Interim Results
Johnson Service Group PLC
13 September 2006
13 September 2006
JOHNSON SERVICE GROUP PLC
STATEMENT FOR THE HALF YEAR ENDED 30 JUNE 2006
Johnson Service Group PLC, the textile related services and facilities
management group announces its interim results for the half year ended 30 June
2006.
Results Summary
• The Rental division achieved good sales growth but higher operating
costs affecting margins
• Corporatewear achieved significant new business wins though activity
remains biased to second half
• Facilities Management trading well and benefiting from successful SGP
acquisition
• Drycleaning responding to cost reductions and branch rationalisation
• £26.5m sale and leaseback of Drycleaning properties completed
• Potential disposal of Drycleaning division advancing through auction
process
Financial Summary
2006 2005 Change
Revenue £200.6m £215.0m (7%)
Revenue (excluding costs recharged to customers) £174.9m £171.3m +2%
Reported Operating Profit £19.0m £14.1m +35%
Adjusted Operating Profit* £14.9m £15.0m (1%)
Reported Profit Before Tax £14.3m £10.2m +40%
Adjusted Profit Before Tax* £10.2m £11.1m (8%)
Interim dividend 4.6p 4.4p +5%
* (before intangibles amortisation and exceptional items)
'We are encouraged by the prospects for the Group in the second half of the
year. The Rental division will benefit from the good sales performance achieved
in the first half, which should help offset some of the operating cost
increases. Corporatewear and Facilities Management are both expected to perform
strongly given the level of planned activity in the second half. In
Drycleaning, action has been taken to reduce costs and promote sales, in an
improving though still unpredictable marketplace. Whilst the remainder of the
year will be influenced by the timing of activity in the Corporatewear and
Facilities Management divisions, as well as the possible sale of the Drycleaning
division, the Board continues to look forward to the future with confidence.'
Simon Sherrard, Chairman
For further information, please contact:
Johnson Service Group PLC
Hudson Sandler
Stuart Graham, CEO Michael Sandler
Jim Wilkinson, CFO Sandrine Gallien
Tel: 020 7796 4133 on 13 September only; Tel: 020 7796 4133
020 7290 0390 thereafter
Website: www.johnsonplc.com
CHAIRMAN'S STATEMENT
The first half results reflect satisfactory trading by our major businesses,
though the timing of activity in both the Corporatewear and Facilities
Management divisions has, as previously indicated, further increased the bias of
our profitability towards the second half. We remain encouraged by the level of
business wins in both of these newly created divisions and believe that it is a
positive indicator for their future prospects. The Rental division has had an
excellent first half in winning new customers, which will help offset increasing
operating costs. As announced in July we are pursuing a formal auction process
for the Drycleaning business which would continue the well-established process
of focusing the Group on activities with more predictable business to business
revenue streams and long-term growth potential.
GROUP RESULTS
Total Group revenue in the six months to 30 June 2006 fell by 7% to £200.6
million (2005: £215.0 million), while underlying revenue, excluding costs
recharged to customers, rose by 2% to £174.9 million (2005: £171.3 million).
Operating profit, excluding amortisation of intangibles and exceptional items,
was 1% lower than in the first half last year at £14.9 million (2005: £15.0
million).
Interest charges increased to £4.7 million (2005: £3.9 million), reflecting
higher average borrowings as a result of the eight acquisitions we completed
during 2005. Adjusted pre-tax profit, excluding amortisation of intangibles and
exceptional items, was £10.2 million (2005: £11.1 million), a reduction of 8%.
Exceptional profit during the half year of £6.9 million (2005: £0.7 million)
comprised a profit of £8.6 million arising on the £26.5 million sale and
leaseback of 79 retail trading properties currently occupied by the Drycleaning
division, partly offset by restructuring costs in the same division of £1.7
million.
After this exceptional credit and amortisation of intangibles of £2.8 million
(2005: £1.6 million), profit before tax was up 40% at £14.3 million (2005: £10.2
million).
Adjusted fully diluted earnings per share were 12.1p (2005: 13.2p), a reduction
of 8%, while earnings inclusive of exceptional items and amortisation were up
45% at 17.5p (2005: 12.1p).
FINANCES
Total debt at the end of the first half was £134.9 million, slightly reduced
from the year-end December 2005 total of £137.2 million. This followed the
receipt of net cash of £23.6 million from our property disposal shortly before
the end of the period. This sale and leaseback transaction was undertaken with
the intention of simplifying the process of disposing of our Drycleaning
division, as well as reducing Group indebtedness.
The underlying increase in debt, before the property disposal, reflected our
continued substantial programme of capital expenditure, notably on the rollout
of our Enterprise Resource Planning system. This was successfully implemented
at Stalbridge Linen Services in April and Johnson Workplace Management in July.
The remaining implementations at Johnsons Apparelmaster and at Head Office are
expected to be completed by the end of 2007.
This continuing level of expenditure will result in a similar level of debt at
December 2006, which is well within our existing headroom.
As referred to in the annual report the balance sheet liability in respect of
the defined benefit pension schemes is related to the longevity assumptions and
movements in the discount rate. At the half year a favourable movement in market
assumptions has reduced the recorded net deficit after tax for all of the
pension schemes by £9.7 million. This is in addition to the reduction resulting
from the additional cash contributions of £1.4 million made in the second
quarter, which will continue at the rate of £5.5 million per annum at least
until the next formal valuation.
DIVIDEND
The Board has decided to pay an increased interim dividend of 4.6p per share
(2005: 4.4p). This is a rise of 5%, reflecting our confidence in the Group's
prospects and in line with our commitment to a progressive dividend policy. The
interim dividend will be paid on 20 October 2006 to those shareholders on the
register at the close of business on 29 September 2006.
DIVISIONAL TRADING RESULTS
Rental
Revenue increased by 7% to £65.6 million (2005: £61.2 million), while adjusted
operating profit was 11% lower than in the first half last year at £6.6 million
(2005: £7.4 million), primarily as the result of increased operating costs.
Johnsons Apparelmaster, the market-leading workwear laundering and rental
business, maintained the positive sales trend established last year. Organic
revenues remained stable and total revenue increased by 2%. Rentokil Initial's
withdrawal from the UK linen and workwear market has assisted an exceptional new
business sales performance, with over 1,600 new customers gained during the
second quarter, including a number of leading food processors. Successful
initiatives to improve customer focus have also helped to improve client
retention. The period immediately following Rentokil's exit from the market was
the first time that new revenue gained has outpaced revenue lost for at least
five years, although we are now expecting to return to recent trends. In order
to help offset the ongoing increase in operating costs we are continuing to
improve the efficiency of our plants through further investments in both people
and infrastructure, with major refurbishments under way at our Birmingham, Leeds
and Basingstoke sites.
Stalbridge Linen Services, focused on the premium hotel, catering and corporate
hospitality markets, again achieved excellent organic sales growth, with total
revenues increasing by 24%. New business sales exceeded our targets, and
customer retention improved on the exceptional performance achieved last year.
As anticipated, pressure on operating margins arose as a result of our
investment in additional people and technologies to support this growth, with
the new IT system going live successfully in April. We are also investing in
additional capacity, with a new, state-of-the-art plant at Hinckley in the East
Midlands currently under construction and due to come on stream early next year.
Johnson Hospitality Services, providing furniture and catering equipment to the
contract catering market, last year underwent rationalisation and restructuring
following its poor performance. Trading has continued to be difficult and we
will undertake a further review of the business during the second half of the
year.
Corporatewear
Revenue of £36.8 million (2005: £39.6 million) was 7% below that of the previous
first half, while adjusted operating profit was 16% lower at £3.8 million (2005:
£4.5 million). This reflects the timing of major contracts for corporate
uniforms, which this year are skewed even more heavily towards the second half.
Our Corporatewear Division is the UK's clear market leader in the supply of high
quality clothing for people at work. Since the beginning of 2006 our brands
have continued to increase their share of this strongly growing market, winning
significant new business with leading retail and restaurant chains. We have
also secured commitments to renew their contracts from three of our largest
customers, assuring the future of the secure, long-term revenue streams that are
one of the most attractive features of this sector.
Our brands focused on the public services have performed particularly strongly,
making this an increasingly important part of our total offer. Yaffy, focusing
on high quality police outerwear, and Boyd Cooper, supplying nurses' uniforms,
have both made excellent progress. Although we performed well in our
Industrial division, delayed rollouts with two major food retailers and a
leading bank meant that our Retail and Financial divisions performed slowly,
though they are well positioned to make strong progress in the second half.
The full integration of all the acquisitions we made in 2004 and 2005 is
progressing well, and we are already realising the principal expected benefits
of leveraging our Group scale to achieve lower product costs and improved
quality. We expect to achieve further improvements in our customer offer and
profitability as we complete this integration process in the months ahead.
Drycleaning
Revenue for the division, which includes retail drycleaning and Alex Reid, the
specialist supplies business, increased by 1% to £49.3 million (2005: £48.7
million) and adjusted operating profit improved by 6% to £3.6 million (2005:
£3.4 million). The result for 2005 benefited from £0.7 million of profit from
routine property disposals, with no benefit arising in 2006. Excluding the
effect of this the underlying adjusted operating profit increase was 33%.
Weak consumer demand, particularly in the first quarter, was reflected in a 2.3%
decline in like-for-like retail Drycleaning sales. Sales were also affected by
our branch rationalisation programme, which reduced the number of Johnsons and
Sketchley outlets from 587 at the beginning of the year to 568 by 30 June.
However, the benefit of cost control measures meant that the underlying
profitability of the retail drycleaning business rose by 34%, with the operating
margin improving from 3.8% to 5.1%. Total divisional turnover and profit also
reflected the acquisition last year of Firbimatic UK to strengthen our Alex Reid
business.
Action was taken during the first half both to reduce the cost base of the
retail business and to stimulate customer demand through a series of successful
operational and marketing initiatives, without compromising quality. A major
management restructuring in April helped to deliver a tighter operational focus
and more effective cost control. This was reflected in improved trading results
in the second quarter, against the background of a gradually improving retail
market.
We continue to focus on developing new stores in convenient, high traffic
locations. A further drive-in site and two new supermarket concessions were
opened during the half-year, and all are trading to expectation. At the same
time we have embarked on an active programme to rationalise underperforming
branches. This will be ongoing. The elimination of loss-making sites, and our
other actions to promote sales and reduce costs, are all expected to contribute
to improved profitability during the second half.
Jeeves of Belgravia, our London luxury drycleaning brand, maintained the more
positive trend established in 2005 and is now trading profitably and achieving
strong like-for-like sales growth.
Although our specialist drycleaning supplies business, Alex Reid, suffered in
line with the drycleaning market as a whole, the integration of Firbimatic,
which was acquired in August 2005, led to a 20% increase in revenue and a 216%
uplift in operating profit.
Although our drycleaning business is the clear UK market leader its revenues are
intrinsically more volatile than those of our other divisions which have
long-term contracted revenue with corporate customers. Following an initial
approach in March 2006, we have received a number of expressions of interest in
the business, and therefore embarked on a formal auction process in July of this
year. We believe that it will be in the best interests of our Shareholders to
seek offers for this business but we will only dispose of it if satisfactory
value can be achieved. We are currently reviewing the initial offers received
and a further announcement will be made in due course.
Facilities Management
Revenue excluding costs recharged to customers grew by 6% to £23.2 million
(2005: £21.8 million) while total revenue fell by 25% to £48.9 million (2005:
£65.5 million), the latter being affected by reduced recharges to customers on
project work. Adjusted operating profit increased by 63% to £2.6 million (2005:
£1.6 million). This included an initial contribution from SGP Property Services
(SGP), acquired in October 2005.
SGP, specialising in the provision of property management services to the
financial, leisure and retail sectors, has continued to meet all our
expectations and to achieve excellent year-on-year growth of 25%. During the
half year it extended its established relationships with Tesco and Arcadia and
gained new business with Marks & Spencer, Phones4U and Superdrug, the last of
these in association with Johnson Workplace Management (JWM).
JWM, focused primarily on the commercial office market, recorded lower turnover
and operating profit, mainly as the result of the timing of contracts and
projects, which are expected to recover in the second half. During the first
half we secured significant contract renewals and extensions with two major
customers, and were awarded a health and safety contract with the Capgemini
consulting and outsourcing group. We also successfully installed a new
Enterprise Resource Planning System, providing a market-leading IT platform
which will help to drive new business generation by providing JWM with valuable
differentiation in its sector.
Workplace Engineering, delivering hi-tech electrical, engineering and fit-out
services, was similarly affected in the first half by the phasing of project
work, which is expected to improve in the second half. It has recently secured a
major head office refurbishment contract with BHS.
IFRS
The Group is required to report under International Financial Reporting
Standards (IFRS) and all figures in this statement refer to reporting under
IFRS.
BOARD
As we have previously announced, David Bryant is to retire from the Board on 2
October after 37 years with the Group. We would like to thank David for his
contribution to the Group, particularly since his appointment as Managing
Director of the Drycleaning division. Although retiring from the Board, David
remains with the Group for the current auction process.
OUTLOOK
We are encouraged by the prospects for the Group in the second half of the year.
The Rental division will benefit from the good sales performance achieved in
the first six months of the year, which should help offset some of the operating
cost increases. Corporatewear and Facilities Management are both expected to
perform strongly given the level of planned activity in the second half. In
Drycleaning, action has been taken to reduce costs and promote sales, in an
improving though still unpredictable marketplace. Whilst the remainder of the
year will be influenced by the timing of activity in the Corporatewear and
Facilities Management divisions, as well as the possible sale of the Drycleaning
division, the Board continues to look forward to the future with confidence
Simon Sherrard
Chairman
Consolidated Income Statement
Half year to Half year to Year ended
30th June 25th June 31st
2006 2005 December
2005
Note £m £m £m
2 REVENUE 200.6 215.0 431.9
Costs recharged to customers (25.7) (43.7) (68.4)
Revenue excluding costs recharged to customers 174.9 171.3 363.5
2 OPERATING PROFIT 19.0 14.1 31.8
OPERATING PROFIT BEFORE INTANGIBLES AMORTISATION AND 14.9 15.0 36.3
EXCEPTIONAL ITEMS
Amortisation of intangible assets (2.8) (1.6) (3.9)
Exceptional items
- Restructuring and environmental costs (1.7) (1.6) (5.0)
- Profit on disposal of property 8.6 2.3 4.4
2 OPERATING PROFIT 19.0 14.1 31.8
Finance costs (4.7) (3.9) (8.2)
PROFIT BEFORE TAXATION 14.3 10.2 23.6
4 Taxation (3.9) (3.0) (6.6)
PROFIT FOR THE PERIOD 10.4 7.2 17.0
5 EARNINGS PER SHARE *
Basic 17.7p 12.4p 29.2p
Diluted 17.5p 12.1p 28.6p
6 ORDINARY DIVIDENDS PAID AND PROPOSED
Interim dividend proposed 4.6p - -
Interim dividend - 4.4p 4.4p
Final dividend - - 15.0p
* Earnings per share before intangibles amortisation, restructuring costs and other exceptional items
are shown in Note 5.
Consolidated Statement of Recognised Income and Expense
Half year to Half year to Year ended
30th June 25th June 31st
2006 2005 December
2005
£m £m £m
Actuarial gain / (loss) on defined benefit pension plans 13.9 (5.0) (15.7)
Taxation in respect of actuarial (gain) / loss (4.2) 1.5 4.7
Net movement on reserves in respect of IAS 19 actuarial gains and 9.7 (3.5) (11.0)
losses
Cash flow hedges movement - (0.2) (0.1)
NET INCOME / (EXPENSE) RECOGNISED DIRECTLY IN EQUITY 9.7 (3.7) (11.1)
Profit for the period 10.4 7.2 17.0
TOTAL RECOGNISED INCOME FOR THE PERIOD 20.1 3.5 5.9
Consolidated Balance Sheet
As at As at As at
30th June 25th June 31st December
2006 2005 2005
Note £m £m £m
ASSETS
NON-CURRENT ASSETS
Goodwill 141.0 124.9 140.7
Intangible assets 53.5 32.3 50.6
Property, plant and equipment 57.0 67.4 68.0
Rental items 31.5 27.6 30.1
Deferred tax assets 13.6 14.9 17.9
296.6 267.1 307.3
CURRENT ASSETS
Inventories 31.4 29.9 30.2
Trade and other receivables 72.2 74.0 65.0
Derivative financial assets 0.4 - 0.2
Cash and cash equivalents 6.4 - 7.5
110.4 103.9 102.9
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 33.8 31.9 26.9
Other creditors and accruals 56.6 63.5 61.1
Current income tax liabilities 5.2 3.1 2.7
Borrowings 1.1 7.4 2.1
Derivative financial liabilities 0.5 0.2 0.2
97.2 106.1 93.0
NET CURRENT ASSETS / (LIABILITIES) 13.2 (2.2) 9.9
NON-CURRENT LIABILITIES
Borrowings 140.2 111.0 142.6
7 Retirement benefit obligations 35.5 39.8 50.4
Deferred tax liabilities 14.0 10.7 14.6
Provisions and other non-current liabilities 18.5 14.6 19.7
208.2 176.1 227.3
NET ASSETS 101.6 88.8 89.9
EQUITY
CAPITAL AND RESERVES ATTRIBUTABLE TO THE COMPANY'S EQUITY HOLDERS
9 Called up share capital 5.9 5.9 5.9
9 Share premium 12.2 10.9 11.9
9 Other reserves 2.1 1.9 2.1
9 Retained earnings 81.4 70.1 70.0
TOTAL EQUITY 101.6 88.8 89.9
Consolidated Cash Flow Statement
Half year to Half year to Year ended
30th June 25th June 31st
2006 2005 December
2005
Note £m £m £m
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation 14.3 10.2 23.6
Adjustments for:
Finance costs 4.7 3.9 8.2
Depreciation and amortisation 17.3 14.2 31.4
Increase in net working capital (6.2) (7.8) (3.4)
Profit on sale of property, plant and equipment (8.4) (2.9) (6.3)
Additional pension contributions (1.4) - -
Other non-cash movements (0.8) 0.2 (0.3)
Cash generated from operations 19.5 17.8 53.2
Interest paid / received (5.0) (3.3) (7.4)
Taxation paid (2.2) (2.4) (6.2)
Net cash flows generated from operating activities 12.3 12.1 39.6
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiaries (net of cash acquired) (1.7) (34.1) (56.2)
8 Proceeds from sale of investments in other companies 0.9 - -
Purchase of property, plant and equipment (7.5) (4.5) (14.1)
Proceeds from sale of property, plant and equipment 23.6 4.6 11.5
Purchase of intangible assets (5.9) (2.7) (9.1)
Purchase of textile rental items (13.0) (12.0) (24.8)
Proceeds from sale of textile rental items 2.2 1.6 3.5
Net cash used in investing activities (1.4) (47.1) (89.2)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from borrowings 42.0 36.0 178.2
Repayments of borrowings (45.0) (2.2) (116.2)
Capital element of finance leases (0.5) (0.5) (1.1)
Net proceeds from issue of share capital 0.3 1.5 2.5
Dividends paid to company shareholders (8.8) (8.2) (10.8)
Net cash generated from financing activities (12.0) 26.6 52.6
Net (decrease) / increase in cash and cash equivalents (1.1) (8.4) 3.0
Cash and cash equivalents at beginning of period 7.5 4.5 4.5
Cash and cash equivalents at end of period 6.4 (3.9) 7.5
Notes to the Consolidated Interim Financial Statements
1 BASIS OF PREPARATION
These unaudited consolidated interim financial statements of Johnson Service
Group PLC are for the six months ended 30th June 2006. They have been prepared
in accordance with those International Financial Reporting Standards (IFRS) and
International Financial Reporting Interpretations Committee (IFRIC)
interpretations issued and endorsed, or issued and expected to be endorsed by
the European Union (EU), as at the time of preparing these statements (September
2006). The IFRS's and IFRIC interpretations that will be applicable at 31st
December 2006, including those that will be applicable on an optional basis, are
not known with certainty at the time of preparing these interim financial
statements.
The Johnson Service Group PLC consolidated financial statements were prepared in
accordance with UK Generally Accepted Accounting Principles (UK GAAP) until 31st
December 2005. Those UK GAAP accounts received an unqualified audit report and
have been filed with the Registrar of Companies, and the auditors' report did
not contain a statement under Section 237 (2) or (3) of the Companies Act 1985
(as amended).
UK GAAP differs in some areas from IFRS. In preparing the Johnson Service Group
PLC 2006 consolidated interim financial statements, management has amended
certain accounting, valuation and consolidation methods applied in the UK GAAP
financial statements to comply with IFRS. The comparative figures were restated
to reflect these adjustments.
Johnson Service Group PLC has elected a date of transition to IFRS of 27th
December 2003. The Group previously reported the impact of the adoption of IFRS
on the 2004 comparative financial information in July 2005. Supplementary IFRS
information was provided in the 2005 Annual Report, together with summary
reconciliations and descriptions of the effect of the transition from UK GAAP to
IFRS on the Group's equity and its net income and cash flows. Further
information is provided within this interim report: the key changes to the
Group's accounting policies as a result of the adoption of IFRS are detailed in
the section entitled 'Summary of the Revised Principal Accounting Policies', and
reconciliations of total equity and reserves and income from UK GAAP to IFRS are
provided in the section entitled 'Transition from UK GAAP to IFRS'.
The revised principal accounting policies are those which are expected to be
formally adopted by the Group when it prepares its Annual Report for the year
ending 31st December 2006, and have been consistently applied to all the periods
presented. Under the transitional arrangements included within IFRS 1,
First-time Adoption of International Financial Reporting Standards, which permit
those companies adopting IFRS for the first time to take some exemptions from
the full requirements of IFRS, the Group has made use of the following
exemptions:
• Business combinations: business combinations prior to the transition
date have not been restated to an IFRS basis.
• Fair value or revaluation as deemed cost of fixed assets: the net
book value of property, plant and equipment under UK GAAP has been
adopted as the deemed cost in the opening balance sheet at the transition
date.
• Share-based payments: IFRS 2 has not been applied to share options
and shares awarded which vested before 1st January 2005.
2 SEGMENT ANALYSIS
Business segments
Segment information is presented in respect of the Group's business segments,
which are based on the Group's management and internal reporting structure as at
30th June 2006. Segment results include items directly attributable to a
segment as well as those that can be allocated on a reasonable basis.
Inter-segment pricing is determined on an arm's length basis.
Geographical segments
Revenue originates wholly within the United Kingdom and as a result, no
geographical segments are presented within these financial statements. There is
no significant difference between revenue by origin and revenue by destination.
The business segment results for the half year ended 30th June 2006, together
with comparative figures, are as follows:
Half year to Half year to Year ended
30th June 25th June 31st
2006 2005 December
2005
£m £m £m
Revenue
Rental 65.6 61.2 128.4
Corporatewear 36.8 39.6 87.1
Drycleaning 49.3 48.7 101.4
Facilities Management 48.9 65.5 115.0
200.6 215.0 431.9
Revenue excluding costs recharged to customers
Rental 65.6 61.2 128.4
Corporatewear 36.8 39.6 87.1
Drycleaning 49.3 48.7 101.4
Facilities Management 23.2 21.8 46.6
174.9 171.3 363.5
2 SEGMENT ANALYSIS (continued)
Half year to Half year to Year ended
30th June 25th June 31st
2006 2005 December
2005
£m £m £m
Operating profit
Rental 6.1 6.0 14.4
Corporatewear 2.5 2.8 6.8
Drycleaning 10.5 5.7 11.9
Facilities Management 1.6 1.5 3.3
Unallocated (1.7) (1.9) (4.6)
19.0 14.1 31.8
Operating profit before intangibles amortisation and exceptional items
Rental 6.6 7.4 15.2
Corporatewear 3.8 4.5 11.4
Drycleaning 3.6 3.4 9.8
Facilities Management 2.6 1.6 4.4
Unallocated (1.7) (1.9) (4.5)
14.9 15.0 36.3
All operations are continuing.
Since the last half year results, and in line with the segment analysis at
December 2005, the segment analysis shows the unallocated central overheads
separately and includes the results of Alex Reid Limited within the Drycleaning
segment. The operating profit, and the operating profit before intangibles
amortisation and exceptional items from Drycleaning, includes £nil (June 2005:
£0.7 million, December 2005: £1.8 million) of profit from the disposal of
properties formerly occupied by the Drycleaning business and other non-trading
items. The 2006 exceptional items of £6.9 million have been included within the
Drycleaning segment in the analysis of operating profit.
3 ADJUSTED PROFIT BEFORE TAXATION
Half year to Half year to Year ended
30th June 25th June 31st
2006 2005 December
2005
£m £m £m
Profit before taxation 14.3 10.2 23.6
Intangibles amortisation 2.8 1.6 3.9
Restructuring and environmental costs 1.7 1.6 5.0
Profit on disposal of property (8.6) (2.3) (4.4)
Adjusted profit before taxation 10.2 11.1 28.1
4 TAXATION
Half year to Half year to Year ended
30th June 25th June 31st
2006 2005 December
2005
£m £m £m
Current tax expense
UK corporation tax charge for the period 5.0 3.1 6.4
Adjustment in relation to previous periods (0.2) - (0.1)
Current tax charge for the period 4.8 3.1 6.3
Deferred tax expense
Origination and reversal of temporary differences (0.4) (0.1) 0.3
Adjustment in relation to previous periods (0.5) - -
Deferred tax charge for the period (0.9) (0.1) 0.3
Total charge for taxation included in the income statement 3.9 3.0 6.6
Taxation on the exceptional items (excluding intangibles amortisation) in the
current period has increased the UK corporation tax charge by £2.2 million (June
2005: £0.3 million reduction, December 2005: £1.2 million reduction). Tax
relief on intangibles amortisation has reduced UK corporation tax by £1.3
million (June 2005: £nil, December 2005: £0.2 million).
5 EARNINGS PER SHARE
Half year to Half year to Year ended
30th June 25th June 31st
2006 2005 December
2005
£m £m £m
Profit for the period attributable to Ordinary Shareholders 10.4 7.2 17.0
Intangibles amortisation (net of taxation) 1.5 1.6 3.7
Restructuring, environmental costs and profit on disposal of property (4.7) (1.0) (0.6)
(net of taxation)
Adjusted profit attributable to Ordinary Shareholders 7.2 7.8 20.1
Weighted average number of Ordinary shares 58,802,635 58,144,347 58,208,126
Dilutive options 871,987 1,267,517 1,149,222
Fully diluted number of Ordinary shares 59,674,622 59,411,864 59,357,348
Basic earnings per share
Basic earnings per share 17.7p 12.4p 29.2p
Adjustment for intangibles amortisation 2.5p 2.7p 6.3p
Adjustment for restructuring, environmental costs and profit on (7.9p) (1.7p) (1.0p)
disposal of property
Adjusted basic earnings per share 12.3p 13.4p 34.5p
Diluted earnings per share
Diluted earnings per share 17.5p 12.1p 28.6p
Adjustment for intangibles amortisation 2.5p 2.8p 6.2p
Adjustment for restructuring, environmental costs and profit on (7.9p) (1.7p) (1.0p)
disposal of property
Adjusted diluted earnings per share 12.1p 13.2p 33.8p
Basic earnings per share is calculated using the weighted average number of
shares in issue during the year, excluding those held by the ESOP, based on the
profit for the period attributable to Ordinary Shareholders.
Adjusted earnings per share figures are given to exclude the effects of
intangibles amortisation, restructuring costs, environmental costs and profit on
disposal of property, all net of taxation, and are considered to show the
underlying results of the Group.
For diluted earnings per share, the weighted average number of Ordinary shares
in issue is adjusted to assume conversion of all dilutive potential Ordinary
shares. The Company has dilutive potential Ordinary shares arising from 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.
6 DIVIDENDS
Half year to Half year to Year ended
30th June 25th June 31st
2006 2005 December
2005
£m £m £m
Ordinary dividends paid and proposed
Interim dividend proposed 4.6p - -
Interim dividend proposed and paid - 4.4p 4.4p
Final dividend proposed and paid - - 15.0p
On 15th May 2006 a dividend of 15.0p was paid on the Ordinary shares in respect
of the 2005 final dividend, utilising £8.8 million of Shareholders' funds. The
Directors are proposing an interim dividend in respect of the year ended 31st
December 2006 of 4.6p which will reduce Shareholders' funds by £2.7 million.
The dividend will be paid on 20th October 2006 to Shareholders on the register
of members at the close of business on 29th September 2006. The Trustee of the
ESOP has waived the entitlement to receive dividends on the Ordinary shares held
by the Trust.
In accordance with International Financial Reporting Standards, these financial
statements do not reflect a liability in respect of the proposed dividend.
7 RETIREMENT BENEFIT OBLIGATIONS
The Group has applied the requirements of IAS 19 Employee Benefits (revised
December 2004) to its employee pension schemes and post-retirement healthcare
benefits.
The IFRS transitional adjustment to net assets of £25.6 million as at December
2003 comprised of a £34.5 million gross liability, an associated deferred tax
asset of £10.4 million and the combined reversal of the previously recognised
SSAP24 asset and a movement due to the variation in the method of valuing scheme
assets as prescribed by IAS 19 of £1.5 million.
As part of the Group's objective to reduce its overall pension liability,
additional contributions of £1.4 million were paid to the Johnson Group Staff
Pension Scheme during the period to 30th June 2006.
Following discussions with the Group's appointed actuary it has been identified
that an actuarial gain of £13.9 million should be recognised in the period to
30th June 2006. This is as a result of the scheme assets and liabilities
performing differently to previous assumptions.
The gross retirement benefit liability and associated deferred tax asset
thereon, together with the net liability is shown below:
Half year to Half year to Year ended
30th June 25th June 31st
2006 2005 December
2005
£m £m £m
Gross retirement benefit liability (35.5) (39.8) (50.4)
Deferred tax asset thereon 10.6 12.1 15.1
Net liability (24.9) (27.7) (35.3)
8 SALE OF INVESTMENTS
During the period, the Group disposed of the trade and assets of Johnson
Environmental Pest Control Limited. The financial performance of the
discontinued operation during the period, together with the related cash flows
thereon, are not separately presented in these interim financial statements as
they are not material in the context of the Group.
Half year to
30th June
2006
£m
Disposal proceeds 0.9
Total net assets disposed -
Goodwill written off (0.9)
Costs of disposal -
Pre-tax profit / (loss) on disposal -
Taxation (0.3)
Profit / (loss) on disposal (0.3)
9 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Share Share Other Retained Total
capital premium reserves earnings equity
£m £m £m £m £m
Balance at 25th December 2004 5.8 9.5 2.1 74.4 91.8
Adoption of IAS 39 - - (0.1) - (0.1)
Balance at 26th December 2004 5.8 9.5 2.0 74.4 91.7
Total recognised income and expense for the - - - 3.7 3.7
period
Dividends - - - (8.2) (8.2)
Issue of share capital 0.1 1.4 - - 1.5
Share options (value of employee services) - - - 0.2 0.2
Cash flow hedges movement - - (0.1) - (0.1)
Balance at 25th June 2005 5.9 10.9 1.9 70.1 88.8
Balance at 26th June 2005 5.9 10.9 1.9 70.1 88.8
Total recognised income and expense for the - - - 2.2 2.2
period
Dividends - - - (2.6) (2.6)
Issue of share capital - 1.0 - - 1.0
Share options (value of employee services) - - - 0.3 0.3
Cash flow hedges movement - - 0.2 - 0.2
Balance at 31st December 2005 5.9 11.9 2.1 70.0 89.9
Balance at 1st January 2006 5.9 11.9 2.1 70.0 89.9
Total recognised income and expense for the - - - 20.1 20.1
period
Dividends - - - (8.8) (8.8)
Issue of share capital - 0.3 - - 0.3
Share options (value of employee services) - - - 0.1 0.1
Balance at 30th June 2006 5.9 12.2 2.1 81.4 101.6
10 ANALYSIS OF NET DEBT
Cash and cash Debt due Debt due Finance Total
equivalents within one after more leases
year than one year net debt
£m £m £m £m £m
Balance at 26th December 2004 4.5 (3.2) (69.9) (5.8) (74.4)
Cash flow (8.4) 2.2 (36.0) 0.5 (41.7)
Acquisitions (excluding cash and - - - (0.1) (0.1)
overdrafts)
Other non-cash changes - (1.3) (0.1) (0.8) (2.2)
Balance at 25th June 2005 (3.9) (2.3) (106.0) (6.2) (118.4)
Balance at 26th June 2005 (3.9) (2.3) (106.0) (6.2) (118.4)
Cash flow 11.4 1.3 (28.2) 0.6 (14.9)
Acquisitions (excluding cash and - - (4.9) (0.1) (5.0)
overdrafts)
Other non-cash changes - - 0.9 0.2 1.1
Balance at 31st December 2005 7.5 (1.0) (138.2) (5.5) (137.2)
Balance at 1st January 2006 7.5 (1.0) (138.2) (5.5) (137.2)
Cash flow (1.1) 1.0 2.0 0.5 2.4
Other non-cash changes - - (0.1) - (0.1)
Balance at 30th June 2006 6.4 - (136.3) (5.0) (134.9)
11 PUBLISHED FINANCIAL STATEMENTS
Copies of the interim report are to be sent to Shareholders and will be
available to members of 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
Summary of the Revised Principal Accounting Policies
SUMMARY OF THE REVISED PRINCIPAL ACCOUNTING POLICIES AS A RESULT OF THE ADOPTION
OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
Consolidation
The financial statements consolidate the results of Johnson Service Group PLC
(the Company) and its subsidiary undertakings. Entities over which the Group
has the ability to exercise control are accounted for as subsidiaries. Control
exists when the Company has the power, directly or indirectly, to govern the
financial and operating policies of an entity so as to obtain benefits from its
activities.
The accounting periods of subsidiary undertakings are co-terminous with those of
the Company. Inter-company transactions, balances and unrealised gains on
transactions between group companies are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of an impairment of the
asset transferred. Subsidiaries' accounting policies have been changed where
necessary to ensure consistency with the policies adopted by the Group.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the Group. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued and liabilities incurred or
assumed at the date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their
fair value at the acquisition date, irrespective of the extent of any minority
interest. The excess of the cost of acquisition over the fair value of the
Group's share of the identifiable tangible and intangible net assets acquired is
recorded as goodwill. If the cost of acquisition is less than the fair value of
the Group's share of the net assets of the subsidiary acquired, the difference
is recognised directly in the income statement.
Interests sold are consolidated up to the date of disposal, when control ceases.
Segment reporting
A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other business segments.
Foreign currency translation
The consolidated financial statements are presented in sterling, which is the
Company's functional and presentational currency.
Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the income
statement, except where hedge accounting is applied as explained below.
Accounting for derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date a derivative
contract is entered into and are subsequently remeasured at their fair value.
The method of recognising the resulting gain or loss depends on whether the
derivative is designated as a hedging instrument, and if so, the nature of the
item being hedged. The Group designates certain derivatives as hedges of the
variability of cash flows (cash flow hedge).
The Group documents at the inception of the transaction the relationship between
hedging instruments and hedged items, as well as its risk management objective
and strategy for undertaking various hedge transactions. The Group also
documents its assessment, both at hedge inception and on an ongoing basis, of
whether the derivatives that are used in hedging transactions are highly
effective in offsetting changes in the cash flows of hedged items.
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow hedges are recognised in equity. The gain
or loss relating to the ineffective portion is recognised immediately in the
income statement.
Amounts accumulated in equity are recycled in the income statement in the
periods when the hedged item will affect profit or loss (for example, when the
forecast transaction that is hedged takes place). However, when the forecast
transaction that is hedged results in the recognition of a non-financial asset
(for example, inventory) or a liability, the gains and losses previously
deferred in equity are transferred from equity and included in the initial
measurement of the cost of the asset or liability.
When a hedging instrument expires or is sold, or when a hedge no longer meets
the criteria for hedge accounting, any cumulative gain or loss existing in
equity at that time remains in equity and is recognised when the forecast
transaction is ultimately recognised in the income statement. When a forecast
transaction is no longer expected to occur, the cumulative gain or loss that was
reported in equity is immediately transferred to the income statement.
Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Such
derivatives are classified as at fair value through profit or loss, and changes
in their fair value are recognised immediately in the income statement.
Fair value estimation
The fair value of financial instruments traded in active markets (such as
publicly traded derivatives, and trading and available-for-sale securities) is
based on quoted market prices at the balance sheet date. The quoted market
price used for financial assets held by the Group is the current bid price; the
appropriate quoted market price for financial liabilities is the current ask
price.
The nominal value less estimated credit adjustments of trade receivables is
assumed to approximate to their fair values. The fair value of financial
liabilities is estimated by discounting the future contractual cash flows at the
current market interest rate that is available to the Group for similar
financial instruments.
Intangible Assets
(i) Goodwill
For acquisitions since 28th December 2003, goodwill represents the excess of the
cost of an acquisition over the fair value of the Group's share of the net
identifiable assets of the acquired subsidiary at the date of acquisition. For
acquisitions prior to this date, goodwill is included at the amount recorded
previously under UK GAAP. Goodwill on acquisitions of subsidiaries is included
in non-current assets. Goodwill is tested annually for impairment and carried
at cost less accumulated impairment losses. Gains and losses on the disposal of
an entity include the carrying amount of goodwill relating to the entity sold.
(ii) Intangible assets
Intangible assets comprise of brands and customer contracts and relationships,
recognised at cost or fair value. They have a finite useful life and are
carried at cost less accumulated amortisation. Amortisation is calculated using
the straight-line method to allocate the cost of the intangible assets over
their estimated useful lives (4 - 20 years).
(iii) Computer software
Acquired computer software licences are capitalised on the basis of the costs
incurred to acquire and bring to use the specific software, and are included on
the balance sheet within intangible assets. Costs are amortised over their
estimated useful lives (4 - 10 years).
Costs associated with the general development and maintenance of computer
software programs are recognised as an expense as incurred. Costs that are
directly associated with the production of identifiable and unique software
products controlled by the Group, and that will probably generate economic
benefits exceeding costs beyond one year, are recognised as intangible assets.
Direct costs include the costs of employees involved in software development and
an appropriate portion of relevant overheads.
Computer software development costs recognised as assets are amortised over
their estimated useful lives (not exceeding 10 years).
Deferred taxation
Deferred tax is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. Deferred tax is not
accounted for if it arises from initial recognition of an asset or liability in
a transaction, other than a business combination, that at the time of the
transaction affects neither accounting nor taxable profit or loss. Deferred tax
is determined using tax rates (and laws) that have been enacted or substantially
enacted by the balance sheet date and that are expected to apply when the
related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be
utilised.
Employee benefits
(i) Pension obligations
Group companies operate various pension schemes. The schemes are funded through
payments to insurance companies or trustee-administered funds, determined by
periodic actuarial calculations. The Group has both defined benefit and defined
contribution plans.
The liability recognised in the balance sheet in respect of defined benefit
pension plans is the present value of the defined benefit obligation at the
balance sheet date less the fair value of plan assets. The defined benefit
obligation is calculated periodically by an independent actuary. The present
value of the defined benefit obligation is determined by discounting the
estimated future cash outflows using interest rates of high-quality corporate
bonds that are denominated in the currency in which benefits will be paid, and
that have terms to maturity approximating to the terms of the related pension
liability.
Current service costs are recognised in operating costs in the income statement.
Interest cost on plan liabilities and the expected return on plan assets are
recognised in finance costs. Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are charged or credited to the
consolidated statement of recognised income and expense.
For defined contribution plans, the Group pays contributions to publicly or
privately administered pension insurance plans on a mandatory, contractual or
voluntary basis. The Group has no further payment obligations once the
contributions have been paid. The contributions are recognised as an employee
benefit expense when they are due. Prepaid contributions are recognised as an
asset to the extent that a cash refund or a reduction in the future payments is
available.
(ii) Share-based compensation
The Group operates a number of equity-settled, share-based compensation plans.
The economic cost of awarding shares and share options to employees is
recognised as an expense in the income statement equivalent to the fair value of
the benefit awarded. The fair value is determined by reference to option
pricing models, principally Binomial and Monte Carlo models. The charge is
recognised in the income statement over the vesting period of the award. At
each balance sheet date, the Group revises its estimate of the number of options
that are expected to become exercisable. Any revision to the original estimate
is reflected in the income statement with a corresponding adjustment to
equity immediately to the extent it relates to past service and the remainder
over the rest of the vesting period.
Dividend distribution
Under IAS 10 (Events after the Balance Sheet Date) dividends to holders of
equity instruments declared after the balance sheet date are not recognised as a
liability as at the balance sheet date. Dividend distribution to the Company's
shareholders is recognised in the Group's financial statements in the period in
which the dividends are declared to the Company's shareholders. Interim
dividends are recognised when paid.
Transition from UK GAAP to IFRS
TRANSITION FROM ACCOUNTING PRACTICES GENERALLY ACCEPTED IN THE UK TO
INTERNATIONAL FINANCIAL REPORTING STANDARDS
Johnson Service Group PLC previously reported the impact of the adoption of
International Financial Reporting Standards (IFRS) on the 2004 comparative
financial information in July 2005. In its 2005 Annual Report, the Group
reported its result for the year ended 31st December 2005 in accordance with UK
GAAP, following the adoption during the year of FRS 17, Retirement Benefits and
FRS 20, Share-based Payment. As a result of adopting these two standards during
2005, the 2004 UK GAAP comparative information was restated.
The reconciliations below in respect of 2004 therefore show the revised effect
of transition from the restated UK GAAP position to IFRS and consequently, the
effects of transition differ in some areas to those previously reported in the
July 2005 document.
The Group has elected a date of transition to IFRS of 27th December 2003. Set
out below, in accordance with the provisions of IFRS 1 'First-time Adoption of
International Financial Reporting Standards' are the reconciliations of total
equity and reserves and income from UK GAAP to IFRS.
RECONCILIATION OF UK GAAP PROFIT AND LOSS ACCOUNT TO IFRS INCOME STATEMENT FOR THE 26 WEEKS ENDED 25TH JUNE
2005
In accordance Effect of As restated
with UK GAAP under IFRS
25th June transition 25th June
2005 to IFRS 2005
£m £m £m
REVENUE 215.0 - 215.0
Costs recharged to customers (43.7) - (43.7)
Revenue excluding costs recharged to customers 171.3 - 171.3
OPERATING PROFIT 10.2 3.9 14.1
OPERATING PROFIT BEFORE INTANGIBLES AMORTISATION AND EXCEPTIONAL ITEMS 15.0 - 15.0
Amortisation of goodwill (5.4) 5.4 -
Amortisation of intangible assets (0.1) (1.5) (1.6)
Exceptional items 0.7 - 0.7
OPERATING PROFIT 10.2 3.9 14.1
Finance costs (net) (3.9) - (3.9)
PROFIT BEFORE TAXATION 6.3 3.9 10.2
Taxation (3.0) - (3.0)
PROFIT FOR THE PERIOD 3.3 3.9 7.2
RECONCILIATION OF NET ASSETS IN ACCORDANCE WITH UK GAAP TO NET ASSETS AS RESTATED UNDER IFRS AS AT 25TH JUNE 2005
£m £m
NET ASSETS IN ACCORDANCE WITH UK GAAP 79.3
IFRS adjustments in respect of:
Dividends 2.6
Share options -
Pensions and healthcare benefits -
Goodwill amortisation 12.5
Recognition of intangibles (2.1)
Other (3.5)
9.5
REVISED NET ASSETS AS RESTATED UNDER IFRS 88.8
RECONCILIATION OF UK GAAP BALANCE SHEET TO IFRS BALANCE SHEET AS AT 25TH JUNE 2005
In Effect of As restated
accordance under IFRS
with UK GAAP
25th June transition 25th June
2005 to IFRS 2005
£m £m £m
ASSETS
NON-CURRENT ASSETS
Goodwill 135.1 (10.2) 124.9
Intangible assets - 32.3 32.3
Property, plant and equipment 71.5 (4.1) 67.4
Rental items 27.6 - 27.6
Deferred tax assets - 14.9 14.9
234.2 32.9 267.1
CURRENT ASSETS
Inventories 29.9 - 29.9
Trade and other receivables 74.0 - 74.0
Cash and cash equivalents - - -
103.9 - 103.9
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 30.4 1.5 31.9
Other creditors and accruals 66.0 (2.5) 63.5
Current income tax liabilities 3.1 - 3.1
Borrowings 7.4 - 7.4
Derivative financial instruments - 0.2 0.2
106.9 (0.8) 106.1
NET CURRENT LIABILITIES (3.0) 0.8 (2.2)
NON-CURRENT LIABILITIES
Borrowings 110.7 0.3 111.0
Retirement benefit obligations 27.9 11.9 39.8
Deferred tax liabilities 0.1 10.6 10.7
Provisions and other non-current liabilities 13.2 1.4 14.6
151.9 24.2 176.1
NET ASSETS 79.3 9.5 88.8
EQUITY
CAPITAL AND RESERVES ATTRIBUTABLE TO THE COMPANY'S EQUITY HOLDERS
Called up share capital 5.9 - 5.9
Share premium account 10.9 - 10.9
Revaluation reserve 8.0 (8.0) -
Other reserves 2.1 (0.2) 1.9
Retained earnings 52.4 17.7 70.1
TOTAL EQUITY 79.3 9.5 88.8
RECONCILIATION OF UK GAAP PROFIT AND LOSS ACCOUNT TO IFRS INCOME STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2005
As previously Effect of As restated
reported under IFRS
under UK GAAP
31st December transition 31st
December
2005 to IFRS 2005
£m £m £m
REVENUE 431.9 - 431.9
Costs recharged to customers (68.4) - (68.4)
Revenue excluding costs recharged to customers 363.5 - 363.5
OPERATING PROFIT 19.7 12.1 31.8
OPERATING PROFIT BEFORE INTANGIBLES AMORTISATION AND EXCEPTIONAL ITEMS 36.3 - 36.3
Amortisation of goodwill (11.4) 11.4 -
Amortisation of intangible assets (0.2) (3.7) (3.9)
Exceptional items (5.0) 4.4 (0.6)
OPERATING PROFIT 19.7 12.1 31.8
Exceptional items 4.4 (4.4) -
Finance costs (net) (8.4) 0.2 (8.2)
PROFIT BEFORE TAXATION 15.7 7.9 23.6
Taxation (6.5) (0.1) (6.6)
PROFIT FOR THE PERIOD 9.2 7.8 17.0
RECONCILIATION OF NET ASSETS PREVIOUSLY REPORTED UNDER UK GAAP TO NET ASSETS AS RESTATED UNDER IFRS AS AT 31ST
DECEMBER 2005
£m £m
NET ASSETS AS PREVIOUSLY REPORTED UNDER UK GAAP 70.3
IFRS adjustments in respect of:
Dividends 8.8
Share options -
Pensions and healthcare benefits -
Goodwill amortisation 18.5
Recognition of intangibles (4.2)
Other (3.5)
19.6
REVISED NET ASSETS AS RESTATED UNDER IFRS 89.9
RECONCILIATION OF UK GAAP BALANCE SHEET TO IFRS BALANCE SHEET AS AT 31ST DECEMBER 2005
As Effect of As restated
previously under IFRS
reported
under UK
GAAP
31st transition 31st December
December
2005 to IFRS 2005
£m £m £m
ASSETS
NON-CURRENT ASSETS
Goodwill 156.0 (15.3) 140.7
Intangible assets - 50.6 50.6
Property, plant and equipment 77.6 (9.6) 68.0
Rental items 30.1 - 30.1
Deferred tax assets - 17.9 17.9
263.7 43.6 307.3
CURRENT ASSETS
Inventories 30.2 - 30.2
Trade and other receivables 65.0 - 65.0
Derivative financial instruments - 0.2 0.2
Cash and cash equivalents 7.5 - 7.5
102.7 0.2 102.9
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 26.9 - 26.9
Other creditors and accruals 68.3 (7.2) 61.1
Current income tax liabilities 2.7 - 2.7
Borrowings 2.1 - 2.1
Derivative financial instruments - 0.2 0.2
100.0 (7.0) 93.0
NET CURRENT ASSETS 2.7 7.2 9.9
NON-CURRENT LIABILITIES
Borrowings 142.4 0.2 142.6
Retirement benefit obligations 35.3 15.1 50.4
Deferred tax liabilities 0.6 14.0 14.6
Provisions and other non-current liabilities 17.8 1.9 19.7
196.1 31.2 227.3
NET ASSETS 70.3 19.6 89.9
EQUITY
CAPITAL AND RESERVES ATTRIBUTABLE TO THE COMPANY'S EQUITY HOLDERS
Called up share capital 5.9 - 5.9
Share premium account 11.9 - 11.9
Revaluation reserve 6.3 (6.3) -
Other reserves 2.1 - 2.1
Retained earnings 44.1 25.9 70.0
TOTAL EQUITY 70.3 19.6 89.9
RECONCILIATION OF UK GAAP PROFIT AND LOSS ACCOUNT TO IFRS INCOME STATEMENT FOR THE 52 WEEKS ENDED 25TH
DECEMBER 2004
As previously Effect of As restated
reported under IFRS
under UK GAAP transition 25th
25th December December
2004 to IFRS 2004
£m £m £m
Restated
REVENUE 364.0 (0.3) 363.7
Costs recharged to customers (86.0) - (86.0)
Revenue excluding costs recharged to customers 278.0 (0.3) 277.7
OPERATING PROFIT 20.9 6.4 27.3
OPERATING PROFIT BEFORE INTANGIBLES AMORTISATION AND EXCEPTIONAL ITEMS 30.1 (0.2) 29.9
Amortisation of goodwill (7.0) 7.0 -
Amortisation of intangible assets (0.2) (0.4) (0.6)
Exceptional items (2.0) - (2.0)
OPERATING PROFIT 20.9 6.4 27.3
Finance costs (net) (5.5) - (5.5)
PROFIT BEFORE TAXATION 15.4 6.4 21.8
Taxation (6.3) 0.7 (5.6)
PROFIT FOR THE PERIOD 9.1 7.1 16.2
RECONCILIATION OF NET ASSETS PREVIOUSLY REPORTED UNDER UK GAAP TO NET ASSETS AS RESTATED UNDER IFRS AS AT 25TH
DECEMBER 2004
£m £m
NET ASSETS AS PREVIOUSLY REPORTED UNDER UK GAAP 80.5
IFRS adjustments in respect of:
Dividends 8.2
Share options -
Pensions and healthcare benefits (0.3)
Goodwill amortisation 7.0
Recognition of intangibles (0.4)
Other (3.2)
11.3
REVISED NET ASSETS AS RESTATED UNDER IFRS 91.8
RECONCILIATION OF UK GAAP BALANCE SHEET TO IFRS BALANCE SHEET AS AT 25TH DECEMBER 2004
As Effect of As restated
previously under IFRS
reported
under UK
GAAP
25th transition 25th December
December
2004 to IFRS 2004
£m £m £m
ASSETS Restated
NON-CURRENT ASSETS
Goodwill 111.4 (3.1) 108.3
Intangible assets - 16.3 16.3
Property, plant and equipment 68.3 (2.3) 66.0
Rental items 24.5 - 24.5
Deferred tax assets - 12.9 12.9
204.2 23.8 228.0
CURRENT ASSETS
Inventories 19.8 - 19.8
Trade and other receivables 54.3 - 54.3
Cash and cash equivalents 4.5 - 4.5
78.6 - 78.6
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 25.1 - 25.1
Other creditors and accruals 56.7 (6.6) 50.1
Current income tax liabilities 2.0 - 2.0
Borrowings 4.2 - 4.2
88.0 (6.6) 81.4
NET CURRENT LIABILITIES (9.4) 6.6 (2.8)
NON-CURRENT LIABILITIES
Borrowings 74.5 0.2 74.7
Retirement benefit obligations 23.9 10.5 34.4
Deferred tax liabilities 0.3 6.5 6.8
Provisions and other non-current liabilities 15.6 1.9 17.5
114.3 19.1 133.4
NET ASSETS 80.5 11.3 91.8
EQUITY
CAPITAL AND RESERVES ATTRIBUTABLE TO THE COMPANY'S EQUITY HOLDERS
Called up share capital 5.8 - 5.8
Share premium account 9.5 - 9.5
Revaluation reserve 8.0 (8.0) -
Other reserves 2.1 - 2.1
Retained earnings 55.1 19.3 74.4
TOTAL EQUITY 80.5 11.3 91.8
RECONCILIATION OF NET ASSETS PREVIOUSLY REPORTED UNDER UK GAAP TO NET ASSETS AS RESTATED UNDER IFRS AS AT 27TH
DECEMBER 2003
£m £m
NET ASSETS AS PREVIOUSLY REPORTED UNDER UK GAAP 104.9
IFRS adjustments in respect of:
Dividends 7.8
Share options 0.3
Pensions and healthcare benefits (25.6)
Goodwill amortisation -
Recognition of intangibles -
Other (3.9)
(21.4)
REVISED NET ASSETS AS RESTATED UNDER IFRS 83.5
RECONCILIATION OF UK GAAP BALANCE SHEET TO IFRS BALANCE SHEET AS AT 27TH DECEMBER 2003
As Effect of As restated
previously under IFRS
reported
under UK
GAAP
27th transition 27th December
December
2003 to IFRS 2003
£m £m £m
ASSETS
NON-CURRENT ASSETS
Goodwill 89.8 (0.7) 89.1
Intangible assets - 1.3 1.3
Property, plant and equipment 64.2 (0.6) 63.6
Rental items 21.4 - 21.4
Deferred tax assets - 12.9 12.9
175.4 12.9 188.3
CURRENT ASSETS
Inventories 8.8 - 8.8
Trade and other receivables 53.5 (5.8) 47.7
Cash and cash equivalents 2.2 - 2.2
64.5 (5.8) 58.7
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 12.8 - 12.8
Other creditors and accruals 55.5 (6.6) 48.9
Current income tax liabilities 2.4 - 2.4
Borrowings 0.3 - 0.3
71.0 (6.6) 64.4
NET CURRENT LIABILITIES (6.5) 0.8 (5.7)
NON-CURRENT LIABILITIES
Borrowings 45.3 0.3 45.6
Retirement benefit obligations 3.8 30.7 34.5
Deferred tax liabilities 0.7 2.3 3.0
Provisions and other non-current liabilities 14.2 1.8 16.0
64.0 35.1 99.1
NET ASSETS 104.9 (21.4) 83.5
EQUITY
CAPITAL AND RESERVES ATTRIBUTABLE TO THE COMPANY'S EQUITY HOLDERS
Called up share capital 5.7 - 5.7
Share premium account 8.0 - 8.0
Revaluation reserve 8.5 (8.5) -
Other reserves 2.1 - 2.1
Retained earnings 80.6 (12.9) 67.7
TOTAL EQUITY 104.9 (21.4) 83.5
RECONCILIATION OF CASH FLOWS FOR THE 26 WEEKS ENDED 25TH JUNE 2005
In accordance Effect of As restated
with UK GAAP transition under IFRS
25th June to IFRS 25th June
2005 2005
£m £m £m
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation 6.3 3.9 10.2
Adjustments for:
Finance income and expense 3.9 - 3.9
Depreciation and amortisation 18.1 (3.9) 14.2
(Increase) / decrease in net working capital (7.8) - (7.8)
Profit on sale of fixed assets (2.9) - (2.9)
Other non-cash movements 0.2 - 0.2
Cash generated from operations 17.8 - 17.8
The adoption of IFRS has had no further impact on the June 2005 cash flow
position of the Group, hence only the movements in the reconciliation of profit
before taxation to cash generated from operations have been disclosed.
RECONCILIATION OF CASH FLOWS FOR THE YEAR ENDED 31ST DECEMBER 2005
As previously Effect of As restated
reported transition under IFRS
under UK GAAP 31st
31st to IFRS December
December 2005 2005
£m £m £m
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation 15.7 7.9 23.6
Adjustments for:
Finance income and expense 8.4 (0.2) 8.2
Depreciation and amortisation 39.1 (7.7) 31.4
(Increase) / decrease in net working capital (3.4) - (3.4)
Profit on sale of fixed assets (6.3) - (6.3)
Other non-cash movements (0.3) - (0.3)
Cash generated from operations 53.2 - 53.2
The adoption of IFRS has had no further impact on the December 2005 cash flow
position of the Group, hence only the movements in the reconciliation of profit
before taxation to cash generated from operations have been disclosed.
RECONCILIATION OF CASH FLOWS FOR THE 52 WEEKS ENDED 25TH DECEMBER 2004
As previously Effect of As restated
reported transition under IFRS
under UK GAAP 25th
25th to IFRS December
December 2004 2004
£m £m £m
Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation 15.4 6.4 21.8
Adjustments for:
Finance income and expense 5.5 - 5.5
Depreciation and amortisation 29.4 (6.6) 22.8
(Increase) / decrease in net working capital (3.9) 0.2 (3.7)
Profit on sale of fixed assets (0.4) - (0.4)
Other non-cash movements (1.1) - (1.1)
Cash generated from operations 44.9 - 44.9
The adoption of IFRS has had no further impact on the December 2004 cash flow
position of the Group, hence only the movements in the reconciliation of profit
before taxation to cash generated from operations have been disclosed.
This information is provided by RNS
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