Interim Results
BROOKS SERVICE GROUP PLC
28 September 1999
Interim Results for the 26 weeks to 26 June 1999
Brooks is one of the leading companies in the provision of textile rental and
retail services in the UK.
Highlights:
* Pre tax profits Up 52% to £914k (1998 : £602k)
* Earnings per share Up 52% to 4.94p (1998 : 3.25p)
* Interim Dividend Up 25% to 2.00p (1998 : 1.60p)
* Gearing Reduced to 19.1% (1998 : 32.8%)
Chairman Simon Brooks commented:
'I am pleased to report that the strong profit growth achieved during recent
years has continued throughout the first half of 1999.'
For further information contact:
John Walters, Chief Executive, 01454 614668
Patrick Mulcahy, Finance Director, 01454 614668
Barrie Newton, Rowan Dartington & Co Ltd, 0117 925 3377
BROOKS SERVICE GROUP Plc
Chairman and Chief Executives' Statement
Group Results and Dividend
We are pleased to report that the strong profit growth achieved during recent
years has continued throughout the first half of 1999. The Group results for
the 26 weeks to 26th June, 1999 are summarised below.
Turnover increased by 4% to £16.6m (1998: £16.0m) whilst pre-tax profits
increased by 52% to £914,000 (1998: £602,000). Basic Earnings per share in
the period were 4.94p (1998: 3.25p) an increase of 52%.
Net Borrowings at 26th June, 1999 were significantly reduced at £2.2m (1998:
£3.5m) reflecting the Group's strong cash flow. Gearing at the half year was
19.1% (1998: 32.8%)
The Board has decided to pay an interim dividend of 2.00p per share (1998:
1.60p), an increase of 25%. This will be paid on 19th November, 1999 to
shareholders on the Register at the close of business on 15th October, 1999.
Rental Services
After a poor January, the market improved considerably and has remained
buoyant throughout the period. We are benefitting from improved efficiencies
across our rental operations and these, combined with a continuing emphasis on
cost control, have produced improved margins. Although we are coming under
pressure on prices, we believe that the aforementioned productivity and
efficiency improvements enable us to compete strongly in the marketplace.
The new washroom central processing unit opened, as planned, in June and is
operating satisfactorily.
We are very pleased with the progress of the joint venture - Brooks Bourne
Services Ltd - which continues to grow sales and profit.
We remain totally committed to providing our customers with a high quality
service and are pleased to report continuing progress in this key area.
Retail Services
It is encouraging to report that the benefits anticipated from the disposal of
unprofitable retail outlets are showing through and our retail operation
traded profitably in the first half of the year, and ahead of the previous
year.
Our 'Fastfotos' photographic service continues to make good progress with
sales up by around 24% on the previous year. We have opened two outlets in
out-of-town superstores and one in a large city centre shopping mall. We are
also expanding our 'On the Move' operation which provides services to office
complexes.
Year 2000
The Group has undertaken an extensive review of the implications of the Year
2000 'millennium bug' issue. The Board assessed the business risks associated
with the Year 2000 issue and has implemented a comprehensive action plan,
including customers and suppliers, with a view to ensuring compliance.
We are at an advanced stage of achieving compliance, with most of our systems
and equipment already fully tested. The programme will have been completed
well in advance of December 1999. The Board is satisfied that it has taken
all appropriate steps to protect the Group against Year 2000 issues, but these
can provide only reasonable and not absolute assurance that no interruption
will occur.
We do not consider the current or the future capital and revenue costs of the
Year 2000 review to be significant.
Trading Outlook
The outlook for the rest of the year remains encouraging and, whilst we do not
anticipate that the exceptional rate of improvement achieved in the first half
year will be maintained during the second six months, we are confident that
your Company's performance for the full year will reflect a very satisfactory
increase in profits.
R S Brooks J W Walters
Chairman Chief Executive
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the period to 26 June 1999
52 weeks to 26 weeks to 26 weeks to
26/12/1998 26/06/1999 27/06/1998
(audited) (unaudited) (unaudited)
£'000 £'000 £'000
Turnover
33,697 Group and share of joint venture 16,636 16,039
1,350 Less share of joint venture 739 642
------ ------ ------
32,347 Group turnover 15,879 15,397
====== ====== ======
2,255 Group operating profit 911 652
Share of profit of joint venture before
215 interest 105 98
------ ------ ------
2,470 Operating profit 1,016 750
267 Interest payable (net) 102 148
------ ------ ------
Profit on ordinary activities before
2,203 taxation 914 602
Taxation on ordinary activities:
625 Group 249 160
53 Joint venture 30 27
------ ------ ------
Profit on ordinary activities after
1,525 taxation 635 415
642 Dividends 258 205
====== ====== ======
883 Profit retained for the period 377 210
====== ====== ======
11.93p Basic earnings per ordinary share 4.94p 3.25p
====== ====== ======
11.84p Diluted earnings per ordinary share 4.90p 3.22p
====== ====== ======
5.00p Rate of dividend per ordinary share 2.00p 1.60p
====== ====== ======
All of the Group's turnover and profit was generated from activities which are
continuing.
Earnings Per Share:
The basic earnings per share for the 26 weeks ending 26 June 1999 is
calculated on the basis of a profit of £635,000 (June 1998: £415,000) and
12,847,223 ordinary shares (June 1998: 12,754,023) being the weighted average
number of the ordinary shares in issue during the period. For diluted
earnings per share the weighted average number of ordinary shares in issue is
adjusted, to 12,953,223 (June 1998: 12,875,367), to assume conversion of all
dilutive potential ordinary shares where the exercise price is less than the
average market price of the Company's ordinary shares during the period.
The basic earnings per share for the 52 weeks ending 26 December 1998 is
calculated on the basis of a profit of £1,525,000 and 12,786,608 ordinary
shares. The diluted earnings per share is calculated using 12,880,308
ordinary shares.
Taxation:
The taxation charge has been estimated at an effective Corporation Tax rate of
30.5 per cent. for the 12 months ending 25 December 1999. This compares with
a rate of 31 per cent. for the 26 weeks to 27 June 1998 and for the 52 weeks
ended 26 December 1998.
CONSOLIDATED BALANCE SHEET
52 weeks to 26 weeks to 26 weeks to
26/12/1998 26/06/1999 27/06/1998
(audited) (unaudited) (unaudited)
£'000 £'000 £'000
7,824 Tangible assets 8,295 7,604
519 Investment in joint venture 588 435
------ ------ ------
8,343 8,883 8,039
------ ------ ------
6,675 Stocks 6,819 6,845
5,335 Debtors 5,351 5,549
646 Bank and cash in hand 373 8
------ ------ ------
12,656 12,543 12,402
9,465 Less creditors 9,486 9,586
------ ------ ------
3,191 3,083 2,816
------ ------ ------
264 Provision for liabilities and charges 264 310
------ ------ ------
11,270 Net assets 11,676 10,545
====== ====== ======
Capital and reserves
5,874 Share capital and share premium account 5,903 5,822
5,396 Profit and loss account 5,773 4,723
------ ------ ------
11,270 Equity shareholders' funds 11,676 10,545
====== ====== ======
CONSOLIDATED CASH FLOW
52 weeks to 26 weeks to 26 weeks to
26/12/1998 26/06/1999 27/06/1998
(audited) (unaudited) (unaudited)
£'000 £'000 £'000
3,104 Net cash inflow from operating activities 1,554 244
------ ------ ------
Returns on investments and servicing
of finance
18 Interest received 13 0
(259) Interest paid (108) (131)
(8) Interest element of finance lease rentals (1) (5)
------ ------ ------
Net cash outflow from returns on
(249) investments and servicing of finance (96) (136)
------ ------ ------
Taxation
Corporation tax paid (including advance
(548) corporation tax) (51) (41)
------ ------ ------
Capital expenditure and financial
investment
(1,913) Purchase of tangible fixed assets (1,155) (1,155)
26 Sale of tangible fixed assets 26 0
------ ------ ------
Net cash outflow from capital expenditure
(1,887) and financial investments (1,129) (1,155)
------ ------ ------
(548) Equity dividends paid (437) (344)
------ ------ ------
Cash outflow before management of liquid
(128) resources and financing (159) (1,432)
------ ------ ------
Financing
58 Issue of ordinary shares 29 6
195 New loans 0 0
(294) Repayment of loans (138) (213)
(48) Principal payment under finance leases (5) (27)
------ ------ ------
(89) Net cash outflow from financing (114) (234)
------ ------ ------
(217) Decrease in cash in period (273) (1,666)
====== ====== ======
The interim statement is unaudited and does not constitute full accounts
within the meaning of the Companies Act 1985. It has been prepared on a basis
consistent with the 1998 statutory accounts. A copy of this interim report is
being sent to shareholders and is available from the Company head office at
Aztec West, Almondsbury, Bristol BS32 4SN.
The comparative figures for the 52 weeks ended 26 December 1998 do not
constitute statutory accounts. These figures have been extracted from the
audited accounts for that period which have been delivered to the Registrar of
Companies and on which the auditors issued an unqualified report.