Final Results

Johnson Service Group PLC 23 March 2001 23 March 2001 JOHNSON SERVICE GROUP PLC PRELIMINARY RESULTS FOR THE 53 WEEKS ENDED 30 DECEMBER 2000 SUMMARY - The UK's leading workwear rental specialist with a market share of c 23% and Britain's largest and most successful multiple drycleaner with a market share of c 20% - Turnover (including 10 months trading of Semara) increased by 27.7% to £220.4 million (1999: £172.5 million) - Pre-tax profit* up 10.0% to £28.2 million (1999: £25.6 million) - Fully diluted earnings per share* increased by 12.8% to 36.0 pence (1999: 31.9 pence) - Total dividend for the year increased by 7.5% to 17.1 pence (1999: 15.9 pence) - Integration of Semara progressing very successfully * excluding reorganisation costs, goodwill amortisation and exceptional items. Commenting on the results, Richard Zerny, Chief Executive, Johnson Service Group PLC, said: 'Following the strategic developments of recent years the Group is in a very strong position. Both our main businesses occupy leading positions in their marketplaces in terms of both sales and profitability. The acquisition of Semara has created a platform for future revenue growth and margin improvement in our enlarged textile rental business. The drycleaning business remains cash generative and well placed to continue to deliver both good profit and an excellent return on capital.' Enquiries: Richard Zerny, Chief Executive Mike Sutton, Finance Director Johnson Service Group PLC Tel: 020 7796 4133 on Friday 23 March 2001 only thereafter on 0151 933 6161 Michael Sandler Hudson Sandler Tel: 020 7796 4133 CHAIRMAN'S STATEMENT 2000 was another year of excellent progress and record profit. Following the February acquisition of Semara Holdings Plc, Johnsons Apparelmaster is now the largest operator in the UK workwear rental market. We have the critical mass, leading systems and working practices to win further market share. With less than 40 percent of the potential market outsourcing its workwear, there is significant opportunity for new business growth over the medium term. We are now a national UK workwear business, which means that we can service the workwear rental requirements of the largest companies. There is also an opportunity for further earnings growth as we raise Semara's operating efficiencies and margins, bringing them closer to the level traditionally achieved by Johnsons Apparelmaster. Johnsons Cleaners is now the UK's leading retail drycleaning brand, and we have continued with our active and targeted promotional campaigns. With 538 shops, there is scope for regional advertising and efficiencies of scale that our competitors cannot match. Group Results and Dividend The inclusion of 10 months' trading of Semara led to a sharp increase in turnover. Sales jumped from £172.5 million in 1999 to £220.4 million in 2000. Pre-tax profit (before reorganisation costs, goodwill amortisation and exceptional items) grew from £25.6 million in 1999 to £28.2 million in 2000 - an increase of 10.0 percent. Adjusted earnings per share (fully diluted) increased by 12.8 percent from 31.9 pence in 1999 to 36.0 pence in 2000. As a result of the acquisition of Semara we incurred reorganisation costs of £ 3.1 million relating to redundancies and plant and office closures. There was also a charge of £2.5 million relating to the planned closure of our Dublin linen plant in April this year. This expenditure will result in a considerable reduction in our cost base. As always, we have carefully managed our capital during the year. Return on Shareholders' funds increased to 27.1 percent in 2000, against 25.8 percent in 1999. Net borrowings at December 30th, 2000, were £94.6 million, compared with £2.9 million at the end of 1999. The increase in borrowings arose mainly from the acquisition of Semara for £103.5 million in cash. The Board is satisfied that the interest charge on these borrowings will be well covered by profit. Reflecting our confidence, we are paying a second interim dividend, to be declared final, of 13.2 pence making 17.1 pence for the full year, which compares with 15.9 pence in 1999 an increase of 7.5 per cent. Trading Review Textile Rental Great Britain - Johnsons Apparelmaster The Semara acquisition led to a near doubling in the size of the British textile rental business. Turnover grew from £63.4 million in 1999 to £122.6 million in 2000. Operating profit increased from £15.8 million to £23.4 million. Operating margins narrowed from 24.8 percent to 19.1 percent, reflecting the lower margins of the Semara business. Trading improved in the second half as a number of new accounts were won and competitive pressures eased slightly. Second half margins of 19.5 percent compared with 18.7 percent for the first half. Ireland - Connacht Court Group Turnover increased from £23.8 million to £25.4 million, but operating profit before reorganisation costs and goodwill amortisation, fell from £1.9 million to £1.6 million. The workwear and clean room businesses performed well. The Dublin linen operation produced poor results but since the year end we have sold the business and we shall exit this loss making plant in April this year. Drycleaning Johnsons Cleaners Johnsons Cleaners is a highly cash generative business. Once again, it showed an improvement in profit and margin. Although turnover showed little change at £72.4 million in 2000, compared with £72.2 million in 1999, like-for-like turnover in fact grew by 3.9 percent. The headline figure was held down by the discontinuation of our low margin photographic franchise operation. Operating profit increased by 4.8 percent from £8.0 million to £8.4 million. Operating margins rose from 11.1 percent to 11.6 percent. As in our textile rental business the second half results benefited from the inclusion of an extra (53rd) week's trading. During the year, we launched a programme of targeted regional TV advertising and continued to promote the Johnsons Priority Club. We opened 16 new branches in locations convenient for our customers and closed 22 poorly sited shops. Integration of Semara The integration of Semara is proceeding smoothly and the benefits of our national presence in UK workwear are already evident. During the year, we won several major national accounts, including: Coca-Cola, British Aerospace, William Price and CPL Petroleum. The former Semara textile rental business now trades under the Johnsons Apparelmaster brand. Significant progress has been made in cutting costs and improving efficiencies. The closure of Semara's head office in Harley Street in March 2000 and of the Apparelmaster factory at Haslington, near Crewe, in June 2000 are part of the ongoing cost reduction programme. Semara's Glasgow factory was closed in January 2001 and the Nottingham factory will be closing later this year. We decided to retain CCM, Semara's workwear manufacturing and sourcing business, and it has traded well since the acquisition. We sold Dimensions Corporatewear, which sources and sells UK corporatewear, for £15.2 million in December. Negotiations to sell Airline Services, which cleans and packages blankets, linen, cutlery and headsets for airline customers, have reached an advanced stage. Strategy and Outlook Following the strategic developments of recent years the Group is in a very strong position. Both our main businesses occupy leading positions in their marketplaces in terms of both sales and profitability. The acquisition of Semara has created a platform for future revenue growth and margin improvement in our enlarged textile rental business. The drycleaning business remains cash generative and well placed to continue to deliver both good profit and an excellent return on capital. In the current year, Johnsons Apparelmaster should begin to benefit from the winning of a number of major new contracts last year. It will focus on growing turnover in future by targeting customers who have not previously used textile rental and by selling additional services to existing accounts. We anticipate the total cost of integrating Semara to be about £7.0 million, of which £3.1 million was incurred in 2000 and the balance will be incurred this year. We now estimate that, when fully implemented, this expenditure will lead to annual cost savings of about £5.0 million - some £1.0 million per annum more than originally expected. In Ireland, the current year should see CCG benefiting from the resolution of our difficulties with the Dublin linen operation, allowing the business to begin to fulfil its true potential. With the last phase of the restructuring of the management of the drycleaning business having been completed in January 2001, Johnsons Cleaners is well placed to continue to generate cash and further improve its margins. Trading in the first two months of 2001 has been in line with management expectations. Our businesses are, of course, influenced by economic conditions and, provided those remain reasonably buoyant, we are confident that 2001 should be another successful year for the Group. John Hancox Chairman REVIEW OF OPERATIONS The year was dominated by our purchase of Semara for £103.5 million - by far the largest acquisition in our history. This made us the UK's leading workwear rental specialist, complementing our long-established position as Britain's number one drycleaner. We have focused on the major task of integrating the two businesses' plants and workforces in a way that preserved and extended the best practice of both organisations, and enabled us to take full advantage of the opportunities created by the acquisition. I am pleased to report that this has progressed very well, in accordance with our plans, and that the acquisition is meeting all our expectations. The enlarged Johnsons Apparelmaster business continued its successful new business development, and margin pressures created by competitor activity eased towards the end of the year. Stalbridge Linen Services maintained its excellent record of profit growth. We incurred start-up costs as expected in building nationwide coverage for Johnsons Washroom Services. In Ireland, we embarked on the final phase of reorganising Connacht Court, which is to exit the unprofitable Dublin hotel and hospital linen markets in the first quarter of 2001. The Dublin linen factory will close in April. Johnsons Cleaners achieved like for like sales growth of 3.9% despite the adverse effects of extreme autumn weather and the fuel crisis. It also made good progress with its brand and shop development programmes, while maintaining its excellent record of cash generation. TEXTILE RENTAL 'Rapid integration of the major Semara acquisition has made Johnsons Apparelmaster the clear market leader in UK workwear rental. Our strategy now is not only to expand our business within our existing customer base by broadening the range of services we provide to them, but also to sell to potential customers who have never before had a rental service.' Peter Robinson, Managing Director, Johnsons Apparelmaster Johnsons Apparelmaster The acquisition of Semara at the end of February 2000 brought together the Johnsons Apparelmaster and Sketchley textile rental businesses to create a new market leader in UK workwear rental. During the year we have cut overheads and integrated the facilities and sales forces, while ensuring that we adopted the best practice of both businesses in all areas of our operations. Following the closure of the Apparelmaster factory at Haslington, near Crewe, in June 2000, and of the former Semara factory at Glasgow in January 2001, we now serve our customers from 18 factories and 3 depots throughout Britain, all operating under the Johnsons Apparelmaster brand. The profitable business from the 2 closed plants was successfully transferred to other factories, reducing overheads and increasing efficiencies in line with our plans and within our budgeted reorganisation cost. Since the year end we have disposed of the remaining unprofitable Semara linen business to concentrate on our core activity of workwear rental. The 2 sales forces were amalgamated and rationalised to give us 40 representatives in the field across Britain, backed by a single, improved telemarketing centre at our head office. We took the opportunity to strengthen the dedicated national sales and service team to manage our larger accounts. Our combined sales force has been trained to focus on 2 key areas: developing business with customers who have not previously used textile rental, and maximising demand for additional services within our existing accounts. A significant proportion of our new business is already derived from organisations that are making their first use of textile rental, and we continue to expand our service range, for example through the launch during the year of a new Floor Care Services business from our Leeds factory, specialising in the provision of dust control mats. As part of the integration process, we introduced several initiatives aimed at ensuring that all our representatives are fully trained in all aspects of product knowledge, and suitably incentivised to sell the complete range of services we offer. Despite the upheaval that inevitably follows any major acquisition, we maintained our strong track record of new business development in 2000. Major national account gains during the year included Coca-Cola, British Aerospace, William Price and CPL Petroleum, while Safeway renewed their business for an extended period. We remain Britain's number one provider of garments to the food industry, through our network of high-care processing facilities. Further development of our Internet strategy during 2000 culminated in the launch of direct sales through our website early in 2001, when we were also pleased to achieve the ISO 14001 environmental standard. The adoption of more environmentally friendly solutions in processing and packaging has been combined with improvements in efficiency and cost reductions. Johnsons Washroom Services We have continued the development of this specialist business, expanding its operations both organically and by acquisition. This enabled us to achieve near national coverage by the end of the year, in line with our plans. We are now able to offer a comprehensive range of washroom products throughout Britain, ranging from handwashing and drying equipment to air freshening, sanitising and feminine hygiene. Our service is aimed at the middle and upper market place, and we are successfully developing our business with quality hotels, offices and commercial premises. Stalbridge Linen Services Our quality linen business maintained its strong growth record, benefiting from increased capacity at its factories in Shaftesbury and Milborne Port. At Shaftesbury, we have developed a new dedicated facility for the reception and sorting of incoming linen, and the despatch of finished goods. This has released space at our main factory, where additional production lines are currently under development to allow a substantial increase in throughput. We successfully entered the Scottish market during the year, following the commissioning of a new regional depot, and we have achieved good growth. Our Premier Linen Service has continued to win new customers among the high-class hotels, restaurants and clubs at which it is targeted, and has enjoyed particularly strong growth in demand for chefs' wear. Connacht Court Group The reorganisation of our operations in Dublin has progressed as planned, and will be completed with the closure of the original linen factory in April 2001. We have withdrawn from the Dublin hotel and hospital linen market to concentrate on our more profitable businesses in workwear rental and healthcare services. The new Naas Road workwear plant is operating successfully and expanding its throughput, and we are currently fitting out another plant nearby to take over the sterile surgical packs business for the healthcare market, currently processed at Rathfarnham. Our Galway business continued to make progress, despite significant increases in labour and fuel costs during the year. We have invested to improve the Galway factory and are committed to continued expansion of the business across its full service range. The Micronclean factory at Spiddal, near Galway, had a successful year, benefiting from stronger than expected growth in demand for cleanroom workwear in the micro-electronics and pharmaceutical sectors. In Northern Ireland, the Central Laundries business acquired in December 1999 made a satisfactory contribution in its first full year within the Group. Its Cookstown facility is the most technically advanced in the Province, giving us a strong platform to market high-care workwear services in particular to the food industry. Our business in Belfast has also continued to expand, notably in the industrial workwear and floor protection sectors. Once our Dublin reorganisation is completed in the current year, we believe that we will have the right mix of businesses and facilities to achieve profitable growth in both the Republic of Ireland and Northern Ireland. CCM We have decided to retain and develop the CCM workwear manufacturing and sourcing business, which was required as part of Semara. This is a well-managed and profitable company, which has traded strongly since joining the Group. Some 70% of its sales are made outside the Group and it has made good progress across its customer base. We believe that there are opportunities for future growth in both the direct sale and rental workwear markets. DRYCLEANING Johnsons Cleaners 'We have made good progress in building consumer awareness of Johnsons as the nation's number one drycleaner, through brand promotions including the launch of TV advertising. This is complemented by our programme of branch relocations to high traffic, high convenience locations, principally through the development of drive-in outlets.' David Bryant, Managing Director, Johnsons Cleaners The completion of our rebranding and rationalisation programme in 1999 gave us a strong, unified identity throughout Britain, providing a solid platform for effective promotion of the Johnsons brand. During the year we undertook TV advertising in all regions outside the South East, and continued our successful development of the Johnsons Priority Club. This now has almost 450,000 members, and in-house development of enhanced EpoS software will enable us to improve our data collection and facilitate even more effective marketing. We have continued to concentrate on developing new outlets in locations that our convenient for our customers. During the year we opened new drive-in outlets in Bournemouth, Guildford, Penge, Ipswich, Swansea, Sandbach, Blackpool and Stafford and acquired an established independent drive-in in Rochdale. Since the start of the current year we have opened further new drive-ins in Chessington, Woodford and Newcastle-under-Lyme, giving us a total of 32 such outlets. In total we opened 16 new branches during 2000 and closed 22, giving us 538 at the year end. We offer our customers a comprehensive range of cleaning services, including processes suitable for all types of fabrics and materials. The successful launch of a nationwide laundry and ironing service during the year took us further towards this goal. We also extended the capabilities of our Central Processing Unit in Rugby, developing our own nationwide distribution service and increasing the range of items we can process. The Rugby facility is now able to offer individual specialist treatment of everything from wedding gowns to horse blankets. Our reputation as the UK market leader in drycleaning continues to be enhanced by the close working relationships developed with leading clothing manufacturers and retailers, who consult us on garment labelling, testing and customer advice. We are also taking a lead by testing a new silicon-based cleaning solvent, Siloxane, which potentially offers significant environmental benefits. The business has benefited from our on-going investment in staff training and development. In particular, the branch management training programme we launched in January 2000 has proved highly successful, and will remain a regular feature of our staff development in the future. During the current year we also plan to further develop the advanced cleaning skills' course for our branch staff as we strive to continually improve our service. At the beginning of 2001 we restructured the business from 4 to 3 regions, reducing overheads and improving our overall efficiencies. Although suitable sites are difficult to find, our focus throughout the current year will remain on the relocation of branches to more convenient locations, the development of our services and the promotion of our brand, all with the aim of increasing revenue and customer satisfaction. PEOPLE It has been a particular pleasure to welcome the many dedicated and professional people who have joined the Group this year through our acquisitions. They have adopted our culture with enthusiasm, and have undoubtedly strengthened the business for the future. The continued success of all our operations depends on the delivery of excellent customer service by our employees, whom we support through our ongoing investment in training and development. Once again, I would like to take this opportunity to thank all our employees for their hard work during the year, which has been the key to both the successful integration of our major acquisition and the continued growth of the Group. Richard Zerny Chief Executive JOHNSON SERVICE GROUP PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT 53 Weeks 52 Weeks to Dec to Dec 2000 1999 £000 £000 TURNOVER Continuing 220,404 159,426 Discontinued - 13,107 Total 220,404 172,533 OPERATING PROFIT BEFORE REORGANISATION COSTS AND GOODWILL AMORTISATION 33,394 26,144 Reorganisation costs (5,630) - Amortisation of goodwill (3,902) (872) OPERATING PROFIT - continuing 23,862 24,791 - - 481 discontinued - total 23,862 25,272 Exceptional items 535 2,500 Profit before interest 24,397 27,772 Net interest (5,182) (497) PROFIT BEFORE TAXATION 19,215 27,275 Total taxation (7,138) (7,895) PROFIT ATTRIBUTABLE TO SHAREHOLDERS 12,077 19,380 PROFIT BEFORE TAXATION (Before reorganisation costs, goodwill amortisation and exceptional items) 28,212 25,647 Dividends i) Rates of dividend per share: Ordinary shares of 10p each - 1st interim paid 3.9p 3.65p - final paid - 12.25p - final proposed 13.2p - - total 17.1p 15.9p Preference shares of 10p each - paid 7.5p 7.5p ii) Total amount absorbed thereby (£000) 9,766 8,689 EARNINGS PER SHARE - Basic 21.9p 36.8p - Fully Diluted 21.5p 34.8p EARNINGS PER SHARE (Before reorganisation costs, goodwill amortisation and exceptional items) - Basic 37.2p 33.6p - Fully Diluted 36.0p 31.9p JOHNSON SERVICE GROUP PLC CONSOLIDATED BALANCE SHEET AS AT DECEMBER 2000 2000 1999 £000 £000 FIXED ASSETS Goodwill 80,368 18,795 Tangible assets 88,071 78,201 Textile rental items 31,722 21,215 Investments 879 749 201,040 118,960 CURRENT ASSETS Investments 2,500 - Stocks 7,998 3,571 Debtors 47,197 19,726 Cash at bank and in hand 878 17,324 58,573 40,621 CURRENT LIABILITIES Creditors: Amounts falling due within one year (49,665) (32,495) NET CURRENT ASSETS 8,908 8,126 TOTAL ASSETS LESS CURRENT LIABILITIES 209,948 127,086 Creditors: Amounts falling due after more than one (90,634) (19,654) year PROVISIONS FOR LIABILITIES AND CHARGES (15,322) (7,976) NET ASSETS 103,992 99,456 CAPITAL AND RESERVES Called-up share capital 5,943 6,052 Share premium account 5,747 4,133 Revaluation reserve 12,138 12,594 Other reserves (153) 1,564 Profit and loss account 80,317 75,113 SHAREHOLDERS' FUNDS 103,992 99,456 Non-equity Shareholders' funds included above 5,906 9,191 JOHNSON SERVICE GROUP PLC CONSOLIDATED CASH FLOW STATEMENT 53 Weeks to 52 Weeks to Dec 2000 Dec 1999 £000 £000 Operating profit 23,862 25,272 Depreciation 36,115 24,714 Loss on sale of tangible fixed assets 693 401 Working capital and other items (net) 2,861 (4,797) NET CASH INFLOW FROM OPERATING ACTIVITIES 63,531 45,590 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Net interest paid (7,504) (410) Preference dividends paid (566) (783) NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (8,070) (1,193) TAXATION Tax paid (net) (8,912) (8,661) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Payments to acquire tangible fixed assets (10,151) (10,511) Payments to acquire textile rental items (22,121) (15,945) Receipts from sales of tangible fixed assets 1,383 6,854 Proceeds from textile rental items withdrawn 4,807 3,018 from circulation Net movement in investments (130) 1,693 NET CASH OUTFLOW FOR CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (26,212) (14,891) ACQUISITIONS AND DISPOSALS Payments to acquire businesses (104,834) (5,060) Investments held for resale (647) - Receipts from disposal of businesses 13,847 20,500 Net cash from acquisitions and disposals - (391) NET CASH (OUTFLOW)/INFLOW FROM ACQUISITIONS (91,634) 15,049 AND DISPOSALS EQUITY DIVIDENDS PAID (8,392) (7,347) CASH (OUTFLOW)/INFLOW BEFORE FINANCING (79,689) 28,547 FINANCING Issue of Ordinary share capital 209 424 Debt due within 1 year: Loan notes redeemed (180) (668) Debt due beyond 1 year: Movement in unsecured loans 62,378 (11,152) Finance lease movement (1,820) (1,394) NET CASH INFLOW/(OUTFLOW) FROM FINANCING 60,587 (12,790) (DECREASE)/INCREASE IN CASH IN THE PERIOD (19,102) 15,757 NOTES TO THE PRELIMINARY ANNOUCEMENT 1. Segmental Information - Analysis of Turnover and Operating Profit Before Reorganisation Costs and Goodwill Amortisation 53 Weeks 52 Weeks to to Dec 2000 Dec 1999 £000 £000 Continuing Operations GB Rental Turnover 122,630 63,437 Profit 23,474 15,757 IR Rental Turnover 25,429 23,821 Profit 1,558 1,927 GB Drycleaning Turnover 72,345 72,168 Profit 8,362 7,979 Total Continuing Operations Turnover 220,404 159,426 Profit 33,394 25,663 Discontinued Operations US Drycleaning Turnover - 13,107 Profit - 481 Total Turnover 220,404 172,533 Operating Profit before Reorganisation Costs and Amortisation of Goodwill 33,394 26,144 The extent of the integration of the Semara business, acquired in February 2000, with the existing business of the Group has meant that it is not possible to report the post acquisition results of Semara separately within continuing operations. The results of other acquisitions, also reported within continuing operations, are not significant. 2. Reorganisation Costs The reorganisation costs are in respect of the integration of the rental business acquired as part of Semara Holdings Plc with the Group's existing Apparelmaster business and in respect of the withdrawal from the Dublin linen rental business. 3. Exceptional Items 53 Weeks to Dec 52 Weeks to Dec 2000 1999 £000 £000 Continuing Operations Gain on disposal of fixed asset - 1,078 investment (Loss) on sales of property (10) 329 fixed assets Total continuing operations (10) 1,407 Discontinued Operations Disposal of US operations 545 1,093 535 2,500 Following the disposal of the US operations in 1999 further net proceeds were received during the year. No taxation arises on exceptional items. 4. Taxation 53 Weeks to Dec 52 Weeks to Dec 2000 1999 £000 £000 Continuing Operations: UK corporation tax 6,037 7,851 Irish corporation tax (405) 1,292 5,632 9,143 UK deferred tax 1,219 (195) Irish deferred tax 287 (1,073) Total Continuing Operations 7,138 7,875 Discontinued Operations: US State and Federal - 20 taxation TOTAL 7,138 7,895 The tax relief on the reorganisation costs incurred in the current year has reduced UK corporation tax by £779,000, Irish corporation tax by £19,000 and Irish deferred tax by £111,000. 5. Dividends 53 Weeks to Dec 52 Weeks to Dec 2000 1999 £000 £000 10p Convertible preference shares at 443 689 7.5p per share Ordinary shares at 17.1p (1999: 15.9p) 9,323 8,000 per share 9,766 8,689 On 20th October 2000 a first interim dividend of 3.9p was paid on the Ordinary shares. A second interim, to be confirmed as final, of 13.2p will be paid on 9th May 2001 to Shareholders on the register of members on 6th April 2001. Dividends on the Convertible preference shares were paid on 3rd July 2000 and 2nd January 2001. 6. Earnings Per Share 53 Weeks to Dec 52 Weeks to Dec 2000 1999 £000 £000 Profit for the financial year 12,077 19,380 Less dividend on 10p Convertible (443) (689) preference shares Profit attributable to Ordinary 11,634 18,691 Shareholders Less (gain) on exceptional items (535) (2,500) Add reorganisation costs (net of 4,721 - taxation) Add goodwill amortisation 3,902 872 Adjusted profit attributable to Ordinary 19,722 17,063 Shareholders Weighted average number of Ordinary 53,056,860 50,857,226 shares Fully diluted number of Ordinary shares 56,066,444 55,603,942 Basic earnings per share is calculated using the weighted average number of shares in issue during the year, excluding those held by the Trust established in connection with the Long Term Incentive Plan, based on the profit attributable to Ordinary Shareholders. Adjusted earnings per share figures are given to exclude the effects of reorganisation costs, goodwill amortisation and exceptional items, net of taxation. 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. The Company has two categories of dilutive potential Ordinary shares: - those share options granted to employees where the exercise price is less than the average market price of the Company's Ordinary shares during the year and those shares arising on conversion of the 7.5p (net) Convertible Cumulative Redeemable Preference shares. 7. Acquisitions and Disposals Purchase of Businesses 53 Weeks to Dec 52 Weeks to Dec 2000 1999 £000 £000 Net Assets Acquired (fair value) Fixed assets 10,855 714 Textile rental items 13,081 723 Current assets 28,451 512 Creditors (9,927) (670) Deferred tax 2,827 (20) Loans and finance agreements (11,254) (85) Provisions (8,015) - 26,018 1,174 Assets held for resale 14,806 - Goodwill 65,475 4,886 Total consideration 106,299 6,060 Discharged by cash 104,834 5,060 Issue of shares 1,465 - Deferred consideration - 1,000 106,299 6,060 The principal acquisition in the period was Semara Holdings Plc, which was acquired on 22nd February 2000 for a total consideration of some £103.5 million. Disposal of Businesses Net Assets Disposed of Investment held for resale 14,663 - Tangible fixed assets - 15,669 Stocks - 927 Debtors - 4,356 Cash - 464 Creditors - (2,257) Goodwill previously written off to reserves - 248 Reduction in loss on disposal of US business 545 1,093 Total 15,208 20,500 Satisfied by cash 13,847 20,500 Amount due within 1 year 1,361 - 15,208 20,500 The assets held for resale disclosed under the acquisition of Semara Holdings Plc included the assets of the Dimensions Corporatewear business, which was disposed of on 6th December 2000. 8. Reconciliation of Net Cash Flow to Movement in Net Debt 53 Weeks 52 Weeks to Dec to 1999 Dec 2000 £000 £000 (Decrease)/Increase in cash in the period (19,102) 15,757 Cash (inflow)/outflow on change in debt and (59,522) 13,214 lease financing Change in net debt resulting from cash flows (78,624) 28,971 Finance leases - new (2,283) (1,829) Amortisation of issue costs of new bank loans (171) - Loans and leases acquired with subsidiaries (11,254) (85) Translation difference 619 1,941 Movement in net debt in period (91,713) 28,998 Opening net debt (2,866) (31,864) Closing net debt (94,579) (2,866) 9. Analysis of Net Debt At Cash Acquisition Other Exchange At December Flow (Excluding Non-cash Movement December 1999 Cash) changes 2000 £000 £000 £000 £000 £000 £000 Cash in hand 17,324 (16,457) - - 11 878 and at bank Overdraft - (2,645) - - - (2,645) Debt due after (16,800) (61,522) (11,146) (171) 601 (89,038) one year Debt due (198) 180 - - - (18) within one year Finance leases (3,192) 1,820 (108) (2,283) 7 (3,756) (2,866) (78,624) (11,254) (2,454) 619 (94,579) Non-cash changes comprise new finance leases and the effects of amortising issue costs relating to bank loans. Movement in debt due after one year: Loans repaid 16,067 New loans received (78,445) Increase in loans (62,378) Less issue costs of new loans 856 (61,522) 10. Abridged Accounts The financial information set out above does not constitute the Company's statutory accounts for the years ended 30th December 2000 or 25th December 1999, but is derived from those accounts. Statutory accounts for 1999 have been delivered to the Registrar of Companies and those for 2000 will be delivered following the Company's Annual General Meeting. The Auditors have reported on those accounts; their reports were unqualified and did not contain statements under s237(2) or (3) Companies Act 1985. 11. Rates of Exchange 2000 1999 Irish Pound Average rate IR£1.29 IR£1.20 Closing rate IR£1.25 IR£1.25 12. Preliminary Announcement A copy of this Preliminary Announcement is available on request to all Shareholders by post from The Company Secretary, Johnson Service Group PLC, Mildmay Road, Bootle Merseyside L20 5EW. The Announcement can also be accessed on the Internet at www.JohnsonPLC.com. 13. Approval The Preliminary Announcement was approved by the Board of Directors on 23rd March 2001.

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