Issue of Equity

RNS Number : 4357W

Johnson Service Group PLC

11 June 2008

FOR IMMEDIATE RELEASE

JOHNSON SERVICE GROUP PLC

(the 'Group')

11 June 2008

CONDITIONAL PLACING OF 150,000,000 NEW ORDINARY SHARES

AT 20 PENCE PER SHARE

Highlights

The Group today announces a conditional placing of 150,000,000 new Ordinary Shares at an Issue Price of 20 pence per share to raise £30.0 million (approximately £27.8 million net of expenses). The proposed Placing is subject to shareholder approval.

The Placing proceeds will be used principally to repay a portion of the Group's bank debt and for general corporate purposes.

Separately, given the large scale and non pre-emptive nature of the Placing, the Group currently intends in the near future to invite Qualifying Shareholders to participate in a second equity fundraising by way of a pre-emptive open offer of up to approximately 49.9 million new Ordinary Shares at the Issue Price to raise up to approximately £10.0 million. The Placing Shares will not qualify for the Proposed Open Offer.

The Placing Shares will represent approximately 252.2 per cent. of the Existing Issued Ordinary Share Capital.

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. Subject to, amongst other things, Admission, it is expected that dealings in the Placing Shares will commence at 8.00 a.m. on 7 July 2008.

To incentivise the executive directors to maximise shareholder value, the Group is proposing to seek shareholder approval to adopt a new long-term incentive plan, the Johnson Service Group Long-Term Growth Plan.

Simon Sherrard, Chairman of Johnson Service Group, commented:

'We are pleased to announce today that we have raised £30.0 million (before expenses) by means of a conditional Placing. Successful completion of the Placing will allow the Group to further reduce its level of indebtedness and will lead to a significant reduction in the interest rate applicable to the Group's remaining debt.

'The Directors have been keen to extend the opportunity to all existing shareholders to participate at the Issue Price and hence intend to extend a proposed open offer of Ordinary Shares to raise up to £10.0 million to all existing shareholders in the near future.

The Placing will result in a reduction in debt and will allow the Group to support the success of its market leading businesses which are continuing to trade satisfactorily.'

Enquiries:

Johnson Service Group PLC 020 7290 0390

Simon Sherrard, Chairman

John Talbot, Chief Executive

Investec (Nomad to Johnson Service Group) 020 7597 5000

Erik Anderson

Michael Lacey-Solymar

Martin Smith

Hudson Sandler 020 7796 4133

Michael Sandler
Sandrine Gallien
Fran Read

This summary should be read in conjunction with the full text of the following announcement.

This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. This document provides you with information about the Placing, and certain limited information about the Proposed Open Offer, but does not invite you to participate in either.

Investec, which is authorised and regulated in the UK by the Financial Services Authority, is acting for Johnson Service Group PLC and for no one else in connection with the conditional Placing and the Proposed Open Offer and will not be responsible to anyone other than Johnson Service Group PLC for providing the protections afforded to clients of Investec nor for providing advice to any other person in relation to the proposed Placing.

JOHNSON SERVICE GROUP PLC

11 June 2008

CONDITIONAL PLACING OF 150,000,000 NEW ORDINARY SHARES AT 20 PENCE PER SHARE

Introduction

The Board announces a conditional placing on behalf of the Company of 150,000,000 new Ordinary Shares at 20 pence per share to raise £30.0 million (approximately £27.8 million net of expenses). The conditional Placing is being carried out on a non pre-emptive basis to institutional and other professional investors and is being fully underwritten by Investec. The Issue Price represents a discount of approximately 14.9 per cent. to the closing middle market quotation of an Ordinary Share on 10 June 2008 (the latest practicable date prior to publication of this announcement). The Placing Shares will represent approximately 252.2 per cent. of the Existing Issued Ordinary Share Capital and approximately 71.6 per cent. of the Enlarged Issued Ordinary Share Capital. The net proceeds of the Placing will be used principally to repay a portion of the Company's bank debt and for general corporate purposes.

The Placing is conditional, amongst other things, on:

the passing (without amendment) of the Resolutions, as set out in the notice convening the Extraordinary General Meeting set out in the circular to shareholders dated 11 June 2008;
the Placing Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms; and
Admission of the Placing Shares to trading on AIM.

Separately, given the large scale and non pre-emptive nature of the Placing, the Company currently intends to invite Qualifying Shareholders and Warrantholders to participate in the near future in a second equity fundraising by way of an open offer of up to 49,945,035 new Ordinary Shares at the Issue Price to raise up to approximately £10.0 million (before expenses). The Placing Shares will not qualify for the Proposed Open Offer. It is currently expected that the Proposed Open Offer will not be underwritten. However the Company may decide to do so if it believes that it would be in the best interests of the Company and Shareholders as a whole. The net proceeds of the Proposed Open Offer will be used to repay further bank debt and for general corporate purposes. The Proposed Open Offer will require the publication by the Company of a prospectus to be prepared in accordance with the Prospectus Rules. The Proposed Open Offer will not proceed without the approval from Shareholders of all the Resolutions at the Extraordinary General Meeting. Although the Directors expect to be able to announce the Proposed Open Offer by 29 August 2008 at the latest, in the unlikely event that they are unable to do so the Proposed Open Offer will not proceed.

The Company's existing arrangement with Kroll Talbot Hughes Limited (Kroll), pursuant to which Kroll provides the services of John Talbot as Chief Executive Officer of the Company, has been extended from 30 September 2008 to 24 January 2009 which is the expiry date of John Talbot's service contract with Kroll. The Company has agreed terms with John Talbot for him to continue in his role as Chief Executive Officer of the Company as an employee of the Company from that date.

In order to incentivise the executive directors to maximise shareholder value and to ensure their services are secured, the Company is proposing to seek Shareholder approval to adopt a new long-term incentive plan, the Johnson Service Group Long-Term Growth Plan (the Incentive Plan). Under the Incentive Plan, selected executives (being, initially, John Talbot, when he becomes an employee of the Company, and Yvonne Monaghan) will be granted awards entitling them to receive Ordinary Shares in the Company after a specified vesting period and subject to the achievement of specified performance conditions. Further details relating to the Incentive Plan are set out below.

Background to and reasons for the Placing

On 11 April 2008 the Company announced the Corporatewear Disposal and the signing of new debt facilities under the Facility Agreement. The facilities under the Facility Agreement comprised four separate tranches, summaries of which are set out below:

The first tranche was a £65 million term loan used to bridge a portion of the proceeds from the Corporatewear Disposal. The first tranche was repaid in full by the Company on 29 April 2008 out of the Company's cash resources and the proceeds of the Corporatewear Disposal.

The second tranche is a £65 million amortising term loan. The applicable rate of interest is LIBOR plus 2.5 per cent. per annum. An amount of £2 million will be repayable on 30 June 2009, with further repayments quarterly thereafter. The final repayment date of this tranche is 31 December 2010.

The third tranche is an amortising revolving credit facility with an initial amount of £25 million to be used for general corporate purposes, £5 million of which will be provided by way of an overdraft. The applicable rate of interest is LIBOR plus 2.5 per cent. per annum. The final repayment date of this tranche is 31 December 2010. The amount available to the Company under this tranche will reduce to £22.5 million on 30 June 2009 and then to £20 million on 31 December 2009.

The fourth tranche is a £50 million non-amortising term loan used to refinance previous indebtedness of the Group. The applicable rate of interest is LIBOR plus 9 per cent. per annum (comprising a combination of 2.5 per cent. cash pay interest and 6.5 per cent. capitalised interest payments). In the event that the Company does not raise at least £25 million (net of costs but together with accrued interest on that amount) from the proceeds of an equity raising by 31 March 2009, the applicable rate of interest will increase to LIBOR plus 15 per cent. per annum thereafter (comprising a combination of 2.5 per cent. cash pay interest and 12.5 per cent. capitalised interest payments). The final repayment date of this tranche is 31 December 2010.

The Facility Agreement also provides that a number of its terms will be adjusted, at the time of repayment, in favour of the Company in the event that the Company raises at least £25 million (net of costs and together with capitalised accrued interest on that amount) from the proceeds of an equity raising by 31 March 2009. These include:

the reduction of the applicable rate of interest on the fourth tranche to LIBOR plus 4 per cent. per annum;

the removal of certain restrictions on the Company's ability to pay dividends contained in the Facility Agreement;

the removal of any right of the lenders to appoint an observer to attend meetings of the Board; and

the ability thereafter to offset any subsequent prepayments of the facilities against the fourth tranche in priority to the second.

Accordingly, under the Facility Agreement, if payment of £25 million (together with capitalised accrued interest on that amount) is made before 31 March 2009, the Company may declare and pay dividends to Shareholders out of distributable reserves provided that the Company is not in default under the Facility Agreement at the time such dividend is paid or that the Company would reasonably be expected not to be in default under the Facility Agreement in the twelve month period following the date of such payment (and the Company has provided projections satisfactory to the Facility Agent (acting reasonably) evidencing this). Further details of the Company's proposed dividend policy are set out below.

The Board believes that it is in the best interests of the Company to proceed as quickly as possible to raise equity finance in order to repay at least £25 million (together with accrued interest on that amount) of the fourth tranche of its facilities. This is particularly so given the recent momentum and investor interest which the Company has generated following the refinancing of its bank facilities and the reduction in its debt levels achieved through the disposal of the Corporatewear Division. For companies admitted to trading on AIM, the quickest way of raising equity finance is through a non pre-emptive placing to institutional and other professional investors which does not trigger the requirement to publish a prospectus to be prepared in accordance with the Prospectus Rules. Accordingly the Board believes that such a placing is the best way for the Company to raise the equity finance required.

The Directors believe that the Placing is in the best interests of the Company as it will lead to a significant reduction in the Group's overall debt and also to a significant reduction in the interest rate applicable to the debt remaining outstanding under the fourth tranche of the bank facilities thereby allowing more of the Group's cash resources to be deployed in support of the Directors' strategy for growth. Further details of the Directors' future plans for the Group are set out below.

Details of the Placing

The Company has entered into a placing agreement with Investec pursuant to which Investec has, as agent for the Company, conditionally placed with institutional and other professional investors 150,000,000 new Ordinary Shares at the Issue Price to raise £30.0 million (approximately £27.8 million net of expenses). The Placing has been fully underwritten by Investec, subject to the terms and conditions of the Placing Agreement.

The Issue Price represents a discount of approximately 14.9 per cent. to the closing middle market price of an Ordinary Share on 10 June 2008 (the latest practicable date prior to publication of this document). The Placing Shares will represent approximately 252.2 per cent. of the Existing Issued Ordinary Share Capital and approximately 71.6 per cent. of the Enlarged Issued Ordinary Share Capital.

The Placing Shares will be issued credited as fully paid and will, on issue, rank pari passu with the Existing Ordinary Shares (including the right to receive all dividends or other distributions declared, made or paid thereon following Admission) except that the Placing Shares will not carry the right to participate in the Proposed Open Offer. The Placing Shares will therefore temporarily trade on AIM with a separate distinct stock line for the period from Admission to the earlier of the next business day following the Record Date and 29 August 2008, at which point the Placing Shares will be merged with the stock line of the Existing Ordinary Shares. Although the Directors expect to be able to announce the Proposed Open Offer by 29 August 2008 at the latest, in the unlikely event that they are unable to do so the Proposed Open Offer will not proceed. The temporary ISIN of the Placing Shares will be GB00B39R5G32. The ISIN of the Existing Ordinary Shares is GB0004762810. Following merger of the two stock lines on the next business day following the Record Date, the ISIN of the Ordinary Shares (including the Placing Shares) will be GB0004762810.

The Placing Agreement provides for the payment by the Company to Investec, in consideration of Investec's services in connection with the Placing, of a commission of 4 per cent of the aggregate value at the Issue Price of the Placing Shares, together with the reimbursement by the Company of Investec's costs and expenses. This commission is conditional on, and is payable within three business days of, Admission of the Placing Shares. If any of the conditions to the Placing are not met, or Investec terminates the Placing Agreement in accordance with its terms, and the Placing does not proceed, the Company will pay Investec a fee of £250,000 together with reimbursement of its costs and expenses. The Placing Agreement also contains warranties and indemnities given by the Company to Investec which are customary for a placing of this nature.

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that Admission will occur on 7 July 2008.

The Placing will be conditional on, amongst other things, the following conditions being satisfied by no later than 8.00 a.m. on 7 July 2008, or such later time and date, being no later than 8.00 a.m. on 29 August 2008, as the Company and Investec may agree:

the passing (without amendment) of the Resolutions at the Extraordinary General Meeting;

the Placing Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms; and

Admission of the Placing Shares to trading on AIM.

Under the Placing Agreement, Investec may in certain circumstances, including where there is a breach of a warranty by the Company or a material adverse change in the financial markets, terminate the Placing Agreement.

Subject to Admission occurring, the Placing Shares will be registered either:

in certificated form, with the relevant share certificate expected to be despatched by post, at the Shareholder's risk, on or about 14 July 2008; or

in CREST, with delivery (to the designated CREST account) of the Placing Shares expected to take place on 7 July 2008.

Use of Placing proceeds

As at 29 February 2008, the Group's net debt was approximately £181 million. Following the Corporatewear Disposal, the Group repaid £65 million of debt drawn under the Facility Agreement on 29 April 2008. The net proceeds of the Placing will be used to repay £25 million (together with capitalised accrued interest on that amount) of the fourth tranche of the Facility Agreement set out above. Proceeds received above this amount will be used to repay debt, to pay fees and expenses in connection with the Placing and for general corporate purposes.

Certain limited details of the Proposed Open Offer

Given the large scale and non pre-emptive nature of the Placing, the Company intends to invite Qualifying Shareholders and Warrantholders to participate in the near future in a second equity fundraising by way of an open offer of up to 49,945,035 new Ordinary Shares at the Issue Price, payable in full on acceptance, to raise up to approximately £10.0 million (before expenses). The Placing Shares will not qualify for the Proposed Open Offer. It is currently expected that the Proposed Open Offer will not be underwritten. However the Company may decide to do so if it believes that it would be in the best interests of the Company and Shareholders as a whole. The net proceeds of the Proposed Open Offer will be used to repay further bank debt and for general corporate purposes. The Proposed Open Offer will require the publication by the Company of a prospectus to be prepared in accordance with the Prospectus Rules. Absent any unforeseen circumstances which would make it impossible or not in the best interests of the Company to do so, the Directors intend to proceed with the Proposed Open Offer, subject to the conditions to be set out in the prospectus. The Proposed Open Offer will not proceed without the approval from Shareholders of all the Resolutions at the Extraordinary General Meeting. Although the Directors expect to be able to announce the Proposed Open Offer by 29 August 2008 at the latest, in the unlikely event that they are unable to do so the Proposed Open Offer will not proceed.

It is expected that the minimum pro rata entitlement of Qualifying Shareholders and Warrantholders under the Proposed Open Offer will be calculated on the following basis:

8 Proposed Open Offer Shares for every 10 Ordinary Shares or entitlement to Warrant Shares (as the case may be) held on the Record Date

and so in proportion for any greater number of Ordinary Shares held on the Record Date. Entitlements of Qualifying Shareholders and Warrantholders will be rounded down to the nearest whole number of Proposed Open Offer Shares. The fractional entitlements which would otherwise have arisen will not be issued to Qualifying Shareholders or Warrantholders and may be ignored. Applications by Qualifying Shareholders and Warrantholders will be satisfied in full up to their Proposed Open Offer Entitlements as will be shown on the application form which will accompany the prospectus to be issued to Qualifying Shareholders and Warrantholders.

There will be an excess application facility which will enable Qualifying Shareholders and Warrantholders to apply for Proposed Open Offer Shares in excess of their Proposed Open Offer Entitlement. Applications under the excess application facility may be scaled back in such manner as the Directors may determine.

Impact on Warrantholders and Optionholders

Warrantholders

On 11 April 2008, in connection with the Facility Agreement, the Company executed a warrant instrument, pursuant to which it has issued Warrants to its lender banks over 2,957,636 Ordinary Shares representing approximately 4.7 per cent. of the fully diluted share capital of the Company as at 5.00 p.m. on 10 April 2008. The Warrants are exercisable from 11 April 2008 until 31 December 2011 at an exercise price of 10 pence per Ordinary Share, which represents the par value of the Ordinary Shares. The Warrants are freely transferable. The Warrants contain anti-dilution provisions under which, in certain circumstances, the number of Ordinary Shares in respect of each outstanding Warrant may be adjusted (an Adjustment Event). However, where Warrantholders have been invited to participate in an Adjustment Event, the anti-dilution provisions in the warrant instrument will not operate. Warrantholders have been invited to participate in the Placing. However, no Warrantholders have taken up the invitation to participate. In addition, it is currently expected that Warrantholders (in their capacity as such) will be invited to participate in the Proposed Open Offer. Accordingly, no adjustment will be made to the number of Ordinary Shares in respect of the outstanding Warrants as a result of the Placing or the Proposed Open Offer.

Optionholders

Options are currently outstanding under the following Johnson Service Group employee share schemes:

The Johnson 1998 Savings-Related Share Option Scheme

The Johnson Discretionary Unapproved Option Plan

Under the Johnson 1998 Savings-Related Share Option Scheme and the Johnson Discretionary Unapproved Option Plan, the Board has no discretion to adjust the number of Ordinary Shares under option or the option price payable in connection with the Placing.

Under the Johnson 1998 Savings-Related Share Option Scheme and the Johnson Discretionary Unapproved Option Plan, the Board has discretion to adjust the number of Ordinary Shares under option and the option price payable in connection with the Proposed Open Offer. However, it is currently expected that no adjustment to the number of Ordinary Shares under option and the option price payable will be made in connection with the Proposed Open Offer.

Future plans for the Group

Following the Corporatewear Disposal which completed on 28 April 2008, the Group has three distinct divisions, each with a strong share in their respective markets. Each division is run by an experienced manager who will, in the Board's opinion (following implementation of the arrangements set out below), be appropriately incentivised to grow his division over the medium term. The Board therefore intends to exploit the opportunities for growth in all of the Group's divisions whilst ensuring that the Group continues to generate acceptable levels of cash. The Board views the future prospects of the Group with confidence.

As described above, the Company's existing arrangement with Kroll, pursuant to which Kroll provides the services of John Talbot as Chief Executive Officer of the Company, has been extended from 30 September 2008 to 24 January 2009 which is the expiry date of John Talbot's service contract with Kroll. The Company has agreed terms with John Talbot for him to continue in his role as Chief Executive Officer of the Company as an employee of the Company from that date.

As part of the arrangements whereby Kroll has agreed to extend the term for the provision of John Talbot's services to the Company, the Company has agreed to pay Kroll a transaction fee equal to 1.8 per cent. of the net proceeds of the Placing (this fee is expected to be approximately £500,000) on completion of the Placing. The quantum of the transaction fee takes into account the discount to Kroll's normal fees charged to the Company for the provision of services to the Group under the engagement letter between Kroll and the Company.

Management incentives

To incentivise the executive directors to maximise shareholder value and to ensure their services are secured, the Company is proposing to seek Shareholder approval to adopt a new long-term incentive plan, the Incentive Plan. Under the Incentive Plan, selected executives (being, initially, John Talbot, when he becomes an employee of the Company, and Yvonne Monaghan) will be granted awards entitling them to receive Ordinary Shares in the Company after a specified vesting period and subject to the achievement of specified performance conditions (see below). Vesting of awards granted under the Incentive Plan will normally occur after a three year performance period. However, in the case of the initial awards proposed to be made to John Talbot and Yvonne Monaghan the awards will be split with one third of the Ordinary Shares subject to the award potentially vesting before the three year anniversary if a specified performance condition is met. The remainder of the Ordinary Shares subject to the awards will be subject to a three year vesting period and a further performance condition.

The performance condition for the initial awards under the Incentive Plan will be linked to the Company's share price. One third of the Ordinary Shares subject to an award will vest and be transferred to the participant immediately if, over any 60 day period during the three year performance period, the Company's total shareholder return (TSR) per share is equal to or exceeds 40 pence, being double the Issue Price (the Company's TSR may fall below 40 pence on one day in the 60 day period provided that the day is not in the last five days of the period). For these purposes, TSR will include share price appreciation, dividends and capital distributions. Subject to permitted disposals to meet any tax liability arising on vesting, 50 per cent. of any Ordinary Shares subject to this part of the award that vest will be retained until 31 July 2010 and the remainder that vest will be retained until 31 July 2011.

The remaining two thirds of the Ordinary Shares subject to an award will vest by reference to the Company's TSR over the three year vesting period. To establish the extent of vesting of the Ordinary Shares subject to this condition, the Company's average TSR per share over the 30 day period following the announcement of the Company's interim results in 2011 will be determined. None of the Ordinary Shares subject to this condition will vest if the Company's TSR per share is equal to or less than 40 pence, equivalent to a doubling of the Issue Price, while all of the Ordinary Shares subject to this condition will vest if the Company's TSR per share is equal to or more than 60 pence, equivalent to a tripling of the Issue Price. Vesting of the Ordinary Shares subject to this condition will be on a straight line basis between these points.

John Talbot's award under the Incentive Plan will be Ordinary Shares representing three per cent. of the issued share capital of the Company immediately following completion of the Placing and the Proposed Open Offer. Vesting of his award will also be pro-rata to the extent that he maintains a holding of Ordinary Shares representing at least one per cent. of the issued share capital of the Company immediately following completion of the Placing and the Proposed Open Offer until 7 July 2010. Yvonne Monaghan's award will be over Ordinary Shares representing one per cent. of the issued share capital of the Company immediately following completion of the Placing and the Proposed Open Offer.

In order to enable John Talbot to maintain this minimum percentage shareholding in the Company immediately following the Placing and the Proposed Open Offer, he has been invited to participate in the Placing and has committed to subscribe, at the Issue Price, for such number of Placing Shares as will maintain his shareholding at that level.

John Talbot will not be entitled to an annual cash bonus. Yvonne Monaghan's award under the Incentive Plan is in addition to her existing cash bonus entitlement.

A copy of the rules of the Incentive Plan may be inspected at either the registered office of the Company or at the offices of Allen & Overy LLP, One Bishops Square, London E1 6AD during usual business hours on any weekday (Saturday, Sunday and any public holidays excepted) from the date of this document up to and including the conclusion of the Extraordinary General Meeting.

It is intended that the three divisional managing directors will be incentivised by reference to the division of the Company that they manage. The plan for the managing director of the Facilities Management division is a cash bonus plan, the reward under which will be linked to the increase in value of the division from 1 January 2008 until the occurrence of the earlier of a number of specified vesting events. A vesting event will occur on a listing or sale of the business (or comparable event) or on finalisation of the division's results for the two years ending 31 December 2011. The notional increase in value of the division will be determined as the increase at the time of vesting over an agreed base value of £35 million agreed for this purpose. The managing director will receive a bonus payment calculated on a scaled percentage ranging from 4 to 8 per cent. of the increase in value of the division. Payment of the bonus will be subject to normal good and bad leaver provisions.

Plans for the managing directors of the Textile Rental and Drycleaning divisions will be developed which are intended to include annual bonuses, an incentive based on long-term increase in the value of the relevant division and market value options over a stated percentage of salary. The options will be granted under the Johnson Discretionary Unapproved Option Plan.

The above divisional incentivisation arrangements are subject to final agreement with the divisional managing directors.

Options granted to divisional managing directors under the Johnson Discretionary Unapproved Option Plan will not trigger an Adjustment Event in relation to the Warrants described above. In contrast, the vesting of awards granted under the Incentive Plan will trigger an Adjustment Event in relation to the Warrants.

Dividend policy

Following the repayment of bank debt as described in this announcement, certain restrictions on the Company paying dividends to Shareholders imposed on the Company under the Facility Agreement will be lifted. Accordingly, the Company intends to adopt a new dividend policy which will reflect the long-term earnings and cashflow potential of the Company, while maintaining an appropriate level of dividend cover. Subject to the foregoing, it is envisaged that the Company will commence the payment of an interim and a final dividend for the financial year ending 31 December 2009.

The payment of a dividend in the future is dependent on a number of factors including the availability of distributable reserves within the Company. The Company is reviewing its reserves position and intends to take such action as is necessary so as to facilitate dividend payments as set out above.

To assist with the Group's distributable reserves planning, the Placing has been structured in a way which is expected to have the effect of creating distributable reserves equal to the net proceeds of the Placing less the par value of the Placing Shares issued by the Company. The Company and Investec have agreed to subscribe for ordinary shares in JSG Capital, a newly incorporated Jersey company. Investec will then apply monies that it receives from placees pursuant to the Placing, after deducting its commissions and expenses, to subscribe for redeemable preference shares in JSG Capital. The Company will allot and issue the Placing Shares to placees in consideration of Investec transferring its holdings of ordinary shares and redeemable preference shares in JSG Capital to the Company. Accordingly, instead of receiving cash as consideration for the issue of the Placing Shares at the conclusion of the Placing, the Company will own the entire issued share capital of JSG Capital whose only asset will be its cash reserves, which will represent an amount equivalent to the proceeds of the Placing net of Investec's commissions and expenses. The Company will be able to utilise this amount by redeeming the redeemable preference shares it holds in JSG Capital. It should be possible for the Company to declare dividends from these reserves in the future, provided that the Company has sufficient cash resources to fund such a dividend, the distributable reserves have not otherwise been reduced, and the Directors consider it appropriate to declare such a dividend.

Current trading

The Company published its preliminary results for the year ended 31 December 2007 on 29 April 2008 and posted its annual report and final accounts to Shareholders on 13 May 2008. The Company continues to trade in line with the Directors' expectations. The Group's Textile Rental division is continuing to improve efficiencies as the Johnsons Apparelmaster and Stalbridge businesses work more closely together. The Facilities Management division is trading in line with the Directors' expectations and is pursuing a number of potential new contracts in the retail and leisure sectors. Despite the challenges affecting the consumer in the UK, the Drycleaning division is trading satisfactorily and continuing to introduce new services into selected outlets.

DEFINITIONS

Admission	admission of the Ordinary Shares to trading on AIM;
AIM	the AIM market operated by the London Stock Exchange;
Board	the board of directors of Johnson Service Group;
Chairman	the chairman of the Board as at the date of this document;
Corporatewear Disposal	the disposal by the Group of Johnson Clothing Limited (as it was then called) and its subsidiaries which completed on 28 April 2008;
CREST	the relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the Operator (as defined in the CREST Regulations);
Directors	the directors of the Company as at the date of this document;
Enlarged Issued Ordinary Share Capital	the issued ordinary share capital of the Company immediately following the completion of the Placing, assuming unless otherwise stated that (i) none of the Warrants in issue as at 10 June 2008 (being the latest practicable date prior to publication of this document) have been exercised and (ii) none of the Options in existence as at 10 June 2008 (being the latest practicable date prior to publication of this document) have been exercised;
Euroclear	Euroclear UK & Ireland Limited;
Existing Issued Ordinary Share Capital	the issued ordinary share capital of the Company as at 10 June 2008 (the latest practicable date prior to publication of this document);
Existing Ordinary Shares	the Ordinary Shares in issue as at the date of this document;
Extraordinary General Meeting	the extraordinary general meeting of the Company convened for 11:00 a.m. on 4 July 2008 to approve the Resolutions;
Facility Agent	The Royal Bank of Scotland plc;
Facility Agreement	the facility agreement dated 11 April 2008 between the Company, various members of the Group, Alliance & Leicester plc, Allied Irish Banks p.l.c., Bank of Ireland, Bank of Taiwan, Barclays Bank PLC, Commerzbank Aktiengesellschaft, London Branch, Lloyds TSB Bank plc and The Royal Bank of Scotland plc;
FSA	the Financial Services Authority;
FSMA	the Financial Services and Markets Act 2000, as amended;
Group	Johnson Service Group and its subsidiary undertakings;
Incentive Plan	the Johnson Service Group Long-Term Growth Plan
Investec	Investec Bank (UK) Limited;
Issue Price	20p per new Ordinary Share;
Johnson Service Group or Company	Johnson Service Group PLC, a company incorporated in England and Wales with registered number 523335 and having its registered office at 3rd Floor, 4 Harley Street, London W1G 9PB;
JSG Capital	JSG Capital (Jersey) Limited, a company incorporated in Jersey with registered number 101036 and having its registered office at Whitely Chambers, Don Street, St. Helier, Jersey JE4 9WG;
LIBOR	the London inter bank offer rate from time to time;
London Stock Exchange	London Stock Exchange plc;
Optionholders	the holders of any of the Company's Options, and Optionholder means any one of them;
Options	options granted by the Company over unissued Ordinary Shares pursuant to the Johnson 1998 Savings-Related Share Option Scheme, the Johnson Discretionary Unapproved Option Plan or any other share option or award plan operated by the Company;
Ordinary Shares	the ordinary shares in the capital of Johnson Service Group;
Placing	the proposed placing of the Placing Shares;
Placing Agreement	the placing agreement dated 11 June 2008 between Investec and the Company;
Placing Shares	the 150,000,000 new Ordinary Shares to be allotted and issued to placees pursuant to the Placing;
The Plan	the Johnson Service Group Long-term Growth Plan
Proposed Open Offer	the proposed pre-emptive offering to Qualifying Shareholders and Warrantholders of the right to subscribe for the Proposed Open Offer Shares
Proposed Open Offer Entitlement	the basic entitlement of Qualifying Shareholders and Warrantholders to subscribe for Proposed Open Offer Shares according to the number of Ordinary Shares held by them or their entitlement to Warrant Shares (as the case may be) on the Record Date;
Proposed Open Offer Shares	up to 49,945,035 new Ordinary Shares intended to be made available to Shareholders pursuant to the Proposed Open Offer;
Prospectus Rules	the Prospectus Rules of the Financial Services Authority;
Qualifying Shareholders	the holders of Ordinary Shares as at the Record Date;
Record Date	means the date as at which a list of Shareholders is extracted from the register of members of the Company in order to process the Proposed Open Offer;;
Regulatory Information Service	has the meaning given in the AIM Rules for Companies;
Resolutions	the resolutions to be proposed at the Extraordinary General Meeting;
Shareholders	the holders of any issued shares in the share capital of the Company from time to time;
UK or United Kingdom	the United Kingdom of Great Britain and Northern Ireland;
Warrantholders	the holders of any of Warrants, and Warrantholder means any one of them;
Warrants	the warrants to subscribe for Ordinary Shares granted by the Company pursuant to the warrant instrument dated 11 April 2008, and Warrant means any one of them; and
Warrant Shares	the Ordinary Shares to be issued on exercise of the Warrants.