Trading Statement

Johnson Service Group PLC 23 January 2007 23 January 2007 Johnson Service Group PLC Trading Statement Johnson Service Group PLC, the textile related services and facilities management Group, announces the following trading update prior to entering its close period. Overall, the Group has traded satisfactorily since the last update on 20th November 2006. Over the last 2 months, several significant measures have been taken to rationalise the Group's operational management. Actions taken include the reduction of Group costs by £2 million per annum, following the streamlining of the executive Board, the removal or downsizing of several Group functions and the closure of the London Head Office. Each of the four divisions is now under the leadership of a Managing Director, currently reporting directly to the Executive Chairman, with a clear focus on tight operational management and cash generation. Rental Despite an improving performance from our garment rental business, Johnsons Apparelmaster, the Rental division overall has performed below our expectations during the year. This is due to issues previously identified at our linen rental business, Stalbridge, and at our events rental business, Johnson Hospitality Services. As previously announced, the Group disposed of the majority of Johnson Hospitality Services in December, with the remainder closed by the year-end. Issues that were identified and previously reported to the market in November regarding Stalbridge continue to be addressed, and although sales remain strong, profitability has been affected by higher than expected costs. The reduced margin is subject to ongoing investigation, with actions being taken. No further significant matters have arisen regarding the implementation of our ERP system. Johnsons Apparelmaster has performed to expectations with revenue growth continuing through market share gains and price increases, albeit, as previously indicated, at a reduced margin as cost pressures have increased. The performance for 2007 is expected to be enhanced by the acquisition of Texicare Limited on 10th January 2007, for a cash consideration of £3 million. Chris Sander has been appointed Managing Director of the Rental division. Drycleaning The Drycleaning division has performed strongly during the second half of the year with like-for-like retail sales picking up from a 2.3% fall in the first half of the year to a 1.1% rise for the full year. Corporatewear Corporatewear has continued to win contracts, although as previously reported, a delay in a roll-out has affected the 2006 results. The integration of support functions across the division is expected to be completed by the summer. Facilities Management The Facilities Management division continued to perform in line with our expectations. Johnson Workplace Management is being integrated into SGP, under their management. Group As a result of the reorganisation measures, the Group is expecting to incur significant exceptional costs. These will be partly offset by the gain on the sale and leaseback of the property transaction made in the first half of the year. The cash element of these costs which will outflow during 2007 is expected to be in the region of £7 million. Net debt at the end of 2006 was slightly below £150 million and is expected to rise to around £170 million at the half year, before falling back to circa £150 million at the end of 2007. The increase in debt at the half year is due to the cash outflows arising from the exceptional costs, deferred payment for 2006 capital expenditure, and the normal weighting of the Group's profitability towards the second half of the year. We are in the process of recruiting a new Chief Executive, and will update the market when appropriate. Simon Sherrard, Executive Chairman of Johnson Service Group, commented: '2006 was a difficult year for the Group. However, we believe that the issues have been identified and that radical and quick actions have been taken to resolve them. These actions have given operational management the energy and sense of purpose required to ensure that the problems are resolved and that the expected financial results for 2007 are delivered.' The Group will be announcing its preliminary results for the full year to 31st December 2006 on 23 March 2007. For further information, please contact: Hudson Sandler Michael Sandler / Sandrine Gallien Telephone: 020 7796 4133 For more information on the Johnson Service Group PLC: www.johnsonplc.com This information is provided by RNS The company news service from the London Stock Exchange
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