Half Yearly Report

23 August 2013

Berendsen plc Interim Results 

Announcement for the Six Months Ended 30 June 2013

* Before £13.5 million (£11.9 million) amortisation of customer contracts

** CER growth at constant exchange rates

*** Underlying growth at constant exchange rates and excluding acquisitions

****Restated for the introduction of IAS19 'Employee Benefits' (Revised)

Operational Highlights

· Underlying revenue up 3% in Core Growth with strong margin improvement in Workwear

· 112% of adjusted profit after tax converted to free cash flow

· Interim dividend up 10%

· Further Strategic Review initiatives commenced

· New Director of Group Procurement and Supply Chain appointed

· Trading as Berendsen in UK (previously Sunlight) from July 2013

· First small step into faster growth emerging markets, supporting a key customer in Russia

Iain Ferguson, Chairman of Berendsen, commented

"We delivered a good underlying performance in the first half of the year, during which we commenced further important strategic initiatives and we will continue to invest in these in the second half. Looking forward the Board continues to expect to achieve a year of good progress in line with its previous expectations."

For further information contact

Analyst Meeting

The company will present to 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.

Results for the six months ended 30 June 2013

We are pleased to report a good set of results for the period, which reflected continued momentum towards achieving our strategic objectives. Reported revenue for our Core Growth businesses increased 9% compared to the same period last year with the underlying level (excluding acquisitions and currency impacts) up 3%. Adjusted operating profit in these businesses was up 15% and excluding acquisitions and currency impacts increased by 9%. The adjusted operating margin for the Group increased 80 bps in the first half to 13.8%. Adjusted earnings per share for the Group were up 21% to 26.2p from 21.6p last year. The Board is recommending an interim dividend of 8.8p (2012: 8.0p), an increase of 10%.

We continued to deliver strong free cash flow in line with our strategic objective of converting more than 100% of our profits to cash. Free cash flow increased 13% to £50.3 million as a result of our continued focus on capital allocation and drive for capital efficiency, with a special focus on textile management in the period.

We made progress against our strategic objectives, building on the initiatives we have put in place. We recognise this is an ongoing process and there is much that we can still do to improve the business. We have started to invest in a number of further initiatives, and this investment will continue in the second half, the benefits of which will materialise in the years ahead.

In April, a new Director of Group Procurement and Supply Chain joined us, bringing a new breadth of experience to the Group. His primary objective will be to drive the next phase of development in our procurement strategy. We are evaluating the findings of his initial review but it is clear there are opportunities available from further leveraging our scale in procuring textiles, pooling our buying of indirect products and services, streamlining our supply chain and improving the management of supplier performance. We expect to see some changes from these initiatives towards the end of this year, with full implementation in the first half of next year.

As one of our first strategic actions in 2011, we changed the name of the Group to Berendsen plc, continuing to trade as Berendsen in Continental Europe but retaining the trading name of Sunlight for the UK. Management in the UK has now decided to change the trading name of our UK textile businesses from Sunlight to Berendsen, which we did from the beginning of July. We have accompanied this with a customer communication programme to re-emphasise, but also broaden, the underlying values and commitments of the business. Our employees in the UK are excited about the change, further aligning themselves to the overall progress we are making as a Group.

A further milestone in the implementation of our strategy has been our move, in a very small way, into Russia where we will support an existing cleanroom customer. While international expansion has not been a priority for us, given the opportunities we see in existing markets, this will provide experience and knowledge of operating in faster growth, but more challenging, markets beyond our existing footprint.

Group Overview

Revenue at £521.5 million in the period was up 7% compared to last year (£488.2 million). Adjusted operating profit (before amortisation of customer contracts) was £71.8 million, up 13% from £63.4 million last year. Excluding the positive impact of currency translation, which increased revenue and adjusted operating profit by £14.4 million and £2.6 million respectively compared to last year, and the contribution from acquisitions, underlying revenue grew 2% and adjusted operating profit grew 8%.

2012 results are restated for the introduction of IAS19 'Employee Benefits' (Revised). The increase in reported pension costs for the first half of 2012 as a result of the prior year adjustment was £1.6 million.

Our net finance expense was £11.6 million, a decrease from £13.5 million last year. We expect the interest charge to be slightly higher in the second half. Adjusted profit before tax was £60.2 million, 21% above last year (£49.9 million) and adjusted earnings per share were up 21% to 26.2 pence (21.6 pence). Our effective tax rate on adjusted profit before taxation was 25.5% down from 26.3% last year with the expected reduction in country rates in Sweden and UK. We expect the tax rate for the full year 2013 to be maintained at this level.

Amortisation of acquired customer contracts was £13.5 million (£11.9 million). Operating profit after amortisation was £58.3 million (£51.5 million) and profit before tax was £46.7 million (£38.0 million). Basic earnings per share were 21 pence compared with 16.4 pence in the first half of 2012.

Our net capital expenditure was similar to last year at £77.1 million (£78.0 million) and below depreciation of £88.5 million (£83.1 million). Plant investments amounted to £12.6 million, slightly above the £10.0 million of last year with funding to upgrade our UK Workwear plants as well as maintaining our well-invested operations, which have an excellent footprint across the markets we serve. Investment in textiles was £66.7 million (£68.4 million) reflecting a good level of new contract activity but also the initiatives we have taken to improve utilisation of textiles. Overall, we expect net capital expenditure to be similar to depreciation in the second half of the year.

Free cash flow was again strong at £50.3 million (£44.7 million), a conversion of 112% of the adjusted profit after tax of the Group. We have contributed £2.5 million to the UK pension fund in the period and intend to contribute a similar amount in the second half of the year. We are undertaking the triennial valuation of our main UK fund this year and expect the results of this in the second half. We do not currently expect any significant change in funding position compared to the last valuation. At 30 June 2013 the pension accounting deficit for the Group was £5.3 million (£20.5 million at the end of 2012). Acquisitions, reflecting deferred consideration paid, amounted to £0.4 million in the period. The impact of exchange rate movements increased net borrowings by £22.3 million and after dividends paid of £29.8 million, net borrowings at 30 June 2013 were £475.9 million (31 December 2012: £463.7 million). The total facilities available to the Group are £816.8 million with our new RCF and our private placement notes extending from 2014 to 2021.

The interim financial information for the six months ended 30th June 2013 has been reviewed by PricewaterhouseCoopers LLP.

Business Line Performance

Below we report the results for the six months ended 30 June 2013 in our Business Line segmentation.

* before amortisation of customer contracts

**restated for the introduction of IAS19 'Employee Benefits' (Revised)

CORE GROWTH

Workwear

Revenue was up 7% in the period at £152.4 million (£143.0 million), with adjusted operating profit 17% ahead at £27.0 million (£23.0 million). Underlying constant currency growth was 3% for revenue and 12% for adjusted operating profit. The adjusted operating margin increased 160bps to 17.7%.

We are seeing benefits from the initiatives and investments our Workwear management team is undertaking, using best practice to define a standard business model. In product development, we have focused on a standard international collection, taking the best we have from different markets, which has improved material costs and also lead times for garments to be available. We are improving our sales management through better coaching methods and we have set more ambitious targets this year for the salesforce as the efficiency of the teams is improving. We launched our operational excellence programme following a structured review of best practice and this is supported by focused improvement reviews to drive productivity and quality and consistent customer satisfaction. There has been special focus on textile management: having defined best practices and workflow optimisation last year, we are seeing early signs of success from implementation this year with savings in textile purchases estimated at £4 million in the first half from the programme.

We have made strong progress in our Workwear business with the benefit of additional volumes and operational improvements through transfer of best practice contributing to the excellent margin increase. In Germany and UK, where the opportunities for best practice transfer are greatest, we delivered in aggregate a 5% increase in revenue and a 30% increase in operating profit, against a weaker first half last year, resulting in a faster than expected margin improvement of more than 200 bps. We have made good strides towards moving these countries closer to the average margin for the Business Line.

In Germany, our revenue growth was close to double-digit following the significant new contract wins and this was a key driver of our excellent profit growth in the business, the highest for the Business Line. In the UK, we have already seen the significant benefits at our Rainhill plant that we can deliver through the conversion of our traditional production flows to the same model we use in Continental Europe, which is based on the principles of lean production and self-managed teams. Productivity at the plant is up by almost a third in the first half compared to last year and the margin at the plant has increased by 160bps over the same period. In May we approved the capital expenditure for conversion of a second plant, at Wakefield, for £2.5 million and this will be completed in October 2013. We are also piloting a service improvement model in the UK, another best practice transfer from Continental Europe, to target an increase in retention rates across the business. Retention in the UK, while it has improved in the last 12 months, remains 5ppt below the rates in Continental Europe.

However, we saw some easing of volumes in Denmark and Sweden, two of our best practice countries, with the Danish economy still sluggish and slightly slowing growth in Sweden: this held back top line growth in these countries. Our Dutch business, also a best practice reference, made good progress, growing revenue 4%. It has benefitted from a recent initiative to grow virgin sales to customers who have not previously had a rental contract, and this has increased the proportion of all new contracts sold in the first half to over 50%.

Facility

Revenue was 16% ahead of last year at £123.0 million (£106.1 million) and adjusted operating profit at £30.4 million (£25.7 million) was up 18%. The adjusted operating profit margin improved to 24.7% from 24.2%. On an underlying constant currency basis excluding acquisitions, revenue grew 3% and adjusted operating profit was up 9%.

We are encouraged by the opportunities for growth in Facility. The market opportunity for new contracts in Mat and Washroom is significant with no more than 10% of the potential market currently taking a fully outsourced service in the markets in which we operate. In addition, we believe that the potential to expand or enhance the level of services to existing customers offers as big a revenue opportunity as new contract sales. Importantly, we have the existing footprint that provides the scale to invest in the salesforce needed to capture this opportunity. This has allowed us to consolidate and focus the operations of our washroom business in each of our Scandinavian countries and Netherlands. Although Washroom remains the smaller of the two businesses in the markets we serve, in many of the more developed facility markets of Europe, washroom is the larger business.

We expanded our contract base in our Mat and Washroom businesses, with mat placements in particular increasing well in the period and we continue to make progress in sales efficiency. This has more than offset the reduction in volume per contract and price pressure, which has resulted from a weak economy in Denmark. We are refining our offerings in washroom services to facilitate customer choice and we are pleased with the integration of Groene Team, which we acquired in Holland at the end of 2012.

In the emerging markets we saw double digit revenue growth in aggregate with the newer territories of the Baltics and Czech Republic growing strongly. There is a good level of growth in Poland, our larger and more established business, and with the operating margin at close to 20% this is converting well to profit. It is encouraging that growth in our Baltic businesses is delivering improved operating margins, up 7ppt in the period and now stands at just under 12%.

Our Cleanroom business delivered another period of excellent progress, clearly benefiting from the added focus of our Business Line structure. The combination of good organic growth and the contribution of the German business we acquired in April 2012, pushed revenue growth above 18% with improved margins. The level of new business in Germany, in particular, has been very strong. In May we contracted to assist one of our major Danish pharmaceutical customers in establishing a plant in Russia. We will manage its cleanroom textile operations from within its plant and while the revenue and scale of operations will initially be small it will further develop our relationship with a key customer and build some experience of operating in the faster growing, emerging economies in line with our strategy.

UK Flat Linen

Revenue was 3% ahead of last year at £98.3 million (£95.0 million) and adjusted operating profit was 2% higher at £10.7 million (£10.5 million). The adjusted operating margin decreased slightly to 10.9%, as a result of higher gas costs.

We are pleased with the increase in revenue growth rate to 3% (2% in the year to 31 December 2012) which has been driven by a combination of new contract wins, modestly higher underlying volumes and price increases. The business continues to place innovation at the heart of its customer service proposition. In Hotels we are the only single company national provider of linen supply and our scale allows us to differentiate through our seven-day service offering, security of supply and ability to dedicate capacity to key customers. We are also innovating our systems solutions for our customers with over 50,000 hits per week by customers in our dedicated webportal. In Healthcare, we recently hosted an innovation day for our customers, showcasing the service and product enhancements we are investing in, which was well received and provides us with valuable insight into our customer needs.

In Hotels we have seen a 2% increase in underlying volumes in our group customers compared to the same period last year. Our salesforce continues to improve its sales management processes, particularly with the introduction of new customer relationship management (CRM) system leading to greater efficiency. The competitive environment remains tough in line with the economic challenges we still face in the UK but overall progress has been good. The margin has been held back in the period, despite improvements in productivity, by higher than expected gas prices as a result of the particularly cold spring we experienced this year in the UK.

In Healthcare, we saw little change in underlying volumes but we benefited from new contract wins, add-on sales from our innovations in product and services to the hospitals, and contractual price increases. We remain well placed to capture further outsourcing and we are in dialogue with a number of prospects.

MANAGE FOR VALUE

Manage for Value businesses continue to fulfil the requirement to generate high cash returns from the existing capital base.

Flat Linen Outside the UK

Our flat linen businesses outside the UK are responding to the strategic challenges of improving performance and generating cash. Revenue was up 4% at £113.7 million (£109.5 million) but adjusted operating profit was down 10% to £8.5 million (£9.4 million). The adjusted operating margin decreased to 7.5% (8.6%).

The businesses within this segment have worked hard in the first half and maintained underlying revenues despite the pricing pressure in Swedish and German Healthcare we highlighted in our February announcement and which has still to be fully absorbed by the business. They are benefiting from the added focus of our business line structure and individual management teams have innovated with add-on services and delivered additional volume. We have seen some good new contract wins in Germany and Austria and in Scandinavian hotels towards the end of the period which will benefit more fully next year.

Clinical Solutions and Decontamination

Revenue was largely unchanged at £34.1 million (£34.6 million) with adjusted operating profit up to £1.7 million compared to £0.9 million last year.

Sales were weaker in our single use surgical drapes and gown business following the loss of a significant customer as a result of changes in its circumstances, but we increased significantly our profit in the period with the completion of our turnaround plan of our sterile consumables business, which we started in the second half of last year.

We continue to improve the performance of our decontamination contracts. The key actions of our turnaround plan are largely delivered with new volume from the existing contract and start up of a significant new contract contributing to a reduction in the loss for the period to £0.4 million compared to £1.5 million last year. There is still further work to do to get the business to breakeven but we are encouraged at the progress, at the heart of which is the quality of our service. £2.9 million of the provision we made in 2010 remains to absorb future losses on these contracts.

Summary and Outlook for the Group

We delivered a good underlying performance in the first half of the year, during which we commenced further important strategic initiatives and we will continue to invest in these in the second half. Looking forward the Board continues to expect to achieve a year of good progress in line with its previous expectations.

Principal Risks and Uncertainties

Details of our principal risks and uncertainties were previously disclosed on pages 32 to 38 of the 2012 Annual Report and Accounts. In that disclosure we referred to our mitigation procedures which remain relevant to the risks outlined below.

Taking into account our strategic objectives outlined on page 11 of the 2012 Annual Report and Accounts, some or all of the principal risks and uncertainties summarised below have the potential to impact our results or financial position during the remaining six months of the financial year:

Delivering sustainable organic growth

· New sales model fails to deliver the necessary new contract wins to drive targeted organic growth.

· Further economic downturn (low or negative GDP growth in Europe).

Maintaining a sound financial position/improving capital efficiency

· Movements in exchange rates adversely affect the translation of our group results into UK sterling.

· Return on Invested Capital (ROIC) is not sufficiently greater than the group's cost of capital.

· Failure to improve the performance of the Decontamination business during 2013.

Improving financial returns by leveraging operational efficiency

· Unforeseen loss of operational/IT capacity.

· One of our major textile suppliers is unexpectedly unable to meet our textile requirements.

Maintaining a motivated workforce driven by an experienced management team

· Inadequate talent management and inability to recruit and retain sufficiently qualified and experienced senior management.

Maintaining health and safety and other governance matters as a priority

· Breach of health and safety regulations.

Reducing our impact on the environment

· Textile suppliers are found not to be adopting appropriate employment and human rights practices.

· Discovery of historic environmental issues at laundries.

CONSOLIDATED INTERIM INCOME STATEMENTFor the six months ended 30 June 2013

CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOMEFor the six months ended 30 June 2013

CONSOLIDATED INTERIM BALANCE SHEETAs at 30 June 2013

CONSOLIDATED INTERIM CASH FLOW STATEMENTFor the six months ended 30 June 2013

CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITYAs at 30 June 2013

CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY continued

As at 30 June 2013

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 2013, the Trust held 2,198,134 (30 June 2012: 2,976,132; 31 December 2012: 2,882,275) shares.

NOTES TO THE INTERIM RESULTS

1 Basis of preparation

This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2012 were approved by the Board of directors on 28 February 2013 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 2013 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 2012, which have been prepared in accordance with IFRSs as adopted by the European Union.

1.1 Going - concern basis

The group meets its day-to-day working capital requirements through its bank facilities. The current economic conditions continue to create uncertainty particularly over (a) the level of demand for the group's products; and (b) the availability of bank finance for the foreseeable future. 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. The total facilities available to the group are £816.8 million with the RCF and private placement notes extending from 2014 to 2021. After making enquiries, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. The group therefore continues to adopt the going concern basis in preparing its consolidated interim financial statements.

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 2012, 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.

On 1 January IAS 19 (amended) employee benefits became mandatory for the first time and the company's results for the six months ended 30 June 2013 have been prepared under the new standard. Consequently the comparative income statement, the statement of comprehensive income and the statement of changes in total equity have been restated for the six months ended 30 June 2012 and 31 December 2012 to reflect the requirements of the revised standard.

The impact of the new standard is to reduce the reported profit after tax by £1.2 million for the six months ended 30 June 2012 and to reduce the reported profit after tax for the year ended 31 December 2012 by £2.5 million. The impact on the statement of changes in equity and the statement of comprehensive income for each of the two periods is to increase other comprehensive income by £1.2 million for the six months ended 30 June 2013 and by £2.5 million for the 12 months ended 31 December 2012. There is no impact on either the Balance Sheets or cash flow statement for any of the reporting periods as a result of adopting the new standard.

The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 January 2013, but have no material impact on the group:

· Amendment to IAS1 Financial Statement has been applied and the resulting classification disclosures set out within the Statement of Comprehensive Income

· Amendment to IFRS 7 Financial instruments: Disclosures (Amendment) - offsetting financial assets and liabilities

· Amendment to IFRS 13 Fair Value Measurement

IFRS 13aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The impact of IFRS 13 on the group's hedging activities is set out in note 15. The carrying value of the Group's borrowings are considered to approximate to their fair value as they attract market rates of interest whilst the carrying value of the remaining financial assets and liabilities are also considered to approximate to their fair value due to their maturity values

· Amendment to IAS 32 Financial Instruments (Amendment) - offsetting financial assets and financial liabilities

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 January 2013 and have not been early adopted. Their expected impact is still being assessed in detail by management:

· IFRS 10 - "Consolidated financial statements"

· IFRS 11 - "Joint arrangements"

· IFRS 12 - "Disclosure of interests in other entities"

· IFRS 27 (Revised) - 'Separate financial statements'

· IAS 28 (Revised) - 'Associates and joint ventures'

· Amendments to IFRS 10, IFRS 12 and IAS 27 - Investment entities

3 Segmental information

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

The results for the six months ended 30 June 2013 under the new business line segment are as follows:

Unallocated costs includes group marketing and communication functions.

Capital expenditure comprises additions to property, plant and equipment and intangible assets, including additions resulting from acquisitions through business combinations. The acquisitions in the period were across different business lines.

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

Analysis of revenue by category:

Analysis of revenue by country:

The segment results for the six months ended 30 June 2012 were as follows:

As set out in Note 1 the 2012 segmental information has been restated to reflect the impact of IAS 19 (Revised).

The segment assets and liabilities at 30 June 2013 are as follows:

The segment assets and liabilities at 30 June 2012 were as follows:

The segment assets and liabilities at 31 December 2012 were as follows:

The disclosure of segment assets and liabilities has been updated from 30 June 2012 to reflect the new business line structure as reported in the 2012 Annual Report and Accounts.

Business line operating assets consist primarily of goodwill, other intangible assets, property, plant and equipment, 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.

Analysis of non-current assets other than financial instruments, deferred tax assets and retirement benefit assets by country are:

4 Exceptional items

There were no exceptional items for the six month period ended 30 June 2013 (30 June 2012: £nil) or for the year ended 31 December 2012.

5 Seasonality

The hotels and restaurants markets are subject to some seasonal fluctuation. Higher revenues in the second and third quarters of the year are expected due to increased demand during the holiday season. Other than this, there is no significant seasonality or cyclicality affecting the interim result of the operations.

6 Taxation

The income tax expense is based on an effective annual tax rate estimated individually for each tax jurisdiction in which the group operates and applied to the pre-tax profit, excluding exceptional items, of the relevant entity. Tax on exceptional items is calculated separately and specifically on those items and is disclosed in note 4. The effective tax rate on adjusted profit before tax is 25.5% (30 June 2012: 26.5%).

Denmark enacted a rate reduction on 27 June 2013. The rate will fall from 25% in 2013 to 24.5% in 2014, 23.5% in 2015 and 22% from 2016. The enactment has led to a one-off reduction of £1.2 million in the group tax charge for the six months ended 30 June 2013.

Legislation to reduce the main rate of UK corporation tax from 23% to 21% from 1 April 2014 and from 21% to 20% from 1 April 2015 was substantively enacted on 2 July 2013. As these changes had not been substantively enacted at the balance sheet date they are not included in these financial results. The overall effect of the reduction in the main rate of UK corporation tax from 23% to 20%, if applied to the deferred tax balances at 30 June 2013, would be to reduce the reported deferred tax liability by approximately £0.5 million.

7 Dividends

A final dividend relating to the year ended 31 December 2012 amounting to £29.8 million was paid in May 2013 (2012: £27.1 million), representing 17.5 pence per share (2012: 16.0 pence).

In addition, the directors recommend an interim dividend in respect of the financial year ending 31 December 2013 of 8.8 pence per ordinary share. It is payable on 11 October 2013 to shareholders who are on the register at 13 September 2013. This interim dividend amounting to £15.0 million is not reflected in these financial statements as it does not represent a liability at 30 June 2013. It will be recognised in shareholders' equity in the year to 31 December 2013.

8 Earnings per share

Basic earnings per ordinary share are based on the group profit for the period and a weighted average of 170,001,149 (2012: 168,757,580) 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 earnings per ordinary share figure has been presented to eliminate the effects of exceptional items and amortisation of customer contracts and intellectual property rights and non-recurring tax items.

This presentation shows the trend in earnings per ordinary share that is attributable to the underlying trading activities of the total group.

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

The results for the six months ended 30 June 2012 and for the year ended 31 December 2012 have been restated in accordance with the requirements of IAS 19 (Revised).

9 Property, plant and equipment

During the six months ended 30 June 2013, the group acquired assets with a cost of £79.7 million (30 June 2012: £79.9 million), not including property, plant and equipment acquired through business combinations.

Assets with a net book value of £1.8 million were disposed of by the group during the six months ended 30 June 2013 (30 June 2012: £1.1 million) resulting in a net gain on disposal of £0.6 million (30 June 2012: £0.5 million).

The group's capital commitments at 30 June 2013 were £16.2 million (30 June 2012: £9.0 million).

10 Provisions

Vacant property provisions are made in respect of vacant and partly sub-let leasehold properties to the extent that the future rental payments are expected to exceed future rental income. It is further assumed, where reasonable, that the properties will be able to be sub-let beyond the present sub-let lease agreements.

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

The group has outstanding warranties, indemnities and guarantees given previously on a number of properties operated by businesses which have been disposed. The majority of these expire in 2017 with the remaining expiring by 2022.

A provision for £9.9 million was recognised for the two decontamination contracts which were considered to be onerous as at 31 December 2010. The provision was utilised principally in the first two years, and the contracts are not expected to be loss-making after four years. The utilisation of the provision is shown within administrative expenses in the income statement. If this assumption is not achieved, further provisioning may be required.

11 Cash flows from operating activities

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

In accordance with paragraph 14 of IAS 7 the group accounted for the special pension contribution payments made in 2013, £2.5 million, as part of its cash generated from operations. In the six months to 30 June 2012 the special pension payment was shown as part of the cash used in investing activities and consequently the 2012 cash flow statement has been restated to show this amount also £2.5 million, within cash generated from operations, for comparative purposes. This reclassification has no impact in either year on the net increase or decrease in cash. 

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

13 Acquisitions

There were no acquisitions made during the six month period ending 30 June 2013. During the period the group paid £0.4 million 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 liability:

15 Fair value measurement

In accordance with IFRS 7, disclosure is required for financial instruments that are measured in the group balance sheet at fair value.

Valuation techniques and assumptions applied in determining fair values of each class of asset or liability are consistent with those used as at 31 December 2012 and reflect the current economic environment.

The fair value measurements of the derivatives are classified as Level 2 in the fair value hierarchy as defined by IFRS7.

The fair value and the notional amounts by designated hedge type are as follows:

16 Related parties

The nature of related parties as disclosed in the consolidated financial statements for the group as at and for the year ended 31 December 2012 has not changed. Further, there have been no significant related party transactions in the six month period ended 30 June 2013.

17 Contingent liabilities

The group operates from a number of laundries across Europe. Some of the sites have operated as laundry sites for many years, and historic environmental liabilities may exist, although the group has indemnities from third parties in respect of a number of sites. The extent of these liabilities and the cover provided by the indemnities are reviewed where appropriate with the relevant third party. The company is currently defending a legal claim to the warranties received for any environmental damage that might have existed when it purchased laundry sites in Sweden and Holland. The company fully expects to have its warranties, which were contractually received in a clear and unequivocal manner, to be confirmed. The company does not expect to incur any significant loss in respect of these or any other sites.

18 Website policy

The directors are responsible for the maintenance and integrity of the company's website. Information published on the internet is accessible in many countries with different legal requirements. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Statement of directors' responsibilities

The directors confirm that this condensed set of consolidated interim financial information have been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and 4.2.8 namely:

· an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

· material related-party transactions in the first six months and any material changes in the related party transactions described in the last annual report.

The directors of Berendsen plc are listed in the Berendsen plc Annual Report for the year ended 31 December 2012.

On behalf of the Board

Peter Ventress

22 August 2013

Chief Executive Officer

Kevin Quinn

22 August 2013

Chief Financial Officer

Independent review report to Berendsen plc

Introduction

We have been engaged by the company to review the condensed consolidated interim financial information in the interim financial report for the six months ended 30 June 2013, which comprises the consolidated interim income statement, consolidated interim statement of comprehensive income, consolidated interim balance sheet, consolidated interim cash flow statement, consolidated statement of changes in total equity and related notes. We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial information.

Directors' responsibilities

The interim financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed consolidated interim financial information included in this interim financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

The maintenance and integrity of the Berendsen plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed consolidated set of interim financial statements in the interim financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial information in the interim financial report for the six months ended 30 June 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

PricewaterhouseCoopers LLP

Chartered Accountants

London

22 August 2013