Final Results

RNS Number : 2681I

Johnson Service Group PLC

09 March 2010

 



9 March 2010

Johnson Service Group PLC

Statement for the Financial Year ended 31 December 2009

Improved performance despite challenging conditions

Johnson Service Group PLC, the textile services and facilities management Group announces its preliminary results for the financial year ending 31 December 2009.

Overview

•     Adjusted profit before tax** increased to £12.2 million (2008: £6.0 million)

•     Continuing adjusted operating profit* increased to £17.5 million (2008: £16.9 million)

•     New bank facility secured

•     Net debt reduced to £67.7 million (2008: £78.5 million)

•     Net finance costs reduced to £5.7 million (2008: £11.8 million)

•     Adjusted fully diluted earnings per share** of 3.4p (2008: 2.8p)

•     Final dividend proposed of 0.5 pence, making 0.75 pence for full year (2008: nil)

Financial Summary

Continuing	2009	2008
	£m	£m
Revenue	236.4	252.3
Revenue (excluding costs recharged to customers)	229.3	242.6
Operating Profit	26.3	5.0
Adjusted Operating Profit*	17.5	16.9
Exceptional Credit***/ (Charge)	12.0	(8.7)
Profit/ (Loss) Before Tax	20.6	(6.8)
Adjusted Profit Before Tax**	12.2	6.0
Fully Diluted Earnings per Share (pence)	5.8p	(3.4)p
Adjusted Fully Diluted Earnings per Share** (pence)	3.4p	2.8p

*	Before intangibles amortisation and impairment (excluding software amortisation) and exceptional items
**	Before intangibles amortisation and impairment (excluding software amortisation), exceptional item and exceptional finance costs
***	Exceptional credit relates to reduction in pension liabilities

John Talbot, Executive Chairman of Johnson Service Group, commented:

"I am pleased with these results which have been achieved despite the challenging conditions affecting all our three divisions. A focus on costs, cash flow and profitability has resulted in an increase in adjusted operating profit and a doubling of adjusted profit before tax. I am particularly pleased that Stalbridge, after a very difficult few years, has returned to profit.

"We have continued to reduce our net debt and I feel very positive about the future prospects of our three divisions despite the harsh economic environment."

Enquiries:

 

Johnson Service Group PLC	Threadneedle Communications
John Talbot, Executive Chairman	Graham Herring
Yvonne Monaghan, Finance Director	John Coles
Tel: [phone] (on the day)
Tel: [phone] (thereafter)	Telephone: [phone]

 

www.johnsonplc.com

Chairman's Statement

Overview

I am pleased to report that the Group has achieved a satisfactory result for 2009, particularly in view of the challenging conditions affecting each of our three divisions. At the end of 2009 we agreed new bank facilities which are more closely aligned to our reduced level of debt. We have declared a proposed final dividend of 0.5 pence per share, making a total dividend for the full year of 0.75 pence.

Group Results

Throughout this statement "Continuing adjusted operating profit" refers to continuing operating profit before amortisation and impairment of intangibles (excluding software amortisation) and exceptional items.  "Adjusted profit before tax" refers to continuing adjusted operating profit less finance costs, excluding exceptional finance costs in relation to bank fees.  References to "continuing" exclude the results of Workplace Engineering, which was disposed of in December 2009, and the Corporatewear division, which was disposed of in April 2008.

Total continuing revenue for the year was £236.4 million (2008: £252.3 million), while revenue, excluding costs recharged to customers, was £229.3 million (2008: £242.6 million).  Continuing adjusted operating profit amounted to £17.5 million (2008: £16.9 million).  This is explained more fully in the Divisional Operating Review.

Net finance costs in 2009 were £5.7 million (2008: £11.8 million) comprising exceptional finance costs in relation to bank fees of £0.4 million (2008: £0.9 million) and £5.3 million of other net finance costs (2008: £10.9 million).  The reduction in other net finance costs reflects the significantly lower average borrowings during the period and lower interest rates, both in terms of margins and LIBOR. Offsetting the reduced interest cost on debt is the notional interest charge in respect of defined benefit post retirement benefits where the charge in 2009 of £0.7 million compared to a credit of £0.7 million in 2008.

Adjusted profit before tax on a continuing basis was £12.2 million (2008: £6.0 million).

Amortisation and impairment of intangibles (excluding software amortisation) on continuing operations amounted to £3.2 million (2008: £3.2 million).

Net exceptional items from continuing operations for the year were a credit of £12.0 million (2008: £8.7 million charge) arising from a reduction in the defined benefit pension scheme liabilities of the Group as we actively manage the assets and liabilities of these schemes.  In addition to the £2.2 million credit recognised in the first half from the pension increase exchange, a further £9.8 million credit has been recognised in respect of the decision to implement a pensionable salary freeze for current employees in the defined benefit schemes.  The exceptional charge in 2008 comprised restructuring and environmental costs of £4.1 million and professional advisory fees of £6.7 million incurred in connection with the bank debt restructuring process and move to the Alternative Investment Market (AIM), offset by the release of excess provision for an uninsured loss of £1.2 million and a profit on the disposal of textile rental properties of £0.9 million.

After the exceptional items and amortisation of intangibles (excluding software amortisation) noted above, the pre-tax profit from continuing operations was £20.6 million (2008: loss £6.8 million).  Adjusted fully diluted earnings per share from continuing operations were 3.4p (2008: 2.8p) while continuing earnings per share after exceptional items and amortisation and impairment of intangibles (excluding software amortisation) were 5.8p (2008: loss 3.4p).

Dividend

The Board is recommending a final dividend of 0.5 pence per share (2008: nil), making a total dividend in respect of 2009 of 0.75 pence per share (2008: nil). Dividend cover, on an adjusted fully diluted earnings per share basis is 4.5 times and is in line with our stated policy of maintaining an adequate level of cover.

The proposed final dividend, if approved by Shareholders, will be paid on 21 May 2010 to Shareholders on the register on 23 April 2010.

Finances

Total net debt at the end of 2009 was significantly reduced to £67.7 million (December 2008: £78.5 million).  In addition to cash generated from operating activities, this reduction reflects a net repayment of corporation tax of £4.8 million.

Interest cover based on continuing adjusted operating profit was 3.3 times (2008: 1.6 times).

A new bank facility was signed in December for an initial amount of £78.5 million and running to April 2013. Following the January 2010 receipt of a further tax repayment of £2.0 million, £1.0 million of the Term Loan was repaid and cancelled. The remaining facility is now £77.5 million and scheduled repayments of the Term Loan commence in December 2010 with a repayment of £1.5 million, followed by half yearly repayments of £1.5 million.

The interest cost in 2010 is protected from increases in LIBOR rates through the use of interest rate hedges.  £40.0 million of Term Loan has been hedged so that LIBOR is substituted for a fixed rate of 1.9% for 2010 and of 3.0% for 2011 and 2012, with the balance of bank debt incurring interest linked to LIBOR. Margins over LIBOR applicable to the full facility are initially 3.75% with margins after April 2010 being linked to the Group's gearing level.

Disposal of Workplace Engineering

The disposal of Workplace Engineering was completed on 14 December 2009 for a total consideration of £0.3 million net of expenses, on a debt free, cash free basis. The loss on disposal together with the loss after tax arising from the business in the eleven months prior to disposal, has been shown as a loss of £3.5 million on discontinued operations. 

The net proceeds of the disposal were principally used to repay debt.

Pension Deficit

The recorded net deficit after tax for all post retirement benefit obligations has remained at a similar level to December 2008 at £14.7 million. 

We are continuing to explore ways of reducing the valuation of past service liabilities in the schemes whilst at the same time protecting members' interests. As part of this process we have successfully implemented a pension increase exchange for eligible retirees, reducing the IAS 19 liabilities through this exercise by £2.5 million. This offer is now being extended to future retirees and should continue to have a further beneficial impact on the liabilities going forward, albeit on a smaller scale.

Although the current members of the schemes represent a relatively small proportion of the total liabilities, we have completed a consultation exercise with current members such that the scheme pensionable salary of current members will be frozen at 6 April 2010. Allowing for the impact of this within the IAS calculations has had the benefit of reducing scheme liabilities by £9.9 million.  

Without these actions to reduce liabilities the deficit would have increased substantially.

Scheme assets have recovered from the levels of December 2008 although the benefit of this has been more than offset by lower corporate bond yields increasing the value of liabilities.

The current agreement with the Trustees of the three defined benefit pension schemes is such that the additional contributions into the schemes will be £1.6 million in 2010. This will be reviewed following the results of the actuarial valuations of two of the schemes, including the main scheme, which are to be calculated as at 5 April 2010 and a new level of deficit contributions agreed.

Operating Reviews

Textile Rental

We are very pleased with the performance of this division in a very challenging year. This division operates from 20 laundries situated throughout Great Britain through two brands, Johnsons Apparelmaster ("Apparelmaster") and Stalbridge Linen Services ("Stalbridge"). Under the Apparelmaster brand we predominantly provide workwear rental and laundry services to all sectors of industry whilst the Stalbridge brand encompasses our premium linen service to the hospitality and corporate event market.

New business wins exceeded our expectations but we experienced an increase in the level of business closures and general reductions in the levels of spend from our existing customers.

As a result of the trading conditions, revenue reduced by 4.6% to £116.9 million (2008: £122.6 million).  However, the business responded very effectively by implementing a cost reduction programme and driving efficiencies from previous capital investment projects.   These, together with the benefits from a small acquisition early in the year, resulted in adjusted operating profit increasing by 2.1% to £14.6 million (2008: £14.3 million), with an improved margin of 12.5% (2008: 11.7%).

Throughout the year, the division continued to invest in capital projects to further increase production efficiencies and at the same time reduce our demand for water, gas and electricity.  The investments will help in achieving our pre-determined 7.5% reduction in energy consumption in line with our recent registration for a Climate Change Agreement. This should assist us in mitigating any impact of forthcoming legislation regarding the Carbon Reduction Commitment (CRC).

As a result of increased efficiencies and despite the reduced income levels and continued investment in rental stocks and capital equipment, the division was very successful in generating £17.0 million (2008: £19.3 million) of cash before interest during the year. This exceeds adjusted operating profit largely through a reduction in working capital.

Revenue from Apparelmaster reduced to £90.1 million (2008: £94.4 million). A major element of this was a reduction in the direct sales of garments and PPE products with revenue falling by £4.8 million in this area. Revenue was also affected as a result of the economic climate and its impact upon the industrial sectors of the West Midlands and Northern England.  Revenue for the year from Stalbridge plants was down to £26.8 million (2008: £28.2 million).

Despite the economic outlook, new contract sales by Apparelmaster were very strong with the business securing new industrial customers and several large food manufacturing customers which increased our weekly volumes by a further 40,000 garments per week.  Stalbridge customer retention levels have yet again improved as a result of the quality improvement programmes and additional resource has now been invested in promoting these activities.

Despite some pressures on the cost base, including higher energy prices, action was taken to reduce costs across the division by £1.4 million excluding the effect of lower direct sales.  Further capital investment programmes were completed in the food production units at our Perth and Basingstoke Apparelmaster laundries in order to increase future production and energy efficiencies in this very competitive sector of the market.

Stalbridge have implemented production efficiencies identified in the restructuring plan and this business is focusing on its core activities in the catering and corporate hospitality market where product quality and excellent service delivery are paramount.  Major investments in equipment were made at the Stalbridge Sturminster Newton event/hospitality laundry and we are already beginning to benefit from these operational improvements.  

Adjusted operating profit for the year from Apparelmaster plants reduced to £12.3 million (2008: £13.8 million) although as anticipated in previous statements we are delighted that Stalbridge has now returned to profitability producing adjusted operating profit of £1.2 million (2008: loss £0.5 million), an improvement of £1.7 million on the previous year.

Following a year of careful project planning, the SAP computer system was successfully replaced by an in-house IT system designed for Stalbridge which is already beginning to deliver both significant cost and operational benefits.

Drycleaning

The Drycleaning Division operates under the brands Johnson Cleaners, our national retail arm, Jeeves of Belgravia, our London based luxury business and Alex Reid, our consumables business and major supplier to the Drycleaning Sector.

Revenue of our Drycleaning Division was £83.5 million (2008: £91.5 million) and adjusted operating profit was £3.0 million (2008: £4.4 million).

The tough trading conditions first witnessed in the latter stages of 2008 prevailed throughout 2009 and as such retailing on Britain's high streets remained extremely challenging.  Whilst 2008 saw rises in costs of oil based products and a general slow down on spending, 2009 saw spending further suppressed and high streets, now with many vacant units, visited less frequently.

The Drycleaning Division Retail Operations were not immune to the economic conditions and consequently the revenue of Johnson Cleaners and Jeeves of Belgravia decreased by 5.1% on a like for like basis with revenue of £74.0 million (2008: £79.3 million) and adjusted operating profit of £3.1 million (2008: £4.2 million).

In anticipation of reduced volumes, management took the initiative to reduce the weekly operating costs of the business at the commencement of 2009 by making more variable what had previously been regarded as fixed costs. The cost savings were implemented by the management team through, in part, a process of consultation and co-operation with employees

who worked with us to reflect the reduced volumes through reduced hours.

Johnson Cleaners, whilst widely recognised as the Nation's No 1 Drycleaner by volume and value across the UK, is aware of its need to constantly evolve both its portfolio and proposition and it made good progress on both fronts in 2009. 

Following a successful 10 store trial in late 2008 where units were refurbished to reflect the green credentials of Johnsons and were co-branded GreenEarth®, a further 84 were completed in 2009 in a roll out programme we have internally named 'Green Evolution'.  Customer reaction in the refurbished stores has been very positive and the message within local markets is transmitted through many mediums including local celebrity launches which have resulted in more than 250 news articles now captured by our newly appointed PR Company.

The results of the now 94 Green Evolution Branches continue to be significantly ahead of the core estate with same source sales for those stores which have been open for 12 months or more at the end of February 2010 running 4.9% higher than the core, and the programme will continue at an enhanced pace in 2010.

Investment in GreenEarth® processing continued within the business with 50 new machine installations taking the processing estate towards 65% by year end.  The roll out will continue in 2010 in line with our Green Evolution Programme.

Within the trading year 10 new locations were opened in potentially high volume locations.  Drive Ins were opened in Chester, Manchester, Newport, Nottingham, Banbury and Chandlers Ford.  Four supermarket launches took place in 2010, two within the conventional format in Asda and two exciting new concepts were opened up in a smaller footprint with Tesco offering a wider range of consumer services. Convenience and Supermarket partnerships will continue to remain high on the strategic agenda of the business. 22 stores have been closed during the year leaving 501 trading locations at the end of 2009.

Our new or extended service range introduced in 2008 showed an increase of 65% year on year, with success across all categories being achieved, whilst the Executive Service with triple digit growth led the way. Having introduced new services successfully and completed a roll out plan in this 2009, 2010 will see a period of refinement leading to a further double digit growth.

Our investment in our portfolio through GreenEarth® and "Green Evolution", together with our ever improving consumer proposition places us well to capitalise in the market place when the economic and high street recovery commences.

Jeeves of Belgravia was hit first and hardest when the slowdown of the economy impacted the UK.  Its much improved performance in the second half of the year both in like for like trading results and operating profit indicates that despite a reduced performance in 2009 the platform and position of the business is such that results are expected to improve further in 2010.

The planned refurbishment programme for the business commenced in 2009 with the flagship Pont Street store setting a new standard for Drycleaning. A further two stores were refitted in the year and the results have been such that investment will continue throughout 2010 with a similar volume of refurbishment in the store portfolio.

Investment in the store portfolio will be matched with investment into new laundry facilities at the Central Processing Unit, which will further enhance the operating results in 2010.

The actions taken at Alex Reid, our specialist Drycleaning Supplies business, during 2009 have provided a platform for this business to make a positive contribution to the division in 2010.  Whilst the business made an operating loss of £0.1 million (2008: £0.2 million profit) on revenue of £9.4 million (2008: £12.2 million) in 2009 it should be noted that costs of £0.1 million were incurred in restructuring the business. Following the closure of one plant location, combining the accounting function with the remainder of the division and the reduction in senior personnel, Alex Reid now has a significantly reduced operating overhead.

Supported by a new IT business solution and driven through a focus on Customer Service, all the ingredients are in place for a more successful trading year for Alex Reid.

Facilities Management

SGP provides predominantly white collar property, building and facilities management (FM) services to many high street chains and to public and commercial organisations, based on a proprietary help desk arrangement. Approaching 45,000 retail and commercial units are under its management and it controls annual spend of over £1.0 billion on behalf of its customers.

SGP has achieved profitability and revenue growth in a very difficult market in 2009, absorbing the impact of the failures of customers Threshers, Woolworth and Adams and the continuing pattern of existing customers restricting their spending levels, including that on major project work.  Revenue excluding costs recharged to customers was 1.4% higher at £28.9 million (2008: £28.5 million), whilst revenue including recharges was 5.8% lower at £36.0 million (2008: £38.2 million), the latter reflecting lower customer spend on facility management services. Adjusted operating profit increased by 6.5% to £3.3 million (2008: £3.1 million). The second half adjusted operating profit of £1.7 million, as anticipated in our interim statement, showed an improving trend on the first half performance of 2009 and on the second half of 2008 reflecting a combination of growth in both new and existing clients and cost saving initiatives.   

During the year SGP had excellent success in retaining and extending its major retail helpdesk contracts including Superdrug, Arcadia and Punch. A number of new helpdesk contracts have also been won and mobilised during the second half of the year including Subway and Scottish and Newcastle.   SGP have developed a major enhancement to its helpdesk services in 2009 via a state of the art online system for its clients. This is starting to generate significant efficiency benefits for them and will cement our position as a key partner for many clients for the longer term.

Our FM contracts continued to perform well with the further expansion of its public sector portfolio from both the existing client base and from new wins such as Worcester Library PFI, South West Hants LIFT, Bucks New University and Redbridge Primary Care Trust.  A number of key FM contracts were also successfully retained and extended including Citigroup, Mitchells and Butler, Getronics, Cap Gemini and Bayern LB.  

The project and property area of the business has continued to experience very challenging conditions, with revenue from these activities 39% down on 2008. SGP remains committed to these business streams, and are well placed to take advantage when a recovery of these capital and project spend areas begins.

For 2010 SGP are investing in additional infrastructure which will restrict growth in operating profit in the current year, but enable accelerated growth in the medium and longer term from the robust platform established. 

Group Costs

Group costs have reduced from £4.9 million in 2008 to £3.4 million in 2009.  Part of the costs in 2008 related to support for the SAP computer system which has now been fully withdrawn and did not receive central support during 2009.

Staff

The skills and efforts of all staff are paramount in ensuring that our customers continue to be impressed by the service they receive.  I would like to thank each and every employee in the Group for the tremendous enthusiasm and commitment that they have shown during the past year and for their continuing efforts in driving the Group forward.

Outlook

I feel very positive about the prospects for the Group despite a harsh economic environment.  Morale is high in our senior management teams, we have recently negotiated funding arrangements for the next three years and there are opportunities for profitable investment in each of the divisions.

I anticipate that the Textile Rental division will continue to win new accounts as a result of its focus on quality and customer service. Investment in energy efficient plant and its well trained and stable workforce should continue to underpin the division's performance. 

Now that the Group has achieved stability we are looking for opportunities to leverage our skills and assets in the Textile Maintenance market and would like to add further portfolios of business to the division during 2010.

Our Drycleaning business faces the toughest challenges as it is the division which appears most directly impacted by changes in consumer confidence. The division has also suffered a short term impact from the very severe winter weather both at the end of 2009 and start of 2010.  We intend to continue to focus on improving the quality of our portfolio by new, high volume store openings and to optimise the overall performance from the more marginal locations. The rollout of GreenEarth® is continuing and is now providing a significant enhancement to performance when compared with the balance of the portfolio.

SGP has been operating in a very difficult retail market with several customers failing and others anxious to minimise spending.  Despite this, management is very positive and our team has achieved growth in revenue and profit.  I believe the division is likely to accelerate growth over the next two or three years in both retail and the longer term PFI contract market.   We have taken the decision to invest in additional infrastructure to support the existing management team, although this will add cost to the current year. We are continuing to seek opportunities to leverage our existing presence in both the FM and retail markets.

Although we are not anticipating any upturn in trading conditions, the Board expects to achieve a satisfactory result for 2010.

Consolidated Income Statement                                                                       

	Year ended 31 December 2009	Year ended 31 December 2008 (as restated)
	£m	£m
REVENUE FROM CONTINUING OPERATIONS	236.4	252.3
Costs recharged to customers	(7.1)	(9.7)
Revenue excluding costs recharged to customers	229.3	242.6
OPERATING PROFIT	26.3	5.0
OPERATING PROFIT BEFORE INTANGIBLES AMORTISATION AND IMPAIRMENT (EXCLUDING SOFTWARE AMORTISATION) AND EXCEPTIONAL ITEMS	17.5	16.9
Amortisation and impairment of intangible assets (excluding software amortisation)	(3.2)	(3.2)
Exceptional items
- Restructuring and other costs	-	(9.6)
- Profit on disposal of property	-	0.9
- Pension credits	12.0	-
OPERATING PROFIT	26.3	5.0
Finance costs         - Ordinary finance costs	(5.5)	(11.8)
- Exceptional finance costs	(0.4)	(0.9)
Finance income	0.2	0.9
PROFIT / (LOSS) BEFORE TAXATION	20.6	(6.8)
Taxation (charge) / credit	(5.7)	1.8
PROFIT / (LOSS) FOR THE YEAR FROM CONTINUING OPERATIONS	14.9	(5.0)
DISCONTINUED OPERATIONS:
LOSS FOR THE YEAR FROM DISCONTINUED OPERATIONS	(3.5)	(1.1)
PROFIT / (LOSS) FOR THE YEAR ATTRIBUTABLE TO EQUITY HOLDERS	11.4	(6.1)
EARNINGS PER SHARE *
Basic earnings per Share
From continuing operations	6.1p	(3.4p)
From discontinued operations	(1.4p)	(0.8p)
From continuing and discontinued operations	4.7p	(4.2p)
Fully diluted earnings per Share
From continuing operations	5.8p	(3.4p)
From discontinued operations	(1.4p)	(0.8p)
From continuing and discontinued operations	4.4p	(4.2p)

*   Adjusted earnings per share (before intangibles amortisation and impairment (excluding software amortisation), exceptional items and exceptional finance costs), are shown in note 8.

Consolidated Statement of COMPREHENSIVE Income

	Year ended 31 December 2009	Year ended 31 December 2008
	£m	£m
Profit / (loss) for the year	11.4	(6.1)
Actuarial loss on defined benefit pension schemes	(13.6)	(11.0)
Taxation in respect of actuarial loss	3.8	3.1
Cash flow hedges (net of taxation) - fair value loss	(0.3)	(0.3)
- transfers to interest	1.1	(0.1)
OTHER COMPREHENSIVE INCOME FOR THE YEAR	(9.0)	(8.3)
TOTAL COMPREHENSIVE INCOME  FOR THE YEAR	2.4	(14.4)

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

	Share Capital	Share Premium	Other Reserves	Retained Earnings	Total Equity
	£m	£m	£m	£m	£m
Balance at 1st January 2008	5.9	13.7	1.9	25.3	46.8
Total comprehensive income for the period	-	-	(0.4)	(14.0)	(14.4)
Reserve created on issue of warrants	-	-	0.3	-	0.3
Reserve transfer	-	-	(0.1)	0.1	-
Issue of share capital	19.0	-	-	16.0	35.0
Share options (value of employee services)	-	-	-	0.4	0.4
Balance at 31st December 2008	24.9	13.7	1.7	27.8	68.1
Balance at 1st January 2009	24.9	13.7	1.7	27.8	68.1
Total comprehensive income for the period	-	-	0.8	1.6	2.4
Reserve transfer	-	-	(0.1)	0.1	-
Share options (value of employee services)	-	-	-	0.9	0.9
Dividend paid	-	-	-	(0.6)	(0.6)
Balance at 31st December 2009	24.9	13.7	2.4	29.8	70.8

Consolidated Balance Sheet

	As at 31 December 2009	As at 31 December 2008
	£m	£m
ASSETS
NON-CURRENT ASSETS
Goodwill	87.6	89.2
Intangible assets	9.2	11.9
Property, plant and equipment	44.9	45.4
Textile rental items	19.6	22.2
Trade and other receivables	0.6	-
Deferred income tax assets	7.4	12.5
	169.3	181.2
CURRENT ASSETS
Inventories	3.4	4.4
Trade and other receivables	34.6	48.6
Current income tax assets	1.2	-
Cash and cash equivalents	2.7	5.2
	41.9	58.2
LIABILITIES
CURRENT LIABILITIES
Trade and other payables	8.1	15.6
Other creditors and accruals	28.2	31.1
Current income tax liabilities	-	4.1
Borrowings	10.5	3.8
Provisions	3.6	2.8
	50.4	57.4
NET CURRENT (LIABILITIES) / ASSETS	(8.5)	0.8
NON-CURRENT LIABILITIES
Retirement benefit obligations	20.4	20.6
Deferred income tax liabilities	1.9	2.5
Other non-current liabilities	1.4	1.3
Borrowings	59.9	79.9
Derivative financial liabilities	-	0.8
Provisions	6.4	8.8
	90.0	113.9
NET ASSETS	70.8	68.1
CAPITAL AND RESERVES ATTRIBUTABLE TO THE COMPANY'S EQUITY HOLDERS
Called up share capital	24.9	24.9
Share premium	13.7	13.7
Other reserves	2.4	1.7
Retained earnings	29.8	27.8
TOTAL EQUITY	70.8	68.1

 Consolidated Statement OF Cash Flows

	Year ended 31 December 2009	Year ended 31 December 2008
	£m	£m
CASH FLOWS FROM OPERATING ACTIVITIES
Profit / (loss) for the year	11.4	(6.1)
Adjustments for:
Income tax - continuing operations	5.7	(1.8)
- discontinued operations	(0.9)	14.1
Finance income and expense	5.7	11.8
Depreciation	20.6	21.4
Amortisation of intangible assets	3.6	4.5
Impairment of goodwill	1.6	-
Decrease / (increase) in inventories	1.0	(2.5)
Decrease in trade and other receivables	5.9	10.6
Decrease in trade and other payables	(7.6)	(18.4)
Profit on sale of property, plant and equipment	(0.4)	(0.6)
Pre-tax loss / (gain) on disposal of business / subsidiaries	0.1	(11.9)
Additional contribution to defined benefit pension schemes	(1.5)	(2.6)
Share-based payments	1.0	0.4
Retirement benefit obligations	(13.0)	(0.3)
Provisions	(1.6)	(5.4)
Cash generated from operations	31.6	13.2
Interest paid	(6.7)	(15.1)
Taxation received	4.8	1.4
Net cash flows generated from / (used in) operating activities	29.7	(0.5)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of business	(0.8)	-
Proceeds from sale of business / subsidiary	0.2	71.7
Purchase of property, plant and equipment	(7.1)	(7.6)
Proceeds from sale of property, plant and equipment	0.7	1.5
Purchase of intangible assets	(0.4)	(0.6)
Purchase of textile rental items	(15.4)	(14.8)
Proceeds from sale of textile rental items	3.0	4.2
Interest received	0.2	0.5
Net cash (used in) / generated from investing activities	(19.6)	54.9
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings	-	197.0
Repayments of borrowings	(13.7)	(296.5)
Capital element of finance leases	(0.8)	(1.0)
Net proceeds from issue of Ordinary shares	-	35.0
Dividends paid to company Shareholders	(0.6)	-
Net cash used in financing activities	(15.1)	(65.5)
Net decrease in cash and cash equivalents	(5.0)	(11.1)
Cash and cash equivalents at beginning of period	5.2	16.3
Cash and cash equivalents at end of period	0.2	5.2

NOTES TO THE PRELIMINARY ANNOUNCEMENT

1          BASIS OF PREPARATION

The financial information contained within this report has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (IFRSs as adopted by the EU), IFRIC Interpretations and the Companies Act 2006 applicable to companies reporting under IFRS.

The financial information has been prepared using accounting policies consistent with those set out in the 2008 Annual Report.

2          SEGMENT ANALYSIS

Segment information is presented in respect of the Group's business segments, which are based on the Group's management and internal reporting structure as at 31st December 2009.  Segmental reporting has been amended in accordance with IFRS8, and comparative figures restated.

The chief operating decision-maker has been identified as the Board of Directors (the Board).  The Board reviews the Group's internal reporting in order to assess performance and allocate resources.  Management has determined the operating segments based on these reports and on the internal reporting structure.

The Board assess the performance of the operating segments based on a measure of earnings before interest and tax, both including and excluding the effects of non-recurring items from the operating segments, such as restructuring costs and impairments when the impairment is the result of an isolated, non-recurring event.  Interest income and expenditure are not included in the result for each operating segment that is reviewed by the Board.  Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis, for example rental income received by the property company is credited back to the paying company for the purpose of segmental reporting.

Other information provided to the Board is measured in a manner consistent with that in the financial statements.  Total segmental assets exclude deferred tax assets, current tax assets, available-for-sale financial assets and cash, all of which are managed on a central basis.  Total segmental liabilities exclude deferred tax liabilities, current tax liabilities and bank borrowings, all of which are managed on a central basis.  These balances are part of the reconciliation to total balance sheet assets and liabilities.  Inter-segment pricing is determined on an arms length basis.  The exceptional items have been included within the appropriate business segment as shown on pages 17 to 18.

The Group comprises the following segments:

Textile Rental Services Workwear rental supply and laundering and linen rental for the premium hotel, catering and corporate hospitality markets.	§  Johnsons Apparelmaster Limited §  Stalbridge Linen Services
Drycleaning With over 510 stores nationwide, provides drycleaning, laundry and ironing services, carpet cleaning, upholstery cleaning, wedding dress cleaning and suede & leather cleaning and the supply of drycleaning consumables.	§  Johnson Cleaners UK Limited §  Jeeves of Belgravia Limited §  Jeeves International Limited §  Alex Reid Limited
Facilities Management Delivering building, facilities and property management services to public, commercial and retail organisations throughout the UK.	§  SGP Property and Facilities Management Limited
All Other Segments Comprising of central and head office costs.	§  Johnson Service Group PLC §  Johnson Group Properties PLC

NOTES TO THE PRELIMINARY ANNOUNCEMENT (continued)

2          SEGMENT ANALYSIS continued

Year ended 31st December 2009	Textile Rental Services		Drycleaning	Facilities   Management	All Other Segments (Group Costs)	Total
	£m		£m	£m	£m	£m
REVENUE
Revenue	116.9		83.5	36.6	-	237.0
Inter-segment revenue	-		-	(0.6)	-	(0.6)
REVENUE - CONTINUING	116.9		83.5	36.0	-	236.4
Revenue - Discontinued						4.0
Total revenue						240.4
REVENUE EXCLUDING COSTS RECHARGED TO CUSTOMERS
Revenue	116.9		83.5	29.5	-	229.9
Inter-segment revenue	-		-	(0.6)	-	(0.6)
REVENUE EXCLUDING COSTS RECHARGED TO CUSTOMERS - CONTINUING	116.9		83.5	28.9	-	229.3
Revenue - Discontinued						4.0
Total revenue excluding costs recharged to customers						233.3
RESULT
Operating profit before intangibles amortisation and impairment (excluding software amortisation) and exceptional items	14.6		3.0	3.3	(3.4)	17.5
Amortisation and impairment of intangible assets	(1.4)		-	(1.8)	-	(3.2)
Exceptional items
- Pension Credits	-		-	0.5	11.5	12.0
Operating profit	13.2		3.0	2.0	8.1	26.3
Finance costs
- Ordinary finance costs						(5.5)
- Exceptional finance costs						(0.4)
Finance income						0.2
Profit before taxation						20.6
Taxation						(5.7)
Profit for the period - Continuing						14.9
Discontinued operations						(3.5)
Profit for the period						11.4

		Discontinued Operations			Textile Rental Services		Drycleaning	Facilities Management	All Other Segments (Group Costs)	Total
			£m		£m		£m	£m	£m	£m
OTHER INFORMATION
Capital expenditure
- Property, plant and equipment			-		2.9		4.2	0.2	-	7.3
- Textile rental items			-		13.5		-	-	-	13.5
- Intangible software			-		-		0.1	0.2	-	0.3
Depreciation and amortisation expense
- Property, plant and equipment			0.1		4.3		2.5	0.3	0.2	7.4
- Textile rental items			-		13.2		-	-	-	13.2
- Intangible software			0.1		-		0.1	0.2	-	0.4
Return on capital employed (%)					38.6%		24.2%	111.4%
BALANCE SHEET INFORMATION
Segment assets			0.1		102.5		37.7	45.5	14.1	199.9
Unallocated assets	- deferred income tax assets									7.4
	- current income tax assets									1.2
	- cash and cash equivalents									2.7
Total assets										211.2
Segment liabilities			(1.0)		(22.7)		(16.1)	(4.7)	(4.8)	(49.3)
Unallocated liabilities	- deferred income tax liabilities									(1.9)
	- borrowings									(69.2)
	- retirement benefit obligations									(20.0)
Total liabilities										(140.4)

NOTES TO THE PRELIMINARY ANNOUNCEMENT (continued)

2          SEGMENT ANALYSIS continued

Year ended 31st December 2008 (as restated)	Textile Rental Services		Drycleaning	Facilities   Management	All Other Segments (Group Costs)	Total
	£m		£m	£m	£m	£m
REVENUE
Revenue	122.6		91.5	38.7	-	252.8
Inter-segment revenue	-		-	(0.5)	-	(0.5)
REVENUE - CONTINUING	122.6		91.5	38.2	-	252.3
Revenue - Discontinued						36.7
Total revenue						289.0
REVENUE EXCLUDING COSTS RECHARGED TO CUSTOMERS
Revenue	122.6		91.5	29.0	-	243.1
Inter-segment revenue	-		-	(0.5)	-	(0.5)
REVENUE EXCLUDING COSTS RECHARGED TO CUSTOMERS - CONTINUING	122.6		91.5	28.5	-	242.6
Revenue - Discontinued						36.7
Total revenue excluding costs recharged to customers						279.3
RESULT
Operating profit before intangibles amortisation and impairment (excluding software amortisation) and exceptional items	14.3		4.4	3.1	(4.9)	16.9
Amortisation and impairment of intangible assets	(1.3)		-	(1.9)	-	(3.2)
Exceptional items
- Restructuring and other costs	(2.0)		(0.4)	-	(7.2)	(9.6)
- Profit on disposal of property	-		-	-	0.9	0.9
Operating profit / (loss)	11.0		4.0	1.2	(11.2)	5.0
Finance costs
- Ordinary finance costs						(11.8)
- Exceptional finance costs						(0.9)
Finance income						0.9
Loss before taxation						(6.8)
Taxation						1.8
Loss for the period - Continuing						(5.0)
Discontinued operations						(1.1)
Loss for the period						(6.1)

		Discontinued Operations			Textile Rental Services		Drycleaning	Facilities Management	All Other Segments (Group Costs)	Total
			£m		£m		£m	£m	£m	£m
OTHER INFORMATION
Capital expenditure
- Property, plant and equipment			0.4		4.3		2.2	0.4	-	7.3
- Textile rental items			-		17.5		-	-	-	17.5
- Intangible software			0.1		-		0.1	0.4	-	0.6
Depreciation and amortisation expense
- Property, plant and equipment			0.3		3.7		2.5	0.3	0.4	7.2
- Textile rental items			-		14.2		-	-	-	14.2
- Intangible software			0.2		-		0.1	0.1	0.1	0.5
Return on capital employed (%)					33.2%		40.6%	209.8%
BALANCE SHEET INFORMATION
Segment assets			5.1		109.6		37.6	50.4	12.4	215.1
Unallocated assets	- deferred income tax assets									12.5
	- other debtors									6.6
	- cash and cash equivalents									5.2
Total assets										239.4
Segment liabilities			(3.5)		(26.3)		(18.6)	(7.0)	(6.4)	(61.8)
Unallocated liabilities	- current income tax liabilities									(4.1)
	- deferred income tax liabilities									(2.5)
	- borrowings									(81.7)
	- retirement benefit obligations									(20.4)
	- derivative financial liabilities									(0.8)
Total liabilities										(171.3)

NOTES TO THE PRELIMINARY ANNOUNCEMENT (continued)

3          EXCEPTIONAL ITEMS

	2009	2008
	£m	£m
Restructuring costs - Textile Rental	-	(2.6)
- Drycleaning	-	(0.3)
- All Other Segments	-	(0.5)
- Total	-	(3.4)
Professional fees associated with bank restructuring process	-	(6.4)
Professional fees associated with moving to AIM	-	(0.3)
Onerous lease and environmental costs	-	(0.7)
Uninsured losses	-	1.2
Total restructuring costs and other items	-	(9.6)
Pension Credits - Past Service Credit	2.2	-
- Curtailment Gain	9.8	-
Property disposals	-	0.9
Total exceptional items	12.0	(8.7)

Exceptional items in relation to discontinued operations have been included within the result from discontinued operations.

During the year the Group made an offer to existing retirees in the Johnson Group Staff Pension Scheme and the Semara Augmented Pension Plan to exchange certain future pension increases for a one time increase.  This has been taken up by a significant number of retirees, resulting in a reduction in future liabilities, on an IAS 19 basis, of £2.5 million.  This is treated as a past service credit of £2.2 million (net of expenses) and has been included as an exceptional credit in the Income Statement.

The Group is implementing a freeze of pensionable salary as at 5th April 2010 for all current active members of the Group's defined benefit schemes.  This has resulted in a reduction of future liabilities, on an IAS 19 basis, of £9.9 million.  This is treated as a curtailment gain of £9.8 million (net of expenses) and has been included as an exceptional credit in the Income Statement.

In addition to the items above, the Group recognised exceptional finance costs during the year of £0.4 million (2008: £0.9 million), further details of which are disclosed within note 4 below.

4          FINANCE COSTS AND INCOME

	2009	2008
	£m	£m
Interest payable on bank loans and overdrafts	(4.1)	(11.7)
Amortisation of bank loan issue costs	(0.4)	(0.5)
Interest payable on obligations under finance leases	(0.1)	(0.1)
Other finance costs	(0.2)	(0.2)
Finance costs before notional interest on defined benefit liabilities and assets	(4.8)	(12.5)
Notional interest on defined benefit obligations:
- Interest cost on pension scheme liabilities	(10.6)	(10.7)
- Expected return on pension scheme assets	10.0	11.5
- Private healthcare	(0.1)	(0.1)
Ordinary finance costs	(5.5)	(11.8)
Exceptional finance costs relating to bank fees	(0.4)	(0.9)
Finance costs	(5.9)	(12.7)
Finance income	0.2	0.9
Net finance expense	(5.7)	(11.8)

On 18th December 2009, a new bank facility was signed.  As a result the unamortised fees relating to the old facility were written off and classed as an exceptional finance cost.

The exceptional finance costs in 2008 relate to the write-off of bank fees on that part of the bank facility which was repaid during the period. 

NOTES TO THE PRELIMINARY ANNOUNCEMENT (continued)

5          TAXATION

	2009		2008
	£m		£m
Current tax
UK corporation tax charge / (credit) for the year	0.8		(3.3)
Adjustment in relation to previous years	(3.5)		(1.4)
Current tax credit for the year	(2.7)		(4.7)
Deferred tax expense
Origination and reversal of temporary differences	5.4		3.3
Adjustment in relation to previous years	3.0		(0.4)
Deferred tax charge for the year	8.4		2.9
Total charge / (credit) for taxation included in the Income Statement for continuing operations		5.7	(1.8)

The tax charge for the period is lower (2008: tax credit for the period is lower) than the weighted average standard rate of corporation tax in the UK of 28.0% (2008: 28.5%).  The differences are explained below:

	2009	2008
	£m	£m
Profit / (loss) before taxation per the Income Statement	20.6	(6.8)
Profit / (loss) before taxation multiplied by the weighted average standard rate of corporation tax in the UK of 28.0% (2008: 28.5%)	5.8	(1.9)
Factors affecting taxation credit for the year:
Tax effect of expenses not deductible for tax purposes	0.6	0.2
Tax effect of non-taxable income	(0.2)	(0.3)
Tax effect of future abolition of IBAs	-	2.0
Adjustments to tax in respect of prior periods	(0.5)	(1.8)
Total charge / (credit) for taxation included in the Income Statement	5.7	(1.8)

Taxation on the exceptional items, including exceptional finance costs, in the current year has increased the charge for taxation by £3.3 million (2008: £2.9 million reduction).  Tax relief on intangibles amortisation and impairment (excluding software amortisation) has reduced the charge for taxation by £0.9 million (2008: £0.9 million reduction).

The taxation numbers above relate to continuing operations.

6          ADJUSTED PROFIT BEFORE AND AFTER TAXATION

The reconciliation of profit before taxation from continuing operations and adjusted profit before taxation from continuing operations is as follows:

	2009	2008
	£m	£m
Profit / (loss) before taxation	20.6	(6.8)
Intangibles amortisation and impairment (excluding software amortisation)	3.2	3.2
Restructuring and other costs	-	9.6
Profit on disposal of property	-	(0.9)
Pension credits	(12.0)	-
Exceptional finance costs in respect of bank fees	0.4	0.9
Adjusted profit before taxation	12.2	6.0
Taxation on adjusted profit	(3.3)	(2.0)
Adjusted profit after taxation attributable to continuing operations	8.9	4.0

7          DIVIDENDS

During the year an interim dividend of 0.25 pence per share was paid, utilising Shareholders' funds of £0.6 million (2008: nil).  The Directors propose the payment of a final dividend in respect of the year ended 31st December 2009 of 0.50 pence per share (2008: nil).  Subject to Shareholder approval, this will be paid on 21st May 2010 to Shareholders on the register on 23rd April 2010 and will utilise Shareholders' funds of £1.2 million.  In accordance with IAS 10, no creditor is recognised at 31st December 2009 in respect of this proposed dividend.

NOTES TO THE PRELIMINARY ANNOUNCEMENT (continued)

8          EARNINGS PER SHARE

	2009			2008
	£m			£m
Profit / (loss) for the financial year from continuing operations attributable to Ordinary Shareholders			14.9	(5.0)
Loss for the financial year from discontinued operations attributable to Ordinary Shareholders			(3.5)	(1.1)
Intangibles amortisation and impairment from continuing operations (net of taxation)		2.3		2.3
Intangibles amortisation and impairment from discontinued operations (net of taxation)		1.6		0.6
Exceptional (credits) /  costs from continuing operations (net of taxation)		(8.6)		6.0
Exceptional costs from discontinued operations (net of taxation)		1.1		1.3
Exceptional finance costs in respect of bank fees from Continuing operations (net of taxation)			0.3	0.7
Adjusted profit attributable to Ordinary Shareholders		8.1		4.8
Weighted average number of Ordinary shares		248,214,351		143,564,940
Dilutive potential Ordinary shares*		10,792,760		2,488,233
Fully diluted number of Ordinary shares		259,007,111		146,053,173
Basic earnings per share
From continuing operations		6.1p		(3.4p)
From discontinued operations		(1.4p)		(0.8p)
From continuing and discontinued operations		4.7p		(4.2p)
Adjustment for intangibles amortisation and impairment (continuing operations)		0.9p		1.6p
Adjustment for intangibles amortisation and impairment (discontinued operations)		0.7p		0.4p
Adjustment for exceptional items (continuing operations)		(3.5p)		4.2p
Adjustment for exceptional items (discontinued operations)		0.4p		0.9p
Adjustment for exceptional finance costs in respect of bank fees (continuing operations)		0.1p		0.4p
Adjusted basic earnings per share (continuing operations)		3.6p		2.8p
Adjusted basic earnings per share (discontinued operations)		(0.3p)		0.5p
Adjusted basic earnings per share from continuing and discontinued operations		3.3p		3.3p
Diluted earnings per share
From continuing operations		5.8p		(3.4p)
From discontinued operations		(1.4p)		(0.8p)
From continuing and discontinued operations		4.4p		(4.2p)
Adjustment for intangibles amortisation and impairment (continuing operations)		0.9p		1.6p
Adjustment for intangibles amortisation and impairment (discontinued operations)		0.7p		0.4p
Adjustment for exceptional items (continuing operations)		(3.4p)		4.2p
Adjustment for exceptional items (discontinued operations)		0.4p		0.9p
Adjustment for exceptional finance costs in respect of bank fees (continuing operations)		0.1p		0.4p
Adjusted diluted earnings per share (continuing operations)		3.4p		2.8p
Adjusted diluted earnings per share (discontinued operations)		(0.3p)		0.5p
Adjusted diluted earnings per share from continuing and discontinued operations		3.1p		3.3p

* Includes outstanding share options granted to employees and warrants issued to the Company's banks.

Basic earnings per share is calculated using the weighted average number of shares in issue during the year, excluding those held by the ESOP, based on the profit for the year attributable to Ordinary Shareholders.

Adjusted earnings per share figures are given to exclude the effects of intangibles amortisation and impairment (excluding software amortisation), exceptional items and exceptional finance costs, all net of taxation, and are considered to show the underlying results of the Group.

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 dilutive potential Ordinary shares arising from warrants issued to the Company's bankers and 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.

Potential Ordinary shares are dilutive at the profit from continuing operations level when their conversion to Ordinary shares would decrease earnings per share or increase loss per share from continuing operations.  For the year ending 31st December 2009, potential Ordinary shares have been treated as dilutive, as their inclusion in the diluted earnings per share calculation decreases earnings per share from continuing operations.  For the year ended 31st December 2008, potential Ordinary shares are antidilutive, as their inclusion in the diluted earnings per share calculation would reduce the loss from continuing operations, and hence have been excluded.

There were no events occurring after the Balance Sheet date that would have changed significantly the number of Ordinary shares or potential Ordinary shares outstanding at the Balance Sheet date, if those transactions had occurred before the end of the reporting period.

NOTES TO THE PRELIMINARY ANNOUNCEMENT (continued)

9          RETIREMENT BENEFIT OBLIGATIONS

The Group has applied the requirements of IAS 19 Employee Benefits (revised December 2004) to its employee pension schemes and post-retirement healthcare benefits.

As part of the Group's objective to reduce its overall pension liability, additional contributions of £1.2 million and £0.3 million (2008: £2.4 million and £0.2 million) were paid to the Johnson Group Staff Pension Scheme and the WML Final Salary Pension Scheme respectively, during the period to 31st December 2009.  No additional contributions were paid to the Semara Augmented Pension Plan (2008: nil).

During the year, and as disclosed within note 3, the Group made an offer to existing retirees in the Johnson Group Staff Pension Scheme and the Semara Augmented Pension Plan to exchange certain future pension increases for a one time increase.  In addition, the Group is implementing a freeze of pensionable salary as at 5th April 2010 for all current active members of the Group's defined benefit schemes.  These changes have resulted in an aggregate reduction of future liabilities, on an IAS 19 basis, of £12.4 million.

Following discussions with the Group's appointed actuary it has been identified that an actuarial loss of £13.6 million (2008: £11.0 million loss) should be recognised in the year to 31st December 2009.  This is as a result of the scheme assets and liabilities performing differently to previous assumptions and changes to the assumptions used in calculating scheme liabilities.

The gross retirement benefit liability and associated deferred tax asset thereon, together with the net liability is shown below:

	2009 £m	2008 £m
Gross retirement benefit liability	(20.4)	(20.6)
Deferred tax asset thereon	5.7	6.0
Net liability	(14.7)	(14.6)

10        BUSINESS COMBINATIONS AND DISCONTINUED OPERATIONS

ACQUISITIONS

On 31st March 2009, Johnsons Apparelmaster Limited acquired certain trade and assets, comprising rental contracts and garments from a small independent competitor for a total consideration of £0.8 million, including associated costs.  The assets acquired included £0.7 million of intangible assets, relating to customer contracts, and £0.1 million of textile rental items.

The Group made no acquisitions during 2008.

DISPOSALS

On 14th December 2009, and effective from the end of November 2009, Workplace Engineering Limited disposed of its trade and certain assets for an initial cash consideration of £0.2 million.

On 28th April 2008, the Group sold the entire share capital of Johnson Clothing Limited on a debt free cash free basis.

The revenue and (loss) / profit after tax of Workplace Engineering Limited (including £1.6 million goodwill impairment in 2009) and Johnson Clothing Limited in the period to the date of disposal, the post-tax loss on disposal together with the net assets of Workplace Engineering Limited and Johnson Clothing Limited as at the date of disposal are detailed below:

	2009	2008
	£m	£m
Revenue from discontinued operations	4.0	36.7
(Loss) / profit before taxation from discontinued operations	(4.3)	1.1
Taxation	0.9	(0.9)
(Loss) / Profit for the period	(3.4)	0.2
Consideration (net of disposal costs)	0.2	84.4
Total net assets disposed of	(0.3)	(72.5)
Pre-tax (loss) / gain on disposal	(0.1)	11.9
Taxation	-	(13.2)
Loss on disposal	(0.1)	(1.3)
Retained loss from discontinued operations	(3.5)	(1.1)

NOTES TO THE PRELIMINARY ANNOUNCEMENT (continued)

10        BUSINESS COMBINATIONS AND DISCONTINUED OPERATIONS continued

Total Net Assets Disposed

	2009	2008
	£m	£m
Goodwill	-	28.5
Intangible assets	0.2	17.0
Property, plant and equipment	-	2.2
Stock	0.1	26.4
Trade and other receivables	0.4	16.3
Trade and other payables	(0.4)	(17.9)
	0.3	72.5

Cash Received for Disposals

	2009	2008
	£m	£m
Cash consideration	0.2	89.7
Costs	-	(2.7)
Tax liability	-	(13.2)
Pension contribution	-	(2.1)
Total cash received in respect of disposals included within the Cash Flow Statement	0.2	71.7

The cash flows (excluding proceeds from disposal) from discontinued operations included within the consolidated Cash Flow Statement are as follows:

	2009	2008
	£m	£m
Net cash generated from /  (used in) operating activities	0.1	(5.6)
Net cash (used in) / generated from investing activities	(0.2)	2.3
Net cash flow	(0.1)	(3.3)

11        ANALYSIS OF NET DEBT

Net debt is calculated as total borrowings less cash and cash equivalents, less unamortised facility fees.

	At 1 January 2009	Cash Flow	Other Non-cash Changes	At 31 December 2009
	£m	£m	£m	£m
Cash and cash equivalents	5.2	(5.0)	-	0.2
Debt due within one year	(3.1)	(4.8)	0.7	(7.2)
Debt due after more than one year	(78.6)	18.5	0.6	(59.5)
Finance leases	(2.0)	0.8	-	(1.2)
	(78.5)	9.5	1.3	(67.7)

Non-cash changes represent the effects of the recognition and subsequent amortisation of issue costs relating to the bank facility and a £0.3 million reduction in the facility due to a repayment directly to the banks out of escrow funds previously relating to the disposal of the Corporatewear business in 2008.

12        RECONCILIATION OF NET CASH INFLOW TO MOVEMENT IN NET DEBT

	2009	2008
	£m	£m
Decrease in cash during the year	(5.0)	(11.1)
Cash outflow on change in debt and lease financing	14.5	100.5
Change in net debt resulting from cash flows	9.5	89.4
Movement in unamortised issue costs of bank loans	1.0	0.6
Other non cash movement in net debt	0.3	-
Movement in net debt in year	10.8	90.0
Opening net debt	(78.5)	(168.5)
Closing net debt	(67.7)	(78.5)

NOTES TO THE PRELIMINARY ANNOUNCEMENT (continued)

13        ABRIDGED ACCOUNTS

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31st December 2009 or 31st December 2008 within the meaning of Section 434 of the Companies Act 2006, but is derived from those accounts.

Statutory accounts for 2008 have been delivered to the Registrar of Companies, and those for 2009 will be delivered as soon as practicable but not later than 30th April 2010.  The Auditors have reported on those accounts; their reports were unqualified and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

14        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, Johnson House, Abbots Park, Monks Way, Preston Brook, Cheshire WA7 3GH.  The Announcement can also be accessed on the Internet at www.johnsonplc.com.

The Annual Report will be posted to Shareholders on or before the 19th March 2010.

15        APPROVAL

The Preliminary Announcement was approved by the Board of Directors on 9th March 2010.

 

END

 

 

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