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REG - Bunzl PLC - Final Results - Part 1
Released: 22/02/2010
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RNS Number : 4320H
Bunzl PLC
22 February 2010
Monday 22 February 2010
-----------------------
ANNUAL RESULTS ANNOUNCEMENT
Bunzl plc, the international distribution and outsourcing Group, today
publishes its annual results for the year ended 31 December 2009.
2009 2008 Growth Growth
as reported at constant exchange
Revenue £4,648.7m £4,177.3m 11% 0%
Operating profit* £295.7m £280.5m 5% (6)%
Profit before tax* £257.8m £242.9m 6% (5)%
Adjusted earnings per 55.9p 52.7p 6% (6)%
share*
Dividend for the year 21.55p 20.6p 5%
Operating profit £253.9m £244.5m 4%
Profit before tax £216.0m £206.9m 4%
Basic earnings per 46.4p 44.5p 4%
share
Other highlights include:
· Group operating margin markedly improved in the second half of
the year compared to the first half
· Underlying revenue growth of 2.6% in North America, the largest
business area
· Cost reduction initiatives resulted in significant improvement
in the UK & Ireland operating margin in the second half of the year compared
to the first half
· Strong increase in operating margin in Continental Europe
compared to 2008
· Continued strong cash flow with operating cash flow to
operating profit* of 102% and net debt to EBITDA† at the year end reduced
to 2.2 times
· Track record of dividend growth continues with 5% increase
· Two acquisitions already completed in 2010
* Before intangible amortisation
† Operating profit before depreciation and intangible amortisation
Commenting on today's results, Michael Roney, Chief Executive of Bunzl,
said:
"The Group has delivered robust results against the backdrop of challenging
macro-economic conditions across its international markets. I am
particularly encouraged by the second half performance of all of the
business areas, highlighted by the positive underlying growth in North
America, the improvement in operating margins achieved in the UK & Ireland
and the Rest of the World and the higher operating margin in Continental
Europe.
Looking ahead, while the economic conditions are expected to remain
challenging, we believe that Bunzl should continue to show resilience and to
develop well, helped by our leading market positions, an improving
environment for acquisitions and our strong cash flow and balance sheet."
Bunzl also today announces that it has acquired Hamo A/S in Denmark from a
privately owned company which is wholly owned by Peter Bergman.
Based in Rødovre, Hamo is principally engaged in the supply of catering
disposables and light catering equipment to a variety of end users in both
the public and private sectors in Denmark. Pro forma revenue in the year
ended 31 December 2009 was DKK43.2 million and the gross assets acquired are
estimated to be DKK14.8 million.
Commenting on the acquisition, Michael Roney said:
"Hamo is a good fit with our existing catering supplies business in Denmark,
extends our customer base in this important market and complements the
business of Clean Care which we acquired in January. I am delighted to
welcome the management and staff to Bunzl."
Enquiries:
Bunzl plc Tulchan
Michael Roney, Chief Executive David Allchurch
Brian May, Finance Director Stephen Malthouse
Tel: 020 7725 5000 Tel: 020 7353 4200
Note:
A live webcast of today's presentation to analysts will be available on
www.bunzl.com commencing at 9.30 am.
CHAIRMAN'S STATEMENT
Against the background of the difficult macroeconomic conditions which
prevailed throughout 2009 across the international markets in which we
operate, I am pleased to report that the Group has produced a robust set of
results. The positive impact of exchange and acquisitions, combined with
new customer wins and additional business gained with existing customers
which have strengthened our position in the market, contributed to an 11%
increase in Group revenue to £4,648.7 million. At constant exchange rates
revenue was at the same level as the previous year.
Profit before tax and intangible amortisation increased 6% to £257.8
million but was down 5% at constant exchange rates as the more challenging
economic environment put pressure on margins, particularly in the UK &
Ireland and the Rest of the World due to reductions in revenue and the
transactional effect of significantly weaker sterling and Australian dollar
which affected the first six months of the year. Overall margins improved
in the second half largely due to the impact of cost reduction initiatives
taken, a reduced negative transaction impact from foreign exchange and
increased sales of cleaning and safety products related to H1N1
prevention. Basic earnings per share rose 4% to 46.4p, down 8% at constant
exchange rates, and adjusted earnings per share, after eliminating
intangible amortisation, increased 6% to 55.9p, down 6% at constant exchange
rates.
Dividend
The Board is recommending a 5% increase in the final dividend to
14.9p. This brings the total dividend for the year to 21.55p, a 5%
increase. Shareholders will again be able to participate in our scrip
dividend scheme which we introduced in 2009 to replace the dividend
reinvestment plan.
Strategy
We continue to pursue our well defined strategy of focusing on our
strengths, developing the business through organic growth and consolidating
the fragmented markets in which we compete, while at the same time
continuously improving the efficiency of our operations. Increasingly
co-ordinating our procurement and international sourcing and continually
redefining and deepening our commitment to our customers and markets, while
looking to extend our business into new geographies, remain important
ongoing elements of our strategy.
Investment
We have continued to invest in the business to enhance its asset base and
ensure that we maintain our competitive advantage. Systems are critical to
our ability to serve our customers in the most cost effective and efficient
manner and we strongly believe that continuously improving and upgrading
both our systems and facilities to increase functionality and efficiency
enables us to maintain our leadership in the marketplace.
Environment and climate change
Bunzl believes that a focus on the environment and climate change is key to
long term sustainability. We aim to minimise our environmental footprint
and the carbon emissions of our operations by continually seeking to improve
our efficiency, in particular relating to the usage of fuel by our truck
fleet as well as energy used for heating and ventilating our
facilities. For example, in the UK the installation of energy efficient
lighting in one of our major warehouses resulted in a 40% reduction in
electricity consumption and the introduction of two aerodynamic double deck
trailers to our fleet increased fuel efficiency by some 15% compared to the
trailers which they replaced. We also look to find ways of helping our
customers to reduce their own environmental impact by offering
environmentally friendly products and services such as in North America
where we provided compostable packaging for use at the Boeing Golf Classic
which assisted in the tournament achieving the highest recycling rate of any
PGA Tour event.
Employees
The turmoil in the world's economies has touched most people's lives and we
appreciate that 2009 has been a tough year for many of our
employees. However, whatever their personal circumstances, everyone
throughout the Group has continued to put the needs of our customers to the
fore and our employees have once again supported Bunzl and each other,
offering their ideas to increase the efficiency of our services. We are
very grateful for their continuing commitment and loyalty which are so
important for the future successful development of Bunzl.
Credit facilities
The Group remains highly cash generative and we will continue to use diverse
sources of funding to achieve our objectives. In 2009 our net cash inflow
of £126.3 million was used to reduce net debt and we raised a further £200
million (sterling equivalent) from the US private placement market, with
maturities ranging from five to ten years, resulting in total funding from
this market of over £500 million. We have also renewed some £140 million
of our banking facilities. Our undrawn committed facilities' headroom at
the end of the year was £541 million.
Board
After nearly 18 years with the Group, Anthony Habgood retired from the Board
at the end of June following his appointment as Chairman of Reed Elsevier
PLC and Reed Elsevier NV. Initially as Chief Executive and subsequently as
Chairman, Tony was instrumental in redefining the Group's strategy and
overseeing Bunzl's development into the focused and successful business that
it is today. We thank Tony for his tremendous contribution over many years
and wish him well for the future. I was appointed as Interim Chairman
pending the recruitment of a permanent successor and, following a process
overseen by the Nomination Committee, I am delighted to welcome Philip
Rogerson to the Board. Philip was appointed as Chairman designate on 1
January 2010 and will become Chairman on 1 March 2010. He is an
established company chairman with a wealth of international experience
across a number of different sectors, both at an operational level and as a
non-executive director. After more than nine years on the Board, I will
retire on 28 February 2010 knowing that I will be leaving the Company in
sound financial health, well positioned in its markets and with a strong
Board and management team to lead the Group forward.
Jeff Harris
Interim Chairman
CHIEF EXECUTIVE'S REVIEW
Operating performance
Revenue increased 11% to £4,648.7 million and operating profit before
intangible amortisation rose 5% to £295.7 million. After adjusting for
the positive impact from currency translation, revenue was at the same level
as 2008 while profits at constant exchange rates were held back by pressure
on margins, particularly in the UK & Ireland and the Rest of the World
resulting from the difficult market conditions and some transactional impact
of the significant weakening against the US dollar of sterling and the
Australian dollar in the latter part of 2008. The strong cash flow of the
Group once again continued as we converted 102% of our operating profit into
cash. In this review all references to operating profit are to operating
profit before intangible amortisation.
In North America revenue and operating profit rose by 19% and 16%
respectively due principally to the stronger US dollar and some organic
revenue growth. Revenue and operating profit fell by 3% and 26%
respectively in the UK & Ireland due to weaker performances in our less
resilient businesses (vending, catering equipment, safety and non-food
retail) and in Ireland and the negative transaction impact from weaker
sterling. In Continental Europe revenue rose 11% due to the stronger euro
and the full year impact of acquisitions made in 2008 and operating profit
increased 22% as a result of these factors and the positive impact in the
second half of the year from increased sales of cleaning and safety products
related to H1N1 prevention, a better customer mix and operating cost
reductions. In the Rest of the World revenue rose 8% due to the positive
impact of currency translation and prior year acquisitions while operating
profit declined 3% largely due to challenging economic conditions and the
transactional impact in the first half from the weaker Australian dollar.
Basic earnings per share were 46.4p, up 4%. Adjusted earnings per share,
after eliminating the effect of intangible amortisation, rose 6% to 55.9p, a
decline of 6% at constant exchange rates. Return on average operating
capital continued at a high level of 55%.
Since there has been a significant impact from strengthening foreign
currencies, principally the US dollar and the euro, the operations,
including the relevant growth rates, are reviewed below at constant exchange
rates to remove the impact of these currency movements. Changes in the level
of revenue and profits at constant exchange rates have been calculated by
retranslating the results for 2008 at the average exchange rates used for
2009.
Acquisitions
While acquisitions remain a key component of our strategy and we have held
discussions with a number of potential targets, acquisition activity has
decreased significantly since mid 2008 as the difference in our price
expectations and those of prospective sellers has proven to be an impediment
to finalising transactions.
In March we acquired the businesses of two companies in administration, W.K.
Thomas and Industrial Supplies, which were part of a group including King UK
which was also in administration. W.K. Thomas is a distributor throughout
the UK of foodservice products, particularly to customers in the catering
and airline sectors. Industrial Supplies is engaged in the distribution of
cleaning and hygiene products throughout the east of England. The
aggregate annualised revenue of these businesses is some £25 million per
annum.
In January 2010 we announced the acquisition of Clean Care, a business
principally engaged in the supply of cleaning and hygiene consumable
products and equipment to a variety of end users including contract cleaners
and other industrial and institutional customers throughout
Denmark. Revenue in the year ended 30 September 2009 was DKK60.4 million.
Today we are announcing a further acquisition in Denmark, Hamo, a
distributor of catering disposables and light catering equipment to
customers in both the public and private sectors, which had pro forma
revenue of DKK43.2 million in the year ended 31 December 2009.
Prospects
Even though the economic environment is expected to remain challenging and
uncertain, a return of economic growth to the markets in which we operate,
together with management initiatives already taken to reduce operating
costs, should have a favourable impact on profitability. In North America
underlying growth should be supported by new business wins and additional
business with existing customers. The difficult economic conditions in the
UK & Ireland are expected to persist, and as a result affect revenue, but
the positive impact from cost reductions and some benefit from stronger
sterling relative to the same period in 2009 should improve margins. In
Continental Europe, while we do not expect to repeat the significant benefit
from the sale of H1N1 related products which we saw towards the end of the
year, trading is expected to hold up well. The Rest of the World should
show improvement resulting from higher margins in Australasia and the return
to growth in our market sectors in Brazil.
While difficult economic conditions and the uncertain outlook in 2009 have
made it difficult for us to have conclusive discussions with potential
acquisition targets, we have completed two acquisitions since the end of the
year and we believe that the current environment will lead to us finalising
more transactions in 2010.
Although it is hard to predict the future direction of economies globally,
the Board believes that our businesses, which have leading positions in the
markets in which they compete, will continue to show resilience and should
develop well due to revenue growth and the positive impact of cost reduction
initiatives.
North America
In North America revenue rose 2% at constant exchange rates to £2,454.1
million (with underlying growth of 2.6%) as a result of new account wins,
particularly in the grocery and non-food retail sectors, and additional
penetration of existing customers. This increase was driven by volume
gains rather than by the impacts of price and product mix which were
negative. Difficult economic conditions continued to affect our customers'
own businesses during 2009 and also put pressure on our margins resulting in
a 1% decrease at constant exchange rates in operating profit to £155.3
million.
Grocery, our largest business, saw an increase in revenue as our leading
market position was enhanced principally by customers awarding us additional
business as they continued to recognise the benefits of outsourcing their
requirements for goods not for resale. Our value proposition of supplying
creative packaging solutions along with our one stop shop programme allows
our customers to reduce working capital and operating costs. In addition,
our wide range of biodegradable, recyclable and compostable products allows
them to reduce their impact on the environment.
Our redistribution business, R3, encountered difficult market conditions as
most of the foodservice customers in this sector themselves faced lower
sales due to consumers choosing less expensive alternatives for their
meals. However, a significant part of this volume decline was offset by
innovative programmes designed for the foodservice distributor, enabling
them to increase their assortment of packaging products while opening space
in their warehouses for more expensive food items. Additionally we
successfully implemented some comprehensive import programmes for several
large national foodservice distributors and buying groups. As well as the
innovations in the foodservice sector we were also able to offer a more
expansive jan/san (janitorial/sanitation) supplies programme through a
regional warehouse and purchasing system introduced late in 2008.
Despite a reduction in processed meat production in 2009, our food processor
business continued to grow through our focused expansion into fresh cut
produce processors, bakeries, specialty processors and meat processors which
are dedicated to supplying some of our large grocery and foodservice
accounts. As consumers continue to look at lower cost and take home
solutions that are more economical than eating out, our customers in this
sector should benefit. We also continue to broaden the array of products
available in an effort to expand our penetration into these accounts by
giving them creative solutions to sell more of their own products and
providing them with a more extensive one stop shop programme.
Our customers in the non-food retail sector suffered lower sales throughout
2009 as the challenging economic conditions negatively impacted consumers'
spending habits. However new business wins and the expansion of our
product line, including the introduction of jan/san items at several large
accounts, offset most of the decline in this sector. In addition we moved
from a third party warehouse to one of our own, driving cost savings and
improved productivity. Co-ordination between the Group's business areas
has also opened up new opportunities with some global customers in this
sector.
Our business serving the convenience store sector was negatively impacted by
both the reduction of consumer spending in, and the number of visits to,
these outlets. We have taken steps to offset the impact of these
circumstances by increasing product penetration at several of our large
accounts and by significantly reducing our operating costs. Furthermore,
several opportunities for new business developed late in the year as
customers continued to look for ways to reduce their investment in working
capital.
Programmes undertaken with many of our strategic suppliers to target
specific customers have produced successful results. We have partnered
with many of them on both new and environmentally friendly products and
innovative solutions to meet changing consumer needs. We have also
continued to expand our private label line by delivering alternative
solutions to our customers at various price points and we have worked
closely with our strategic suppliers on logistics programmes that reduce
supply chain costs and improve service to our mutual customers. Our import
programme has been expanded to provide our customers with quality, low cost
alternatives for many new products, enabling us to be competitive in the
marketplace as well as introduce alternative and creative solutions to
them. We have also continued to improve our logistics platform, allowing
us to service more efficiently our facilities in North America.
During the year we reduced our operating costs despite an increased level of
sales. Reduced fuel costs and freight rates and increased productivity
have contributed to the reduction. We consolidated six of our facilities,
mostly in the Northeast, into other existing facilities to streamline our
operations and improve service to our customers in the various business
sectors. We have also achieved substantial savings in updating our truck
fleet and warehouse transportation equipment by purchasing used rather than
new equipment.
Our consistent year on year revenue growth in North America in varying
macroeconomic cycles demonstrates that our value added offering to our
customers continues to be in demand even when economic conditions are at
their most difficult. Each customer has unique needs but our flexible
approach built on a national operating platform remains well placed to meet
the demands of our markets.
UK & Ireland
Our UK & Ireland business area had a difficult year with revenue falling by
4% at constant exchange rates to £1,068.4 million and operating profit down
27% to £57.8 million.
Our businesses here operate in a number of sectors which have been less
resilient to the prevailing economic conditions including vending, catering
equipment, safety and non-food retail. Disappointing performances in these
sectors, together with the particularly challenging market conditions in
Ireland, have detracted from our more resilient sectors being cleaning and
hygiene, healthcare, food retail and catering disposables.
The weakening of sterling from the levels of the first half of 2008 impacted
our margins as many of our products are sourced from euro or dollar
denominated countries and subsequently sold in sterling. The degree of
product cost increases caused by the rapid exchange rate changes had a
notable negative impact in the first half of 2009 and, in the challenging
economic environment, it took some time to be able to pass these cost
increases on to our customers. In order to mitigate the impact of both the
reductions in volumes and profit margins, we implemented a number of
programmes to reduce operating costs and position the businesses for more
robust performances going forward. As a result of the subsequent
strengthening of sterling and the cost reductions, we saw margins improve
significantly in the second half.
In our horeca (hotel, restaurant and catering) business we grew volumes as a
result of a number of customer wins, a competitor going into administration
and the acquisition of W.K. Thomas, an established supplier of foodservice
products to customers in the catering and airline sectors. In the early
part of 2009 margins were under greater pressure and since then extensive
work has been undertaken to review the costs of serving our accounts as we
have sought to operate more efficiently to the benefit of both our customers
and ourselves. Catering equipment volumes also came under pressure due to
the more discretionary nature of spending on such items. We have however
seen a slowing of this decline more recently as a result of active marketing
and category management campaigns.
Our food retail supplies business, supplying a consolidated range of goods
not for resale, had another good year in spite of a continuing decline in
demand for single use plastic carrier bags. Carrier bag volumes have
declined year on year since 2007 but now appear to be stabilising. Some of
the decline has been offset by reusable bags. Our approach has been to
extend the offering to our customers in terms of product ranges and also to
target more retailers who are looking to outsource the supply of their goods
not for resale. Our much smaller, less resilient, non-food retail supplies
business was adversely affected by the economic downturn.
Margins have also been under pressure in our healthcare business as many
products are imported resulting in higher sterling cost prices due to the
movement in exchange rates. The implementation of a new IT platform was
completed at the beginning of the year. This helped to enhance service
levels greatly and further work has been done to streamline our processes
and reduce costs as margins have been slow to recover.
Within our cleaning and safety business, volumes in the cleaning and hygiene
sector have proved to be resilient in the current economic cycle. Our
business has continued to develop well, both with established contracts with
a number of key customers and a continued increase in the proportion of
transactions that are handled via the internet. This has resulted in a
more efficient business that continues to deliver a consistently high level
of service. Industrial Supplies was acquired in March and this has proved
to be an excellent fit with our existing operations. Although the safety
sector has been particularly impacted by the downturn in construction, our
good position in this market, combined with our strong relationships with
our customers and the quick actions taken to realign the cost base with the
reduced level of activity, helped offset the pressure on sales and margins.
Vending has been severely affected by the slowdown in the corporate and
banking sectors. During the year the integration of Coffee Point was
completed and the implementation of a new IT system continued. Together
with the actions taken following the fall off in activity levels, these
initiatives have led to a significant reduction in the cost base and we
should start to see the benefits coming through in 2010.
During 2009 the economy in Ireland contracted by 8% and this has had a
significant impact on our business there. The hospitality sector which we
serve has been disproportionately affected due to declining demand, a fall
in tourism and an oversupply of hotel rooms. This has necessitated an
aggressive programme of cost cutting and infrastructure rationalisation and
we have worked hard to maintain a robust business that is well positioned
for a future recovery.
Continental Europe
In an environment of declining economic output across the region, revenue
only fell by 1% at constant exchange rates to £910.2 million and operating
profit rose 9% to £81.7 million. Particular focus was placed on gross
margin management as sales growth started to slow towards the end of
2008. In addition costs were reduced quickly to reflect the lower levels
of activity such that the overall operating margin has improved.
In France, our cleaning and hygiene business saw only a minor reduction in
revenue as the loss of some business was compensated by some new customer
wins and increased sales of products related to H1N1 prevention in the
second half. Margins improved, in part due to greater sales of own brand
and imported products, and operating costs fell, resulting in significant
profit growth. Two more regional businesses implemented the new ERP system
and the roll out is scheduled to be complete in the first half of 2010
enabling further efficiency gains to be realised. Our personal protection
equipment business also benefited from H1N1 related sales, improved margins
and lower costs, delivering higher profits than in 2008 despite its exposure
to the industrial sector.
In the Netherlands our horeca, food retail and cleaning and hygiene
businesses all improved gross margins. Total operating costs were tightly
controlled leaving profit at a similar level to last year despite lower
sales, particularly in the horeca and retail sectors. Worldpack, acquired
in June 2008, performed well in the first half but has seen a slowdown in
recent months due to its exposure to the non-food retail sector.
In Belgium weaker sales have also been compensated for by stronger margins
and lower costs. Following disruption in 2008 due to a warehouse
relocation and IT implementation, the cleaning and hygiene business has
delivered strong profit growth from its more efficient operating
platform. The retail business has also performed well despite particularly
slow sales of industrial packaging and delivered above average profit
growth.
In Germany sales remained robust in our main horeca sector although were
weaker in guest amenities, despite new customers won and cross-selling
opportunities exploited with other parts of the Group, due to the slowdown
in the hotel sector. Gross margins improved and costs remained tightly
managed. In addition the business benefited from the full year impact of
savings made from the 2008 integration of our two warehouses.
In Denmark our retail business improved margins and reduced costs to report
a rise in profits despite a slowdown in its sectors, especially the sale of
capital goods to supermarkets. The horeca business increased both sales
and operating margins, benefiting from its relocation to more efficient
premises at the start of 2009. Clean Care, a distributor of cleaning and
hygiene consumables and equipment, and Hamo, a supplier of catering
disposables and light catering equipment, which were acquired in January and
February 2010 respectively, both have a strong customer focus and broad
product offering and are excellent additions to our existing business.
In central Europe trading conditions have been particularly difficult with a
significant slowdown in industrial production and retail store openings
adversely impacting our businesses in the region. Margins have been under
pressure and as a result we undertook substantial cost reduction measures in
the first half of the year such that we are now well positioned to benefit
from an upturn in activity.
In Spain, our safety business continues to be impacted by difficult
conditions in its core markets for personal protection equipment. However,
margins remain robust and cost reduction measures have reduced the impact of
lower sales. The cleaning and hygiene business has benefited from new
customer wins and improvements in margins to deliver strong profit growth
despite the weak Spanish economy.
Rest of the World
In the Rest of the World revenue decreased by 1% at constant exchange rates
to £216.0 million and operating profit fell by 12% to £17.0 million
principally due to the impact from the economic downturn and the
transactional impact in the first half of the year from the significant
weakening of the Australian dollar, particularly against the US dollar.
In Australasia cost reduction programmes were implemented early in the year
to help reduce the impact of these external factors. The subsequent
strengthening of the local currency also helped results in the second half.
Our largest business, Outsourcing Services, while affected by higher
imported product costs and reduced demand, benefited from operational
performance improvements and finished the year strongly with new business
opportunities which should continue the momentum into 2010. The business
strengthened its position in the more resilient healthcare sector following
the successful integration of our specialist healthcare business during the
year. Overall this business is now well positioned to capitalise on the
market as it recovers.
Our food processor business was also affected by the transaction impact of
currency and a reduction in demand from our major customers. The
combination of lower sales and increased margin pressure was only partially
offset by cost reductions. During the year we made significant changes to
the organisational structure of the business to strengthen its management
and operational performance. These included successfully completing the
migration of the remaining branch network onto the main IT system. In
addition we introduced new technology to automate order capture which will
improve the speed and accuracy of this process in the future.
Our catering equipment business felt the effects of the downturn in the
hospitality and catering sectors but benefited from work to improve its
product mix into the more resilient quick service restaurants and healthcare
sectors. This, combined with ongoing operational and service improvements,
helped improve results which were ahead of last year.
In Brazil, while our personal protection equipment business was affected by
the slowdown in the construction and industrial sectors that we serve, we
saw a higher level of sales towards the latter part of the year and improved
our margins compared to 2008. We are well positioned to benefit from
future improvements in economic activity. Work began on the implementation
of a new IT system to increase the efficiency of our operations and we
opened two new branches, thereby extending our geographic coverage of the
country.
Michael Roney
Chief Executive
Consolidated income statement
for the year ended 31 December 2009
Growth
Actual Constant
2009 2008 exchange exchange
Notes £m £m rates rates
Revenue 2 4,648.7 4,177.3 11% 0%
Operating profit before
intangible amortisation
2 295.7 280.5 5% (6)%
Intangible amortisation (41.8) (36.0)
Operating profit 2 253.9 244.5 4% (7)%
Finance income 3 16.8 27.6
Finance cost 3 (54.7) (65.2)
Profit before income tax 216.0 206.9 4% (6)%
Profit before income tax
and
257.8 242.9 6% (5)%
intangible amortisation
UK income tax (12.1) (8.6)
Overseas income tax (55.0) (56.1)
Total income tax 4 (67.1) (64.7)
Profit for the year
attributable to the
Company's equity holders
148.9 142.2 5% (7)%
Earnings per share
attributable to the
Company's equity holders
Basic 6 46.4p 44.5p 4% (8)%
Diluted 6 46.3p 44.4p 4% (7)%
Dividend per share 5 21.55p 20.60p 5%
Consolidated statement of comprehensive income
for the year ended 31 December 2009
2009 2008*
£m £m
Profit for the year 148.9 142.2
Other comprehensive income
Actuarial loss on pension schemes (19.3) (32.7)
Movement in pension schemes' minimum funding liabilities 5.5 12.6
Foreign currency translation differences for foreign (55.4) 186.4
operations
Gain/(loss) taken to equity as a result of designated
effective net investment hedges
8.9 (120.6)
Loss recognised in cash flow hedge reserve (6.3) (4.3)
Movement from cash flow hedge reserve to income statement 7.5 0.5
Income tax credit on other comprehensive income 7.8 26.8
Other comprehensive (expense)/income for the year (51.3) 68.7
Total comprehensive income for the year attributable to the
Company's equity holders
97.6 210.9
* Restated on adoption of International Financial Reporting Interpretations
Committee ('IFRIC') 14 'IAS 19 - The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their Interaction' (see Note 1).
Consolidated balance sheet
at 31 December 2009
2009 2008*
Notes £m £m
Assets
Property, plant and equipment 102.8 111.3
Intangible assets 7 1,196.6 1,301.3
Investment in associates 0.5 0.5
Derivative assets 28.8 49.1
Deferred tax assets 6.9 4.3
Total non-current assets 1,335.6 1,466.5
Inventories 429.3 490.6
Income tax receivable 6.5 5.8
Trade and other receivables 677.9 724.8
Derivative assets 0.9 1.7
Cash and deposits 8 57.9 65.6
Total current assets 1,172.5 1,288.5
Total assets 2,508.1 2,755.0
Equity
Share capital 113.0 112.6
Share premium 131.7 126.6
Translation reserve 52.7 96.0
Other reserves 8.5 6.2
Retained earnings 368.2 287.8
Total equity attributable to the Company's equity 674.1 629.2
holders
Liabilities
Interest bearing loans and borrowings 8 780.3 919.7
Retirement benefit obligations 59.8 55.9
Other payables 8.0 11.9
Derivative liabilities 2.6 -
Provisions 40.7 50.2
Deferred tax liabilities 104.0 134.1
Total non-current liabilities 995.4 1,171.8
Bank overdrafts 8 14.9 8.1
Interest bearing loans and borrowings 8 7.7 57.6
Income tax payable 59.4 55.0
Trade and other payables 744.4 813.3
Derivative liabilities 1.9 6.4
Provisions 10.3 13.6
Total current liabilities 838.6 954.0
Total liabilities 1,834.0 2,125.8
Total equity and liabilities 2,508.1 2,755.0
* Restated on adoption of IFRIC 14 and amendments to International
Accounting Standard ('IAS') 10 'Events after the reporting period' (See Note
1).
Consolidated statement of changes in equity
Other Retained
Translation
reserve reserves* earnings**
Share Share Total
capital premium equity
£m £m £m £m £m £m
At 1 January 2009 112.6 126.6 96.0 6.2 287.8 629.2
Profit for the 148.9 148.9
year
Actuarial loss on (19.3) (19.3)
pension schemes
Movement in
pension schemes'
minimum funding
liabilities
5.5 5.5
Foreign currency
translation
differences for
foreign
operations (55.4) (55.4)
Gain taken to
equity as a
result of
designated
effective net 8.9 8.9
investment hedges
Loss recognised (6.3) (6.3)
in cash flow
hedge reserve
Movement from
cash flow hedge
reserve to income
statement
7.5 7.5
Income tax credit
on other
comprehensive
income
3.2 1.1 3.5 7.8
Total (43.3) 2.3 138.6 97.6
comprehensive
(expense)/income
2008 interim (20.6) (20.6)
dividend
2008 final (45.3) (45.3)
dividend
Issue of share 0.4 5.1 5.5
capital
Employee trust 2.8 2.8
shares
Share based 4.9 4.9
payments
At 31 December 113.0 131.7 52.7 8.5 368.2 674.1
2009
Other Retained
Translation
reserve reserves* earnings**
Share Share Total
capital premium equity
£m £m £m £m £m £m
At 1 January 2008 112.4 124.6 9.5 10.0 238.3 494.8
Adoption of IFRIC (13.0) (13.0)
14
At 1 January 2008 112.4 124.6 9.5 10.0 225.3 481.8
as restated
Profit for the 142.2 142.2
year
Actuarial loss on (32.7) (32.7)
pension schemes
Movement in
pension schemes'
minimum funding
liabilities
12.6 12.6
Foreign currency
translation
differences for
foreign
operations 186.4 186.4
Loss taken to
equity as a
result of
designated
effective net (120.6) (120.6)
investment hedges
Loss recognised (4.3) (4.3)
in cash flow
hedge reserve
Movement from
cash flow hedge
reserve to income
statement
0.5 0.5
Income tax credit
on other
comprehensive
income
20.7 6.1 26.8
Total 86.5 (3.8) 128.2 210.9
comprehensive
income/(expense)
2007 interim (18.6) (18.6)
dividend
2007 final (41.3) (41.3)
dividend
Issue of share 0.2 2.0 2.2
capital
Employee trust (7.7) (7.7)
shares
Share based 1.9 1.9
payments
At 31 December 112.6 126.6 96.0 6.2 287.8 629.2
2008
* Other reserves comprises merger reserve of £2.5m (2008: £2.5m), capital
redemption reserve of £8.6m (2008: £8.6m) and cash flow hedge reserve of
£(2.6)m (2008: £(4.9)m).
** Restated for amendments to IAS 10.
Consolidated cash flow statement
for the year ended 31 December 2009
2009 2008
Notes £m £m
Cash flow from operating activities
Profit before income tax 216.0 206.9
Adjustments for non-cash items:
depreciation 23.5 19.7
intangible amortisation 41.8 36.0
share based payments 4.6 5.3
Working capital movement 17.5 (15.9)
Finance income (16.8) (27.6)
Finance cost 54.7 65.2
Provisions and pensions (17.4) (15.8)
Other (1.1) (1.5)
Cash generated from operations 322.8 272.3
Income tax paid (75.0) (66.4)
Cash inflow from operating activities 247.8 205.9
Cash flow from investing activities
Interest received 1.6 7.0
Purchase of property, plant and equipment (23.9) (20.9)
Sale of property, plant and equipment 3.0 5.7
Purchase of businesses (6.4) (115.9)
Investment in associates - (0.5)
Cash outflow from investing activities (25.7) (124.6)
Cash flow from financing activities
Interest paid (37.0) (48.4)
Dividends paid (62.3) (59.9)
Decrease in short term loans (48.2) (76.7)
(Decrease)/increase in long term loans (83.3) 165.8
Realised losses on foreign exchange contracts (7.3) (62.5)
Net proceeds from/(purchase of) from employee shares 3.5 (7.2)
Cash outflow from financing activities (234.6) (88.9)
Exchange (loss)/gain on cash and cash equivalents (2.0) 9.4
(Decrease)/increase in cash and cash equivalents (14.5) 1.8
Cash and cash equivalents at start of year 57.5 55.7
(Decrease)/increase in cash and cash equivalents (14.5) 1.8
Cash and cash equivalents at end of year 8 43.0 57.5
*Notes*
1. Basis of preparation
The consolidated financial statements for the year ended 31 December 2009
have been approved by the directors and prepared in accordance with EU
endorsed International Financial Reporting Standards ('IFRS') and
interpretations of the International Financial Reporting Interpretations
Committee ('IFRIC'). The consolidated financial statements have been
prepared on a going concern basis and under the historical cost convention,
with the exception of certain items which are measured at fair value.
Bunzl plc's 2009 Annual Report will be despatched to shareholders at the end
of March 2010. The financial information set out herein does not
constitute the Company's statutory accounts for the year ended 31 December
2009 but is derived from those accounts and the accompanying directors'
report. Statutory accounts for 2009 will be delivered to the Registrar of
Companies following the Company's Annual General Meeting which will be held
on 21 April 2010. The auditors have reported on those accounts; their
report was unqualified and did not contain statements under Section 495
(4)(b) of the Companies Act 2006.
The comparative figures for the year ended 31 December 2008 are not the
Company's statutory accounts for the financial year but are derived from
those accounts which have been reported on by the Company's auditors and
delivered to the Registrar of Companies. The report of the auditors was
unqualified and did not contain statements under Section 237 (2) or (3) of
the Companies Act 1985.
International Accounting Standard ('IAS') 1 (revised) 'Presentation of
Financial Statements' has been adopted during the year. The adoption of
this Standard has resulted in some presentational changes to the primary
financial statements which have had no impact on the reported net result or
financial position of the Group.
IFRS 8 'Operating Segments' has been adopted during the year. The Group is
managed through four business areas based on geographic regions which
represent the reporting segments under IFRS 8. Each of these business
areas supplies a range of products to customers operating primarily in the
foodservice, grocery, cleaning & safety, non-food retail and healthcare
markets. The performance of the four business areas is assessed by
reference to operating profit before intangible amortisation and this
measure also represents the segment results for the purposes of reporting in
accordance with IFRS 8. Accordingly, on the adoption of IFRS 8, no changes
were required to be made to any segment's revenue or results previously
presented in accordance with IAS 14 'Segment Reporting'.
IFRIC 14 'IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction' has been adopted during 2009 and as a
result the comparative figures have been restated. The impact on the
balance sheet at 31 December 2008 was to increase the retirement benefit
obligations by £5.5m (£18.1m at 31 December 2007), increase deferred tax
assets by £1.5m (£5.1m at 31 December 2007) and reduce retained earnings
by £4.0m (£13.0m at 31 December 2007). As a result of a change to the
trust deed for the UK defined benefit pension plan in the second half of
2009, IFRIC 14 no longer impacts the financial position of the Group and
consequently there is no additional retirement benefit obligation (or
related deferred tax asset) to recognise at 31 December 2009.
Following amendments to IAS 10 'Events after the Reporting Period', it
is no longer appropriate to recognise
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