Interim Results

BROOKS SERVICE GROUP PLC 28 September 1999 Interim Results for the 26 weeks to 26 June 1999 Brooks is one of the leading companies in the provision of textile rental and retail services in the UK. Highlights: * Pre tax profits Up 52% to £914k (1998 : £602k) * Earnings per share Up 52% to 4.94p (1998 : 3.25p) * Interim Dividend Up 25% to 2.00p (1998 : 1.60p) * Gearing Reduced to 19.1% (1998 : 32.8%) Chairman Simon Brooks commented: 'I am pleased to report that the strong profit growth achieved during recent years has continued throughout the first half of 1999.' For further information contact: John Walters, Chief Executive, 01454 614668 Patrick Mulcahy, Finance Director, 01454 614668 Barrie Newton, Rowan Dartington & Co Ltd, 0117 925 3377 BROOKS SERVICE GROUP Plc Chairman and Chief Executives' Statement Group Results and Dividend We are pleased to report that the strong profit growth achieved during recent years has continued throughout the first half of 1999. The Group results for the 26 weeks to 26th June, 1999 are summarised below. Turnover increased by 4% to £16.6m (1998: £16.0m) whilst pre-tax profits increased by 52% to £914,000 (1998: £602,000). Basic Earnings per share in the period were 4.94p (1998: 3.25p) an increase of 52%. Net Borrowings at 26th June, 1999 were significantly reduced at £2.2m (1998: £3.5m) reflecting the Group's strong cash flow. Gearing at the half year was 19.1% (1998: 32.8%) The Board has decided to pay an interim dividend of 2.00p per share (1998: 1.60p), an increase of 25%. This will be paid on 19th November, 1999 to shareholders on the Register at the close of business on 15th October, 1999. Rental Services After a poor January, the market improved considerably and has remained buoyant throughout the period. We are benefitting from improved efficiencies across our rental operations and these, combined with a continuing emphasis on cost control, have produced improved margins. Although we are coming under pressure on prices, we believe that the aforementioned productivity and efficiency improvements enable us to compete strongly in the marketplace. The new washroom central processing unit opened, as planned, in June and is operating satisfactorily. We are very pleased with the progress of the joint venture - Brooks Bourne Services Ltd - which continues to grow sales and profit. We remain totally committed to providing our customers with a high quality service and are pleased to report continuing progress in this key area. Retail Services It is encouraging to report that the benefits anticipated from the disposal of unprofitable retail outlets are showing through and our retail operation traded profitably in the first half of the year, and ahead of the previous year. Our 'Fastfotos' photographic service continues to make good progress with sales up by around 24% on the previous year. We have opened two outlets in out-of-town superstores and one in a large city centre shopping mall. We are also expanding our 'On the Move' operation which provides services to office complexes. Year 2000 The Group has undertaken an extensive review of the implications of the Year 2000 'millennium bug' issue. The Board assessed the business risks associated with the Year 2000 issue and has implemented a comprehensive action plan, including customers and suppliers, with a view to ensuring compliance. We are at an advanced stage of achieving compliance, with most of our systems and equipment already fully tested. The programme will have been completed well in advance of December 1999. The Board is satisfied that it has taken all appropriate steps to protect the Group against Year 2000 issues, but these can provide only reasonable and not absolute assurance that no interruption will occur. We do not consider the current or the future capital and revenue costs of the Year 2000 review to be significant. Trading Outlook The outlook for the rest of the year remains encouraging and, whilst we do not anticipate that the exceptional rate of improvement achieved in the first half year will be maintained during the second six months, we are confident that your Company's performance for the full year will reflect a very satisfactory increase in profits. R S Brooks J W Walters Chairman Chief Executive CONSOLIDATED PROFIT AND LOSS ACCOUNT for the period to 26 June 1999 52 weeks to 26 weeks to 26 weeks to 26/12/1998 26/06/1999 27/06/1998 (audited) (unaudited) (unaudited) £'000 £'000 £'000 Turnover 33,697 Group and share of joint venture 16,636 16,039 1,350 Less share of joint venture 739 642 ------ ------ ------ 32,347 Group turnover 15,879 15,397 ====== ====== ====== 2,255 Group operating profit 911 652 Share of profit of joint venture before 215 interest 105 98 ------ ------ ------ 2,470 Operating profit 1,016 750 267 Interest payable (net) 102 148 ------ ------ ------ Profit on ordinary activities before 2,203 taxation 914 602 Taxation on ordinary activities: 625 Group 249 160 53 Joint venture 30 27 ------ ------ ------ Profit on ordinary activities after 1,525 taxation 635 415 642 Dividends 258 205 ====== ====== ====== 883 Profit retained for the period 377 210 ====== ====== ====== 11.93p Basic earnings per ordinary share 4.94p 3.25p ====== ====== ====== 11.84p Diluted earnings per ordinary share 4.90p 3.22p ====== ====== ====== 5.00p Rate of dividend per ordinary share 2.00p 1.60p ====== ====== ====== All of the Group's turnover and profit was generated from activities which are continuing. Earnings Per Share: The basic earnings per share for the 26 weeks ending 26 June 1999 is calculated on the basis of a profit of £635,000 (June 1998: £415,000) and 12,847,223 ordinary shares (June 1998: 12,754,023) being the weighted average number of the ordinary shares in issue during the period. For diluted earnings per share the weighted average number of ordinary shares in issue is adjusted, to 12,953,223 (June 1998: 12,875,367), 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. The basic earnings per share for the 52 weeks ending 26 December 1998 is calculated on the basis of a profit of £1,525,000 and 12,786,608 ordinary shares. The diluted earnings per share is calculated using 12,880,308 ordinary shares. Taxation: The taxation charge has been estimated at an effective Corporation Tax rate of 30.5 per cent. for the 12 months ending 25 December 1999. This compares with a rate of 31 per cent. for the 26 weeks to 27 June 1998 and for the 52 weeks ended 26 December 1998. CONSOLIDATED BALANCE SHEET 52 weeks to 26 weeks to 26 weeks to 26/12/1998 26/06/1999 27/06/1998 (audited) (unaudited) (unaudited) £'000 £'000 £'000 7,824 Tangible assets 8,295 7,604 519 Investment in joint venture 588 435 ------ ------ ------ 8,343 8,883 8,039 ------ ------ ------ 6,675 Stocks 6,819 6,845 5,335 Debtors 5,351 5,549 646 Bank and cash in hand 373 8 ------ ------ ------ 12,656 12,543 12,402 9,465 Less creditors 9,486 9,586 ------ ------ ------ 3,191 3,083 2,816 ------ ------ ------ 264 Provision for liabilities and charges 264 310 ------ ------ ------ 11,270 Net assets 11,676 10,545 ====== ====== ====== Capital and reserves 5,874 Share capital and share premium account 5,903 5,822 5,396 Profit and loss account 5,773 4,723 ------ ------ ------ 11,270 Equity shareholders' funds 11,676 10,545 ====== ====== ====== CONSOLIDATED CASH FLOW 52 weeks to 26 weeks to 26 weeks to 26/12/1998 26/06/1999 27/06/1998 (audited) (unaudited) (unaudited) £'000 £'000 £'000 3,104 Net cash inflow from operating activities 1,554 244 ------ ------ ------ Returns on investments and servicing of finance 18 Interest received 13 0 (259) Interest paid (108) (131) (8) Interest element of finance lease rentals (1) (5) ------ ------ ------ Net cash outflow from returns on (249) investments and servicing of finance (96) (136) ------ ------ ------ Taxation Corporation tax paid (including advance (548) corporation tax) (51) (41) ------ ------ ------ Capital expenditure and financial investment (1,913) Purchase of tangible fixed assets (1,155) (1,155) 26 Sale of tangible fixed assets 26 0 ------ ------ ------ Net cash outflow from capital expenditure (1,887) and financial investments (1,129) (1,155) ------ ------ ------ (548) Equity dividends paid (437) (344) ------ ------ ------ Cash outflow before management of liquid (128) resources and financing (159) (1,432) ------ ------ ------ Financing 58 Issue of ordinary shares 29 6 195 New loans 0 0 (294) Repayment of loans (138) (213) (48) Principal payment under finance leases (5) (27) ------ ------ ------ (89) Net cash outflow from financing (114) (234) ------ ------ ------ (217) Decrease in cash in period (273) (1,666) ====== ====== ====== The interim statement is unaudited and does not constitute full accounts within the meaning of the Companies Act 1985. It has been prepared on a basis consistent with the 1998 statutory accounts. A copy of this interim report is being sent to shareholders and is available from the Company head office at Aztec West, Almondsbury, Bristol BS32 4SN. The comparative figures for the 52 weeks ended 26 December 1998 do not constitute statutory accounts. These figures have been extracted from the audited accounts for that period which have been delivered to the Registrar of Companies and on which the auditors issued an unqualified report.
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