Operating and Financial Review
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1Underlying Profit from Operations and Underlying Profit before Tax exclude brand intangible amortisation (£6 million), Restructuring costs (£72 million), Non-trading items (£25 million) and the impact of fair value accounting under IAS 39 (£23 million). Underlying earnings per share also excludes the tax effects of these adjustments, the credit arising on the recognition of the UK deferred tax asset (£104 million) and the intra-group transfer of intellectual property assets (£11 million). A full reconciliation between underlying and reported measures is included in the Segmental Analysis on pages 11 to 13. 2Excluding the estimated impact of revenues and profits in the 53rd week of 2004. 3Constant currency growth excludes the impact of exchange rate movements during the period. 4In this review EPS is presented on a basic total group basis and therefore includes the earnings contribution from Europe Beverages. All other amounts are presented on a continuing basis. Revenue in 2005 was £6,508 million. This was £423 million, or 7%, higher than in 2004. The net effect of exchange movements during the year increased reported Revenue by £105 million, mainly driven by a strengthening in the Australian Dollar and Mexican Peso. In 2005, acquisitions, net of disposals, resulted in an £11 million reduction in reported Revenue relative to the prior year. The reduction was driven principally by the disposal of Piasten, our German confectionery business, offset by additional revenues arising following our acquisition of Green & Black's. The absence of a 53rd week in 2005 reduced Revenues by an estimated £49 million, or 1%. Base business Revenue grew £378 million or 6% driven by growth in all four of our continuing business segments, led by Americas Confectionery and Asia Pacific. Underlying Profit from Operations (Profit from Operations before restructuring costs, non-trading items, brand intangibles amortisation and the IAS 39 adjustment) was £1,033 million. This was £79 million or 8% higher than in 2004. Consistent with the impact on Revenue, currency movements had a £16 million (2%) favourable impact on Underlying Profit from Operations. The full-year impact of acquisitions, net of disposals, was minimal at £1 million as the Green & Black's profits more than offset the impact of the Piasten disposal. The lack of the 53rd week in 2005 gave rise to an estimated £11 million reduction in Underlying Profit from Operations. After allowing for these items the base business grew by £73 million or 8%. Further explanations of these movements are set out in the business segment performance analysis starting on page 11. Profit from Operations was up £178 million (22%) compared to 2004. This was principally driven by the £79 million increase in Underlying Profit from Operations and £68 million lower Restructuring costs. Reported Profit before Tax increased by 31% to £843 million. The increase reflected the increase in Profit from Operations as well as a reduction in financing costs and an increase in our share of our associates' profits. |
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