Transcript No Slide Title

SER V I C E G R O U P P L C
INTERIM RESULTS
for the 26 weeks ended 28 June 2003
Interim Results - June 2003
INTRODUCTION
Introduction
Stuart Graham, CEO
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SER V I C E G R O U P P L C
Interim Results – June 2003
Financial Review
Mike Sutton, CFO
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SER V I C E G R O U P P L C
Interim Results - June 2003
TURNOVER AND ADJUSTED OPERATING PROFIT
Text from Chairman’s
Statement
“results in line with
expectations”
Turnover
- Continuing
- Discontinued
Adjusted operating profit*
- Continuing
- Discontinued
Margin* - continuing
2003
£m
2002
£m
Change
%
97.4
12.9
98.1
11.2
(0.7)
110.3
109.3
0.9
13.0
0.4
15.7
(0.2)
(17.2)
13.4
15.5
(13.5)
13.3% 16.0%
* Excludes goodwill amortisation
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SER V I C E G R O U P P L C
Interim Results – June 2003
PROFIT AND LOSS ACCOUNT
Goodwill amortisation and exceptional items
Amortisation of goodwill
Impairment of goodwill - Ireland
Impairment of goodwill – UK
textile rental
Disposal of Northern Irish Linen
business
2003
2002
£m
£m
(2.6)
(2.3)
(10.5)
-
(3.6)
-
-
(1.3)
(16.7)
(3.6)
2003
£m
2002 Change
£m
%
Adjusted operating profit*
Interest
13.4
(2.2)
15.5
(2.7)
(13.5)
Adjusted PBT**
Goodwill amortisation
and exceptional items
11.2
12.8
(12.5)
(16.7)
(3.6)
(5.5)
9.2
PBT
* Excludes goodwill amortisation
** Excludes goodwill amortisation and exceptional items
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SER V I C E G R O U P P L C
Interim Results – June 2003
EARNINGS PER SHARE (ADJUSTED)
Calculation excludes tax
credit relating to
previous years.
2003
£m
2002 Change
£m
%
Adjusted profit before tax*
Taxation**
11.2
(3.2)
12.8
(3.8)
Adjusted profit after tax*,**
8.0
9.0
Number ordinary shares
(fully diluted)
Adjusted EPS*,**
Interim dividend
Total dividend
(12.5)
57.2 57.4
million million
14.0p
4.0p
15.6p
4.0p
17.6p
* Excludes goodwill amortisation and exceptional items
** Excludes tax credit relating to earlier years (2003)
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SER V I C E G R O U P P L C
Interim Results – June 2003
SUMMARY BALANCE SHEET
Intangible fixed assets
June
2003
£m
67.8
Dec
2002
£m
79.3
Tangible fixed assets
73.7
76.3
Textile rental items
25.4
25.8
0.4
0.4
167.3
181.8
Provisions
Deferred tax
0.5
0.4
Private healthcare
1.9
1.8
Property
7.7
6.9
Self insurance
3.1
3.0
13.2
12.1
Fixed assets
Investments
Fixed Assets
Current assets (excl. cash)
Current liabilities (excl.overdraft)
Financing (net of cash)
Provisions
NET ASSETS
June
2003
£m
Dec
2002
£m
167.3
49.2
(40.1)
(63.2)
(13.2)
100.0
181.8
46.0
(46.3)
(61.9)
(12.1)
107.5
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SER V I C E G R O U P P L C
Interim Results – June 2003
CASHFLOW
2003
£m
2002
£m
Operating profit*
13.4
15.5
Depreciation
13.8
14.7
Working capital
(0.3)
1.0
1.3
0.6
(0.4)
(0.4)
27.8
31.4
Fixed assets
5.4
5.3
Textile rental items
8.4
9.4
13.8
14.7
Fixed assets
(1.3)
(3.5)
Textile rental items
(7.7)
(6.5)
(9.0)
(10.0)
Provisions
Other
Depreciation
Capital expenditure (net)
* excludes goodwill amortisation
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SER V I C E G R O U P P L C
Interim Results – June 2003
NET BORROWINGS / INTEREST COVER
Net debt and banking
facilities
£m
Net borrowings
140
2003
£m
120
100
80
At June 2003
63.2
Interest cover*
6.1x
60
40
20
0
Dec00
Dec01
Dec- Jun-03
02
net debt
facility
Subsequent to period end disposal
proceeds of over £27m received
* Operating profit excluding goodwill amortisation
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SER V I C E G R O U P P L C
Interim Results – June 2003
DISPOSALS
Text from Chairman’s
statement
“The proceeds have
been used to reduce
borrowings and are
available to further the
development of the
Group’s activities”
 Disposals in August 2003
– Cash proceeds in August 2003
– CCG £14.7m with adjustment of up to
£1.2m for pension liabilities
– JWS £13.7m less a retention of £0.5m
– CCG goodwill impairment £10.5m in H1
– JWS profit on disposal £4m + to be
recognised in H2
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SER V I C E G R O U P P L C
Interim Results – June 2003
TEXTILE RENTAL - UNITED KINGDOM
Turnover
63%
Continuing
Turnover
2003
£m
2002 Change
£m
%
61.6
62.4
(1.3)
9.0
11.8
(23.7)
UK textile rental
Adjusted operating
profit *
Adjusted operating profit*
Margin*
14.6% 18.9%
69%
* Excludes goodwill amortisation
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SER V I C E G R O U P P L C
Interim Results – June 2003
TEXTILE RENTAL – JOHNSONS APPARELMASTER
Text from Chairman’s
statement
“cumulative effects of
poor sales and customer
retention over last three
years have continued to
impact on turnover”
Annualised lost business (£m)
10
5
0
2000
2001
2002
2003*
* Equivalent annual rate
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SER V I C E G R O U P P L C
Interim Results – June 2003
DRYCLEANING
Turnover
37
%
Drycleaning
Adjusted operating
profit *
31%
* Excludes goodwill amortisation
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SER V I C E G R O U P P L C
Interim Results – June 2003
Review, Strategy and Outlook
Stuart Graham, CEO
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SER V I C E G R O U P P L C
Interim Results - June 2003
OVERVIEW
Text from Chairman’s
statement
“The first six months
have been a period of
significant change for
the Group….”
 Transitional period for the Group
 Group delivered on objectives to date
 Management team significantly strengthened
 Work in progress
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SER V I C E G R O U P P L C
Interim Results – June 2003
TEXTILE RENTAL - UNITED KINGDOM
Text from Chairman’s
statement
“The cumulative effect
of poor sales and
customer retention over
the last three years….”
 Johnsons Apparelmaster
– Shrinkage in traditional workwear market
ongoing
– Masterplan initiative progressing well
– Sales team strengthened further
– Separate customer service function
– Plant closed in North East
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SER V I C E G R O U P P L C
Interim Results – June 2003
TEXTILE RENTAL - UNITED KINGDOM
Text from Chairman’s
Statement
“achieved further
progress……”
 Stalbridge Linen Services
– Further progress achieved
– Opportunities to offer added services
– Plant locations to be reviewed
– Maintained our market share
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SER V I C E G R O U P P L C
Interim Results – June 2003
TEXTILE RENTAL - UNITED KINGDOM
Text from Chairman’s
Statement
“We see considerable
opportunities for
growth…”
 CCM
– Increase in sales
– Arco contract volumes as expected
– Initial start up costs have restricted profit
in first half
– New markets and products being
identified
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SER V I C E G R O U P P L C
Interim Results – June 2003
DRYCLEANING
Text from Chairman’s
Statement
“appointment as the
Master Licensor for
GreenEarth®”
Johnsons Cleaners
– Results encouraging
– GreenEarth®
• exciting first-to-market opportunity
• Roll out over 2 years
– Logistics
– CPU
– New operating model
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SER V I C E G R O U P P L C
Interim Results – June 2003
DRYCLEANING
Text from Chairman’s
Statement
“acquisition increases
our penetration in the
South East….”
Jeeves of Belgravia
– Acquired in May 2003
– Established luxury brand in London
– 12 shops and CPU in London
– “London’s Finest Drycleaner”
– Growth potential
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SER V I C E G R O U P P L C
Interim Results – June 2003
OUTLOOK
Text from Chairman’s
statement
“Broadening the base of
our activities in terms of
both the services we offer
and their geographical
location.…
 Transitional period for the Group
 Significant progress made to date
 Strategy for growth
 Strong balance sheet
 Confident about the prospects for the Group
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SER V I C E G R O U P P L C