TIDMJSG
RNS Number : 3157G
Johnson Service Group PLC
03 March 2015
3rd March 2015
Johnson Service Group PLC
Preliminary Statement for the Financial Year ended 31st December
2014
'Another Strong Set of Results'
Johnson Service Group PLC, the Textile Services group (the
"Group"), announces its preliminary results for the financial year
ended 31st December 2014.
FINANCIAL HIGHLIGHTS
Increase
Continuing Operations 2014 2013 / (Decrease)
--------------------------------- ---------- ------------ --------------
Revenue GBP210.4m GBP193.6m 8.7%
Adjusted Operating Profit(1) GBP21.8m GBP17.0m 28.2%
Adjusted Profit Before Tax(2) GBP20.0m GBP13.4m 49.3%
Adjusted Fully Diluted Earnings
Per Share(3) 5.20p 3.80p 36.8%
Profit Before Tax GBP11.6m GBP12.2m (4.9%)
Dividend 1.70p 1.21p 40.5%
Net Debt GBP28.5m GBP34.0m(4) n/a
OPERATIONAL HIGHLIGHTS
-- Strong performance with Adjusted Operating Profit(1) up by 28.2% to GBP21.8 million.
-- Adjusted Profit Before Tax(2) increased by 49.3% to GBP20.0 million.
-- A successful entry into the volume hotel linen market with
the immediately earnings enhancing acquisition of Bourne in March
2014, which is trading strongly.
-- All three Textile Rental businesses performed ahead of management expectations.
-- GBP8.5 million capital investment in a new, highly efficient,
workwear processing facility in Leeds.
-- Restructure of Drycleaning, announced in January 2015, proceeding to plan.
1 "Adjusted Operating Profit" is before charging GBP1.6 million
(2013: GBP0.6 million) of amortisation and impairment of intangible
assets (excluding software amortisation) and GBP6.8 million (2013:
GBP0.6 million) of exceptional items.
2 "Adjusted Profit Before Tax" is Adjusted Operating Profit, less total finance cost.
3 "Adjusted Fully Diluted Earnings per Share" is calculated
using Adjusted Profit Before Tax, and deducting the charge to, or
adding the credit for, taxation thereon.
4 Pro-forma basis, after adjusting for the acquisition of Bourne
Services Group Limited (GBP22.3 million) and the equity fund
raising (net GBP12.8 million), both in March 2014.
Paul Moody, Non-Executive Chairman of the Group, commented:
"I am delighted that the Group has delivered another strong set
of results for the full year.
The acquisition of Bourne has proven to be very successful and
immediately earnings enhancing. The strong performance by Textile
Rental has continued into 2015 and the recent significant
investment in a new workwear processing facility reaffirms our
strategic focus on this division. The restructuring of the
Drycleaning division will provide new opportunities to improve the
performance of this business.
Overall, the Board expects that the Group will continue to
deliver a positive operational and financial performance
underpinned by the successful implementation of its strategy in
2015."
ANALYST MEETING
The Company will present to analysts at 09:30 today. A copy of
the presentation will be available on the Company's website
(www.jsg.com) following the meeting.
ENQUIRIES
Johnson Service Group PLC
Chris Sander, CEO
Yvonne Monaghan, CFO
Tel: 020 7653 9850 (on the day)
Tel: 01928 704600 (thereafter)
Investec Investment Banking (NOMAD) Newgate
James Rudd Tim Thompson
David Flin Robyn McConnachie
Matt Lewis Adam Lloyd
Tel: 020 7597 4000 Tel: 020 7653 9850
www.jsg.com
Note
Throughout this statement "adjusted operating profit" refers to
continuing operating profit before amortisation and impairment of
intangible assets (excluding software amortisation) and exceptional
items. "Adjusted profit before tax" refers to adjusted operating
profit less total finance cost.
CHAIRMAN'S STATEMENT
Overview
I am delighted to report that the Group has delivered another
strong set of results for the full year, building on the success of
the first half, and significantly ahead of 2013. Our entry into the
volume hotel linen market through the acquisition of Bourne
Services Group Limited (Bourne) in March 2014 has been very
successful and immediately earnings enhancing. Our Apparelmaster
and Stalbridge businesses have also performed strongly and the
recent significant investment in a new, highly efficient, workwear
processing facility reaffirms our focus on the Textile Rental
business.
At the beginning of January 2015, we announced the restructuring
of the Drycleaning business, with the future focus on highly
convenient collection and delivery locations. Implementation of the
restructuring plan is progressing in line with our
expectations.
Given the encouraging performance of the Group, and our
confidence in the future prospects of the business, we are
proposing a final dividend of 1.20 pence (2013: 0.81 pence) per
share, making a total dividend for the full year of 1.70 pence
(2013: 1.21 pence), an increase of 40.5%.
Group Results
Total revenue for the year increased to GBP210.4 million (2013:
GBP193.6 million) benefitting from the ten months of trading from
Bourne. Adjusted operating profit increased by 28.2% to GBP21.8
million (2013: GBP17.0 million). The key drivers of this
performance are explained further in the Chief Executive's
Operating Review.
Total finance cost in 2014 was GBP1.8 million (2013: GBP3.6
million), benefitting from the lower margin on reduced average bank
borrowings and a reduction in the notional interest charge on net
pension liabilities to GBP0.2 million (2013: GBP0.8 million).
Adjusted profit before tax increased by 49.3% to GBP20.0 million
(2013: GBP13.4 million).
Amortisation and impairment of intangible assets (excluding
software amortisation) for the year increased to GBP1.6 million
(2013: GBP0.6 million), reflecting the acquisition of Bourne.
Exceptional items for the year amounted to an aggregate charge of
GBP6.8 million (2013: GBP0.6 million) and comprise costs in
relation to business acquisition activity totalling GBP0.6 million,
costs arising from the relocation to our new workwear processing
facility in Leeds amounting to GBP1.3 million and the past service
cost impact, together with expenses, arising on the closure to
future accrual of the Group's final salary pension scheme on 31st
December 2014 totalling GBP4.9 million. Of this pension charge,
GBP4.7 million is non-cash.
Profit before tax amounted to GBP11.6 million (2013: GBP12.2
million).
The tax charge on the adjusted profit before tax was at a rate
of 22.4% (2013: 22.6%). After the amortisation and impairment of
intangible assets (excluding software amortisation) and exceptional
items noted above, the post-tax profit from continuing operations
was GBP8.6 million (2013: GBP9.8 million).
Adjusted fully diluted earnings per share from continuing
operations were up 36.8% to 5.2 pence (2013: 3.8 pence). Fully
diluted earnings per share from continuing operations after
exceptional items were 2.9 pence (2013: 3.6 pence).
Dividend
The Board is recommending a final dividend of 1.20 pence per
share (2013: 0.81 pence), making a total dividend in respect of
2014 of 1.70 pence per share (2013: 1.21 pence), an increase of
40.5%. The dividend increase is reflective of the significant
increase in underlying adjusted profit before tax whilst having
regard for the anticipated cash requirement for future
expansion.
The proposed final dividend, if approved by Shareholders, will
be paid on 15th May 2015 to Shareholders on the register at close
of business on 17th April 2015. The ex-dividend date is 16th April
2015.
Finances
Total net debt at the end of 2014 was GBP28.5 million (December
2013: GBP24.5 million), with the strong trading performance and
equity raising helping to offset the acquisition of Bourne and the
significant investment in capital expenditure.
Interest cover, based on adjusted operating profit and excluding
notional interest, was 13.6 times (2013: 6.1 times).
A new bank facility, which currently comprises a GBP60.0 million
revolving credit facility, was agreed in February 2014 and runs to
May 2018.
Interest payable on bank borrowings is based upon LIBOR plus a
margin which is linked to gearing levels. The applicable margin
during 2014 was, on average, 1.83% and will be 1.50% for, at least,
the first quarter of 2015. We have mitigated our exposure to
increases in LIBOR rates through the use of interest rate hedging.
GBP20.0 million of the bank facility has been hedged so that LIBOR
is substituted for a fixed rate of 1.79% for three years from
January 2013.
Pension
The recorded net deficit after tax for all post-employment
benefit obligations increased to GBP14.8 million from GBP3.4
million at December 2013. This increase in deficit is disappointing
given the actions taken in previous years. The increase is due to a
combination of a significant reduction in the discount rate applied
to liabilities, being only partly offset by the impact of an out
performance of returns on scheme assets, and the impact of the
closure of the defined benefit scheme to future accrual. The
closure of the defined benefit pension scheme to future accrual
accounts for GBP3.8 million of the increase in the recorded net
deficit after tax and reflects the recognition of past service
liabilities.
Asset allocation has been reviewed with the Trustee and changes
made to more appropriately match assets against the remaining
scheme liabilities and to reduce risk to a more acceptable
level.
Deficit recovery payments amounted to GBP2.0 million in 2014
(2013: GBP1.9 million) and are expected to be GBP1.9 million in
2015, as agreed with the Trustee following the completion of the
triennial valuation as at 5th October 2013.
The notional interest charge, which is non-cash, amounted to
GBP0.2 million in 2014 (2013: GBP0.8 million). The charge for 2015
is dependent upon the level of the accounting deficit at 31st
December 2014, and will, therefore, increase to GBP0.6 million for
2015.
Drycleaning Restructuring
The restructuring of the branch portfolio announced in January
2015 is progressing to plan and we believe the strategic actions we
are taking will reposition the business to cater for the future
requirements of customers and enable us to improve margin.
Employees
I would like to thank all employees in every part of the Group
for their continuing commitment and dedication to delivering
service beyond our customers' expectations.
Outlook
The strong performance of Textile Rental in 2014 has continued
into 2015. We have identified areas for future growth and
investment, particularly in sectors of the market where we are
under represented.
The streamlined branch network, together with a focus on highly
convenient drop off and collection locations, will provide new
opportunities to improve the performance of our Drycleaning
business.
The Board expects that the Group will continue to deliver a
strong performance and successfully implement its strategy for
2015.
Paul Moody
Non-Executive Chairman
3rd March 2015
CHIEF EXECUTIVE'S OPERATING REVIEW
Within the Group there are two operating segments, Textile
Rental, which is by far the largest business, and Drycleaning.
Textile Rental
The Textile Rental business trades through three brands
servicing three market sectors within Textile Rental in the UK.
These are "Apparelmaster", which predominantly provides workwear
rental and laundry services to all sectors of industry,
"Stalbridge", which provides premium linen services to the
hospitality and corporate events market and "Bourne", which
provides high volume hotel linen.
Textile Rental revenue increased by 13.8% to GBP155.0 million
(2013: GBP136.2 million) whilst adjusted operating profit increased
by 25.9% to GBP23.8 million (2013: GBP18.9 million), both helped by
the addition of Bourne in March 2014. The associated margin
increased from 13.9% to 15.4%.
Apparelmaster had another successful year, delivering higher
levels of new business wins, increasing sales to existing customers
and improving customer retention levels to in excess of 95%,
resulting in both adjusted operating profit and margin improving. A
number of large national contracts renewed their agreements
resulting in additional spend on textile rental items with a
corresponding increase in rental stock depreciation. However, this
increased cost was offset by production efficiencies together with
improved energy unit prices and consumption.
As in previous years, the business has continued to invest in
equipment to drive higher productivity and lower energy
consumption, ensuring that the business is on schedule to meet the
Government targets for reduced energy consumption under the CCA
(Climate Change Agreement).
As part of this investment strategy, a new and highly efficient
GBP8.5 million workwear processing facility in Leeds has been
completed, which replaces an existing facility, and which
significantly increases garment processing capacity. The new state
of the art plant is the largest and most modern workwear processing
facility in the UK and incorporates some of the most efficient and
cost effective equipment available in the market.
Apparelmaster has also continued to invest in IT support for the
business and has further improved the ability to communicate with
customers in a simple and transparent manner. The training and
development of staff is key to our continued success and a more
structured process is being introduced to ensure the continuing
personal development of staff at all levels.
The business strategy of delivering enhanced quality and service
to our customer base will continue into 2015 with the aim of
sustaining the high customer retention rate achieved in 2014.
Stalbridge returned a strong performance as a result of
encouraging new sales wins and a further improvement in customer
retention levels, both of which were underpinned by productivity
and efficiency benefits from the capital investment made in the
final quarter of 2013 and the first quarter of 2014.
A new Managing Director was appointed during 2014, and by the
end of the year had implemented a restructure of central overheads,
which will reduce costs for 2015. Further investment of GBP1.2
million in plant and machinery has been approved for the first
quarter of 2015 which will increase capacity and reduce operating
costs.
Stalbridge continues to focus on delivering market leading
service and quality to premium hotel, restaurant and catering
locations. To further improve the customer experience a new
extranet and field based mobile technology solution has been
developed. To enhance the Stalbridge brand values and service
proposition a vigorous marketing campaign is planned throughout
2015, specifically related to its core market.
Bourne traded very strongly throughout the ten months since
acquisition, delivering increased volume from existing customers as
a result of buoyant hotel occupancy levels and new hotel openings.
Despite strong pricing competition in the high volume linen market,
Bourne has been very successful in delivering new sales wins. As a
result of the increased volume, some of the additional capacity
that was available upon acquisition is already being utilised.
Similar to our Apparelmaster and Stalbridge businesses, Bourne
continuously invests in plant and equipment with a view to driving
operational efficiency and lower energy consumption, as well as
providing its customers with a higher quality product.
The addition of Bourne to our wider Textile Rental business is
also allowing us to identify synergies and improvements in the
efficiency of our supply chain.
We anticipate that Bourne will continue to perform ahead of our
original expectations throughout 2015 in terms of business
development, adjusted operating profit and margin.
Drycleaning
Our Drycleaning business is represented across the UK through
the highly recognised Johnson Cleaners brand and our London based
premium brand, Jeeves.
Revenue reduced to GBP55.4 million (2013: GBP57.4 million),
reflecting the reduced number of branches, although adjusted
operating profit was maintained at GBP1.6 million (2013: GBP1.6
million).
As the market dynamics of retail high streets have continued to
change in recent years, so has our Drycleaning business model, and
2014 saw a significant development in alternative routes to market
for Johnson Cleaners.
During 2014, the business developed a front of store presence in
the premium supermarket Waitrose, improving convenience for many
drycleaning customers. Following the success of the partnership
trials, Johnson Cleaners had opened facilities in 78 Waitrose
locations by December 2014, all utilising our unique and
environmentally friendly GreenEarth(c) cleaning process. The number
of Waitrose locations has subsequently increased to 122. We are
very proud to be working with such a premium brand and to have
developed a relationship which provides both parties with brand
extension and customer reach opportunities.
In order to further enhance customer convenience, we have also
established collection and delivery points in a small number of
corporate office premises with a high concentration of staff and,
in particular, as a preferred supplier with a number of facilities
management companies who offer multiple services to their
clients.
In addition to these initiatives, we have made significant
progress with our website development, which now incorporates the
capability of online transactions across various services and which
will enable home collection and delivery of bulky items in the near
future.
As announced on 6th January 2015, we have identified 109
branches which we expect to close by the end of the first half. The
estimated net cost of the restructuring remains at GBP6.5 million
and will be treated as an exceptional item in 2015. Of the
estimated cost, GBP0.4 million is non-cash and only GBP1.4 million
is an additional cash requirement, relating to the restructuring
cost, as the balance is already contractually committed cash spend
in the current and future years (including rent, rates, insurance
and dilapidations) irrespective of the restructuring plan.
Chris Sander
Chief Executive Officer
3rd March 2015
CONSOlidated Income Statement
Year ended Year ended
31 December 31 December
Note 2014 2013
GBPm GBPm
REVENUE FROM CONTINUING OPERATIONS 2 210.4 193.6
OPERATING PROFIT 2 13.4 15.8
OPERATING PROFIT BEFORE AMORTISATION AND IMPAIRMENT
OF INTANGIBLE ASSETS (EXCLUDING SOFTWARE AMORTISATION)
AND EXCEPTIONAL ITEMS 2 21.8 17.0
Amortisation and impairment of intangible
assets (excluding software amortisation) (1.6) (0.6)
Exceptional items 3
- Restructuring and other costs (1.3) (1.2)
- Costs in relation to business acquisition
activity (0.6) -
- Pension (costs) / credits (4.9) 0.6
OPERATING PROFIT 2 13.4 15.8
Finance cost (1.6) (2.8)
Notional interest (0.2) (0.8)
------------------------------------------------------- ------------ ------------
TOTAL FINANCE COST 4 (1.8) (3.6)
PROFIT BEFORE TAXATION 11.6 12.2
Taxation charge * 6 (3.0) (2.4)
------------------------------------------------------- ------------ ------------
PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS 8.6 9.8
RESULT / (LOSS) FOR THE YEAR FROM DISCONTINUED
OPERATIONS 10 - (9.1)
------------------------------------------------------- ------------ ------------
PROFIT FOR THE YEAR ATTRIBUTABLE TO EQUITY
HOLDERS 8.6 0.7
------------------------------------------------------- ------------ ------------
EARNINGS PER SHARE 7
Basic earnings per share
From continuing operations 2.9p 3.8p
From discontinued operations - (3.6p)
-------------------------------------------------------
From continuing and discontinued operations 2.9p 0.2p
------------------------------------------------------- ------------ ------------
Diluted earnings per share
From continuing operations 2.9p 3.6p
From discontinued operations - (3.4p)
------------------------------------------------------- ------------ ------------
From continuing and discontinued operations 2.9p 0.2p
------------------------------------------------------- ------------ ------------
Adjusted basic earnings per share
From continuing operations 5.3p 4.0p
From discontinued operations - 0.6p
------------------------------------------------------- ------------ ------------
From continuing and discontinued operations 5.3p 4.6p
------------------------------------------------------- ------------ ------------
Adjusted diluted earnings per share
From continuing operations 5.2p 3.8p
From discontinued operations - 0.5p
------------------------------------------------------- ------------ ------------
From continuing and discontinued operations 5.2p 4.3p
------------------------------------------------------- ------------ ------------
* Including GBP0.4 million credit (2013: GBP0.1 million credit)
relating to amortisation and impairment of intangible assets
(excluding software amortisation) and GBP1.1 million credit (2013:
GBP0.4 million credit) in relation to exceptional items of which
GBP0.2 million charge (2013: GBP0.3 million credit) relates to
prior year adjustments.
Consolidated Statement of COMPREHENSIVE Income
Year ended Year ended
31 December 31 December
2014 2013
GBPm GBPm
Profit for the year 8.6 0.7
Items that will not be subsequently reclassified
to profit or loss
Re-measurement and experience (losses) / gains
on post-employment benefit obligations (11.5) 11.7
Taxation in respect of re-measurement and experience
losses / (gains) 2.3 (2.3)
Change in deferred tax due to change in tax
rate - (0.6)
Items that may be subsequently reclassified
to profit or loss
Cash flow hedges (net of taxation) - fair value
(loss) / gain (0.4) 0.1
- transfers to finance cost 0.3 0.7
------------------------------------------------------------------------------------ ------------- -------------
OTHER COMPREHENSIVE (LOSS) / INCOME FOR THE
YEAR (9.3) 9.6
TOTAL COMPREHENSIVE (LOSS) / INCOME FOR THE
YEAR (0.7) 10.3
------------------------------------------------------------------------------------ ------------- -------------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Capital
Share Share Merger Redemption Hedge Retained Total
Capital Premium Reserve Reserve Reserve Earnings Equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1st
January 2013 25.6 13.9 1.6 0.6 (1.1) 20.4 61.0
Profit for the
year - - - - - 0.7 0.7
Other comprehensive
income - - - - 0.8 8.8 9.6
------------------------------------- ---- --------- --------- ------------ --------- ---------- --------
Total comprehensive
income for the year - - - - 0.8 9.5 10.3
------------------------------------- ---- --------- --------- ------------ --------- ---------- --------
Share options
(value of employee
services) - - - - - 0.5 0.5
Purchase of shares
by the EBT* - - - - - (0.4) (0.4)
Current tax on
share options - - - - - 0.2 0.2
Deferred tax on
share options - - - - - 1.0 1.0
Issue of share
capital 0.6 0.2 - - - - 0.8
Dividend paid - - - - - (2.9) (2.9)
---------------------------- ------------- --------- --------- ------------ --------- ---------- --------
Transactions with
Shareholders recognised
directly in Shareholders'
equity 0.6 0.2 - - - (1.6) (0.8)
---------------------------- ------------- --------- --------- ------------ --------- ---------- --------
Balance at 31st
December 2013 26.2 14.1 1.6 0.6 (0.3) 28.3 70.5
---------------------------- ------------- --------- --------- ------------ --------- ---------- --------
Balance at 1st
January 2014 26.2 14.1 1.6 0.6 (0.3) 28.3 70.5
Profit for the
year - - - - - 8.6 8.6
Other comprehensive
loss - - - - (0.1) (9.2) (9.3)
---------------------------- ------------- --------- --------- ------------ --------- ---------- --------
Total comprehensive
loss for the year - - - - (0.1) (0.6) (0.7)
------------------------------------- ---- --------- --------- ------------ --------- ---------- --------
Share options
(value of employee
services) - - - - - 0.4 0.4
Purchase of shares
by the EBT* - - - - - (0.9) (0.9)
Current tax on
share options - - - - - 1.2 1.2
Deferred tax on
share options - - - - - (1.0) (1.0)
Issue of share
capital 3.8 0.4 - - - 10.2 14.4
Dividend paid - - - - - (3.9) (3.9)
---------------------------- ------------- --------- --------- ------------ --------- ---------- --------
Transactions with
Shareholders recognised
directly in Shareholders'
equity 3.8 0.4 - - - 6.0 10.2
---------------------------- ------------- --------- --------- ------------ --------- ---------- --------
Balance at 31st
December 2014 30.0 14.5 1.6 0.6 (0.4) 33.7 80.0
---------------------------- ------------- --------- --------- ------------ --------- ---------- --------
* The Group has an Employee Benefit Trust (EBT) to administer
share plans and to acquire shares, using funds contributed by the
Group, to meet commitments to employee share schemes. At 31st
December 2014, the EBT held 20,739 shares (2013: 31,000).
Consolidated Balance Sheet
As at As at
31 December 31 December
Note 2014 2013
GBPm GBPm
ASSETS
NON-CURRENT ASSETS
Goodwill 56.2 52.4
Intangible assets 11.7 3.0
Property, plant and equipment 51.3 36.0
Textile rental items 30.5 26.0
Trade and other receivables 3.3 3.4
Deferred income tax assets 4.6 4.5
157.6 125.3
----------------------------------------------------- ------------ ------------
CURRENT ASSETS
Inventories 2.1 2.0
Trade and other receivables 30.3 28.8
Cash and cash equivalents 0.2 3.4
----------------------------------------------------- ------------ ------------
32.6 34.2
----------------------------------------------------- ------------ ------------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 43.7 37.6
Current income tax liabilities 1.5 0.3
Borrowings 6.9 0.8
Provisions 4.6 4.2
----------------------------------------------------- ------------ ------------
56.7 42.9
----------------------------------------------------- ------------ ------------
NET CURRENT LIABILITIES (24.1) (8.7)
----------------------------------------------------- ------------ ------------
NON-CURRENT LIABILITIES
Post-employment benefit
obligations 9 18.5 4.3
Deferred income tax liabilities 1.8 -
Other non-current liabilities 0.9 0.9
Borrowings 21.8 27.1
Derivative financial liabilities 0.4 0.3
Provisions 10.1 13.5
----------------------------------------------------- ------------ ------------
53.5 46.1
----------------------------------------------------- ------------ ------------
NET ASSETS 80.0 70.5
----------------------------------------------------- ------------ ------------
CAPITAL AND RESERVES ATTRIBUTABLE TO THE COMPANY'S
SHAREHOLDERS
Share capital 30.0 26.2
Share premium 14.5 14.1
Merger reserve 1.6 1.6
Capital redemption reserve 0.6 0.6
Hedge reserve (0.4) (0.3)
Retained earnings 33.7 28.3
----------------------------------------------------- ------------ ------------
TOTAL SHAREHOLDERS EQUITY 80.0 70.5
----------------------------------------------------- ------------ ------------
Consolidated Statement OF Cash Flows
Year ended Year ended
31 December 31 December
Note 2014 2013
GBPm GBPm
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year 8.6 0.7
Adjustments for:
Income tax charge / (credit)
- continuing operations 6 3.0 2.4
- discontinued operations 10 (0.7) 0.3
Total finance cost - continuing
operations 4 1.8 3.6
- discontinued operations 10 - 0.7
Depreciation 28.3 24.9
Amortisation 1.6 2.0
Decrease in inventories 0.2 0.2
Decrease in trade and other receivables 0.6 2.5
Increase in trade and other payables 1.6 0.5
Loss on sale of property, plant and equipment - 0.2
Loss / (profit) on disposal of business 0.4 (1.1)
Impairment of assets held for resale - 9.0
Costs in relation to business acquisition activity 0.6 -
Deficit recovery payments in respect of post-employment
benefit obligations (2.0) (1.9)
Share-based payments 0.4 0.5
Post-employment benefit obligations 4.6 (1.1)
Decrease in provisions (3.1) (6.8)
------------
Cash generated from operations 45.9 36.6
Interest paid (2.0) (3.0)
Taxation paid (0.1) (1.3)
--------------------------------------------------------------------------------- ------------ ------------
Net cash generated from operating activities 43.8 32.3
--------------------------------------------------------------------------------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of business (net of cash acquired) (22.4) -
Proceeds from sale of business (net of cash
disposed) 0.1 26.7
Purchase of property, plant and equipment (11.6) (4.8)
Proceeds from sale of property, plant and equipment 0.1 0.4
Purchase of intangible assets (0.1) (0.2)
Purchase of textile rental items (24.9) (19.1)
Proceeds received in respect of special charges 1.9 2.2
Net cash (used in) / generated from investing
activities (56.9) 5.2
--------------------------------------------------------------------------------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 66.0 12.0
Repayment of borrowings (70.0) (43.0)
Capital element of finance leases (0.8) (0.7)
Purchase of own shares by Employee Benefit Trust (0.9) (0.4)
Net proceeds from issue of Ordinary shares 14.4 0.8
Dividend paid (3.9) (2.9)
--------------------------------------------------------------------------------- ------------ ------------
Net cash generated from / (used in) financing
activities 4.8 (34.2)
--------------------------------------------------------------------------------- ------------ ------------
Net (decrease) / increase in cash and cash equivalents (8.3) 3.3
Cash and cash equivalents at beginning of period 3.4 0.1
Cash and cash equivalents at end of period (4.9) 3.4
--------------------------------------------------------------------------------- ------------ ------------
NOTES TO THE PRELIMINARY STATEMENT
1 BASIS OF PREPARATION
The financial information contained within this Preliminary
Statement has been prepared on a going concern basis in accordance
with International Financial Reporting Standards as adopted by the
European Union (IFRS), IFRS Interpretations Committee (IFRS IC)
interpretations and the Companies Act 2006 applicable to companies
reporting under IFRS.
The financial information has been prepared using accounting
policies consistent with those set out in the 2014 Annual
Report.
The financial information set out within this Preliminary
Statement does not constitute the Company's statutory accounts for
the years ended 31st December 2013 or 31st December 2014 within the
meaning of Section 434 of the Companies Act 2006, but is derived
from those accounts.
Statutory accounts for 2013 have been delivered to the Registrar
of Companies, and those for 2014 will be delivered as soon as
practicable but not later than 30th April 2015. The auditor has
reported on those accounts; the reports were unqualified and did
not contain a statement under Section 498(2) or (3) of the
Companies Act 2006.
2 SEGMENT ANALYSIS
Segment information is presented in respect of the Group's
operating segments, which are based on the Group's management and
internal reporting structure as at 31st December 2014.
The chief operating decision-maker has been identified as the
Board of Directors (the Board). The Board reviews the Group's
internal reporting in order to assess performance and allocate
resources. Management has determined the operating segments based
on these reports and on the internal reporting structure.
The Board assesses the performance of the operating segments
based on a measure of operating profit, both including and
excluding the effects of non-operating or non-recurring items from
the operating segments, such as restructuring costs and impairments
when the impairment is the result of an isolated, non-recurring
event. Interest income and expenditure are not included in the
result for each operating segment that is reviewed by the Board.
Segment results 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 Johnson Group Properties PLC is
credited back, where appropriate, to the paying company for the
purpose of segmental reporting. There have been no changes in
measurement methods used compared to the prior year.
Other information provided to the Board is measured in a manner
consistent with that in the financial statements. Segment assets
exclude deferred income tax assets, current income tax assets and
cash and cash equivalents, all of which are managed on a central
basis. Segment liabilities include non-bank borrowings but exclude
deferred income tax liabilities, current income tax liabilities,
bank borrowings and derivative financial liabilities, all of which
are managed on a central basis. These balances are part of the
reconciliation to total assets and liabilities.
The exceptional items have been included within the appropriate
operating segment as shown on pages 12 to 13.
The Group comprises the following segments:
Textile Rental
Supply and laundering of workwear * Apparelmaster
garments, premium linen to the
hotel, catering and corporate
hospitality markets, linen to * Stalbridge
the volume hotel market and sale
of ancillary items.
* Bourne
Drycleaning
Provision of drycleaning, laundry * Johnson Cleaners
and ironing services, carpet
cleaning, upholstery cleaning,
wedding dress cleaning and suede * Jeeves
& leather cleaning.
All Other Segments
Comprising of central and head
office costs.
NOTES TO THE PRELIMINARY STATEMENT (continued)
2 SEGMENT ANALYSIS continued
All
Textile Other
Year ended 31st December 2014 Rental Drycleaning Segments Total
GBPm GBPm GBPm GBPm
REVENUE
Continuing 155.0 55.4 - 210.4
------------------------------------------- ----------- ----------------- ---------- --------
Total revenue 210.4
------------------------------------------- ----------- ----------------- ---------- --------
RESULT
Operating profit before amortisation
and impairment of intangible assets
(excluding software amortisation) and
exceptional items 23.8 1.6 (3.6) 21.8
Amortisation and impairment of intangible
assets
(excluding software amortisation) (1.6) - - (1.6)
Exceptional items:
- Restructuring and other costs (1.3) - - (1.3)
- Costs in relation to business
acquisition activity (0.6) - - (0.6)
- Pension costs - - (4.9) (4.9)
------------------------------------------- ----------- ----------------- ---------- --------
Operating profit / (loss) 20.3 1.6 (8.5) 13.4
Total finance cost (1.8)
------------------------------------------- ----------- ----------------- ---------- --------
Profit before taxation 11.6
Taxation (3.0)
------------------------------------------- ----------- ----------------- ---------- --------
Profit for the period - continuing
operations 8.6
Result for the period - discontinued
operations (note 10) -
------------------------------------------- ----------- ----------------- ---------- --------
Profit for the period 8.6
------------------------------------------- ----------- ----------------- ---------- --------
All
Discontinued Textile Other
Operations Rental Drycleaning Segments Total
GBPm GBPm GBPm GBPm GBPm
OTHER INFORMATION
Non-current asset additions
- Property, plant and equipment - 13.7 1.0 - 14.7
- Textile rental items - 24.9 - - 24.9
- Intangible software - - 0.1 - 0.1
Depreciation and amortisation
expense
- Property, plant and equipment - 6.0 2.0 0.2 8.2
- Textile rental items - 20.1 - - 20.1
- Customer contracts - 1.6 - - 1.6
BALANCE SHEET INFORMATION
Segment assets 1.1 148.5 20.9 14.9 185.4
Unallocated assets: Deferred
income tax assets 4.6
Cash and cash
equivalents 0.2
--------------------------------------------------------- ------------- -------- ------------ ---------- --------
Total assets 190.2
--------------------------------------------------------- ------------- -------- ------------ ---------- --------
Segment liabilities (4.1) (37.2) (17.7) (3.4) (62.4)
Unallocated liabilities: Deferred
income tax liabilities (1.8)
Bank borrowings (25.6)
Current income tax
liabilities (1.5)
Derivative financial
liabilities (0.4)
Post-employment
benefit obligations (18.5)
--------------------------------------------------------- ------------- -------- ------------ ---------- --------
Total liabilities (110.2)
--------------------------------------------------------- ------------- -------- ------------ ---------- --------
Return on Capital Employed 42.0% 33.7%
--------------------------------------------------------- ------------- -------- ------------ ---------- --------
The results, assets and liabilities of all segments arise in the
Group's country of domicile, being the United Kingdom.
NOTES TO THE PRELIMINARY STATEMENT (continued)
2 SEGMENT ANALYSIS continued
Textile All Other
Year ended 31st December 2013 Rental Drycleaning Segments Total
GBPm GBPm GBPm GBPm
REVENUE
Continuing 136.2 57.4 - 193.6
Discontinued 29.0
------------------------------------------- ------------ ------------ ---------- ------
Total revenue 222.6
------------------------------------------- ------------ ------------ ---------- ------
RESULT
Operating profit before amortisation
and impairment of intangible assets
(excluding software amortisation)
and exceptional items 18.9 1.6 (3.5) 17.0
Amortisation and impairment of intangible
assets
(excluding software amortisation) (0.6) - - (0.6)
Exceptional items:
- Restructuring and other costs - (1.2) - (1.2)
- Pension credits - - 0.6 0.6
------------------------------------------- ------------ ------------ ---------- ------
Operating profit / (loss) 18.3 0.4 (2.9) 15.8
Total finance cost (3.6)
------------------------------------------- ------------ ------------ ---------- ------
Profit before taxation 12.2
Taxation (2.4)
------------------------------------------- ------------ ------------ ---------- ------
Profit for the period - continuing
operations 9.8
Loss for the period - discontinued
operations (note 10) (9.1)
------------------------------------------- ------------ ------------ ---------- ------
Profit for the period 0.7
------------------------------------------- ------------ ------------ ---------- ------
Discontinued Textile All Other
Operations Rental Drycleaning Segments Total
GBPm GBPm GBPm GBPm GBPm
OTHER INFORMATION
Non-current asset additions
- Property, plant and equipment 0.1 4.7 1.4 - 6.2
- Textile rental items - 19.5 - - 19.5
- Intangible software 0.2 - - - 0.2
Depreciation and amortisation
expense
- Property, plant and equipment 0.2 4.2 2.1 0.2 6.7
- Textile rental items - 18.2 - - 18.2
- Intangible software 0.2 - - - 0.2
- Customer contracts 1.2 0.6 - - 1.8
BALANCE SHEET INFORMATION
Segment assets 2.2 116.4 22.4 10.6 151.6
Unallocated assets: Deferred
income tax assets 4.5
Cash and cash
equivalents 3.4
----------------------------------------------------- ------------------ -------- ------------ ---------- -------
Total assets 159.5
----------------------------------------------------- ------------------ -------- ------------ ---------- -------
Segment liabilities (5.0) (31.1) (19.4) (3.6) (59.1)
Unallocated liabilities: Deferred
income tax liabilities -
Bank borrowings (25.0)
Current income tax
liabilities (0.3)
Derivative
financial
liabilities (0.3)
Post-employment
benefit
obligations (4.3)
----------------------------------------------------- ------------------ -------- ------------ ---------- -------
Total liabilities (89.0)
----------------------------------------------------- ------------------ -------- ------------ ---------- -------
Return on Capital Employed 42.9% 22.1%
----------------------------------------------------- ------------------ -------- ------------ ---------- -------
The results, assets and liabilities of all segments arise in the
Group's country of domicile, being the United Kingdom.
NOTES TO THE PRELIMINARY STATEMENT (continued)
3 EXCEPTIONAL ITEMS
2014 2013
GBPm GBPm
Restructuring and other costs - Textile Rental (1.3) -
- Drycleaning - (1.2)
---------------------------------------------------------------------- ------ ------
(1.3) (1.2)
Costs in relation to business acquisition activity (0.6) -
Pension (costs) / credits (4.9) 0.6
Total exceptional items (6.8) (0.6)
---------------------------------------------------------------------- ------ ------
CURRENT YEAR EXCEPTIONAL ITEMS
Restructuring and other costs - Textile Rental
A new processing facility has been constructed to replace an
existing Textile Rental plant in Leeds. The total cost of this
relocation, excluding the capital investment, is expected to be
GBP2.3 million, of which, GBP1.3 million has been charged to
exceptional items in the year with a further GBP1.0 million
expected to be charged to exceptional items in 2015. Of the total
costs, GBP0.7 million was non-cash, relating to the impairment of
property, plant and equipment.
Costs in relation to business acquisition activity
During the year, costs relating to business acquisition activity
of GBP0.6 million have been recognised. Professional fees of GBP0.4
million and Stamp Duty of GBP0.1 million were paid relating to the
acquisition of Bourne. The remainder of the cost relates to fees
and expenses incurred during negotiations with other undisclosed
targets.
Pension costs and credits
During the year, the Group closed its defined benefit pension
scheme, the Johnson Group Defined Benefit Scheme (JGDBS) to future
accrual. The resulting past service cost of GBP4.7 million has been
recognised as an exceptional cost together with GBP0.2 million of
associated fees.
Prior year exceptional items
Restructuring and other costs - Drycleaning
In July 2012, the Group announced a review of the Drycleaning
business. This review resulted in a total exceptional charge to the
Income Statement of GBP23.9 million; of this amount GBP22.7 million
was charged in 2012, with the remaining GBP1.2 million charged
during 2013.
Pension costs and credits
During the prior year, the Group merged the existing three
defined benefit pension schemes into a single new defined benefit
scheme, the Johnson Group Defined Benefit Scheme (JGDBS). As part
of the merger, members with small benefits were offered the option
of taking their benefits as a 'winding up lump sum'. The resulting
settlement gain (net of associated fees) was recognised as an
exceptional credit of GBP0.6 million.
4 TOTAL FINANCE COST
2014 2013
GBPm GBPm
Finance cost:
- Interest payable on bank loans and overdrafts (1.2) (2.1)
- Amortisation of bank facility fees (0.2) (0.5)
- Provision discount unwind (0.1) (0.1)
- Interest payable on obligations under
finance leases (0.1) (0.1)
Finance cost before notional interest on
post-employment benefit obligations (1.6) (2.8)
Notional interest on post-employment benefit
obligations:
- Pension scheme liability (0.1) (0.7)
- Private healthcare (0.1) (0.1)
-------------------------------------------------- ------ ------
(0.2) (0.8)
Total finance cost (1.8) (3.6)
-------------------------------------------------- ------ ------
In addition, interest of GBPnil (2013: GBP0.7 million) has been
charged to discontinued operations (see note 10).
NOTES TO THE PRELIMINARY STATEMENT (continued)
5 ADJUSTED PROFIT BEFORE AND AFTER TAXATION
2014 2013
Continuing Operations GBPm GBPm
Profit before taxation 11.6 12.2
Amortisation and impairment of intangible
assets (excluding software amortisation) 1.6 0.6
Restructuring and other costs 1.3 1.2
Costs in relation to business acquisition
activity 0.6 -
Pension costs / (credits) 4.9 (0.6)
Adjusted profit before taxation 20.0 13.4
Taxation on adjusted profit (4.5) (2.9)
-------------------------------------------- ------ ------
Adjusted profit after taxation 15.5 10.5
-------------------------------------------- ------ ------
6 TAXATION
2014 2013
GBPm GBPm
Current tax
UK corporation tax charge for the year 2.9 1.4
Adjustment in relation to previous years (0.4) (0.1)
--------------------------------------------------- ------ ------
Current tax charge for the year 2.5 1.3
Deferred tax
Origination and reversal of temporary differences (0.1) 1.5
Changes in statutory tax rate - 0.3
Adjustment in relation to previous years 0.6 (0.7)
--------------------------------------------------- ------ ------
Deferred tax charge for the year 0.5 1.1
Total charge for taxation included in the Income
Statement for continuing operations 3.0 2.4
--------------------------------------------------- ------ ------
The tax charge for the period is higher (2013: lower) than the
effective rate of Corporation Tax in the UK of 21.50% (2013:
23.25%). The differences are explained below:
2014 2013
GBPm GBPm
Profit before taxation per the Income Statement 11.6 12.2
---------------------------------------------------- ----- ------
Profit before taxation multiplied by the effective
rate of UK Corporation Tax 2.5 2.8
Factors affecting taxation charge for the year:
Tax effect of expenses not deductible for tax
purposes 0.3 0.2
Changes in statutory tax rate - 0.2
Adjustments to tax in respect of prior periods 0.2 (0.8)
---------------------------------------------------- ----- ------
Total charge for taxation included in the Income
Statement for continuing operations 3.0 2.4
---------------------------------------------------- ----- ------
Taxation in relation to amortisation and impairment of
intangible assets (excluding software amortisation) has reduced the
charge by GBP0.4 million (2013: reduced charge by GBP0.1 million).
Taxation on the exceptional items in the current year has reduced
the charge for taxation relating to continuing operations by GBP1.1
million (2013: reduced charge by GBP0.4 million) of which GBP0.2
million charge (2013: GBP0.3 million credit) relates to the prior
year.
The tax charge for the year is based on the effective rate of UK
Corporation Tax for the period of 21.50% (2013: 23.25%). The
statutory rate of UK Corporation Tax reduced from 23% to 21% on 1st
April 2014 and will reduce to 20% on 1st April 2015. The impact of
these changes was reflected in the opening tax balances and these
changes have therefore had no impact on the tax recognised in the
Income Statement, Statement of Comprehensive Income or directly to
Shareholders' equity in the year.
During the year a GBP1.2 million credit relating to current
taxation (2013: GBP0.2 million) and a debit of GBP1.0 million
relating to deferred taxation (2013: credit of GBP1.0 million) have
been recognised directly in Shareholders' equity.
NOTES TO THE PRELIMINARY STATEMENT (continued)
7 EARNINGS PER SHARE
2014 2013
GBPm GBPm
Profit for the financial year from continuing
operations attributable to Shareholders 8.6 9.8
Result / (loss) for the financial year from
discontinued operations attributable to Shareholders - (9.1)
Amortisation and impairment of intangible assets
from continuing operations (net of taxation) 1.2 0.5
Amortisation and impairment of intangible assets
from discontinued operations (net of taxation) - 0.9
Exceptional costs from continuing operations
(net of taxation) 5.7 0.2
Exceptional costs from discontinued operations
(net of taxation) (0.2) 9.2
Exceptional finance costs from discontinued
operations (net of taxation) - 0.5
-------------------------------------------------------- ------------ ------------
Adjusted profit attributable to Shareholders
relating to continuing operations 15.5 10.5
Adjusted profit attributable to Shareholders
relating to discontinued operations (0.2) 1.5
-------------------------------------------------------- ------------ ------------
Adjusted profit attributable to shareholders 15.3 12.0
-------------------------------------------------------- ------------ ------------
Weighted average number of Ordinary shares 291,829,363 258,032,874
Dilutive potential Ordinary shares* 5,001,228 16,455,525
-------------------------------------------------------- ------------ ------------
Fully diluted number of Ordinary shares 296,830,591 274,488,399
-------------------------------------------------------- ------------ ------------
Basic earnings per share
From continuing operations 2.9p 3.8p
From discontinued operations - (3.6p)
-------------------------------------------------------- ------------ ------------
From continuing and discontinued operations 2.9p 0.2p
-------------------------------------------------------- ------------ ------------
Adjustment for amortisation and impairment of
intangible assets (continuing operations) 0.4p 0.2p
Adjustment for amortisation and impairment of
intangible assets (discontinued operations) - 0.4p
Adjustment for exceptional items (continuing
operations) 2.0p -
Adjustment for exceptional items (discontinued
operations) - 3.6p
Adjustment for exceptional finance costs (discontinued
operations) - 0.2p
-------------------------------------------------------- ------------ ------------
Adjusted basic earnings per share (continuing
operations) 5.3p 4.0p
Adjusted basic earnings per share (discontinued
operations) - 0.6p
-------------------------------------------------------- ------------ ------------
Adjusted basic earnings per share from continuing
and discontinued operations 5.3p 4.6p
-------------------------------------------------------- ------------ ------------
Diluted earnings per share
From continuing operations 2.9p 3.6p
From discontinued operations - (3.4p)
-------------------------------------------------------- ------------ ------------
From continuing and discontinued operations 2.9p 0.2p
-------------------------------------------------------- ------------ ------------
Adjustment for amortisation and impairment of
intangible assets (continuing operations) 0.4p 0.2p
Adjustment for amortisation and impairment of
intangible assets (discontinued operations) - 0.3p
Adjustment for exceptional items (continuing
operations) 1.9p -
Adjustment for exceptional items (discontinued
operations) - 3.4p
Adjustment for exceptional finance costs (discontinued
operations) - 0.2p
-------------------------------------------------------- ------------ ------------
Adjusted diluted earnings per share (continuing
operations) 5.2p 3.8p
Adjusted diluted earnings per share (discontinued
operations) - 0.5p
-------------------------------------------------------- ------------ ------------
Adjusted diluted earnings per share from continuing
and discontinued operations 5.2p 4.3p
-------------------------------------------------------- ------------ ------------
* Includes outstanding share options granted to employees.
Basic earnings per share is calculated using the weighted
average number of Ordinary shares in issue during the year,
excluding those held by the EBT, based on the profit for the year
attributable to Shareholders.
Adjusted earnings per share figures are given to exclude the
effects of amortisation and impairment of intangible assets
(excluding software amortisation), exceptional items and
exceptional finance costs, all net of taxation, and are considered
to show the underlying performance 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 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.
Potential Ordinary shares are dilutive at the point, from a
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 ended 31st December 2014
and 31st December 2013, potential Ordinary shares have been treated
as dilutive, as their inclusion in the diluted earnings per share
calculation decreases earnings per share from continuing
operations.
There were no events occurring after the balance sheet date that
would have changed significantly the number of Ordinary shares or
dilutive potential Ordinary shares outstanding at the balance sheet
date if those transactions had occurred before the end of the
reporting period.
NOTES TO THE PRELIMINARY STATEMENT (continued)
8 DIVIDENDS
2014 2013
Dividend per share
Final dividend proposed 1.20p -
Interim dividend paid 0.50p 0.40p
Final dividend paid -- 0.81p
2014 2013
GBPm GBPm
Shareholders' equity utilised
Final dividend proposed 3.6 -
Interim dividend paid 1.5 1.0
Final dividend paid - 2.4
The Directors propose the payment of a final dividend in respect
of the year ended 31st December 2014 of 1.20 pence per share. This
will utilise Shareholders' equity of GBP3.6 million and will be
paid, subject to Shareholder approval, on 15th May 2015 to
Shareholders on the register of members on 17th April 2015. The
trustee of the EBT has waived the entitlement to receive dividends
on the Ordinary shares held by the Trust. In accordance with IAS 10
there is no payable recognised at 31st December 2014 in respect of
this proposed dividend.
9 POST-EMPLOYMENT BENEFIT OBLIGATIONS
The Group has applied the requirements of IAS 19(R), 'Employee
Benefits' (revised June 2011) to its employee pension schemes and
post-employment healthcare benefits.
During the prior year the Company established a new pension
scheme, the Johnson Group Defined Benefit Scheme ("JGDBS") and on
6th April 2013 transferred the assets and liabilities of the
Johnson Group Staff Pension Scheme ("Staff Scheme"), the Semara
Augmented Pension Plan ("SAPP") and the WML Final Salary Pension
Scheme ("WML Scheme") to this new scheme.
As part of the Group's objective to reduce its overall pension
liability, deficit recovery payments of GBP2.0 million, GBPnil and
GBPnil (2013: GBP0.4 million, GBP1.3 million and GBP0.2 million)
were paid to the JGDBS, Staff Scheme and the WML Scheme
respectively, during the year to 31st December 2014.
A net re-measurement and experience loss of GBP11.5 million
(2013: net re-measurement and experience gain of GBP11.7 million)
has been recognised in the year to 31st December 2014. This is as a
result of the schemes' assets and liabilities performing
differently to previous assumptions and changes to the assumptions
used in calculating liabilities of the schemes.
The gross post-employment benefit obligation and associated
deferred tax asset thereon is shown below:
2014 2013
GBPm GBPm
Gross post-employment benefit obligation 18.5 4.3
Deferred tax asset thereon (3.7) (0.9)
------------------------------------------ ------ ------
Net liability 14.8 3.4
------------------------------------------ ------ ------
Amounts recognised in the Balance Sheet are as follows:
2014 2013
GBPm GBPm
Present value of funded pension obligations 215.5 188.0
Fair value of pension scheme assets (198.3) (185.0)
Post-employment healthcare obligations 1.3 1.3
--------------------------------------------- -------- --------
Gross post-employment benefit obligation 18.5 4.3
--------------------------------------------- -------- --------
The reconciliation of the opening gross post-employment benefit
obligation to the closing gross post-employment benefit obligation
is shown below:
2014 2013
GBPm GBPm
Opening gross post-employment benefit obligation 4.3 18.2
Current service cost 0.3 0.5
Assets distributed on settlements - 3.9
Liabilities extinguished on settlements - (5.1)
Past service cost 4.7 -
Notional interest 0.2 0.8
Employer contributions (2.5) (2.2)
Re-measurement and experience losses / (gains) 11.5 (11.7)
Utilisation of healthcare provision - (0.1)
-------------------------------------------------- ------ -------
Closing gross post-employment benefit obligation 18.5 4.3
-------------------------------------------------- ------ -------
NOTES TO THE PRELIMINARY STATEMENT (continued)
10 BUSINESS COMBINATIONS AND DISCONTINUED OPERATIONS
BUSINESS COMBINATIONS
On 2nd March 2014 the Group acquired the entire share capital of
Bourne Services Group Limited along with its subsidiary Bourne
Textile Services Limited (together "Bourne") for gross
consideration of GBP26.7 million plus fees.
Bourne's operations are focussed on the volume hotel linen
market. Bourne operates from purpose built freehold premises which
cover four acres and has a total of 90,000 sq ft of production
capacity located in Bourne, Lincolnshire. Bourne services hotel
customers in the Midlands, South Yorkshire, East Anglia, North
London and the Home Counties.
The Bourne business has been included in the Textile Rental
operating segment.
Since acquisition, Bourne has generated a profit of GBP2.4
million on revenue of GBP16.1 million. Had the business been
acquired at the start of the period it is estimated that profit of
GBP2.5 million would have been generated on revenue of GBP18.6
million.
The fair values of the assets and liabilities acquired are as
follows:
Accounting Fair value
Net assets Fair value policy of assets
acquired adjustments realignment acquired
GBPm GBPm GBPm GBPm
Intangible assets - Goodwill - 3.8 - 3.8
Intangible assets - Customer
lists and contracts - 10.2 - 10.2
Property, plant and equipment 9.1 - (0.2) 8.9
Textile rental items 1.8 - (0.2) 1.6
Inventories 0.3 - - 0.3
Trade and other receivables 2.5 - - 2.5
Cash 4.9 - - 4.9
Trade and other payables (2.3) - - (2.3)
Current income tax liability (0.4) - - (0.4)
Deferred income tax liability (0.2) (2.6) - (2.8)
-------------------------------- ----------- ------------- ------------- -----------
15.7 11.4 (0.4) 26.7
------------------------------- ----------- ------------- ------------- -----------
Goodwill represents the deferred income tax arising on the
recognition of the customer lists and contracts plus the expected
benefits to the wider Group arising from the acquisition. None of
the acquired goodwill is expected to be deductible for tax
purposes.
The acquired property, plant and equipment includes a freehold
building that was impaired immediately prior to the acquisition.
The carrying value of the freehold building included within the net
assets acquired column above reflects the impairment.
Trade and other receivables includes gross contractual amounts
for trade receivables of GBP2.2 million of which GBPnil is expected
to be uncollectable.
The cash flows in relation to business acquisition activity are
summarised below:
2014 2013
GBPm GBPm
Consideration paid 26.7 -
Cash acquired (4.9) -
Cost in relation to business acquisition
activity 0.6 -
----------------------------------------- ------ -----
22.4 -
----------------------------------------- ------ -----
There were no business combinations during 2013.
DISPOSALS AND DISCONTINUED OPERATIONS
There were no business disposals in the year.
On 30th June 2013 the assets and liabilities of the Facilities
Management division were classed as a disposal group and, as a
result, the value of the assets held for resale was impaired by
GBP9.0 million. On the 7th August 2013 the Facilities Management
division was disposed of for a total consideration of GBP37.7
million (including GBP1.5 million of deferred and contingent
consideration), of which GBP36.2 million was received at
completion, resulting in a profit on disposal of GBP1.1 million.
Full details of the assets and liabilities disposed of are provided
in the 2013 Annual Report.
At the point of acquisition, the deferred and contingent
consideration of GBP1.5 million represented GBP0.8 million of
deferred consideration and GBP1.4 million of contingent
consideration less a provision of GBP0.7 million representing the
Group's best estimate of the contingent consideration to be
received. The deferred consideration of GBP0.8 million, together
with GBP0.2 million of the contingent consideration, is expected to
be received in 2015. Contingent consideration of GBP0.1 million has
been received in the period. A further GBP0.4 million of provision
against contingent consideration has been recognised in the
year.
NOTES TO THE PRELIMINARY STATEMENT (continued)
10 BUSINESS COMBINATIONS AND DISCONTINUED OPERATIONS continued
DISPOSALS AND DISCONTINUED OPERATIONS continued
Of the total disposal costs of GBP2.2 million, payments
totalling GBP1.9 million were made in 2013. As at 31st December
2014 there is an outstanding creditor in relation to the costs of
disposal of GBP0.3 million. This is expected to be paid in
2015.
In 2014, discontinued operations includes the following
items:
-- Additional provisions of GBP0.3 million relating to future
lease commitments on properties, along with the related taxation
credit.
-- A revision of the best estimate of the contingent
consideration receivable which has resulted in a loss of GBP0.4
million.
-- A tax credit of GBP0.6 million relating to the disposal of
the Facilities Management division in 2013.
In 2013, discontinued operations includes the following
items:
-- The results for the Facilities Management division up to the
point of disposal, including taxation thereon.
-- Exceptional finance costs of GBP0.1 million of unamortised
fees written off on the prepayment of bank loans.
-- Exceptional interest costs of GBP0.6 million relating to the
cost of settling interest rate hedge arrangements as a result of
the disposal.
-- The impairment of assets held for resale prior to the sale of
the Facilities Management division.
-- The profit on disposal of the Facilities Management division.
The total result / (loss) relating to discontinued operations is
as follows:
2014 2013
GBPm GBPm
Revenue from discontinued operations - 29.0
-------------------------------------------------------- ------ ------
Operating (loss) / profit before amortisation
and impairment of intangible assets (excluding
software amortisation) and exceptional items (0.3) 2.3
Amortisation and impairment of intangible assets
(excluding software amortisation) - (1.2)
Exceptional items - (1.3)
-------------------------------------------------------- ------ ------
Loss before exceptional finance cost and taxation
from discontinued operations (0.3) (0.2)
Exceptional finance cost - (0.7)
Taxation credit / (charge) 0.1 (0.3)
-------------------------------------------------------- ------ ------
Loss for the period (0.2) (1.2)
-------------------------------------------------------- ------ ------
Pre-tax (loss) / profit on disposal (0.4) 1.1
Impairment of assets held for resale - (9.0)
Taxation credit 0.6 -
------------------------------------------------------- ------ ------
Gain / (loss) on disposal 0.2 (7.9)
-------------------------------------------------------- ------ ------
Retained result / (loss) from discontinued operations - (9.1)
-------------------------------------------------------- ------ ------
Cash flows from discontinued operations
The cash flows from discontinued operations included within the
Consolidated Statement of Cash Flows are as follows:
2014 2013
GBPm GBPm
Proceeds from disposal 0.1 36.2
Payment of costs relating to disposals - (1.9)
Cash disposed of - (7.6)
------------------------------------------------ ------ ------
Net proceeds from sale of business 0.1 26.7
Net cash (used in) / generated from operating
activities (0.8) 2.1
Interest paid - (0.6)
Net cash flow (0.7) 28.2
------------------------------------------------ ------ ------
NOTES TO THE PRELIMINARY STATEMENT (continued)
11 ANALYSIS OF NET DEBT
Net debt is calculated as total borrowings less cash and cash
equivalents (excluding Lifecycle funds prior to the disposal of the
Facilities Management division on 7th August 2013), less
unamortised bank facility fees. Non-cash changes represent the
effects of the recognition and subsequent amortisation of fees
relating to the bank facility, changing maturity profiles and new
finance leases entered into during the year.
At 1st At 31st
January Non-cash December
2014 Cash Flow Changes 2014
GBPm GBPm GBPm GBPm
Cash and cash equivalents - per
Statement of Cash Flows 3.4 (8.3) - (4.9)
Debt due within one year - (1.0) 0.2 (0.8)
Debt due after more than one
year (25.0) 5.0 0.3 (19.7)
Finance leases (2.9) 0.8 (1.0) (3.1)
--------------------------------- --------- ---------- --------- ----------
(24.5) (3.5) (0.5) (28.5)
--------------------------------- --------- ---------- --------- ----------
At 1st Other At 31st
January Non-cash December
2013 Cash Flow Changes 2013
GBPm GBPm GBPm GBPm
Cash and cash equivalents - per
Statement of Cash Flows 0.1 3.3 - 3.4
Less: Lifecycle funds (1.3) 1.3 - -
-------------------------------------- --------- ---------- ---------- ----------
Cash and cash equivalents (excluding
lifecycle funds) (1.2) 4.6 - 3.4
Debt due within one year (8.1) 8.5 (0.4) -
Debt due after more than one
year (47.3) 22.5 (0.2) (25.0)
Finance leases (1.9) 0.7 (1.7) (2.9)
-------------------------------------- --------- ---------- ---------- ----------
(58.5) 36.3 (2.3) (24.5)
-------------------------------------- --------- ---------- ---------- ----------
12 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2014 2013
GBPm GBPm
(Decrease) / increase in cash per the Consolidated
Statement of Cash Flows (8.3) 3.3
Movement in lifecycle funds - 1.3
---------------------------------------------------- ------- -------
(Decrease) / increase in cash excluding lifecycle
funds (8.3) 4.6
Cash outflow on change in debt and lease financing 4.8 31.7
---------------------------------------------------- ------- -------
Change in net debt resulting from cash flows (3.5) 36.3
Movement in unamortised bank facility fees 0.5 (0.6)
New finance leases (1.0) (1.7)
Movement in net debt (4.0) 34.0
Opening net debt (24.5) (58.5)
---------------------------------------------------- ------- -------
Closing net debt (28.5) (24.5)
---------------------------------------------------- ------- -------
13 EVENTS AFTER THE REPORTING PERIOD
Drycleaning Restructuring
As previously announced on 6th January 2015, the Drycleaning
business continues to operate in a difficult high street
environment and, despite several initiatives to reach new
customers, the like for like sales increase achieved in 2013 has
not been maintained in 2014.
In parallel with our strategy to develop alternative, more
convenient collection and delivery locations, the lease profile of
our existing estate was reviewed and 109 branches were identified,
the majority of which have leases expiring within the next two
years, where renewal will not be financially viable. A consultation
exercise with affected employees is underway and it is anticipated
that the affected branches will close during the first half of
2015.
The estimated charge to the Group's Income Statement for the
planned restructuring of the Drycleaning business and associated
property provisions is, in aggregate, approximately GBP6.5 million
net, and will be treated as an exceptional item in the first half
of 2015.
NOTES TO THE PRELIMINARY STATEMENT (continued)
14 FORWARD LOOKING STATEMENTS
Certain statements in this Preliminary Statement are
forward-looking. The terms 'expect', 'should be', 'will be' and
similar expressions identify forward looking statements. Although
the Board believes that the expectations reflected in these
forward-looking statements are reasonable, such statements are
subject to a number of risks and uncertainties and actual results
and events could differ materially from those expressed or implied
by these forward-looking statements.
15 DIRECTORS' RESPONSIBILITIES STATEMENT
The Directors are responsible for preparing the Annual Report in
accordance with applicable law and regulations. Having taken advice
from the Audit Committee, the Board considers the Annual Report,
taken as a whole, to be fair, balanced and understandable and that
it provides the information necessary for shareholders to assess
the Company's performance, business model and strategy.
The Company's Annual Report for the year ended 31st December
2014, which will be posted to Shareholders on or before 13th March
2015, contains the following statement regarding responsibility for
the Strategic Report, the Directors' Report (including the
Corporate Governance Report), the Board Report on Remuneration and
the financial statements included within the Annual Report:
"Each of the Directors confirms that to the best of their
knowledge:
-- the Group financial statements, which have been prepared in
accordance with IFRSs as adopted by the EU, give a true and fair
view of the assets, liabilities, financial position and result of
the Group;
-- the Strategic Report includes a fair review of the
development and performance of the business and the position of the
Group, together with a description of the principal risks and
uncertainties that it faces;
-- there isno relevant audit information of which the Company's
auditors are unaware; and
-- he/she has taken all the steps that he/she ought to have
taken as a Director in order to make himself/ herself aware of any
relevant audit information and to establish that the Company's
auditors are aware of that information."
16 PRELIMINARY STATEMENT
A copy of this Preliminary Statement 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 Statement can also be accessed at
www.jsg.com.
The 2014 Annual Report will be distributed to Shareholders on or
before 13th March 2015.
17 APPROVAL
The Preliminary Statement was approved by the Board of Directors
on 3rd March 2015.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SSSFWEFISEDD
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