TIDMDVSG
RNS Number : 7313R
Davis Service Group PLC
27 August 2010
27th
August 2010
THE DAVIS SERVICE GROUP PLC
Interim results announcement
for the six months ended 30th June 2010
Financial Highlights
+---------------------------------+----------+------------------------------------------+
| | | |
| Revenue | | Up 1% to GBP488.5 million (first half |
| | | 2009: GBP481.5 million) |
+---------------------------------+----------+------------------------------------------+
| | | |
| Adjusted operating profit* | | Up 5% to GBP54.8 million (GBP52.0 |
| | | million) |
+---------------------------------+----------+------------------------------------------+
| Adjusted operating margin* | | |
| | | Up 40bps to 11.2% (10.8%) |
+---------------------------------+----------+------------------------------------------+
| Adjusted profit before tax* | | |
| | | Up 2% to GBP41.0 million (GBP40.2 |
| | | million) |
+---------------------------------+----------+------------------------------------------+
| Adjusted earnings per share* | | |
| | | Up 3% to 17.7p (17.2p) |
+---------------------------------+----------+------------------------------------------+
| Free cash flow | | |
| | | Up 47% to GBP37.9 million (GBP25.8 |
| | | million) |
+---------------------------------+----------+------------------------------------------+
| | | |
| Interim dividend per share | | Maintained at 6.5p (6.5p) |
+---------------------------------+----------+------------------------------------------+
| Profit before taxation | | |
| | | Down 1% to GBP28.8 million (GBP29.2 |
| | | million) |
+---------------------------------+----------+------------------------------------------+
| | | |
| Basic earnings per share | | Up 4% to 12.5p (12.0p) |
+---------------------------------+----------+------------------------------------------+
* before GBP0.9m (GBP2.7m) exceptional charges and GBP11.3m (GBP8.3m)
amortisation of customer contracts.
Operational Highlights
· Nordic region:
o Revenue up 4% to GBP171.9m (GBP164.5m)
o Adjusted operating profit up 10% at GBP25.3m (GBP23.1m)
o Margin increase in Norway and Sweden with signs of economic improvement
· Continent region:
o Revenue down 2% to GBP121.0m (GBP123.0m)
o Adjusted operating profit broadly maintained at GBP15.4m (GBP15.5m)
o Margin improvement in the workwear and facilities businesses
· UK and Ireland:
o Revenue up 1% to GBP195.6m (GBP194.0m)
o Adjusted operating profit up 6% to GBP17.4m (GBP16.4m)
o 230bps margin improvement in textile maintenance
Christopher Kemball, Chairman of Davis Service Group, commented:
"The group has made good progress during the period. We are particularly
pleased that our cost management actions have improved our operating margins and
that the business has delivered strong free cash flow.
"We see current trading conditions continuing into the second half of the year
giving the Board confidence in the outturn for the full year. Our priorities
remain to improve our operational efficiency, to deliver strong cash flow and to
maintain a robust balance sheet.
"Looking forward we have a well established and well invested operating platform
and the strategic review we are undertaking confirms the growth opportunities
available to the group by building on this. We intend to deliver accelerated
sales growth, to consolidate further our market leading positions and to enhance
returns through greater capital efficiency"
For further information contact:
The Davis Service Group Plc
Financial Dynamics
Peter Ventress, Chief Executive
Richard Mountain
Kevin Quinn, Finance Director
Telephone 020 7269 7291
Telephone 020 7291 (today until 12 noon)
Telephone 020 7259 6663 (thereafter)
Analyst Meeting
The company will be presenting to a meeting of analysts at 09.30am today. A
live audiocast of the presentation and questions will be available on the
company's website on www.dsgplc.co.uk. Questions will only be taken at the
meeting.
Results for the six months ended 30th June 2010
We are pleased to report that the group has continued to make good progress
during the period. Our textile maintenance businesses delivered a one
percentage point improvement in operating margin compared with the same period
of 2009 and after accounting for the loss in Clinical Solutions and
Decontamination and central costs, we have seen a 5% improvement in adjusted
operating profit to GBP54.8 million (GBP52.0 million). Our free cash flow was
47% stronger than last year at GBP37.9 million (2009: GBP25.8 million). This
represented a 127% (87%) conversion of our adjusted profit after taxation.
Results
Revenue increased to GBP488.5 million in the period, up 1% (GBP481.5 million).
Adjusted operating profit (before exceptional items and amortisation of customer
contracts) was GBP54.8 million, up from the GBP52.0 million last year. Both
revenue and adjusted operating profit growth include only a small impact from
exchange rates, although the Euro has progressively weakened against Sterling
since the start of the year. Our net finance expense was GBP13.8 million, an
increase on the GBP11.8 million last year as a result of the refinancing we did
in November 2009 to extend the maturity of our funding; this has offset the
benefit of the improved cash flow. We expect the interest charge to be slightly
lower in the second half if current interest rates prevail. Adjusted profit
before taxation was GBP41.0 million, 2% above last year. Adjusted earnings per
share were up 3% to 17.7 pence (17.2 pence). Our effective tax rate on adjusted
profit before taxation was 26.6% and we expect the tax rate for the full year to
be similar.
During the period we incurred net exceptional costs of GBP0.9 million. These
included restructuring costs of GBP0.5 million, relating primarily to the
closure of 3 plants and associated redundancy cost following the acquisition of
the ISS business in Norway and we expect to incur a further GBP1.0 million in
the second half on completing this integration. In addition, we have incurred
acquisition costs of GBP0.4 million, which are expensed to the income statement
following a change in accounting requirement (IFRS 3 revised). Amortisation of
acquired customer contracts was GBP11.3 million compared with GBP8.3 million
last year. Operating profit after these items was GBP42.6 million (GBP41.0
million) and profit before taxation was GBP28.8 million (GBP29.2 million).
Basic earnings per share were up 4% to 12.5 pence compared with 12.0 pence in
the first half of 2009.
Our net capital expenditure was GBP73.1 million (GBP72.8 million). This
includes the investment in our new mat plant in Stockholm which was opened in
May 2010 and the new workwear and mat plant in Czech Republic, opened in March
2010. The investment in textiles of GBP53.2 million (GBP51.6 million)
represented 91% (84%) of the related depreciation. Overall, we expect net
capital expenditure to be similar to depreciation in the second half of the
year.
Free cash flow was GBP37.9 million (GBP25.8 million). We have contributed
GBP4.0 million to the UK pension fund in the period and intend to contribute a
further GBP2.0 million in the second half of the year in advance of completion
of the triennial valuation, which is ongoing. At 30th June 2010 the accounting
deficit for the group was GBP42.5 million (GBP32.9 million at the end of 2009).
Acquisition consideration including deferred consideration and financial
liabilities assumed, amounted to GBP47.6 million, including GBP41.6 million for
the two acquisitions we announced in January relating to mat services in Norway
and Sweden and to workwear in Germany. The impact of exchange rates increased
net borrowings by GBP11.6 million and, after dividends paid of GBP22.9 million,
net borrowings at 30th June 2010 were GBP528.6 million (31st December 2009:
GBP484.9 million). The total facilities available to the group are GBP945
million with our revolving credit facilities totalling GBP590 million committed
to June 2012 and our private placement notes extending from 2014 to 2021. We
have GBP412.6 million of fixed rate borrowings with an average rate of 4.8%.
The interim financial information for the six months ended 30th June 2010 has
been reviewed by PricewaterhouseCoopers LLP.
Dividend
The Board is recommending an interim dividend at the same level as last year of
6.5 pence. The dividend will be paid on 14th October 2010 to shareholders on
the register at the close of business on 17th September 2010.
Nordic Region
Performance
Revenue increased 4% to GBP171.9 million (GBP164.5 million) and adjusted
operating profit increased 10% to GBP25.3 million (GBP23.1 million). In
constant currency and excluding acquisition benefits, revenue was down 2% but
adjusted operating profit was up 1%. The adjusted operating margin increased to
14.7% from 14.0%.
The pace of economic recovery differs by country across the region. Norway was
the stand out country, delivering good organic revenue growth and higher
margins. This business is also benefitting from the integration of the mat
services acquisition we made at the end of the last year. The recession has
been shorter lived in Norway than in most other countries and the economy is now
experiencing positive momentum.
Confidence is slowly starting to return to the Swedish economy after a very
difficult 2009. The average number of wearers per contract for our textile
rental business stabilised at the start of the year after a significant decline
in 2009, and has seen some improvement in the second quarter. Björnkläder, our
direct sale business, saw a solid improvement in revenue in the first half. In
both these parts of the business we saw stronger margins than in the first half
of 2009.
As previously indicated, our Danish business is seeing more difficult market
conditions, having entered recession later. Although we have a good and
resilient customer base and made some good customer gains, revenue was lower in
the first half of the year compared with 2009.
The Baltic States continue to experience very difficult market conditions with
revenue down and we reported a small loss overall.
Outlook
The pricing environment in the region remains robust overall and sales of new
contracts are encouraging. As the economies of the countries in which we
operate show more progress we expect to see an increase in the volumes per
contract, which will drive revenue growth.
Continent Region
Performance
Revenue of our Continent region decreased by 2% to GBP121.0 million (GBP123.0
million) and adjusted operating profit was similar to last year at GBP15.4
million (GBP15.5 million). In constant currency, and excluding acquisitions,
revenue was down 2% and adjusted operating profit was down 5%. The adjusted
operating margin improved to 12.7% (12.6%).
Our workwear and facilities businesses in Germany, Holland and Poland have yet
to see any significant upturn in their markets with revenue broadly flat
overall. The German business is benefiting from the acquisitions we made at the
start of the year and the integration is progressing well. Adjusted operating
profit and margin moved ahead in Holland and Poland, benefiting from good cost
control.
Our German Healthcare business continued to improve its operational focus and
capabilities but the market remains competitive and we lost further volumes with
revenue down 9% on last year. Despite this, the business held its adjusted
operating margin at 5%, the same as full year 2009, with a reduction of costs to
align with lower volumes. Should the business lose further significant volume,
we may be required to take further restructuring action to improve margins.
The Austrian Healthcare business performed well in a stable market and our
business in Czech Republic and Slovakia is making good progress with the opening
of our new plant. We also made a small acquisition in Czech Republic which is
increasing further our local presence.
Outlook
Growth in the German economy, which drives so much of the region's prospects,
has yet to gain momentum but economic data in recent months has been more
positive. We expect to benefit when this translates into sustainable
improvement in employment, which is key to our business.
UK and Ireland
Performance
The performance of our UK Hotel and Healthcare businesses drove an excellent
first half profit conversion in textile maintenance, which showed revenue of
GBP162.3 million, down 2% on last year but with adjusted operating profit of
GBP18.1 million, up 23%. The operating margin improved 230 basis points from
8.9% to 11.2%.
Like for like volumes in the key accounts of our hotel linen business were up 4%
across the half and with the improvements to our cost base from last year, we
more than doubled our operating profit. Revenue for the division was down
slightly overall as we exited some accounts to improve the mix of business. The
pricing environment has been tough but we have been able to recover our cost
inflation.
Our healthcare linen business saw another period of good growth with more
outsourced contract wins and higher like for like volumes. The current PaSA
framework agreement, which was scheduled to end in May 2010, has been rolled
forward and is now expected to be reviewed in November 2010. We continue to
work with NHS Trusts to ensure we deliver the savings that are required in the
current environment. We believe outsourcing can deliver the greatest savings
where in-house operations are transferred.
Workwear in the UK continued to be challenging but we managed well with revenue
and operating profit only slightly down. In Ireland, the economy was very
difficult and this was reflected in significantly lower revenue, which could
only be mitigated partially by cost cutting.
Revenue of our Clinical Solutions and Decontamination business was GBP33.3
million (GBP28.5 million) and we made an adjusted operating loss of GBP0.7
million compared with a profit of GBP1.7 million in 2009. We started up our
decontamination services towards the end of the first half of 2009 and therefore
the loss on the two principal contracts we operate of GBP2.6 million has no
comparative in 2009. We have made progress in our decontamination service and
capabilities but the efficiencies we require to make financial improvements have
not been delivered. Overall volumes remain below expectation and we are
pressing our customers to engage fully in resolving this issue, which is proving
difficult. However, our sterile consumables and theatre linen businesses saw
growth in revenue of 3% with higher profits.
Outlook
We expect hotels and healthcare to continue to deliver a strong performance in
the remainder of the year, with workwear and Ireland remaining a challenge. We
have taken some steps to improving the financial performance of our
decontamination contracts but we expect this to have only a marginal impact on
the loss rate in the second half of 2010.
Strategy Review Update
As previously indicated we are undertaking a strategic review of the group,
which is now nearing completion.
We have a well established and well invested operating platform with leading
positions in several core European markets, supported by strong and stable
operational leadership.
The scope exists for the group to build upon this robust base through a greater
degree of focus. In particular we intend to accelerate sales growth in core
markets and our chosen business segments, to further consolidate and develop
market leading positions and to enhance returns through greater capital
efficiency. Our ambition is to grow our revenue organically in excess of the
GDP of the markets we serve and to improve substantially our return on invested
capital. All of these initiatives aim to enhance the group's established
attributes of sustainable earnings growth and attractive income.
Across the group, we will focus upon capitalising on our market leadership
primarily in the higher margin workwear, facilities and, specifically in the UK,
the healthcare business. Through increased focus on sales and margin
initiatives, and redeployment of capital, we see opportunities to grow with
improved returns. Development of our hotel and restaurant businesses will be
largely confined to the UK where we see the most significant opportunities to
build on our strong position as market conditions improve.
We continue to review all the strategic options for our broader portfolio of
businesses.
We will be presenting the full findings of our strategy review and proposals for
implementation to the investment community at the beginning of November.
Outlook for the Group
We see current trading conditions continuing into the second half of the year
giving the Board confidence in the outturn for the full year. Our priorities
remain to improve our operational efficiency, to deliver strong cash flow and to
maintain a robust balance sheet.
Looking forward we have a well established and well invested operating platform
and the strategic review we are undertaking confirms the growth opportunities
available to the group to build on this. We intend to deliver accelerated sales
growth, to consolidate further our market leading positions and to enhance
returns through greater capital efficiency.
Principal Risks and Uncertainties
Details of our principal risks and uncertainties were previously disclosed on
pages 23 to 25 of the 2009 Annual Report and Accounts. Since then the risk
associated with a flu pandemic is thought to have receded. The Board now
recognises two new risks, one relating to the potential implications of the UK
Bribery Act, and the other to the consequences of a breakdown in our quality
control procedures in sterile or clean room production. Taking into account our
strategic objectives outlined on page 2 of the 2009 Annual Report and Accounts,
some or all of the principal risks and uncertainties summarised below have the
potential to impact our results or financial position during the remaining six
months of the financial year:
1 Delivering organic revenue growth
· The European economies in which the group operates do not return to
economic growth as forecast if the recovery is weaker than anticipated
· Further deterioration in market presence and/or profitability of the
German healthcare business
· Reduction in hotel volumes and pressure on pricing in the UK and Ireland
and Nordic Regions
2 Delivering on acquisitions
· Failure to deliver in accordance with the Clinical Solutions and
Decontamination business acquisition model
3 Maintaining operational efficiency
· Unforeseen loss of capacity
· One of our major textile suppliers is unexpectedly unable to meet our
textile requirements
4 Maintaining a sound financial position
· Insufficient free cash flow
· Foreign currency exposures (in particular relating to the Euro) and
interest rate volatility
· Significant increase in the liability associated with the main UK defined
benefit pension scheme
5 Maintaining health and safety and other governance matters as a priority
· Breach of health and safety regulations or lack of cleanliness of staff
and/or facilities
· Breakdown in the required quality control procedures in our sterile or
clean room production
· Adverse media publicity
· Failure to establish and maintain sufficient procedures designed to
prevent an employee or another "associated person" from offering or accepting a
bribe
6 Maintaining a motivated workforce driven by an experienced management team
· Inadequate talent management
· Inability to recruit and retain sufficiently qualified and experienced
senior management
7 Reducing our impact on the environment
· Non-compliance with Group Corporate Responsibility (CR) Policies
including Environmental Policy
· Historical environmental liabilities may exist
CONSOLIDATED INTERIM INCOME STATEMENT
For the six months ended 30th June
2010
+---------------------------------------------+-------+-----------+-----------+----------+
| | Notes | Unaudited | Unaudited | Audited |
| | | Six | Six | Year to |
| | | months to | months | 31st |
| | | 30th June | to | December |
| | | 2010 | 30th June | 2009 |
| | | GBPm | 2009 | GBPm |
| | | | GBPm | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Continuing operations | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Revenue | 3 | 488.5 | 481.5 | 970.9 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Cost of sales | | (258.3) | (261.7) | (525.2) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Gross profit | | 230.2 | 219.8 | 445.7 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Other operating income | | 0.9 | 2.5 | 3.1 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Distribution costs | | (94.2) | (92.6) | (182.2) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Administrative expenses | | (79.4) | (73.8) | (144.8) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Other operating expenses | | (14.9) | (14.9) | (36.5) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Operating profit | 3 | 42.6 | 41.0 | 85.3 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Analysed as: | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Operating profit before exceptional items | 3 | 54.8 | 52.0 | 115.3 |
| and amortisation of customer contracts and | | | | |
| intellectual property rights | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Exceptional items | 4 | (0.9) | (2.7) | (12.7) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Amortisation of customer contracts and | | (11.3) | (8.3) | (17.3) |
| intellectual property rights | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Operating profit | 3 | 42.6 | 41.0 | 85.3 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Finance expense | | (14.4) | (12.5) | (25.1) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Finance income | | 0.6 | 0.7 | 1.5 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Profit before taxation | | 28.8 | 29.2 | 61.7 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Taxation | | (7.4) | (8.5) | (15.9) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Profit for the period | | 21.4 | 20.7 | 45.8 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Profit attributable to non-controlling | | 0.3 | 0.3 | 0.7 |
| interests | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Profit attributable to equity shareholders | | 21.1 | 20.4 | 45.1 |
+---------------------------------------------+-------+-----------+-----------+----------+
| | | 21.4 | 20.7 | 45.8 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Earnings per share for profit attributable | | | | |
| to the ordinary equity holders of the | | | | |
| company, expressed in pence per share | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| - Basic and diluted | 8 | 12.5 | 12.0 | 26.6 |
+---------------------------------------------+-------+-----------+-----------+----------+
CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
For the six months
ended 30th June 2010
+----------------------------------------------+----+-----------+-----------+----------+
| | | Unaudited | Unaudited | Audited |
| | | Six | Six | Year to |
| | | months to | months | 31st |
| | | 30th June | to | December |
| | | 2010 | 30th June | 2009 |
| | | GBPm | 2009 | GBPm |
| | | | GBPm | |
+----------------------------------------------+----+-----------+-----------+----------+
| Profit for the period | | 21.4 | 20.7 | 45.8 |
+----------------------------------------------+----+-----------+-----------+----------+
| Other comprehensive (loss)/income | | | | |
+----------------------------------------------+----+-----------+-----------+----------+
| Currency translation difference, net of tax | | (23.7) | (25.1) | (4.5) |
+----------------------------------------------+----+-----------+-----------+----------+
| Actuarial losses, net of tax | | (11.5) | (13.9) | (13.4) |
+----------------------------------------------+----+-----------+-----------+----------+
| Cash flow hedges, net of tax | | 20.4 | (9.6) | (14.4) |
+----------------------------------------------+----+-----------+-----------+----------+
| Other comprehensive loss for the period, net | | (14.8) | (48.6) | (32.3) |
| of tax | | | | |
+----------------------------------------------+----+-----------+-----------+----------+
| Total comprehensive income/(loss) for the | | 6.6 | (27.9) | 13.5 |
| period | | | | |
+----------------------------------------------+----+-----------+-----------+----------+
| Total comprehensive income/(loss) | | | | |
| attributable to: | | | | |
+----------------------------------------------+----+-----------+-----------+----------+
| Equity shareholders | | 6.7 | (27.8) | 13.0 |
+----------------------------------------------+----+-----------+-----------+----------+
| Non-controlling interests | | (0.1) | (0.1) | 0.5 |
+----------------------------------------------+----+-----------+-----------+----------+
CONSOLIDATED INTERIM BALANCE SHEET
As at 30th June 2010
+---------------------------------------------+-------+-----------+-----------+----------+
| | Notes | Unaudited | Unaudited | Audited |
| | | Six | Six | Year to |
| | | months to | months | 31st |
| | | 30th June | to | December |
| | | 2010 | 30th June | 2009 |
| | | GBPm | 2009 | GBPm |
| | | | GBPm | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Assets | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Goodwill | | 434.5 | 438.0 | 461.7 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Other intangible assets | | 65.2 | 45.1 | 68.0 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Property, plant and equipment | 9 | 503.3 | 518.5 | 535.3 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Assets classified as held for sale | | 1.6 | 2.4 | 1.6 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Deferred tax assets | | 14.9 | 16.5 | 30.4 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Derivative financial instruments | | 75.7 | 21.1 | 24.7 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Trade and other receivables | | 3.6 | 4.5 | 3.6 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Total non-current assets | | 1,098.8 | 1,046.1 | 1,125.3 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Inventories | | 43.5 | 39.0 | 39.9 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Income tax receivable | | 6.6 | 11.9 | 8.8 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Derivative financial instruments | | 0.5 | 0.3 | 0.2 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Trade and other receivables | | 161.2 | 158.0 | 161.0 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Cash and cash equivalents | | 75.5 | 71.8 | 272.2 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Total current assets | | 287.3 | 281.0 | 482.1 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Liabilities | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Interest bearing loans and borrowings | | (3.0) | (3.2) | (3.2) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Income tax payable | | (10.9) | (19.8) | (17.8) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Derivative financial instruments | | (1.3) | (0.1) | (3.4) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Trade and other payables | | (186.5) | (175.4) | (206.0) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Provisions | 10 | (2.7) | (4.5) | (5.2) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Total current liabilities | | (204.4) | (203.0) | (235.6) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Net current assets | | 82.9 | 78.0 | 246.5 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Interest bearing loans and borrowings | | (601.1) | (548.2) | (753.9) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Derivative financial instruments | | (32.2) | (36.4) | (42.3) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Pension scheme deficits | 14 | (42.5) | (36.5) | (32.9) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Deferred tax liabilities | | (60.9) | (54.2) | (62.6) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Trade and other payables | | (1.7) | - | (1.8) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Provisions | 10 | (2.5) | (2.5) | (2.5) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Total non-current liabilities | | (740.9) | (677.8) | (896.0) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Net assets | | 440.8 | 446.3 | 475.8 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Equity | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Share capital | | 51.5 | 51.4 | 51.5 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Share premium | | 96.7 | 95.6 | 96.4 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Other reserves | | 17.2 | 1.5 | (3.3) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Capital redemption reserve | | 150.9 | 150.9 | 150.9 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Retained earnings | | 120.9 | 143.6 | 176.5 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Total shareholders' equity | | 437.2 | 443.0 | 472.0 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Minority interest in equity | | 3.6 | 3.3 | 3.8 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Total equity | | 440.8 | 446.3 | 475.8 |
+---------------------------------------------+-------+-----------+-----------+----------+
CONSOLIDATED INTERIM CASH FLOW STATEMENT
For the six months ended 30th June
2010
+---------------------------------------------+-------+-----------+-----------+----------+
| | Notes | Unaudited | Unaudited | Audited |
| | | Six | Six | Year to |
| | | months to | months | 31st |
| | | 30th June | to | December |
| | | 2010 | 30th June | 2009 |
| | | GBPm | 2009 | GBPm |
| | | | GBPm | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Cash flows from operating activities | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Cash generated from operations | 11 | 139.4 | 124.7 | 270.5 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Interest paid | | (14.1) | (12.9) | (25.1) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Interest received | | 0.6 | 0.7 | 1.5 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Income tax paid | | (14.9) | (13.9) | (24.2) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Net cash generated from operating | | 111.0 | 98.6 | 222.7 |
| activities | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Cash flows from investing activities | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Acquisition of subsidiaries, net of cash | | (35.9) | (5.5) | (7.5) |
| acquired | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Purchase of property, plant and equipment | | (73.8) | (77.7) | (149.7) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Proceeds from the sale of property, plant | 11 | 2.9 | 6.9 | 11.2 |
| and equipment | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Purchase of intangible assets | | (2.2) | (2.0) | (7.5) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Special pension contribution payments | | (4.0) | (2.0) | (6.0) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Net cash used in investing activities | | (113.0) | (80.3) | (159.5) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Cash flows from financing activities | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Net proceeds from issue of ordinary share | | 0.3 | - | 0.9 |
| capital | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Purchase of treasury shares and own shares | | (2.5) | (0.8) | (3.4) |
| by the Employee Benefit Trust | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Drawdown of borrowings | | 19.2 | 20.0 | 199.3 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Repayment of borrowings | | (181.0) | (7.6) | (22.8) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Repayment of finance leases/hire purchase | | (2.3) | (2.0) | (4.1) |
| liabilities | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Dividends paid to Company's shareholders | 7 | (22.9) | (22.9) | (33.9) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Dividends paid to minority interests | | (0.1) | - | (0.1) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Net cash used in financing activities | | (189.3) | (13.3) | 135.9 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Net (decrease)/increase in cash | | (191.3) | 5.0 | 199.1 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Cash at beginning of period | | 272.2 | 72.5 | 72.5 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Exchange (losses)/gains on cash | | (5.4) | (5.7) | 0.6 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Cash at end of period | | 75.5 | 71.8 | 272.2 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Free cash flow | | 37.9 | 25.8 | 76.7 |
+---------------------------------------------+-------+-----------+-----------+----------+
| Analysis of free cash flow: | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Net cash generated from operating | | 111.0 | 98.6 | 222.7 |
| activities | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Purchase of property, plant and equipment | | (73.8) | (77.7) | (149.7) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Proceeds from the sale of property, plant | | 2.9 | 6.9 | 11.2 |
| and equipment | | | | |
+---------------------------------------------+-------+-----------+-----------+----------+
| Purchase of intangible assets | | (2.2) | (2.0) | (7.5) |
+---------------------------------------------+-------+-----------+-----------+----------+
| Free cash flow | | 37.9 | 25.8 | 76.7 |
+---------------------------------------------+-------+-----------+-----------+----------+
CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY
As at 30th June 2010
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| | Attributable to shareholders of the | | |
| | company | | |
+----------------------------+---------------------------------------------------------------+----------+--------+
| | Share | Share | Other | Capital | Retained | Total | Minority | Total |
| | capital | premium | reserves | redemption | earnings | GBPm | interest | equity |
| | GBPm | GBPm | GBPm | reserve | GBPm | | GBPm | GBPm |
| | | | | GBPm | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| At 1st January 2009 | 51.4 | 95.6 | 11.1 | 150.9 | 183.7 | 492.7 | 3.4 | 496.1 |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Profit for the period | - | - | - | - | 20.4 | 20.4 | 0.3 | 20.7 |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Other comprehensive | | | | | | | | |
| income: | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Actuarial losses | - | - | - | - | (19.4) | (19.4) | - | (19.4) |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Cash flow hedges | - | - | (13.3) | - | - | (13.3) | - | (13.3) |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Currency translation | - | - | - | - | (26.1) | (26.1) | (0.4) | (26.5) |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Tax on items taken | - | - | 3.7 | - | 6.9 | 10.6 | - | 10.6 |
| directly to equity | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Transactions with owners: | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Purchase of own shares by | - | - | - | - | (0.8) | (0.8) | - | (0.8) |
| the Employee Benefit Trust | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Dividends | - | - | - | - | (22.9) | (22.9) | - | (22.9) |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Value of employee service | - | - | - | - | 1.8 | 1.8 | - | 1.8 |
| for share option schemes | | | | | | | | |
| and share awards | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| At 30th June 2009 | 51.4 | 95.6 | 1.5 | 150.9 | 143.6 | 443.0 | 3.3 | 446.3 |
| (unaudited) | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Comprehensive income: | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Profit for the period | - | - | - | - | 24.7 | 24.7 | 0.4 | 25.1 |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Other comprehensive | | | | | | | | |
| income: | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Actuarial gains | - | - | - | - | 0.6 | 0.6 | - | 0.6 |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Cash flow hedges | - | - | (6.7) | - | - | (6.7) | - | (6.7) |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Currency translation | - | - | - | - | 15.9 | 15.9 | 0.2 | 16.1 |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Tax on items taken | - | - | 1.9 | - | 4.6 | 6.5 | - | 6.5 |
| directly to equity | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Transactions with owners: | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Issue of share capital for | 0.1 | 0.8 | - | - | - | 0.9 | - | 0.9 |
| share option schemes | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Purchase of own shares by | - | - | - | - | (2.6) | (2.6) | - | (2.6) |
| the Employee Benefit Trust | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Dividends | - | - | - | - | (11.0) | (11.0) | - | (11.0) |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Value of employee service | - | - | - | - | 0.7 | 0.7 | - | 0.7 |
| for share option schemes | | | | | | | | |
| and share awards | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| At 31st December 2009 | 51.5 | 96.4 | (3.3) | 150.9 | 176.5 | 472.0 | 3.8 | 475.8 |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Comprehensive income: | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Profit for the period | - | - | - | - | 21.1 | 21.1 | 0.3 | 21.4 |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Other comprehensive | | | | | | | | |
| income: | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Actuarial losses | - | - | - | - | (15.5) | (15.5) | - | (15.5) |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Cash flow hedges | - | - | 28.4 | - | - | 28.4 | - | 28.4 |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Currency translation | - | - | - | - | (33.0) | (33.0) | (0.4) | (33.4) |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Tax on items taken | - | - | (7.9) | - | (5.7) | (13.6) | - | (13.6) |
| directly to equity | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Transactions with owners: | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Issue of share capital for | - | 0.3 | - | - | - | 0.3 | - | 0.3 |
| share option schemes | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Purchase of own shares by | - | - | - | - | (2.2) | (2.2) | - | (2.2) |
| the Employee Benefit Trust | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Dividends | - | - | - | - | (22.9) | (22.9) | (0.1) | (23.0) |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| Value of employee service | - | - | - | - | 2.6 | 2.6 | - | 2.6 |
| for share option schemes | | | | | | | | |
| and share awards | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
| At 30th June 2010 | 51.5 | 96.7 | 17.2 | 150.9 | 120.9 | 437.2 | 3.6 | 440.8 |
| (unaudited) | | | | | | | | |
+----------------------------+---------+---------+----------+------------+----------+--------+----------+--------+
The number of treasury shares held by the company as at 30th June 2010 was
1,025,000 (30th June 2009: 1,025,000).
In addition, the number of own shares held in the Employee Benefit Trust as at
30th June 2010 was 1,765,938 (30th June 2009: 841,873).
NOTES TO THE INTERIM RESULTS
1 Basis of preparation
This condensed consolidated interim financial information does not comprise
statutory accounts within the meaning of Section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31st December 2009 were approved by the
Board of directors on 25th February 2010 and delivered to the Registrar of
Companies. The auditors' report on those accounts was unqualified, did not
contain an emphasis of matter paragraph and did not contain a statement under
Section 498 of the Companies Act 2006.
This condensed consolidated interim financial information has been reviewed, not
audited.
This condensed consolidated interim financial information for the six months
ended 30th June 2010 has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim
financial reporting' as adopted by the European Union. The condensed
consolidated interim financial information should be read in conjunction with
the annual financial statements for the year ended 31st December 2009, which
have been prepared in accordance with IFRSs as adopted by the European Union.
2 Accounting policies
Except as described below, the accounting policies applied are consistent with
those of the annual financial statements for the year ended 31st December 2009,
as described in those annual financial statements.
The following new standards and amendments to standards are mandatory for the
first time for the financial year beginning 1 January 2010:
· IFRS 3 (revised), 'Business combinations', and consequential amendments
to IAS 27, 'Consolidated and separate financial statements', IAS 28,
'Investments in associates', and IAS 31, 'Interests in joint ventures'. The
adoption of these standards has not had a material effect on the financial
statements of the group except for the treatment of business combinations. The
most significant changes to the group's previous accounting policies for
business combinations are:
- All transactions costs are expensed
- All consideration to purchase a business is recorded at fair value at the
acquisition date; any subsequent changes are recognised in the income statement.
The following new standards, amendments to standards and interpretations are
mandatory for the first time for the financial year beginning 1 January 2010,
but have no material impact on the group:
· IFRIC 17, 'Distribution of non-cash assets to owners'.
· IFRIC 18, 'Transfers of assets from customers'.
The following new standards, amendments to standards and interpretations have
been issued, but are not effective for the financial year beginning 1 January
2010 and have not been early adopted. Their expected impact is still being
assessed in detail by management:
· IFRS 9, 'Financial Instruments'
· IAS 24 (revised), 'Related party disclosures'
· IAS 32 (amendment), 'Classification of rights issue'
· IFRIC 14 (amendment), 'Prepayments of a minimum funding
requirement'.
· IFRIC 19, 'Extinguishing financial liabilities with equity
instruments'.
3 Segmental information
The basis of segmentation and the basis of measurement of segment profit or loss
are consistent with the annual financial statements for the year ended 31st
December 2009. The segment results for the six months ended 30th June 2010 are
as follows:
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Continuing | Textile | Textile | Textile | Total | Clinical | Unallocated | Group |
| operations | maintenance | maintenance | maintenance | textile | solutions | GBPm | GBPm |
| | Nordic | Continent | UK and | maintenance | and | | |
| | GBPm | GBPm | Ireland | GBPm | decontamination | | |
| | | | GBPm | | GBPm | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Total segment | 172.3 | 122.4 | 162.3 | 457.0 | 33.7 | - | 490.7 |
| revenue | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Inter-segment | (0.4) | (1.4) | - | (1.8) | (0.4) | - | (2.2) |
| revenue | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Revenue from | 171.9 | 121.0 | 162.3 | 455.2 | 33.3 | - | 488.5 |
| external | | | | | | | |
| customers | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Operating | 25.3 | 15.4 | 18.1 | 58.8 | (0.7) | (3.3) | 54.8 |
| profit before | | | | | | | |
| exceptional | | | | | | | |
| items and | | | | | | | |
| amortisation | | | | | | | |
| of customer | | | | | | | |
| contracts and | | | | | | | |
| intellectual | | | | | | | |
| property | | | | | | | |
| rights | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Exceptional | (0.1) | (0.8) | - | (0.9) | - | - | (0.9) |
| items | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Amortisation | (7.1) | (2.8) | (1.4) | (11.3) | - | - | (11.3) |
| of customer | | | | | | | |
| contracts and | | | | | | | |
| intellectual | | | | | | | |
| property | | | | | | | |
| rights | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Segment | 18.1 | 11.8 | 16.7 | 46.6 | (0.7) | (3.3) | 42.6 |
| result | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Net finance | | | | | | | (13.8) |
| expense | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Profit before | | | | | | | 28.8 |
| taxation | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Taxation | | | | | | | (7.4) |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Profit for | | | | | | | 21.4 |
| the period | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Profit | | | | | | | 0.3 |
| attributable | | | | | | | |
| to minority | | | | | | | |
| interests | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Profit | | | | | | | 21.1 |
| attributable | | | | | | | |
| to equity | | | | | | | |
| shareholders | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Capital | 28.8 | 39.6 | 23.7 | 92.1 | 1.7 | 0.5 | 94.2 |
| expenditure | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Depreciation | 24.1 | 23.6 | 30.8 | 78.5 | 2.2 | 0.1 | 80.8 |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Amortisation | 8.3 | 3.2 | 1.8 | 13.3 | 0.4 | - | 13.7 |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
Capital expenditure comprises additions to property, plant and equipment and
intangible assets, including additions resulting from acquisitions through
business combinations. The acquisition in the period was in the Textile
maintenance Continent segment.
Sales between segments are carried out at arm's length. The company is domiciled
in the UK. Revenue from external customers in the UK is GBP179.6 million (2009:
GBP175.0 million), and the total revenue from external customers from other
countries is GBP308.9 million (2009: GBP306.5 million).
Analysis of revenue by category:
+-------------------------------------------------------------+--------+--------+
| | Six | Six |
| | months | months |
| | to 30 | to 30 |
| | June | June |
| | 2010 | 2009 |
| | GBPm | GBPm |
+-------------------------------------------------------------+--------+--------+
| Sales of goods | 27.4 | 25.3 |
+-------------------------------------------------------------+--------+--------+
| Revenue from services | 461.1 | 456.2 |
+-------------------------------------------------------------+--------+--------+
| | 488.5 | 481.5 |
+-------------------------------------------------------------+--------+--------+
3 Segmental information continued
The segment results for the six months ended 30th June 2009 were as follows:
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Continuing | Textile | Textile | Textile | Total | Clinical | Unallocated | Group |
| operations | maintenance | maintenance | maintenance | textile | solutions | GBPm | GBPm |
| | Nordic | Continent | UK and | maintenance | and | | |
| | GBPm | GBPm | Ireland | GBPm | decontamination | | |
| | | | GBPm | | GBPm | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Total segment | 164.9 | 123.7 | 165.5 | 454.1 | 28.8 | - | 482.9 |
| revenue | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Inter-segment | (0.4) | (0.7) | - | (1.1) | (0.3) | - | (1.4) |
| revenue | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Revenue from | 164.5 | 123.0 | 165.5 | 453.0 | 28.5 | - | 481.5 |
| external | | | | | | | |
| customers | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Operating | 23.1 | 15.5 | 14.7 | 53.3 | 1.7 | (3.0) | 52.0 |
| profit before | | | | | | | |
| exceptional | | | | | | | |
| items and | | | | | | | |
| amortisation | | | | | | | |
| of customer | | | | | | | |
| contracts and | | | | | | | |
| intellectual | | | | | | | |
| property | | | | | | | |
| rights | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Exceptional | (4.5) | (0.1) | 1.9 | (2.7) | - | - | (2.7) |
| items | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Amortisation | (4.8) | (1.5) | (2.0) | (8.3) | - | - | (8.3) |
| of customer | | | | | | | |
| contracts and | | | | | | | |
| intellectual | | | | | | | |
| property | | | | | | | |
| rights | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Segment | 13.8 | 13.9 | 14.6 | 42.3 | 1.7 | (3.0) | 41.0 |
| result | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Net finance | | | | | | | (11.8) |
| expense | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Profit before | | | | | | | 29.2 |
| taxation | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Taxation | | | | | | | (8.5) |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Profit for | | | | | | | 20.7 |
| the period | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Profit | | | | | | | 0.3 |
| attributable | | | | | | | |
| to minority | | | | | | | |
| interests | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Profit | | | | | | | 20.4 |
| attributable | | | | | | | |
| to equity | | | | | | | |
| shareholders | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Capital | 22.0 | 26.7 | 22.6 | 71.3 | 12.0 | - | 83.3 |
| expenditure | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Depreciation | 24.1 | 24.3 | 33.4 | 81.8 | 1.8 | - | 83.6 |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
| Amortisation | 5.7 | 2.0 | 2.0 | 9.7 | 0.5 | - | 10.2 |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+--------+
The segment assets and liabilities at 30th June 2010 are as follows:
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+---------+
| | Textile | Textile | Textile | Total | Clinical | Unallocated | Group |
| | maintenance | maintenance | maintenance | textile | solutions | GBPm | GBPm |
| | Nordic | Continent | UK and | maintenance | and | | |
| | GBPm | GBPm | Ireland | GBPm | decontamination | | |
| | | | GBPm | | GBPm | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+---------+
| Total assets | 546.6 | 351.6 | 284.2 | 1,182.4 | 94.5 | 108.4 | 1,385.3 |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+---------+
| Total | 124.0 | 70.4 | 99.5 | 293.9 | 14.0 | 636.6 | 944.5 |
| liabilities | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+---------+
The segment assets and liabilities at 30th June 2009 were as follows:
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+---------+
| | Textile | Textile | Textile | Total | Clinical | Unallocated | Group |
| | maintenance | maintenance | maintenance | textile | solutions | GBPm | GBPm |
| | Nordic | Continent | UK and | maintenance | and | | |
| | GBPm | GBPm | Ireland | GBPm | decontamination | | |
| | | | GBPm | | GBPm | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+---------+
| Total assets | 523.2 | 340.5 | 286.8 | 1,150.5 | 93.7 | 82.9 | 1,327.1 |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+---------+
| Total | 119.5 | 62.8 | 108.5 | 290.8 | 11.9 | 578.1 | 880.8 |
| liabilities | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+---------+
The segment assets and liabilities at 30th December 2009 were as follows:
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+---------+
| | Textile | Textile | Textile | Total | Clinical | Unallocated | Group |
| | maintenance | maintenance | maintenance | textile | solutions | GBPm | GBPm |
| | Nordic | Continent | UK and | maintenance | and | | |
| | GBPm | GBPm | Ireland | GBPm | decontamination | | |
| | | | GBPm | | GBPm | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+---------+
| Total assets | 614.3 | 367.5 | 296.8 | 1,278.6 | 92.7 | 236.1 | 1,607.4 |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+---------+
| Total | 153.5 | 70.7 | 87.8 | 312.0 | 15.2 | 804.4 | 1,131.6 |
| liabilities | | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-----------------+-------------+---------+
Unallocated assets include segment assets for corporate entities and derivative
financial instruments.
Unallocated liabilities include segment liabilities for corporate entities and
derivative financial instruments.
4 Exceptional items
+--------------------------------------------------+--------+--------+----------+
| | Six | Six | Year to |
| | months | months | 31st |
| | to | to | December |
| | 30th | 30th | 2009 |
| | June | June | GBPm |
| | 2010 | 2009 | |
| | GBPm | GBPm | |
+--------------------------------------------------+--------+--------+----------+
| Restructuring costs | 0.5 | 2.8 | 8.7 |
+--------------------------------------------------+--------+--------+----------+
| Acquisition transaction costs | 0.4 | - | - |
+--------------------------------------------------+--------+--------+----------+
| Goodwill impairment | - | 1.6 | 6.0 |
+--------------------------------------------------+--------+--------+----------+
| Loss on property disposals | - | (1.7) | (2.0) |
+--------------------------------------------------+--------+--------+----------+
| Total | 0.9 | 2.7 | 12.7 |
+--------------------------------------------------+--------+--------+----------+
The restructuring costs relate primarily to the integration costs incurred
following acquisitions. This includes the closure of 3 plants and associated
redundancy costs. The tax credit on these was GBP0.5 million (30th June 2009
GBP0.6 million).
Acquisition costs of GBP0.4 million have been expensed to the income statement
in line with IFRS 3 (revised). These would previously have been accounted for as
part of the business combination. The tax credit on these was GBP0.1 million.
In 2009, the group wrote off goodwill in relation to the direct sales businesses
in Germany, Finland and the UK. There was no tax charge arising. Additionally,
in 2009 the group realised a net profit on UK property disposals. The tax
credit on this at 30th June 2009 was GBP0.5 million.
5 Seasonality
The hotels and restaurants markets are subject to some seasonal fluctuation.
Higher revenues in the second and third quarters of the year are expected due to
increased demand during the holiday season. Other than this, there is no
significant seasonality or cyclicality affecting the interim result of the
operations.
6 Taxation
The income tax expense is based on an effective annual tax rate estimated
individually for each tax jurisdiction in which the group operates and applied
to the pre-tax profit, excluding exceptional items, of the relevant entity. Tax
on exceptional items is calculated separately and specifically on those items
and is disclosed in note 4. The effective tax rate on adjusted profit before
tax was 26.6% (30th June 2009: 26.5%).
A reduction in the UK corporation tax rate from 28% to 24% over four years from
April 2011 was announced on 22 June 2010. The first reduction was not
substantively enacted by 30 June 2010 and so did not impact the tax charge for
the first six months of the year. The impact on the net assets of the Group of a
4% reduction in the tax rate over four years is estimated to be a benefit of
GBP1.3 million in total.
7 Dividends
A final dividend relating to the year ended 31st December 2009 amounting to
GBP22.9 million was paid in May 2010 (2008: GBP22.9 million), representing 13.5
pence per share (2008: 13.5 pence).
In addition, an interim dividend in respect of the financial year ending 31st
December 2010 of [6.5] pence per ordinary share was proposed by the board of
directors on 24th August 2010. It is payable on 14th October 2010 to
shareholders who are on the register at 17th September 2010. This interim
dividend amounting to GBP11.0 million is not reflected in these financial
statements as it does not represent a liability at 30th June 2010. It will be
recognised in shareholders' equity in the year to 31 December 2010.
8 Earnings per ordinary share
Basic earnings per ordinary share are based on the profit for the period
attributable to the equity holders and a weighted average of 169,075,040 (30th
June 2009: 169,737,810) ordinary shares in issue during the period and exclude
the treasury shares and shares in the Employee Benefit Trust.
Diluted earnings per share are based on the group profit for the period and a
weighted average of ordinary shares in issue during the period calculated as
follows:
+----------------------------------------------------+-------------+-------------+-------------+
| | 30th | 30th | 31st |
| | June | June | December |
| | 2010 | 2009 | 2009 |
| | Number | Number | Number |
| | of | of | of |
| | shares | shares | shares |
+----------------------------------------------------+-------------+-------------+-------------+
| In issue | 169,075,040 | 169,737,810 | 169,533,679 |
+----------------------------------------------------+-------------+-------------+-------------+
| Dilutive potential ordinary shares arising from | 309,215 | 119,596 | 150,955 |
| unexercised share options and awards | | | |
+----------------------------------------------------+-------------+-------------+-------------+
| | 169,384,255 | 169,857,406 | 169,684,634 |
+----------------------------------------------------+-------------+-------------+-------------+
An adjusted earnings per ordinary share figure has been presented to eliminate
the effects of exceptional items and amortisation of customer contracts and
intellectual property rights.
This presentation shows the trend in earnings per ordinary share that is
attributable to the underlying trading activities of the total group.
The reconciliation between the basic and adjusted figures for the total group is
as follows:
+----------------------------+--------+----------+--------+----------+--------+----------+
| | Six months to | Six months to | Year to |
| | 30th June 2010 | 30th June 2009 | 31st December |
| | | | 2009 |
+----------------------------+-------------------+-------------------+-------------------+
| | GBPm | Earnings | GBPm | Earnings | GBPm | Earnings |
| | | per | | per | | per |
| | | share | | share | | share |
| | | pence | | pence | | pence |
+----------------------------+--------+----------+--------+----------+--------+----------+
| Profit attributable to | 21.1 | 12.5 | 20.4 | 12.0 | 45.1 | 26.6 |
| equity shareholders of the | | | | | | |
| company for basic earnings | | | | | | |
| per share calculation | | | | | | |
+----------------------------+--------+----------+--------+----------+--------+----------+
| Profit on sale of | - | - | (1.2) | (0.7) | (1.6) | (0.9) |
| properties (after | | | | | | |
| taxation) | | | | | | |
+----------------------------+--------+----------+--------+----------+--------+----------+
| Goodwill impairment (after | - | - | 1.6 | 0.9 | 6.0 | 3.5 |
| taxation) | | | | | | |
+----------------------------+--------+----------+--------+----------+--------+----------+
| Restructuring items (after | - | - | 2.2 | 1.4 | 5.7 | 3.3 |
| taxation) | | | | | | |
+----------------------------+--------+----------+--------+----------+--------+----------+
| Acquisition transaction | 0.3 | 0.2 | - | - | - | - |
| costs (after taxation) | | | | | | |
+----------------------------+--------+----------+--------+----------+--------+----------+
| Amortisation of customer | 8.5 | 5.0 | 6.2 | 3.6 | 13.2 | 7.8 |
| contracts and intellectual | | | | | | |
| property rights (after | | | | | | |
| taxation) | | | | | | |
+----------------------------+--------+----------+--------+----------+--------+----------+
| Exceptional tax credit due | - | - | - | - | (1.6) | (0.9) |
| to change in tax rates | | | | | | |
+----------------------------+--------+----------+--------+----------+--------+----------+
| Adjusted earnings | 29.9 | 17.7 | 29.2 | 17.2 | 66.8 | 39.4 |
+----------------------------+--------+----------+--------+----------+--------+----------+
| Diluted basic earnings | - | 12.5 | - | 12.0 | - | 26.6 |
+----------------------------+--------+----------+--------+----------+--------+----------+
9 Property, plant and equipment
During the six months ended 30th June 2010, the group acquired assets with a
cost of GBP75.8 million (30th June 2009: GBP79.1 million), not including
property, plant and equipment acquired through business combinations.
Assets with a net book value of GBP2.3 million were disposed of by the group
during the six months ended 30th June 2010 (30th June 2009: GBP4.5 million)
resulting in a net gain on disposal of GBP0.6 million (30th June 2009: GBP2.4
million).
The group's capital commitments at 30th June 2010 were GBP2.8 million (30th June
2009: GBP1.0 million).
10 Provisions
+----------------------------------------------+------------+---------------+-----------+---------+
| | Vacant | | Property | Total |
| | | Restructuring | disposals | GBPm |
| | Properties | GBPm | GBPm | |
| | GBPm | | | |
+----------------------------------------------+------------+---------------+-----------+---------+
| At 1st January 2010 | 0.5 | 4.7 | 2.5 | 7.7 |
+----------------------------------------------+------------+---------------+-----------+---------+
| Charged in the period | - | 0.5 | - | 0.5 |
+----------------------------------------------+------------+---------------+-----------+---------+
| Utilised in the period | (0.1) | (2.6) | - | (2.7) |
+----------------------------------------------+------------+---------------+-----------+---------+
| Currency translation | - | (0.3) | - | (0.3) |
+----------------------------------------------+------------+---------------+-----------+---------+
| At 30th June 2010 | 0.4 | 2.3 | 2.5 | 5.2 |
+----------------------------------------------+------------+---------------+-----------+---------+
All provisions except for the property disposal provision are current in nature.
Vacant properties
Vacant property provisions are made in respect of vacant and partly sub-let
leasehold properties to the extent that the future rental payments are expected
to exceed future rental income. It is further assumed, where reasonable, that
the properties will be able to be sub-let beyond the present sub-let lease
agreements. In determining the vacant property provision, the cash flows have
been discounted on a pre-tax basis using the appropriate government bond rates.
Restructuring
Restructuring provisions comprise largely of employee termination payments.
Provisions are not recognised for future operating losses.
Property disposals
The group has outstanding warranties, indemnities and guarantees given
previously on a number of properties operated by businesses which have been
disposed. The majority of these expire in 2017 with the remaining expiring by
2022.
11 Cash generated from operations
Reconciliation of profit for the period to cash generated from operations.
+---------------------------------------------+----------+----------+------------+
| | Six | Six | Year to |
| | months | months | 31st |
| | to | to | December |
| | 30th | 30th | 2009 |
| | June | June | GBPm |
| | 2010 | 2009 | |
| | GBPm | GBPm | |
+---------------------------------------------+----------+----------+------------+
| Profit for the period | 21.4 | 20.7 | 45.8 |
+---------------------------------------------+----------+----------+------------+
| Adjustments for: | | | |
+---------------------------------------------+----------+----------+------------+
| Taxation | 7.4 | 8.5 | 15.9 |
+---------------------------------------------+----------+----------+------------+
| Amortisation of intangible fixed assets | 13.7 | 10.2 | 21.6 |
+---------------------------------------------+----------+----------+------------+
| Depreciation of tangible fixed assets | 80.8 | 83.6 | 166.2 |
+---------------------------------------------+----------+----------+------------+
| Profit on sale of property | - | (1.9) | (2.0) |
+---------------------------------------------+----------+----------+------------+
| Profit on sale of plant and equipment | (0.6) | (0.5) | (0.9) |
+---------------------------------------------+----------+----------+------------+
| Restructuring costs (non-cash element) | - | 2.8 | 5.9 |
+---------------------------------------------+----------+----------+------------+
| Goodwill impairment | - | 1.6 | 6.0 |
+---------------------------------------------+----------+----------+------------+
| Onerous property lease | - | - | 0.4 |
+---------------------------------------------+----------+----------+------------+
| Finance income | (0.6) | (0.7) | (1.5) |
+---------------------------------------------+----------+----------+------------+
| Finance expense | 14.4 | 12.5 | 25.1 |
+---------------------------------------------+----------+----------+------------+
| Other non-cash movements | 1.6 | 1.8 | 0.7 |
+---------------------------------------------+----------+----------+------------+
| Changes in working capital (excluding | | | |
| effect of acquisitions, | | | |
+---------------------------------------------+----------+----------+------------+
| disposals and exchange differences on | | | |
| consolidation): | | | |
+---------------------------------------------+----------+----------+------------+
| Inventories | (4.3) | 1.2 | 2.4 |
+---------------------------------------------+----------+----------+------------+
| Trade and other receivables | (3.9) | (0.2) | 5.2 |
+---------------------------------------------+----------+----------+------------+
| Trade and other payables | 12.2 | (12.2) | (13.8) |
+---------------------------------------------+----------+----------+------------+
| Provisions | (2.7) | (2.7) | (6.5) |
+---------------------------------------------+----------+----------+------------+
| Cash generated from operations | 139.4 | 124.7 | 270.5 |
+---------------------------------------------+----------+----------+------------+
In the cash flow statement, proceeds from sale of property, plant and equipment
comprise:
+---------------------------------------------+----------+----------+------------+
| | Six | Six | Year to |
| | months | months | 31st |
| | to | to | December |
| | 30th | 30th | 2009 |
| | June | June | GBPm |
| | 2010 | 2009 | |
| | GBPm | GBPm | |
+---------------------------------------------+----------+----------+------------+
| Net book amount | 2.3 | 4.5 | 8.3 |
+---------------------------------------------+----------+----------+------------+
| Profit on sale of property, plant and | 0.6 | 2.4 | 2.9 |
| equipment | | | |
+---------------------------------------------+----------+----------+------------+
| Proceeds from sale of property, plant and | 2.9 | 6.9 | 11.2 |
| equipment | | | |
+---------------------------------------------+----------+----------+------------+
12 Reconciliation of net cash flow to movement in net debt
+---------------------------------------------+----------+----------+------------+
| | Six | Six | Year to |
| | months | months | 31st |
| | to | to | December |
| | 30th | 30th | 2009 |
| | June | June | GBPm |
| | 2010 | 2009 | |
| | GBPm | GBPm | |
+---------------------------------------------+----------+----------+------------+
| (Decrease)/increase in cash | (191.2) | 5.0 | 199.1 |
+---------------------------------------------+----------+----------+------------+
| Cash outflow/(inflow) from movement in debt | 164.1 | (10.3) | (172.4) |
| and lease financing | | | |
+---------------------------------------------+----------+----------+------------+
| Changes in net debt resulting from cash | (27.1) | (5.3) | 26.7 |
| flows | | | |
+---------------------------------------------+----------+----------+------------+
| New finance leases | (2.0) | (1.5) | (3.0) |
+---------------------------------------------+----------+----------+------------+
| Bank loans and lease obligations acquired | (3.0) | - | - |
| with subsidiaries | | | |
+---------------------------------------------+----------+----------+------------+
| Currency translation | (11.6) | 71.3 | 35.5 |
+---------------------------------------------+----------+----------+------------+
| Movement in net debt in period | (43.7) | 64.5 | 59.2 |
+---------------------------------------------+----------+----------+------------+
| Net debt at beginning of period | (484.9) | (544.1) | (544.1) |
+---------------------------------------------+----------+----------+------------+
| Net debt at end of period | (528.6) | (479.6) | (484.9) |
+---------------------------------------------+----------+----------+------------+
13 Acquisitions
On 4 January 2010, the group further strengthened its existing German Workwear
business through the acquisition of 100% of the issued shares of a German
Workwear business, for consideration of circa GBP14.8 million. The fair value
exercise is in progress and therefore the amounts below are provisional, to be
finalised in the 2010 accounts. The cash and deferred consideration payable is
dependent on the fair value of the assets and liabilities at the date of
acquisition and is therefore also provisional.
+----------------------------------------------------------------------+-------------+
| | Provisional |
| | fair values |
| | GBPm |
+----------------------------------------------------------------------+-------------+
| Intangible assets | 12.5 |
+----------------------------------------------------------------------+-------------+
| Property, plant and equipment | 5.7 |
+----------------------------------------------------------------------+-------------+
| Inventory | 0.3 |
+----------------------------------------------------------------------+-------------+
| Trade and other receivables | 5.1 |
+----------------------------------------------------------------------+-------------+
| Cash and cash equivalents | 1.1 |
+----------------------------------------------------------------------+-------------+
| Trade and other payables | (1.6) |
+----------------------------------------------------------------------+-------------+
| Income tax payable | (1.6) |
+----------------------------------------------------------------------+-------------+
| Interest bearing loans and borrowings | (3.0) |
+----------------------------------------------------------------------+-------------+
| Deferred tax liabilities | (4.5) |
+----------------------------------------------------------------------+-------------+
| Net assets acquired | 14.0 |
+----------------------------------------------------------------------+-------------+
| Goodwill | 0.8 |
+----------------------------------------------------------------------+-------------+
| Consideration satisfied by: | 14.8 |
+----------------------------------------------------------------------+-------------+
| - Cash | 6.1 |
+----------------------------------------------------------------------+-------------+
| - Deferred consideration | 7.9 |
+----------------------------------------------------------------------+-------------+
| - Contingent consideration | 0.8 |
+----------------------------------------------------------------------+-------------+
| | 14.8 |
+----------------------------------------------------------------------+-------------+
Acquisition related costs of GBP0.4 million are included in the income statement
in exceptional items (note 4).
The contingent consideration arrangements require the group to pay the former
owners additional contingent consideration on future sales. The future payable
is up to a maximum undiscounted amount of GBP2.0 million. The contingent
consideration has given rise to goodwill, none of which is expected to be
deductible for tax purposes.
The fair value of trade and other receivables is GBP5.1 million and includes
trade receivables with a fair value of GBP1.7 million. The gross contractual
amount for trade receivables due is GBP2.0 million, of which GBP0.3 million is
expected to be uncollectible.
Shown below are the revenues and profit for the year after tax as if the above
acquisitions had been made at the beginning of the period.
+--------------------------------------------------------------------------+------+
| | GBPm |
+--------------------------------------------------------------------------+------+
| Revenue | 3.1 |
+--------------------------------------------------------------------------+------+
| Operating profit | 1.0 |
+--------------------------------------------------------------------------+------+
From the date of acquisition to 30th June 2010, the above acquisitions
contributed GBP3.1 million to revenue and GBP0.7 million to profit after tax for
the period.
During the period the group also paid deferred consideration on previous
acquisitions. A reconciliation of the total net cash paid for acquisitions is
provided below:
+--------------------------------------------------------------------------+------+
| | GBPm |
+--------------------------------------------------------------------------+------+
| Net cash consideration | 5.0 |
+--------------------------------------------------------------------------+------+
| Deferred consideration paid on previous acquisitions | 30.9 |
+--------------------------------------------------------------------------+------+
| | 35.9 |
+--------------------------------------------------------------------------+------+
The total consideration including net financial liabilities assumed and deferred
consideration payable for the acquisitions is GBP47.6 million.
14 Pension schemes
The amounts recognised in the balance sheet are determined as follows:
+----------------------------------------------------------+----------+----------+
| | As at | As at |
| | 30th | 31st |
| | June | December |
| | 2010 | 2009 |
| | GBPm | GBPm |
+----------------------------------------------------------+----------+----------+
| Present value of obligations | (257.4) | (246.6) |
+----------------------------------------------------------+----------+----------+
| Fair value of plan assets | 214.9 | 213.7 |
+----------------------------------------------------------+----------+----------+
| Net liability recognised in balance sheet | (42.5) | (32.9) |
+----------------------------------------------------------+----------+----------+
| Analysed as: | | |
+----------------------------------------------------------+----------+----------+
| - Pension scheme deficit and unfunded schemes | (42.5) | (32.9) |
+----------------------------------------------------------+----------+----------+
| | (42.5) | (32.9) |
+----------------------------------------------------------+----------+----------+
Analysis of the movement in the net balance sheet liability:
+----------------------------------------------------------+----------+---------+
| | | Six |
| | | months |
| | | to |
| | | 30th |
| | | June |
| | | 2010 |
| | | GBPm |
+----------------------------------------------------------+----------+---------+
| At 1st January 2010 | | (32.9) |
+----------------------------------------------------------+----------+---------+
| Current service cost | | (1.4) |
+----------------------------------------------------------+----------+---------+
| Interest cost | | (6.6) |
+----------------------------------------------------------+----------+---------+
| Expected return on plan assets | | 7.1 |
+----------------------------------------------------------+----------+---------+
| Actuarial loss recognised in other comprehensive income | | (15.6) |
+----------------------------------------------------------+----------+---------+
| Special contributions | | 4.0 |
+----------------------------------------------------------+----------+---------+
| Contributions paid | | 1.9 |
+----------------------------------------------------------+----------+---------+
| Currency translation | | 1.0 |
+----------------------------------------------------------+----------+---------+
| At 30th June 2010 | | (42.5) |
+----------------------------------------------------------+----------+---------+
15 Related parties
The nature of related parties as disclosed in the consolidated financial
statements for the group as at and for the year ended 31st December 2009 has not
changed. Further, there have been no significant related party transactions in
the six month period ended 30th June 2010.
16 Contingent liabilities
The group operates from 128 laundries across Europe. Some of the sites have
operated as laundry sites for many years, and historic environmental liabilities
may exist, although the group has indemnities from third parties in respect of a
number of sites. The extent of these liabilities and the cover provided by the
indemnities are reviewed where appropriate with the relevant third party. Such
liabilities are not expected to give rise to any significant loss.
17 Website policy
The directors are responsible for the maintenance and integrity of the company's
website. Information published on the internet is accessible in many countries
with different legal requirements. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Statement of directors' responsibilities
The directors confirm that this condensed set of consolidated interim financial
information have been prepared in accordance with IAS 34 as adopted by the
European Union and that the interim management report includes a fair review of
the information required by DTR 4.2.7 and 4.2.8.
By order of the Board
Peter Ventress
26th August 2010
Chief Executive
Kevin Quinn
26th August 2010
Finance Director
Independent review report to The Davis Service Group plc
Introduction
We have been engaged by the company to review the condensed consolidated interim
financial information in the interim financial report for the six months ended
30th June 2010, which comprises the consolidated interim income statement,
consolidated interim statement of comprehensive income, consolidated interim
balance sheet, consolidated interim cash flow statement, consolidated statement
of changes in total equity and related notes. We have read the other information
contained in the interim financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the information in the
condensed consolidated interim financial information.
Directors' responsibilities
The interim financial report is the responsibility of, and has been approved by,
the directors. The directors are responsible for preparing the interim financial
report in accordance with the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed consolidated interim financial information included in this interim
financial report has been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
consolidated set of interim financial statements in the interim financial report
based on our review. This report, including the conclusion, has been prepared
for and only for the company for the purpose of the Disclosure and Transparency
Rules of the Financial Services Authority and for no other purpose. We do not,
in producing this report, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed consolidated interim financial information in the interim
financial report for the six months ended 30th June 2010 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
London
26th August 2010
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KMGZRVVRGGZM
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