Business
City Link Update
City Link Update.
About this update from Rentokil Initial Plc
[{"type":"text","content":"\n Rentokil Initial PLC\n21 April 2008\n\n\n 21 April 2008\n\n RENTOKIL INITIAL PLC (RTO)\n CITY LINK UPDATE\n\nThe difficulties experienced in the group's parcel delivery business, City Link,\nhave continued through Q1 2008.\n\nThe new senior management team put in place at City Link over the past two\nmonths has begun to address the operational problems within the business. This\nteam, consisting largely of individuals experienced in running non-franchise\nnetworks, has already enjoyed some success in improving service levels and in\nre-establishing relationships with customers.\n\nHowever, the declining performance trend of the fourth quarter 2007 has\ncontinued into Q1 2008. This is a result of the difficulties experienced in\nintegrating the City Link franchisees and the Target Express acquisition with\nthe core City Link business. This has led to a greater than anticipated\nadjusted operating loss of £16.9 million for Q1 2008 (of which £10 million is\nattributable to non-recurring costs).\n\nThe previous guidance was that City Link may not trade better than break even\nfor 2008. Although the full year outcome remains unclear, in light of first\nquarter trading and the current trends in revenue and costs, it now appears\nlikely that the division will incur a significant full year loss.\n\n Quarter One Quarter Four\n 2008 2007 2007\n £m £m £m\n\nNetwork revenue (1) 96.0 107.3 108.0\n\nRevenue (2) 95.2 94.5 106.5\n\nCosts (3) 112.1 84.3 100.2\n\nProfit/(loss) (4) (16.9) 10.2 6.3\n\n(1) Network revenue represents the total system sales and combines the\nrevenues of City Link (including Target Express) and its franchisees.\n\n(2) Revenue represents the total sales of City Link, the franchises that\nhave been acquired and Target Express. The difference between network revenue\nand revenue therefore represents largely the revenue of the franchises not yet\nacquired.\n\n(3) Before one-off costs of £nil for the first quarter of 2008, £0.9m for\nthe first quarter of 2007 and £19.7 million for the fourth quarter of 2007.\n\n(4) Profit/(loss) is adjusted operating profit and is stated before one-off\nitems and amortisation.\n\nNetwork revenue was 11% lower than Q1 2007. Adjusted for lower trading days in\n2008, revenue was down 8%.\n\nRevenue from the top 50 customers, which accounts for 26% of total revenue, has\ngrown year o...