2nd May 2007 07:01
Rentokil Initial PLC02 May 2007 2 May 2007 RENTOKIL INITIAL PLC (RTO) FIRST QUARTER TRADING UPDATE FOR 3 MONTHS ENDED 31 MARCH 2007 Highlights • Revenue up in all divisions; group revenue up 23.9% at £521.5 million • Organic revenue growth 3.4% • Profits in line with our expectations and prior guidance o Adjusted operating profit from continuing operations down 4.3% at £53.9 million o Adjusted profit before income tax down 23.2% at £35.5 million o Statutory profit before income tax £23.6 million • Offer of £595 million received for Electronic Security; completion expected in June • Integration of Target Express on track; all operations rebranded City Link from 1 May • 21 acquisitions completed for gross consideration of £66 million • Outlook for year unchanged Note: all numbers are at constant exchange rates except statutory profit beforeincome tax which is at actual exchange rates. Doug Flynn, Chief Executive Officer of Rentokil Initial plc, said: "We are very confident that we are doing the right things to deliversustainable, profitable growth. We have strengthened our positions in keymarkets and are transforming the operations of those businesses in need ofreinvigoration, whilst all the time putting customers at the heart of everythingwe do. "Performance in the first quarter was in line with our expectations and we arepleased with the progress being achieved. The integration of City Link andTarget Express is on track and the combined parcel business is generating stronggrowth. Asia Pacific is buoyant with 11 acquisitions completed in the quarterand the award of one of the world's largest pest control contracts in Hong Kong.The restructuring initiatives at UK Pest Control and French Textiles aremoving forward and both are seeing improving trends. UK Washroom's improvementprogramme has further to go but is making progress. "Our outlook for 2007 is unchanged. Excluding the effect of the proposed saleof Electronic Security, we continue to expect that profits for the year beforeone-off items will be in line with 2006. Profits in the second quarter willshow some improvement over the first quarter and are then expected to movestrongly ahead of 2006 in the second half of the year." Financial Summary First Quarter £million 2007 2006 change Pro forma Continuing Operations(1) At 2006 constant exchange rates(2) Revenue 521.5 421.0 23.9% Operating profit before amortisation of intangible assets(3) 51.6 53.4 (3.4%) Add back: one-off items 2.3 2.9 (20.7%) Adjusted operating profit(4) 53.9 56.3 (4.3%) Share of profit from associates (net of tax) 0.6 0.6 - Interest (19.0) (10.7) (77.6%) Adjusted profit before income tax(4) 35.5 46.2 (23.2%) Continuing Operations(1) At actual exchange rates Revenue 515.3 425.8 21.0% Operating profit before amortisation of intangible assets(5) 50.8 54.2 (6.3%) Amortisation of intangible assets(5) (8.6) (3.6) (138.9%) Operating profit 42.2 50.6 (16.6%) Share of profit from associates (net of tax) 0.5 0.6 (16.7%) Net interest payable (19.1) (10.6) (80.2%) Profit before income tax 23.6 40.6 (41.9%) Operating cash flow 52.0 37.5 38.7% Free cash flow(6) 26.2 12.5 109.6% (1) All figures are for continuing operations and are unaudited. The Electronic Security division has been treated as discontinued. (2) Results at constant exchange rates have been translated at the full year average exchange rates for the year ended 31 December 2006. £/$ average rates: Q1 2007 1.9623; Q1 2006 1.7487; FY 2006 1.8469. £/• average rates: Q1 2007 1.4869; Q1 2006 1.4552; FY 2006 1.4659. (3) Before amortisation of intangible assets (other than computer software and development costs) of £8.7m (2006: £3.5m). (4) Before amortisation of intangible assets (other than computer software and development costs) of £8.7m (2006: £3.5m) and items of a one-off nature of £2.3m (2006: £2.9m). See appendix 4 for further details. (5) All intangible assets (other than computer software and development costs). (6) Cash flow before acquisitions, disposals, equity dividend payments and special pension contribution. For further information Shareholder/analyst enquiries:Andrew Macfarlane, Chief Financial Officer Rentokil Initial plc 020 7866 3000Lisa Williams, Head of Investor Relations Media enquiries:Malcolm Padley, Head of Corporate Communications Rentokil Initial plc 07788 978 199Jon Rhodes, Tom Williams Brunswick Group 020 7404 5959 A conference call for analysts and shareholders will be held on Wednesday 2 Mayat 9:00am. To join this call, please dial +44 (0) 20 7806 1967 (UK), +33 (0) 170 99 42 95 (France), +852 3002 1355 (Hong Kong). A recording of the call willbe available for 14 days on the following numbers: UK - +44 (0) 20 7806 1970,France - +33 (0) 1 71 23 02 48, USA - +1 718 354 1112, Hong Kong - +852 30021607. The passcode for all replay numbers is 7669463#. This announcement contains statements that are, or may be, forward-lookingregarding the group's financial position and results, business strategy, plansand objectives. Such statements involve risk and uncertainty because theyrelate to future events and circumstances and there are accordingly a number offactors which might cause actual results and performance to differ materiallyfrom those expressed or implied by such statements. QUARTERLY REVIEW In all cases, references to operating profit are for continuing businessesbefore amortisation of intangible assets (other than computer software anddevelopment costs). References to adjusted operating profit and adjusted profitbefore tax and amortisation (PBTA) also exclude one-off items totalling £2.3million (2006: £2.9 million) that have impacted the results for the period. Theyprimarily relate to the group's restructuring programmes and consist ofconsultancy, reorganisation and redundancy costs. In addition, in 2007 theyinclude the costs of integrating City Link and Target Express. One-off itemshave been separately identified because they are not considered to be "businessas usual" expenses and have a varying impact on different businesses andreporting periods. An analysis of these costs by division is provided inappendix 4. All comparisons are at constant 2006 full year average exchangerates. Progress was made in many businesses in the first quarter. Revenue increased inall divisions and group revenue was 23.9% higher than the same quarter last yearat £521.5 million. Excluding acquisitions, organic revenue growth for the groupwas 3.4%. Modest contract portfolio growth was achieved by all divisions andoverall the portfolio grew by 0.8% or £11.5 million, consisting of new businesswins of £43.8 million, net additions/reductions of £4.9 million and acquisitionsof £4.0 million offset by terminations of £41.2 million. The group's customerretention rate for the quarter was 88.4% on an annualised basis (Q1 2006:88.3%). Operating profit for the quarter was £51.6 million, a decline of 3.4% versuslast year. Excluding restructuring and integration costs of £2.3 millionincurred in Textiles and Washroom Services, Pest Control and Parcel Delivery,adjusted operating profit was 4.3% lower than last year. Adjusted profit before amortisation of intangible assets and income tax was downby 23.2%, largely as a result of a 77.6% increase in net interest. Thisincrease is principally due to higher net debt following the acquisition ofTarget Express and higher interest rates compared with the first quarter of lastyear and was in line with our expectations. Net debt is expected to reducelater in the year following the receipt of proceeds from the proposed sale ofthe Electronic Security division which will in turn result in a lower secondhalf interest charge. As indicated in the outlook statement at the time of the preliminary results inFebruary, profits were lower in the first quarter versus the prior year for anumber of reasons: • The group has become more seasonal. We have acquired businesses thathave a seasonally weaker first quarter, including JC Ehrlich and Target Express/City Link franchises. At the same time, we have sold non-seasonal businessessuch as Electronic Security and Manned Guarding. • The extensive organisational restructuring associated with the twomajor change programmes in the UK (Pest Control and Washroom) held back theperformance of those businesses in the first quarter. • The first quarter of 2007 includes set-up costs for the UK sharedservice centre. • The net interest charge in the first quarter is substantially higherthan last year due to higher net debt and higher interest rates. The group has maintained its strategy of investing in growth markets andcompleted 21 acquisitions during the quarter, principally in Asia Pacific, PestControl and Parcel Delivery. On 30 March, the group announced an offer from United Technologies Corporationfor the Electronic Security division which values the division at £595 million.Closing of the transaction is conditional upon a limited number of itemsincluding regulatory approvals. These are being sought and completion of thetransaction is expected before the end of June. As a consequence, theElectronic Security division has been treated as discontinued for the purpose ofthis trading update. Proceeds from the sale will be used to reduce net debt.Trading in the division continues to make satisfactory progress. During March, the group issued a €500 million seven year bond under its EuropeanMedium Term Note programme. The issue was significantly oversubscribed. OUTLOOK The outlook for 2007 is unchanged. Excluding the effect of the proposed sale ofElectronic Security, we continue to expect that profits for the year beforeone-off items will be in line with 2006. Profits in the second quarter willshow some improvement over the first quarter and are then expected to movestrongly ahead of 2006 in the second half of the year. We are confident that profits will increase in the remainder of 2007 for thefollowing reasons: • The second, third and fourth quarters are seasonally stronger,particularly Ehrlich in the second and third quarters and City Link in thefourth quarter. • We expect to begin to see the benefits of the two major UK turnaroundinitiatives and in particular to arrest the recent profit declines in thesebusinesses. • Other businesses - such as Textiles and Washroom Services incontinental Europe and Facilities Services - are showing a gradual trend ofimproving profits which is expected to continue through the year. • Acquisitions made during 2006 will be progressively integrated duringthe course of 2007, providing synergy benefits. They include Pink Healthcare inAustralia and other Asia Pacific acquisitions. Synergy benefits from theacquisition of Target Express will not start to come through until 2008. DIVISIONAL PERFORMANCE Initial Textiles and Washroom Services £ million First Quarter 2007 2006 Change At 2006 constant exchange rates: Portfolio - net movement (appendix 1) 1.3 0.7 Revenue 149.8 147.2 1.8% Operating profit (before amortisation of intangible assets(1)) 24.1 27.0 (10.7%) One-off items 1.0 0.3 233.3% Adjusted operating profit (before one-off items and amortisation of intangible 25.1 27.3 (8.1%)assets(1)) (1) Other than computer software and development costs There were some positive signs in the Textiles and Washroom Services divisionduring the first quarter, particularly in continental Europe. Restructuring inthe UK continues. Overall, revenue increased by 1.8% compared with the first quarter last year.Excluding acquisitions, organic revenue growth was 1.6%. Divisional adjustedoperating profit was 8.1% lower than last year, due to the ongoing issues in theUK. This was an improvement over the 14.4% decline recorded in the fourthquarter of 2006 and the 18.7% fall in 2006 as a whole. In continental Europe, the encouraging portfolio trends seen in the fourthquarter of last year continued into the first quarter of this year. The organicgrowth in the portfolio was some 4% in the quarter. As a result, performanceimproved in many of the division's operations in the region. Excluding theGerman hospital services business which is in the process of being sold, revenueshowed an increase of 4% with almost all markets recording gains. The largebusinesses in Belgium, Germany and the Netherlands all contributed good growthin operating profit. France, the largest European business, saw net gain in theportfolio during the quarter and although operating profit was down for thequarter as a whole, there was an improving trend during the period. Whilstprice pressure continues to be an issue in Europe, there are no signs that it isgetting worse and positive price increases were achieved in the quarter in mostbusinesses. The UK Washroom business continues to suffer from high termination rates whichled to a fall in the value of its contract portfolio during the quarter. Morepositively, sales performance is beginning to improve, assisted by theintroduction of new technology. The decline in the portfolio, together with afall in non-contract work, led to a decrease in first quarter revenue of 7.3%.Good progress has been made with the branch rationalisation programme but thebusiness has not yet optimised its work scheduling and routes. Operating coststherefore continue to run at a higher level than planned. This contributed toa substantial decline in operating profit in the UK during the first quarterversus the same quarter last year, comparisons with which are also impacted bythe loss of washroom portfolio associated with the closure of the UK linen andworkwear business which occurred in the second and third quarters of last year.One-off costs of £1.0 million associated with the reorganisation were incurredin the quarter. Rentokil Pest Control £ million First Quarter 2007 2006 change At 2006 constant exchange rates: Portfolio - net movement (appendix 1) 4.3 47.0 Revenue 67.2 56.9 18.1% Operating profit (before amortisation of intangible assets(1)) 10.1 13.7 (26.3%) One-off items 0.4 0.6 (33.3%) Adjusted operating profit (before one-off items and amortisation of intangible 10.5 14.3 (26.6%)assets(1)) (1) Other than computer software and development costs Performance in the first quarter of 2007 was significantly impacted by theinclusion of a full quarter of seasonal losses at the US business, JC Ehrlich,which was acquired on 1 March 2006. In addition, comparisons with 2006 reflectthe transfer of R&D costs previously borne centrally to this division which tookplace at the end of 2006; these are some £3 million per annum. Revenue for the division as a whole was 18.1% higher than last year. On anorganic basis, the 2.9% growth of the businesses in North America andcontinental Europe was offset by a first quarter decline in the UK, leaving thedivision 1.2% below last year. In the UK, revenue declined by 9.6% compared to the same quarter last year.This was mostly a result of the significant reorganisation in the last part of2006 and early part of 2007 which led temporarily to lower sales of bothcontract and jobs work. Performance did, however, improve during the course ofthe quarter with revenue generation in March well up on January. This positivetrend is expected to continue during the course of 2007. Other positive signsinclude further progress in improving customer retention and employee churn -the latter ending the quarter at its best level for five years (on a threemonth rolling basis) - and a number of large business wins including WembleyStadium, Yorkshire Water and Leeds City Council. The physical aspects of thereorganisation were completed on schedule and the benefits of the new structureare already apparent. One-off reorganisation costs of £0.4 million wereincurred in the period. The fall in revenue inevitably led to a sharp declinein profitability in the UK in the first quarter which the business expects torecover in the balance of the year. Continental Europe recorded a 6.6% increase in revenue over the prior year.Retention rates remained at the strong levels seen at the end of 2006. Therewas notable improvement in new sales performance, one of the issues which hadbeen highlighted as a key priority for 2007. This improvement is underpinned byinvestment to support sales growth through salesforce and sales managementtraining, implementation of account management systems, the roll-out ofwww.rentokil.com and additional sales heads. Profits were up in most of thelarger European markets. A number of small acquisitions were made during thequarter and there will continue to be a focus on acquisitions during the year. Direct year-on-year comparisons in North America are difficult due to the 1March 2006 acquisition of JC Ehrlich. On a pro forma basis, revenue in thismarket was 8.2% higher than the first quarter last year. As previouslycommunicated, Ehrlich is a very seasonal business which makes losses in thefirst quarter. Ambius £ million First Quarter 2007 2006 Change At 2006 constant exchange rates: Portfolio - net movement (appendix 1) 0.5 0.4 Revenue 25.4 24.5 3.7% Operating profit (before amortisation of intangible assets(1)) 0.4 0.7 (42.9%) (1) Other than computer software and development costs In March, the Tropical Plants division's UK operations were rebranded Ambius,the first stage in a global roll-out of the new brand over the next year. Thenew brand will support the introduction of expanded services including ambientscenting, plants on canvas and fruit snack delivery. Initial feedback fromcustomers and employees is very positive. Ambius saw a 3.7% increase in revenue in the first quarter and a marginaldecrease in organic revenue, largely due to lower revenue in the UK which waspartly offset by organic growth of 0.9% in North America and continental Europe.Operating profit for the division as a whole fell by £0.3 million, reflectinga spend of some £0.5 million in the first quarter relating to the rebrandingprogramme. In North America, revenue increased by 6.1%. Operating profit improvedsignificantly, assisted by the return to profit of the Canadian operations whichhad been loss making in the first quarter of 2006. The business in the UK has been undergoing a turnaround programme which isshowing early signs of success. Customer retention rates improved in the firstquarter, although further work is needed on new sales generation. First quarterrevenue fell by 11.2% in the UK which resulted in a significant decline inprofits. A new managing director - who was previously managing director ofRentokil Initial New Zealand - has now joined the UK business and progress isexpected to be made in improving its performance during the remainder of 2007. In continental Europe, revenue was up in most of the markets in the firstquarter, including the Netherlands, Belgium and Sweden - three of the largestoperations. Overall, revenue increased by 6.0% during the period in the region.Profits improved strongly in the quarter, led by good growth in France, Norwayand Germany. City Link £ million First Quarter 2007 2006 Change At 2006 constant exchange rates: Revenue 94.5 34.1 177.1% Operating profit (before amortisation of intangible assets(1)) 9.3 5.7 63.2% Integration costs 0.9 - - Adjusted operating profit (before integration costs and amortisation of intangible 10.2 5.7 78.9%assets(1)) (1) Other than computer software and development costs Comparisons for the division are impacted by the acquisition of Target Expressand the franchise operations. Revenue almost tripled as compared with the firstquarter of last year. Excluding the acquisitions, organic revenue growth was9.8%. Market growth in the quarter was estimated at 3%. The number ofconsignments handled increased by 13.1% for the joint City Link/Target Expressbusiness. Operating profit almost doubled, despite a continuation of thelong-term trend of declining revenue per consignment. The integration of Target Express is progressing to plan. As of 1 May 2007, thecombined company is operating under a single brand, City Link. It has a singlesalesforce and a single sales proposition meaning all salespeople are nowselling the same product set. Sales systems have also been integrated.Integration costs of £0.9 million were incurred in the first quarter. The nextmilestone in the integration programme occurs in late July 2007 when thebusiness will start the move to a single operating platform using the City Linkmethodology. This involves the delivery of 140 new trailers for the trunkerfleet and 7,000 new cages for parcel handling. Our expectation of totalintegration costs and benefits is unchanged. One franchise was acquired in the first quarter and a further five in April.Total acquisition spend to date since the start of the franchise buy-backprogramme in late 2005 is £65 million. Four franchises remain outstanding andmanagement expects that the buy-back programme will be completed by the summer,well ahead of schedule. Initial Facilities Services £ million First Quarter 2007 2006 changeAt 2006 constant exchange rates: Portfolio - net movement (appendix 1) 0.3 6.4 Revenue 143.0 128.2 11.5% Operating profit (before amortisation of intangible assets(1)) 9.8 7.5 30.7% (1) Other than computer software and development costs Revenue growth of 11.5% in the first quarter included organic growth of 6.1%. UK Cleaning recorded a 25% increase in revenue in the quarter. Operating profitimproved at a similar level. The contract portfolio was impacted by the loss ofparts of two sizeable contracts. However, the new business pipeline remainsstrong. The cleaning activities in Spain and the Netherlands also producedrevenue and operating profit growth in the quarter. Catering revenue fell by 17% due to the exit from a number of loss-makingcontracts and lower volumes. Operating profit was considerably below last yearbecause of the nutritional guidelines for schools introduced in the second halfof 2006. Encouragingly, Catering was profitable in the first quarter comparedwith losses in the fourth quarter of 2006. A new managing director has beenappointed who has significant catering sector experience. Initiatives designedto drive down operating costs, including the use of e-auctions for foodprocurement, are being introduced. Hospital Services saw revenue increase by 11.2% compared to last year, driven toa certain extent by Agenda for Change. Operating profit improved significantly,partly due to the non-recurrence of Agenda for Change costs which adverselyaffected the first quarter of 2006 and to operational improvements. Rentokil Initial Asia Pacific £ million First Quarter 2007 2006 changeAt 2006 constant exchange rates: Portfolio - net movement (appendix 1) 3.9 2.1 Revenue 34.3 22.8 50.4% Operating profit (before amortisation of intangible assets(1)) 5.7 4.8 18.8% One-off items - 0.1 - Adjusted operating profit (before one-off items and amortisation of intangible 5.7 4.9 16.3%assets(1)) (1) Other than computer software and development costs Asia Pacific increased revenue by 50.4% in the first quarter. This reflectedthe acquisitions of Campbell Brothers pest control, Ding Sharn pest control andan electronic security business in 2007 plus the full year effect ofacquisitions completed in the second half of 2006 such as Pink and CWS-brandedwashroom operations. All markets increased revenue, with strong growth inAustralia, New Zealand, Singapore, Malaysia, Hong Kong and Taiwan. Organically, revenue grew by 6.1% with the strongest organic growth inAustralia, New Zealand, Malaysia, the Philippines and Hong Kong. Customerretention rates continued to improve in a number of markets. During the quarter,the Hong Kong business secured a major pest control contract from thegovernment. This is expected to generate revenues in excess of £20 million overthe two year contract period, albeit at relatively slim margins. Operating profit was higher for most businesses compared to the first quarter oflast year, resulting in an increase of 18.8% for the division. Profit growth wasdriven by the above mentioned acquisitions and organic business growth. Thedivision's major markets, Australia, New Zealand, Malaysia, Hong Kong,Philippines, Taiwan and South Korea all had higher operating profit than lastyear but profit was lower in Indonesia, Thailand and China. Eleven acquisitions were made in the quarter and the acquisition pipeline forthe rest of the year is very healthy. Other £ million First Quarter 2007 2006 changeAt 2006 constant exchange rates: Portfolio - net movement (appendix 1) 1.2 0.6 Revenue 7.3 7.3 - Operating profit (before amortisation of intangible assets(1)) 2.6 2.7 (3.7%) (1) Other than computer software and development costs The division comprises the group's activities in South Africa, principallywashroom services, pest control and plants. Overall, revenue was unchangedyear-on-year but operating profit declined by 3.7%. Improving retention and newsales are priorities for all the businesses in the division. Central Costs £ million First Quarter 2007 2006 change At 2006 constant exchange rates: Central costs (10.4) (8.7) (19.5%) One-off items - 1.9 - Central costs before one-off items (10.4) (6.8) (52.9%) Central costs of £10.4 million for the quarter increased by £3.6 million overthe £6.8 million adjusted figure for the first quarter of 2006, primarily as aresult of start-up costs associated with the new UK shared service centre andthe non-recurrence of profits from certain property sales last year. One-off Items Details of the one-off items incurred in the period are set out in Appendix 4.Across the group, the net cost of one-off items in the first quarter of 2007 was£2.3 million compared with £2.9 million in 2006. Rationalisation costs ofaround £10 million may be incurred during 2007 on initiatives under way or underconsideration. These include the completion of the changes underway in UKWashroom and UK Pest Control. In addition, around half of the £12 million ofTarget Express integration costs will be incurred in 2007. Synergy benefitswill not be realised until 2008. Interest Net interest payable of £19.0 million was £8.3 million higher than 2006 withhigher average net debt accounting for almost half of the increase and higherrates accounting for most of the balance. Discontinued Operations An offer to purchase the Electronic Security division for £595 million wasreceived during the quarter, with completion expected in June 2007. As a result,the activities of the division have been treated as discontinued operations andexcluded from the profit before income tax shown on page 2. Revenue andadjusted operating profit from the division for the first quarter were £75.9million (2006: £68.7 million) and £8.7 million (2006: £7.0 million)respectively. Profit on sale is expected to be circa £500 million, with nosignificant tax payable on the proceeds. Cash Flow and Debt Operating cash flow was £52.0 million compared with £37.5 million in the priorperiod as a result of higher EBITDA and better working capital and capexperformance than last year. Free cash flow was £26.2 million against £12.5million in 2006, with higher interest in the current period being largely offsetby lower tax payments. A scheduled payment of £30 million was made to the UKpension scheme at the end of January. In March, a seven year €500 million bond was issued to pre-finance a bond of thesame size which matures in May 2007. Acquisitions During the quarter, 21 acquisitions were completed for a gross consideration of£66 million resulting in the recognition of goodwill of £21 million and otherintangible assets (excluding computer software) of £33 million. Annual revenueand operating profit (before amortisation of intangibles) from these businessesare estimated to be £40 million and £6 million respectively. Appendix 1 ANNUAL CONTRACT PORTFOLIO - CONTINUING BUSINESSES 3 Months to 31 March 2007 Net£m at constant 2006 New Additions/exchange rates 1.1.07 Business Terminations Reductions Acquisitions 31.3.07 Textiles & Washroom Services 571.5 15.1 (14.7) 0.9 - 572.8Pest Control 214.4 8.3 (7.6) 2.1 1.5 218.7Ambius 88.3 1.9 (2.4) 1.0 - 88.8 Facilities Services 414.4 13.2 (12.7) (0.2) - 414.7Asia Pacific 103.1 4.4 (2.8) (0.2) 2.5 107.0 Other 26.7 0.9 (1.0) 1.3 - 27.9TOTAL 1,418.4 43.8 (41.2) 4.9 4.0 1,429.9 Notes Contract portfolio definition: Customer contracts are usually either "fixedprice", "as-used" (based on volume) or mixed contracts. Contract portfolio isthe measure of the annualised value of these customer contracts. Contract portfolio valuation: The contract portfolio value is typically recordedas the annual value from the customer contract. However, in some cases -especially "as-used" (based on volume) and mixed contracts - estimates arerequired in order to derive the contract portfolio value. The key points inrespect of valuation are: "As-used" contracts: These are more typical in Textiles and Washroom Services,where elements of the contract are often variable and based on usage. Valuationis based on historic data (where available) or forecast values. Income annualisation: In some instances, where for example the underlyingcontract systems cannot value portfolio or there is a significant "as-used"element, the portfolio valuation is calculated using an invoice annualisationmethod. Inter-company: The contract portfolio figures include an element ofinter-company revenue. Job work and extras: Many of the contracts within the contract portfolioinclude ad hoc and/or repeat job work and extras. These values are excludedfrom the contract portfolio. Rebates: The contract portfolio value is gross of customer rebates. These areconsidered as a normal part of trading and are therefore not removed from theportfolio valuation. New business: Represents new contractual arrangements in the period, which caneither be new contracts with an existing customer or with a new customer. Terminations: Represent the cessation of either a specific existing customercontract or the complete cessation of business with a customer, in the period. Net additions/reductions: Represents net change to the value of existingcustomer contracts in the period as a result of changes (either up or down) involume and/or pricing. Acquisitions: Represents the valuation of customer contracts obtained fromacquisitions made in the period. Appendix 2 Divisional Analysis (at constant exchange rates)(based upon the way businesses are managed) 3 months to 3 months to 31 March 31 March 2007 2006(at 2006 constant exchange rates) £m £m (unaudited & (unaudited & unreviewed) unreviewed)Business Analysis Revenue Textiles & Washroom Services 149.8 147.2Pest Control 67.2 56.9Ambius 25.4 24.5City Link 94.5 34.1Facilities Services 143.0 128.2Asia Pacific 34.3 22.8Other 7.3 7.3 Continuing operations at 2006 constant exchange rates 521.5 421.0Exchange (6.2) 4.8 Continuing operations at actual exchange rates 515.3 425.8 Operating profit* Textiles & Washroom Services 24.1 27.0Pest Control 10.1 13.7Ambius 0.4 0.7City Link 9.3 5.7Facilities Services 9.8 7.5Asia Pacific 5.7 4.8Other 2.6 2.7Central costs (10.4) (8.7) Continuing operations at 2006 constant exchange rates 51.6 53.4Exchange (0.8) 0.8 Continuing operations at actual exchange rates 50.8 54.2 Adjusted operating profit** Textiles & Washroom Services 25.1 27.3Pest Control 10.5 14.3Ambius 0.4 0.7City Link 10.2 5.7Facilities Services 9.8 7.5Asia Pacific 5.7 4.9Other 2.6 2.7Central costs (10.4) (6.8) Continuing operations at 2006 constant exchange rates 53.9 56.3Exchange (0.8) 0.8 Continuing operations at actual exchange rates 53.1 57.1 * Before amortisation of intangible assets other than computer software anddevelopment costs ** Before amortisation of intangible assets other than computer software anditems of a one-off nature (see appendix 4 for further details). Appendix 3 Divisional Analysis (at actual exchange rates)(based upon the way businesses are managed) 3 months to 3 months to 31 March 31 March 2007 2006(at actual exchange rates) £m £m (unaudited & (unaudited & unreviewed) unreviewed)Business Analysis Revenue Textiles & Washroom Services 148.0 148.3Pest Control 65.5 57.7Ambius 24.4 25.3City Link 94.5 34.1Facilities Services 142.7 128.4Asia Pacific 33.7 23.6Other 6.5 8.4 Continuing operations at actual exchange rates 515.3 425.8 Operating profit* Textiles & Washroom Services 23.7 27.1Pest Control 10.0 13.8Ambius 0.4 0.7City Link 9.3 5.7Facilities Services 9.8 7.5Asia Pacific 5.7 5.0Other 2.3 3.1Central costs (10.4) (8.7) Continuing operations at actual exchange rates 50.8 54.2 Adjusted operating profit** Textiles & Washroom Services 24.7 27.4Pest Control 10.4 14.4Ambius 0.4 0.7City Link 10.2 5.7Facilities Services 9.8 7.5Asia Pacific 5.7 5.1Other 2.3 3.1Central costs (10.4) (6.8) Continuing operations at actual exchange rates 53.1 57.1 * Before amortisation of intangible assets other than computer software anddevelopment costs. ** Before amortisation of intangible assets other than computer software anddevelopment costs and items of a one-off nature (see appendix 4 for furtherdetails). Appendix 4 One-off Items 3 months to 3 months to 31 March 31 March 2007 2006 £m £m (unaudited & (unaudited & unreviewed) unreviewed) Textiles & Washroom Services (1.0) (0.3)Pest Control (0.4) (0.6)Ambius - -City Link (0.9) -Facilities Services - -Asia Pacific - (0.1)Other - -Central costs - (1.9) (2.3) (2.9) Note: All numbers at both actual and constant exchange rates. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Rentokil Initial