Business review

Business overview

All numbers at 2008 average exchange rates.

This review of performance takes a close look at each of our business areas – Textiles and Washroom Services, Pest Control, Asia Pacific, Ambius, City Link, and Facilities Services. In each case we report on market conditions, record our progress against key performance indicators and discuss the most important developments in 2009 and our expectations for 2010.

Basis of preparation

Segmental information has been presented in accordance with IFRS 8 "Operating Segments" which the group has implemented with effect from 1 January 2009. This review also reflects internal organisation changes made in the third quarter resulting in some businesses moving from Pest Control to Textiles and Washroom Services. Prior year comparisons and prior year periods have been restated. In all cases references to operating profit are for continuing businesses before amortisation and impairment of intangible assets (other than computer software). References to adjusted operating profit and adjusted profit before income tax also exclude items of a one-off nature, totalling a net cost of £37.1 million (2008: £19.6 million) that have had a significant impact on the results of the group. They relate directly to the group’s various performance improvement initiatives and consist mainly of redundancy and other reorganisation costs including consultancy, plant and office closure costs net of the profit on sale of certain properties, profit or loss on disposal of businesses not classified as discontinued and acquisition integration cost. They have been separately identified as they represent an investment in the future performance of the group and are not considered to be "business as usual" expenses and have a varying impact on different businesses and reporting periods. All comparisons are at constant 2008 full year average exchange rates.

Full year financial overview

Full year revenue of £2,355.8 million (at constant exchange rates) declined by 2.2% on the same period last year, but grew 5.0% at actual exchange rates. Revenue performance was held back principally by City Link and Initial Facilities Services, both of which experienced particularly difficult market conditions in 2009. Despite the weakened economy, Textiles and Washroom Services and Pest Control reported revenue growth of 2.5% and 3.3% respectively with some notably robust country performances in both divisions. The contract portfolio decreased by 3.6% year-on-year reflecting customer terminations and a slowdown in new business which we attribute directly to the economic downturn. Group operating profit (before amortisation and impairment of intangible assets) increased by 7.2% to £158.2 million and adjusted operating profit (again before amortisation and impairment of intangible assets) amounted to £195.3 million, an increase of 16.8% on the prior year. Group full year adjusted profit before tax and amortisation grew by 29.8% to £140.1 million. Profit before income tax from continuing operations was £47.2 million (2008: £22.8 million), an increase of 107.0%. This profit reflects £55.8 million of amortisation and goodwill impairment charges (2008: £65.5 million) and is stated after charging one-off costs of £37.1 million (2008: £19.6 million). Full details of divisional performance can be found in the tabs above.