10th Oct 2007 07:00
C&C Group Plc10 October 2007 C&C GROUP PLC INTERIM RESULTS FOR SIX MONTHS ENDED 31 AUGUST 2007 Dublin, London, 10 October 2007: C&C Group plc ('C&C' or the 'Group'), a leadingmanufacturer, marketer and distributor of branded beverages in Ireland and theUK, today announces its interim results for the six months ended 31 August,2007. Financial & Operating Overview Financial Review (i) > Revenue (ii) for the period was flat at €375.6 million > Operating profit (ii) was €67.9 million for the period - a decline of 33% > Adjusted basic EPS down 39% at 17.5 cent > Interim dividend unchanged at 12.0 cent per share > Net debt reduced by 31% (€93.6 million) since 28 February 2007 to €211.8 million Operating Review > The Group's branded cider volumes declined by 1% > Magners volume increased by 2% year on year and in Great Britain On-Trade distribution was 66% in July 2007 compared with 67% in February 2007 > Volume for the Group's Irish whiskey brand, Tullamore Dew, grew by 22% > Marketing investment(ii) for the period increased by 50% > Cider manufacturing capacity expansion programme completed > Completion of the disposal of the Group's soft drinks division and related assets to Britvic plc. Maurice Pratt, Group Chief Executive Officer, commented "the financialperformance reflects a number of factors such as exceptionally poor summerweather; increased competition; and additional costs in marketing and cidermanufacturing capacity. C&C has conducted an extensive review of its performanceand market position and has taken certain corrective steps which will extend inthe coming months to a broader series of measures to sharpen its competitivecapability and to implement a comprehensive restructuring and cost reductionprogramme. These measures are intended to restore growth in revenue andoperating margin in 2008/09 and beyond". (i) Comparisons exclude exceptional items and unless otherwise stated are in comparison with H1 2006/07 (ii) Continuing operations (iii) "LAD" refers to Long Alcohol Drinks (iv) Unless otherwise stated all market statistics are per A.C. Nielsen (v) Premium cider in Great Britain is measured as Magners and HP Bulmers combined (vi) "MAT" refers to Moving Annual Total __________________________________________________________________________________________________________ Investors and analysts Irish Media International Media__________________________________________________________________________________________________________ Mark Kenny or Jonathan Neilan Paddy Hughes Edward Orlebar or Charlotte KirkhamK Capital Source Drury Communications M Communications Tel: +353 1 631 5500 Tel: +353 1 260 5000 Tel: +44 207 153 1523/1531Email :c&[email protected] Email: [email protected] Email: [email protected] [email protected]__________________________________________________________________________________________________________ Summary results for six months ended 31 August 2007 C&C is reporting operating profit for continuing operations before exceptionalitems of €67.9 million and adjusted earnings per share for the Group of 17.5cent for the six months ended 31 August 2007. This decline in operating profit of 33% is in line with the guidance given inthe Group's trading update issued on 31 July 2007. This is due to a combinationof a sales volume decline in the Group's Cider division, increased marketinginvestment and the cost of the additional manufacturing capacity. The salesvolume outcome was due principally to a decline in the Irish cider market, dueto poor weather, and a loss of share in the On-Trade cider market in GreatBritain. Free Cash Flow (FCF) in the period fell to €3.8 million as a result of reducedprofits and the high level of capital expenditure on cider manufacturingcapacity expansion. The full cider expansion plan has been reduced from anoriginal €200 million programme to €115 million, most of which will be spent inthe current fiscal year. The resulting drop in capital expenditure in 2008/09and beyond will result in a high FCF conversion providing the Group with astrengthened financial position. European Market Tests In the period to 31 August 2007, C&C commenced a structured test to assess theprospects for its Magners cider brand in Spain and Germany. The conclusion fromthe test is that there is a consumer opportunity in both markets but significantchallenges to its realisation. C&C plans to remain in both markets and formulatea revised approach, in light of results to date, for 2008/09. Disposal On 29 August 2007, the Group completed the disposal of its Soft Drinks divisionand related assets (Republic of Ireland Wholesaling) to Britvic plc, for aconsideration of €249.2 million. This gave rise to an exceptional gain in theperiod of €141.3 million. Shareholder Returns The Group will pay an unchanged interim dividend for the period of 12 cent pershare. The interim dividend will be paid on 12 December 2007 to shareholders onthe Group's register at the close of business on 19 October 2007. A scripdividend option will also be available. The Group also expects to maintain itsfinal dividend at last year's level. As previously stated C&C intends to return part of the proceeds of the SoftDrinks disposal to shareholders by way of an on-market share buyback programme.The timing and amount of this programme are under review. Outlook C&C expects that the current underlying trend in the premium cider category inGreat Britain - low growth due to a loss in recruitment arising from poor summerweather - and a decline in market share, will lead to a high single-digitpercentage decline in Cider revenue in the second half year in comparison withthe second half of 2006/07. This expectation is a substantial improvement on thequarter ended 31 August 2007. Taking account of cost reduction measures alreadyin place this should lead to a small improvement in operating margin in theCider division compared with the first half year. The Spirits & Liqueursdivision is expected to see a continuation of good revenue growth althoughmargins will reduce as a result of increased marketing investment and rising rawmaterial costs. C&C's research confirms that the premium cider category in Great Britain, is nowa firmly established part of the LAD(iii) market and the Group is confident thatthe category has good growth prospects. Looking beyond the current fiscal year, therefore, C&C's principal focus will beon driving this growth in Great Britain through consumer marketing while at thesame time implementing a range of measures to enhance its competitive position. C&C is also at an advanced stage in the preparation of a comprehensiverestructuring and cost reduction plan across the Group. Following internalconsultation, details of the cost reduction, anticipated savings and theresulting exceptional charge to be taken in the year ending 28 February 2008,will be announced by the end of November 2007. Principal Risks and Uncertainties Under the Transparency (Directive 2004/109/EC) Regulations 2007 the Group isrequired to give a description of the principal risks and uncertainties itfaces. These risks and uncertainties are as follows: • The Group faces strong competition in its various markets and if it fails to compete successfully, market share and profitability may decline. • Consumer preferences may change and demand for existing products may decline (as a result of poor weather or otherwise) or be replaced by other products which the Group does not produce, and as a result, sales volumes and profitability may be volatile or decline. • The Group may not be able to fulfil the demand for its products due to circumstances such as the loss of a production or storage facility or disruptions to its supply chains. This would affect sales volumes and profitability. • The Group may be adversely affected by government regulations including possible changes in excise duty on cider in the UK and Ireland and restrictions on alcohol advertising. • The Group may be adversely affected by changes in foreign currency exchange rates and higher interest rates. • The Group is subject to stringent environmental, health and safety and food safety laws and regulations which could result in increased compliance or remediation costs which would adversely affect profitability. • The Group could be subject to accidental, natural or malicious contamination of its products, which could result in the recall of the Groups' products, damage to its brands and falls in demand for its products. OPERATIONS REVIEW Summary Revenue for continuing operations of €375.6 million for the 6 months ended 31August 2007 was marginally below the prior year. Operating profit for continuingoperations before exceptional items declined by 32.6% and operating margindropped 8.7 percentage points. The revenue decline reflects a virtually flat outcome for the Cider division asa result of poor weather and increased competition; good growth in Spirits &Liqueurs; and a decline in Distribution as a result of the loss of certain wineagencies. The decline in operating margin reflects significantly increased marketingexpenditure in both the Cider and Spirits & Liqueurs divisions and the highercosts associated primarily with the manufacturing capacity increase in theGroup's Cider division. Summary Group Income Statement (before exceptional items) Six months ended Six months ended 31 August 2007 31 August 2006 •m •m Revenue 375.6 376.5 Operating Profit before exceptional items 67.9 100.8 Operating Profit Margin before exceptional items 18.1% 26.8% Net finance charges (8.6) (7.8) Income tax expense (7.1) (11.2) Profit from Continuing Operations 52.2 81.8 Discontinued Operations 4.8 11.7 Total Profit before exceptional items 57.0 93.5 Total Profit before exceptional items decreased by 39% in the period. Inaddition to the decline in operating profit in continuing operations, thedecrease reflects the impact of a profit decline in discontinued operations andan increase in finance costs. Divisional Review: Cider Six months ended Six months ended Growth 31 August 2007 31 August 2006 Year-on-Year •m •m Revenue 272.7 269.5 1.2% Operating Profit 57.5 90.0 (36.1%) Operating margin 21.1% 33.4% Revenue for the Cider division of €272.7 million represents a 1.2% increase on2006 and reflects a 2% decline in sales volume. Operating profit declined by36.1% to €57.5 million compared to €90.0 million in 2006. Operating margin, at21.1%, declined by 12.3 percentage points year-on-year. Volume for the Group's international cider brand, Magners, grew by 2% in thehalf year and volumes for the Group's Irish cider brand, Bulmers, declined by7%. This reflects the extremely poor weather in Great Britain and Ireland andalso increased competition in the premium cider category in Great Britain. In Great Britain, which is Magners' principal market, the On-Trade LAD marketdeclined by 5.7% in the 5 months to 31 July 2007 while Magners' MAT(vi) marketshare increased from 1.7% to 1.9% over the period (Source: AC Neilsen). Premium cider's share of total cider (On-Trade) fell slightly in the 5 months to31 July 2007 compared with the 6 months to 28 February 2007 to approximately 28%due to a decline of approximately 18% in July reflecting the unusually poorweather. Magners' market share of the premium cider category declined from 90%in the 6 months to 28 February 2007 to 80% in the 5 months ended 31 July 2007 asa result of heavy price-led competition. Notwithstanding the market share loss,the Magners brand showed its resilience in maintaining its overall distributionbroadly in line with the February 2007 level and its significantly superior rateof sale compared to its main competitor (Source: AC Nielsen). In the Republic of Ireland the overall beer/cider market declined by 1.6% in the5 months to 31 July 2007 while Bulmers' MAT(vi) market share declined from 10.5%to 10.2% over the period (Source: Revenue Commissioners). The decline in operating margin reflects the weak volume performance combinedwith substantially higher manufacturing and marketing costs. Marketing costsincreased by 53% with increases in Great Britain, Ireland and in the Europeantest markets. Manufacturing cost increases predominately arose from increasingmanufacturing capacity. Divisional Review: Spirits & Liqueurs Six months ended Six months ended Growth 31 August 2007 31 August 2006 Year-on-Year •m •m Revenue 41.0 36.1 13.6% Operating Profit 9.2 9.8 (6.1%) Operating margin 22.4% 27.1% Revenue for the Spirits & Liqueurs division of €41.0 million represents a 13.6%increase on 2006 levels. Operating profit declined 6.1% to €9.2 million against€9.8 million in 2006. Operating margin, at 22.4%, declined by 4.7 percentagepoints year-on-year. Overall volume shipments increased 8% in the period. It is estimated thatdepletions growth in the period was 7%. Within this overall depletionsperformance, Tullamore Dew continued to show exceptionally strong growth whileCarolans and Frangelico were weak. The decline in operating margin reflects the substantially higher investment inmarketing costs principally in support of Tullamore Dew which is expected toboost its long term growth rate. Investment in marketing increased by 51% inthe period. Divisional Review: Distribution (ii) Six months ended Six months ended Growth 31 August 2007 31 August 2006 Year-on-Year •m •m Revenue 61.9 70.9 (12.7%) Operating Profit 1.2 1.0 20.0% Operating margin 1.9% 1.4% Revenue for the Distribution division of €61.9 million represents a 12.7%decline on 2006 levels. Operating profit increased by 20% to €1.2 millioncompared to €1.0 million in 2006. Operating margin at 1.9% increased by 0.5 percentage points year-on-year. The decline in revenue reflects the loss of the Fosters Group wine brands in theperiod while focus on improving margins has benefited operating profit in theperiod. FINANCE REVIEW Cash Flow Free cash flow before soft drinks disposal proceeds, for the six months ended 31August 2007, amounted to €3.8 million compared to €81.6 million in thecorresponding prior period. The reduced cashflow is driven by the combination oflower profits and higher capital spend. Capital expenditure in the periodamounted to €61.4 million compared with €31.9 million in the same period lastyear. The main component of expenditure in the period related to the expansionof cider manufacturing facilities. Finance Costs Finance costs for the half year at €8.6 million were €0.8 million higher than inthe corresponding prior period, reflecting the impact of higher interest ratesand the write-off of issue costs arising from debt refinancing in May 2007. The Group has hedged a portion of its net debt for the next four years at baserates ranging from 3.5% to 4.5%. The hedged amounts range from €250 million for2007/08 to €50 million for 2011/12. Interest for the six month period to 31 August 2007 was covered 13 times byEBITDA. Share Buyback Programme The company commenced a share buyback programme on 18 June 2007 and repurchased12.1 million shares at an average price of €9.38 up to 31 July 2007 when theprogramme was suspended due to exceptional volatility in the share price duringthat period. Net Debt Net debt at 31 August 2007 amounted to €211.8 million, which is €93.6 millionlower than at 28 February 2007. Movement in net debt was as follows: •mNet debt at 1 March 2007 305.4 Free cash flow in period (3.8) Dividends paid 45.1 Own shares acquired 114.8 Net disposal proceeds from sale of Soft Drinks business (248.1) Other (1.6) Net debt at 31 August 2007 211.8 Refinancing of Debt Facility In May 2007 the Group refinanced its bank debt to capitalise both on itsimproved financial position and favourable market conditions. Under the terms of the refinancing, the Group replaced its existing €348 milliondebt facility with a new five year revolving debt facility of €600 million. Special note regarding forward-looking information Some statements in this Announcement are forward-looking. They represent 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. Statement of the directors in respect of the half-yearly financial report We confirm our responsibility for the half yearly financial statements and thatto the best of our knowledge: • the condensed set of financial statements comprising the condensed income statement, the condensed statement of recognised income and expense, the condensed balance sheet and the related notes have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU; • the interim management report includes a fair review of the information required by: (a) Regulation 7(2) of the Transparency (Directive 2004/109/EC) Regulations 2007, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and (b) Regulation 7(3) of the Transparency (Directive 2004/109/EC) Regulations 2007, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so. The Group's auditors have not reviewed these condensed financial statements. On behalf of the Board T. O'Brien M. PrattChairman Chief Executive Officer 10 October 2007 Group condensed income statementfor the six months ended 31 August 2007 Six months ended 31 August 2007 Six months ended 31 August 2006 Before Before exceptional Exceptional exceptional Exceptional items items Total items items Total •m •m •m •m •m •m Revenue 375.6 - 375.6 376.5 - 376.5 Operating costs (307.7) - (307.7) (275.7) (8.3) (284.0) _________________________________________________________________________________ Operating profit 67.9 - 67.9 100.8 (8.3) 92.5 Finance income 1.0 - 1.0 0.8 - 0.8Finance costs (9.6) - (9.6) (8.6) - (8.6) _________________________________________________________________________________ Profit before tax 59.3 - 59.3 93.0 (8.3) 84.7 Income tax expense (7.1) - (7.1) (11.2) - (11.2) _________________________________________________________________________________ Profit from continuing operations 52.2 - 52.2 81.8 (8.3) 73.5 Discontinued operationsProfit from discontinuedoperations 4.8 141.3 146.1 11.7 4.1 15.8 _________________________________________________________________________________ Profit for the period attributableto equity shareholders 57.0 141.3 198.3 93.5 (4.2) 89.3 _________________________________________________________________________________ Earnings per shareBasic earnings per share (cent) 61.0 27.4Diluted earnings per share (cent) 60.3 27.1 Continuing operationsBasic earnings per share (cent) 16.1 22.6Diluted earnings per share (cent) 15.9 22.3 Group condensed statement of recognised income and expensefor the six months ended 31 August 2007 31 August 31 August 2007 2006 •m •m INCOME AND EXPENSE RECOGNISED DIRECTLY IN EQUITY: Exchange difference arising on the net investment in foreignoperations - 0.4Movement in cashflow hedging reserve 0.9 0.8Deferred tax liability on cashflow hedges (0.1) (0.1)Actuarial gain on defined benefit pension schemes 32.8 1.8 ______________________________________________ Deferred tax on defined benefit pension schemes (4.3) 0.3 Total income and expense recognised directly in equity 29.3 3.2 Profit attributable to equity shareholders 198.3 89.3 ______________________________________________ Total recognised income and expense for the period attributable toequity shareholders 227.6 92.5 ______________________________________________ Group condensed balance sheetas at 31 August 2007 31-Aug-07 31-Aug-06 28-Feb-07 Notes (audited) •m •m •mASSETSNon-current assetsGoodwill 394.7 453.6 426.9Property, plant & equipment 6 200.5 152.1 212.4Derivative financial assets 2.8 - 3.7Retirement benefit asset 2.0 - -Deferred tax - 8.9 8.7 ______________________________________________ 600.0 614.6 651.7 ______________________________________________ Current assetsInventories 89.5 56.2 97.8Trade & other receivables 123.2 191.6 138.8Derivative financial assets 3.4 - 2.3Cash & cash equivalents 78.0 97.3 40.7 ______________________________________________ 294.1 345.1 279.6 ______________________________________________ TOTAL ASSETS 894.1 959.7 931.3 ______________________________________________ EQUITYShare capital 9 3.2 3.3 3.3Share premium 9 40.5 27.5 32.8Reserves 9 30.7 27.7 33.1Retained earnings 9 381.7 235.1 315.3 Total equity 456.1 293.6 384.5 LIABILITIESNon-current liabilitiesInterest bearing loans & borrowings 7 289.8 392.8 316.1Derivative financial liabilities 0.6 0.1 -Retirement benefit obligations - 55.2 51.5Provisions 0.6 1.7 1.3Deferred tax 3.6 5.3 5.0 ______________________________________________ 294.6 455.1 373.9 ______________________________________________ Current liabilitiesInterest bearing loans & borrowings 7 - 25.0 30.0Derivative financial liabilities 3.2 1.7 4.2Trade & other payables 128.5 163.7 132.5Current tax liabilities 11.7 20.6 6.2 ______________________________________________ 143.4 211.0 172.9 ______________________________________________ Total liabilities 438.0 666.1 546.8 ______________________________________________ TOTAL EQUITY & LIABILITIES 894.1 959.7 931.3 ______________________________________________ Group cash flow statementfor the six months ended 31 August 2007 6 months ended 6 months ended 31 August 2007 31 August 2006 •m •m CASH FLOWS FROM OPERATING ACTIVITIESProfit for the period attributable to equity shareholders 198.3 89.3Finance income (1.0) (0.8)Finance costs 9.6 8.6Income tax expense 7.9 12.7Depreciation of property, plant & equipment 14.5 11.1Impairment of goodwill - 8.3Profit on disposal of property, plant & equipment - (4.6)Profit on disposal of subsidiaries (141.3) -Charge for equity settled share-based employee benefits 1.1 0.8Contributions paid less pensions charged to profit (2.7) (2.0) ______________________________________________ 86.4 123.4Increase in inventories (10.4) (1.1)Increase in trade & other receivables (36.8) (79.9)Increase in trade & other payables 33.9 64.4 ______________________________________________ 73.1 106.8 Interest received 1.0 0.8Interest paid (7.7) (8.3)Income tax (paid) / refunded (1.2) 0.2 ______________________________________________ Net cash inflow from operating activities 65.2 99.5 ______________________________________________ CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant & equipment (61.4) (31.9)Sale of property, plant & equipment - 14.0Net proceeds on disposal of subsidiaries 248.1 - ______________________________________________ Net cash inflow / (outflow) from investing activities 186.7 (17.9) ______________________________________________ CASH FLOWS FROM FINANCING ACTIVITIESShares issued on exercise of share options 3.6 1.0Bank loans repaid (597.0) (10.0)New bank loans drawn down net of issue costs paid 538.7 -Shares purchased under share buyback programme (114.8) -Dividends paid (45.1) (19.8) ______________________________________________ Net cash outflow from financing activities (214.6) (28.8) ______________________________________________ Net increase in cash & cash equivalents 37.3 52.8 Cash & cash equivalents at beginning of period 40.7 44.5 ______________________________________________ Cash & cash equivalents at end of period 78.0 97.3 ______________________________________________ Notes to the interim resultsfor the six months ended 31 August 2007 1. Basis of preparation The interim accounts, which are abridged and unaudited, have been prepared inaccordance with International Financial Reporting Standard, IAS34 InterimFinancial Reporting. The same accounting policies and methods of computation are followed in thesefinancial statements as were applied in the consolidated financial statementsfor the year ended 28 February 2007 and as those expected to apply for thefinancial year to 29 February 2008. The preparation of financial statements in conformity with IFRSs requires theuse of certain critical accounting estimates and judgements. The areas involvinga high degree of judgement or complexity, or areas where assumptions andestimates are significant to the financial statements, relate primarily toaccounting for defined benefit pension schemes, financial instruments,share-based payments, provisions, goodwill impairment and deferred tax. 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 judgementsabout carrying values of assets and liabilities that are not readily apparentfrom other sources. The income tax expense for the six-month period is calculated by applying thedirectors' best estimate of the annual effective tax rate to the profit for theperiod. The Board approved the interim results on 10 October 2007. 2. Segmental analysis Segmental information is presented below in respect of the Group's continuingbusiness segments, which are the primary basis of segment reporting. Thebusiness segment reporting format reflects the Group's management and internalreporting structure and reflects the dominant source and nature of risks andreturns arising from the Group's business. During the six months ended 31 August 2007, the Group disposed of its softdrinks manufacturing and distribution business and certain related operationsthat had previously been reported within the distribution segment (see note 4).The reported segmental figures have been amended to exclude discontinuedoperations. The analysis by segment includes both items directly attributable to a segmentand those that can be allocated on a reasonable basis. The Group analyses its business into three main segments as follows: - (i) Cider This segment includes all Group cider products, with Bulmers in the Republic ofIreland and Magners in all other markets being the two main brands involved. (ii) Spirits & Liqueurs This segment consists of four brands, viz. Tullamore Dew, Carolans Irish Cream,Frangelico Liqueur and Irish Mist Liqueur, all of which are owned by the Groupand are marketed internationally. (iii) Distribution This segment consists of distribution of wine and spirits and agency products inboth the Republic of Ireland and Northern Ireland and wholesaling to thelicensed trade in Northern Ireland. Six months ended 31 August Six months ended 31 August 2007 2006Class of business analysis Revenue *Net result Revenue *Net result •m •m •m •m ______________________________________________________ Cider 272.7 57.5 269.5 90.0Spirits & Liqueurs 41.0 9.2 36.1 9.8Distribution 61.9 1.2 70.9 1.0 ______________________________________________________ 375.6 67.9 376.5 100.8 ______________________________________________________ *Net result represents profit before finance costs and exceptional items. Cyclicality of interim results Operating profit for continuing operations for the 6 months period to 31 August2006 represented 50.5% of the full year profits. 3. Income tax charge Interim period income tax is accrued based on the estimated average annualeffective income tax rate of 12% (6 months ended 31 August 2006: 11.5%). 4. Discontinued operations On 21 September 2006 and 29 August 2007, the Group completed the sale of itsSnacks and Soft Drinks businesses respectively. These businesses are presentedas discontinued operations for all periods presented and are shown separatelyfrom continuing operations. Results of discontinued operations 29 August 2007 31 August 2006 •m •m _______________________________________ Revenue 130.8 155.6Expenses (125.2) (142.9)Exceptional items - 4.6 _______________________________________ Results from discontinued operations before tax 5.6 17.3Income tax expense (0.8) (1.5) _______________________________________ Results from discontinued operations (net of income tax) 4.8 15.8Gain on sale of discontinued operations 145.8 -Capital Gains Tax arising on sale of discontinued operations (4.5) - _______________________________________ Profit from discontinued operations (net of tax) 146.1 15.8 _______________________________________ Cash flows from discontinued activities 29 August 2007 31 August 2006 •m •m Net cash from operating activities (0.8) 23.8Net cash from investing activities 246.1 8.5Net cash from financing activities* (20.0) (23.0) _______________________________________ Net cash (used in)/derived from discontinued operations 225.3 9.3 _______________________________________ _______________________________________ Depreciation 4.6 5.3 _______________________________________ Capital expenditure (2.0) (3.4) _______________________________________* intragroup dividend Effect of disposal on financial position of the Group 29 August 2007 31 August 2006 •m •m _______________________________________ Property, plant & equipment 57.1 60.0Goodwill 32.2 58.9Inventories 18.5 17.2Trade & other receivables 52.2 60.0Cash & cash equivalents - 9.6Deferred tax liabilities 2.9 2.7Trade & other payables (49.9) (63.2)Provisions (0.9) (1.2)Retirement benefit obligations (18.0) (19.4) _______________________________________ Net assets and liabilities disposed of 94.1 124.6 _______________________________________ Consideration received in cash 249.2 -Disposal expenses (14.3) - _______________________________________ 234.9 -Foreign currency reserve movement on disposal 0.5 - _______________________________________ Profit arising on disposal of subsidiaries 141.3 - 5. Earnings per ordinary share Six months ended 31 Six months ended 31 August 2007 August 2006 •m •m Earnings as reported 198.3 89.3Adjustments for exceptional items, net of tax (141.3) 4.2 ____________________________________________ Earnings adjusted for exceptional items 57.0 93.5 ____________________________________________ '000 '000Number of shares at beginning of period 327,569 325,204Shares issued in lieu of dividend 327 1,236Shares issued in respect of options exercised 1,482 380Own shares acquired (12,100) - ____________________________________________ Number of shares at end of period 317,278 326,820 ____________________________________________ Weighted average number of ordinary shares 325,089 325,841Adjustment for the effect of conversion of options 3,572 3,796 ____________________________________________ Weighted average number of ordinary shares, including options 328,661 329,637 Basic earnings per share Cent CentBasic earnings per share - cent 61.0 27.4Adjusted basic earnings per share - cent 17.5 28.7 Diluted earnings per shareDiluted earnings per share - cent 60.3 27.1Adjusted diluted earnings per share - cent 17.3 28.4 Continuing Operations •m •mEarnings from continuing operations - as reported 52.2 73.5Adjustments for exceptional items, net of tax - 8.3 ____________________________________________ Earnings adjusted for exceptional items 52.2 81.8 Basic earnings per share Cent CentBasic earnings per share - cent 16.1 22.6Adjusted basic earnings per share - cent 16.1 25.1 Diluted earnings per shareDiluted earnings per share - cent 15.9 22.3Adjusted diluted earnings per share - cent 15.9 24.8 Discontinued Operations •m •mEarnings from discontinued operations - as reported 146.1 15.8Adjustments for exceptional items, net of tax (141.3) (4.1) ____________________________________________ Earnings adjusted for exceptional items 4.8 11.7 Basic earnings per share Cent CentBasic earnings per share - cent 44.9 4.8Adjusted basic earnings per share - cent 1.5 3.6 Diluted earnings per shareDiluted earnings per share - cent 44.5 4.8Adjusted diluted earnings per share - cent 1.5 3.5 6. Property, plant & equipment Acquisitions and disposals During the six months ended 31 August 2007, the Group acquired assets with acost of €61.4 million (six months ended 31 August 2006: €31.9 million). Assets with a net book value of €57.1 million were disposed of during the sixmonths ended 31 August 2007 (six months ended 31 August 2006: €6.8 million),including assets disposed of through sale of discontinued operations (see note 4) of €57.1 million (2006: nil). Capital commitments During the six months ended 31 August 2007, the Group entered into contracts topurchase property, plant and equipment that were outstanding at the period endtotalling €30 million (31 August 2006: €25 million). 7. Details of Borrowing 31 August 2007 28 February 2007 31 August 2006 •m •m •mMaturity analysisCurrent0-1 year - 30.0 25.0 ______________________________________________________ - 30.0 25.0 Non-current1-2 years - 30.0 30.02-3 years - - 15.03-4 years - 286.1 -4-5 years 289.8 - 347.8 ______________________________________________________ 289.8 316.1 392.8 Unamortised issue costs of €1.2 million (2006: €2.2million) have been nettedagainst outstanding bank loans repayable between 2 and 5 years. 8. Analysis of net debt Cash & cash Bank loans due Bank loans due Net debt equivalents within one year after one year •m •m •m •m At 31 August 2006 (97.3) 25.0 392.8 320.5At 1 March 2007 (40.7) 30.0 316.1 305.4 __________________________________________________________________________ At 31 August 2007 (78.0) - 289.8 211.8 __________________________________________________________________________ During the period, the Group negotiated a new long-term bank debt facility inthe amount of €600 million, of which €540 million was drawn down. The proceedswere used to repay the existing bank loan of €348 million and to meet short-termexpenditure needs. Disposal proceeds from the sale of the soft drinks divisionof €249 million were received during the period from Britvic plc and were usedto repay debt. The new bank loan is structured as a five year revolving loanbearing interest at market rates, a portion of which has been converted to fixedrates using interest rate swaps. 9. Reserves Reserves _________________________________________________ Share Share Capital Cashflow Shares to Currency Retained 2006 capital premium reserve* hedging be issued translation income Total reserve reserve reserve •m •m •m •m •m •m •m •m GroupAt 28 February 2006 3.3 18.6 25.2 (1.5) 1.7 0.6 171.2 219.1Total recognised income and expense for the period - - - 0.7 - 0.4 91.4 92.5Dividend on ordinary shares - 7.9 - - - - (27.7) (19.8)Exercise of share options - 1.0 - - (0.2) - 0.2 1.0Equity settled share based payments - - - - 0.8 - - 0.8 ____________________________________________________________________________________________ At 31 August 2006 3.3 27.5 25.2 (0.8) 2.3 1.0 235.1 293.6 ____________________________________________________________________________________________ Reserves ________________________________________________ Share Share Capital Cashflow Shares to Currency Retained 2007 capital premium reserve* hedging be issued translation income Total reserve reserve reserve •m •m •m •m •m •m •m •m Group At 31 August 2006 3.3 27.5 25.2 (0.8) 2.3 1.0 235.1 293.6Total recognised income and expense for the period - - - 2.7 - (0.2) 118.8 121.3Dividend on ordinary shares - 4.3 - - - - (39.2) (34.9)Exercise of share options - 1.0 - - (0.6) - 0.6 1.0Equity settled share based payments - - - - 3.5 - - 3.5 ____________________________________________________________________________________________ At 28 February 2007 3.3 32.8 25.2 1.9 5.2 0.8 315.3 384.5 ____________________________________________________________________________________________ Reserves _______________________________________________ Share Share Capital Cashflow Shares to Currency Retained 2007 capital premium reserve* hedging be issued translation income Total reserve reserve reserve •m •m •m •m •m •m •m •m GroupAt 28 February 2007 3.3 32.8 25.2 1.9 5.2 0.8 315.3 384.5Total recognised incomeand expense for the period - - - 0.8 - - 226.8 227.6Foreign currency reservemovement on disposal - - - - - (0.5) - (0.5)Dividend on ordinary shares - 4.1 - - - - (49.2) (45.1)Exercise of share options - 3.6 - - (3.6) - 3.6 3.6Own shares acquired ** (0.1) - 0.1 - - - (114.8) (114.8)Equity settled share basedpayments - - - - 0.8 - - 0.8 ___________________________________________________________________________________________ At 31 August 2007 3.2 40.5 25.3 2.7 2.4 0.3 381.7 456.1 ___________________________________________________________________________________________ * the capital reserve includes a capital redemption reserve of €0.4 million (2006: €0.3 million). ** the company acquired 12.1 million of its own shares at an average share price of €9.38. Capital redemption reserve and capital reserves These reserves arose on the conversion of preference shares into share capitalof the Company, and other changes and reorganisations of the Group's capitalstructure in prior years, and reserves arising in the current period in relationto the purchase of the company's own shares. These reserves are notdistributable. Cashflow hedging reserve The hedging reserve comprises the effective portion of the cumulative net changein the fair value of cash flow hedging instruments related to hedgedtransactions that have not yet occurred. Share based payment reserve This reserve comprises amounts expensed in the Income Statement in connectionwith share option grants falling within the scope of IFRS 2 Share-based Paymentless any exercises or lapses of such share options. Currency translation reserve The translation reserve comprises all foreign exchange differences from 1 March2004, arising from the translation of the net assets of the Group's non-eurodenominated operations, including the translation of the profits of suchoperations from the average exchange rate for the year to the exchange rate atthe balance sheet date, as well as from the translation of liabilities thathedge those net assets, where applicable. 10. Dividend During the interim period, a dividend of 15 cent (2006: 12 cent) per share waspaid to the shareholders. An interim dividend of 12 cent per share is proposedon 317,323,315 ordinary shares amounting to €38.1 million. Dividends declared after the balance sheet date are not recognised as aliability at the balance sheet date. 12. Related Parties Transactions with key management personnel For the purposes of the disclosure requirements of IAS 24 Related PartyDisclosures, the Group has defined the term "key management personnel", as itsexecutive and non-executive directors. Key management personnel receive compensation in the form of short-term employeebenefits, post-employment benefits and equity compensation benefits. Keymanagement personnel received total compensation of €2.7 million for the sixmonths ended 31 August 2007 (six months ended 31 August 2006: €2.7 million) 13. Balance Sheet as at 28 February 2007 The balance sheet presented for 28 February 2007 on page 14 does not representbut has been extracted from the statutory consolidated financial statements ofthe Group. These statutory consolidated financial statements were preparedseparately and attached to the annual return filed in the Companies RegistrationOffice on 29 May 2007. The Group's auditors issued an unqualified audit opinionon those consolidated financial statements. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
C&C Group