RNS Number:7675J
Johnson Service Group PLC
11 September 2001
11 September 2001
JOHNSON SERVICE GROUP PLC
INTERIM RESULTS FOR THE 26 WEEKS ENDED 30 JUNE 2001
SUMMARY
- The UK's leading workwear rental specialist with a market share of
c 23% and Britain's largest and most successful multiple drycleaner with a
market share of c 20%
- Turnover increased by 7.7% to #110.7 million (2000: #102.8 million)
- Operating profit* increased by 12.2% to #16.8 million (2000: #15.0
million)
- Pre-tax profit* increased by 5.3% to #13.9 million (2000: #13.2 million)
- Adjusted, fully diluted earnings per share increased by 4.2% to 17.1p
(2000: 16.4p)
- Interim dividend per Ordinary share increased by 2.6% to 4.0p
(2000: 3.9p)
- A cash generative business.
* excluding goodwill amortisation, reorganisation costs and exceptional items.
Commenting on the results, Richard Zerny, Chief Executive, said:
"We are pleased to report a satisfactory performance for the Group at the
half-year stage and we remain confident that the inherent strength and
stability of our core businesses will enable us to achieve a satisfactory
overall result despite the worsening economic conditions."
Enquiries: Johnson Service Group PLC
Richard Zerny, Chief Executive
Mike Sutton, Finance Director
Tel: 020 7796 4133 on Tuesday 11 September 2001 only
thereafter on 0151 933 6161
Hudson Sandler
Michael Sandler / Wendy Baker
Tel: 020 7796 4133
JOHNSON SERVICE GROUP PLC
INTERIM RESULTS FOR THE 26 WEEKS ENDED 30 JUNE 2001
GROUP RESULTS AND DIVIDEND
We are pleased to report a satisfactory performance for the Group at the
half-year stage. This result was achieved in an economy which began to weaken
in the second quarter, impairing sales growth in our core textile rental
business.
Highlights of the Group results for the 26 weeks to June 30th were as follows:
* Turnover increased by 7.7% to #110.7 million (2000: #102.8
million), while operating profit, excluding goodwill amortisation,
reorganisation costs and exceptional items, increased by 12.2% to #16.8
million (2000: #15.0 million).
* Pre-tax profit, excluding goodwill amortisation, reorganisation
costs and exceptional items, increased by 5.3% to #13.9 million (2000:
#13.2 million). Adjusted earnings per share, on a fully diluted basis,
increased by 4.2% to 17.1p (2000: 16.4p).
* Goodwill amortisation amounted to #2.2million (2000: #1.5 million).
Reorganisation costs relating to the integration of Semara and the
reorganisation of CCG's Dublin operation, amounted to #4.3 million (2000:
#1.7 million). This completes the reorganisation charges for these two
businesses.
* The interest charge increased by #1.1 million to #2.9 million reflecting a
full six months' interest charge on the borrowings incurred at the time of
acquiring Semara (as opposed to just four months last year). The interest
charge was covered more than 5 times by profit.
* Net borrowings at June 30th 2001 were #85.5 million, compared to #94.6
million at December 31st, 2000, reflecting the cash generative nature of
the business and tight management of capital.
* The Board has decided to pay an interim dividend of 4.0p per share
(2000: 3.9p), an increase of 2.6%.
Divisional Trading Results
Our British textile rental businesses, including CCM, increased their turnover
by 16.1% to #63.7 million, while profit rose by 13.3% to #11.6 million. The
rise reflects six months' contribution from Semara, compared to four months in
last year's interim results, and it also reflects a net reduction of
approximately #1.5 million of former Semara linen turnover, which was disposed
of by February. Stalbridge Linen Services again achieved turnover growth, but
profit was constrained by the anticipated initial costs of the new sorting and
administration building in Shaftesbury, and by expansion into Scotland.
Johnsons Washroom Services' progress was impeded by some delays in making
acquisitions, and, consequently, the business made a larger loss in the period
than expected. CCM, the workwear manufacturing and sourcing company,
performed well, endorsing our decision to retain this part of Semara.
As already reported, we sold the Airline Services' business, acquired as part
of Semara, for #3.4m in March.
Turnover of CCG, our Irish textile rental business, decreased by 7.0% to #11.4
million. However, excluding the Dublin linen operation, which was sold early
in the year, turnover increased by 5.8%. As a result of management action,
operating profit increased to #1.0 million (2000: #0.6 million) and the profit
margin increased to 8.8% (2000: 5.1%). The Rathfarnham plant in Dublin closed
in April as planned, and the new Wilton premises opened in April to handle the
Sterile Surgical Pack business for the healthcare sector.
Like for like turnover of our British drycleaning business increased by 0.2%,
although headline turnover decreased by 0.3% to #35.6 million (2000: #35.7
million). Operating profit increased by 2.1% to #4.2 million (2000: #4.1
million). The profit margin increased to 11.8% (2000: 11.5%)
Outlook
At the AGM in May, we stated that, provided economic conditions remained
reasonably buoyant, 2001 should be another successful year for the Group.
Since then the economic situation in Britain and Ireland has deteriorated and
there is no doubt that this is now affecting some of the markets in which our
customers operate, particularly manufacturing and tourism.
With Semara successfully integrated, our core textile rental business is
operating more efficiently, but the full benefits will not be evident until
economic conditions improve.
Drycleaning continues to trade very profitably, in line with management
expectations, and remains highly cash generative.
We remain confident that the inherent strength and stability of our core
businesses will enable us to achieve a satisfactory overall result despite the
worsening economic conditions.
Copies of the interim report are to be sent to shareholders and will be
available to the public at the Company's registered office at Mildmay Road,
Bootle, Merseyside L20 5EW. The report can also be accessed on the internet
at www.johnsonplc.com.
John Hancox Richard Zerny
Chairman Chief Executive
JOHNSON SERVICE GROUP PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Note 26 Weeks 26 Weeks 53 Weeks
June June Dec
2001 2000 2000
#000 #000 #000
1 TURNOVER 110,697 102,818 220,404
1 OPERATING PROFIT BEFORE REORGANISATION COSTS
AND GOODWILL AMORTISATION 16,821 14,997 33,394
2 Reorganisation costs (4,307) (1,693) (5,630)
Amortisation of goodwill (2,212) (1,521) (3,902)
OPERATING PROFIT 10,302 11,783 23,862
3 EXCEPTIONAL ITEMS
Disposal of property fixed assets 156 (55) (10)
Disposal of US business - 622 545
PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST 10,458 12,350 24,397
Net interest (2,912) (1,789) (5,182)
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 7,546 10,561 19,215
4 Tax on profit on ordinary activities 3,451 3,509 7,138
PROFIT FOR THE PERIOD 4,095 7,052 12,077
5 Dividends 2,295 2,479 9,766
RETAINED PROFIT FOR THE PERIOD 1,800 4,573 2,311
PROFIT BEFORE TAX EXCLUDING REORGANISATION
COSTS, GOODWILL AMORTISATION AND EXCEPTIONAL 13,909 13,208 28,212
ITEMS
RATES OF DIVIDEND PER SHARE
Ordinary shares of 10p each:-
1st interim - paid - - 3.9p
1st interim - proposed 4.0p 3.9p -
Final - paid - - 13.2p
Preference shares of 10p each - paid 3.75p 3.75p 7.5p
6 BASIC EARNINGS PER SHARE 7.3p 12.9p 21.9p
ADJUSTED BASIC EARNINGS PER SHARE 17.4p 16.9p 37.2p
Preference shares of 10p each - paid
6 DILUTED EARNINGS PER SHARE 7.2p 12.6p 21.5p
ADJUSTED DILUTED EARNINGS PER SHARE - Basic 17.1p 16.4p 36.0p
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
There are no material gains or losses other than the profit for the period.
All operations, other than the profit on the disposal of the US business, are
continuing.
JOHNSON SERVICE GROUP PLC
CONSOLIDATED BALANCE SHEET
JUNE JUNE DECEMBER
2001 2000 2000
#000 #000 #000
Note
FIXED ASSETS
Goodwill 77,149 71,780 80,368
Tangible assets 83,551 87,365 88,071
Textile rental items 29,846 33,117 31,722
Investments 547 881 879
191,093 193,143 201,040
CURRENT ASSETS
Investments - 19,500 2,500
Stocks 8,319 8,043 7,998
Debtors: Amounts falling due within one 35,606 33,889 34,481
year
: Amounts falling due after 12,080 18,643 12,716
more than one year
Cash at bank and in hand - - 878
56,005 80,075 58,573
CURRENT LIABILITIES
Creditors:
Amounts falling due within one year (44,235) (47,214) (49,665)
NET CURRENT ASSETS 11,770 32,861 8,908
TOTAL ASSETS LESS CURRENT LIABILITIES 202,863 226,004 209,948
Creditors:
Amounts falling due after more than one (81,409) (104,780) (90,634)
year
PROVISIONS FOR LIABILITIES AND CHARGES (15,111) (15,224) (15,322)
NET ASSETS 106,343 106,000 103,992
CAPITAL AND RESERVES
Called-up share capital 5,763 5,941 5,943
8 Share premium account 6,610 5,706 5,747
8 Revaluation reserve 11,387 12,398 12,138
8 Other reserves (285) 107 (153)
8 Profit and loss account 82,868 81,848 80,317
9 SHAREHOLDERS' FUNDS 106,343 106,000 103,992
Non equity Shareholders' funds 175 5,906 5,906
Equity Shareholders' funds 106,168 100,094 98,086
106,343 106,000 103,992
JOHNSON SERVICE GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
26 Weeks 26 Weeks 53 Weeks
June June Dec
2001 2000 2000
#000 #000 #000
Note
Operating profit 10,302 11,783 23,862
Depreciation 17,685 16,759 36,115
Loss on sale of tangible fixed assets 2,330 169 693
Working capital and other items (net) (5,849) 1,043 2,861
NET CASH INFLOW FROM OPERATING ACTIVITIES 24,468 29,754 63,531
RETURNS ON INVESTMENTS AND SERVICING OF
FINANCE
Net interest paid (2,849) (2,284) (7,504)
Preference dividends paid (221) (345) (566)
NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS (3,070) (2,629) (8,070)
AND SERVICING OF FINANCE
TAXATION
Tax repaid (net) 935 (2,023) (8,912)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Payments to acquire tangible fixed assets (5,387) (4,356) (10,151)
Payments to acquire textile rental items (12,248) (10,067) (22,121)
Receipts from sales of tangible fixed assets 1,618 529 1,383
Proceeds from textile rental items withdrawn 2,580 2,243 4,807
from circulation
Movement in investments - (132) (130)
NET CASH OUTFLOW FOR
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (13,437) (11,783) (26,212)
ACQUISITIONS AND DISPOSALS
Payment to acquire businesses (3) (104,582) (104,834)
Cash generated by businesses held for resale 118 2,314 (647)
10 Receipts from disposal of businesses 5,540 622 13,847
NET CASH INFLOW FROM ACQUISITIONS AND 5,655 (101,646) (91,634)
DISPOSALS
EQUITY DIVIDENDS PAID (7,025) (6,134) (8,392)
CASH INFLOW BEFORE FINANCING 7,526 (94,461) (79,689)
FINANCING
Issue of Ordinary share capital 898 165 209
Debt due within 1 year:
Loan notes redeemed (18) (107) (180)
Debt due beyond 1 year:
Movement in unsecured loans (7,723) 75,784 62,378
Finance lease movement (1,148) (686) (1,820)
NET CASH OUTFLOW FROM FINANCING (7,991) 75,156 60,587
11 DECREASE IN CASH IN THE PERIOD (465) (19,305) (19,102)
JOHNSON SERVICE GROUP PLC
NOTES
1. Segmental information
Operating profit before
reorganisation costs and goodwill
Turnover amortisation
26 26 53 26 26 53
weeks weeks weeks weeks weeks weeks
June June Dec June June Dec
2001 2000 2000 2001 2000 2000
#000 #000 #000 #000 #000 #000
GB - Textile 63,666 54,823 122,630 11,608 10,244 23,474
rental
IR - Textile 11,391 12,248 25,429 1,004 629 1,558
rental
GB - 35,640 35,747 72,345 4,209 4,124 8,362
Drycleaning
110,697 102,818 220,404 16,821 14,997 33,394
As explained previously, the extent of the integration of the Semara business
with the existing business of the Group has meant that it is not possible to
report separately the post acquisition results of Semara.
There is no material difference between turnover by origin and by destination.
2. Reorganisation Costs
The reorganisation costs are in respect of the continued integration of the
Semara rental business and the withdrawal from the Dublin linen rental market.
3. Exceptional Items
26 weeks 26 weeks 53 weeks
June 2001 June 2000 Dec 2000
#000 #000 #000
Continuing Operations
Profit on sales of 156 (55) (10)
property fixed asset
Discontinued Operations
Disposal of US business - 622 545
156 567 535
4. Tax on profit on ordinary activities
26 weeks 26 weeks 53 weeks
June 2001 June 2000 Dec 2000
#000 #000 #000
Taxation has been estimated at:
Continuing Operations:
UK corporation tax 3,132 3,442 6,037
Irish corporation tax 65 41 (405)
3,197 3,483 5,632
UK deferred tax 254 26 1,219
Irish deferred tax - - 287
Total Continuing Operations 3,451 3,509 7,138
Reorganisation costs have reduced
the tax charge by:-
UK corporation tax 718 495 779
Irish corporation tax 18 - 19
Irish deferred tax - - 111
736 495 909
5. Dividends
26 weeks 26 weeks 53 weeks
June 2001 June 2000 Dec 2000
#000 #000 #000
Dividend on Ordinary shares 2,229 2,258 9,323
Dividend on 10p preference share 66 221 443
2,295 2,479 9,766
The first interim dividend, of 4.0p, on the Ordinary shares will be paid on 12
October 2001 to those Shareholders registered in the books of the Company at
21 September 2001. The dividend on the 10p Convertible preference shares was
paid on 2 July 2001.
The outstanding Convertible preference shares were converted into Ordinary
shares on 31 July 2001. No further dividends are payable on those shares.
6. Earnings Per Share
26 weeks 26 weeks 53 weeks
June 2001 June 2000 Dec 2000
#000 #000 #000
Profit for the period 4,095 7,052 12,077
Less dividend on Preference shares (66) (221) (443)
Profit attributable to Ordinary 4,029 6,831 11,634
Shareholders
Less gain on exceptional items (156) (567) (535)
Add reorganisation costs (net of 3,571 1,198 4,721
taxation)
Add goodwill amortisation 2,212 1,521 3,902
Adjusted profit attributable to 9,656 8,983 19,722
Ordinary Shareholders
Weighted average number of Ordinary 55,529,215 53,049,336 53,056,860
shares
Fully diluted number of Ordinary 56,864,252 56,063,166 56,066,444
shares
Adjusted earnings per share figures are given to exclude the effects of
reorganisation costs, goodwill amortisation and exceptional items, net of
taxation.
7. Land and Buildings
Land and buildings are included within tangible fixed assets at the valuation
adopted in the financial statements for the year to 30 December 2000 or where
acquired since that date at cost at the date of acquisition.
8. Reserves
Other Reserves
Share Revaluation Exchange Capital Merger Profit &
Premium Reserve Reserve Redemption Reserve Loss
Account Reserve Account
#000 #000 #000 #000 #000 #000
At 30 5,747 12,138 (1,993) 289 1,551 80,317
December
2000
Premium on 863 - - - - -
issue of
shares
Retained - - - - - 1,800
profit
Transfer of - (751) - - - 751
realised
profits
Arising on - - - 214 - -
conversion
Exchange - - (346) - - -
movement
At 30 June 6,610 11,387 (2,339) 503 1,551 82,868
2001
9. Reconciliation of Movements in Shareholders' Funds
26 weeks June 26 weeks June 53 weeks Dec
2001 2000 2000
#000 #000 #000
Profit for period 4,095 7,052 12,077
Dividends (2,295) (2,479) (9,766)
1,800 4,573 2,311
Other recognised gains and losses (346) 340 551
relating to the period
Movement in share capital (180) (111) (109)
Share premium 863 1,573 1,614
Capital redemption 214 169 169
Net addition to Shareholders' 2,351 6,544 4,536
funds
Opening Sahreholders' funds 103,992 99,456 99,456
Closing Shareholders' funds 106,343 106,000 103,992
10. Disposal of Businesses
26 weeks 26 weeks 53 weeks
June 2001 June 2000 Dec 2000
#000 #000 #000
Proceeds from disposal of Airline Services 2,725 - -
business
Proceeds from disposal of Linen business 1,454 - -
Proceeds from disposal of Dimensions 1,361 - 13,302
Corporatewear business
Proceeds from disposal of US business - 622 545
5,540 622 13,847
The investment held for resale at December 2000 of #2.5m was in respect of the
Airline Services business which was disposed of during the period to June
2001. The investment, together with other cash flows of the business,
resulted in an adjustment to the goodwill attributable to the acquisition of
Semara Holdings Plc of #338,000.
11. Reconciliation of Net Cash Flow to Movement in Net Debt
26 weeks 26 weeks 53 weeks
June 2001 June 2000 Dec 2000
#000 #000 #000
Decrease in cash in the period (465) (19,305) (19,102)
Cash outflow on change in debt and 8,889 (74,991) (59,522)
lease financing
Change in net debt resulting from 8,424 (94,296) (78,624)
cash flows
Finance leases - new (3) - (2,283)
Amortisation of issue costs of new (86) - (171)
bank loans
Loans and leases acquired with - (11,257) (11,254)
subsidiaries
Exchange difference 773 737 619
Movement in net debt in period 9,108 (104,816) (91,713)
Opening net debt (94,579) (2,866) (2,866)
Closing net debt (85,471) (107,682) (94,579)
12. Analysis of Net Debt
Other non-cash
At Cash changes Exchange At
30 Dec flow movement 30 June
2000 2001
#000 #000 #000 #000 #000
Cash in hand and at 878 (864) - (14) -
bank
Overdraft (2,645) 399 - 44 (2,202)
Debt due after one (89,038) 7,723 (86) 733 (80,668)
year
Debt due within one (18) 18 - - -
year
Finance leases (3,756) 1,148 (3) 10 (2,601)
(94,579) 8,424 (89) 773 (85,471)
13. The interim results have been prepared on the basis of accounting policies
set out in the Group's 2000 statutory accounts. The profit and loss accounts,
balance sheets and cash flow statements as at June 2001 and June 2000, are
unaudited and have not been reviewed by the auditors. The financial
information does not amount to full accounts within the meaning of Section 240
of the Companies Act 1985 (as amended).
The profit and loss account, balance sheet and cash flow statement for
December 2000, are abridged from the Group's full accounts for that year.
Those accounts received an unqualified audit report and have been filed with
the Registrar of Companies. The auditors' report did not contain a statement
under Section 237(2) or (3) of the Companies Act 1985 (as amended).
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