.9 (1.5) 1.7 0.6 171.2 219.1 Total recognised income - - - - 3.4 - 0.2 210.2 213.8and expense for the yearDividend on ordinary - 12.2 - - - - - (66.9) (54.7)sharesExercised share options - 2.0 - - - (0.8) - 0.8 2.0Equity settled share - - - - - 4.3 - - 4.3based payments At 28 February 2007 3.3 32.8 0.3 24.9 1.9 5.2 0.8 315.3 384.5 NOTE TO THE PRELIMINARY ANNOUNCEMENT 1. Basis of preparation The Group and individual financial statements of the Company are prepared on thehistorical cost basis and the measurement at fair value of derivative financialinstruments, pension obligations and share based payments. The accountingpolicies have been applied consistently by Group entities and for all periodspresented. The financial statements are presented in euro millions to onedecimal place. The preparation of financial statements in conformity with IFRS requires the useof certain critical accounting estimates. In addition, it requires managementto exercise judgment in the process of applying the Group and Company accountingpolicies. The areas involving a high degree of judgment or complexity, or areaswhere assumptions and estimates are significant to the financial statements,relate primarily to accounting for defined benefit pension schemes, financialinstruments, share-based payments, provisions, goodwill impairment and deferredtax and are documented in the relevant accounting policies and notes. Theestimates and associated assumptions are based on historical experience andvarious other factors that are believed to be reasonable under thecircumstances, the results of which form the basis of making the judgments aboutcarrying values of assets and liabilities that are not readily apparent fromother sources. The estimates and underlying assumptions are reviewed on anongoing basis. Revisions to accounting estimates are recognised in the periodin which the estimate is revised if the revision affects only that period or inthe period of the revision and future periods if the revision affects bothcurrent and future periods. 2. Exceptional items 2007 2006 •m •m Reorganisation costs - 9.2(Profit) on disposal of property, plant & equipment (4.6) (6.6)Pension credit - (1.2)(Profit) on disposal of subsidiary (32.9) -Impairment of goodwill 8.3 - (29.2) 1.4Allocated to discontinued operations 37.5 (4.2) Total 8.3 (2.8) The taxation implication of the exceptional items is a charge of €0.2m todiscontinued operations (2006: €0.4m credit to discontinued operations) with noimpact on continuing operations. (a) Reorganisation costs The reorganisation costs in the prior year related mainly to redundancy costs arising on the outsourcing of production in the Snacks division. (b) Profit on disposal of property, plant & equipment The profit on disposals relate to the disposal of property arising from reorganisations in operations. (c) Pension credit The exceptional credit of €1.2m arose as a result of the reduction in employee numbers following the outsourcing of production in the Snacks division. (d) Profit on disposal of subsidiary An agreement was signed for the disposal of Tayto Crisps Limited and its subsidiary companies on 5 July 2006, which was subsequently ratified by the Competition Authority on 4 September 2006, for a gross consideration of €62.3m. The transaction was completed on 21 September 2006 and the proceeds arising from the disposal were applied towards debt reduction. A profit on the disposal of €32.9m was realised. (e) Impairment of goodwill The loss of the former Allied Domecq brands and certain wine agencies resulted in an impairment of goodwill in the Distribution division and consequently the write off of €8.3m of the carrying value of goodwill attributed to this division. 3. Segmental Reporting Segmental information is presented in respect of the Group's continuing businessand geographical segments. The primary format, of business divisions is basedon the Group's management and internal reporting structure and reflects thedominant source and nature, risks and returns arising from the Group's business. The Group analyses its business into four main divisions as follows: - (i) Cider This division includes all Group cider products, with Bulmers in the Republic of Ireland and Magners in all other markets being the two main brands involved. (ii) Spirits & Liqueurs. This division consists of four brands: Tullamore Dew; Carolans Irish Cream; Franjelico Liqueur; and Irish Mist Liqueur, all of which are owned by the Group and are marketed internationally. (iii) Soft Drinks This division includes all the Group's non-alcoholic soft drinks and water products that are sold in Ireland and Northern Ireland. (iv) Distribution This division consists of distribution of wine and spirits, agency products, and the wholesaling of beer products to the licenced trade in both Ireland and Northern Ireland. The analysis by division includes both items directly attributable to a division and those that can be allocated on a reasonable basis. Unallocated items comprise mainly retirement benefit obligations, borrowings and certain exceptional expense items. (a) Class of business analysis 2007 2006 Operating Operating Revenue profit Assets Liabilities Revenue profit Assets Liabilities •m •m •m •m •m •m •m •m Cider 517.9 178.9 633.2 (75.7) 278.4 85.3 462.6 (42.3)Spirits & Liqueurs 79.1 17.7 72.2 (18.1) 68.8 16.3 75.8 (12.3)Soft Drinks 185.2 15.3 123.1 (34.4) 187.6 12.7 164.7 (40.1)Distribution 199.2 0.7 47.4 (16.8) 234.5 5.3 68.8 (23.0) Total before 981.4 212.6 875.9 (145.0) 769.3 119.6 771.9 (117.7)exceptional items Un-allocated items:Exceptional items - (8.3) - - - 2.8 - -Financial - - 6.0 (4.2) - - 1.0 (3.2)LiabilitiesRetirement benefit obligations - - 8.7 (51.5) - - 9.1 (58.9)Group net - - 40.7 (346.1) - - 44.5 (427.6)borrowings 981.4 204.3 931.3 (546.8) 769.3 122.4 826.5 (607.4) (b) Geographical analysis of revenue, assets and liabilities by country of operation 2007 2006 Revenue Assets Liabilities Revenue Assets Liabilities •m •m •m •m •m •m Ireland 844.9 841.1 (132.3) 630.2 729.5 (102.9)Rest of the world 136.5 34.8 (12.7) 139.1 42.4 (14.8) Total before unallocated 981.4 875.9 (145.0) 769.3 771.9 (117.7)items (c) Geographical analysis of revenue by country of destination 2007 2006 •m •mIreland 473.7 493.1UK 419.0 203.0Rest of Europe 45.6 35.5North America 35.1 32.4Rest of the world 8.0 5.3 Total before 981.4 769.3exceptional items 4. Earnings per ordinary share 2007 2006 •m •m Earnings as reported 208.2 95.8Adjustments for exceptional items net of tax (29.0) 1.0 Earnings adjusted for exceptional items 179.2 96.8 Number Number '000 '000 Number of shares at beginning of year 325,204 321,130Shares issued in lieu of dividend 1,592 4,074Shares issued in respect of options exercised 773 - Number of shares at end of year 327,569 325,204 Weighted average number of ordinary share 326,517 323,253Adjustment for the effect of conversion of options 4,609 2,357 Weighted average number of ordinary shares including options 331,126 325,610 Basic earnings per share Cent CentBasic earnings per share - cent 63.8 29.6Adjusted basic earnings per share - cent 54.9 29.9 Diluted earnings per shareDiluted earnings per share - cent 62.9 29.4Adjusted diluted earnings per share - cent 54.1 29.7 Continuing Operations •m •mEarnings from continuing operations - as reported 167.4 95.0Adjustments for exceptional items net of tax 8.3 (2.5) 175.7 92.5 Basic earnings per share Cent CentBasic earnings per share - cent 51.3 29.4Adjusted basic earnings per share - cent 53.8 28.6 Diluted earnings per shareDiluted earnings per share - cent 50.6 29.2Adjusted diluted earnings per share - cent 53.1 28.4 Discontinued Operations •m •mEarnings from discontinued operations - as reported 40.8 0.8Adjustments for exceptional items net of tax (37.3) 3.5 3.5 4.3 Basic earnings per share Cent CentBasic earnings per share - cent 12.5 0.2Adjusted basic earnings per share - cent 1.1 1.3 Diluted earnings per shareDiluted earnings per share - cent 12.3 0.2Adjusted diluted earnings per share - cent 1.1 1.3 5. Analysis of net debt Group 28 February Non-cash 28 February 2006 Cash flow Changes 2007 •m •m •m •m Bank loans 427.6 (82.0) 0.5 346.1Cash at bank and in hand (44.5) 3.8 - (40.7) 383.1 (78.2) 0.5 305.4 6. Dividends 2007 2006 •m •mDividends Paid 27.7 24.1 Final: paid 8.5c per ordinary share in July 2006 (2006: 7.5c paid in July2005)Interim: paid 12.0c per ordinary share in December 2006 (2006: 6.5c paid in 39.2 21.1December 2005) Total equity dividends 66.9 45.2 Settled as follows:Paid in cash 54.7 29.9Scrip dividend 12.2 15.3 66.9 45.2 The directors have proposed a final dividend of 15.0 cent per share, which is subject to shareholder approval at the AGM, giving a total dividend for the year of 27.0 cent per share. Dividends declared after the balance sheet date are not recognised as a liability at the balance sheet date. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
C&C Group