29th Aug 2006 07:01
Bunzl PLC29 August 2006 Tuesday 29 August 2006 INTERIM RESULTS FOR SIX MONTHS ENDED 30 JUNE 2006 AND TWO ACQUISITIONS IN NORTH AMERICA Bunzl plc, the international distribution and outsourcing Group, today announcesits interim results for the six months ended 30 June 2006 and two significant acquisitions in North America. • Revenue up 17% to £1,603.2 million • Operating profit before intangible amortisation up 14% to £104.8 million • Profit before tax and intangible amortisation up 11% to £97.8 million • Profit before tax up 9% to £88.1 million • Earnings per share of continuing operations up 7% to 17.5p • Adjusted earnings per share* up 8% to 19.3p • Dividend up 8% to 5.3p * before intangible amortisation Other highlights include: • All business areas increased revenue and profits • Improved overall organic growth • Acquisitions in North America of Morgan Scott and United American Sales announced today • Southern Syringe, a healthcare distributor in the UK, acquired in July • 2006 acquisitions to date add annualised revenue of about £285 million • Limited on-market share buy back Commenting on today's results, Anthony Habgood, Chairman of Bunzl, said: "These are a good set of results. They combine sound operating performance witha number of acquisitions which fit closely with our stated strategy while at thesame time opening important potential development opportunities for the Group." Michael Roney, Chief Executive of Bunzl, said: "These results show the good progress which we have made in the first half. Ourimproved level of underlying growth and the continuing integration ofacquisitions clearly position us well for the future." Bunzl also today announces that it has completed two further acquisitions inNorth America. The Company has acquired the business of Morgan Scott from two privately ownedcompanies, Morgan Scott Inc, controlled by William O'Brien and Robert Giroux, and MorganScott (Kingston) Inc, controlled by Robert Tremblay. Based in Toronto, thebusiness is engaged in the distribution of jan/san and foodservice disposableproducts in eastern Canada. Revenue in 2005 was C$65.6 million and the grossassets acquired are estimated to be C$19 million. Bunzl has also purchased the business of United American Sales Inc from aprivate company owned by Joseph Sodini and Timothy Homan. Based in Ohio withfacilities also in California, Nevada, Texas and Georgia, the business suppliespersonal protection equipment through redistributors to the industrial andconstruction markets. Revenue in 2005 was $57.7 million and the gross assetsacquired are estimated to be $15 million. Commenting on these acquisitions, Michael Roney, Chief Executive of Bunzl, said: "The acquisitions of Morgan Scott and United American Sales are excellentadditions to our successful and growing business in North America. Morgan Scottwill further strengthen our presence in eastern Canada, particularly in the jan/san and foodservice sectors, while United American Sales will enable us to enterthe redistribution sector for personal protection equipment in North America andprovides an opportunity to develop further in this market. Together with Southern Syringe, announced in July, we have now completed threeacquisitions since the end of June, each of which gives the Group exciting opportunities to develop successfully in both existing and new sectors with significant potential. With the acquisitions made in the first half, they will add annualised revenue of about £285 million". Enquiries: Bunzl plc FinsburyMichael Roney, Chief Executive Roland RuddBrian May, Finance Director Mark HarrisTel: 020 7495 4950 Tel: 020 7251 3801 CHAIRMAN'S STATEMENT During our first full year as a focused, international, value-added distributionand outsourcing Group, I am pleased to be able to report that overall trading inthe first half has continued to be strong with revenue up 17% to £1,603.2 million. This increase was principally the result of a combination of organic growth and acquisition activity. Currency movements, largely the dollar which, despite currently being weaker than it was at this time last year, averaged $1.79 to £1 during the first half compared to $1.86 in 2005, contributed about 2.5% to this increase. Following the Group's reorganisation in November 2005 into four geographic business areas (North America, UK & Ireland, Continental Europe and Australasia), it is particularly pleasing that all areas showed increased revenues over the comparable period last year. Operating profit before intangible amortisation was up 14% to £104.8 millionwith each business area also showing an increase over 2005. Profit before taxincreased 9% to £88.1 million. This was impacted by an increase of 75% in theinterest charge to £7.0 million as a result of higher interest rates,particularly in North America, combined with a slightly higher level of debt,and amortisation up 33% as a result of acquisition activity. With somewhat moreshares in issue, principally due to the exercise of options by Filtronaemployees following its demerger from the Group last summer, earnings per shareof continuing operations rose by 7%. Adjusted earnings per share, aftereliminating intangible amortisation, rose 8% to 19.3p. Strategy We are continuing to pursue our well defined strategy of focusing on ourstrengths and consolidating our markets while also logically extending theproduct and geographic areas in which we compete. Expanding our geographicspread, increasingly co-ordinating our procurement and international sourcingand continually redefining and deepening our commitment to our customers andmarkets remain important ongoing elements of our success. Dividend The Board has decided to increase the interim dividend by 8% to 5.3p (2005:4.9p). Shareholders will again be able to participate in our dividend reinvestment plan. Board On 1 January Brian May, who had been Finance Director designate since June 2005,joined the Board as Finance Director. His previous role was as Finance Directorof our growing and successful European and Australasian businesses. Also on 1January, Peter Johnson, Chairman of Inchcape plc, joined the Board as anindependent non-executive director. His experience of distribution andinternational markets is already proving to be of value to us. Finally on 31January, David Williams, Finance Director until the end of 2005, retired afterreaching his normal retirement age and having served as a director for over 14years. I wish Brian every success in his new role and welcome Peter to theBoard. I would also like to thank David for his highly significant contributionto Bunzl over many years. CHIEF EXECUTIVE'S REVIEW Operating performance Revenue rose by 17% to £1,603.2 million due to a combination of improved organicgrowth and the impact of acquisitions. Operating profit before intangibleamortisation of £104.8 million was 14% higher than 2005 as the acquisitions madein the second half of 2005 at lower than average Group margins continue to beintegrated into the operations. While the overall net margin is down from 6.7%to 6.5%, the net margin excluding the impact of acquisitions has improvedslightly. In North America revenue rose by 24% with operating profit increasing by 18%largely due to the impact of the lower margin acquisitions completed in thesecond half of 2005. Revenue and operating profit in the UK & Ireland rose by 3%. Continental Europe showed a 16% increase in revenue and an 11% improvement in operating profit due to good growth from recent acquisitions at lower margins than the business area average and a small reduction in operating returns. In Australasia revenue increased by 19% and operating profit rose by 18%. Adjusted earnings per share, after eliminating the effect of intangible amortisation, were 19.3p, an increase of 8%. Cash inflow from operations funded acquisition activity and reduced net debtfrom £355.5 million at the year end to £296.6 million. With shareholders' equity increasing to £503.6 million from £460.4 million at the year end, gearing fell to 58.9% from 77.2%. Return on operating capital was 62.7% compared to 62.1% in the first half of 2005 and 61.4% for the year. Acquisitions In 2006 we have made acquisitions in each of the business areas. Master CraftPackaging, which serves the redistribution and foodservice sectors inCalifornia, Oregon and Washington and had revenue of $11 million in 2005, waspurchased in January. Midshires Group, with revenue of £12 million in 2005,provides vending services throughout central England and was acquired in lateJanuary. In April we announced the acquisition of Picardie Hygiene, a cleaningand hygiene distributor based in northeast France which had revenue of€10 million in 2005, and the purchase of Allcare Disposable Products, adistributor to food processors based in Melbourne, Australia with revenue ofA$23 million in the year to June 2005. In early July we acquired SouthernSyringe. The business, which is based in London, is involved in the sale anddistribution throughout the UK of healthcare related consumables to a variety ofend users including the NHS, private hospitals and nursing homes and had revenueof £182 million in 2005. This important acquisition significantly expands ourposition in the growing healthcare consumables market. Today we announced thepurchase of Morgan Scott and United American Sales. Based in Toronto, MorganScott had revenue in 2005 of C$66 million. It is a regional distributor of jan/san and foodservice disposable products and will further strengthen our presencein eastern Canada. United American Sales is a redistributor based in Ohio withrevenue in 2005 of $58 million. This business is our first move into theredistribution sector for personal protection equipment in the North Americanmarket. 2006 acquisition activity to date will add annualised revenue of about £285million at a total cost of £90 million. Share buy back We have decided to implement a limited on-market share buy back programme, suchpurchases to be made subject to market conditions. This is consistent with theBoard's objective of maintaining an appropriate balance sheet structure whilecontinuing with our strategic priority of growing both organically and byacquisition. Prospects The possibilities for growth in our sectors continue to be promising and, as weexpand both organically and through acquisitions, we will extend our coverageand further consolidate our markets. Revenue in North America remains strong, aided by good underlying growthsupported by upward pressure from product prices, and the impact of recentlyacquired businesses. The acquisitions made in the second half of 2005, at lowerthan the Group's average margins, are now largely integrated onto the Company'sIT platform and, together with the more recent acquisitions, are expected toshow benefits in future periods. In the UK & Ireland organic growth has slowed due to weaker market conditionsand competitive pressures. Tight cost control, supported by additional operatingefficiencies, continues to offset underlying cost pressures. The recentlyannounced acquisition in the growing healthcare consumables market will broadenour product offering and customer base and will give us the opportunity toextend our business in this sector. Revenue in Continental Europe continues to develop well due to a combination ofgood organic growth across all businesses and the impact of acquisitions. Whilewe expect some continued margin pressure, we will reduce operating costs throughthe ongoing integration of the acquisitions onto new IT platforms and furtherbusiness reorganisation. Overall we see good growth opportunities as weconsolidate our markets and extend our coverage into new countries. The outlook for Australasia is good due to satisfactory organic growth,increased international sourcing and the positive effect of acquisitions madesince the first half of 2005. While the first half US dollar translation impact has been favourable comparedto 2005, if the current rate holds until the end of the year the impact on thefull year results would be slightly negative. The combination of good organic growth, our strong positions in the markets inwhich we operate, the most recent acquisitions and a promising pipeline ofopportunities give us confidence that the prospects are good and that the Groupwill continue to develop satisfactorily. North America A combination of organic and acquisition growth contributed to dollar revenuegrowth of 19% and a 14% increase in dollar operating profit. The underlying revenue growth has improved as has the underlying margin despite rising input prices and continued competitive pressure. All of our sectors showed good organic growth and, while the supermarket business continues to be the largest of our customer categories, we continue to expand our presence in a greater way in the redistribution, food processor, non-food retail and convenience store business sectors. Acquisitions made in 2005 were an important component of our growth and theongoing successful integration of SOFCO, A W Mendenhall and Retail Resourceswill benefit our margins and support our growth initiatives in the key sectorsof redistribution and non-food retail. Although currently generating lowermargins, we expect to see improvement as they are all now on our IT platform andmany cost reduction initiatives have recently been implemented. The three acquisitions made this year are exciting additions to our currentbusiness. In January we purchased Master Craft Packaging which strengthens ourposition in the redistribution and foodservice segments. Today we announced theacquisition of Morgan Scott and United American Sales. Morgan Scott is a Torontobased distributor of jan/san and foodservice disposable products which willsignificantly grow our sales in eastern Canada. United American Sales is aredistribution business supplying personal protection equipment into theindustrial and construction markets. This business gives us a platform to growin a new sector with significant potential. In order to drive organic sales growth, we are making significant investments inour employees. An example of this is the VIP (value, integrity, performance)sales training and development initiative launched in the second half of 2005.It is designed to give our sales professionals the more advanced selling toolsto help them identify opportunities to enhance margin and increase sales. AllGeneral Managers, Sales Managers and Sales Representatives have completed thisthree day programme. Our goal is to expand the VIP training to other operationalareas of the business in order to enhance our exceptional customer service. We also anticipate organic growth through deeper penetration of existingcustomers, particularly with jan/san products. A new catalogue containsinformation on more than 5,000 jan/san and foodservice items for ourredistribution business. We are also working closely with suppliers to furtherdevelop our jan/san capabilities on a national basis. Despite higher fuel charges we continue to manage our costs effectively.Proactive measures to minimise the impact on our cost base include modificationof truck driving behaviour and practices to improve driver safety and fueleconomy. Outbound freight costs have been kept to a minimum by implementation ofa new freight rating system. We are confident that our IT capabilities, supplychain and delivery methods will help to decrease costs, particularly in ourrecent acquisitions. In addition, we continue to strengthen our relationshipswith both suppliers and customers to further enhance our competitive position. UK & Ireland During the first half, when both sales and operating profit grew by 3%, wecontinued to implement many initiatives to grow our business and make ouroperations more efficient. The retail supplies business benefited from a new contract with a leading highstreet retailer which was won during 2005. Our history of growing business withcurrent customers and winning new ones continued in 2006 as we moved into a newsegment with an agreement to supply a national chain of garage forecourts.Our Manchester warehouse site is undergoing a significant expansion to handlethe growth in our retail business. While the horeca (hotel, restaurant and catering) market has been challenging,our business has implemented several initiatives to operate more efficiently atlower cost that will put us in a better position for the future. While revenue in the cleaning and safety business was flat, we saw animprovement in operating margins. Our customer segments provided mixed resultsas the sales grew to major contract cleaners and construction companies butdeclined to manufacturers and smaller, local customers. At the end of the firsthalf we secured a long term national contract with a leading contract cleanerand we also opened a new safety supplies branch in Essex to better serve thatlocal market. Margins were partly enhanced by a continuing focus on importedproducts and private label sales. In Ireland revenue in the horeca business was boosted by the continuinginvestment in the hotel sector while we consolidated our cleaning and safetybusinesses in Dublin to improve operating efficiencies and to maximise crossselling opportunities. Vending benefited from the acquisition of Midshires at the end of January. Thisincreased our presence in the Midlands and we have already completed theintegration of the Midshires sites with our existing locations. While the healthcare business was impacted by the NHS budget deficits, spendingcutbacks and the rising price of latex for gloves, we made good progress byoffering new product ranges and increasing our sales of vinyl and nitrilegloves. In early July we made an important acquisition, that of Southern Syringewith sales of £182 million in 2005. This company has a significant presence inthe healthcare distribution market and, although currently operating atconsiderably lower than the Group's average margins, will give us an opportunityto develop successfully in this sector. Continental Europe Revenue increased by 16% and operating profit rose by 11% as the businesscontinued to develop through stronger organic growth and the impact ofacquisitions. The combination of acquisitions made at lower than the businessarea average margin and a small reduction in operating returns caused a declinein the overall margin. In France our business has experienced satisfactory growth in spite of adifficult market. Sales to national account cleaning and hygiene customers havegrown and this has been further supported by the acquisition of PicardieHygiene. Margin pressure will be partly offset through the recent introductionof Techline, our own branded range of products, and our ongoing investment in anew IT system. Our personal protection equipment/safety products business hasperformed well principally due to strong organic growth. In the Netherlands our retail business achieved excellent results through verygood organic growth. We have increased our range of products and greatlybenefited from significant new contracts. Our business supplying horecacustomers also delivered a strong performance largely due to organic salesgrowth. In Germany the good growth in revenue came from additional business withnational and regional accounts and from the FIFA World Cup. Strong cost controlalso helped to improve profitability. Our retail business in Denmark has exceeded expectations as strong organicgrowth has been supported by ongoing cost savings. Our business supplying horecacustomers continues to prosper. A significant contract win at the end of 2005and the introduction of a food solutions product range have helped deliverprofitable growth. The recent acquisitions in central Europe have performed very well and haveincreased our interest in emerging market opportunities. Beltex, our cleaningand safety products business based in Hungary and acquired in November 2004,delivered a strong performance principally due to good underlying revenue growthand good cost control. Tecep, our retail business purchased in July 2005covering the principal countries of central Europe, delivered better thanexpected results due to increased sales of equipment and packaging to newsupermarkets in the region. Australasia A combination of organic and acquisition growth increased revenue and operatingprofit by 19% and 18% respectively. Our main business continues to grow organically and leverage its strong marketposition as a leading consolidator within its core sectors of healthcare,industrial, horeca and retail. We have achieved new contract wins and a newdistribution facility in New Zealand will further support our growthinitiatives. Our specialist healthcare business, Sanicare, which was acquired in July 2005,was successfully integrated into the Bunzl operating system in April. From July2006 Sanicare will also operate out of the new Bunzl facility in New Zealandwhich will be the platform for our business development within this region. In April we acquired Allcare Disposable Products, which expands our position andproduct offering into the food processor sector. Allcare is a recognised marketleader and the acquisition strengthens our position while creating opportunitiesfor wider distribution of existing product categories. We continue to pursue initiatives to operate more efficiently at lower cost. Wehave successfully conducted consolidation import trials from a warehouse inShanghai. The business is investing in new infrastructure along with upgradingexisting facilities and additional enhancements to our IT systems. An internetordering platform has been developed to complement our existing e-businessconnections with customers and suppliers. CONSOLIDATED INCOME STATEMENT Six months Six months to to Year to 30.6.06 30.6.05 31.12.05Continuing operations Notes £m £m £m--------------------------------------------------------------------------------Revenue Existing businesses 1,592.0 1,366.3 2,924.4Acquisitions 11.2-------------------------------------------------------------------------------- 2 1,603.2 1,366.3 2,924.4-------------------------------------------------------------------------------- Operating profit before intangibleamortisationExisting businesses 103.9 91.8 203.4Acquisitions 0.9--------------------------------------------------------------------------------Operating profit beforeintangible amortisation 104.8 91.8 203.4--------------------------------------------------------------------------------Intangible amortisation (9.7) (7.3) (15.9)--------------------------------------------------------------------------------Operating profit 2 95.1 84.5 187.5Finance income 3 9.5 14.2 22.0Finance cost 3 (16.5) (18.2) (32.8)--------------------------------------------------------------------------------Profit before income tax 88.1 80.5 176.7--------------------------------------------------------------------------------Profit before income tax andintangible amortisation 97.8 87.8 192.6--------------------------------------------------------------------------------UK income tax (5.3) (3.8) (8.7)Overseas income tax (22.8) (21.8) (48.0)--------------------------------------------------------------------------------Total income tax 4 (28.1) (25.6) (56.7)--------------------------------------------------------------------------------Profit for the period 60.0 54.9 120.0-------------------------------------------------------------------------------- Discontinued operationsProfit for the period - 4.2 4.2--------------------------------------------------------------------------------Total profit for the period 60.0 59.1 124.2-------------------------------------------------------------------------------- Attributable to:Equity holders of the Company 60.0 58.5 123.6Minority interests - 0.6 0.6--------------------------------------------------------------------------------Total profit for the period 60.0 59.1 124.2-------------------------------------------------------------------------------- Earnings per share of the totalprofit for the periodattributable to the Company'sequity holders --------------------------------------------------------------------------------Basic 17.5p 17.4p 36.5p--------------------------------------------------------------------------------Diluted 17.4p 17.3p 36.3p--------------------------------------------------------------------------------Earnings per share of the profitfor the period from continuing operations attributable to theCompany's equity holders--------------------------------------------------------------------------------Basic 6 17.5p 16.3p 35.4p--------------------------------------------------------------------------------Diluted 6 17.4p 16.2p 35.2p--------------------------------------------------------------------------------Proposed dividend per sharerelating to the period 5.3p 4.9p 15.7p-------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE Six months Six months to to Year to 30.6.06 30.6.05 31.12.05 £m £m £m--------------------------------------------------------------------------------Profit for the period 60.0 59.1 124.2 Actuarial gain/(loss) on pensionschemes 20.0 (19.2) (27.3)Deferred taxation on actuarial(gain)/loss (6.2) 6.2 8.4Currency translation differences* (3.3) 0.7 8.1Movement of cash flow hedgingreserve (0.6) 2.1 1.6--------------------------------------------------------------------------------Net income/(expense) recogniseddirectly in equity 9.9 (10.2) (9.2)--------------------------------------------------------------------------------Total recognised income for theperiod 69.9 48.9 115.0--------------------------------------------------------------------------------Adoption of IAS 32 and IAS 39 (1.3) (1.3)-------------------------------------------------------------------------------- 69.9 47.6 113.7--------------------------------------------------------------------------------Attributable to:Equity holders of the Company 69.9 48.0 114.1Minority interests - 0.9 0.9--------------------------------------------------------------------------------Total recognised income for theperiod 69.9 48.9 115.0-------------------------------------------------------------------------------- * Currency translation differences for the six months to 30 June 2006 of £(3.3)m(six months to 30 June 2005: £0.7m; year to 31 December 2005: £8.1m) are net ofgains of £9.1m (six months to 30 June 2005: £2.1m; year to 31 December 2005:losses of £15.7m) taken to equity as a result of designated effective netinvestment hedges. CONSOLIDATED BALANCE SHEET 30.6.06 30.6.05 31.12.05 £m £m £m--------------------------------------------------------------------------------AssetsProperty, plant and equipment 72.7 64.2 69.8Intangible assets 699.1 597.2 695.5Derivative assets - - 4.8Deferred tax assets 9.0 13.6 22.2--------------------------------------------------------------------------------Total non-current assets 780.8 675.0 792.3 Inventories 247.2 218.8 272.3Income tax receivable 2.1 2.8 2.5Trade and other receivables 468.4 424.3 470.7Derivative assets 0.6 0.8 0.9Cash and deposits 66.6 103.8 53.7--------------------------------------------------------------------------------Total current assets 784.9 750.5 800.1--------------------------------------------------------------------------------Total assets 1,565.7 1,425.5 1,592.4-------------------------------------------------------------------------------- EquityShare capital 111.7 110.0 111.4Share premium 115.8 98.9 112.8Merger reserve 2.5 - 2.5Capital redemption reserve 8.6 8.6 8.6Cash flow hedging reserve (0.3) 0.8 0.3Translation reserve 5.2 1.1 8.5Retained earnings 260.1 171.2 216.3--------------------------------------------------------------------------------Total equity 503.6 390.6 460.4 LiabilitiesInterest bearing loans and borrowings 289.0 287.8 339.7Retirement benefit obligations 39.9 53.2 60.0Other payables 2.0 4.8 1.5Derivative liabilities 2.2 - -Provisions 34.3 31.9 38.3Deferred tax liabilities 72.3 62.3 79.3--------------------------------------------------------------------------------Total non-current liabilities 439.7 440.0 518.8 Bank overdrafts 25.0 42.6 17.0Interest bearing loans and borrowings 49.2 59.0 52.5Income tax payable 52.0 41.8 40.8Trade and other payables 490.2 447.4 497.6Derivative liabilities 0.3 - -Provisions 5.7 4.1 5.3--------------------------------------------------------------------------------Total current liabilities 622.4 594.9 613.2--------------------------------------------------------------------------------Total liabilities 1,062.1 1,034.9 1,132.0--------------------------------------------------------------------------------Total equity and liabilities 1,565.7 1,425.5 1,592.4-------------------------------------------------------------------------------- CONSOLIDATED CASH FLOW STATEMENT Six months Six months to to Year to 30.6.06 30.6.05 31.12.05 £m £m £m--------------------------------------------------------------------------------Cash flow from operating activities ofcontinuing operations Profit before income tax 88.1 80.5 176.7Adjustments for non-cash items: Depreciation 7.1 6.7 13.6 Intangible amortisation 9.7 7.3 15.9 Other 3.0 (0.2) 4.5Working capital movement (17.2) (18.3) (11.4)Finance income (9.5) (14.2) (22.0)Finance cost 16.5 18.2 32.8Special pension contribution - (3.3) (3.3)Employee trust shares 1.8 2.2 (2.7)Other cash movements (7.3) (5.3) (6.4)--------------------------------------------------------------------------------Cash inflow from operatingactivities of continuing operations 92.2 73.6 197.7 Cash inflow from operatingactivities of discontinuedoperations - 16.1 2.2Income tax paid of continuingoperations (11.4) (31.2) (56.7)Income tax paid of discontinuedoperations - (2.8) (2.8)--------------------------------------------------------------------------------Cash inflow from operatingactivities 80.8 55.7 140.4 Cash flow from investing activities ofcontinuing operationsInterest received 3.4 10.5 11.8Purchase of property, plant andequipment (8.0) (4.8) (11.4)Sale of property, plant andequipment 0.3 0.6 0.8Purchase of businesses (24.0) (22.7) (124.4)Demerger of business - 115.4 115.4Other investment cash flows - (3.0) 0.7--------------------------------------------------------------------------------Cash (outflow)/inflow from investingactivities of continuing operations (28.3) 96.0 (7.1)Cash outflow from investingactivities of discontinuedoperations - (12.3) (12.3)--------------------------------------------------------------------------------Cash (outflow)/inflow from investingactivities (28.3) 83.7 (19.4) Cash flow from financing activities ofcontinuing operationsInterest paid (6.0) (10.5) (20.2)Dividends paid (16.5) (18.5) (57.8)Increase/(decrease) in short termloans 4.2 (87.6) (102.3)(Decrease)/increase in long termloans (31.9) (1.8) 37.6Shares issued for cash 3.3 11.4 26.6--------------------------------------------------------------------------------Cash outflow from financingactivities of continuing operations (46.9) (107.0) (116.1)Cash outflow from financingactivities of discontinuedoperations - (35.1) (35.1)--------------------------------------------------------------------------------Cash outflow from financingactivities (46.9) (142.1) (151.2) Exchange (loss)/gain on cash andcash equivalents of continuingoperations (0.7) (0.9) 2.1Exchange gain on cash and cashequivalents of discontinuedoperations - 0.3 0.3--------------------------------------------------------------------------------Net exchange (loss)/gain on cash andcash equivalents (0.7) (0.6) 2.4 Increase/(decrease) in cash and cashequivalents 4.9 (3.3) (27.8)-------------------------------------------------------------------------------- Cash and cash equivalents at startof period 36.7 64.5 64.5--------------------------------------------------------------------------------Increase in cash and cashequivalents of continuing operations 4.9 30.5 19.9Decrease in cash and cashequivalents of discontinuedoperations - (33.8) (47.7)--------------------------------------------------------------------------------Cash and cash equivalents at end ofperiod 41.6 61.2 36.7-------------------------------------------------------------------------------- Notes 1. Basis of preparationThe figures for the six months to 30 June 2006 and 30 June 2005 are unauditedand do not constitute statutory accounts. However, the auditors have carried outa review of the figures to 30 June 2006 and their report is set out in theIndependent review report. The comparative figures for the year ended 31December 2005 are not the Company's statutory accounts for the year. Thoseaccounts have been reported on by the Company's auditors and delivered to theRegistrar of Companies. The report of the auditors was unqualified and did notcontain statements under Section 237(2) or (3) of the Companies Act 1985. The interim financial information has been prepared on the basis of theaccounting policies set out in the Group's 2005 statutory accounts. Someadjustments have been made to the figures for the six months to30 June 2005, none of which materially impact the previously published financialinformation, to reflect reclassifications and interpretations of accountingstandards following the adoption of International Financial Reporting Standardsin 2005. As a result, for the six months to 30 June 2005, the intangibleamortisation charge and the related deferred tax have each reduced by £0.5m, thebasic and diluted earnings per share for the Group and for continuing operationshave each increased by 0.3p and total equity has increased by £2.3m. There hasbeen no change to the adjusted earnings per share for the six months to 30 June2005 or to the financial information for the year ended 31 December 2005. 2. Segment analysis Revenue Operating profit -------------------------------------------------------------------------------------------- Six months Six months Six months Six months to to Year to to to Year toContinuing 30.6.06 30.6.05 31.12.05 30.6.06 30.6.05 31.12.05operations £m £m £m £m £m £m-------------------------------------------------------------------------------------------North America 934.3 753.2 1,665.2 62.0 52.5 116.0UK & Ireland 334.3 326.1 664.2 25.5 24.8 56.1Continental Europe 278.3 239.8 490.0 20.9 18.8 37.9Australasia 56.3 47.2 105.0 3.9 3.3 8.4------------------------------------------------------------------------------------------- 1,603.2 1,366.3 2,924.4 112.3 99.4 218.4 Corporate (7.5) (7.6) (15.0)Intangibleamortisation* (9.7) (7.3) (15.9)-------------------------------------------------------------------------------------------- 1,603.2 1,366.3 2,924.4 95.1 84.5 187.5-------------------------------------------------------------------------------------------- * For the six months to 30 June 2006 intangible amortisation comprised NorthAmerica £2.1m, UK & Ireland £0.4m, Continental Europe £6.7m and Australasia£0.5m. For the six months to 30 June 2005 intangible amortisation comprisedNorth America £0.8m, UK & Ireland £0.1m, Continental Europe £6.1m andAustralasia £0.3m. For the year to 31 December 2005 intangible amortisationcomprised North America £2.4m, UK & Ireland £0.3m, Continental Europe £12.6m and Australasia £0.6m. 3. Finance income/(cost) Six months to Six months to Year to 30.6.06 30.6.05 31.12.05 £m £m £m----------------------------------------------------------------------===-------Deposits 3.8 9.3 11.8Expected return on pension schemeassets 5.7 4.9 10.2--------------------------------------------------------------------------------Finance income 9.5 14.2 22.0-------------------------------------------------------------------------------- Loans and overdrafts (10.7) (13.2) (22.5)Interest charge on pension schemeliabilities (5.8) (5.0) (10.3)--------------------------------------------------------------------------------Finance cost (16.5) (18.2) (32.8)-------------------------------------------------------------------------------- 4. Income tax for continuing operations A taxation charge of 32.0% (2005: 32.0%) on the profit on underlying operationsexcluding the impact of intangible amortisation of £9.7m (2005: £7.3m) andrelated deferred tax of £3.2m (2005: £2.5m) has been provided based on theestimated effective rate of taxation for the year. Including the impact ofintangible amortisation and related deferred tax, the overall tax rate is 31.9%(2005: 31.8%). 5. Dividends Dividends for the period in which they were declared are: Per share Total----------------------------------------------------------------------------------------- Six months Six months Six months Six months to to Year to to to Year to 30.6.06 30.6.05 31.12.05 30.6.06 30.6.05 31.12.05 £m £m £m------------------------------------------------------------------------------------------2004 final 9.15p 9.15p 39.3 39.32005 interim 4.9p 16.52005 final 10.8p 36.5------------------------------------------------------------------------------------------ 10.8p 9.15p 14.05p 36.5 39.3 55.8------------------------------------------------------------------------------------------ The 2006 interim dividend of 5.3p will be paid on 2 January 2007 to shareholderson the register on 17 November 2006. 6. Earnings per share Six months to Six months to Year to 30.6.06 30.6.05 31.12.05 £m £m £mContinuing operationsProfit for the period 60.0 54.9 120.0Adjustment 6.5 4.8 11.0--------------------------------------------------------------------------------Adjusted profit* 66.5 59.7 131.0--------------------------------------------------------------------------------Discontinued operationsProfit for the period (net ofminority interests) - 3.6 3.6-------------------------------------------------------------------------------- Basic weighted average ordinaryshares in issue (million) 343.7 336.0 338.8Dilutive effect of employee shareplans (million) 1.5 2.2 1.7--------------------------------------------------------------------------------Diluted weighted average ordinaryshares (million) 345.2 338.2 340.5-------------------------------------------------------------------------------- Continuing operationsBasic earnings per share 17.5p 16.3p 35.4p--------------------------------------------------------------------------------Adjustment 1.8p 1.5p 3.3p--------------------------------------------------------------------------------Adjusted earnings per share* 19.3p 17.8p 38.7p--------------------------------------------------------------------------------Diluted basic earnings per share 17.4p 16.2p 35.2p--------------------------------------------------------------------------------Discontinued operationsBasic earnings per share - 1.1p 1.1p--------------------------------------------------------------------------------Diluted basic earnings per share - 1.1p 1.1p-------------------------------------------------------------------------------- * Adjusted earnings per share excludes the charge for intangible amortisationand the related deferred tax. This adjustment removes a non-cash charge which isnot used by management to assess the underlying performance of the businesses. 7. Cash and cash equivalents and net debt 30.6.06 30.6.05 31.12.05 £m £m £m--------------------------------------------------------------------------------Cash at bank and in hand 27.4 82.9 48.4Short term deposits repayable on demand - 7.9 -Bank overdrafts (25.0) (42.6) (17.0)--------------------------------------------------------------------------------Cash 2.4 48.2 31.4Short term deposits repayable in less thanthree months 39.2 13.0 5.3--------------------------------------------------------------------------------Cash and cash equivalents 41.6 61.2 36.7--------------------------------------------------------------------------------Current liabilities - interest bearingloans and borrowings (49.2) (59.0) (52.5)--------------------------------------------------------------------------------Non-current liabilities - interest bearingloans and borrowings (289.0) (287.8) (339.7)--------------------------------------------------------------------------------Net debt (296.6) (285.6) (355.5)-------------------------------------------------------------------------------- 8. Movement in reserves Six months to Six months to Year to 30.6.06 30.6.05 31.12.05 £m £m £m--------------------------------------------------------------------------------Beginning of period 460.4 487.5 487.5Total recognised income for theperiod 69.9 48.9 115.0Final dividend (36.5) (39.3) (39.3)Interim dividend - - (16.5)Issue of share capital 3.3 11.4 29.2Employee trust shares 2.3 2.7 (1.1)Share based payments 4.2 1.8 8.0Demerger of business - (122.4) (122.4)--------------------------------------------------------------------------------End of period 503.6 390.6 460.4-------------------------------------------------------------------------------- Independent review reportby KPMG Audit Plc to Bunzl plc Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 June 2006 which comprises the Consolidated income statement, the Consolidated statement of recognised income and expense, the Consolidated balance sheet, the Consolidated cash flow statement and the related notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the Company in accordance with the terms of ourengagement to assist the Company in meeting the requirements of the ListingRules of the Financial Services Authority. Our review has been undertaken sothat we might state to the Company those matters we are required to state to itin this report and for no other purpose. To the fullest extent permitted by law,we do not accept or assume responsibility to anyone other than the Company forour review work, for this report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4'Review of interim financial information' issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of making enquiriesof Group management and applying analytical procedures to the financialinformation and underlying financial data and, based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance withInternational Statements on Auditing (UK and Ireland) and therefore provides alower level of assurance than an audit. Accordingly, we do not express an auditopinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006. KPMG Audit PlcChartered AccountantsLondon29 August 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Bunzl