13th Sep 2006 07:02
Johnson Service Group PLC13 September 2006 13 September 2006 JOHNSON SERVICE GROUP PLC STATEMENT FOR THE HALF YEAR ENDED 30 JUNE 2006 Johnson Service Group PLC, the textile related services and facilitiesmanagement group announces its interim results for the half year ended 30 June2006. Results Summary • The Rental division achieved good sales growth but higher operating costs affecting margins • Corporatewear achieved significant new business wins though activity remains biased to second half • Facilities Management trading well and benefiting from successful SGP acquisition • Drycleaning responding to cost reductions and branch rationalisation • £26.5m sale and leaseback of Drycleaning properties completed • Potential disposal of Drycleaning division advancing through auction process Financial Summary 2006 2005 ChangeRevenue £200.6m £215.0m (7%)Revenue (excluding costs recharged to customers) £174.9m £171.3m +2%Reported Operating Profit £19.0m £14.1m +35%Adjusted Operating Profit* £14.9m £15.0m (1%)Reported Profit Before Tax £14.3m £10.2m +40%Adjusted Profit Before Tax* £10.2m £11.1m (8%)Interim dividend 4.6p 4.4p +5% * (before intangibles amortisation and exceptional items) "We are encouraged by the prospects for the Group in the second half of theyear. The Rental division will benefit from the good sales performance achievedin the first half, which should help offset some of the operating costincreases. Corporatewear and Facilities Management are both expected to performstrongly given the level of planned activity in the second half. InDrycleaning, action has been taken to reduce costs and promote sales, in animproving though still unpredictable marketplace. Whilst the remainder of theyear will be influenced by the timing of activity in the Corporatewear andFacilities Management divisions, as well as the possible sale of the Drycleaningdivision, the Board continues to look forward to the future with confidence." Simon Sherrard, Chairman For further information, please contact:Johnson Service Group PLC Hudson SandlerStuart Graham, CEO Michael SandlerJim Wilkinson, CFO Sandrine GallienTel: 020 7796 4133 on 13 September only; Tel: 020 7796 4133 020 7290 0390 thereafter Website: www.johnsonplc.com CHAIRMAN'S STATEMENT The first half results reflect satisfactory trading by our major businesses,though the timing of activity in both the Corporatewear and FacilitiesManagement divisions has, as previously indicated, further increased the bias ofour profitability towards the second half. We remain encouraged by the level ofbusiness wins in both of these newly created divisions and believe that it is apositive indicator for their future prospects. The Rental division has had anexcellent first half in winning new customers, which will help offset increasingoperating costs. As announced in July we are pursuing a formal auction processfor the Drycleaning business which would continue the well-established processof focusing the Group on activities with more predictable business to businessrevenue streams and long-term growth potential. GROUP RESULTS Total Group revenue in the six months to 30 June 2006 fell by 7% to £200.6million (2005: £215.0 million), while underlying revenue, excluding costsrecharged to customers, rose by 2% to £174.9 million (2005: £171.3 million).Operating profit, excluding amortisation of intangibles and exceptional items,was 1% lower than in the first half last year at £14.9 million (2005: £15.0million). Interest charges increased to £4.7 million (2005: £3.9 million), reflectinghigher average borrowings as a result of the eight acquisitions we completedduring 2005. Adjusted pre-tax profit, excluding amortisation of intangibles andexceptional items, was £10.2 million (2005: £11.1 million), a reduction of 8%. Exceptional profit during the half year of £6.9 million (2005: £0.7 million)comprised a profit of £8.6 million arising on the £26.5 million sale andleaseback of 79 retail trading properties currently occupied by the Drycleaningdivision, partly offset by restructuring costs in the same division of £1.7million. After this exceptional credit and amortisation of intangibles of £2.8 million(2005: £1.6 million), profit before tax was up 40% at £14.3 million (2005: £10.2million). Adjusted fully diluted earnings per share were 12.1p (2005: 13.2p), a reductionof 8%, while earnings inclusive of exceptional items and amortisation were up45% at 17.5p (2005: 12.1p). FINANCES Total debt at the end of the first half was £134.9 million, slightly reducedfrom the year-end December 2005 total of £137.2 million. This followed thereceipt of net cash of £23.6 million from our property disposal shortly beforethe end of the period. This sale and leaseback transaction was undertaken withthe intention of simplifying the process of disposing of our Drycleaningdivision, as well as reducing Group indebtedness. The underlying increase in debt, before the property disposal, reflected ourcontinued substantial programme of capital expenditure, notably on the rolloutof our Enterprise Resource Planning system. This was successfully implementedat Stalbridge Linen Services in April and Johnson Workplace Management in July.The remaining implementations at Johnsons Apparelmaster and at Head Office areexpected to be completed by the end of 2007. This continuing level of expenditure will result in a similar level of debt atDecember 2006, which is well within our existing headroom. As referred to in the annual report the balance sheet liability in respect ofthe defined benefit pension schemes is related to the longevity assumptions andmovements in the discount rate. At the half year a favourable movement in marketassumptions has reduced the recorded net deficit after tax for all of thepension schemes by £9.7 million. This is in addition to the reduction resultingfrom the additional cash contributions of £1.4 million made in the secondquarter, which will continue at the rate of £5.5 million per annum at leastuntil the next formal valuation. DIVIDEND The Board has decided to pay an increased interim dividend of 4.6p per share(2005: 4.4p). This is a rise of 5%, reflecting our confidence in the Group'sprospects and in line with our commitment to a progressive dividend policy. Theinterim dividend will be paid on 20 October 2006 to those shareholders on theregister at the close of business on 29 September 2006. DIVISIONAL TRADING RESULTS Rental Revenue increased by 7% to £65.6 million (2005: £61.2 million), while adjustedoperating profit was 11% lower than in the first half last year at £6.6 million(2005: £7.4 million), primarily as the result of increased operating costs. Johnsons Apparelmaster, the market-leading workwear laundering and rentalbusiness, maintained the positive sales trend established last year. Organicrevenues remained stable and total revenue increased by 2%. Rentokil Initial'swithdrawal from the UK linen and workwear market has assisted an exceptional newbusiness sales performance, with over 1,600 new customers gained during thesecond quarter, including a number of leading food processors. Successfulinitiatives to improve customer focus have also helped to improve clientretention. The period immediately following Rentokil's exit from the market wasthe first time that new revenue gained has outpaced revenue lost for at leastfive years, although we are now expecting to return to recent trends. In orderto help offset the ongoing increase in operating costs we are continuing toimprove the efficiency of our plants through further investments in both peopleand infrastructure, with major refurbishments under way at our Birmingham, Leedsand Basingstoke sites. Stalbridge Linen Services, focused on the premium hotel, catering and corporatehospitality markets, again achieved excellent organic sales growth, with totalrevenues increasing by 24%. New business sales exceeded our targets, andcustomer retention improved on the exceptional performance achieved last year.As anticipated, pressure on operating margins arose as a result of ourinvestment in additional people and technologies to support this growth, withthe new IT system going live successfully in April. We are also investing inadditional capacity, with a new, state-of-the-art plant at Hinckley in the EastMidlands currently under construction and due to come on stream early next year. Johnson Hospitality Services, providing furniture and catering equipment to thecontract catering market, last year underwent rationalisation and restructuringfollowing its poor performance. Trading has continued to be difficult and wewill undertake a further review of the business during the second half of theyear. Corporatewear Revenue of £36.8 million (2005: £39.6 million) was 7% below that of the previousfirst half, while adjusted operating profit was 16% lower at £3.8 million (2005:£4.5 million). This reflects the timing of major contracts for corporateuniforms, which this year are skewed even more heavily towards the second half. Our Corporatewear Division is the UK's clear market leader in the supply of highquality clothing for people at work. Since the beginning of 2006 our brandshave continued to increase their share of this strongly growing market, winningsignificant new business with leading retail and restaurant chains. We havealso secured commitments to renew their contracts from three of our largestcustomers, assuring the future of the secure, long-term revenue streams that areone of the most attractive features of this sector. Our brands focused on the public services have performed particularly strongly,making this an increasingly important part of our total offer. Yaffy, focusingon high quality police outerwear, and Boyd Cooper, supplying nurses' uniforms,have both made excellent progress. Although we performed well in ourIndustrial division, delayed rollouts with two major food retailers and aleading bank meant that our Retail and Financial divisions performed slowly,though they are well positioned to make strong progress in the second half. The full integration of all the acquisitions we made in 2004 and 2005 isprogressing well, and we are already realising the principal expected benefitsof leveraging our Group scale to achieve lower product costs and improvedquality. We expect to achieve further improvements in our customer offer andprofitability as we complete this integration process in the months ahead. Drycleaning Revenue for the division, which includes retail drycleaning and Alex Reid, thespecialist supplies business, increased by 1% to £49.3 million (2005: £48.7million) and adjusted operating profit improved by 6% to £3.6 million (2005:£3.4 million). The result for 2005 benefited from £0.7 million of profit fromroutine property disposals, with no benefit arising in 2006. Excluding theeffect of this the underlying adjusted operating profit increase was 33%. Weak consumer demand, particularly in the first quarter, was reflected in a 2.3%decline in like-for-like retail Drycleaning sales. Sales were also affected byour branch rationalisation programme, which reduced the number of Johnsons andSketchley outlets from 587 at the beginning of the year to 568 by 30 June.However, the benefit of cost control measures meant that the underlyingprofitability of the retail drycleaning business rose by 34%, with the operatingmargin improving from 3.8% to 5.1%. Total divisional turnover and profit alsoreflected the acquisition last year of Firbimatic UK to strengthen our Alex Reidbusiness. Action was taken during the first half both to reduce the cost base of theretail business and to stimulate customer demand through a series of successfuloperational and marketing initiatives, without compromising quality. A majormanagement restructuring in April helped to deliver a tighter operational focusand more effective cost control. This was reflected in improved trading resultsin the second quarter, against the background of a gradually improving retailmarket. We continue to focus on developing new stores in convenient, high trafficlocations. A further drive-in site and two new supermarket concessions wereopened during the half-year, and all are trading to expectation. At the sametime we have embarked on an active programme to rationalise underperformingbranches. This will be ongoing. The elimination of loss-making sites, and ourother actions to promote sales and reduce costs, are all expected to contributeto improved profitability during the second half. Jeeves of Belgravia, our London luxury drycleaning brand, maintained the morepositive trend established in 2005 and is now trading profitably and achievingstrong like-for-like sales growth. Although our specialist drycleaning supplies business, Alex Reid, suffered inline with the drycleaning market as a whole, the integration of Firbimatic,which was acquired in August 2005, led to a 20% increase in revenue and a 216%uplift in operating profit. Although our drycleaning business is the clear UK market leader its revenues areintrinsically more volatile than those of our other divisions which havelong-term contracted revenue with corporate customers. Following an initialapproach in March 2006, we have received a number of expressions of interest inthe business, and therefore embarked on a formal auction process in July of thisyear. We believe that it will be in the best interests of our Shareholders toseek offers for this business but we will only dispose of it if satisfactoryvalue can be achieved. We are currently reviewing the initial offers receivedand a further announcement will be made in due course. Facilities Management Revenue excluding costs recharged to customers grew by 6% to £23.2 million(2005: £21.8 million) while total revenue fell by 25% to £48.9 million (2005:£65.5 million), the latter being affected by reduced recharges to customers onproject work. Adjusted operating profit increased by 63% to £2.6 million (2005:£1.6 million). This included an initial contribution from SGP Property Services(SGP), acquired in October 2005. SGP, specialising in the provision of property management services to thefinancial, leisure and retail sectors, has continued to meet all ourexpectations and to achieve excellent year-on-year growth of 25%. During thehalf year it extended its established relationships with Tesco and Arcadia andgained new business with Marks & Spencer, Phones4U and Superdrug, the last ofthese in association with Johnson Workplace Management (JWM). JWM, focused primarily on the commercial office market, recorded lower turnoverand operating profit, mainly as the result of the timing of contracts andprojects, which are expected to recover in the second half. During the firsthalf we secured significant contract renewals and extensions with two majorcustomers, and were awarded a health and safety contract with the Capgeminiconsulting and outsourcing group. We also successfully installed a newEnterprise Resource Planning System, providing a market-leading IT platformwhich will help to drive new business generation by providing JWM with valuabledifferentiation in its sector. Workplace Engineering, delivering hi-tech electrical, engineering and fit-outservices, was similarly affected in the first half by the phasing of projectwork, which is expected to improve in the second half. It has recently secured amajor head office refurbishment contract with BHS. IFRS The Group is required to report under International Financial ReportingStandards (IFRS) and all figures in this statement refer to reporting underIFRS. BOARD As we have previously announced, David Bryant is to retire from the Board on 2October after 37 years with the Group. We would like to thank David for hiscontribution to the Group, particularly since his appointment as ManagingDirector of the Drycleaning division. Although retiring from the Board, Davidremains with the Group for the current auction process. OUTLOOK We are encouraged by the prospects for the Group in the second half of the year. The Rental division will benefit from the good sales performance achieved inthe first six months of the year, which should help offset some of the operatingcost increases. Corporatewear and Facilities Management are both expected toperform strongly given the level of planned activity in the second half. InDrycleaning, action has been taken to reduce costs and promote sales, in animproving though still unpredictable marketplace. Whilst the remainder of theyear will be influenced by the timing of activity in the Corporatewear andFacilities Management divisions, as well as the possible sale of the Drycleaningdivision, the Board continues to look forward to the future with confidence Simon Sherrard Chairman Consolidated Income Statement Half year to Half year to Year ended 30th June 25th June 31st 2006 2005 December 2005Note £m £m £m 2 REVENUE 200.6 215.0 431.9 Costs recharged to customers (25.7) (43.7) (68.4) Revenue excluding costs recharged to customers 174.9 171.3 363.5 2 OPERATING PROFIT 19.0 14.1 31.8 OPERATING PROFIT BEFORE INTANGIBLES AMORTISATION AND 14.9 15.0 36.3 EXCEPTIONAL ITEMS Amortisation of intangible assets (2.8) (1.6) (3.9) Exceptional items - Restructuring and environmental costs (1.7) (1.6) (5.0) - Profit on disposal of property 8.6 2.3 4.4 2 OPERATING PROFIT 19.0 14.1 31.8 Finance costs (4.7) (3.9) (8.2) PROFIT BEFORE TAXATION 14.3 10.2 23.6 4 Taxation (3.9) (3.0) (6.6) PROFIT FOR THE PERIOD 10.4 7.2 17.0 5 EARNINGS PER SHARE * Basic 17.7p 12.4p 29.2p Diluted 17.5p 12.1p 28.6p 6 ORDINARY DIVIDENDS PAID AND PROPOSED Interim dividend proposed 4.6p - - Interim dividend - 4.4p 4.4p Final dividend - - 15.0p * Earnings per share before intangibles amortisation, restructuring costs and other exceptional items are shown in Note 5. Consolidated Statement of Recognised Income and Expense Half year to Half year to Year ended 30th June 25th June 31st 2006 2005 December 2005 £m £m £m Actuarial gain / (loss) on defined benefit pension plans 13.9 (5.0) (15.7) Taxation in respect of actuarial (gain) / loss (4.2) 1.5 4.7 Net movement on reserves in respect of IAS 19 actuarial gains and 9.7 (3.5) (11.0) losses Cash flow hedges movement - (0.2) (0.1) NET INCOME / (EXPENSE) RECOGNISED DIRECTLY IN EQUITY 9.7 (3.7) (11.1) Profit for the period 10.4 7.2 17.0 TOTAL RECOGNISED INCOME FOR THE PERIOD 20.1 3.5 5.9 Consolidated Balance Sheet As at As at As at 30th June 25th June 31st December 2006 2005 2005Note £m £m £m ASSETS NON-CURRENT ASSETS Goodwill 141.0 124.9 140.7 Intangible assets 53.5 32.3 50.6 Property, plant and equipment 57.0 67.4 68.0 Rental items 31.5 27.6 30.1 Deferred tax assets 13.6 14.9 17.9 296.6 267.1 307.3 CURRENT ASSETS Inventories 31.4 29.9 30.2 Trade and other receivables 72.2 74.0 65.0 Derivative financial assets 0.4 - 0.2 Cash and cash equivalents 6.4 - 7.5 110.4 103.9 102.9 LIABILITIES CURRENT LIABILITIES Trade and other payables 33.8 31.9 26.9 Other creditors and accruals 56.6 63.5 61.1 Current income tax liabilities 5.2 3.1 2.7 Borrowings 1.1 7.4 2.1 Derivative financial liabilities 0.5 0.2 0.2 97.2 106.1 93.0 NET CURRENT ASSETS / (LIABILITIES) 13.2 (2.2) 9.9 NON-CURRENT LIABILITIES Borrowings 140.2 111.0 142.6 7 Retirement benefit obligations 35.5 39.8 50.4 Deferred tax liabilities 14.0 10.7 14.6 Provisions and other non-current liabilities 18.5 14.6 19.7 208.2 176.1 227.3 NET ASSETS 101.6 88.8 89.9 EQUITY CAPITAL AND RESERVES ATTRIBUTABLE TO THE COMPANY'S EQUITY HOLDERS 9 Called up share capital 5.9 5.9 5.9 9 Share premium 12.2 10.9 11.9 9 Other reserves 2.1 1.9 2.1 9 Retained earnings 81.4 70.1 70.0 TOTAL EQUITY 101.6 88.8 89.9 Consolidated Cash Flow Statement Half year to Half year to Year ended 30th June 25th June 31st 2006 2005 December 2005Note £m £m £m CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation 14.3 10.2 23.6 Adjustments for: Finance costs 4.7 3.9 8.2 Depreciation and amortisation 17.3 14.2 31.4 Increase in net working capital (6.2) (7.8) (3.4) Profit on sale of property, plant and equipment (8.4) (2.9) (6.3) Additional pension contributions (1.4) - - Other non-cash movements (0.8) 0.2 (0.3) Cash generated from operations 19.5 17.8 53.2 Interest paid / received (5.0) (3.3) (7.4) Taxation paid (2.2) (2.4) (6.2) Net cash flows generated from operating activities 12.3 12.1 39.6 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of subsidiaries (net of cash acquired) (1.7) (34.1) (56.2) 8 Proceeds from sale of investments in other companies 0.9 - - Purchase of property, plant and equipment (7.5) (4.5) (14.1) Proceeds from sale of property, plant and equipment 23.6 4.6 11.5 Purchase of intangible assets (5.9) (2.7) (9.1) Purchase of textile rental items (13.0) (12.0) (24.8) Proceeds from sale of textile rental items 2.2 1.6 3.5 Net cash used in investing activities (1.4) (47.1) (89.2) CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from borrowings 42.0 36.0 178.2 Repayments of borrowings (45.0) (2.2) (116.2) Capital element of finance leases (0.5) (0.5) (1.1) Net proceeds from issue of share capital 0.3 1.5 2.5 Dividends paid to company shareholders (8.8) (8.2) (10.8) Net cash generated from financing activities (12.0) 26.6 52.6 Net (decrease) / increase in cash and cash equivalents (1.1) (8.4) 3.0 Cash and cash equivalents at beginning of period 7.5 4.5 4.5 Cash and cash equivalents at end of period 6.4 (3.9) 7.5 Notes to the Consolidated Interim Financial Statements 1 BASIS OF PREPARATION These unaudited consolidated interim financial statements of Johnson ServiceGroup PLC are for the six months ended 30th June 2006. They have been preparedin accordance with those International Financial Reporting Standards (IFRS) andInternational Financial Reporting Interpretations Committee (IFRIC)interpretations issued and endorsed, or issued and expected to be endorsed bythe European Union (EU), as at the time of preparing these statements (September2006). The IFRS's and IFRIC interpretations that will be applicable at 31stDecember 2006, including those that will be applicable on an optional basis, arenot known with certainty at the time of preparing these interim financialstatements. The Johnson Service Group PLC consolidated financial statements were prepared inaccordance with UK Generally Accepted Accounting Principles (UK GAAP) until 31stDecember 2005. Those UK GAAP accounts received an unqualified audit report andhave been filed with the Registrar of Companies, and the auditors' report didnot contain a statement under Section 237 (2) or (3) of the Companies Act 1985(as amended). UK GAAP differs in some areas from IFRS. In preparing the Johnson Service GroupPLC 2006 consolidated interim financial statements, management has amendedcertain accounting, valuation and consolidation methods applied in the UK GAAPfinancial statements to comply with IFRS. The comparative figures were restatedto reflect these adjustments. Johnson Service Group PLC has elected a date of transition to IFRS of 27thDecember 2003. The Group previously reported the impact of the adoption of IFRSon the 2004 comparative financial information in July 2005. Supplementary IFRSinformation was provided in the 2005 Annual Report, together with summaryreconciliations and descriptions of the effect of the transition from UK GAAP toIFRS on the Group's equity and its net income and cash flows. Furtherinformation is provided within this interim report: the key changes to theGroup's accounting policies as a result of the adoption of IFRS are detailed inthe section entitled "Summary of the Revised Principal Accounting Policies", andreconciliations of total equity and reserves and income from UK GAAP to IFRS areprovided in the section entitled "Transition from UK GAAP to IFRS". The revised principal accounting policies are those which are expected to beformally adopted by the Group when it prepares its Annual Report for the yearending 31st December 2006, and have been consistently applied to all the periodspresented. Under the transitional arrangements included within IFRS 1,First-time Adoption of International Financial Reporting Standards, which permitthose companies adopting IFRS for the first time to take some exemptions fromthe full requirements of IFRS, the Group has made use of the followingexemptions: • Business combinations: business combinations prior to the transition date have not been restated to an IFRS basis. • Fair value or revaluation as deemed cost of fixed assets: the net book value of property, plant and equipment under UK GAAP has been adopted as the deemed cost in the opening balance sheet at the transition date. • Share-based payments: IFRS 2 has not been applied to share options and shares awarded which vested before 1st January 2005. 2 SEGMENT ANALYSIS Business segments Segment information is presented in respect of the Group's business segments,which are based on the Group's management and internal reporting structure as at30th June 2006. Segment results include items directly attributable to asegment as well as those that can be allocated on a reasonable basis.Inter-segment pricing is determined on an arm's length basis. Geographical segments Revenue originates wholly within the United Kingdom and as a result, nogeographical segments are presented within these financial statements. There isno significant difference between revenue by origin and revenue by destination. The business segment results for the half year ended 30th June 2006, togetherwith comparative figures, are as follows: Half year to Half year to Year ended 30th June 25th June 31st 2006 2005 December 2005 £m £m £mRevenueRental 65.6 61.2 128.4Corporatewear 36.8 39.6 87.1Drycleaning 49.3 48.7 101.4Facilities Management 48.9 65.5 115.0 200.6 215.0 431.9 Revenue excluding costs recharged to customersRental 65.6 61.2 128.4Corporatewear 36.8 39.6 87.1Drycleaning 49.3 48.7 101.4Facilities Management 23.2 21.8 46.6 174.9 171.3 363.5 2 SEGMENT ANALYSIS (continued) Half year to Half year to Year ended 30th June 25th June 31st 2006 2005 December 2005 £m £m £mOperating profitRental 6.1 6.0 14.4Corporatewear 2.5 2.8 6.8Drycleaning 10.5 5.7 11.9Facilities Management 1.6 1.5 3.3Unallocated (1.7) (1.9) (4.6) 19.0 14.1 31.8 Operating profit before intangibles amortisation and exceptional itemsRental 6.6 7.4 15.2Corporatewear 3.8 4.5 11.4Drycleaning 3.6 3.4 9.8Facilities Management 2.6 1.6 4.4Unallocated (1.7) (1.9) (4.5) 14.9 15.0 36.3 All operations are continuing. Since the last half year results, and in line with the segment analysis atDecember 2005, the segment analysis shows the unallocated central overheadsseparately and includes the results of Alex Reid Limited within the Drycleaningsegment. The operating profit, and the operating profit before intangiblesamortisation and exceptional items from Drycleaning, includes £nil (June 2005:£0.7 million, December 2005: £1.8 million) of profit from the disposal ofproperties formerly occupied by the Drycleaning business and other non-tradingitems. The 2006 exceptional items of £6.9 million have been included within theDrycleaning segment in the analysis of operating profit. 3 ADJUSTED PROFIT BEFORE TAXATION Half year to Half year to Year ended 30th June 25th June 31st 2006 2005 December 2005 £m £m £mProfit before taxation 14.3 10.2 23.6Intangibles amortisation 2.8 1.6 3.9Restructuring and environmental costs 1.7 1.6 5.0Profit on disposal of property (8.6) (2.3) (4.4)Adjusted profit before taxation 10.2 11.1 28.1 4 TAXATION Half year to Half year to Year ended 30th June 25th June 31st 2006 2005 December 2005 £m £m £mCurrent tax expenseUK corporation tax charge for the period 5.0 3.1 6.4Adjustment in relation to previous periods (0.2) - (0.1)Current tax charge for the period 4.8 3.1 6.3 Deferred tax expenseOrigination and reversal of temporary differences (0.4) (0.1) 0.3Adjustment in relation to previous periods (0.5) - -Deferred tax charge for the period (0.9) (0.1) 0.3Total charge for taxation included in the income statement 3.9 3.0 6.6 Taxation on the exceptional items (excluding intangibles amortisation) in thecurrent period has increased the UK corporation tax charge by £2.2 million (June2005: £0.3 million reduction, December 2005: £1.2 million reduction). Taxrelief on intangibles amortisation has reduced UK corporation tax by £1.3million (June 2005: £nil, December 2005: £0.2 million). 5 EARNINGS PER SHARE Half year to Half year to Year ended 30th June 25th June 31st 2006 2005 December 2005 £m £m £m Profit for the period attributable to Ordinary Shareholders 10.4 7.2 17.0Intangibles amortisation (net of taxation) 1.5 1.6 3.7Restructuring, environmental costs and profit on disposal of property (4.7) (1.0) (0.6)(net of taxation)Adjusted profit attributable to Ordinary Shareholders 7.2 7.8 20.1 Weighted average number of Ordinary shares 58,802,635 58,144,347 58,208,126Dilutive options 871,987 1,267,517 1,149,222Fully diluted number of Ordinary shares 59,674,622 59,411,864 59,357,348 Basic earnings per shareBasic earnings per share 17.7p 12.4p 29.2pAdjustment for intangibles amortisation 2.5p 2.7p 6.3pAdjustment for restructuring, environmental costs and profit on (7.9p) (1.7p) (1.0p)disposal of propertyAdjusted basic earnings per share 12.3p 13.4p 34.5p Diluted earnings per shareDiluted earnings per share 17.5p 12.1p 28.6pAdjustment for intangibles amortisation 2.5p 2.8p 6.2pAdjustment for restructuring, environmental costs and profit on (7.9p) (1.7p) (1.0p)disposal of propertyAdjusted diluted earnings per share 12.1p 13.2p 33.8p Basic earnings per share is calculated using the weighted average number ofshares in issue during the year, excluding those held by the ESOP, based on theprofit for the period attributable to Ordinary Shareholders. Adjusted earnings per share figures are given to exclude the effects ofintangibles amortisation, restructuring costs, environmental costs and profit ondisposal of property, all net of taxation, and are considered to show theunderlying results of the Group. For diluted earnings per share, the weighted average number of Ordinary sharesin issue is adjusted to assume conversion of all dilutive potential Ordinaryshares. The Company has dilutive potential Ordinary shares arising from shareoptions granted to employees where the exercise price is less than the averagemarket price of the Company's Ordinary shares during the year. 6 DIVIDENDS Half year to Half year to Year ended 30th June 25th June 31st 2006 2005 December 2005 £m £m £m Ordinary dividends paid and proposedInterim dividend proposed 4.6p - -Interim dividend proposed and paid - 4.4p 4.4pFinal dividend proposed and paid - - 15.0p On 15th May 2006 a dividend of 15.0p was paid on the Ordinary shares in respectof the 2005 final dividend, utilising £8.8 million of Shareholders' funds. TheDirectors are proposing an interim dividend in respect of the year ended 31stDecember 2006 of 4.6p which will reduce Shareholders' funds by £2.7 million.The dividend will be paid on 20th October 2006 to Shareholders on the registerof members at the close of business on 29th September 2006. The Trustee of theESOP has waived the entitlement to receive dividends on the Ordinary shares heldby the Trust. In accordance with International Financial Reporting Standards, these financialstatements do not reflect a liability in respect of the proposed dividend. 7 RETIREMENT BENEFIT OBLIGATIONS The Group has applied the requirements of IAS 19 Employee Benefits (revisedDecember 2004) to its employee pension schemes and post-retirement healthcarebenefits. The IFRS transitional adjustment to net assets of £25.6 million as at December2003 comprised of a £34.5 million gross liability, an associated deferred taxasset of £10.4 million and the combined reversal of the previously recognisedSSAP24 asset and a movement due to the variation in the method of valuing schemeassets as prescribed by IAS 19 of £1.5 million. As part of the Group's objective to reduce its overall pension liability,additional contributions of £1.4 million were paid to the Johnson Group StaffPension Scheme during the period to 30th June 2006. Following discussions with the Group's appointed actuary it has been identifiedthat an actuarial gain of £13.9 million should be recognised in the period to30th June 2006. This is as a result of the scheme assets and liabilitiesperforming differently to previous assumptions. The gross retirement benefit liability and associated deferred tax assetthereon, together with the net liability is shown below: Half year to Half year to Year ended 30th June 25th June 31st 2006 2005 December 2005 £m £m £m Gross retirement benefit liability (35.5) (39.8) (50.4)Deferred tax asset thereon 10.6 12.1 15.1Net liability (24.9) (27.7) (35.3) 8 SALE OF INVESTMENTS During the period, the Group disposed of the trade and assets of JohnsonEnvironmental Pest Control Limited. The financial performance of thediscontinued operation during the period, together with the related cash flowsthereon, are not separately presented in these interim financial statements asthey are not material in the context of the Group. Half year to 30th June 2006 £m Disposal proceeds 0.9Total net assets disposed -Goodwill written off (0.9)Costs of disposal -Pre-tax profit / (loss) on disposal -Taxation (0.3)Profit / (loss) on disposal (0.3) 9 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Share Share Other Retained Total capital premium reserves earnings equity £m £m £m £m £mBalance at 25th December 2004 5.8 9.5 2.1 74.4 91.8Adoption of IAS 39 - - (0.1) - (0.1) Balance at 26th December 2004 5.8 9.5 2.0 74.4 91.7Total recognised income and expense for the - - - 3.7 3.7periodDividends - - - (8.2) (8.2)Issue of share capital 0.1 1.4 - - 1.5Share options (value of employee services) - - - 0.2 0.2Cash flow hedges movement - - (0.1) - (0.1)Balance at 25th June 2005 5.9 10.9 1.9 70.1 88.8 Balance at 26th June 2005 5.9 10.9 1.9 70.1 88.8Total recognised income and expense for the - - - 2.2 2.2periodDividends - - - (2.6) (2.6)Issue of share capital - 1.0 - - 1.0Share options (value of employee services) - - - 0.3 0.3Cash flow hedges movement - - 0.2 - 0.2Balance at 31st December 2005 5.9 11.9 2.1 70.0 89.9 Balance at 1st January 2006 5.9 11.9 2.1 70.0 89.9Total recognised income and expense for the - - - 20.1 20.1periodDividends - - - (8.8) (8.8)Issue of share capital - 0.3 - - 0.3Share options (value of employee services) - - - 0.1 0.1Balance at 30th June 2006 5.9 12.2 2.1 81.4 101.6 10 ANALYSIS OF NET DEBT Cash and cash Debt due Debt due Finance Total equivalents within one after more leases year than one year net debt £m £m £m £m £mBalance at 26th December 2004 4.5 (3.2) (69.9) (5.8) (74.4)Cash flow (8.4) 2.2 (36.0) 0.5 (41.7)Acquisitions (excluding cash and - - - (0.1) (0.1)overdrafts)Other non-cash changes - (1.3) (0.1) (0.8) (2.2)Balance at 25th June 2005 (3.9) (2.3) (106.0) (6.2) (118.4) Balance at 26th June 2005 (3.9) (2.3) (106.0) (6.2) (118.4)Cash flow 11.4 1.3 (28.2) 0.6 (14.9)Acquisitions (excluding cash and - - (4.9) (0.1) (5.0)overdrafts)Other non-cash changes - - 0.9 0.2 1.1Balance at 31st December 2005 7.5 (1.0) (138.2) (5.5) (137.2) Balance at 1st January 2006 7.5 (1.0) (138.2) (5.5) (137.2)Cash flow (1.1) 1.0 2.0 0.5 2.4Other non-cash changes - - (0.1) - (0.1)Balance at 30th June 2006 6.4 - (136.3) (5.0) (134.9) 11 PUBLISHED FINANCIAL STATEMENTS Copies of the interim report are to be sent to Shareholders and will beavailable to members of the public at the Company's registered office at MildmayRoad, Bootle, Merseyside L20 5EW. The report can also be accessed on the internet at www.johnsonplc.com Summary of the Revised Principal Accounting Policies SUMMARY OF THE REVISED PRINCIPAL ACCOUNTING POLICIES AS A RESULT OF THE ADOPTIONOF INTERNATIONAL FINANCIAL REPORTING STANDARDS Consolidation The financial statements consolidate the results of Johnson Service Group PLC(the Company) and its subsidiary undertakings. Entities over which the Grouphas the ability to exercise control are accounted for as subsidiaries. Controlexists when the Company has the power, directly or indirectly, to govern thefinancial and operating policies of an entity so as to obtain benefits from itsactivities. The accounting periods of subsidiary undertakings are co-terminous with those ofthe Company. Inter-company transactions, balances and unrealised gains ontransactions between group companies are eliminated. Unrealised losses are alsoeliminated unless the transaction provides evidence of an impairment of theasset transferred. Subsidiaries' accounting policies have been changed wherenecessary to ensure consistency with the policies adopted by the Group. The purchase method of accounting is used to account for the acquisition ofsubsidiaries by the Group. The cost of an acquisition is measured as the fairvalue of the assets given, equity instruments issued and liabilities incurred orassumed at the date of exchange, plus costs directly attributable to theacquisition. Identifiable assets acquired and liabilities and contingentliabilities assumed in a business combination are measured initially at theirfair value at the acquisition date, irrespective of the extent of any minorityinterest. The excess of the cost of acquisition over the fair value of theGroup's share of the identifiable tangible and intangible net assets acquired isrecorded as goodwill. If the cost of acquisition is less than the fair value ofthe Group's share of the net assets of the subsidiary acquired, the differenceis recognised directly in the income statement. Interests sold are consolidated up to the date of disposal, when control ceases. Segment reporting A business segment is a group of assets and operations engaged in providingproducts or services that are subject to risks and returns that are differentfrom those of other business segments. Foreign currency translation The consolidated financial statements are presented in sterling, which is theCompany's functional and presentational currency. Foreign currency transactions are translated into the functional currency usingthe exchange rates prevailing at the dates of the transactions. Foreignexchange gains and losses resulting from the settlement of such transactions andfrom the translation at year-end exchange rates of monetary assets andliabilities denominated in foreign currencies are recognised in the incomestatement, except where hedge accounting is applied as explained below. Accounting for derivative financial instruments and hedging activities Derivatives are initially recognised at fair value on the date a derivativecontract is entered into and are subsequently remeasured at their fair value.The method of recognising the resulting gain or loss depends on whether thederivative is designated as a hedging instrument, and if so, the nature of theitem being hedged. The Group designates certain derivatives as hedges of thevariability of cash flows (cash flow hedge). The Group documents at the inception of the transaction the relationship betweenhedging instruments and hedged items, as well as its risk management objectiveand strategy for undertaking various hedge transactions. The Group alsodocuments its assessment, both at hedge inception and on an ongoing basis, ofwhether the derivatives that are used in hedging transactions are highlyeffective in offsetting changes in the cash flows of hedged items. Cash flow hedges The effective portion of changes in the fair value of derivatives that aredesignated and qualify as cash flow hedges are recognised in equity. The gainor loss relating to the ineffective portion is recognised immediately in theincome statement. Amounts accumulated in equity are recycled in the income statement in theperiods when the hedged item will affect profit or loss (for example, when theforecast transaction that is hedged takes place). However, when the forecasttransaction that is hedged results in the recognition of a non-financial asset(for example, inventory) or a liability, the gains and losses previouslydeferred in equity are transferred from equity and included in the initialmeasurement of the cost of the asset or liability. When a hedging instrument expires or is sold, or when a hedge no longer meetsthe criteria for hedge accounting, any cumulative gain or loss existing inequity at that time remains in equity and is recognised when the forecasttransaction is ultimately recognised in the income statement. When a forecasttransaction is no longer expected to occur, the cumulative gain or loss that wasreported in equity is immediately transferred to the income statement. Derivatives that do not qualify for hedge accounting Certain derivative instruments do not qualify for hedge accounting. Suchderivatives are classified as at fair value through profit or loss, and changesin their fair value are recognised immediately in the income statement. Fair value estimation The fair value of financial instruments traded in active markets (such aspublicly traded derivatives, and trading and available-for-sale securities) isbased on quoted market prices at the balance sheet date. The quoted marketprice used for financial assets held by the Group is the current bid price; theappropriate quoted market price for financial liabilities is the current askprice. The nominal value less estimated credit adjustments of trade receivables isassumed to approximate to their fair values. The fair value of financialliabilities is estimated by discounting the future contractual cash flows at thecurrent market interest rate that is available to the Group for similarfinancial instruments. Intangible Assets (i) Goodwill For acquisitions since 28th December 2003, goodwill represents the excess of thecost of an acquisition over the fair value of the Group's share of the netidentifiable assets of the acquired subsidiary at the date of acquisition. Foracquisitions prior to this date, goodwill is included at the amount recordedpreviously under UK GAAP. Goodwill on acquisitions of subsidiaries is includedin non-current assets. Goodwill is tested annually for impairment and carriedat cost less accumulated impairment losses. Gains and losses on the disposal ofan entity include the carrying amount of goodwill relating to the entity sold. (ii) Intangible assets Intangible assets comprise of brands and customer contracts and relationships,recognised at cost or fair value. They have a finite useful life and arecarried at cost less accumulated amortisation. Amortisation is calculated usingthe straight-line method to allocate the cost of the intangible assets overtheir estimated useful lives (4 - 20 years). (iii) Computer software Acquired computer software licences are capitalised on the basis of the costsincurred to acquire and bring to use the specific software, and are included onthe balance sheet within intangible assets. Costs are amortised over theirestimated useful lives (4 - 10 years). Costs associated with the general development and maintenance of computersoftware programs are recognised as an expense as incurred. Costs that aredirectly associated with the production of identifiable and unique softwareproducts controlled by the Group, and that will probably generate economicbenefits exceeding costs beyond one year, are recognised as intangible assets.Direct costs include the costs of employees involved in software development andan appropriate portion of relevant overheads. Computer software development costs recognised as assets are amortised overtheir estimated useful lives (not exceeding 10 years). Deferred taxation Deferred tax is provided in full, using the liability method, on temporarydifferences arising between the tax bases of assets and liabilities and theircarrying amounts in the consolidated financial statements. Deferred tax is notaccounted for if it arises from initial recognition of an asset or liability ina transaction, other than a business combination, that at the time of thetransaction affects neither accounting nor taxable profit or loss. Deferred taxis determined using tax rates (and laws) that have been enacted or substantiallyenacted by the balance sheet date and that are expected to apply when therelated deferred tax asset is realised or the deferred tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that futuretaxable profit will be available against which the temporary differences can beutilised. Employee benefits (i) Pension obligations Group companies operate various pension schemes. The schemes are funded throughpayments to insurance companies or trustee-administered funds, determined byperiodic actuarial calculations. The Group has both defined benefit and definedcontribution plans. The liability recognised in the balance sheet in respect of defined benefitpension plans is the present value of the defined benefit obligation at thebalance sheet date less the fair value of plan assets. The defined benefitobligation is calculated periodically by an independent actuary. The presentvalue of the defined benefit obligation is determined by discounting theestimated future cash outflows using interest rates of high-quality corporatebonds that are denominated in the currency in which benefits will be paid, andthat have terms to maturity approximating to the terms of the related pensionliability. Current service costs are recognised in operating costs in the income statement. Interest cost on plan liabilities and the expected return on plan assets arerecognised in finance costs. Actuarial gains and losses arising from experienceadjustments and changes in actuarial assumptions are charged or credited to theconsolidated statement of recognised income and expense. For defined contribution plans, the Group pays contributions to publicly orprivately administered pension insurance plans on a mandatory, contractual orvoluntary basis. The Group has no further payment obligations once thecontributions have been paid. The contributions are recognised as an employeebenefit expense when they are due. Prepaid contributions are recognised as anasset to the extent that a cash refund or a reduction in the future payments isavailable. (ii) Share-based compensation The Group operates a number of equity-settled, share-based compensation plans.The economic cost of awarding shares and share options to employees isrecognised as an expense in the income statement equivalent to the fair value ofthe benefit awarded. The fair value is determined by reference to optionpricing models, principally Binomial and Monte Carlo models. The charge isrecognised in the income statement over the vesting period of the award. Ateach balance sheet date, the Group revises its estimate of the number of optionsthat are expected to become exercisable. Any revision to the original estimate is reflected in the income statement with a corresponding adjustment toequity immediately to the extent it relates to past service and the remainderover the rest of the vesting period. Dividend distribution Under IAS 10 (Events after the Balance Sheet Date) dividends to holders ofequity instruments declared after the balance sheet date are not recognised as aliability as at the balance sheet date. Dividend distribution to the Company'sshareholders is recognised in the Group's financial statements in the period inwhich the dividends are declared to the Company's shareholders. Interimdividends are recognised when paid. Transition from UK GAAP to IFRS TRANSITION FROM ACCOUNTING PRACTICES GENERALLY ACCEPTED IN THE UK TOINTERNATIONAL FINANCIAL REPORTING STANDARDS Johnson Service Group PLC previously reported the impact of the adoption ofInternational Financial Reporting Standards (IFRS) on the 2004 comparativefinancial information in July 2005. In its 2005 Annual Report, the Groupreported its result for the year ended 31st December 2005 in accordance with UKGAAP, following the adoption during the year of FRS 17, Retirement Benefits andFRS 20, Share-based Payment. As a result of adopting these two standards during2005, the 2004 UK GAAP comparative information was restated. The reconciliations below in respect of 2004 therefore show the revised effectof transition from the restated UK GAAP position to IFRS and consequently, theeffects of transition differ in some areas to those previously reported in theJuly 2005 document. The Group has elected a date of transition to IFRS of 27th December 2003. Setout below, in accordance with the provisions of IFRS 1 'First-time Adoption ofInternational Financial Reporting Standards' are the reconciliations of totalequity and reserves and income from UK GAAP to IFRS. RECONCILIATION OF UK GAAP PROFIT AND LOSS ACCOUNT TO IFRS INCOME STATEMENT FOR THE 26 WEEKS ENDED 25TH JUNE2005 In accordance Effect of As restated with UK GAAP under IFRS 25th June transition 25th June 2005 to IFRS 2005 £m £m £m REVENUE 215.0 - 215.0Costs recharged to customers (43.7) - (43.7)Revenue excluding costs recharged to customers 171.3 - 171.3 OPERATING PROFIT 10.2 3.9 14.1 OPERATING PROFIT BEFORE INTANGIBLES AMORTISATION AND EXCEPTIONAL ITEMS 15.0 - 15.0 Amortisation of goodwill (5.4) 5.4 - Amortisation of intangible assets (0.1) (1.5) (1.6) Exceptional items 0.7 - 0.7 OPERATING PROFIT 10.2 3.9 14.1 Finance costs (net) (3.9) - (3.9) PROFIT BEFORE TAXATION 6.3 3.9 10.2 Taxation (3.0) - (3.0) PROFIT FOR THE PERIOD 3.3 3.9 7.2 RECONCILIATION OF NET ASSETS IN ACCORDANCE WITH UK GAAP TO NET ASSETS AS RESTATED UNDER IFRS AS AT 25TH JUNE 2005 £m £mNET ASSETS IN ACCORDANCE WITH UK GAAP 79.3 IFRS adjustments in respect of: Dividends 2.6 Share options - Pensions and healthcare benefits - Goodwill amortisation 12.5 Recognition of intangibles (2.1) Other (3.5) 9.5REVISED NET ASSETS AS RESTATED UNDER IFRS 88.8 RECONCILIATION OF UK GAAP BALANCE SHEET TO IFRS BALANCE SHEET AS AT 25TH JUNE 2005 In Effect of As restated accordance under IFRS with UK GAAP 25th June transition 25th June 2005 to IFRS 2005 £m £m £mASSETSNON-CURRENT ASSETSGoodwill 135.1 (10.2) 124.9Intangible assets - 32.3 32.3Property, plant and equipment 71.5 (4.1) 67.4Rental items 27.6 - 27.6Deferred tax assets - 14.9 14.9 234.2 32.9 267.1CURRENT ASSETSInventories 29.9 - 29.9Trade and other receivables 74.0 - 74.0Cash and cash equivalents - - - 103.9 - 103.9LIABILITIESCURRENT LIABILITIESTrade and other payables 30.4 1.5 31.9Other creditors and accruals 66.0 (2.5) 63.5Current income tax liabilities 3.1 - 3.1Borrowings 7.4 - 7.4Derivative financial instruments - 0.2 0.2 106.9 (0.8) 106.1 NET CURRENT LIABILITIES (3.0) 0.8 (2.2) NON-CURRENT LIABILITIESBorrowings 110.7 0.3 111.0Retirement benefit obligations 27.9 11.9 39.8Deferred tax liabilities 0.1 10.6 10.7Provisions and other non-current liabilities 13.2 1.4 14.6 151.9 24.2 176.1 NET ASSETS 79.3 9.5 88.8 EQUITYCAPITAL AND RESERVES ATTRIBUTABLE TO THE COMPANY'S EQUITY HOLDERSCalled up share capital 5.9 - 5.9Share premium account 10.9 - 10.9Revaluation reserve 8.0 (8.0) -Other reserves 2.1 (0.2) 1.9Retained earnings 52.4 17.7 70.1TOTAL EQUITY 79.3 9.5 88.8 RECONCILIATION OF UK GAAP PROFIT AND LOSS ACCOUNT TO IFRS INCOME STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2005 As previously Effect of As restated reported under IFRS under UK GAAP 31st December transition 31st December 2005 to IFRS 2005 £m £m £m REVENUE 431.9 - 431.9Costs recharged to customers (68.4) - (68.4)Revenue excluding costs recharged to customers 363.5 - 363.5 OPERATING PROFIT 19.7 12.1 31.8 OPERATING PROFIT BEFORE INTANGIBLES AMORTISATION AND EXCEPTIONAL ITEMS 36.3 - 36.3 Amortisation of goodwill (11.4) 11.4 -Amortisation of intangible assets (0.2) (3.7) (3.9)Exceptional items (5.0) 4.4 (0.6) OPERATING PROFIT 19.7 12.1 31.8 Exceptional items 4.4 (4.4) - Finance costs (net) (8.4) 0.2 (8.2) PROFIT BEFORE TAXATION 15.7 7.9 23.6 Taxation (6.5) (0.1) (6.6) PROFIT FOR THE PERIOD 9.2 7.8 17.0 RECONCILIATION OF NET ASSETS PREVIOUSLY REPORTED UNDER UK GAAP TO NET ASSETS AS RESTATED UNDER IFRS AS AT 31STDECEMBER 2005 £m £mNET ASSETS AS PREVIOUSLY REPORTED UNDER UK GAAP 70.3 IFRS adjustments in respect of: Dividends 8.8 Share options - Pensions and healthcare benefits - Goodwill amortisation 18.5 Recognition of intangibles (4.2) Other (3.5) 19.6 REVISED NET ASSETS AS RESTATED UNDER IFRS 89.9 RECONCILIATION OF UK GAAP BALANCE SHEET TO IFRS BALANCE SHEET AS AT 31ST DECEMBER 2005 As Effect of As restated previously under IFRS reported under UK GAAP 31st transition 31st December December 2005 to IFRS 2005 £m £m £mASSETSNON-CURRENT ASSETSGoodwill 156.0 (15.3) 140.7Intangible assets - 50.6 50.6Property, plant and equipment 77.6 (9.6) 68.0Rental items 30.1 - 30.1Deferred tax assets - 17.9 17.9 263.7 43.6 307.3 CURRENT ASSETSInventories 30.2 - 30.2Trade and other receivables 65.0 - 65.0Derivative financial instruments - 0.2 0.2Cash and cash equivalents 7.5 - 7.5 102.7 0.2 102.9 LIABILITIESCURRENT LIABILITIESTrade and other payables 26.9 - 26.9Other creditors and accruals 68.3 (7.2) 61.1Current income tax liabilities 2.7 - 2.7Borrowings 2.1 - 2.1Derivative financial instruments - 0.2 0.2 100.0 (7.0) 93.0 NET CURRENT ASSETS 2.7 7.2 9.9 NON-CURRENT LIABILITIESBorrowings 142.4 0.2 142.6Retirement benefit obligations 35.3 15.1 50.4Deferred tax liabilities 0.6 14.0 14.6Provisions and other non-current liabilities 17.8 1.9 19.7 196.1 31.2 227.3 NET ASSETS 70.3 19.6 89.9 EQUITYCAPITAL AND RESERVES ATTRIBUTABLE TO THE COMPANY'S EQUITY HOLDERSCalled up share capital 5.9 - 5.9Share premium account 11.9 - 11.9Revaluation reserve 6.3 (6.3) -Other reserves 2.1 - 2.1Retained earnings 44.1 25.9 70.0TOTAL EQUITY 70.3 19.6 89.9 RECONCILIATION OF UK GAAP PROFIT AND LOSS ACCOUNT TO IFRS INCOME STATEMENT FOR THE 52 WEEKS ENDED 25THDECEMBER 2004 As previously Effect of As restated reported under IFRS under UK GAAP transition 25th 25th December December 2004 to IFRS 2004 £m £m £m RestatedREVENUE 364.0 (0.3) 363.7Costs recharged to customers (86.0) - (86.0)Revenue excluding costs recharged to customers 278.0 (0.3) 277.7 OPERATING PROFIT 20.9 6.4 27.3 OPERATING PROFIT BEFORE INTANGIBLES AMORTISATION AND EXCEPTIONAL ITEMS 30.1 (0.2) 29.9 Amortisation of goodwill (7.0) 7.0 - Amortisation of intangible assets (0.2) (0.4) (0.6) Exceptional items (2.0) - (2.0) OPERATING PROFIT 20.9 6.4 27.3 Finance costs (net) (5.5) - (5.5) PROFIT BEFORE TAXATION 15.4 6.4 21.8 Taxation (6.3) 0.7 (5.6) PROFIT FOR THE PERIOD 9.1 7.1 16.2 RECONCILIATION OF NET ASSETS PREVIOUSLY REPORTED UNDER UK GAAP TO NET ASSETS AS RESTATED UNDER IFRS AS AT 25THDECEMBER 2004 £m £mNET ASSETS AS PREVIOUSLY REPORTED UNDER UK GAAP 80.5 IFRS adjustments in respect of: Dividends 8.2 Share options - Pensions and healthcare benefits (0.3) Goodwill amortisation 7.0 Recognition of intangibles (0.4) Other (3.2) 11.3 REVISED NET ASSETS AS RESTATED UNDER IFRS 91.8 RECONCILIATION OF UK GAAP BALANCE SHEET TO IFRS BALANCE SHEET AS AT 25TH DECEMBER 2004 As Effect of As restated previously under IFRS reported under UK GAAP 25th transition 25th December December 2004 to IFRS 2004 £m £m £mASSETS RestatedNON-CURRENT ASSETSGoodwill 111.4 (3.1) 108.3Intangible assets - 16.3 16.3Property, plant and equipment 68.3 (2.3) 66.0Rental items 24.5 - 24.5Deferred tax assets - 12.9 12.9 204.2 23.8 228.0 CURRENT ASSETSInventories 19.8 - 19.8Trade and other receivables 54.3 - 54.3Cash and cash equivalents 4.5 - 4.5 78.6 - 78.6 LIABILITIESCURRENT LIABILITIESTrade and other payables 25.1 - 25.1Other creditors and accruals 56.7 (6.6) 50.1Current income tax liabilities 2.0 - 2.0Borrowings 4.2 - 4.2 88.0 (6.6) 81.4 NET CURRENT LIABILITIES (9.4) 6.6 (2.8) NON-CURRENT LIABILITIESBorrowings 74.5 0.2 74.7Retirement benefit obligations 23.9 10.5 34.4Deferred tax liabilities 0.3 6.5 6.8Provisions and other non-current liabilities 15.6 1.9 17.5 114.3 19.1 133.4 NET ASSETS 80.5 11.3 91.8 EQUITYCAPITAL AND RESERVES ATTRIBUTABLE TO THE COMPANY'S EQUITY HOLDERSCalled up share capital 5.8 - 5.8Share premium account 9.5 - 9.5Revaluation reserve 8.0 (8.0) -Other reserves 2.1 - 2.1Retained earnings 55.1 19.3 74.4TOTAL EQUITY 80.5 11.3 91.8 RECONCILIATION OF NET ASSETS PREVIOUSLY REPORTED UNDER UK GAAP TO NET ASSETS AS RESTATED UNDER IFRS AS AT 27THDECEMBER 2003 £m £m NET ASSETS AS PREVIOUSLY REPORTED UNDER UK GAAP 104.9 IFRS adjustments in respect of: Dividends 7.8 Share options 0.3 Pensions and healthcare benefits (25.6) Goodwill amortisation - Recognition of intangibles - Other (3.9) (21.4) REVISED NET ASSETS AS RESTATED UNDER IFRS 83.5 RECONCILIATION OF UK GAAP BALANCE SHEET TO IFRS BALANCE SHEET AS AT 27TH DECEMBER 2003 As Effect of As restated previously under IFRS reported under UK GAAP 27th transition 27th December December 2003 to IFRS 2003 £m £m £mASSETSNON-CURRENT ASSETSGoodwill 89.8 (0.7) 89.1Intangible assets - 1.3 1.3Property, plant and equipment 64.2 (0.6) 63.6Rental items 21.4 - 21.4Deferred tax assets - 12.9 12.9 175.4 12.9 188.3 CURRENT ASSETSInventories 8.8 - 8.8Trade and other receivables 53.5 (5.8) 47.7Cash and cash equivalents 2.2 - 2.2 64.5 (5.8) 58.7 LIABILITIESCURRENT LIABILITIESTrade and other payables 12.8 - 12.8Other creditors and accruals 55.5 (6.6) 48.9Current income tax liabilities 2.4 - 2.4Borrowings 0.3 - 0.3 71.0 (6.6) 64.4 NET CURRENT LIABILITIES (6.5) 0.8 (5.7) NON-CURRENT LIABILITIESBorrowings 45.3 0.3 45.6Retirement benefit obligations 3.8 30.7 34.5Deferred tax liabilities 0.7 2.3 3.0Provisions and other non-current liabilities 14.2 1.8 16.0 64.0 35.1 99.1 NET ASSETS 104.9 (21.4) 83.5 EQUITYCAPITAL AND RESERVES ATTRIBUTABLE TO THE COMPANY'S EQUITY HOLDERSCalled up share capital 5.7 - 5.7Share premium account 8.0 - 8.0Revaluation reserve 8.5 (8.5) -Other reserves 2.1 - 2.1Retained earnings 80.6 (12.9) 67.7TOTAL EQUITY 104.9 (21.4) 83.5 RECONCILIATION OF CASH FLOWS FOR THE 26 WEEKS ENDED 25TH JUNE 2005 In accordance Effect of As restated with UK GAAP transition under IFRS 25th June to IFRS 25th June 2005 2005 £m £m £mCASH FLOWS FROM OPERATING ACTIVITIESProfit before taxation 6.3 3.9 10.2Adjustments for:Finance income and expense 3.9 - 3.9Depreciation and amortisation 18.1 (3.9) 14.2(Increase) / decrease in net working capital (7.8) - (7.8)Profit on sale of fixed assets (2.9) - (2.9)Other non-cash movements 0.2 - 0.2 Cash generated from operations 17.8 - 17.8 The adoption of IFRS has had no further impact on the June 2005 cash flowposition of the Group, hence only the movements in the reconciliation of profitbefore taxation to cash generated from operations have been disclosed. RECONCILIATION OF CASH FLOWS FOR THE YEAR ENDED 31ST DECEMBER 2005 As previously Effect of As restated reported transition under IFRS under UK GAAP 31st 31st to IFRS December December 2005 2005 £m £m £mCASH FLOWS FROM OPERATING ACTIVITIESProfit before taxation 15.7 7.9 23.6Adjustments for:Finance income and expense 8.4 (0.2) 8.2Depreciation and amortisation 39.1 (7.7) 31.4(Increase) / decrease in net working capital (3.4) - (3.4)Profit on sale of fixed assets (6.3) - (6.3)Other non-cash movements (0.3) - (0.3) Cash generated from operations 53.2 - 53.2 The adoption of IFRS has had no further impact on the December 2005 cash flowposition of the Group, hence only the movements in the reconciliation of profitbefore taxation to cash generated from operations have been disclosed. RECONCILIATION OF CASH FLOWS FOR THE 52 WEEKS ENDED 25TH DECEMBER 2004 As previously Effect of As restated reported transition under IFRS under UK GAAP 25th 25th to IFRS December December 2004 2004 £m £m £m RestatedCASH FLOWS FROM OPERATING ACTIVITIESProfit before taxation 15.4 6.4 21.8Adjustments for:Finance income and expense 5.5 - 5.5Depreciation and amortisation 29.4 (6.6) 22.8(Increase) / decrease in net working capital (3.9) 0.2 (3.7)Profit on sale of fixed assets (0.4) - (0.4)Other non-cash movements (1.1) - (1.1) Cash generated from operations 44.9 - 44.9 The adoption of IFRS has had no further impact on the December 2004 cash flowposition of the Group, hence only the movements in the reconciliation of profitbefore taxation to cash generated from operations have been disclosed. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Johnson Service