TIDMJSG
RNS Number : 5827O
Johnson Service Group PLC
10 March 2009
10 March 2009
Johnson Service Group PLC
Statement for the Financial Year to 31 December 2008
Johnson Service Group PLC, the textile services and facilities management Group
announces its preliminary results for the financial year ending 31 December
2008.
Overview
* Resilient trading performance in difficult environment
* Three cash generative businesses with strong market positions and growth
potential
* Net debt reduced to GBP78.5 million from GBP168.5 million
* Continuing adjusted operating profit* at GBP17.4m
* Adjusted fully diluted earnings per share** of 3.0p
Financial Summary
+-----------------------------------------------+--------------+------------+
| | 2008 | 2007 |
+-----------------------------------------------+--------------+------------+
| | GBPm | GBPm |
+-----------------------------------------------+--------------+------------+
| Revenue | 263.3 | 316.8 |
+-----------------------------------------------+--------------+------------+
| Revenue (excluding costs recharged to | 253.6 | 275.7 |
| customers) | | |
+-----------------------------------------------+--------------+------------+
| Operating Profit / (Loss) | 5.5 | (33.1) |
+-----------------------------------------------+--------------+------------+
| Adjusted Operating Profit* | 17.4 | 18.1 |
+-----------------------------------------------+--------------+------------+
| Exceptional Items | (8.7) | (39.9) |
+-----------------------------------------------+--------------+------------+
| Loss Before Tax | (6.3) | (47.4) |
+-----------------------------------------------+--------------+------------+
| Adjusted Profit Before Tax** | 6.5 | 6.5 |
+-----------------------------------------------+--------------+------------+
* Before intangibles amortisation and impairment (excluding software
amortisation) and exceptional items
** Before intangibles amortisation and impairment (excluding software
amortisation), exceptional items and exceptional finance costs
John Talbot, Executive Chairman of Johnson Service Group, commented:
"The trading performance overall for 2008 has been satisfactory, given a
deteriorating UK economy. Johnsons Apparelmaster has had an extremely
successful year despite challenging market conditions. I am delighted with the
return to profitability of Stalbridge Linen Services in the second half of the
year.
Drycleaning will continue to be affected by the lack of confidence in the high
street. However, the actions taken towards the end of 2008 have resulted in a
reduction in the weekly costs of the business of GBP4.0 million (6.0%), on an
annualised basis, at present levels of activity.
Our FM division has had a very successful year. We anticipate that the
profitability of this division will continue to grow notwithstanding market
conditions.
The Board's current intention is to resume dividend payments as soon as
appropriate and it intends, subject to continued satisfactory trading, to
declare a 2009 interim dividend.
Following the significant progress made during 2008 we now have three market
leading divisions which are well placed to meet the difficulties presented by
the current economic climate. Overall, the Board expects to achieve a
satisfactory result for 2009."
Enquiries:
+--------------+---------------+
| Johnson | Hudson |
| Service | Sandler |
| Group | |
| PLC | |
+--------------+---------------+
| John | Michael |
| Talbot, | Sandler |
| Executive | |
| Chairman | |
+--------------+---------------+
| Yvonne | Wendy |
| Monaghan, | Baker |
| Finance | |
| Director | |
+--------------+---------------+
| Tel: | Fran |
| 020 | Read |
| 7796 | |
| 4133 | |
| (on | |
| the | |
| day) | |
+--------------+---------------+
| Tel: | Telephone: |
| 01928 | 020 7796 4133 |
| 704600 | |
| (thereafter) | |
+--------------+---------------+
www.johnsonplc.com
Chairman's Statement
Overview
During the year to December 2008 the Group was restructured. A key focus was to
reduce borrowings through a combination of strategic disposals, equity raising
and resilient trading performance. As a result net debt reduced by GBP90.0
million during the year from GBP168.5 million to GBP78.5 million at 31 December
2008.
The trading performance overall for 2008 has been satisfactory, given a
deteriorating UK economy.
The Divisional Directors for the three main divisions have joined the Board as
Executive Directors.
Group Results
Throughout this statement "Continuing adjusted operating profit" refers to
continuing operating profit before amortisation and impairment of intangibles
(excluding software amortisation) and exceptional items. "Adjusted profit before
tax" refers to continuing adjusted operating profit less finance costs,
excluding exceptional finance costs in relation to bank fees. References to
"continuing" exclude the results of the Corporatewear division which was
disposed of in April 2008.
Total continuing revenue for the year reduced to GBP263.3 million (2007:
GBP316.8 million), while revenue, excluding costs recharged to customers, fell
to GBP253.6 million (2007: GBP275.7 million). Continuing adjusted operating
profit was GBP17.4 million (2007: GBP18.1 million). This is explained more fully
in the Divisional Operating Review.
Amortisation and impairment of intangibles (excluding software amortisation) on
continuing operations amounted to GBP3.2 million (2007: GBP11.3 million).
Adjusted profit before tax on a continuing basis, excluding amortisation and
impairment of intangibles (excluding software amortisation) and exceptional
items and exceptional finance costs, was GBP6.5 million (2007: GBP6.5 million).
Net exceptional costs from continuing operations for the year of GBP8.7 million
(2007: GBP39.9 million) included restructuring costs of GBP3.4 million (2007:
GBP15.6 million) and professional fees of GBP6.7 million (2007: GBP2.4 million)
incurred in connection with the bank debt restructuring process and move to the
Alternative Investment Market (AIM).
Net finance costs in 2008 were GBP11.8 million (2007: GBP14.3 million)
comprising exceptional finance costs in relation to bank fees of GBP0.9 million
(2007: GBP2.7 million) and GBP10.9 million of other net finance costs (2007:
GBP11.6 million). The reduction in other net finance costs reflects lower
average borrowings during the period offset by higher margins paid on the new
bank facilities.
After the exceptional costs and amortisation and impairment of intangibles
(excluding software amortisation) noted above, the pre-tax loss from continuing
operations was GBP6.3 million (2007: loss GBP47.4 million). Adjusted fully
diluted earnings per share from continuing operations were 3.0p (2007: 3.9p)
while continuing earnings per share after exceptional items and amortisation and
impairment of intangibles (excluding software amortisation) were a loss of 3.2p
(2007: loss 64.7p).
Finances
Total net debt at the end of 2008 was significantly reduced to GBP78.5 million
(December 2007: GBP168.5 million). This reduction reflects the net receipt of
GBP71.7 million from the sale of Corporatewear and garment sourcing businesses
and GBP35.0 million from the net proceeds of the Placing of Shares and
subsequent Open Offer of shares offset by restructuring costs and bank fees.
Interest cover based on continuing adjusted operating profit was 1.6 times
(2007: 1.6 times). As all but GBP20 million of the Group's bank debt is drawn at
rates linked to LIBOR, the interest cost in 2009 will benefit from the current
reduction in LIBOR rates. Margins over LIBOR applicable to the facility are 4%
on GBP20 million and 2.5% on the remaining GBP87.5 million. Facility repayments
of GBP8.5 million are due in 2009.
On 31 December 2008, GBP2.5 million of the bank facility was repaid leaving a
facility of GBP107.5 million in place. The existing facility, which runs to
December 2010, is significantly in excess of the anticipated level of borrowings
for the foreseeable future.
Disposal of Corporatewear
The disposal of Corporatewear was completed on 28 April 2008 for a total
consideration of GBP84.4 million net of expenses, on a debt free, cash free
basis, but before a payment into the pension scheme and the de-grouping charge
mentioned below. The pre-tax gain on disposal of GBP11.9 million, less the
estimated de-grouping tax charge arising on the disposal in the sum of GBP13.2
million, together with the profit after tax arising from the business in the
four months prior to disposal, has been shown as a loss on discontinued
operations.
The net proceeds of the disposal were principally used to repay debt.
Pension Deficit
The recorded net deficit after tax for all post retirement benefit obligations
has increased from GBP11.0 million at December 2007 to GBP14.6 million at
December 2008. The value of assets, as with many other pension schemes, has been
impacted by the fall in equity markets during recent months.
Although the reported deficit will continue to be impacted by movements in
assumptions and actual discount rates, both of which are outside the control of
the Group, we are working closely with the Trustees of all of our schemes to
ensure that the Group's interests are protected. We are in the process of
reviewing the investment principles of the scheme in order to maximise the
potential return on assets at an appropriate level of risk. In addition we are
continuing to explore ways of reducing the valuation of past service liabilities
in the schemes whilst at the same time protecting members' interests.
Agreement has been reached with the Trustees of the three defined benefit
pension schemes that the additional contributions into the schemes will be
GBP1.5 million in 2009.
Dividend
No final dividend has been declared for 2008. The Board's current intention is
to resume dividend payments as soon as appropriate and it intends, subject to
continued satisfactory trading, to declare a 2009 interim dividend.
Operating Reviews
Textile Rental
The performance of our Textile Rental Division, which combines Johnsons
Apparelmaster and Stalbridge Linen Services, exceeded our expectations for 2008.
Although the revenue for the division reduced by 5.0% to GBP122.6 million (2007:
GBP129.0 million) this was largely as a result of a pre-determined disposal of
high volume, low margin hotel linen contracts within Stalbridge in the first
half of the year. As a result of the disposal of Corporatewear the intra-Group
trading results have been reclassified from the Corporatewear segment to Textile
Rental for 2007. After this adjustment, adjusted operating profit increased by
23.3% to GBP14.3 million (2007: GBP11.6 million).
Johnsons Apparelmaster, the market leading laundry and workwear rental business,
increased revenue by 1.9% to GBP94.4 million, although the core garment rental
and laundry revenue achieved 2.4% growth in a market which continues to remain
very competitive. Adjusted operating profit increased by 9.5% to GBP13.8 million
(2007: GBP12.6 million) giving a margin of 14.6% (2007: 13.6%).
The increase in revenue largely reflected a high level of customer retention,
particularly during the first nine months of the year, and an increased level of
new business wins, up 30% on the previous year, which generated revenue in the
second half. These achievements were offset, to some degree, by increased
customer losses in the last three months of the year resulting from higher
levels of business closures and downsizing within retained accounts.
In April 2008 the business completed the installation of a new GBP0.9 million
central computer suite in its Fulwood head office and this has delivered much
improved IT facilities with capacity for further bespoke development in the
future. The operating cost of the IT infrastructure has been reduced during 2008
and has provided an opportunity for sharing IT resources with the Stalbridge
business.
In December, the business successfully commissioned a new workwear facility at
Logix Park in Hinckley which had been vacated by the Stalbridge operation. The
new facility, which utilises less energy and labour, has allowed us to close the
existing nearby laundry and demonstrates our commitment to investment in the
business for the medium to long term.
Stalbridge Linen Services continues to make significant improvements and is
beginning to return to its former market position as the premium quality
provider of linen, chefswear, kitchen and restaurant linen to hotels,
restaurants, contract catering and corporate hospitality kitchens.
Total revenue reduced in line with our strategy to GBP28.2 million (2007:
GBP36.4 million) with an adjusted operating loss of GBP0.5 million (2007: GBP2.0
million loss). The business generated a modest profit in the second half despite
increased energy costs and tougher trading conditions experienced in the hotel
and restaurant sectors and remains on track to return to profitability for the
year as a whole in 2009.
In April 2008 we continued our capital investment programme by installing modern
and efficient washing and processing equipment at our Shaftesbury location which
now has improved production efficiencies, quality and operating costs.
As outlined in the half year statement, the financial accounting function was
transferred to the Apparelmaster headquarters in Fulwood along with the
previously outsourced computer hosting and maintenance facilities. A dedicated
project team is currently developing new computer software programmes to replace
the existing SAP system which has proved to be disproportionately expensive.
This is due to be completed in the final quarter of 2009 with cost savings being
achieved in 2010.
Drycleaning
Our retail drycleaning division consists of Johnson Cleaners and Jeeves of
Belgravia together with Alex Reid, a leading supplier to the drycleaning
industry.
Johnson Cleaners is recognised as the UK's number one drycleaner by both volume
and value. It is a trusted national brand that cleans over 15 million garments
per annum.
Total revenue of the division decreased by 3.3% to GBP91.5 million from GBP94.6
million in 2007 and adjusted operating profit decreased to GBP4.4 million from
GBP6.0 million in 2007.
The slowdown in the global economy, the sharp decline of spending in the high
street and the rising costs of oil based products throughout the majority of
2008 affected the results of the division.
Johnson Cleaners and Jeeves of Belgravia revenue decreased by 3.2% on a like for
like basis to GBP79.3 million (2007: GBP82.8 million) and adjusted operating
profit to GBP4.2 million (2007: GBP6.6 million).
The like for like sales for the first half decreased by 2.5%. Although it was
anticipated that, the deficit would reduce in the second half of the year, the
deterioration of the whole UK economy and in particular a significant slowdown
on the high street resulted in like for like sales down by 3.9% in the second
half, giving a decrease of 3.2% for the year as a whole.
Management have taken measures to address both the decline in consumer spending
and increased operating costs through a programme of cost control initiatives
and adapting their strategy to expand and promote additional services.
The repositioning of the Johnson Cleaners portfolio to convenient locations is a
key strand to the business strategy and in the year seven new locations were
opened in Sainsbury's and Waitrose stores and one new drive-in was opened in
Dunfermline in Scotland.
The new site pipeline for 2009 is looking strong with three new openings planned
for the first half and many new opportunities coming to market following a
recent national campaign to identify potential sites.
In line with estate management strategies, 23 locations closed in the year at
the end of their lease. This resulted in the portfolio consisting of 523
branches at the end of 2008.
Our commitment to GreenEarth continues with the installation of 21 machines in
2008; this has taken the number of branches offering GreenEarth cleaning to
some 50% of the portfolio with further installations planned for 2009. A 10 year
license extension has been agreed with GreenEarth Inc. and an environmental
brand manager appointed to oversee the promotion of the benefits of the process.
As part of our store refurbishment programme we have completed 10 locations
where our "Green Credentials" are widely publicised through exterior and
interior designs and messaging. This format is being rolled out more widely as a
consequence of the improved results from the stores.
Our newly introduced executive service has now been extended to 280 stores
following a successful 50 store trial and sales continue to grow on this
service. Our priority club membership has been maintained at around 520,000
members despite a net reduction of 14 branches. A 70% like for like increase in
sales of laundry and ironing services was also achieved through revitalised
offerings across the portfolio.
Johnsons Fabric Restoration, the specialist operation providing fire and flood
damaged fabric restoration solutions to the insurance sector, has continued to
develop strongly during 2008. Additional satellite facilities have been
established at Plymouth and Sleaford and a new 17,000 sq ft site was opened in
Glasgow during November, which increases both the business capacity and ability
to provide a national service. Business development continues to grow with a
sole supply agreement established with Homeserve/ChemDry and strong ongoing
relationships with other contractors.
The barriers to entering the drycleaning market are increasing, not only due to
more stringent environmental regulations through enforcement of the Solvent
Emissions Directive, but also through higher operational costs due to the
increased costs of oil based products and new machines sourced from Europe.
Through the investment in GreenEarth technology and upgrading our machine
population over the last five years we are well placed to take advantage of any
reduction in the number of competitor sites.
Jeeves of Belgravia has grown both sales and profit during 2008 and plans are
now well advanced to embark on a refit programme commencing with the Flagship
store at Pont Street, West London. Extension of the brand has resulted in
relationships being nurtured with luxury fashion houses and provision of new
services such as garment storage.
During 2008 the Jeeves International business has been re-established with
successful development of the existing franchise network in New York, Istanbul,
Jakarta and Hong Kong and a new franchise in Kuala Lumpur.
Alex Reid our specialist drycleaning supplies business, traded disappointingly
in the first half of 2008, operating at break even (2007: loss GBP0.1 million).
With renewed focus on this business in the second half of the year the operating
profit result for the full year improved to GBP0.2 million (2007: loss of GBP0.6
million) on total revenue of GBP12.2 million (2007: GBP11.8 million).
Facilities Management
The Facilities Management division comprises SGP Property & Facilities
Management (SGP) and Workplace Engineering. As reported in September's interim
statement a major customer took its property management in house with effect
from the beginning of 2008, reducing the reported revenue and adjusted operating
profit within the division. Revenue for the division was GBP49.2 million (2007:
GBP93.2 million) whilst revenue excluding costs recharged to customers was
GBP39.5 million (2007: GBP52.1 million). Adjusted operating profit reduced to
GBP3.6 million (2007: GBP5.9 million).
SGP, formerly Johnson Facilities Management, which provides property management
services to the public sector and to retail, financial and commercial office
markets, has produced an adjusted operating profit of GBP3.1 million (2007:
GBP5.6 million).
Revenue, excluding costs recharged to customers reduced from GBP40.5 million to
GBP28.5 million while total revenue, including recharges, decreased to GBP38.2
million (2007: GBP81.6 million). Revenue and contribution in 2007 from the
contract referred to above was GBP12.8 million and GBP2.9 million respectively.
If the contract referred to above is excluded from the comparative figures, the
operating profit would show an increase of 14.8%.
During the year the business was re-branded under the SGP banner, encompassing
four main revenue streams, and has won a number of significant new customers
particularly in the retail sector where it serves around a quarter of the total
number of large high street retailers with chains of over 100 outlets. In the
second half of 2008, SGP signed contracts with two well-known fast food
retailers and a fashion chain, obtained letters of intent, now contractually
confirmed, from a leading distributor of building materials and motorway service
stations to provide helpdesk services. The benefits of these contracts will
begin to be seen in 2009. SGP is also in the process of retaining and extending
its major retail helpdesk contracts, and current indications are that we will
achieve a high degree of success in this respect. Our conventional FM business
has performed extremely well in 2008 with the expansion of additional services
into our existing customer base along with the mobilisation and start up of many
new contracts during the year.
The project and property agency area of the business has, as highlighted in the
pre close statement, experienced very challenging conditions in 2008 as many of
our customers in the retail sector have delayed or cancelled capital projects
that are managed by our staff. As a consequence, revenue from projects was down
by 73% on 2007. Whilst this is likely to continue throughout 2009, the larger
helpdesk and FM business streams are expected to benefit from the downturn as
more businesses look to SGP for their cost saving solutions via outsourcing.
Although it is anticipated that difficult high street trading conditions will
continue and affect businesses in 2009, this is not expected to have a major
impact on SGP overall, given the significant percentage of Public Sector income
included in its customer base. As a consequence, 2009 is expected to be a growth
year, with SGP's business streams now well positioned in their respective
markets to take advantage of any future upturn.
Workplace Engineering, which provides electrical engineering and fit out
services reported revenue of GBP11.0 million (2007: GBP11.6 million) and
adjusted operating profit of GBP0.5 million (2007: GBP0.5 million). This was a
very credible performance given that the business was affected by the loss of
the major contract referred to above which was the major contributor to revenue
and profit in 2007. The business has a number of potential new contracts in the
pipeline together with a growing number of maintenance contracts which provide a
predictable revenue stream.
Group Costs
Group costs have reduced from GBP5.4 million in 2007 to GBP4.9 million in 2008.
Part of the costs in 2008 related to support for the SAP computer system which
is now being withdrawn. These costs will reduce during the current year, and
this together with other efficiencies, will result in lower ongoing central
costs.
Staff
I would like to thank employees at all levels for the tremendous support and
commitment that they have given the Group during the past year.
Outlook
Within the Textile Rental division, Johnsons Apparelmaster has had an extremely
successful year despite challenging market conditions. We expect markets to
remain difficult throughout 2009 as the UK economy suffers from increased
business closures and customers remain more cautious with their spending. I am
delighted with the return to profitability of Stalbridge Linen Services in the
second half of the year and anticipate that this business will be profitable in
2009, which will be a major landmark for the Group.
Drycleaning will continue to be affected by the lack of confidence in the high
street. Sales in the first two months of 2009 have remained in line with
expectations. The actions taken towards the end of 2008 have resulted in a
reduction in the weekly costs of the business of GBP4.0 million (6.0%), on an
annualised basis, at present levels of activity. Despite unfavourable trading
conditions we are investing to further improve the quality of our estate and we
intend to open more supermarket and drive in locations during 2009. We shall
also continue to expand our promotion of the environmentally friendly GreenEarth
cleaning process.
Our FM division has had a very successful year. When a major contract, which was
taken back in-house by the customer at the end of 2007, is excluded from the
comparatives the profitability of the division grew despite a significant
decline in the project work from our retail customers which generated over
GBP1.0 million of contribution in 2007. The major reasons for this achievement
are the profitability of our long term facility management contracts and the
outstanding success of our 'help desk' concept utilised by the owners of major
property estates. Many new customers have seen our help desk services as a way
to control successfully their own costs. We anticipate that the profitability of
this division will continue to grow notwithstanding market conditions and it
will be exceptionally well placed to benefit from any increase in discretionary
spending by its customers.
Following the significant progress made during 2008 we now have three market
leading divisions which are well placed to meet the difficulties presented by
the current economic climate. Overall, the Board expects to achieve a
satisfactory result for 2009.
Consolidated Income Statement
+--------+----------------------------------------------------------------+----------+----------+
| | | Year | Year |
| | | ended | ended |
| | | 31 | 31 |
| | | December | December |
| | | 2008 | 2007 |
+--------+----------------------------------------------------------------+----------+----------+
| Note | | GBPm | GBPm |
+--------+----------------------------------------------------------------+----------+----------+
| | | | |
+--------+----------------------------------------------------------------+----------+----------+
| 2 | REVENUE | 263.3 | 316.8 |
| | FROM | | |
| | CONTINUING | | |
| | OPERATIONS | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Costs | (9.7) | (41.1) |
| | recharged | | |
| | to | | |
| | customers | | |
+--------+----------------------------------------------------------------+----------+----------+
| 2 | Revenue | 253.6 | 275.7 |
| | excluding | | |
| | costs | | |
| | recharged | | |
| | to | | |
| | customers | | |
+--------+----------------------------------------------------------------+----------+----------+
| | | | |
+--------+----------------------------------------------------------------+----------+----------+
| 2 | OPERATING | 5.5 | (33.1) |
| | PROFIT / | | |
| | (LOSS) | | |
+--------+----------------------------------------------------------------+----------+----------+
| | | | |
+--------+----------------------------------------------------------------+----------+----------+
| 2 | OPERATING | 17.4 | 18.1 |
| | PROFIT | | |
| | BEFORE | | |
| | INTANGIBLES | | |
| | AMORTISATION | | |
| | AND | | |
| | IMPAIRMENT | | |
| | (EXCLUDING | | |
| | SOFTWARE | | |
| | AMORTISATION) | | |
| | AND | | |
| | EXCEPTIONAL | | |
| | ITEMS | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Amortisation | (3.2) | (11.3) |
| | and | | |
| | impairment | | |
| | of | | |
| | intangible | | |
| | assets | | |
| | (excluding | | |
| | software | | |
| | amortisation) | | |
+--------+----------------------------------------------------------------+----------+----------+
| 3 | Exceptional | | |
| | items | | |
+--------+----------------------------------------------------------------+----------+----------+
| | - | (9.6) | (42.0) |
| | Restructuring | | |
| | and other | | |
| | costs | | |
+--------+----------------------------------------------------------------+----------+----------+
| | - | 0.9 | 2.1 |
| | Profit | | |
| | on | | |
| | disposal | | |
| | of | | |
| | property | | |
+--------+----------------------------------------------------------------+----------+----------+
| | | | |
+--------+----------------------------------------------------------------+----------+----------+
| 2 | OPERATING | 5.5 | (33.1) |
| | PROFIT / | | |
| | (LOSS) | | |
+--------+----------------------------------------------------------------+----------+----------+
| | | | |
+--------+----------------------------------------------------------------+----------+----------+
| 5 | Finance | (11.8) | (12.7) |
| | costs - | | |
| | Ordinary | | |
| | finance | | |
| | costs | | |
+--------+----------------------------------------------------------------+----------+----------+
| | - | (0.9) | (2.7) |
| | Exceptional | | |
| | finance | | |
| | costs | | |
+--------+----------------------------------------------------------------+----------+----------+
| 5 | Finance | 0.9 | 1.1 |
| | income | | |
+--------+----------------------------------------------------------------+----------+----------+
| | | | |
+--------+----------------------------------------------------------------+----------+----------+
| | LOSS | (6.3) | (47.4) |
| | BEFORE | | |
| | TAXATION | | |
+--------+----------------------------------------------------------------+----------+----------+
| | | | |
+--------+----------------------------------------------------------------+----------+----------+
| 6 | Taxation | 1.7 | 9.0 |
+--------+----------------------------------------------------------------+----------+----------+
| | | | |
+--------+----------------------------------------------------------------+----------+----------+
| | LOSS | (4.6) | (38.4) |
| | FOR | | |
| | THE | | |
| | YEAR | | |
| | FROM | | |
| | CONTINUING | | |
| | OPERATIONS | | |
+--------+----------------------------------------------------------------+----------+----------+
| | | | |
+--------+----------------------------------------------------------------+----------+----------+
| | DISCONTINUED | | |
| | OPERATIONS: | | |
+--------+----------------------------------------------------------------+----------+----------+
| 10 | LOSS | (1.5) | (6.5) |
| | FOR | | |
| | THE | | |
| | YEAR | | |
| | FROM | | |
| | DISCONTINUED | | |
| | OPERATIONS | | |
+--------+----------------------------------------------------------------+----------+----------+
| | | | |
+--------+----------------------------------------------------------------+----------+----------+
| | LOSS | (6.1) | (44.9) |
| | FOR | | |
| | THE | | |
| | YEAR | | |
| | ATTRIBUTABLE | | |
| | TO EQUITY | | |
| | HOLDERS | | |
+--------+----------------------------------------------------------------+----------+----------+
| | | | |
+--------+----------------------------------------------------------------+----------+----------+
| | | | |
+--------+----------------------------------------------------------------+----------+----------+
| 8 | EARNINGS | | |
| | PER | | |
| | SHARE * | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Basic | | |
| | earnings | | |
| | per | | |
| | Share | | |
+--------+----------------------------------------------------------------+----------+----------+
| | From | (3.2p) | (64.7p) |
| | continuing | | |
| | operations | | |
+--------+----------------------------------------------------------------+----------+----------+
| | From | (1.0p) | (11.1p) |
| | discontinued | | |
| | operations | | |
+--------+----------------------------------------------------------------+----------+----------+
| | From | (4.2p) | (75.8p) |
| | continuing | | |
| | and | | |
| | discontinued | | |
| | operations | | |
+--------+----------------------------------------------------------------+----------+----------+
| | | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Fully | | |
| | diluted | | |
| | earnings | | |
| | per | | |
| | Share | | |
+--------+----------------------------------------------------------------+----------+----------+
| | From | (3.2p) | (64.7p) |
| | continuing | | |
| | operations | | |
+--------+----------------------------------------------------------------+----------+----------+
| | From | (1.0p) | (11.1p) |
| | discontinued | | |
| | operations | | |
+--------+----------------------------------------------------------------+----------+----------+
| | From | (4.2p) | (75.8p) |
| | continuing | | |
| | and | | |
| | discontinued | | |
| | operations | | |
+--------+----------------------------------------------------------------+----------+----------+
| | | | |
+--------+----------------------------------------------------------------+----------+----------+
* Adjusted earnings per share (before intangibles amortisation and
impairment (excluding software amortisation), exceptional items and exceptional
finance costs), are shown in note 8.
Consolidated Statement of Recognised Income and Expense
+--------+-----------------+----------+----------+
| | | Year | Year |
| | | ended | ended |
| | | 31 | 31 |
| | | December | December |
| | | 2008 | 2007 |
+--------+-----------------+----------+----------+
| | | GBPm | GBPm |
+--------+-----------------+----------+----------+
| | | | |
+--------+-----------------+----------+----------+
| 9 | Actuarial | (11.0) | 10.4 |
| | (loss) / | | |
| | gain on | | |
| | defined | | |
| | benefit | | |
| | pension | | |
| | schemes | | |
+--------+-----------------+----------+----------+
| | Taxation | 3.1 | (3.1) |
| | in | | |
| | respect | | |
| | of | | |
| | actuarial | | |
| | loss / | | |
| | (gain) | | |
+--------+-----------------+----------+----------+
| | Net | (7.9) | 7.3 |
| | movement | | |
| | on | | |
| | reserves | | |
| | in | | |
| | respect | | |
| | of | | |
| | defined | | |
| | benefit | | |
| | actuarial | | |
| | gains and | | |
| | losses | | |
+--------+-----------------+----------+----------+
| | Cash | (0.3) | (0.6) |
| | flow | | |
| | hedges | | |
| | (net | | |
| | of | | |
| | taxation)- fair | | |
| | value losses | | |
+--------+-----------------+----------+----------+
| | - transfers | - | 0.3 |
| | to inventory | | |
+--------+-----------------+----------+----------+
| | - transfers | (0.1) | (0.2) |
| | to interest | | |
+--------+-----------------+----------+----------+
| | NET (EXPENSE) | (8.3) | 6.8 |
| | / INCOME | | |
| | RECOGNISED | | |
| | DIRECTLY IN | | |
| | EQUITY | | |
+--------+-----------------+----------+----------+
| | Loss | (6.1) | (44.9) |
| | for | | |
| | the | | |
| | year | | |
+--------+-----------------+----------+----------+
| | TOTAL | (14.4) | (38.1) |
| | RECOGNISED | | |
| | EXPENSE | | |
| | FOR THE | | |
| | YEAR | | |
+--------+-----------------+----------+----------+
Consolidated Balance Sheet
+--------+---------------+----------+----------+
| | | As at | As at |
| | | 31 | 31 |
| | | December | December |
| | | 2008 | 2007 |
+--------+---------------+----------+----------+
| Note | | GBPm | GBPm |
+--------+---------------+----------+----------+
| | ASSETS | | |
+--------+---------------+----------+----------+
| | NON-CURRENT | | |
| | ASSETS | | |
+--------+---------------+----------+----------+
| | Goodwill | 89.2 | 117.7 |
+--------+---------------+----------+----------+
| | Intangible | 11.9 | 32.9 |
| | assets | | |
+--------+---------------+----------+----------+
| | Property, | 45.4 | 48.4 |
| | plant and | | |
| | equipment | | |
+--------+---------------+----------+----------+
| | Textile | 22.2 | 23.1 |
| | rental | | |
| | items | | |
+--------+---------------+----------+----------+
| | Deferred | 12.5 | 13.8 |
| | income | | |
| | tax | | |
| | assets | | |
+--------+---------------+----------+----------+
| | | 181.2 | 235.9 |
+--------+---------------+----------+----------+
| | | | |
+--------+---------------+----------+----------+
| | CURRENT | | |
| | ASSETS | | |
+--------+---------------+----------+----------+
| | Inventories | 4.4 | 30.5 |
+--------+---------------+----------+----------+
| | Trade | 48.6 | 69.0 |
| | and | | |
| | other | | |
| | receivables | | |
+--------+---------------+----------+----------+
| | Derivative | - | 0.6 |
| | financial | | |
| | assets | | |
+--------+---------------+----------+----------+
| | Cash | 5.2 | 16.3 |
| | and | | |
| | cash | | |
| | equivalents | | |
+--------+---------------+----------+----------+
| | | 58.2 | 116.4 |
+--------+---------------+----------+----------+
| | | | |
+--------+---------------+----------+----------+
| | LIABILITIES | | |
+--------+---------------+----------+----------+
| | CURRENT | | |
| | LIABILITIES | | |
+--------+---------------+----------+----------+
| | Trade | 15.6 | 27.7 |
| | and | | |
| | other | | |
| | payables | | |
+--------+---------------+----------+----------+
| | Other | 31.1 | 49.5 |
| | creditors | | |
| | and | | |
| | accruals | | |
+--------+---------------+----------+----------+
| | Current | 4.1 | 0.3 |
| | income | | |
| | tax | | |
| | liabilities | | |
+--------+---------------+----------+----------+
| | Borrowings | 3.8 | 107.8 |
+--------+---------------+----------+----------+
| | Derivative | - | 0.8 |
| | financial | | |
| | liabilities | | |
+--------+---------------+----------+----------+
| | Provisions | 2.8 | 7.1 |
+--------+---------------+----------+----------+
| | | 57.4 | 193.2 |
+--------+---------------+----------+----------+
| | NET | 0.8 | (76.8) |
| | CURRENT | | |
| | ASSETS | | |
| | / | | |
| | (LIABILITIES) | | |
+--------+---------------+----------+----------+
| | | | |
+--------+---------------+----------+----------+
| | NON-CURRENT | | |
| | LIABILITIES | | |
+--------+---------------+----------+----------+
| 9 | Retirement | 20.6 | 15.8 |
| | benefit | | |
| | obligations | | |
+--------+---------------+----------+----------+
| | Deferred | 2.5 | 7.9 |
| | income | | |
| | tax | | |
| | liabilities | | |
+--------+---------------+----------+----------+
| | Other | 1.3 | 1.5 |
| | non-current | | |
| | liabilities | | |
+--------+---------------+----------+----------+
| | Borrowings | 79.9 | 77.0 |
+--------+---------------+----------+----------+
| | Derivative | 0.8 | 0.3 |
| | financial | | |
| | liabilities | | |
+--------+---------------+----------+----------+
| | Provisions | 8.8 | 9.8 |
+--------+---------------+----------+----------+
| | | 113.9 | 112.3 |
+--------+---------------+----------+----------+
| | NET | 68.1 | 46.8 |
| | ASSETS | | |
+--------+---------------+----------+----------+
| | | | |
+--------+---------------+----------+----------+
| | EQUITY | | |
+--------+---------------+----------+----------+
| | CAPITAL AND | |
| | RESERVES | |
| | ATTRIBUTABLE TO | |
| | THE COMPANY'S | |
| | EQUITY HOLDERS | |
+--------+--------------------------+----------+
| | Called | 24.9 | 5.9 |
| | up | | |
| | share | | |
| | capital | | |
+--------+---------------+----------+----------+
| | Share | 13.7 | 13.7 |
| | premium | | |
+--------+---------------+----------+----------+
| | Other | 1.7 | 1.9 |
| | reserves | | |
+--------+---------------+----------+----------+
| | Retained | 27.8 | 25.3 |
| | earnings | | |
+--------+---------------+----------+----------+
| | TOTAL | 68.1 | 46.8 |
| | EQUITY | | |
+--------+---------------+----------+----------+
Consolidated Cash Flow Statement
+--------+----------------------------------------------------------------+----------+----------+
| | | Year | Year |
| | | ended | ended |
| | | 31 | 31 |
| | | December | December |
| | | 2008 | 2007 |
+--------+----------------------------------------------------------------+----------+----------+
| Note | | GBPm | GBPm |
+--------+----------------------------------------------------------------+----------+----------+
| | CASH | | |
| | FLOWS | | |
| | FROM | | |
| | OPERATING | | |
| | ACTIVITIES | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Loss | (6.1) | (44.9) |
| | for | | |
| | the | | |
| | year | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Adjustments | | |
| | for: | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Income | (1.7) | (9.0) |
| | tax - | | |
| | continuing | | |
| | operations | | |
+--------+----------------------------------------------------------------+----------+----------+
| | - | 14.0 | 1.5 |
| | discontinued | | |
| | operations | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Finance | 11.8 | 14.3 |
| | income | | |
| | and | | |
| | expense | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Depreciation | 21.4 | 28.6 |
| | | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Amortisation | 4.5 | 7.5 |
| | of | | |
| | intangible | | |
| | assets | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Impairment | - | 21.2 |
| | of | | |
| | goodwill | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Impairment | - | 17.0 |
| | of | | |
| | intangible | | |
| | assets | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Write-off | - | 3.6 |
| | of | | |
| | textile | | |
| | rental | | |
| | items | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Increase | (2.5) | (1.0) |
| | in | | |
| | inventories | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Decrease | 10.6 | 0.8 |
| | in trade | | |
| | and | | |
| | other | | |
| | receivables | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Decrease | (18.4) | (10.9) |
| | in trade | | |
| | and | | |
| | other | | |
| | payables | | |
+--------+----------------------------------------------------------------+----------+----------+
| | (Profit) | (0.6) | 6.2 |
| | / loss | | |
| | on sale | | |
| | of | | |
| | property, | | |
| | plant and | | |
| | equipment | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Loss | - | 0.7 |
| | on | | |
| | disposal | | |
| | of | | |
| | intangible | | |
| | assets | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Pre-tax | (11.9) | - |
| | gain on | | |
| | disposal | | |
| | of | | |
| | subsidiaries | | |
+--------+----------------------------------------------------------------+----------+----------+
| 9 | Additional | (2.6) | (3.5) |
| | contribution | | |
| | to defined | | |
| | benefit | | |
| | pension | | |
| | schemes | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Share-based | 0.4 | 0.2 |
| | payments | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Fair | - | (0.2) |
| | value | | |
| | of | | |
| | financial | | |
| | instruments | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Retirement | (0.3) | (0.2) |
| | benefit | | |
| | obligations | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Provisions | (5.4) | (0.2) |
+--------+----------------------------------------------------------------+----------+----------+
| | Cash | 13.2 | 31.7 |
| | generated | | |
| | from | | |
| | operations | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Interest | (15.1) | (15.0) |
| | paid | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Taxation | 1.4 | 0.5 |
| | received | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Net | (0.5) | 17.2 |
| | cash | | |
| | flows | | |
| | (used | | |
| | in) / | | |
| | generated | | |
| | from | | |
| | operating | | |
| | activities | | |
+--------+----------------------------------------------------------------+----------+----------+
| | | | |
+--------+----------------------------------------------------------------+----------+----------+
| | CASH | | |
| | FLOWS | | |
| | FROM | | |
| | INVESTING | | |
| | ACTIVITIES | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Acquisition | - | (7.1) |
| | of | | |
| | subsidiary | | |
| | (net of | | |
| | cash | | |
| | acquired) | | |
+--------+----------------------------------------------------------------+----------+----------+
| 10 | Proceeds | 71.7 | - |
| | from | | |
| | sale of | | |
| | subsidiary | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Purchase | (7.6) | (12.5) |
| | of | | |
| | property, | | |
| | plant and | | |
| | equipment | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Proceeds | 1.5 | 5.7 |
| | from | | |
| | sale of | | |
| | property, | | |
| | plant and | | |
| | equipment | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Purchase | (0.6) | (6.3) |
| | of | | |
| | intangible | | |
| | assets | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Purchase | (14.8) | (19.4) |
| | of | | |
| | textile | | |
| | rental | | |
| | items | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Proceeds | 4.2 | 3.6 |
| | from | | |
| | sale of | | |
| | textile | | |
| | rental | | |
| | items | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Interest | 0.5 | 1.1 |
| | received | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Net | 54.9 | (34.9) |
| | cash | | |
| | generated | | |
| | from / | | |
| | (used in) | | |
| | investing | | |
| | activities | | |
+--------+----------------------------------------------------------------+----------+----------+
| | | | |
+--------+----------------------------------------------------------------+----------+----------+
| | CASH | | |
| | FLOWS | | |
| | FROM | | |
| | FINANCING | | |
| | ACTIVITIES | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Proceeds | 197.0 | 63.0 |
| | from | | |
| | borrowings | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Repayments | (296.5) | (31.0) |
| | of | | |
| | borrowings | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Capital | (1.0) | (1.4) |
| | element | | |
| | of | | |
| | finance | | |
| | leases | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Net | 35.0 | 1.0 |
| | proceeds | | |
| | from | | |
| | issue of | | |
| | Ordinary | | |
| | shares | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Dividends | - | (8.9) |
| | paid to | | |
| | company | | |
| | Shareholders | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Net | (65.5) | 22.7 |
| | cash | | |
| | (used | | |
| | in) / | | |
| | generated | | |
| | from | | |
| | financing | | |
| | activities | | |
+--------+----------------------------------------------------------------+----------+----------+
| | | | |
+--------+----------------------------------------------------------------+----------+----------+
| 11 | Net | (11.1) | 5.0 |
| | (decrease) | | |
| | / increase | | |
| | in cash | | |
| | and cash | | |
| | equivalents | | |
+--------+----------------------------------------------------------------+----------+----------+
| | Cash | 16.3 | 11.3 |
| | and | | |
| | cash | | |
| | equivalents | | |
| | at | | |
| | beginning | | |
| | of period | | |
+--------+----------------------------------------------------------------+----------+----------+
| 12 | Cash | 5.2 | 16.3 |
| | and | | |
| | cash | | |
| | equivalents | | |
| | at end of | | |
| | period | | |
+--------+----------------------------------------------------------------+----------+----------+
NOTES TO THE PRELIMINARY ANNOUNCEMENT
1. Basis of Preparation
The financial information contained within this report has been prepared in
accordance with International Financial Reporting Standards (IFRS) as adopted by
the European Union (IFRSs as adopted by the EU), IFRIC Interpretations and the
Companies Act 1985 applicable to companies reporting under IFRS.
The financial information has been prepared using accounting policies consistent
with those set out in the 2007 Annual Report.
2.Sement Information - Analysis of Revenue, Operating Profit Before Exceptional
Items and Intangibles Amortisation and Impairment (excluding software
amortisation) and Profit Before Taxation
Segment information is presented in respect of the Group's business segments,
which are based on the Group's management and internal reporting structure as at
31st December 2008.
The segment analysis shows the unallocated central overheads separately. The
exceptional items have been included within the appropriate business segment as
shown on pages 16 to 17.
Revenue from continuing operations originates in the United Kingdom. There is no
material difference between revenue by origin and by destination.
Facilities management revenue comprises fees receivable and costs recharged to
customers where the relationship with the supplier of services is that of
principal. The element of revenue which comprises supplier costs recharged to
customers has been shown separately on the income statement to aid
interpretation of the business.
Inter-segment pricing is determined on an arm's length basis.
Segment results, assets and liabilities include items directly attributable to a
segment as well as those that can be allocated on a reasonable basis, for
example:
* Rental income received by the property company is allocated to segments based
upon rents paid during the year; and
* Costs of the Internal Audit function are allocated to segments based upon
revenue during the year.
Unallocated items comprise mainly income-earning assets and revenue,
interest-bearing loans, borrowings and expenses, and corporate assets and
expenses.
The Textile Rental Services results for 2007 have been re-presented for the
changed treatment of intra-Group trading to reflect the disposal of
Corporatewear.
Segment assets consist primarily of property, plant and equipment, intangible
assets, inventories, derivatives designated as hedges of future commercial
transactions, receivables and operating cash. They exclude taxation, investments
and derivatives designated as hedges of borrowings.
Segment liabilities comprise operating liabilities (including derivatives
designated as hedges of future transactions). They exclude taxation and
corporate borrowings and related hedging derivatives.
Segment capital expenditure is the total cost incurred during the period to
acquire segment assets that are expected to be used for more than one period.
Capital expenditure comprises additions to property, plant and equipment,
textile rental items and intangible assets, excluding additions resulting from
acquisitions through business combinations.
Geographical segments
Revenue originates wholly within the United Kingdom and as a result, no
geographical segments are presented within this announcement.
Business segments
The Group comprises the following main business segments:
* Textile Rental Services - workwear rental supply and laundering and linen rental
for the premium hotel, catering and corporate hospitality markets;
* Drycleaning - with over 520 stores nationwide, provides drycleaning, laundry and
ironing services, carpet cleaning, upholstery cleaning, wedding dress cleaning
and suede & leather cleaning and the supply of drycleaning consumables; and
* Facilities Management - delivering building, facilities and property management
services and specialist engineering services to public, commercial and retail
organisations throughout the UK.
NOTES TO THE PRELIMINARY ANNOUNCEMENT /Continued...
2. Segment Information - Analysis of Revenue, Operating Profit Before
Exceptional Items and Intangibles Amortisation and Impairment (excluding
software amortisation) and Profit Before Taxation /continued...
+---------------+------------------------+--------+----------+-------------+------------+-------------+--------+
| Year ended 31 December 2008 | | | | | |
+-------------------------------------------------+----------+-------------+------------+-------------+--------+
| | | Textile | Drycleaning | Facilities | Unallocated | Total |
| | | Rental | | Management | | |
| | | Services | | | | |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| | | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| REVENUE | | | | | | |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| Revenue | | 122.6 | 91.5 | 49.7 | - | 263.8 |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| Inter-segment revenue | | - | - | (0.5) | - | (0.5) |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| REVENUE - CONTINUING | | 122.6 | 91.5 | 49.2 | - | 263.3 |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| Revenue - Discontinued | | | | | | 25.7 |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| Total revenue | | | | | | 289.0 |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| REVENUE EXCLUDING COSTS | | | | | |
| RECHARGED TO CUSTOMERS | | | | | |
+-------------------------------------------------+----------+-------------+------------+-------------+--------+
| Revenue | | 122.6 | 91.5 | 40.0 | - | 254.1 |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| Inter-segment revenue | | - | - | (0.5) | - | (0.5) |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| REVENUE EXCLUDING COSTS | 122.6 | 91.5 | 39.5 | - | 253.6 |
| RECHARGED TO CUSTOMERS - CONTINUING | | | | | |
+-------------------------------------------------+----------+-------------+------------+-------------+--------+
| Revenue | | | | | | 25.7 |
| - | | | | | | |
| Discontinued | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| Total revenue excluding costs recharged | | | | | 279.3 |
| to customers | | | | | |
+-------------------------------------------------+----------+-------------+------------+-------------+--------+
| | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| RESULT | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| Operating profit before intangibles | 14.3 | 4.4 | 3.6 | (4.9) | 17.4 |
| amortisation and impairment (excluding | | | | | |
| software amortisation) and exceptional | | | | | |
| items | | | | | |
+-------------------------------------------------+----------+-------------+------------+-------------+--------+
| Amortisation and impairment of | (1.3) | - | (1.9) | - | (3.2) |
| intangible assets | | | | | |
+-------------------------------------------------+----------+-------------+------------+-------------+--------+
| Exceptional | | | | | | |
| items | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| - | | (2.0) | (0.4) | - | (7.2) | (9.6) |
| Restructuring | | | | | | |
| and other | | | | | | |
| costs | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| - | | - | - | - | 0.9 | 0.9 |
| Profit | | | | | | |
| on | | | | | | |
| disposal | | | | | | |
| of | | | | | | |
| property | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| Operating | | 11.0 | 4.0 | 1.7 | (11.2) | 5.5 |
| profit / | | | | | | |
| (loss) | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| Finance | | | | | | |
| costs | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| - | | | | | | (11.8) |
| Ordinary | | | | | | |
| finance | | | | | | |
| costs | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| - | | | | | | (0.9) |
| Exceptional | | | | | | |
| finance | | | | | | |
| costs | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| Finance | | | | | | 0.9 |
| income | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| Loss | | | | | | (6.3) |
| before | | | | | | |
| taxation | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| Taxation | | | | | | 1.7 |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| Loss | | | | | | (4.6) |
| for | | | | | | |
| the | | | | | | |
| period | | | | | | |
| - | | | | | | |
| Continuing | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| Discontinued operations - Corporatewear | | | | | (1.5) |
+-------------------------------------------------+----------+-------------+------------+-------------+--------+
| Loss | | | | | | (6.1) |
| for | | | | | | |
| the | | | | | | |
| period | | | | | | |
+---------------+------------------------+--------+----------+-------------+------------+-------------+--------+
+-------------------------+-----+---------+----------+-------------+------------+-------------+---------+
| | Discontinued | Textile | Drycleaning | Facilities | Unallocated | Total |
| | Operations | Rental | | Management | | |
| | | Services | | | | |
+-------------------------+---------------+----------+-------------+------------+-------------+---------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| OTHER INFORMATION | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| Capital expenditure | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| - Property, plant | 0.3 | 4.3 | 2.2 | 0.5 | - | 7.3 |
| and equipment | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| - Textile rental | - | 17.5 | - | - | - | 17.5 |
| items | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| - Intangible | 0.1 | - | 0.1 | 0.4 | - | 0.6 |
| software | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| Depreciation and amortisation | | | | | | |
| expense | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| - Property, plant | 0.2 | 3.7 | 2.5 | 0.4 | 0.4 | 7.2 |
| and equipment | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| - Textile rental | - | 14.2 | - | - | - | 14.2 |
| items | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| - Intangible | 0.1 | - | 0.1 | 0.2 | 0.1 | 0.5 |
| software | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| - Intangibles | 0.8 | 1.3 | - | 1.9 | - | 4.0 |
| (excluding software) | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| BALANCE SHEET INFORMATION | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| Segment assets | - | 109.8 | 37.6 | 53.7 | 38.3 | 239.4 |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| Segment liabilities | - | (26.9) | (18.6) | (9.9) | (115.9) | (171.3) |
+-------------------------+-----+---------+----------+-------------+------------+-------------+---------+
NOTES TO THE PRELIMINARY ANNOUNCEMENT /Continued...
2. Segment Information - Analysis of Revenue, Operating Profit Before
Exceptional Items and Intangibles Amortisation and Impairment (excluding
software amortisation) and Profit Before Taxation /continued...
+---------------+------------------------+--------+----------+-------------+------------+-------------+--------+
| Year ended 31 December 2007 | | | | | |
+-------------------------------------------------+----------+-------------+------------+-------------+--------+
| | | Textile | Drycleaning | Facilities | Unallocated | Total |
| | | Rental | | Management | | |
| | | Services | | | | |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| | | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| REVENUE | | | | | | |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| Revenue | | 129.0 | 94.6 | 94.4 | - | 318.0 |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| Inter-segment revenue | | - | - | (1.2) | - | (1.2) |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| REVENUE - CONTINUING | | 129.0 | 94.6 | 93.2 | - | 316.8 |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| Revenue - Discontinued | | | | | | 89.3 |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| Total revenue | | | | | | 406.1 |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| REVENUE EXCLUDING COSTS | | | | | |
| RECHARGED TO CUSTOMERS | | | | | |
+-------------------------------------------------+----------+-------------+------------+-------------+--------+
| Revenue | | 129.0 | 94.6 | 53.3 | - | 276.9 |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| Inter-segment revenue | | - | - | (1.2) | - | (1.2) |
+----------------------------------------+--------+----------+-------------+------------+-------------+--------+
| REVENUE EXCLUDING COSTS | 129.0 | 94.6 | 52.1 | - | 275.7 |
| RECHARGED TO CUSTOMERS - CONTINUING | | | | | |
+-------------------------------------------------+----------+-------------+------------+-------------+--------+
| Revenue | | | | | | 89.3 |
| - | | | | | | |
| Discontinued | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| Total revenue excluding costs recharged | | | | | 365.0 |
| to customers | | | | | |
+-------------------------------------------------+----------+-------------+------------+-------------+--------+
| | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| RESULT | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| Operating profit before intangibles | 11.6 | 6.0 | 5.9 | (5.4) | 18.1 |
| amortisation and impairment (excluding | | | | | |
| software amortisation) and exceptional | | | | | |
| items | | | | | |
+-------------------------------------------------+----------+-------------+------------+-------------+--------+
| Amortisation and impairment of | (1.3) | (1.4) | (8.6) | - | (11.3) |
| intangible assets | | | | | |
+-------------------------------------------------+----------+-------------+------------+-------------+--------+
| Exceptional | | | | | | |
| items | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| - | | (13.1) | (0.1) | (1.5) | (27.3) | (42.0) |
| Restructuring | | | | | | |
| and other | | | | | | |
| costs | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| - | | 0.9 | 1.2 | - | - | 2.1 |
| Profit | | | | | | |
| on | | | | | | |
| disposal | | | | | | |
| of | | | | | | |
| property | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| Operating | | (1.9) | 5.7 | (4.2) | (32.7) | (33.1) |
| profit / | | | | | | |
| (loss) | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| Finance | | | | | | |
| costs | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| - | | | | | | (12.7) |
| Ordinary | | | | | | |
| finance | | | | | | |
| costs | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| - | | | | | | (2.7) |
| Exceptional | | | | | | |
| finance | | | | | | |
| costs | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| Finance | | | | | | 1.1 |
| income | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| Loss | | | | | | (47.4) |
| before | | | | | | |
| taxation | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| Taxation | | | | | | 9.0 |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| Loss | | | | | | (38.4) |
| for | | | | | | |
| the | | | | | | |
| period | | | | | | |
| - | | | | | | |
| Continuing | | | | | | |
+---------------+---------------------------------+----------+-------------+------------+-------------+--------+
| Discontinued operations - Corporatewear | | | | | (6.5) |
+-------------------------------------------------+----------+-------------+------------+-------------+--------+
| Loss | | | | | | (44.9) |
| for | | | | | | |
| the | | | | | | |
| period | | | | | | |
+---------------+------------------------+--------+----------+-------------+------------+-------------+--------+
+-------------------------+-----+---------+----------+-------------+------------+-------------+---------+
| | Discontinued | Textile | Drycleaning | Facilities | Unallocated | Total |
| | Operations | Rental | | Management | | |
| | | Services | | | | |
+-------------------------+---------------+----------+-------------+------------+-------------+---------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| OTHER INFORMATION | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| Capital expenditure | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| - Property, plant | 1.8 | 3.6 | 1.9 | 0.9 | 0.4 | 8.6 |
| and equipment | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| - Textile rental | - | 18.5 | - | - | - | 18.5 |
| items | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| - Intangible | 0.7 | - | 0.1 | 0.6 | 3.2 | 4.6 |
| software | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| Depreciation and amortisation | | | | | | |
| expense | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| - Property, plant | 0.7 | 4.1 | 2.9 | 3.7 | 0.5 | 11.9 |
| and equipment | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| - Textile rental | - | 16.7 | - | - | - | 16.7 |
| items | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| - Intangible | 0.3 | - | 0.1 | 0.2 | 0.9 | 1.5 |
| software | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| - Intangibles | 2.7 | 1.3 | - | 2.1 | - | 6.1 |
| (excluding software) | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| - Impairment of | 13.2 | - | 1.4 | 6.5 | - | 21.1 |
| goodwill | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| | | | | | | |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| BALANCE SHEET INFORMATION |
+-------------------------------------------------------------------------------------------------------+
| Segment assets | 95.2 | 116.8 | 36.4 | 57.2 | 46.7 | 352.3 |
+-------------------------------+---------+----------+-------------+------------+-------------+---------+
| Segment liabilities | (19.6) | (32.0) | (21.1) | (12.2) | (220.6) | (305.5) |
+-------------------------+-----+---------+----------+-------------+------------+-------------+---------+
NOTES TO THE PRELIMINARY ANNOUNCEMENT /Continued...
3.Exceptional Items
+-------------------------------------------------------------------------------------+--------+--------+--------+
| | 2008 | | 2007 |
| | GBPm | | GBPm |
+-------------------------------------------------------------------------------------+--------+--------+--------+
| | | | |
+-------------------------------------------------------------------------------------+--------+--------+--------+
| Restructuring | (2.6) | | (9.5) |
| costs - | | | |
| Textile | | | |
| Rental | | | |
| Services | | | |
+-------------------------------------------------------------------------------------+--------+--------+--------+
| - | (0.3) | | (0.1) |
| Drycleaning | | | |
+-------------------------------------------------------------------------------------+--------+--------+--------+
| - | - | | (1.5) |
| Facilities | | | |
| Management | | | |
+-------------------------------------------------------------------------------------+--------+--------+--------+
| - | (0.5) | | (4.5) |
| Unallocated | | | |
+-------------------------------------------------------------------------------------+--------+--------+--------+
| - | (3.4) | | (15.6) |
| Total | | | |
+-------------------------------------------------------------------------------------+--------+--------+--------+
| | | | |
+-------------------------------------------------------------------------------------+--------+--------+--------+
| Professional | (6.4) | | (2.4) |
| fees | | | |
| associated | | | |
| with bank | | | |
| restructuring | | | |
| process | | | |
+-------------------------------------------------------------------------------------+--------+--------+--------+
| Professional | (0.3) | | - |
| fees | | | |
| associated | | | |
| with moving | | | |
| to AIM | | | |
+-------------------------------------------------------------------------------------+--------+--------+--------+
| Onerous | (0.7) | | (3.7) |
| lease | | | |
| and | | | |
| environmental | | | |
| costs | | | |
+-------------------------------------------------------------------------------------+--------+--------+--------+
| Write-off | - | | (3.6) |
| of rental | | | |
| stock | | | |
+-------------------------------------------------------------------------------------+--------+--------+--------+
| Write-off | - | | (16.7) |
| of ERP | | | |
| system | | | |
| (software | | | |
| and | | | |
| hardware) | | | |
+-------------------------------------------------------------------------------------+--------+--------+--------+
| Uninsured | 1.2 | | - |
| losses | | | |
+-------------------------------------------------------------------------------------+--------+--------+--------+
| Total | (9.6) | | (42.0) |
| restructuring | | | |
| and other | | | |
| costs | | | |
+-------------------------------------------------------------------------------------+--------+--------+--------+
| Property | 0.9 | | 2.1 |
| disposals | | | |
+-------------------------------------------------------------------------------------+--------+--------+--------+
| Total | (8.7) | | (39.9) |
| Exceptional | | | |
| Items | | | |
+-------------------------------------------------------------------------------------+--------+--------+--------+
Exceptional items in relation to discontinued operations have been included
within the result from discontinued operations.
In addition to the items above, the Group recognised exceptional finance costs
of GBP0.9m (2007: GBP2.7m), further details of which are disclosed within note
5.
Restructuring costs within the Textile Rental Services division largely relate
to the new processing facility in Hinckley and include redundancy costs and dual
processing costs incurred during the transfer of processing facilities.
Drycleaning and unallocated restructuring costs relate largely to the
termination costs of staff.
Professional fees associated with the bank restructuring process include the
cost of an Independent Business Review, legal fees and other advisory fees.
Onerous lease and environmental costs represent a reassessment of expected
future costs arising from significant changes in circumstances on specific
properties.
The uninsured losses credit arises as a result of a legal claim against the
Group being settled for an amount less than that previously estimated.
Property disposals in 2008 relate to the sale of a former textile rental plant.
4.Adjusted Profit Before and After Taxation
The reconciliation of profit before taxation from continuing operations and
adjusted profit before taxation from continuing operations is as follows:
+---------------+--------+--------+--------+
| | | 2008 | 2007 |
| | | GBPm | GBPm |
+---------------+--------+--------+--------+
| | | | |
+---------------+--------+--------+--------+
| Loss | | (6.3) | (47.4) |
| before | | | |
| taxation | | | |
+---------------+--------+--------+--------+
| Intangibles | | 3.2 | 11.3 |
| amortisation | | | |
| and | | | |
| impairment | | | |
| (excluding | | | |
| software | | | |
| amortisation) | | | |
+---------------+--------+--------+--------+
| Restructuring | | 9.6 | 42.0 |
| and other | | | |
| costs | | | |
+---------------+--------+--------+--------+
| Profit | | (0.9) | (2.1) |
| on | | | |
| disposal | | | |
| of | | | |
| property | | | |
+---------------+--------+--------+--------+
| Exceptional | | 0.9 | 2.7 |
| finance | | | |
| costs in | | | |
| respect of | | | |
| bank fees | | | |
+---------------+--------+--------+--------+
| Adjusted | | 6.5 | 6.5 |
| profit | | | |
| before | | | |
| taxation | | | |
+---------------+--------+--------+--------+
| Taxation | | (2.1) | (4.2) |
| on | | | |
| adjusted | | | |
| profit | | | |
+---------------+--------+--------+--------+
| Adjusted | | 4.4 | 2.3 |
| profit | | | |
| after | | | |
| taxation | | | |
| attributable | | | |
| to | | | |
| continuing | | | |
| operations | | | |
+---------------+--------+--------+--------+
NOTES TO THE PRELIMINARY ANNOUNCEMENT /Continued...
5.Finance Costs and Income
+--------------+--------+--------+--------+
| | 2008 | | 2007 |
| | GBPm | | GBPm |
+--------------+--------+--------+--------+
| | | | |
+--------------+--------+--------+--------+
| Interest | (11.7) | | (12.7) |
| payable | | | |
| on bank | | | |
| loans | | | |
| and | | | |
| overdrafts | | | |
+--------------+--------+--------+--------+
| Amortisation | (0.5) | | (0.4) |
| of bank loan | | | |
| issue costs | | | |
+--------------+--------+--------+--------+
| Interest | (0.1) | | (0.2) |
| payable | | | |
| on | | | |
| obligations | | | |
| under | | | |
| finance | | | |
| leases | | | |
+--------------+--------+--------+--------+
| Other | (0.2) | | - |
| finance | | | |
| costs | | | |
+--------------+--------+--------+--------+
| | (12.5) | | (13.3) |
+--------------+--------+--------+--------+
| Change | - | | (0.2) |
| in | | | |
| fair | | | |
| value | | | |
| of | | | |
| financial | | | |
| derivatives | | | |
| not | | | |
| qualifying | | | |
| for hedge | | | |
| accounting | | | |
+--------------+--------+--------+--------+
| Finance | (12.5) | | (13.5) |
| costs | | | |
| before | | | |
| notional | | | |
| interest | | | |
| on | | | |
| defined | | | |
| benefit | | | |
| liabilities | | | |
| and assets | | | |
+--------------+--------+--------+--------+
| | | | |
+--------------+--------+--------+--------+
| Notional | | | |
| interest | | | |
| on | | | |
| defined | | | |
| benefit | | | |
| obligations: | | | |
+--------------+--------+--------+--------+
| - | (10.7) | | (9.8) |
| Interest | | | |
| cost on | | | |
| pension | | | |
| scheme | | | |
| liabilities | | | |
+--------------+--------+--------+--------+
| - | 11.5 | | 10.7 |
| Expected | | | |
| return | | | |
| on | | | |
| pension | | | |
| scheme | | | |
| assets | | | |
+--------------+--------+--------+--------+
| - | (0.1) | | (0.1) |
| Private | | | |
| healthcare | | | |
+--------------+--------+--------+--------+
| Ordinary | (11.8) | | (12.7) |
| finance | | | |
| costs | | | |
+--------------+--------+--------+--------+
| | | | |
+--------------+--------+--------+--------+
| Exceptional | (0.9) | | (2.7) |
| finance | | | |
| costs | | | |
| relating to | | | |
| bank fees | | | |
+--------------+--------+--------+--------+
| Finance | (12.7) | | (15.4) |
| Costs | | | |
+--------------+--------+--------+--------+
| | | | |
+--------------+--------+--------+--------+
| Gain | - | | 0.8 |
| on | | | |
| interest | | | |
| rate | | | |
| swap | | | |
+--------------+--------+--------+--------+
| Other | 0.9 | | 0.3 |
| finance | | | |
| income | | | |
+--------------+--------+--------+--------+
| Finance | 0.9 | | 1.1 |
| income | | | |
+--------------+--------+--------+--------+
| Net | (11.8) | | (14.3) |
| finance | | | |
| expense | | | |
+--------------+--------+--------+--------+
The exceptional finance costs during the year relate to the write-off of bank
fees on that part of the new bank facility which was repaid during the period.
The exceptional finance costs in 2007 relate to a fee of GBP1.5 million which
the Group was required to pay to its bankers as part of the negotiations of a
covenant waiver ahead of the December 2007 covenant test together with the
write-off of the remaining GBP1.2 million unamortised fees paid in respect of
the previous facility.
6.Taxation
+--------------+--------+--------+--------+
| | 2008 | | 2007 |
| | GBPm | | GBPm |
+--------------+--------+--------+--------+
| CURRENT | | | |
| TAX | | | |
+--------------+--------+--------+--------+
| UK | (3.2) | | (3.3) |
| corporation | | | |
| tax credit | | | |
| for the | | | |
| year | | | |
+--------------+--------+--------+--------+
| Adjustment | (1.4) | | 1.0 |
| in | | | |
| relation | | | |
| to | | | |
| previous | | | |
| years | | | |
+--------------+--------+--------+--------+
| Current | (4.6) | | (2.3) |
| tax | | | |
| credit | | | |
| for the | | | |
| year | | | |
+--------------+--------+--------+--------+
| | | | |
+--------------+--------+--------+--------+
| DEFERRED | | | |
| TAX | | | |
+--------------+--------+--------+--------+
| Origination | 3.3 | | (6.8) |
| and | | | |
| reversal of | | | |
| timing | | | |
| differences | | | |
+--------------+--------+--------+--------+
| Adjustment | (0.4) | | 0.1 |
| in | | | |
| relation | | | |
| to | | | |
| previous | | | |
| years | | | |
+--------------+--------+--------+--------+
| Deferred | 2.9 | | (6.7) |
| tax | | | |
| charge / | | | |
| (credit) | | | |
| for the | | | |
| year | | | |
+--------------+--------+--------+--------+
| Total | (1.7) | | (9.0) |
| credit | | | |
| for | | | |
| taxation | | | |
| included in | | | |
| the Income | | | |
| Statement | | | |
+--------------+--------+--------+--------+
The taxation numbers above relate to continuing operations.
The tax credit for the period is lower (2007: lower) than the weighted average
standard rate of corporation tax in the UK of 28.5% (2007: 30%). The differences
are explained below:
+--------------------------------------------------+--------------+--+------------+
| | 2008 | | 2007 |
| | GBPm | | GBPm |
+--------------------------------------------------+--------------+--+------------+
| | | | |
+--------------------------------------------------+--------------+--+------------+
| Loss before taxation per the Income Statement | (6.3) | | (47.4) |
+--------------------------------------------------+--------------+--+------------+
| Loss before taxation multiplied by the weighted | (1.8) | | (14.2) |
| average standard rate of | | | |
| corporation tax in the UK of 28.5% (2007: 30%) | | | |
+--------------------------------------------------+--------------+--+------------+
| Factors affecting charge for the year: | | | |
+--------------------------------------------------+--------------+--+------------+
| Tax effect of expenses not deductible for tax | 0.2 | | 3.4 |
| purposes | | | |
+--------------------------------------------------+--------------+--+------------+
| Tax effect of non-taxable income | (0.3) | | (0.2) |
+--------------------------------------------------+--------------+--+------------+
| Reduction of deferred tax due to rate change | - | | 0.9 |
+--------------------------------------------------+--------------+--+------------+
| Tax effect of future abolition of IBAs | 2.0 | | - |
+--------------------------------------------------+--------------+--+------------+
| Adjustments to tax in respect of prior periods | (1.8) | | 1.1 |
+--------------------------------------------------+--------------+--+------------+
| Total credit for taxation included in the Income | (1.7) | | (9.0) |
| Statement | | | |
+--------------------------------------------------+--------------+--+------------+
Taxation on the restructuring and other costs, including exceptional finance
costs, in the current year has reduced the charge for taxation by GBP2.9 million
(2007: GBP12.6 million). Tax relief on intangibles amortisation and impairment
(excluding software amortisation) has reduced the charge for taxation by GBP0.9
million (2007: GBP1.0 million). There was no tax effect during the year in
respect of the property disposals (2007: GBP0.4 million increase).
NOTES TO THE PRELIMINARY ANNOUNCEMENT /Continued...
7.Dividends
The Directors do not propose the payment of a dividend in respect of the year
ended 31 December 2008 (2007: nil).
8.Earnings Per Share
+------------------------+------------------------------------------------+--------+--------+-------------+
| | 2008 | | 2007 |
| | GBPm | | GBPm |
+-------------------------------------------------------------------------+--------+--------+-------------+
| | | | |
+-------------------------------------------------------------------------+--------+--------+-------------+
| Loss for the financial year from continuing operations | (4.6) | | (38.4) |
| attributable to Ordinary Shareholders | | | |
+-------------------------------------------------------------------------+--------+--------+-------------+
| Loss for the financial year from discontinued | (1.5) | | (6.5) |
| operations attributable to Ordinary Shareholders | | | |
+-------------------------------------------------------------------------+--------+--------+-------------+
| Intangibles amortisation and impairment from continuing | 2.3 | | 10.3 |
| operations (net of taxation) | | | |
+-------------------------------------------------------------------------+--------+--------+-------------+
| Intangibles amortisation and impairment from | 0.6 | | 15.1 |
| discontinued operations (net of taxation) | | | |
+-------------------------------------------------------------------------+--------+--------+-------------+
| Exceptional costs from continuing operations (net of | 6.0 | | 28.5 |
| taxation) | | | |
+-------------------------------------------------------------------------+--------+--------+-------------+
| Exceptional costs from discontinued operations (net of | 1.3 | | 0.8 |
| taxation) | | | |
+-------------------------------------------------------------------------+--------+--------+-------------+
| Exceptional finance costs in respect of bank fees from | 0.7 | | 1.9 |
| continuing operations (net of taxation) | | | |
+-------------------------------------------------------------------------+--------+--------+-------------+
| Adjusted | 4.8 | | 11.7 |
| profit | | | |
| attributable | | | |
| to Ordinary | | | |
| Shareholders | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Weighted | 143,564,940 | | 59,295,914 |
| average | | | |
| number | | | |
| of | | | |
| Ordinary | | | |
| shares | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Dilutive | 2,488,233 | | 56,055 |
| potential | | | |
| Ordinary | | | |
| shares * | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Fully | 146,053,173 | | 59,351,969 |
| diluted | | | |
| number | | | |
| of | | | |
| Ordinary | | | |
| shares | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Basic | | | |
| earnings | | | |
| per | | | |
| share | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| From | (3.2p) | | (64.7p) |
| continuing | | | |
| operations | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| From | (1.0p) | | (11.1p) |
| discontinued | | | |
| operations | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| From | (4.2p) | | (75.8p) |
| continuing | | | |
| and | | | |
| discontinued | | | |
| operations | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Adjustment | 1.6p | | 17.3p |
| for | | | |
| intangibles | | | |
| amortisation | | | |
| and | | | |
| impairment (continuing | | | |
| operations) | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Adjustment | 0.4p | | 25.6p |
| for | | | |
| intangibles | | | |
| amortisation | | | |
| and | | | |
| impairment | | | |
| (discontinued | | | |
| operations) | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Adjustment | 4.2p | | 48.1p |
| for | | | |
| exceptional | | | |
| costs | | | |
| (continuing | | | |
| operations) | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Adjustment | 0.9p | | 1.3p |
| for | | | |
| exceptional | | | |
| costs | | | |
| (discontinued | | | |
| operations) | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Adjustment | 0.4p | | 3.2p |
| for | | | |
| exceptional | | | |
| finance | | | |
| costs in | | | |
| respect of | | | |
| bank fees | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Adjusted | 3.0p | | 3.9p |
| basic | | | |
| earnings | | | |
| per | | | |
| share | | | |
| from | | | |
| continuing | | | |
| operations | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Adjusted | 0.3p | | 15.8p |
| basic | | | |
| earnings | | | |
| per | | | |
| share | | | |
| from | | | |
| discontinued | | | |
| operations | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Adjusted | 3.3p | | 19.7p |
| basic | | | |
| earnings | | | |
| per | | | |
| share | | | |
| from | | | |
| continuing | | | |
| and | | | |
| discontinued | | | |
| operations | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Diluted | | | |
| earnings | | | |
| per | | | |
| share | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| From | (3.2p) | | (64.7p) |
| continuing | | | |
| operations | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| From | (1.0p) | | (11.1p) |
| discontinued | | | |
| operations | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| From | (4.2p) | | (75.8p) |
| continuing | | | |
| and | | | |
| discontinued | | | |
| operations | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Adjustment | 1.6p | | 17.3p |
| for | | | |
| intangibles | | | |
| amortisation | | | |
| and | | | |
| impairment (continuing | | | |
| operations) | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Adjustment | 0.4p | | 25.6p |
| for | | | |
| intangibles | | | |
| amortisation | | | |
| and | | | |
| impairment | | | |
| (discontinued | | | |
| operations) | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Adjustment | 4.2p | | 48.1p |
| for | | | |
| exceptional | | | |
| costs | | | |
| (continuing | | | |
| operations) | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Adjustment | 0.9p | | 1.3p |
| for | | | |
| exceptional | | | |
| costs | | | |
| (discontinued | | | |
| operations) | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Adjustment | 0.4p | | 3.2p |
| for | | | |
| exceptional | | | |
| finance | | | |
| costs in | | | |
| respect of | | | |
| bank fees | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Adjusted | 3.0p | | 3.9p |
| diluted | | | |
| earnings | | | |
| per | | | |
| share | | | |
| from | | | |
| continuing | | | |
| operations | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Adjusted | 0.3p | | 15.8p |
| diluted | | | |
| earnings | | | |
| per | | | |
| share | | | |
| from | | | |
| discontinued | | | |
| operations | | | |
+------------------------+---------------------------------------------------------+--------+-------------+
| Adjusted | 3.3p | | 19.7p |
| diluted | | | |
| earnings | | | |
| per | | | |
| share | | | |
| from | | | |
| continuing | | | |
| and | | | |
| discontinued | | | |
| operations | | | |
+------------------------+------------------------------------------------+--------+--------+-------------+
* Includes outstanding share options granted to employees and warrants issued to
the Company's banks.
Basic earnings per share is calculated using the weighted average number of
shares in issue during the year, excluding those held by the ESOP, based on the
profit for the year attributable to Ordinary Shareholders. Note that the
weighted average number of shares in issue during the year for 2009 will, as a
minimum, be equal to the current number of issued shares i.e. 249,302,482.
Adjusted earnings per share figures are given to exclude the effects of
intangibles amortisation and impairment (excluding software amortisation),
exceptional items and exceptional finance costs, all net of taxation, and are
considered to show the underlying results of the Group.
For diluted earnings per share, the weighted average number of Ordinary shares
in issue is adjusted to assume conversion of all dilutive potential Ordinary
shares. The Company has dilutive potential Ordinary shares arising from warrants
issued to the Company's bankers and share options granted to employees where the
exercise price is less than the average market price of the Company's Ordinary
shares during the year.
NOTES TO THE PRELIMINARY ANNOUNCEMENT /Continued...
8.Earnings Per Share /continued...
Potential Ordinary shares are dilutive at the profit from continuing operations
level when their conversion to Ordinary shares would decrease earnings per share
or increase loss per share from continuing operations. For the years ending 31st
December 2008 and 31st December 2007, potential Ordinary shares are
antidilutive, as their inclusion in the diluted earnings per share calculation
would reduce the loss from continuing operations, and hence have been excluded.
Other than for the grant of 7,479,074 share options under the Long Term Growth
Plan, there were no events occurring after the Balance Sheet date that would
have changed significantly the number of Ordinary shares or potential Ordinary
shares outstanding at the Balance Sheet date, if those transactions had occurred
before the end of the reporting period.
9.Retirement Benefit Obligations
The Group has applied the requirements of IAS 19 Employee Benefits (revised
December 2004) to its employee pension schemes and post-retirement healthcare
benefits.
As part of the Group's objective to reduce its overall pension liability,
additional contributions of GBP2.4 million and GBP0.2 million (2007: GBP2.8
million and GBP0.6 million) were paid to the Johnson Group Staff Pension Scheme
and the WML Final Salary Pension Scheme respectively, during the period to 31st
December 2008. No additional contributions were paid to the Semara Augmented
Pension Plan (2007: GBP0.1 million). In addition, following the disposal of the
Corporatewear division in April 2008, GBP2.1 million was paid into the Johnson
Group Staff Pension Scheme.
Following discussions with the Group's appointed actuary it has been identified
that an actuarial loss of GBP11.0 million (2007: GBP10.4 million gain) should be
recognised in the year to 31st December 2008. This is as a result of the scheme
assets and liabilities performing differently to previous assumptions and
changes to the assumptions used in calculating scheme liabilities.
The gross retirement benefit liability and associated deferred tax asset
thereon, together with the net liability is shown below:
+------------+--------+--------+--------+
| | 2008 | | 2007 |
| | GBPm | | GBPm |
+------------+--------+--------+--------+
| | | | |
+------------+--------+--------+--------+
| Gross | (20.6) | | (15.8) |
| retirement | | | |
| benefit | | | |
| liability | | | |
+------------+--------+--------+--------+
| Deferred | 6.0 | | 4.8 |
| tax | | | |
| asset | | | |
| thereon | | | |
+------------+--------+--------+--------+
| Net | (14.6) | | (11.0) |
| liability | | | |
+------------+--------+--------+--------+
10.Disposals
On 19th March 2008 Johnson Clothing Limited, the Group's Corporatewear business
disposed of assets including stock, certain supply contracts and associated
goodwill relating to CCM, the company's garment sourcing business, to its fellow
subsidiary Johnsons Apparelmaster Limited. The CCM business was then immediately
sold to a third party for a total cash consideration, before costs, of GBP2.8
million.
On 28th April 2008, the Group sold the entire share capital of Johnson Clothing
Limited on a debt free cash free basis. The revenue and profit after tax of
Johnson Clothing Limited in the period to the date of disposal, the post-tax
loss on disposal together with the net assets of Johnson Clothing Limited as at
the date of disposal were as follows:
+----------------------------------------------------+------------+--+-----------+
| | 2008 | | 2007 |
| | GBPm | | GBPm |
+----------------------------------------------------+------------+--+-----------+
| | | | |
+----------------------------------------------------+------------+--+-----------+
| Revenue from discontinued operations | 25.7 | | 89.3 |
+----------------------------------------------------+------------+--+-----------+
| | | | |
+----------------------------------------------------+------------+--+-----------+
| Profit / (loss) before taxation from discontinued | 0.6 | | (5.0) |
| operations | | | |
+----------------------------------------------------+------------+--+-----------+
| Taxation | (0.8) | | (1.5) |
+----------------------------------------------------+------------+--+-----------+
| Loss for the period | (0.2) | | (6.5) |
+----------------------------------------------------+------------+--+-----------+
| | | | |
+----------------------------------------------------+------------+--+-----------+
| Consideration (net of disposal costs) | 84.4 | | - |
+----------------------------------------------------+------------+--+-----------+
| Total net assets disposed of | (72.5) | | - |
+----------------------------------------------------+------------+--+-----------+
| Pre-tax gain on disposal | 11.9 | | - |
+----------------------------------------------------+------------+--+-----------+
| Taxation | (13.2) | | - |
+----------------------------------------------------+------------+--+-----------+
| Loss on disposal | (1.3) | | - |
+----------------------------------------------------+------------+--+-----------+
| | | | |
+----------------------------------------------------+------------+--+-----------+
| Retained loss from discontinued operations | (1.5) | | (6.5) |
+----------------------------------------------------+------------+--+-----------+
NOTES TO THE PRELIMINARY ANNOUNCEMENT /Continued...
10.Disposals /continued...
Total Net Assets disposed of
+----------------------------------------------------+------------+--+-----------+
| | 2008 | | 2007 |
| | GBPm | | GBPm |
+----------------------------------------------------+------------+--+-----------+
| | | | |
+----------------------------------------------------+------------+--+-----------+
| Goodwill | 28.5 | | - |
+----------------------------------------------------+------------+--+-----------+
| Intangible assets | 17.0 | | - |
+----------------------------------------------------+------------+--+-----------+
| Property, plant and equipment | 2.2 | | - |
+----------------------------------------------------+------------+--+-----------+
| Stock | 26.4 | | - |
+----------------------------------------------------+------------+--+-----------+
| Trade and other receivables | 16.3 | | - |
+----------------------------------------------------+------------+--+-----------+
| Trade and other payables | (17.9) | | - |
+----------------------------------------------------+------------+--+-----------+
| | 72.5 | | - |
+----------------------------------------------------+------------+--+-----------+
Cash Received for Disposals
+----------------------------------------------------+------+---------+--+-----------+
| | 2008 | | 2007 |
| | GBPm | | GBPm |
+----------------------------------------------------+----------------+--+-----------+
| | | | |
+----------------------------------------------------+----------------+--+-----------+
| Cash consideration | 87.1 | | - |
+----------------------------------------------------+----------------+--+-----------+
| | | | |
+----------------------------------------------------+----------------+--+-----------+
| Costs | (2.7) | | - |
+----------------------------------------------------+----------------+--+-----------+
| Tax liability | (13.2) | | - |
+----------------------------------------------------+----------------+--+-----------+
| Pension contribution | (2.1) | | - |
+----------------------------------------------------+----------------+--+-----------+
| | | | |
+----------------------------------------------------+----------------+--+-----------+
| Net cash received in the year from the disposal of | 69.1 | | - |
| Johnson Clothing Limited | | | |
+----------------------------------------------------+----------------+--+-----------+
| Net cash received in the year from the disposal of | 2.6 | | - |
| CCM | | | |
+----------------------------------------------------+----------------+--+-----------+
| Net cash received in respect of disposals | 71.7 | | - |
| included within the Cash Flow Statement | | | |
+----------------------------------------------------+------+---------+--+-----------+
The cash flows (excluding proceeds from disposal) from discontinued operations
included within the consolidated Cash Flow Statement are as follows:
+----------------------------------------------------+------------+--+-----------+
| | 2008 | | 2007 |
| | GBPm | | GBPm |
+----------------------------------------------------+------------+--+-----------+
| | | | |
+----------------------------------------------------+------------+--+-----------+
| Net cash (used in) / generated from operating | (5.4) | | 0.9 |
| activities | | | |
+----------------------------------------------------+------------+--+-----------+
| Net cash generated from / (used in) investing | 2.1 | | (1.5) |
| activities | | | |
+----------------------------------------------------+------------+--+-----------+
| Net cash flow | (3.3) | | (0.6) |
+----------------------------------------------------+------------+--+-----------+
11.Reconciliation Of Net Cash Inflow To Movement In Net Debt
+-------------+---------+--------+---------+
| | 2008 | | 2007 |
| | GBPm | | GBPm |
+-------------+---------+--------+---------+
| | | | |
+-------------+---------+--------+---------+
| (Decrease) | (11.1) | | 5.0 |
| / increase | | | |
| in cash in | | | |
| year | | | |
+-------------+---------+--------+---------+
| Cash | 100.5 | | (30.6) |
| outflow | | | |
| / (inflow) | | | |
| on change | | | |
| in debt and | | | |
| lease | | | |
| financing | | | |
+-------------+---------+--------+---------+
| Change | 89.4 | | (25.6) |
| in net | | | |
| debt | | | |
| resulting | | | |
| from cash | | | |
| flows | | | |
+-------------+---------+--------+---------+
| | | | |
+-------------+---------+--------+---------+
| Movement | 0.6 | | (0.4) |
| in | | | |
| unamortised | | | |
| issue costs | | | |
| of bank | | | |
| loans | | | |
+-------------+---------+--------+---------+
| Movement | 90.0 | | (26.0) |
| in net | | | |
| debt in | | | |
| year | | | |
+-------------+---------+--------+---------+
| Opening | (168.5) | | (142.5) |
| net | | | |
| debt | | | |
+-------------+---------+--------+---------+
| Closing | (78.5) | | (168.5) |
| net | | | |
| debt | | | |
+-------------+---------+--------+---------+
NOTES TO THE PRELIMINARY ANNOUNCEMENT /Continued...
12.Analysis of Net Debt
Net debt is calculated as total borrowings less cash and cash equivalents, less
unamortised facility fees.
+-------------+---------+--------+----------+----------+
| | At | Cash | Other | At |
| | 1 | Flow | Non-cash | 31 |
| | January | GBPm | Changes | December |
| | 2008 | | GBPm | 2008 |
| | GBPm | | | GBPm |
+-------------+---------+--------+----------+----------+
| | | | | |
+-------------+---------+--------+----------+----------+
| Cash | 16.3 | (11.1) | - | 5.2 |
| and | | | | |
| cash | | | | |
| equivalents | | | | |
+-------------+---------+--------+----------+----------+
| Debt | (106.8) | 103.5 | 0.2 | (3.1) |
| due | | | | |
| within | | | | |
| one | | | | |
| year | | | | |
+-------------+---------+--------+----------+----------+
| Debt | (75.0) | (4.0) | 0.4 | (78.6) |
| due | | | | |
| after | | | | |
| more | | | | |
| than | | | | |
| one | | | | |
| year | | | | |
+-------------+---------+--------+----------+----------+
| Finance | (3.0) | 1.0 | - | (2.0) |
| leases | | | | |
+-------------+---------+--------+----------+----------+
| | (168.5) | 89.4 | 0.6 | (78.5) |
+-------------+---------+--------+----------+----------+
Non-cash changes represent the effects of amortising issue costs relating to
bank loans.
13.Abridged Accounts
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31st December 2008 or 31st December 2007
within the meaning of Section 240 of the Companies Act 1985, but is derived from
those accounts.
Statutory accounts for 2007 have been delivered to the Registrar of Companies,
and those for 2008 will be delivered as soon as practicable but not later than
30th April 2009. The Auditors have reported on those accounts; their reports
were unqualified and did not contain a statement under s237(2) or (3) of the
Companies Act 1985.
14.Preliminary Announcement
A copy of this Preliminary Announcement is available on request to all
Shareholders by post from The Company Secretary, Johnson Service Group PLC,
Johnson House, Abbots Park, Monks Way, Preston Brook, Cheshire WA7 3GH. The
Announcement can also be accessed on the Internet at www.johnsonplc.com.
The Annual Report will be posted to Shareholders on or before the 25th March
2009.
15.Approval
The Preliminary Announcement was approved by the Board of Directors on
10th March 2009.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SSMESUSUSESD
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