Final Results

24th February 2012

BERENDSEN PLC

 Full Year results announcement

for the year ended 31st December 2011

Financial Highlights

* before net exceptional charges of £8.5 million (2010: £6.4 million credit and impairments and recognition of onerous contract provisions of £47.3 million) and amortisation of customer contracts of £24.0 million (£21.6 million)

Highlights

·; 8% increase in revenue in our Core Growth businesses

·; Adjusted Group operating margin increased 150bps to 14.1%

·; Strong free cash flow conversion at 114% of adjusted profit after tax

·; Good progress delivering our strategic review initiatives: new business line structure complete: capabilities strengthened in sales, procurement and HR management

Christopher Kemball, Chairman of Berendsen plc, commented:

''I am pleased to report a strong set of results for 2011 along with significant progress being made on the Group's strategic initiatives. The move to a business line structure is now complete and we have strengthened our capabilities in sales, HR and business development, as well as having developed major Group wide programmes in capital efficiency and procurement. We remain encouraged by the scope both to accelerate the development of our Core Growth businesses and to enhance the returns of our Manage for Value businesses. We finished the year with a strong balance sheet and a secure long-term funding position.

"2011 was my final full year as Chairman and I believe we enter 2012 in good shape with the benefits of our strategic initiatives already gathering momentum. While much of our top line growth is dependent upon economic activity, at this early stage, we anticipate delivering a slightly better performance in 2012 than previously expected."

For further information contact:

Analyst Meeting

The company will be presenting to a meeting of analysts at 9.00am today. A live audiocast of the presentation and questions will be available on the company's website on www.berendsen.com. Questions will only be taken at the meeting.

Overview of the 12 months ended 31st December 2011

We are pleased to report a strong set of results for the Group with our adjusted operating margin increasing 150bps to 14.1%, which is a 10 year high. Group adjusted operating profit increased 13% to £139.8 million (2010: £123.9 million), which is an increase of 8% excluding the benefit of the provision we made at the end of 2010 for future losses on UK decontamination contracts. Adjusted earnings per share were 48.4p compared with 41.7p last year, an increase of 16%. The Board is recommending a final dividend of 16.0p (14.7p) bringing the total dividend to 23.4p (21.2p), an increase of 10%.

During the year we increased our focus on the delivery of cash through our capital efficiency programme and, in line with our strategic objectives, we converted more than 100% of our profits to cash. Free cash flow was 23% higher than last year at £93.1 million (£75.5 million), representing a strong cash conversion of 114% (107%) of our adjusted profit after tax. As a consequence our net debt was reduced to £513.6 million compared with £540.2 million as at 31st December 2010.

We also improved our return on invested capital by 50bps from 7.4% in 2010 to 7.9%. Increasing these returns towards double digit levels remains a key objective of our Strategic Review.

In November 2010, we presented the results of our Strategic Review and we are pleased with the progress we have made in implementing various initiatives during the course of 2011. We have strengthened our capabilities in sales, HR and business development and we have progressed major Group-wide programmes in capital efficiency and procurement. Our new business line structure is fully in place with effect from 1st January 2012 and we are now managing our operations along these business lines, which are further differentiated for capital allocation between those deemed to be Core Growth and those which we will Manage for Value. During 2011 we increased revenue by 8% in our Core Growth businesses and improved operating margins by 70 bps as we strived for greater efficiency. Measures taken already started to deliver benefits in the second half of 2011. Furthermore, whilst the aggregate revenue of our Manage for Value businesses declined by 13%, following disposals in 2010, the operating margin increased in our Flat Linen businesses outside the UK by 130 bps as we accelerated restructuring plans. We remain committed to increasing value from both segments and the reviews below discuss performance on both the previous regional basis and in the new business line segments.

On 7th December 2011 we announced that the Chairman, Christopher Kemball, plans to retire after the Annual General Meeting on 26th April 2012. The Board also announced the appointment of Iain Ferguson, currently Senior Independent Non-Executive Director of the Company, as Non-Executive Chairman upon Christopher's retirement. The Board, on behalf of all the Company, would like to thank Christopher for his excellent stewardship of Berendsen, first as Non-Executive Director and then as Chairman, over the past twelve years.

Results

Revenue increased to £992.0 million in the year, up 1% on the prior year (2010: £986.1 million). Adjusted operating profit (before exceptional items and amortisation of customer contracts) was £139.8 million, compared with £123.9 million last year, an increase of 13%. Comparisons of revenue and adjusted operating profit performance to the equivalent period last year reflect the provisioning at the end of 2010 of the estimated future losses on decontamination contracts (£4.4 million loss in 2011 and declining) and the £34.3 million acquisition of the ISS washroom activities in Denmark, Sweden and Norway in December 2010, which have performed ahead of our expectations in 2011. Partially offsetting the impact of these, was the disposal for £28.3 million of Björnkläder (the Swedish direct sales business) also in December 2010. Excluding these items and the impact of currency, underlying revenue grew 2% and adjusted operating profit grew 5%. Foreign exchange translation increased revenue and adjusted operating profit by £17.4 million and £2.7 million respectively compared to the prior year. However, so far in 2012 we have seen close to a 5% weakening of the Euro against Sterling compared to average rates for 2011.

Our net finance costs were £28.0 million compared with £26.8 million last year, reflecting a modest uplift in the pricing of the 5 year €535 million Revolving Credit Facility, which we signed in July 2011, compared to our previous facilities. This new facility provides the Group with further long term funding as discussed below. Adjusted profit before tax was £111.8 million (£97.1 million) and adjusted earnings per share were 48.4 pence (41.7 pence).

Our effective tax rate on adjusted profit before tax was 26.4%, similar to last year (26.6%), and it is expected to remain at around this level in 2012.

Net exceptional charges of £8.5 million were incurred in 2011. We incurred restructuring costs in the first half of the year in our German Healthcare business of £3.0 million (announced in 2010). We have incurred costs of £5.4 million in restructuring our Irish and Scandinavia flat linen businesses, which we are managing for value, and in rationalising the salesforce in our Core Growth business. Costs of £2.5 million have been incurred in managing the change programmes identified in our Strategic Review, such as the capital efficiency and procurement review programmes. Most of the one-off costs of our strategic initiatives have now been incurred and we expect to conclude the programme in 2012, with further costs next year of around £2.0 million. Net costs of £1.2 million were incurred in transaction fees on acquisitions and similar initiatives in 2011. Exceptional credits of £3.1 million have been recognised for changes in the management and funding arrangements for long term employee benefits. This covers a number of countries and includes the impact of closing to future accrual the UK defined benefit pension scheme. This scheme was closed to new entrants in 2003 and by closing to future accrual, we have now brought the scheme into line with standard practice in the UK.

In 2010, we had net exceptional credits of £6.4 million, including the gain we generated on disposal of Björnkläder of £11.4 million, and we made impairments to the goodwill of our German Healthcare business and UK decontamination business (in total £34.1 million) as well as provisioning for future losses on these contracts (£9.9 million).

Amortisation of acquired customer contracts increased to £24.0 million (£21.6 million). After amortisation and net exceptional items, operating profit was £107.3 million (£61.4 million), profit before taxation was £79.3 million (£34.6 million) and basic earnings per share were up to 33.8 pence compared with 12.9 pence in 2010.

Our net capital expenditure was £159.2 million, compared to £160.1 million in the previous year. This was 96% (98%) of the depreciation charged. The investment in textiles and other rental assets increased by £13.4 million to £131.3 million (£117.9 million) in support of higher underlying volumes and the new contract wins, particularly in Sweden. As previously indicated, we are a well invested business. Expenditure on plant and equipment reduced from £49.0 million last year to £32.1 million in 2011 but we have continued to target investment to the higher growth areas of our business. We concluded the capacity investment in our mats and workwear plant near Oslo, Norway, and made efficiency investments in a number of our Swedish workwear plants. For 2012, we expect net capital expenditure to be in line with depreciation. Free cash flow was significantly higher at £93.1 million (£75.5 million). Our initiatives in capital efficiency improved cash flow with a positive inflow of £6.3 million (£0.7 million) in working capital. We are about halfway through this programme of initiatives and will continue to focus on this in 2012, where we will be again targeting to convert over 100% of our adjusted profit after tax to free cash flow.

We contributed £5 million to the UK pension fund in the year and a further £5 million is planned in 2012, in line with the funding plan agreed following the 2010 triennial valuation. We ended the year with net retirement benefit obligation liabilities for the Group of £28.2 million (£3.6 million) reflecting the decrease we have seen in discount rates following the lowering of bond yields. This was partially offset by improved asset performance. The main UK pension fund shows an asset of £10.3 million (£22.5 million) on an IFRS accounting basis but a deficit at the triennial valuation for funding purposes, with our overseas pension funds showing a liability of £38.5 million (£26.1 million). These overseas plans are unfunded in line with local practice.

Acquisition spend amounted to £13.7 million (£85.6 million). This relates to eight small bolt-on acquisitions, primarily in Scandinavia and in Poland which are in our Core Growth businesses. These are already contributing to Group profits. After the cash cost of exceptional restructuring of £6.6 million (£4.2 million), a small increase of £1.4 million from exchange translation and dividends paid of £37.3 million (£33.8 million), net debt at 31st December 2011 was £513.6 million (£540.2 million).

Overall the Group retains a strong balance sheet with a ratio of net debt to earnings before exceptional items, interest, tax, depreciation and amortisation (EBITDA) of 1.66 times (2010: 1.85 times), compared with a covenant level of not more than three times. At current exchange rates we have total private placement notes of £357.6 million with maturities between 2014 and 2021. In addition the Group's bank facilities extend to July 2016 and amount to £448.2 million, of which £240.2 million was drawn at the year end.

We have increased our return on invested capital from 7.4% last year to 7.9% in 2011. Further improving these returns is a key strategic objective.

The Board is recommending a final dividend of 16.0 pence, which, together with the interim dividend of 7.4 pence paid in October 2011, gives a total of 23.4 pence, an increase of 10% on last year's level. The final dividend will be paid on 4th May 2012 to shareholders on the register at the close of business on 13th April 2012.

Performance Review 2011

Set out below is our review of the performance of the regional segments in 2011. This is followed by our review of performance by business line.

* before exceptional items and amortisation of customer contracts

Nordic Region

Revenue was broadly maintained at £347.7 million (£348.8 million) but adjusted operating profit increased by 16% to £66.5 million. The growth rates against last year reflect the disposal of the Björnkläder business and the acquisition of Scandinavian washroom business of ISS. On a constant currency basis and excluding these transactions, revenue was up 4% and adjusted operating profit was up 8%. The adjusted operating margin increased to 19.1% from 16.4%.

Our Swedish business continued its good level of growth, accompanied by margin improvement through leverage of higher volumes, resulting in a significant increase in adjusted operating profit. Denmark finished the year well with a good level of growth in adjusted operating profit, although revenue was broadly flat year-on-year in a stable market.

Our Norwegian business also grew revenue well, both organically and through the acquisition of ISS washroom. There was profit improvement in the second half, having made progress on the integration issues we reported as holding back profits in the first half.

The Baltic countries made a small adjusted operating profit on good revenue growth.

Continent Region

Revenue in the Continent region was similar to last year at £238.6 million (£239.0 million) and adjusted operating profit was also similar to last year at £33.3 million (£33.5 million). The adjusted operating margin for the region was 14.0%.

Our workwear and facility businesses in Holland and Poland had a strong year. Holland had higher revenue growth and with margin improvement delivered a good adjusted operating profit growth.

We made particularly strong progress in our business in Poland, where we returned to double digit growth and increased our adjusted operating margin back towards 20%. In our smaller businesses in the Baltics and Czech Republic we also made good progress.

This was offset by our German Healthcare business where we held our margin at 7% but on lower revenue, reflecting the previously reported full year effect of the lost volume in 2010. In our Workwear business in Germany we have gained some good new contract wins and a higher level of customer satisfaction leading to better retention following the management change we made in the first half. We are making progress but the business performed below expectations in 2011.

UK and Ireland

Revenue of our textile business in UK and Ireland grew modestly by 2% from £330.3 million to £336.7 million but profits were up 7% from £41.2 million to £43.9 million, with stronger operating margins in the second half. In our Hotel business we were able to deliver operational efficiencies as we adjusted to the lower than expected levels of volume following a strong 2010: although volumes were stable across the year as a whole, there was some slight weakening towards the end of the year. Our Healthcare business performed very well, growing revenue and improving profits. Workwear also increased profits and our Irish business benefited from the restructuring we have implemented through the year.

In our Clinical Solutions and Decontamination business revenue increased to £69.0 million from £68.0 million due to higher revenues on the decontamination contracts. Following the provisioning of future losses on these decontamination contracts at the end of 2010 for £9.9 million, which was taken as an exceptional item, we saw the business as a whole report a profit of £3.3 million. We are making steady progress on improving the performance of our decontamination contracts and working with our customers to bring these contracts to longer term viability. £4.4 million of the future loss provision was utilised in 2011 in line with expectations (2010 full year loss £5.4 million), with a further provision of £5.5 million remaining. Sterile consumables encountered some supply issues in the second half of the year, which held back profits but it was a solid year for our reusable textile business.

Business Line Performance

In line with our Strategic Review, we have reorganised the Group's structure with effect from 1st January 2012 along lines of business. Below we report the results for the year ended 31st December 2011 on the new business line segmentation, which is extracted from our audited financial statements. Comparatives are provided for the year ended 31st December 2010, which have been extracted from unaudited management accounts.

* before exceptional items and amortisation of customer contracts

** extracted from unaudited management accounts

*** includes Group marketing and communication functions, previously reported within the regional businesses

Workwear

Revenue grew 5% in the year to £286.5 million. Excluding currency and the impact of a number of small acquisitions underlying growth was 2%. Margins were slightly higher at 17.2%, with adjusted operating profits up 7% to £49.2 million (£46.1 million).

Over recent years we have confirmed the resilience of our workwear business with its diverse customer base across Northern Europe, the number and scope of contracts and by the innovations we have brought to our markets. We have benefited from our focus on Northern Europe and Scandinavia, where markets generally improved in 2011 and are currently stable. We saw higher levels of revenue growth in Sweden with an all time high volume and with the operational efficiencies we were able to gain, we delivered strong profit growth. Both Denmark and Holland improved adjusted operating margins to deliver a good operating profit performance. Our UK workwear business grew revenue and operating profits modestly and while we were disappointed with the performance of the business in Germany, we saw some improvement in the second half.

In 2012 we will build on our solid contract base with initiatives to improve our market focus through the new business line structure. Our target sectors have been identified to address that part of the market which is not outsourced and is, we believe, at least as big as the existing outsourced textile maintenance market. It may take time for some of these initiatives to enhance top line growth, which also depends upon economic activity. However, we expect to make solid progress again in 2012.

Facility

Our Facility businesses benefitted from the acquisition of the Scandinavian washroom business of ISS at the end of last year but we also saw higher levels of organic revenue growth in the business line, which has the least developed market and offers the most potential for growth. Excluding the impact of acquisitions and currency, organic revenue growth was 5% and underlying operating profit growth was 7%. The margin improved from 22.4% to 23.1%.

Our mat and washroom businesses in Scandinavia delivered solid organic revenue growth and improved their market leadership with the benefit of the acquisition of ISS washrooms. Adjusted operating profits were held back in Norway in the first half by increased distribution costs following the acquisition, but the business is now well placed to capture further benefits from the additional volume and enhancements to product and service offered to our washroom customers. There was strong progress in Poland and our businesses in the Baltics and Czech Republic also developed well.

Our cleanroom businesses (based in Denmark, Holland and Sweden) performed very well in the year, broadening the service range and winning key contract extensions as well as new customers. We won a significant reference customer in Germany, which will be serviced from our existing operations. We saw high single digit growth in revenue and adjusted operating profit this year.

The outlook for the Facility business remains good and we expect this segment to again drive the highest level of growth for the Group in revenue and adjusted operating profit in 2012.

UK Flat Linen

There was a 2% increase in revenue in 2011 to £195.2 million (£191.1 million) whilst adjusted operating profit was up 5% to £26.1 million (£24.9 million). The adjusted operating margin increased 40bps to 13.4%. We saw higher levels of growth in the Healthcare business as like-for-like volumes stabilised towards the end of the year and we won a major contract, which was newly outsourced in the second half. We remain well placed to capture contracts for further outsourcing, although the decision making around these opportunities is currently rather slow.

Like-for-like volumes in our hotel business were broadly in line with 2010 for the year as a whole but with some variability and weakening as the year progressed. Revenue was slightly higher as a result of the price increases we were able to introduce. Our operating margin was slightly lower than 2010 as we adjusted our volume expectations through the year, but we were able to preserve most of the strong increase in margin we delivered in 2010.

The outlook is for further progress in Healthcare where we expect new outsourcing opportunities to come through. Our Hotel business is dependent upon a stable economy through the year and while the Olympics in London will boost demand, it is taking place in a normal seasonally busy period for the Group.

Clinical Solutions and Decontamination

Comments on our 2011 performance are included in the regional review for UK and Ireland above.

We expect progress to be steady in 2012 with the focus of the business on margin improvements and cash returns, and securing the long term viability of our decontamination contracts.

Flat Linen outside the UK

This comprises our hotel and healthcare businesses in Denmark and Sweden, our healthcare businesses in Germany and Austria and our Irish business. We include here our remaining direct sale business in the UK (revenues of £11million) having sold Björnkläder (Sweden) in 2010; we reported revenue of £46.4 million and operating profit of £3.1 million in this segment in 2010.

Excluding the impact of the sale of Björnkläder, Flat Linen business outside the UK held revenues broadly flat at £234.0 million but improved profits 11% to £21.7 million. The margin increased to 9.3% from 8.0%.

Our focus in these Manage for Value businesses has been on margin improvement and we have undertaken restructuring in Ireland and in Denmark and concluded the restructuring in German Healthcare announced in 2010 to align these businesses to the new priorities. These actions delivered excellent progress with a significant adjusted operating margin improvement in Ireland and Scandinavia. Our German Healthcare business held margins at 7%, the same as 2010 but on lower volumes, with the full year effect of 2010 customer losses.

We expect further improvement in these businesses with the focus on margin and cash generation. While recognising that the opportunities for higher levels of revenue growth may not be as strong in this segment, these are good businesses with experienced management teams and good market positions, so they have much to contribute to the success of the Group.

Outlook for the Group

The Group delivered a strong set of results in 2011 and made significant progress with its strategic initiatives. The move to a business line structure is now complete and we have strengthened our capabilities in sales, HR and business development, as well as developed major Group wide programmes in capital efficiency and procurement. We remain encouraged by the scope both to accelerate the development of our Core Growth businesses and to enhance the returns of our Manage for Value businesses. We finished the year with a strong balance sheet and a secure long-term funding position.

The Group has entered 2012 in good shape with the benefits of our strategic initiatives already gathering momentum. While much of our top line growth is dependent upon economic activity, at this early stage, we anticipate delivering a slightly better performance in 2012 than previously expected.

Consolidated income statement

For the year ended 31st December 2011

Consolidated statement of comprehensive income

For the year ended 31st December 2011

Items in the statement above are disclosed net of tax.

Consolidated balance sheet

For the year ended 31st December 2011

Consolidated cash flow statement

For the year ended 31st December 2011

Consolidated statement of changes in equity

At 31st December 2011, the company held nil (2010: 1,025,000) treasury shares as these shares were transferred to the Employee Benefit Trust during the year.

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 31st December 2011, the Trust held 2,915,296 (2010: 1,965,939) shares.

Notes to the consolidated financial statements

Accounting policies to the consolidated financial statements

1 Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU), IFRIC Interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, as modified by available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

The Berendsen plc's Report and Accounts 2011 (the "Annual Report") will be posted to shareholders on 15th March 2012. The Annual Report will also be made available on the company's website, www.berendsen.eu, from 15th March 2012. The financial information set out herein does not constitute the company's statutory accounts for the year ended 31st December 2011 but is derived from those financial statements and the accompanying directors' report. The statutory accounts for 2011 will be delivered to the Registrar of Companies following the Company's Annual General Meeting which will be held on 26th April 2012. The auditors have reported on the company's statutory accounts; the report was unqualified and did not contain statements under Section 498 (2) or (3) of the Companies Act 2006.

The comparative figures for the year ended 31st December 2010 are not the financial statements for the financial year but are derived from those accounts which have been reported on by the group's auditors and delivered to the Registrar of Companies. The report was unqualified and did not contain statements under Section 237 (2) or (3) of the Companies Act 1985.

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Berendsen plc executive board.

During 2011, the Berendsen plc executive board considered the business from both a geographical and product service perspective: Textile maintenance Nordic, Textile maintenance Continent, Textile maintenance UK and Ireland and Clinical Solutions and Decontamination. The Clinical Solutions and Decontamination segment is reported although it does not meet the quantitative thresholds required by IFRS 8.

Following the strategic review of the business presented in November 2010, from 1st January 2012 the Berendsen plc executive board will manage the business under the business lines of Workwear, Facility, UK Flat Linen, Flat Linen outside UK and Clinical Solutions and Decontamination.

The group has provided voluntary disclosure under the new segment for 2011.

2 Segmental information

The segment results for the year ended 31st December 2011 are as follows:

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

Sales between segments are carried out at arm's length. The company is domiciled in the UK.

Analysis of revenue by category:

Analysis of external revenue by country:

2 Segmental information (continued)

The segment results for the year ended 31st December 2010 were as follows:

The segment assets and liabilities at 31st December 2011 are as follows:

2 Segmental information (continued)

The segment assets and liabilities at 31st December 2010 were as follows: