Final Results - Year Ended 25 December 1999

Brooks Service Group PLC 29 March 2000 BROOKS SERVICE GROUP Plc Preliminary profit announcement for the period ended 25 December 1999 Brooks Service Group Plc, the textile care company providing linen hire, workwear rental, washroom hygiene and retail services, today announced its results for the 52 weeks to 25 December 1999 which were approved by the Board on 28 March 2000. Summary: * Pre-tax profits up 28% to £2.8m (1998: £2.2m) * Operating profit up 20% to £3.0m (1998: £2.5m) * Basic earnings per share up 30% to 15.5p (1998: 11.9p) * Total dividend for the year up 20% to 6.0p (1998: 5.0p) Chairman, Simon Brooks commented: 'I am delighted that, yet again, I am able to report on another successful year's trading for your company covering the 52 weeks ended 25 December 1999.' For further information contact: John Walters, Chief Executive - 01454 614668 Patrick Mulcahy, Financial Director - 01454 614668 1999 RESULTS Profit before tax increased by 28% to £2.8 million. The increase in turnover to £36.6 million is relatively modest. This is an inevitable result of the Board's decisions to dispose of a number of unprofitable retail branches and not to renew certain rental contracts whose contribution to profits was inadequate. Basic earnings per share again showed a substantial increase, up from ll.9p to 15.5p, an increase of 30%, and the Group's year-end gearing reduced from 19% to 6% as a result of strong cash generation. The directors recommend a final dividend of 4.Op, which, together with the interim dividend of 2.Op, gives a total for the year of 6.Op. This represents an increase of 20% over the previous year. Subject to approval at the Annual General Meeting, the final dividend will be posted on 2 June 2000 to shareholders on the Register on 14 April 2000. OPERATIONS REVIEW Textile Rental The Linen Division is a major supplier of linen hire products to the hotel and restaurant sectors throughout England and Wales. The market for our services was variable throughout the year and, as a result, volumes were only marginally ahead of the previous year. Pricing came under pressure during the year and this, combined with fluctuating volumes, resulted in a disappointing increase in rental revenue. However, the ongoing investment in new plant and machinery linked to continuing development of 'best practice' has produced tremendous improvements in efficiency levels. This, along with further major progress in cost benchmarking and productivity gains, enabled the division to turn in outstanding profit growth and margin results for the year. The focus now is to increase our market share. We are increasing capacity selectively within the division and, in addition, we are increasing our sales presence in the market place. In this respect we have appointed a Sales Director and he now heads up a very much strengthened sales team. The Workwear Division is a regional supplier of garment rental and washroom services and serves the industrial, food and pharmaceutical sectors. The market was fairly strong throughout the year and this enabled the division to achieve a good increase in sales turnover. Although strong regionally, Brooks is a small player in this market. This, coupled with the market size, provides our company with huge potential to grow turnover well into double figures. With this in mind, we have appointed a Sales Controller and added significantly to our team of sales managers. We are also looking for any opportunities to expand the business by acquisition and have identified a number of areas of particular interest. As with the Linen Division, the management is committed to the benchmarking concept and we are seeing real benefits coming through at the established business units. The division achieved excellent profit growth and margin improvements year on year. Joint Venture Our joint venture company located at Bourne in Lincolnshire had an extremely good year with sales up by 11% and profit up by 19%. Retail The Retail Division provides dry cleaning, shoe repairs, key cutting and photo processing services from around 70 outlets. The market for the core services remained tough throughout the year, albeit our fastfoto service grew by over 25%. The division continued its progress of the last two years and turned in a small profit for the year. We continue to monitor the performance of individual shops very closely and, as a result, we closed seven locations in 1999. The strategy to increase our representation in large out of town superstores continues and a further five were opened during the year, taking the total to thirteen, with three more opening in the first quarter of 2000. Capital Expenditure Expenditure on plant and equipment amounted to £2.1m in the year, which is 8% higher than the previous year. The Future Given the continuance of a buoyant economy, the markets your company serve look likely to prosper, and we with them. We therefore view the future with confidence and I look forward to reporting further progress in the months ahead. GROUP PROFIT AND LOSS ACCOUNT For the Fifty-two weeks ended 25 December 1999 1999 1998 £'000 £'000 Restated (Note 1) Turnover Group and share of joint venture 36,581 35,729 Less share of joint venture (1,502) (1,350) ------ ------ Group turnover 35,079 34,379 ====== ====== Group operating profit 2,716 2,255 Share of profit of joint venture before interest 255 215 ------ ------ Total operating profit 2,971 2,470 Interest payable (net) 144 267 ------ ------ Profit on ordinary activities before taxation 2,827 2,203 Taxation on profit on ordinary activities 837 678 ------ ------ Profit on ordinary activities after taxation 1,990 1,525 Dividends 774 642 ------ ------ Retained profit for the period 1,216 883 ====== ====== Basic earnings per ordinary share l5.46p 11.93p ====== ====== Diluted earnings per ordinary share 15.31p 11.84p ====== ====== Dividend per ordinary share 6.OOp 5.OOp ====== ====== All of the Group's turnover and profit was generated from activities which are continuing. There were no gains or losses in the period other than those recognised in the profit and loss account and there was no difference between the above figures and the historical cost profits and losses. GROUP BALANCE SHEET At 25 December 1999 1999 1998 £'000 £'000 Fixed Assets Tangible assets 8,587 7,824 Interest in joint venture 708 519 ------ ------ 9,295 8,343 ------ ------ Current assets Stocks 6,625 6,675 Debtors 5,211 5,335 Cash at bank and in hand 1,451 646 ------ ------ 13,287 12,656 Current liabilities Creditors: amounts falling due within one year 7,885 6,924 ------ ------ Net current assets 5,402 5,732 ------ ------ Total assets less current liabilities 14,697 14,075 Creditors: amounts falling due after more than one year 1,649 2,541 Provision for liabilities and charges 524 264 ------ ------ Net assets 12,524 11,270 ====== ====== Capital and reserves Called up share capital 3,225 3,211 Share premium 2,687 2,663 Profit and loss account 6,612 5,396 ------ ------ Equity shareholders' funds 12,524 11,270 ====== ====== CASH FLOW STATEMENT For the fifty two weeks ended 25 December 1999 1999 1998 £'000 £'000 Net cash inflow from operating activities 4,874 3,104 ------ ------ Returns on investments and servicing of finance Interest received 41 18 Interest paid (173) (259) Interest element of finance lease rentals (5) (8) ------ ------ Net cash outflow from returns on investments and servicing of finance (137) (249) ------ ------ Taxation Corporation tax paid (including advance corporation tax - 1998) (846) (548) ------ ------ Capital expenditure and financial investment Purchase of tangible fixed assets (2,061) (1,913) Sale of tangible fixed assets 92 26 ------ ------ Net cash outflow from capital expenditure and financial investment (1,969) (1,887) ------ ------ Equity dividends paid (695) (548) ------ ------ Cash inflow/(outflow) before management of liquid resources and financing 1,227 (128) ------ ------ Financing Issue of ordinary shares 38 58 New loans - 195 Repayment of loans (696) (294) New finance leases 119 - Principal payment under finance leases (18) (48) Repayment of loan by joint venture 135 - ------ ------ Net cash outflow from financing (422) (89) ------ ------ Increase/(decrease) in cash 805 (217) ====== ====== Notes to the Accounts 1. Segmental information 1999 1998 £'000 £'000 Restated (see below) External Turnover: Rental services 29,569 28,625 Retail services 7,012 7,104 ------ ------ 36,581 35,729 Less joint venture* (1,502) (1,350) ------ ------ Group turnover 35,079 34,379 ====== ====== As a result of a review during 1999 of the arrangements with certain customers regarding sales of textiles, it was determined that it would be more appropriate to disclose these transactions on a gross basis within turnover and cost of sales, rather than as a net deduction from cost of sales. Accordingly, the comparative figures for turnover and cost of sales have been increased by £2,032,000. There is no effect on profit arising from the changes. Operating profit: Rental services 3,821 3,061 Retail services 40 2 Central charges, net of rentals to subsidiaries** (890) (593) ------ ------ Total operating profit 2,971 2,470 Less joint venture* (255) (215) ------ ------ Group operating profit 2,716 2,255 ====== ====== Profit on ordinary activities before tax: Group 2,580 2,006 Joint venture 247 197 ------ ------ 2,827 2,203 ====== ====== Net assets: Rental services 11,007 10,646 Retail services 1,109 963 Unallocated, principally the Group's freehold properties 3,212 2,772 ------ ------ 15,328 14,381 less joint venture * (650) (362) ------ ------ Net assets, excluding interest bearing liabilities 14,678 14,019 Loans (2,020) (2,716) Finance leases (134) (33) ------ ------ Net assets 12,524 11,270 ====== ====== All operations are in the United Kingdom * Included in Rental services ** 1999 includes provisions of £304,000 in respect of leases on vacant properties 2. The financial information set out above does not constitute the Company's statutory accounts for the period ended 25 December 1999. The information has been prepared on the basis of accounting policies adopted in the statutory accounts for the period ended 25 December 1999. The statutory accounts for the period ended 25 December 1999 have been reported on by the auditors without qualification, but have not yet been delivered to the Registrar of Companies. Full accounts for the Group for the period ended 26 December 1998 have been delivered to the Registrar of Companies and contain an unqualified audit report. 3. The proposed final dividend of 4.OOp (1998 - 3.40p) per share which, with the interim dividend of 2.OOp (1998 - 1.60p) makes a total of 6.OOp for the year (1998 - 5.OOp). The proposed final dividend will be posted on 2 June 2000 to shareholders on the register at 14 April 2000. 4. The earnings per share have been calculated in accordance with FRS14 'Earnings per share'. Basic earnings per share have been calculated using the weighted average number of ordinary shares in issue during the period of 12,868,285 (1998 - 12,786,608) and profits of £1,990,000 (1998 - £1,525,000). For diluted earnings per share the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares where the exercise price is less than the average market price of the Company's ordinary shares during the period, 1999 - 129,250 (1998 - 93,683). 5. The Annual Report will be posted to shareholders on 20 April 2000. Copies will be available to the public, free of charge, from the Financial Times Annual Report Service (Tel: 020 8391 6000). 6. The Annual General Meeting will be held on 24 May 2000 at 210 Aztec West, Almondsbury, Bristol, at 2.30 pm. 7. Further information on Brooks Service Group Plc is available on the company website: www.brooks-service-group.co.uk

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