28th Aug 2007 07:02
Bunzl PLC28 August 2007 Tuesday 28 August 2007 INTERIM RESULTS FOR SIX MONTHS ENDED 30 JUNE 2007 Bunzl plc, the international distribution and outsourcing Group, today announcesits interim results for the six months ended 30 June 2007. • Revenue was £1,725.6 million (2006: £1,603.2 million), up 14% at constant exchange rates • Operating profit before intangible amortisation was £111.7 million (2006: £104.8 million), up 13% at constant exchange rates • Profit before tax and intangible amortisation was £100.3 million (2006: £97.8 million), up 9% at constant exchange rates • Profit before tax was £89.1 million (2006: £88.1 million), up 8% at constant exchange rates • Earnings per share were 18.3p (2006: 17.5p), up 12% at constant exchange rates • Adjusted earnings per share* were 20.7p (2006: 19.3p), up 14% at constant exchange rates • Interim dividend up 9% to 5.8p Other highlights include: • Underlying operating margin* excluding acquisitions up from 6.5% to 6.8% • Competition clearance obtained for King Benelux acquisition which is expected to complete this week • Recent acquisitions of King Benelux and Coffee Point take 2007 acquisition spend to over £140 million • £90 million spent year to date on share buy back * before intangible amortisation Commenting on today's results, Anthony Habgood, Chairman of Bunzl, said: "These are good results from Bunzl. They combine strong revenue growth withimproving underlying margins and a good level of acquisition spend. Theyposition the Group well for the future." Michael Roney, Chief Executive of Bunzl, said: "I am very pleased to report that in the first half we have delivered doubledigit growth at constant exchange rates in revenue, operating profit andadjusted earnings per share. This growth, together with the two recentlyannounced acquisitions of King Benelux and Coffee Point, give us a strongplatform and momentum for further success." Enquiries: Bunzl plc TulchanMichael Roney, Chief Executive David AllchurchBrian May, Finance Director Stephen MalthouseTel: 020 7495 4950 Tel: 020 7353 4200 Note: A webcast of today's presentation to analysts will be available on www.bunzl.comby 12 noon today CHAIRMAN'S STATEMENT In our 50th year as a listed company on the London Stock Exchange, I am pleasedto announce that overall trading in the first half of 2007 has continued to bestrong with revenue of £1,725.6 million (2006: £1,603.2 million), up 14% atconstant exchange rates. This increase was the result of a combination oforganic growth and acquisition activity. The translation effect of the weak USdollar, which averaged $1.97 compared to $1.79 in 2006, caused a 6% reduction inthe sales increase from 14% to 8%. Once again demonstrating our strength acrossour international markets, all four geographic business areas showed increasedrevenues in local currencies over the comparable period last year. Operating profit before intangible amortisation was £111.7 million (2006: £104.8million), up 13% at constant exchange rates with each business area ahead of2006. Profit before tax increased to £89.1 million (2006: £88.1 million), up 8%at constant exchange rates. This was impacted by an increase of 63% in theinterest charge to £11.4 million as a result of higher interest rates combinedwith a higher level of debt, due to both acquisitions and the purchase ofshares, and amortisation up 15% as a result of acquisition activity. With lessshares in issue, due to the ongoing buy back programme, earnings per share roseto 18.3p (2006: 17.5p), up 12% at constant exchange rates. Adjusted earnings pershare, after eliminating intangible amortisation, increased to 20.7p (2006:19.3p), up 14% at constant exchange rates. We have continued with the share buyback during the second half and have bought 12.7 million shares into treasury inthe year to date at a cost of £90 million. We are currently expecting to spend atotal of about £100 million during the year. Strategy We continue to pursue our well defined strategy of focusing on our strengths andconsolidating our markets while also logically extending the product andgeographic areas in which we compete both organically and by acquisition.Expanding our geographic spread, increasingly co-ordinating our procurement andinternational sourcing and continually redefining and deepening our commitmentto our customers and markets remain important ongoing elements of our success. Delisting from the New York Stock Exchange In June the Company delisted its American Depositary Shares (ADSs) from the NewYork Stock Exchange and ended the registration of its securities under theSecurities Exchange Act of 1934. The Board believed that the administrativeburden and costs associated with the ADSs and the Exchange Act registrationoutweighed the benefits to the Company and its shareholders. Dividend The Board has decided to increase the interim dividend by 9% to 5.8p (2006:5.3p). Shareholders will again be able to participate in our dividendreinvestment plan. Board We have recently added to the independent element of our Board with theappointment of David Sleath as a non-executive director with effect fromSeptember. David is Group Finance Director of SEGRO plc. A former partner atArthur Andersen, he was Finance Director of Wagon plc before joining SEGRO in2005. He has a strong finance background and broad international experience andwe welcome him to the Board. CHIEF EXECUTIVE'S REVIEW Operating performance The translation effects of the weak US dollar and overall currency movementssignificantly reduced the reported growth rates of revenue and operating profit.The operations, including the relevant growth rates, are therefore reviewedbelow at constant exchange rates to remove the distorting impact of thesecurrency movements and, unless otherwise stated, in this review references tooperating profit are to operating profit before intangible amortisation. Thefollowing table compares the half year growth rates of revenue and operatingprofit as reported in sterling with those at constant exchange rates: Actual exchange rates Constant exchange rates Operating erating Revenue profit* Revenue profit* % Growth % Growth % Growth % Growth-------------------------------------------------------------------------------North America -3 -6 +7 +4UK & Ireland +40 +26 +40 +26Continental Europe +5 +17 +6 +18Australasia +10 +15 +12 +15Group +8 +7 +14 +13------------------------------------------------------------------------------- *Before intangible amortisation Changes in the level of revenue and profits at constant exchange rates have beencalculated by retranslating the results for the six months to 30 June 2006 atthe average exchange rates used for the six months to 30 June 2007. Revenue was £1,725.6 million, up 14%, and operating profit was £111.7 million,up 13%. While the overall operating margin was steady at 6.5%, the operatingmargin excluding the impact of acquisitions rose by 30 basis points from 6.5% to6.8%. In North America revenue and operating profit rose by 7% and 4% respectively,with the lower level of profit increase largely due to the impact of lowermargin acquisitions made in the second half of 2006. In the UK & Ireland revenueincreased by 40% while operating profit rose less, by 26%, as a result of theimpact of Southern Syringe which has improved margins during the first half but,on acquisition in July 2006, was operating at margins much lower than thebusiness area average. Revenue in Continental Europe was up 6% with an operatingprofit increase of 18% due to margin improvements in France and elsewhere in theregion. In Australasia the revenue and operating profit increased by 12% and 15%respectively due principally to good organic growth with some new contract wins. Operating cash generation partly funded our ongoing share buy back activity of£72.6 million and acquisition spend of £19.2 million during the first half. As a result our net debt rose from£430.7 million at the year end to £495.4 million with a net debt to EBITDA ratioof just under two times. Return on operating capital was down marginally to 60.8% compared to 62.7% inthe first half of 2006 and 61.7% for the year, due to the impact of recentacquisitions which have been operating at lower returns. Acquisitions Following the acquisition of King Benelux and Coffee Point, spend onacquisitions to date will be over £140 million adding annualised revenue inexcess of £150 million. In January we announced two acquisitions in North America. Tec Products, withrevenue of $14 million in 2006, is principally engaged in the supply of jan/sanand associated products through distributors. We also purchased Westgate whichis a supplier of personal protection equipment through distributors in theeastern US and Canada and had revenue of $18 million in 2006. At the end ofFebruary we acquired Iberlim based in Barcelona, Spain with revenue of €9million in 2006. This distributor of cleaning and hygiene products marks ourentry into the promising Spanish market. In mid-August we completed the purchaseof Coffee Point, a growing vending business based in London with revenue of £45million in the year ended March 2007. This substantially increases the size ofour vending business which is now the largest vending operator in the UK.Finally, clearance from the relevant competition authority has now been obtainedfor the acquisition of King Benelux, announced in July, which had proformarevenue in 2006 of €125 million. The business is principally engaged in thedistribution of products to the healthcare and contract cleaning sectors in theNetherlands and the foodservice, retail and healthcare sectors in Belgium. Thisis an important strategic acquisition, which we expect to complete shortly,since it will not only expand our successful business in the Netherlands intothe healthcare and contract cleaning sectors but will also provide a significantbusiness in Belgium. Prospects We are well positioned in the markets where we compete and the opportunities forcontinued growth both organically and by acquisition remain good. In NorthAmerica, although we anticipate that growth will remain below that of the otherbusiness areas for the rest of the year, margins from the larger acquisitionsmade in 2005 and 2006 are expected to improve and the 2007 acquisitions areintegrating well. In the UK & Ireland good organic growth should continue,resulting from increased volumes and new customers. Southern Syringe, whileoperating at lower than the business area average margins, is continuing toimprove and the results for the year should be well ahead of our initial plan.The performance of Keenpac, acquired in December 2006, is proceeding in linewith expectations. Organic growth in Continental Europe should continue to bestrong especially in the countries outside France and we remain confident thatour operational initiatives recently implemented in France will continue toimprove the business. Organic growth in Australasia is expected to remain strongand the 2006 acquisitions are continuing to develop well. The recentacquisitions of King Benelux and Coffee Point will also contribute to theresults in the second half. The current value of the US dollar is somewhat weaker than the average for thesecond half of 2006 and, should that continue, although the adverse impact willbe less in the second half than it has been in the first six months, it wouldhave a negative translation effect on our full year results for 2007. Given ourstrong competitive position in the markets in which we operate, the Board isconfident that the Group will continue to develop in a positive way. North America A combination of acquisitions and organic growth contributed to a US dollarincrease in revenue of 7% and in operating profit of 4%. In a mixed inputpricing environment, competitive pricing pressure and slower economic growthimpacted our results as compared to a very strong first half in 2006. Inparticular our businesses serving redistribution, non-food retail andconvenience stores grew well through the continued development of newopportunities. Early in the year two acquisitions were completed that have augmented ourgrowing redistribution business. New Jersey-based Tec Products is principallyengaged in the supply of jan/san and associated products while Westgate, alsobased in New Jersey, has advanced our safety products and PPE redistributionbusiness. These follow the acquisitions of Morgan Scott, UASI and Cole Harfordin the second half of 2006 that are integrating well into our business. The demand for redistribution of disposable packaging products for thefoodservice and jan/san sectors has grown in recent years, due partly to theincrease in suppliers' distribution costs, and our most recent acquisitions havebeen more concentrated in this area. Recognising that we need to organise theseand previous acquisitions together into one business, we have combinedPapercraft, our long standing redistribution business, with more recentlyacquired brands into a new, dynamic organisation. Based in Chicago, thisprovides comprehensive redistribution services under the name R3 which standsfor Reliable Redistribution Resource. This development gives us the ability tofulfil redistribution orders and manage the supply chain more efficiently andcost effectively. A new marketing support programme is underway with a customerfriendly R3 website and a new R3 catalogue. Customer feedback to date has beenpositive. Forty managers have now been certified as master trainers under the VIP (value,integrity and performance) training programme. We are currently evaluatingadditional training for sales representatives that will reinforce what theylearned in VIP, as well as take them to the next level to drive sales andincrease margins. VIP training has also recently been expanded to all customerservice and purchasing personnel. Promoting an exceptional safety culture is of the utmost importance. Our goal isto achieve a significant reduction in accidents, temporary personnel costs andinsurance premiums. Beginning with our drivers and warehouse personnel, we areincreasing safety awareness in all our locations through training, on-siteaudits and award programmes. Although fuel costs have now stabilised, they remain high and standardisedpractices and procedures for our drivers have been implemented to improve fueleconomy. Our environmental initiatives are continuing to move forward. Manybranches conserve natural resources by recycling paper and we are investigatingrecycling the plastic and cardboard waste from our warehouse operations. Theinstallation of high efficiency, low energy lights will reduce our operatingcosts and conserve energy in locations where we have new leases or move to newfacilities. We have also made available to our customers a broad range ofproducts considered to be environmentally friendly. We will continue to buildthis programme and adapt it to our customers' needs. We continue to develop further paperless systems to reduce our administrationcosts. Our e-warehouse radio frequency, scan-based technology is currently livein nearly two dozen branch locations. This technology increases warehouseefficiencies, reduces costs and improves customer service and has allowed us tomeet the e-commerce and labelling requirements of several large nationalcustomers. UK & Ireland The benefit of acquisitions completed in 2006, together with customer wins andoperational initiatives and restructuring, has led to significant revenue growthof 40% and operating profit growth of 26%. Our retail supplies business had a good start to the year helped partly byaccount wins achieved last year. We successfully renewed one of our largestcontracts and expanded into additional product categories with another existingcustomer that will benefit the second half. The acquisition of Keenpac inDecember extended our product offering to premium retail packaging. The businesshas continued to develop since acquisition due to a new contract with a leadingsupermarket and additional luxury brand customers. Following a difficult 2006, the hotel, restaurant and catering (horeca) businesshas benefited from the restructuring activity undertaken last year. With animproved operational base we have won significant new business and a majorrestaurant contract has been renewed with additional product categories awardedfor the second half. Operational improvements are continuing and, after asuccessful pilot, a new vehicle routing and loading system is being rolled outto improve fuel and vehicle usage. The cleaning and safety businesses also performed well with additional accountwins and the impact of the new Essex warehouse opened last year. The cleaningand hygiene business has started the transition to the safety business'scomputer system and this will be completed by the end of 2007. Greenham, our UKsafety business, renewed its largest contract which is within the public sectorand continues to grow within the construction sector securing anothersignificant national account during the period. In Ireland the horeca business continued to grow despite fewer new hotelopenings. The cleaning and safety business benefited from the rationalisation toa single site at the end of the first half last year. The retail business, whichwas refocused under new management at the end of 2006, had a positive start tothe year with new customer wins and the appointment of a sales manager topromote the Keenpac range. Our vending business benefited from Midshires which was acquired early last yearand work is underway to introduce a new computer system across the business thatwill improve operating efficiencies. The recently completed acquisition ofCoffee Point, which has a reputation for providing excellent service andinnovative products with a strong and growing customer base, has expanded ourbusiness to become the largest vending operator in the UK. The revenue for both our healthcare business and for the business area overallwas significantly enhanced by the acquisition of Southern Syringe at thebeginning of July 2006. While we have not yet finished the integration, with theIT system implementation still in progress, costs are under control, operatingmargins have improved and performance is well ahead of our initial plan. Continental Europe At constant exchange rates revenue increased by 6% and operating profit rose by18% as good organic sales growth was accompanied by both improved margins andtight cost control. The cleaning and hygiene business in France experienced strong marginimprovement and improved cost efficiencies against a background of difficultmarket conditions resulting in slower sales growth compared to the rest ofContinental Europe. Sales of our Techline own brand products have continued togrow well and the product range has been extended. Investment in a new IT systemcontinues and the first locations have gone live. Improved margins and costcontrol have also enabled our personal protection equipment/safety productsbusiness in France to increase profits during the period. In the Netherlands our retail business continues to generate excellent resultsfrom strong organic growth following contract wins and extensions to the productrange. Our horeca business also continues to deliver strong organic growth andhas won a number of new accounts. The business in the Netherlands will beexpanded considerably by the acquisition of King Benelux which will extend thebusiness into the healthcare and contract cleaning sectors and also provide asignificant business in Belgium. In Germany, revenue growth was good despite increased competition and theexceptional benefits in 2006 from the FIFA World Cup. Improvement has come inparticular from regional accounts and tight cost control which has led toimproved returns. The retail business in Denmark has continued to deliver good profit growthfollowing recent account wins in higher margin sectors. Our business supplyinghoreca customers has also achieved above average sales growth and improvedmargins. Our businesses in central Europe are performing very strongly and are benefitingfrom the roll-out of a new IT system. Beltex, our cleaning and safety productsbusiness in Hungary and Romania, has enjoyed high levels of organic sales growthas well as delivering improved margins. Tecep, our retail business covering themain central European countries, has also delivered improved returns on highlevels of organic growth. Iberlim, our cleaning and hygiene business in Spain acquired at the end ofFebruary, is performing in line with expectations. Australasia During the first half revenue increased by 12% and operating profit rose by 15%at constant exchange rates due principally to strong organic growth. Our largest business benefited from new contract wins within its core sectors ofhealthcare, industrial, horeca and retail across the region. During the secondhalf of last year we expanded into the catering equipment sector, where theproduct range complements our already strong and growing position within horecaand healthcare, and this business has continued to develop during the firsthalf. Our food processor supplies businesses, Lesnies and Allcare, have progresseddespite the effects of the drought conditions throughout most of Australia.Allcare has increased its market coverage and service offering by utilising thenational infrastructure of Lesnies. These two businesses are complementary inthis sector and this creates opportunities for wider distribution of existingproduct categories. Our specialist healthcare supplies business, Sanicare, has introduced anelectronic ordering and reporting system which will enhance their offering as amarket leader in the aged care sector. To support our organic growth objectives we have recently introduced the VIPsales training programme to our national salesforce following its success inNorth America. We are confident that this programme will benefit our sales teamsby improving the skills and techniques required to establish and maintainpreferred relationships with our key customers. Consolidated income statement Growth Six months to Six months to Actual Constant Year to 30.6.07 30.6.06 exchange exchange 31.12.06 Notes £m £m rates rates £m------------------------------------------------------------------------------------------Revenue 2 1,725.6 1,603.2 8% 14% 3,333.2------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------Operating profit beforeintangible amortisation 111.7 104.8 7% 13% 226.3------------------------------------------------------------------------------------------ Intangible amortisation (11.2) (9.7) (19.9)------------------------------------------------------------------------------------------Operating profit 2 100.5 95.1 6% 12% 206.4Finance income 3 10.1 9.5 19.6Finance cost 3 (21.5) (16.5) (36.3)------------------------------------------------------------------------------------------Profit before income tax 89.1 88.1 1% 8% 189.7------------------------------------------------------------------------------------------Profit before income tax and intangibleamortisation 100.3 97.8 3% 9% 209.6------------------------------------------------------------------------------------------ UK income tax (5.7) (5.3) (9.1)Overseas income tax (22.5) (22.8) (51.2)------------------------------------------------------------------------------------------Total income tax 4 (28.2) (28.1) (60.3)------------------------------------------------------------------------------------------Profit for the period 60.9 60.0 2% 8% 129.4------------------------------------------------------------------------------------------ Earnings per shareBasic 6 18.3p 17.5p 5% 12% 37.8p------------------------------------------------------------------------------------------Diluted 6 18.1p 17.4p 4% 11% 37.5p------------------------------------------------------------------------------------------ Proposed dividend per share relatingto the period 5.8p 5.3p 9% 9% 17.0p------------------------------------------------------------------------------------------ Consolidated statement of recognised income and expense Six months to Six months to Year to 30.6.07 30.6.06 31.12.06 £m £m £m-------------------------------------------------------------------------------Profit for the period 60.9 60.0 129.4 Actuarial gain on pension schemes 12.6 20.0 17.4Deferred tax on actuarial gain (3.8) (6.2) (5.5)Currency translation differences* 3.3 (3.3) (7.1)Loss recognised in cash flow hedgereserve (0.3) (0.3) (0.3)Movement from cash flow hedgereserve to income statement 0.3 (0.3) (0.3)-------------------------------------------------------------------------------Net income recognised directly inequity 12.1 9.9 4.2-------------------------------------------------------------------------------Total recognised income for theperiod 73.0 69.9 133.6------------------------------------------------------------------------------- *Currency translation differences for the six months to 30 June 2007 of £3.3m(six months to 30 June 2006: £(3.3)m; year to 31 December 2006: £(7.1)m) are netof losses of £0.3m (six months to 30 June 2006: gains of £9.1m; year to 31December 2006: gains of £17.6m) taken to equity as a result of designatedeffective net investment hedges. Consolidated balance sheet 30.6.07 30.6.06 31.12.06 £m £m £m-------------------------------------------------------------------------------AssetsProperty, plant and equipment 76.3 72.7 74.3Intangible assets 784.4 699.1 776.7Derivative assets 2.1 - 5.4Deferred tax assets 1.0 9.0 4.1-------------------------------------------------------------------------------Total non-current assets 863.8 780.8 860.5 Inventories 280.7 247.2 290.8Income tax receivable 1.7 2.1 2.7Trade and other receivables 534.2 468.4 521.2Derivative assets 0.1 0.6 0.1Cash and deposits 39.2 66.6 49.0-------------------------------------------------------------------------------Total current assets 855.9 784.9 863.8-------------------------------------------------------------------------------Total assets 1,719.7 1,565.7 1,724.3------------------------------------------------------------------------------- EquityShare capital 112.3 111.7 112.0Share premium 123.7 115.8 119.8Merger reserve 2.5 2.5 2.5Capital redemption reserve 8.6 8.6 8.6Cash flow hedge reserve (0.3) (0.3) (0.3)Translation reserve 4.7 5.2 1.4Retained earnings 203.6 260.1 244.0-------------------------------------------------------------------------------Total equity 455.1 503.6 488.0 LiabilitiesInterest bearing loans and borrowings 519.6 289.0 456.9Retirement benefit obligations 13.8 39.9 37.5Other payables 4.7 2.0 5.6Derivative liabilities 2.4 2.2 -Provisions 47.6 34.3 44.6Deferred tax liabilities 67.9 72.3 73.0-------------------------------------------------------------------------------Total non-current liabilities 656.0 439.7 617.6 Bank overdrafts 11.0 25.0 23.9Interest bearing loans and borrowings 3.8 49.2 4.3Income tax payable 49.9 52.0 58.4Trade and other payables 537.6 490.2 524.5Derivative liabilities 0.3 0.3 0.7Provisions 6.0 5.7 6.9-------------------------------------------------------------------------------Total current liabilities 608.6 622.4 618.7-------------------------------------------------------------------------------Total liabilities 1,264.6 1,062.1 1,236.3-------------------------------------------------------------------------------Total equity and liabilities 1,719.7 1,565.7 1,724.3------------------------------------------------------------------------------- Consolidated cash flow statement Six months to Six months to Year to 30.6.07 30.6.06 31.12.06 £m £m £m-------------------------------------------------------------------------------Cash flow from operating activitiesProfit before income tax 89.1 88.1 189.7Adjustments for non-cash items: depreciation 7.4 7.1 14.6 intangible amortisation 11.2 9.7 19.9 share based payments 2.0 1.6 3.0 other (1.3) (0.9) 1.0Working capital movement (13.0) (17.2) (20.0)Finance income (10.1) (9.5) (19.6)Finance cost 21.5 16.5 36.3Provisions and pensions (4.2) (5.0) (5.7)Special pension contribution (9.5) - (5.0)-------------------------------------------------------------------------------Cash generated from operations 93.1 90.4 214.2Income tax paid (32.9) (11.4) (40.5)-------------------------------------------------------------------------------Cash inflow from operating activities 60.2 79.0 173.7 Cash flow from investing activitiesInterest received 2.5 3.4 8.5Purchase of property, plant andequipment (9.4) (8.0) (15.8)Sale of property, plant and equipment 0.9 0.3 4.3Purchase of businesses (19.2) (24.0) (156.7)Other investment cash flows - - (1.0)-------------------------------------------------------------------------------Cash outflow from investingactivities (25.2) (28.3) (160.7) Cash flow from financing activitiesInterest paid (14.8) (6.0) (24.9)Dividends paid (17.6) (16.5) (53.3)(Decrease)/increase in short term loans (0.4) 4.2 (28.5)Increase/(decrease) in long term loans 69.6 (31.9) 141.4Net proceeds from employee shares 3.7 5.1 5.2Purchase of own shares into treasury (72.6) - (63.1)-------------------------------------------------------------------------------Cash outflow from financing activities (32.1) (45.1) (23.2) Net exchange gain/(loss) on cash andcash equivalents 0.2 (0.7) (1.4) Increase/(decrease) in cash and cashequivalents 3.1 4.9 (11.6)------------------------------------------------------------------------------- Cash and cash equivalents at startof period 25.1 36.7 36.7-------------------------------------------------------------------------------Increase/(decrease) in cash and cashequivalents 3.1 4.9 (11.6)-------------------------------------------------------------------------------Cash and cash equivalents at end ofperiod 28.2 41.6 25.1------------------------------------------------------------------------------- Notes 1. Basis of preparation The figures for the six months to 30 June 2007 and 30 June 2006 are unauditedand do not constitute statutory accounts. However, the auditors have carried outa review of the figures to 30 June 2007 and their report is set out in theIndependent review report. The comparative figures for the year to 31 December2006 are not the Company's statutory accounts for the year. Those accounts havebeen reported on by the Company's auditors and delivered to the Registrar ofCompanies. The report of the auditors was unqualified and did not containstatements under Section 237(2) or (3) of the Companies Act 1985. The interimfinancial information has been prepared on the basis of the accounting policiesset out in the Group's 2006 statutory accounts. 2. Segment analysis Revenue Operating profit -------------------------------------------------------------------------------------- Six months to Six months to Year to Six months to Six months to Year to 30.6.07 30.6.06 31.12.06 30.6.07 30.6.06 31.12.06 £m £m £m £m £m £m---------------------------------------------------------------------------------------------------North America 905.1 934.3 1,896.8 58.5 62.0 131.2UK & Ireland 467.2 334.3 774.6 32.1 25.5 59.7ContinentalEurope 291.4 278.3 544.7 24.4 20.9 40.9Australasia 61.9 56.3 117.1 4.5 3.9 9.6--------------------------------------------------------------------------------------------------- 1,725.6 1,603.2 3,333.2 119.5 112.3 241.4Corporate (7.8) (7.5) (15.1)Intangibleamortisation* (11.2) (9.7) (19.9)--------------------------------------------------------------------------------------------------- 1,725.6 1,603.2 3,333.2 100.5 95.1 206.4--------------------------------------------------------------------------------------------------- *For the six months to 30 June 2007 the intangible amortisation related to NorthAmerica £2.9m, UK & Ireland £1.0m, Continental Europe £6.7m and Australasia£0.6m. For the six months to 30 June 2006 the intangible amortisation related toNorth America £2.1m, UK & Ireland £0.4m, Continental Europe £6.7m andAustralasia £0.5m. For the year to 31 December 2006 the intangible amortisationrelated to North America £4.8m, UK & Ireland £0.8m, Continental Europe £13.3mand Australasia £1.0m. 3. Finance income/(cost) Six months to Six months to Year to 30.6.07 30.6.06 31.12.06 £m £m £m--------------------------------------------------------------------------------Deposits 0.3 0.2 1.2Interest income from foreignexchange contracts 2.7 3.3 6.2Foreign exchange gains - - 0.4Expected return on pension schemeassets 6.9 5.7 11.6Other finance income 0.2 0.3 0.2--------------------------------------------------------------------------------Finance income 10.1 9.5 19.6-------------------------------------------------------------------------------- Bank loans and overdrafts (14.8) (10.4) (22.4)Interest expense from foreignexchange contracts (0.3) (0.1) (0.3)Interest charge on pension schemeliabilities (6.3) (5.8) (12.0)Other finance expense (0.1) (0.2) (1.6)--------------------------------------------------------------------------------Finance cost (21.5) (16.5) (36.3)-------------------------------------------------------------------------------- 4. Income tax A tax charge of 31.3% (six months to 30 June 2006: 32.0%; year to 31 December2006: 32.0%) on the profit on underlying operations excluding the impact ofintangible amortisation of £11.2m (six months to 30 June 2006: £9.7m; year to 31 December 2006: £19.9m) and related deferred tax of £3.2m (six months to 30 June2006: £3.2m; year to 31 December 2006: £6.7m) has been provided based on theestimated effective rate of tax for the year. Including the impact of intangibleamortisation and related deferred tax, the overall tax rate is 31.6% (six monthsto 30 June 2006: 31.9%; year to 31 December 2006: 31.8%). Of the decrease inthese tax rates compared to the rates applied to the prior periods, 0.2% of thereduction is due to a decrease in deferred tax provisions as a result of therecently announced change in the UK corporation tax rate to 28% which will takeeffect from April 2008. 5. Dividends Dividends for the period in which they were declared are: Per share Total ------------------------------------------------------------------------------------- Six months to Six months to Year to Six months to Six months to Year to 30.6.07 30.6.06 31.12.06 30.6.07 30.6.06 31.12.06 £m £m £m------------------------------------------------------------------------------------------------2005 final 10.8p 10.8p 36.5 36.52006 interim 5.3p 17.62006 final 11.7p 38.6------------------------------------------------------------------------------------------------ 11.7p 10.8p 16.1p 38.6 36.5 54.1------------------------------------------------------------------------------------------------ The 2007 interim dividend of 5.8p will be paid on 4 January 2008 to shareholderson the register on 16 November 2007. 6. Earnings per share Six months to Six months to Year to 30.6.07 30.6.06 31.12.06 £m £m £m-------------------------------------------------------------------------------Profit for the period 60.9 60.0 129.4Adjustment 8.0 6.5 13.2-------------------------------------------------------------------------------Adjusted profit* 68.9 66.5 142.6------------------------------------------------------------------------------- Basic weighted average ordinaryshares in issue (million) 333.1 343.7 342.1Dilutive effect of employee shareplans (million) 2.7 1.5 2.6-------------------------------------------------------------------------------Diluted weighted average ordinaryshares (million) 335.8 345.2 344.7------------------------------------------------------------------------------- Basic earnings per share 18.3p 17.5p 37.8pAdjustment 2.4p 1.8p 3.9p-------------------------------------------------------------------------------Adjusted earnings per share* 20.7p 19.3p 41.7p-------------------------------------------------------------------------------Diluted basic earnings per share 18.1p 17.4p 37.5p------------------------------------------------------------------------------- *Adjusted profit and adjusted earnings per share exclude the charge forintangible amortisation and the related deferred tax. This adjustment removes anon-cash charge which is not used by management to assess the underlyingperformance of the businesses. 7. Cash and cash equivalents and net debt 30.6.07 30.6.06 31.12.06 £m £m £m--------------------------------------------------------------------------------Cash at bank and in hand 36.5 27.4 45.2Short term deposits repayable in less thanthree months 2.7 39.2 3.8--------------------------------------------------------------------------------Cash and deposits 39.2 66.6 49.0Bank overdrafts (11.0) (25.0) (23.9)--------------------------------------------------------------------------------Cash and cash equivalents 28.2 41.6 25.1--------------------------------------------------------------------------------Interest bearing loans and borrowingsCurrent liabilities (3.8) (49.2) (4.3)Non-current liabilities (519.6) (289.0) (456.9)Derivative assets - fair value of interest rate swaps hedging fixed interest rate borrowings 2.1 0.3 5.4Derivative liabilities - fair value ofinterest rate swaps hedging fixed interest rate borrowings (2.3) (2.2) ---------------------------------------------------------------------------------Net debt (495.4) (298.5) (430.7)-------------------------------------------------------------------------------- Net debt includes the fair value of interest rate swaps hedging fixed interestrate borrowings. Net debt at 30 June 2006 has been re-presented on a consistentbasis. 8. Movement in reserves Six months to Six months to Year to 30.6.07 30.6.06 31.12.06 £m £m £m--------------------------------------------------------------------------------Beginning of period 488.0 460.4 460.4Total recognised income for the period 73.0 69.9 133.6Final dividend (38.6) (36.5) (36.5)Interim dividend - - (17.6)Issue of share capital 4.2 3.3 7.6Employee trust shares (2.9) 2.3 (1.5)Share based payments 4.0 4.2 5.1Purchase of own shares into treasury (72.6) - (63.1)--------------------------------------------------------------------------------End of period 455.1 503.6 488.0-------------------------------------------------------------------------------- Independent review report by 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 2007 which comprises the Consolidated incomestatement, the Consolidated statement of recognised income and expense, theConsolidated balance sheet, the Consolidated cash flow statement and the relatednotes. We have read the other information contained in the interim report andconsidered whether it contains any apparent misstatements or materialinconsistencies 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 PracticesBoard for use in the United Kingdom. A review consists principally of makingenquiries of Group management and applying analytical procedures to thefinancial information and underlying financial data and, based thereon,assessing whether the accounting policies and presentation have beenconsistently applied unless otherwise disclosed. A review excludes auditprocedures such as tests of controls and verification of assets, liabilities andtransactions. It is substantially less in scope than an audit performed inaccordance with International Standards on Auditing (UK and Ireland) andtherefore provides a lower level of assurance than an audit. Accordingly, we donot express an audit opinion 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 2007. KPMG Audit PlcChartered Accountants London28 August 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Bunzl