Interim Results

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

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