BERENDSEN PLC HALF YEAR RESULTS

This announcement contains inside information

BERENDSEN PLC RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2017

26 JULY 2017

Notes:

1 Before exceptional costs and amortisation of customer contracts

2 Adjusted growth at constant exchange rates ("CER") and excluding acquisitions and disposals

3 Reconciliation of statutory and adjusted performance measures is set out in note 21

Financial Summary

· Underlying revenue grew by 2.4%; reported revenue grew 7.8% to £575.1 million

· Adjusted operating profit of £65.9 million; reported operating profit of £45.2 million

· In Continental Europe, the Group continued to make good progress; underlying revenue grew 5% and underlying adjusted operating profit grew 3.6%

· As expected, the UK continued to be impacted by operational issues identified in the second half of 2016; underlying revenue declined 2% across the UK; adjusted operating profit in UK textiles parts of the Workwear, Healthcare and Hospitality Business Lines declined by £5 million or 30%.

· Interim dividend of 11.0 pence (HY 2016: 10.5 pence). This was previously disclosed on 12 June in the announcement relating to the recommended acquisition of Berendsen by Elis SA.

Outlook

· Adjusted operating profit for full year 2017 expected to be approximately £150 million

· Adjusted operating profit for full year 2018 expected to be approximately £170 million

James Drummond, Chief Executive Officer, commented: "The Group continued to make good progress during the first half of 2017. The businesses continued to implement the Berendsen Excellence strategy, which is building the foundations for operational improvement, to enable us to serve better our existing customers, and a platform for sustainable growth, to ensure we make the most of the opportunities we see in our markets.

We have continued to invest in the capabilities of our people, systems and plants, and I am pleased that we are now starting to see those benefits coming through. I am confident that our strategy will enable the Group to capture progressively the sizeable opportunity for growth and margin improvement."

Contacts:

Berendsen

Peter Young

Director of Investor Relations

Tel: +44 (0)7825 297 198

Email: [email protected]

FTI Consulting

Richard Mountain / Susanne Yule

Telephone: +44 (0)20 3727 1374

2017 INTERIM RESULTS ANNOUNCEMENT

1. Results Overview

2. Outlook

3. Recommended offer by Elis SA

4. CEO Review & Strategy Update

5. Business Line Performance Reviews

6. Other Financial Items

1. RESULTS OVERVIEW

Unless otherwise stated, all commentary in this section is on an underlying basis (note 21). Underlying growth figures are at constant currency rates and exclude the impact of acquisitions, disposals and internal transfers. Adjusted operating profit excludes the impact of exceptional items and amortisation of customer contracts.

Reported Group revenue grew 7.8% to £575.1 million (HY 2016: £533.5 million). Underlying Group revenue grew 2.4%, with growth in each of the four Business Lines; Facility grew 4%, Workwear grew 3%, Healthcare grew 2% and Hospitality grew 1%. The Group grew faster outside the UK, with growth of 5%, compared to a decline in the UK, which had been expected, of 2%.

Adjusted operating profit, before exceptional items and amortisation of customer contracts, declined 6.1% to £65.9 million (HY 2016: £70.2 million); underlying adjusted operating profit declined 13.6%, as an increase in profitability in Europe was more than offset by an expected £5 million decline in the UK textiles parts of the Workwear, Healthcare and Hospitality Business Lines; this was a continuation of the trends identified in the second half of 2016, which were detailed in the 2016 full year results announcement.

Net finance costs reduced by £0.9 million to £9.1 million (HY 2016: £10.0 million), due to lower underlying finance cost following the partial repayment of private placement debt in 2016. Therefore, adjusted profit before tax reduced by £3.4 million to £56.8 million (HY 2016: £60.2 million).

Reported profit before tax, including the amortisation of customer contracts of £3.8 million (HY 2016: £3.6 million) and exceptional costs of £16.9 million (HY 2016: £4.9 million), decreased by £15.6 million to £36.1 million (HY 2016: £51.7 million). The effective tax rate on adjusted profit before taxation was 22.6% (HY 2016: 23.1%). The tax rate for the full year is hence expected to be in line with the prior year, approximately 23%.

Basic adjusted earnings per share were 25.6 pence (HY 2016: 27.0 pence), and basic reported earnings per share were 15.7 pence (HY 2016: 23.1 pence). The interim dividend per share increased by 5% to 11.0p (HY 2016: 10.5p); this was previously disclosed on 12 June in the announcement relating to the recommended acquisition of Berendsen by Elis SA.

2. OUTLOOK

On 3 March 2017, the Board of Berendsen announced a profit forecast for the financial year ended 31 December 2017 stating that adjusted operating profit for 2017 was expected to be approximately £150 million (the "2017 Profit Forecast") and that profitability was expected to be more weighted to the second half (approximately 40:60 split), than in previous years (the "Original Profit Forecast Split"). The Board of Berendsen today reconfirms the 2017 Profit Forecast and expresses its confidence in its delivery. Therefore, the Board of Berendsen hereby updates the Original Profit Forecast Split, as the Board expects that the weighting of the profitability to the second half of 2017 will change. The Board of Berendsen now expects that profitability, whilst remaining more weighted to the second half of 2017, will now comprise an approximate 44:56 split (the "Updated Profit Forecast Split").

Furthermore, the Board of Berendsen announced on 24 May, in the announcement titled "Statement regarding Elis' Possible Offer", a forecast for adjusted operating profit for the financial year ending 31 December 2018 of approximately £170 million (the "2018 Profit Forecast"). The Board of Berendsen today reconfirms the 2018 Profit Forecast and expresses its confidence in its delivery. Further details of the 2017 Profit Forecast and the 2018 Profit Forecast are set out at Appendix 1 to this Announcement.

3. RECOMMENDED OFFER BY ELIS SA

On 12 June 2017 the boards of Elis SA and Berendsen plc announced that they had reached agreement on the terms of a recommended acquisition by Elis of the entire issued and to be issued share capital of Berendsen (the "Transaction").

The Berendsen Board remains confident that the Berendsen Excellence strategy would deliver significant value for the Berendsen Shareholders on a standalone basis. However, it also believes that the terms of the offer by Elis SA substantially acknowledges the quality of the Berendsen business and the strength of its future prospects. Furthermore, the Berendsen Board recognises that the Transaction will create a pan-European leader in textile services, with attractive positions in the markets in which it operates and with sufficient scale and footprint to provide customers with the most efficient and comprehensive textile services offering across the European continent. As such, the Berendsen Board intends unanimously to recommend the Transaction to Berendsen Shareholders.

It is expected that the Scheme Document, containing further information about the Transaction and notices of the Court Meeting and General Meeting, together with the Forms of Proxy, will be posted to Berendsen Shareholders no later than 31 July 2017. An expected timetable of principal events will be included in the Scheme Document. Completion of the transaction is expected during the third quarter of 2017, subject to relevant shareholder and regulatory approvals.

4. CEO REVIEW & STRATEGY UPDATE

The Group has made good progress implementing the Berendsen Excellence strategy in the first half of 2017, particularly with actions to address the three root causes of poor and deteriorating operating performance in the UK. There is still a lot of work to do during 2017, as we continue to implement the Group strategy. We continue to expect tangible benefits to start coming through in the second half of 2017. The acceleration of investment in people, processes, systems, plant and machinery will ensure that the Group enters 2018 with the ability to capture the significant opportunities we have identified.

Berendsen Excellence Strategy Update

Customer Focus

Implementation of the new customer relationship management (CRM) tool, Berendsen Advance, has been completed across the Group. In the first half over 900 new users have been trained in its use, and the database has been populated with current customer and market data. The new system will standardise processes and data capture across all Business Lines and geographies, enhance customer targeting, drive closer integration with customers, help to identify and monitor new business opportunities and direct strategic and operational resource planning over the medium to long term. This will underpin the Group's ability to drive higher levels of growth, on the right terms, in attractive markets.

The Group has continued to make good progress in developing the scope of services, including new and adjacent markets. In Healthcare, the Clinical Solutions business has had notable success in medical device sterilisation pilots; the business has developed a rental service for critical surgical instruments, initially for the provision of endoscopes. The business was pleased to sign its first full service contract for the provision of endoscopes in the first half of 2017, has developed an attractive pipeline of further customer contracts and continues to see good opportunity for growth to expand the service to cover more hospitals and a wider range of medical instruments.

Operational Excellence

The Group is focused on driving improvements in operational and financial visibility across the organisation, as it implements standard processes and controls across each of the Business Lines. The new set of common Key Performance Indicators is being implemented by all of the Business Lines in the first half, and incorporated into the monthly management reporting process. The first version of the Berendsen Management System, which captures these key metrics, was launched in February 2017.

The new operating models, designed and tested during 2016, are now being implemented in the UK Healthcare and Hospitality businesses; in the first half three brownfield plant conversion were completed in the UK Hospitality business, and one in the UK Healthcare business. Overall, plant efficiency is expected to increase by over 30% post implementation. These plants are being closely monitored, and are performing in line with expectations.

The project management framework designed during 2016, to ensure all projects are aligned with the Group's strategic priorities and that appropriate levels of governance are being consistently applied, is now live and in use. The web-based tool allows project progress to be tracked against cost and schedule, and monitors post-implementation benefits against expectations. This will reduce the risk of implementing new capital projects, and maximise returns, through better support, improved forecasting, clear processes and controls, improved knowledge sharing across the Group and better understanding of challenges and benefits.

People

The Group continues to increase its focus on health and safety and is driving a change and improvement in culture across the organisation. The new Berendsen Incident Reporting System (BIRS), introduced in the second half of 2016, is continuing to drive higher levels of engagement throughout the Group. Safety observations continued to grow in the first half of 2017. The Group is now benefiting from comparative data from the prior year, which is helping to identify trends; whilst still at a very early stage, the trends are showing initial signs of improvement, which is encouraging.

During the first half of 2017 the Group successfully completed the Organisational Capability Review (OCR) of the individuals, structure processes and systems of the UK business. As part of this process, over 130 new people have been hired, and training and development of the management teams has been increased.

The Group continued to invest in the capabilities of its people in the first half of 2017, through increased training, monitoring and formalised development structures. A new leadership development programme was implemented in the UK at the start of 2017, which included development for over 300 senior leaders. The leadership programme is expected to be rolled out across the Group in the second half of 2017.

Efficient use of capital

In March 2017 the Group outlined plans to invest approximately £450 million in plant and machinery over the next 3 years: c. £250 million is expected to be invested in mainland Europe, predominately in growth capital to meet growing demand where the businesses are already well positioned; and, c. £200m in the UK, where the majority is being spent to replace aged plants and machinery, address cost of quality issues and create market leading capabilities. All growth capital invested is expected to deliver a minimum 15% pre-tax return, enabling the Group to achieve its target of a sustainable double digit Return on Invested Capital (ROIC).

The investment programme continues to progress in line with expectations, with capital expenditure in 2017 expected to be weighted to the second half. During the first half of 2017 the Group spent approximately £41 million on the completion of seven brownfield plant conversions, two new build plants and on ongoing maintenance across all operations. During the second half of 2017 nine brownfield plant conversions and four new build plants are scheduled for completion. In addition the Group expects to start work on a further 10 new build plants, due for completion in 2018.

5. BUSINESS LINE PERFORMANCE REVIEWS

Unless otherwise stated, all commentary in this section is on an underlying basis. Growth figures are at constant currency rates and exclude the impact of acquisitions and internal transfers. Operating profit is adjusted to exclude the impact of exceptional items and amortisation of customer contracts.

From 1 January 2017 the Group has reported the Workwear operations in Poland, the Czech Republic and the Slovak Republic within the Workwear Business Line. Previously these operations were reported as part of the Facility Business Line, within Mats, and accordingly the comparative financial information for the six months ended 30 June 2016 has been restated.

Notes:

1 Before exceptional costs and amortisation of customer contracts

2 From 1 January 2017 the Group has reported the Workwear operations in Poland, the Czech Republic and the Slovak Republic within the Workwear Business Line. Previously these operations were reported as part of the Facility Business Line, within Mats, and accordingly the comparative financial information for the six months ended 30 June 2016 has been restated.

Workwear

Revenue in the Workwear Business Line grew 10.4% to £198.5 million (HY 2016: £179.8 million); underlying revenue growth was 3%, as 5% growth in Europe more than offset a 4% decline in the UK. The adjusted operating profit increased to £36.5 million (HY 2016: £33.7 million), with growth in Europe being offset by a decline in the UK. As a result the adjusted operating margin decreased slightly to 18.4% (HY 2016: 18.7%). Reported operating profit was £33.5 million (HY 2016: £33.0 million).

The UK accounts for just under 25% of Workwear revenues, and is the largest single operation within the Business Line. Revenue declined, as anticipated, 4% in the first half. This decline was predominately due to actions taken in 2016 to reduce the number of less profitable customers, which continued to impact the first half of 2017 and due to operational issues in the prior year which had some impact on customer service levels. However, the impact is starting to reduce, with the loss rate in Q2 lower than Q1; a further improvement is expected in the second half and is reflected in the improving termination pipeline we are seeing. Adjusted underlying operating profit for the first half was in line with expectations, c. £1 million lower than the first half of 2016. During the first half the business was impacted by lower revenue and a continuation of the negative trends identified in the second half of 2016, but this was partially offset by ongoing operational efficiency improvements.

Outside the UK, which accounts for just over 75% of Workwear revenues, underlying revenues grew 5%, with growth in each of the countries in Europe. Germany and Holland, which account for over 40% of revenue outside the UK, both grew over 5%. Operating profit grew compared to the first half of 2016, both on a reported and constant currency basis. However margins declined slightly as a result of the strong revenue growth in the first half requiring higher textile investment, particularly in Germany and Sweden.

As part of the Berendsen Excellence strategy, capital investment into the Workwear business has been accelerated. The investment programme continues to progress in line with expectations. During the first half one new build plant was completed in Denmark and one brownfield conversion was completed in Sweden. Two further new build plants are scheduled for completion in the second half of 2017, in Germany and in Holland, as well as a brownfield conversion in the UK.

Facility

Reported revenue in the Facility Business Line grew 16% to £128.3 million (HY 2016: £110.6 million); underlying revenue grew 4%, predominately due to strong growth in Cleanroom. Adjusted operating profit grew by £5.0 million to £31.2 million (HY 2016: £26.2 million). As a result, the adjusted operating margin increased compared to the prior year to 24.3% (2016: 23.7%). Reported operating profit was £28.0 million (HY 2016: £23.5 million).

The Facility Business Line is made up of three distinct services: Cleanroom, Mats and Washroom.

Cleanroom delivers very high integrity textile solutions, primarily for highly regulated pharmaceutical or technology sites. Cleanroom plants are configured on the CL2000 operating mode, similar to Workwear, which allows variable workflow patterns to be processed efficiently with lower direct inputs. Revenue in Cleanroom, which accounts for approximately 25% of the Facility Business Line revenue, continued to perform strongly. Underlying revenue grew 8%, with growth in each country, and particularly strong growth in Germany. Adjusted underlying operating profit grew in line with revenue. Cleanroom grew margins in each of its two largest countries, Denmark and Holland, as well as the UK.

Revenue in Mats, which accounts for over 50% of the Facility Business Line revenue, grew 1%, with growth in Norway and Sweden, the two largest countries in which the Mats service operates, as well as strong growth in the Baltics. Adjusted underlying operating profit was broadly flat compared to the first half of 2016.

Revenue in Washroom, which accounts for just under 20% of the Facility Business Line revenue, grew approximately 3%. Operating profit grew strongly, as Washroom is now benefiting from actions taken in 2016 to increase its direct sales capability, expand its direct supply chain to increase the use of proprietary products and reduce its reliance on third-party resellers. As a result, the adjusted underlying operating margin increased by over 600 basis points.

As part of the Berendsen Excellence strategy, capital investment into the Facility business has been accelerated. The investment programme continues to progress in line with expectations. During the first half one brownfield plant conversions were completed: one in Germany and one in Sweden. Four further brownfield plant conversions are scheduled for completion in the second half of 2017, two in Denmark, one in Holland and one in Finland.

Healthcare

Reported revenue, including the impact of foreign exchange movements, grew 6.4% to £163.5 million (HY 2016: £153.7 million); underlying revenue grew 2%, as good growth in Europe more than offset a decline in the UK. Adjusted operating profit declined by £1.5 million to £10.0 million (HY 2016: £11.5 million), as a reduction in the UK more than offset a good performance in Europe. As a result, the adjusted operating margin declined to 6.1% (HY 2016: 7.5%). Reported operating profit was £7.5 million (HY 2016: £11.0 million).

Revenues in the UK Healthcare textile business, which account for just under 30% of total Healthcare revenues, declined 3%, predominately due to customer losses from the prior year, particularly in the second half. However the win rate on new tenders and contract renewals has improved materially compared to the prior year, as a result of the progress the business made during the second half of 2016 and the first half of 2017 to improve the customer value proposition, with particular focus on the sales and customer service capabilities. This positions the business well for growth in future years. Profitability continued to be impacted by the negative trends identified in the second half of 2016, as disclosed in the 2016 full year results. However the business has made good progress in identifying, implementing and monitoring areas for cost and efficiency improvement. As a result adjusted underlying operating profit declined by approximately £2 million, compared to the first half of 2016.

Underlying revenues in Healthcare textiles outside the UK, which account for approximately 50% of total Healthcare revenues, grew 6%, as good growth in Germany, Sweden and Ireland more than offset a small decline in Denmark. Operating profits increased compared to the prior year, predominately due to an improved performance in Germany, as a result of plant closure costs in the first half of 2016, relating to a plant in Erbach, which did not repeat in 2017. The German business continues to make progress, as it begins to implement its operational improvement programme; this is expected to lead to capital investment plans being finalised over the next 12 months.

Revenues in the Clinical Solutions businesses, which are based in the UK and account for just over 20% of total Healthcare revenues, were in line with the first half of 2016 whilst profitability declined slightly, primarily as a result of the impact of currency on product sourcing costs. The Clinical Solutions business provides single use garments, reusable textiles, custom procedure trays, disposable medical packs, single use instruments and cleaning and sterilisation services for surgical and dental instruments. During 2016 the business developed a pilot rental service for critical surgical instruments, initially for the provision of endoscopes, with its first full service contract signed in the first half of 2017, a key success for the business. It continues to see good opportunity for growth to expand the service to cover more hospitals and a wider range of medical instruments.

As part of the Berendsen Excellence strategy, capital investment into the Healthcare business has been accelerated. The investment programme continues to progress in line with expectations. During the first half, one brownfield plant conversion was completed in the UK and one new build Care Home facility was completed in Ireland. During the second half of 2017 one new build and four brownfield plant conversions are scheduled for completion.

Hospitality

Underlying revenue grew 1%, as good growth in Scandinavia, particularly Sweden, was partially offset by a decline in the UK and Ireland. Reported revenue fell 5% to £84.8 million (HY 2016: £89.4 million), despite the positive impact of foreign exchange in the first half of 2017, due to the negative impact from the disposal of its direct sales business in the UK in the second half of 2016. Adjusted operating profit fell by £2.9 million to a £1.5 million loss (HY 2016: £1.4 million profit), due to a weaker performance in the UK, whilst profitability elsewhere was broadly flat. Reported operating loss was £3.2 million (HY 2016: £1.1 million profit).

Revenue in the UK linen business, which accounts for just over 60% of total Hospitality revenues, declined 2%, predominately due to customer losses in the prior year, whilst profitability was approximately £2 million lower than the prior year. During the first half, the business implemented a number of improvement plans to address the operational issues identified in the second half of 2016, such as high levels of machine downtime, process inefficiency and increased rework. As part of this, three plants completed brownfield conversions to the new operating model, as well as increased investment in maintenance capital for the legacy plants, to replace aged and unreliable machinery. In addition, the capability of management teams has been improved, training has been increased and action plans developed for each individual plant. These actions will deliver significant improvements in operational efficiency, particularly in the converted plants; these benefits should start to come through in the second half of 2017. 

Revenues in Hospitality outside the UK, which account for just under 40% of total hospitality revenues, grew by over 7%, predominately due to strong growth in Sweden. The strong performance in Sweden, which accounts for just under half of the revenue outside the UK, is a continuation of the performance in the prior year, as a result of a strong customer focus, operational improvements made to the businesses in recent years and good market conditions. Underlying adjusted operating profits outside the UK were broadly flat compared to the first half of 2016.

In August 2016 the Hospitality business disposed of its direct sale business. This business contributed revenue of £7.5 million in the first half of 2016 and operating profit of £1.1 million.

As part of the Berendsen Excellence strategy, capital investment into the Healthcare business has been accelerated. The investment programme continues to progress in line with expectations. During the first half, three brownfield plant conversions were completed in the UK. A new build plant in Scotland, currently under construction, is scheduled for completion in the second half of 2017.

Central Costs

Central costs increased, as guided at the 2016 full year results, by £7.7 million to £10.3 million (HY 2016: £2.6 million), due to a higher level of provision for share based compensation, higher pension costs and also higher capability costs at the centre of the Group, including approximately £2m in respect of the implementation of group programmes.

6. OTHER FINANCIAL ITEMS

Dividends

The Board has declared an interim dividend of 11.0 pence (HY 2016: 10.5 pence). This represents an increase of 5% compared to the prior year, and reflects the Board's confidence in the growth outlook for the Group and the ongoing strength of the balance sheet. The intention to declare this dividend was previously disclosed on 12 June in the announcement relating to the recommended acquisition of Berendsen by Elis SA. It is payable on 25 August to shareholders who are on the register at 4 August 2017. See note 7 for further details.

Exceptional costs and customer contract amortisation

Exceptional costs were £16.9 million (HY 2016: £4.9 million). See note 5.

Exceptional costs related to merger and acquisition activity and implementation of the Group strategy. The Group incurred expenses of £9.0 million relating to the recommended acquisition of Berendsen by Elis SA. In addition the Group incurred £7.9 million of costs relating to the implementation of the Berendsen Excellence strategic initiatives, which include professional fees and consultancy costs relating to HR, and restructuring and redundancy costs. Approximately £5m of further exceptional costs in respect of implementing these strategic initiatives is expected to be incurred in the second half of the year.

Amortisation of acquired customer contracts was £3.8 million (HY 2016: 3.6 million).

Cash flow

Cash flows from operating activities increased by £5.1 million to £137.6 million (HY 2016: £132.5 million). Net cash generated from operating activities, after net interest paid of £8.8 million (HY 2016: 9.9 million) and income tax paid of £22.4 million (HY 2016: 12.6 million), decreased by £3.6 million to £106.4 million (HY 2016: £110.0 million). Free cash flow, calculated as net cash generated from operating activities less net capital expenditure of £135.0 million (HY 2016: £109.4 million), reduced to an outflow of £28.6 million (HY 2016: £0.6 million inflow). See note 11.

The reduction in free cash flow conversion was primarily driven by a £24.9 million increase in capital expenditure on textiles, property, plant and equipment to £133.9 million (HY 2016: £108.6 million); capital expenditure was £35.1 million above depreciation of £98.8 million (HY 2016: £87.7 million). This includes an investment in textiles of £91.8 million (HY 2016: £80.4 million). Investment in plant and machinery, including land and buildings, increased £13.9 million to £42.1 million (HY 2016: £28.2 million), as the Group accelerated investment in plants in both the UK and in Europe. The Group expects capital investment in plant and machinery to increase further in the second half, as a result of a number of projects completing in the second half and additional projects starting in the second half that will only complete in 2018.

Other items impacting the cash flow included dividends paid to shareholders of £38.5 million (HY 2016: £36.8 million).

Balance Sheet

Net debt, defined as borrowing less cash deposits, as at 30 June 2017 was £488 million (FY 2016: £429.4 million), reflecting cash flow conversion being offset by increased capital expenditure and the payment of dividends.

The Group retains a strong balance sheet with funding flexibility for future growth and a ratio of net debt to earnings before exceptional items, interest, tax, depreciation and amortisation (EBITDA) of 1.2 times (FY 2016: 1.0 times) on a covenant basis, compared with the lowest covenant level within the Group's borrowing portfolio of three times cover. The total facilities available to the Group are almost £895 million with our Revolving Credit Facility and our Private Placement notes, which extend to 2025.

Forward-looking statements

This announcement contains forward-looking statements relating to the business, financial performance and results of the Company and the industry in which the Company operates. These statements may be identified by words such as "expectation", "belief", "estimate", "plan", "target", or "forecast" and similar expressions or the negative thereof; or by forward-looking nature of discussions of strategy, plans or intentions; or by their context. No representation is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. All statements regarding the future are subject to inherent risks and uncertainties and various factors could cause actual future results, performance or events to differ materially from those described or implied in these statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies, the environment in which the Company will operate in the future and of future events which may not prove to be accurate. None of the Company, its subsidiary undertakings, affiliates, agents or advisers or any of such persons' respective directors, officers, employees or agents nor any other person accepts any responsibility for the accuracy of the opinions expressed in this announcement or the underlying assumptions. Past performance is not an indication of future results and past performance should not be taken as a representation that trends or activities underlying past performance will continue in the future. The forward-looking statements in this announcement speak only as at the date of this announcement and the Company, its subsidiary undertakings, affiliates, agents and advisers and any of such persons' respective directors, officers, employees or agents expressly disclaim any obligation or undertaking to release any updates or revisions to these forward-looking statements to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based after the date of this announcement or to update or to keep current any other information contained in this announcement or to provide any additional information in relation to such forward-looking statements. You are therefore cautioned not to place any undue reliance on such forward-looking statements.

Appendix 1

BERENDSEN PROFIT FORECASTS

1. Profit forecast regarding the financial year to 31 December 2017

In the announcement titled "Berendsen plc Results for the Full Year ended 31 December 2016" dated 3 March 2017, Berendsen announced that "we expect adjusted operating profit for 2017 to be approximately £150 million" (the "2017 Profit Forecast") and "Profitability is expected to be more weighted to the second half (approximately 40:60 split), than in previous years" (the "Original Profit Forecast Split").

Berendsen today has announced adjusted operating profit of £65.9 million in respect of the six months ended 30 June 2017. Berendsen also confirms that its 2017 Profit Forecast remains unchanged. Therefore, the Berendsen Directors confirm that the Original Profit Forecast Split is to be updated, as the Berendsen Directors expect that the weighting of the profitability to the second half of 2017 will change. The Berendsen Directors now expect that profitability, whilst remaining more weighted to the second half of 2017, will now comprise an approximate 44:56 split (the "Updated Profit Forecast Split", and together with the 2017 Profit Forecast, the "Berendsen 2017 Profit Forecast").

The 2017 Profit Forecast and the Original Profit Forecast Split were published before Elis made an approach with regard to a possible offer for Berendsen and therefore the requirements of Rule 28.1(c) of the City Code on Takeovers and Mergers (the "Takeover Code") apply to the 2017 Profit Forecast and the Original Profit Forecast Split.

Further, the Berendsen directors confirm that the Berendsen 2017 Profit Forecast is an ordinary course profit forecast and therefore pursuant to Note 2(b) to Rule 28.1 of the Takeover Code, with the agreement of Elis, the Panel has granted Berendsen a dispensation from the requirement to include reports from reporting accountants and Berendsen's financial advisers in relation to the Berendsen 2017 Profit Forecast, but the requirements of Rule 28.1(c)(i) apply to the Berendsen 2017 Profit Forecast.

In accordance with Rule 28.1(c)(i) of the Takeover Code, the Berendsen Directors confirm that the Berendsen 2017 Profit Forecast is valid and confirm that the Berendsen 2017 Profit Forecast has been properly compiled on the basis of the assumptions stated below and that the basis of accounting used is consistent with Berendsen's accounting policies.

The Berendsen 2017 Profit Forecast does not take into account any impact of the Transaction.

The Berendsen Directors prepared the Berendsen 2017 Profit Forecast on the basis of the following assumptions, any of which could turn out to be incorrect and therefore affect whether the Berendsen 2017 Profit Forecast is achieved:

Factors outside the influence and control of the Berendsen Board

(a) there will be no material change in the political and/or economic environment that would materially affect Berendsen;

(b) there will be no material change in market conditions in relation to customer demand or the competitive environment;

(c) there will be no material change in legislation or regulatory requirements impacting on the Berendsen Group's operations or its accounting policies;

(d) there will be no material litigation or regulatory investigations, or material unexpected developments in any existing litigation or regulatory investigation, in relation to any of Berendsen's operations, products or services;

(e) there will be no business disruptions that materially affect Berendsen, its customers, operations, supply chain or labour supply, including natural disasters, acts of terrorism, cyber-attack and/or technological issues;

(f) foreign exchange rates will be an average of GBP:EUR sterling exchange rate of 1.16; and

(g) there will be no material change in the management or control of Berendsen.

Factors within the influence and control of the Berendsen Board

(a) there will be no material acquisitions or disposals;

(b) there will be no material change in the existing operational strategy of Berendsen; and

(c) there are no material strategic investments or capital expenditure in addition to those already planned.

2. Profit Forecast regarding the financial year to 31 December 2018

In the announcement titled "Statement regarding Elis' Possible Offer" dated 24 May 2017, Berendsen announced "a forecast for adjusted operating profit for the financial year ending 31 December 2018 of approximately £170 million" (the "Berendsen 2018 Profit Forecast").

In accordance with Rule 28.2 of the Takeover Code, the Panel has granted Berendsen a dispensation from the requirement to include reports from reporting accountants and Berendsen's financial advisers in relation to the Berendsen 2018 Profit Forecast because it was for a financial period ending more than 15 months from the date of the announcement in which it was first published, but the requirements of Rule 28.1(c)(i) apply to the Berendsen 2018 Profit Forecast.

In accordance with Rule 28.1(c), the Berendsen Directors confirm that the Berendsen 2018 Profit Forecast remains valid and confirm that the Berendsen 2018 Profit Forecast has been properly compiled on the basis of the assumptions stated below and that the basis of accounting used is consistent with Berendsen's accounting policies.

The Berendsen 2018 Profit Forecast does not take into account any impact of the Transaction.

The Berendsen Directors prepared the Berendsen 2018 Profit Forecast on the basis of the following assumptions, any of which could turn out to be incorrect and therefore affect whether the Berendsen 2018 Profit Forecast is achieved.

Factors outside the influence and control of the Berendsen Board

(a) there will be no material change in the political and/or economic environment that would materially affect Berendsen;

(b) there will be no material change in market conditions in relation to customer demand or the competitive environment;

(c) there will be no material change in legislation or regulatory requirements impacting on the Berendsen Group's operations or its accounting policies;

(d) there will be no material litigation or regulatory investigations, or material unexpected developments in any existing litigation or regulatory investigation, in relation to any of Berendsen's operations, products or services;

(e) there will be no business disruptions that materially affect Berendsen, its customers, operations, supply chain or labour supply, including natural disasters, acts of terrorism, cyber-attack and/or technological issues;

(f) foreign exchange rates will be an average of GBP:EUR sterling exchange rate of 1.16; and

(g) there will be no material change in the management or control of Berendsen.

Factors within the influence and control of the Berendsen Board

(a) there will be no material acquisitions or disposals;

(b) there will be no material change in the existing operational strategy of Berendsen; and

(c) there are no material strategic investments or capital expenditure in addition to those already planned.

CONSOLIDATED INTERIM INCOME STATEMENTFor the six months ended 30 June 2017

The notes on pages 21 to 45 are an integral part of these condensed interim financial statements.

All operations are continuing.

CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOMEFor the six months ended 30 June 2017

CONSOLIDATED INTERIM BALANCE SHEETAs at 30 June 2017

CONSOLIDATED INTERIM CASH FLOW STATEMENTFor the six months ended 30 June 2017

CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY

CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY continued

The group has an Employee Benefit Trust to administer share plans and to acquire company shares, using funds contributed by the group, to meet commitments to group employees. At 30 June 2017, the Trust held 1,291,621 (30 June 2016: 1,514,115; 31 December 2016: 1,390,393) shares.

NOTES TO THE INTERIM FINANCIAL INFORMATION

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 31 December 2016 were approved by the Board of directors on 2 March 2017 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 30 June 2017 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct 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 31 December 2016, which have been prepared in accordance with IFRSs as adopted by the European Union and applicable law.

1.1 Going - concern basis

The group meets its day-to-day working capital requirements through its bank facilities. Although the current economic conditions, particularly in the UK following the recent referendum, continue to create uncertainty, particularly over the level of demand for the group's products, the group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the group should be able to operate within the level of its current facilities. As a consequence, and having reassessed the principal risks, the directors considered it appropriate to adopt the going concern basis of accounting in preparing the interim financial information.

2 Accounting policies

Except as described below, the accounting policies and key assumptions and sources of estimation uncertainty applied are consistent with those of the annual financial statements for the year ended 31 December 2016, as described in those annual financial statements.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.

The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 January 2017, but have no material impact on the group:

· Amendments to IAS 12, 'Income taxes' on Recognition of deferred tax assets for unrealised losses subject to EU endorsement

The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 January 2017 and have been applied within these financial statements.

· Amendments to IAS 7, 'Statement of cash flows' subject to EU endorsement which sets out the need for additional disclosure requirements in respect of movements in finance liabilities in particular identifying cash flow and non- cash flow movements (see note 12)

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2018 and have not been applied in preparing these consolidated financial statements. None of these are expected to have a significant effect on the consolidated financial statements of the group, except the following as set out below:

· IFRS 9, 'Financial instruments', addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 9 was issued in November 2009 and October 2010 and endorsed by the EU in November 2016. It replaces the parts of IAS 39 that relate to the classification and measurement of financial instruments and is effective for accounting periods commencing 1 January 2018. IFRS 9 requires financial assets to be classified into two measurement categories: those measured as at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification depends on the entity's business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity's own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. At this time the group does not expect IFRS 9 will have a significant impact on its existing accounting policies for financial instruments, because the new rules have a more direct impact on the accounting treatment of financial assets to which the group has limited exposure except trade receivables. The key area of impact for the group will be as a result of the introduction of the forward looking expected credit loss model.

2 Accounting policies (continued)

Similarly the way that the group currently deals with its hedge accounting transactions will not be significantly impacted by the move to IFRS 9. However it is likely that disclosures around the entity's risk management strategy and the impact of hedge accounting on the financial statements will be enhanced.

· IFRS 15, 'Revenue from contracts with customers' deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 'Revenue' and IAS 11 'Construction contracts' and related interpretations. The standard which was endorsed by the EU in September 2016 is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted. At this time the group does not expect there to be any significant impact of the standard on revenue recognition within the group which will continue to recognise revenue in line with current reporting. For the group's textile revenue income it is expected that the performance obligation will be the provision of the textile rental service and hence revenue will continue to be recognised over time. Revenue from direct sales is expected to be recognised at a point in time where the performance obligation is the provision of the direct goods.

The standard includes detailed application guidance which is being considered across all business lines as part of the group's detailed review and implementation plan ahead of the introduction of the standard from 1 January 2018.

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2019 and have not been applied in preparing these consolidated financial statements. None of these are expected to have a significant effect on the consolidated financial statements of the group, except the following as set out below:

· In January 2016 IFRS 16 - Leases was issued. The board is still in the process of reviewing the impact of IFRS 16 on the group's accounting policies. However, indicatively, because the accounting rules for lessors are largely unchanged the group is unlikely to have to change its current method of accounting for the textile rental assets held on its own balance sheet. All income arising from its textile and other rental assets are treated in effect as operating lease income and this will not change unless any future contracts result in the assets rented to third parties qualifying as finance leases rather than operating leases.

The group currently leases both properties and vehicles under a series of operating lease contracts which will be impacted by the new standard and these types of leases may need to be brought onto the group's balance sheet from the date of adoption of the new standard. As a consequence of this there is likely to be an impact on the make-up of the group's income statement where operating leases are likely to be replaced by a depreciation charge and related interest charge.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the group.

3 Segmental information

The business line results for the six months ended 30 June 2017 are as follows:

Unallocated costs include group marketing, central procurement and communication functions.

Capital expenditure comprises additions to property, plant and equipment and intangible assets, including additions resulting from acquisitions through business combinations.

The restated results for the half year ended 30 June 2016 under the new Business Line structure set out in the financial statements for the year ended 31 December 2016 are as follows: 

Sales between business line segments are carried out at arms-length. 

3 Segmental information (continued)

The segment assets and liabilities at 30 June 2017 under the Business Line structure are as follows:

The segment assets and liabilities at 30 June 2016 restated under the new Business Line structure are as follows:

From 1 January 2017 the group has reported the Workwear operations in Poland, the Czech Republic and the Slovak Republic within the Workwear business line. Previously these operations were reported as part of the Facility business line and accordingly, where applicable, the comparative financial information for the full year ended 31 December 2016 has been represented.

The represented segment assets and liabilities at 31 December 2016 under the new Business Line structure are as follows:

Business line operating assets consist primarily of property, plant and equipment, intangible assets, inventories and trade and other receivables.

Business line operating liabilities consist primarily of trade and other payables and provisions.

Unallocated assets include operating assets relating to corporate segments.

Unallocated liabilities include operating liabilities for corporate segments.

The group's revenues analysed by major country may be summarised as follows:

4 Seasonality

The hotels and restaurants markets are subject to some seasonal fluctuation. Higher revenues and operating profits 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.

5 Exceptional items

Included within operating profit are the following items which the group considers to be exceptional.

During the period the group incurred exceptional costs of £16.9m.

· £9m of exceptional costs were incurred in respect of legal and professional fees in respect of the recommended acquisition of Berendsen by Elis SA "the Transaction". The tax credit associated with these costs was £1.6m.

· £7.6m of exceptional costs were incurred in respect of both the substantial completion reorganisation and operational capability review costs, principally within the UK. The tax credit associated with these costs was £1.4m.

· £0.3m of exceptional costs were incurred in respect of the implementation of the group's strategic plans. The tax credit associated with these costs was £0.1m.

Contingent on completion of the Transaction, further fees of £23m would be payable. Other financial implications of the Transaction include the impact of the repayment of borrowings and the close out of associated derivatives, as well as the cost of accelerating unvested share awards. Further details of the Transaction will be included within the Scheme of Arrangement.

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. The effective tax rate on adjusted profit before tax is 22.6 % (30 June 2016: 23.1%).

7 Dividends

A final dividend relating to the year ended 31 December 2016 amounting to £38.5 million was paid in May 2017 (2016: £36.8 million), representing 22.5 pence per share (2015: 21.5 pence).

In addition, the directors have declared an interim dividend in respect of the financial year ending 31 December 2017 of 11p per ordinary share. It is payable on 25 August to shareholders who are on the register at 4 August 2017. This interim dividend amounting to approximately £19.0 million is not reflected in these financial statements as it does not represent a liability at 30 June 2017. It will be recognised in shareholders' equity in the year to 31 December 2017.

8 Earnings per share

Basic earnings per ordinary share are based on the group profit for the period and a weighted average of 171,293,223 (2016: 170,969,519) ordinary shares in issue during the period.

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:

An adjusted operating profit and earnings per ordinary share figure has been presented to eliminate the effects of exceptional items, amortisation of customer contracts, and non-recurring tax items. This presentation is shown because, in the opinion of the directors, this represents useful additional information to the readers of the interim financial statements, providing information attributable to the underlying activities of the business.

The reconciliation between the basic and adjusted figures for the total group is as follows:

9 Property, plant and equipment

During the six months ended 30 June 2017, the group acquired assets including new leases, but excluding property, plant and equipment acquired through business combinations, with a cost of £134 million (30 June 2016: £109 million).

Assets with a net book value of £1.7 million were disposed of by the group during the six months ended 30 June 2017 (30 June 2016: £1.4 million) resulting in a net loss on disposal of £0.4 million (30 June 2016: loss £0.5 million).

The group's capital commitments at 30 June 2017 were £48.3 million (30 June 2016: £23.2 million).

10 Provisions

Restructuring

Restructuring provisions comprise largely of employee termination payments. Provisions are not recognised for future operating losses.

Regulatory and legal

In an international group, a variety of claims arise from time to time. Such claims may arise due to litigation against group

companies, as a result of investigations by fiscal and competition authorities, or under regulatory requirements including

environmental. Provision against a number of such items has been made in these consolidated financial statements against

those claims which the directors consider are likely to result in significant liabilities.

11 Cash flows from operating activities

Reconciliation of operating profit to net cash inflow from operating activities:

11 Cash flows from operating activities (continued)

In the cash flow statement, proceeds from sale of property (including assets held for sale), plant and equipment comprise:

12 Reconciliation of net cash flow to movement in net debt

Reconciliation of liabilities arising from financing activities

13 Acquisitions

The group made no acquisitions in the period ended 30 June 2017. Over the same period the group paid £nil in respect of previous acquisitions made.

14 Pension schemes

The amounts recognised in the balance sheet are determined as follows:

Analysis of the movement in the net balance sheet asset:

The movement in the pension balance in the six months ended 30 June 2017 largely reflects the result of a fall in the Corporate bond rate during the period and the impact of this fall on discounted pension obligations.

15 Financial risk management and financial instruments

15.1 Financial risk factors

The group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.

The condensed interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements and hence they should be read in conjunction with the group's annual financial statements as at 31 December 2016. There have been no changes in the risk management department or in any risk management policies since the year end.

15.2 Liquidity Risk

Compared to year end, there was no material change in the contractual undiscounted cash out flows for financial liabilities. During the period the group made an additional drawdown from its RCF of £58 million.

15 Financial risk management and financial instruments (continued)

15.3 Fair Value estimation

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

· Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).

· Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2)

· Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

The following table presents the group's financial assets and liabilities that are measured at fair value at 30 June 2017:

The following table presents the group's financial assets and liabilities that are measured at fair value at 30 June 2016:

The following table presents the group's financial assets and liabilities that are measured at fair value at 31 December 2016: