Final Results

RNS Number : 3157G

Johnson Service Group PLC

03 March 2015

 



3rd March 2015

Johnson Service Group PLC

Preliminary Statement for the Financial Year ended 31st December 2014

'Another Strong Set of Results'

Johnson Service Group PLC, the Textile Services group (the "Group"), announces its preliminary results for the financial year ended 31st December 2014.

FINANCIAL HIGHLIGHTS

Continuing Operations	2014	2013	Increase / (Decrease)
Revenue	£210.4m	£193.6m	8.7%
Adjusted Operating Profit1	£21.8m	£17.0m	28.2%
Adjusted Profit Before Tax2	£20.0m	£13.4m	49.3%
Adjusted Fully Diluted Earnings Per Share3	5.20p	3.80p	36.8%
Profit Before Tax	£11.6m	£12.2m	(4.9%)
Dividend	1.70p	1.21p	40.5%
Net Debt	£28.5m	£34.0m4	n/a

OPERATIONAL HIGHLIGHTS

•       Strong performance with Adjusted Operating Profit¹ up by 28.2% to £21.8 million.

•       Adjusted Profit Before Tax² increased by 49.3% to £20.0 million.

•       A successful entry into the volume hotel linen market with the immediately earnings enhancing acquisition of Bourne in March 2014, which is trading strongly.

•       All three Textile Rental businesses performed ahead of management expectations.

•       £8.5 million capital investment in a new, highly efficient, workwear processing facility in Leeds.

•       Restructure of Drycleaning, announced in January 2015, proceeding to plan.

1      "Adjusted Operating Profit" is before charging £1.6 million (2013: £0.6 million) of amortisation and impairment of intangible assets (excluding software amortisation) and £6.8 million (2013: £0.6 million) of exceptional items.

2      "Adjusted Profit Before Tax" is Adjusted Operating Profit, less total finance cost.

3      "Adjusted Fully Diluted Earnings per Share" is calculated using Adjusted Profit Before Tax, and deducting the charge to, or adding the credit for, taxation thereon.

4      Pro-forma basis, after adjusting for the acquisition of Bourne Services Group Limited (£22.3 million) and the equity fund raising (net £12.8 million), both in March 2014.

Paul Moody, Non-Executive Chairman of the Group, commented:

"I am delighted that the Group has delivered another strong set of results for the full year.

The acquisition of Bourne has proven to be very successful and immediately earnings enhancing.  The strong performance by Textile Rental has continued into 2015 and the recent significant investment in a new workwear processing facility reaffirms our strategic focus on this division.  The restructuring of the Drycleaning division will provide new opportunities to improve the performance of this business.

Overall, the Board expects that the Group will continue to deliver a positive operational and financial performance underpinned by the successful implementation of its strategy in 2015."

ANALYST MEETING

The Company will present to analysts at 09:30 today.  A copy of the presentation will be available on the Company's website (www.jsg.com) following the meeting.

ENQUIRIES

 

Johnson Service Group PLC
Chris Sander, CEO
Yvonne Monaghan, CFO
Tel: [phone] (on the day)
Tel: [phone] (thereafter)
Investec Investment Banking (NOMAD)	Newgate
James Rudd	Tim Thompson
David Flin	Robyn McConnachie
Matt Lewis	Adam Lloyd
Tel: [phone]	Tel: [phone]

 

www.jsg.com

Note

Throughout this statement "adjusted operating profit" refers to continuing operating profit before amortisation and impairment of intangible assets (excluding software amortisation) and exceptional items.  "Adjusted profit before tax" refers to adjusted operating profit less total finance cost.

 

CHAIRMAN'S STATEMENT

Overview

I am delighted to report that the Group has delivered another strong set of results for the full year, building on the success of the first half, and significantly ahead of 2013.  Our entry into the volume hotel linen market through the acquisition of Bourne Services Group Limited (Bourne) in March 2014 has been very successful and immediately earnings enhancing.  Our Apparelmaster and Stalbridge businesses have also performed strongly and the recent significant investment in a new, highly efficient, workwear processing facility reaffirms our focus on the Textile Rental business.

At the beginning of January 2015, we announced the restructuring of the Drycleaning business, with the future focus on highly convenient collection and delivery locations.  Implementation of the restructuring plan is progressing in line with our expectations.

Given the encouraging performance of the Group, and our confidence in the future prospects of the business, we are proposing a final dividend of 1.20 pence (2013: 0.81 pence) per share, making a total dividend for the full year of 1.70 pence (2013: 1.21 pence), an increase of 40.5%.

Group Results

Total revenue for the year increased to £210.4 million (2013: £193.6 million) benefitting from the ten months of trading from Bourne. Adjusted operating profit increased by 28.2% to £21.8 million (2013: £17.0 million). The key drivers of this performance are explained further in the Chief Executive's Operating Review.

Total finance cost in 2014 was £1.8 million (2013: £3.6 million), benefitting from the lower margin on reduced average bank borrowings and a reduction in the notional interest charge on net pension liabilities to £0.2 million (2013: £0.8 million).

Adjusted profit before tax increased by 49.3% to £20.0 million (2013: £13.4 million).

Amortisation and impairment of intangible assets (excluding software amortisation) for the year increased to £1.6 million (2013: £0.6 million), reflecting the acquisition of Bourne.  Exceptional items for the year amounted to an aggregate charge of £6.8 million (2013: £0.6 million) and comprise costs in relation to business acquisition activity totalling £0.6 million, costs arising from the relocation to our new workwear processing facility in Leeds amounting to £1.3 million and the past service cost impact, together with expenses, arising on the closure to future accrual of the Group's final salary pension scheme on 31st December 2014 totalling £4.9 million.  Of this pension charge, £4.7 million is non-cash.

Profit before tax amounted to £11.6 million (2013: £12.2 million).

The tax charge on the adjusted profit before tax was at a rate of 22.4% (2013: 22.6%).  After the amortisation and impairment of intangible assets (excluding software amortisation) and exceptional items noted above, the post-tax profit from continuing operations was £8.6 million (2013: £9.8 million).

Adjusted fully diluted earnings per share from continuing operations were up 36.8% to 5.2 pence (2013: 3.8 pence).  Fully diluted earnings per share from continuing operations after exceptional items were 2.9 pence (2013: 3.6 pence).

Dividend

The Board is recommending a final dividend of 1.20 pence per share (2013: 0.81 pence), making a total dividend in respect of 2014 of 1.70 pence per share (2013: 1.21 pence), an increase of 40.5%.  The dividend increase is reflective of the significant increase in underlying adjusted profit before tax whilst having regard for the anticipated cash requirement for future expansion.

The proposed final dividend, if approved by Shareholders, will be paid on 15th May 2015 to Shareholders on the register at close of business on 17th April 2015.  The ex-dividend date is 16th April 2015.

Finances

Total net debt at the end of 2014 was £28.5 million (December 2013: £24.5 million), with the strong trading performance and equity raising helping to offset the acquisition of Bourne and the significant investment in capital expenditure.

Interest cover, based on adjusted operating profit and excluding notional interest, was 13.6 times (2013: 6.1 times).

A new bank facility, which currently comprises a £60.0 million revolving credit facility, was agreed in February 2014 and runs to May 2018.

Interest payable on bank borrowings is based upon LIBOR plus a margin which is linked to gearing levels.  The applicable margin during 2014 was, on average, 1.83% and will be 1.50% for, at least, the first quarter of 2015.  We have mitigated our exposure to increases in LIBOR rates through the use of interest rate hedging.  £20.0 million of the bank facility has been hedged so that LIBOR is substituted for a fixed rate of 1.79% for three years from January 2013.

Pension

The recorded net deficit after tax for all post-employment benefit obligations increased to £14.8 million from £3.4 million at December 2013.  This increase in deficit is disappointing given the actions taken in previous years.  The increase is due to a combination of a significant reduction in the discount rate applied to liabilities, being only partly offset by the impact of an out performance of returns on scheme assets, and the impact of the closure of the defined benefit scheme to future accrual.  The closure of the defined benefit pension scheme to future accrual accounts for £3.8 million of the increase in the recorded net deficit after tax and reflects the recognition of past service liabilities.

Asset allocation has been reviewed with the Trustee and changes made to more appropriately match assets against the remaining scheme liabilities and to reduce risk to a more acceptable level.

Deficit recovery payments amounted to £2.0 million in 2014 (2013: £1.9 million) and are expected to be £1.9 million in 2015, as agreed with the Trustee following the completion of the triennial valuation as at 5th October 2013.

The notional interest charge, which is non-cash, amounted to £0.2 million in 2014 (2013: £0.8 million).  The charge for 2015 is dependent upon the level of the accounting deficit at 31st December 2014, and will, therefore, increase to £0.6 million for 2015.

Drycleaning Restructuring

The restructuring of the branch portfolio announced in January 2015 is progressing to plan and we believe the strategic actions we are taking will reposition the business to cater for the future requirements of customers and enable us to improve margin.

Employees

I would like to thank all employees in every part of the Group for their continuing commitment and dedication to delivering service beyond our customers' expectations.

Outlook

The strong performance of Textile Rental in 2014 has continued into 2015.  We have identified areas for future growth and investment, particularly in sectors of the market where we are under represented.

The streamlined branch network, together with a focus on highly convenient drop off and collection locations, will provide new opportunities to improve the performance of our Drycleaning business.

The Board expects that the Group will continue to deliver a strong performance and successfully implement its strategy for 2015.

Paul Moody

Non-Executive Chairman

3rd March 2015

CHIEF EXECUTIVE'S OPERATING REVIEW

Within the Group there are two operating segments, Textile Rental, which is by far the largest business, and Drycleaning.

Textile Rental

The Textile Rental business trades through three brands servicing three market sectors within Textile Rental in the UK.  These are "Apparelmaster", which predominantly provides workwear rental and laundry services to all sectors of industry, "Stalbridge", which provides premium linen services to the hospitality and corporate events market and "Bourne", which provides high volume hotel linen.

Textile Rental revenue increased by 13.8% to £155.0 million (2013: £136.2 million) whilst adjusted operating profit increased by 25.9% to £23.8 million (2013: £18.9 million), both helped by the addition of Bourne in March 2014.  The associated margin increased from 13.9% to 15.4%.

Apparelmaster had another successful year, delivering higher levels of new business wins, increasing sales to existing customers and improving customer retention levels to in excess of 95%, resulting in both adjusted operating profit and margin improving.  A number of large national contracts renewed their agreements resulting in additional spend on textile rental items with a corresponding increase in rental stock depreciation.  However, this increased cost was offset by production efficiencies together with improved energy unit prices and consumption.

As in previous years, the business has continued to invest in equipment to drive higher productivity and lower energy consumption, ensuring that the business is on schedule to meet the Government targets for reduced energy consumption under the CCA (Climate Change Agreement).

As part of this investment strategy, a new and highly efficient £8.5 million workwear processing facility in Leeds has been completed, which replaces an existing facility, and which significantly increases garment processing capacity.  The new state of the art plant is the largest and most modern workwear processing facility in the UK and incorporates some of the most efficient and cost effective equipment available in the market.

Apparelmaster has also continued to invest in IT support for the business and has further improved the ability to communicate with customers in a simple and transparent manner.  The training and development of staff is key to our continued success and a more structured process is being introduced to ensure the continuing personal development of staff at all levels.

The business strategy of delivering enhanced quality and service to our customer base will continue into 2015 with the aim of sustaining the high customer retention rate achieved in 2014.

Stalbridge returned a strong performance as a result of encouraging new sales wins and a further improvement in customer retention levels, both of which were underpinned by productivity and efficiency benefits from the capital investment made in the final quarter of 2013 and the first quarter of 2014.

A new Managing Director was appointed during 2014, and by the end of the year had implemented a restructure of central overheads, which will reduce costs for 2015.  Further investment of £1.2 million in plant and machinery has been approved for the first quarter of 2015 which will increase capacity and reduce operating costs.

Stalbridge continues to focus on delivering market leading service and quality to premium hotel, restaurant and catering locations.  To further improve the customer experience a new extranet and field based mobile technology solution has been developed.  To enhance the Stalbridge brand values and service proposition a vigorous marketing campaign is planned throughout 2015, specifically related to its core market.

Bourne traded very strongly throughout the ten months since acquisition, delivering increased volume from existing customers as a result of buoyant hotel occupancy levels and new hotel openings.  Despite strong pricing competition in the high volume linen market, Bourne has been very successful in delivering new sales wins.  As a result of the increased volume, some of the additional capacity that was available upon acquisition is already being utilised.

Similar to our Apparelmaster and Stalbridge businesses, Bourne continuously invests in plant and equipment with a view to driving operational efficiency and lower energy consumption, as well as providing its customers with a higher quality product.

The addition of Bourne to our wider Textile Rental business is also allowing us to identify synergies and improvements in the efficiency of our supply chain.

We anticipate that Bourne will continue to perform ahead of our original expectations throughout 2015 in terms of business development, adjusted operating profit and margin.

Drycleaning

Our Drycleaning business is represented across the UK through the highly recognised Johnson Cleaners brand and our London based premium brand, Jeeves.

Revenue reduced to £55.4 million (2013: £57.4 million), reflecting the reduced number of branches, although adjusted operating profit was maintained at £1.6 million (2013: £1.6 million).

As the market dynamics of retail high streets have continued to change in recent years, so has our Drycleaning business model, and 2014 saw a significant development in alternative routes to market for Johnson Cleaners.

During 2014, the business developed a front of store presence in the premium supermarket Waitrose, improving convenience for many drycleaning customers.  Following the success of the partnership trials, Johnson Cleaners had opened facilities in 78 Waitrose locations by December 2014, all utilising our unique and environmentally friendly GreenEarth© cleaning process.  The number of Waitrose locations has subsequently increased to 122.  We are very proud to be working with such a premium brand and to have developed a relationship which provides both parties with brand extension and customer reach opportunities.

In order to further enhance customer convenience, we have also established collection and delivery points in a small number of corporate office premises with a high concentration of staff and, in particular, as a preferred supplier with a number of facilities management companies who offer multiple services to their clients.

In addition to these initiatives, we have made significant progress with our website development, which now incorporates the capability of online transactions across various services and which will enable home collection and delivery of bulky items in the near future.

As announced on 6th January 2015, we have identified 109 branches which we expect to close by the end of the first half.  The estimated net cost of the restructuring remains at £6.5 million and will be treated as an exceptional item in 2015.  Of the estimated cost, £0.4 million is non-cash and only £1.4 million is an additional cash requirement, relating to the restructuring cost, as the balance is already contractually committed cash spend in the current and future years (including rent, rates, insurance and dilapidations) irrespective of the restructuring plan.

Chris Sander

Chief Executive Officer

3rd March 2015

CONSOlidated Income Statement

Note			Year ended 31 December 2014	Year ended 31 December 2013
			£m	£m
REVENUE FROM CONTINUING OPERATIONS	2		210.4	193.6
OPERATING PROFIT	2		13.4	15.8
OPERATING PROFIT BEFORE AMORTISATION AND IMPAIRMENT OF INTANGIBLE ASSETS (EXCLUDING SOFTWARE AMORTISATION) AND EXCEPTIONAL ITEMS		2	21.8	17.0
Amortisation and impairment of intangible assets (excluding software amortisation)			(1.6)	(0.6)
Exceptional items	3
- Restructuring and other costs			(1.3)	(1.2)
- Costs in relation to business acquisition activity			(0.6)	-
- Pension (costs) / credits			(4.9)	0.6
OPERATING PROFIT	2		13.4	15.8
Finance cost			(1.6)	(2.8)
Notional interest			(0.2)	(0.8)
TOTAL FINANCE COST	4		(1.8)	(3.6)
PROFIT BEFORE TAXATION			11.6	12.2
Taxation charge *	6		(3.0)	(2.4)
PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS			8.6	9.8
RESULT / (LOSS) FOR THE YEAR FROM DISCONTINUED OPERATIONS	10		-	(9.1)
PROFIT FOR THE YEAR ATTRIBUTABLE TO EQUITY HOLDERS			8.6	0.7
EARNINGS PER SHARE	7
Basic earnings per share
From continuing operations			2.9p	3.8p
From discontinued operations			-	(3.6p)
From continuing and discontinued operations			2.9p	0.2p
Diluted earnings per share
From continuing operations			2.9p	3.6p
From discontinued operations			-	(3.4p)
From continuing and discontinued operations			2.9p	0.2p
Adjusted basic earnings per share
From continuing operations			5.3p	4.0p
From discontinued operations			-	0.6p
From continuing and discontinued operations			5.3p	4.6p
Adjusted diluted earnings per share
From continuing operations			5.2p	3.8p
From discontinued operations			-	0.5p
From continuing and discontinued operations			5.2p	4.3p

*       Including £0.4 million credit (2013: £0.1 million credit) relating to amortisation and impairment of intangible assets (excluding software amortisation) and £1.1 million credit (2013: £0.4 million credit) in relation to exceptional items of which £0.2 million charge (2013: £0.3 million credit) relates to prior year adjustments. 

Consolidated Statement of COMPREHENSIVE Income

	Year ended 31 December 2014 £m	Year ended 31 December 2013 £m
Profit for the year	8.6	0.7
Items that will not be subsequently reclassified to profit or loss
Re-measurement and experience (losses) / gains on post-employment benefit obligations	(11.5)	11.7
Taxation in respect of re-measurement and experience losses / (gains)	2.3	(2.3)
Change in deferred tax due to change in tax rate	-	(0.6)
Items that may be subsequently reclassified to profit or loss
Cash flow hedges (net of taxation) - fair value (loss) / gain	(0.4)	0.1
- transfers to finance cost	0.3	0.7
OTHER COMPREHENSIVE (LOSS) / INCOME FOR THE YEAR	(9.3)	9.6
TOTAL COMPREHENSIVE (LOSS) / INCOME FOR THE YEAR	(0.7)	10.3

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

	Share Capital				Share Premium	Merger Reserve	Capital Redemption Reserve	Hedge Reserve	Retained Earnings	Total Equity
	£m				£m	£m	£m	£m	£m	£m
Balance at 1st January 2013	25.6				13.9	1.6	0.6	(1.1)	20.4	61.0
Profit for the year	-				-	-	-	-	0.7	0.7
Other comprehensive income			-		-	-	-	0.8	8.8	9.6
Total comprehensive income for the year				-	-	-	-	0.8	9.5	10.3
Share options (value of employee services)	-				-	-	-	-	0.5	0.5
Purchase of shares by the EBT*	-				-	-	-	-	(0.4)	(0.4)
Current tax on share options	-				-	-	-	-	0.2	0.2
Deferred tax on share options	-				-	-	-	-	1.0	1.0
Issue of share capital	0.6				0.2	-	-	-	-	0.8
Dividend paid	-				-	-	-	-	(2.9)	(2.9)
Transactions with Shareholders recognised directly in Shareholders' equity	0.6				0.2	-	-	-	(1.6)	(0.8)
Balance at 31st December 2013	26.2				14.1	1.6	0.6	(0.3)	28.3	70.5
Balance at 1st January 2014	26.2				14.1	1.6	0.6	(0.3)	28.3	70.5
Profit for the year	-				-	-	-	-	8.6	8.6
Other comprehensive loss	-				-	-	-	(0.1)	(9.2)	(9.3)
Total comprehensive loss for the year				-	-	-	-	(0.1)	(0.6)	(0.7)
Share options (value of employee services)	-				-	-	-	-	0.4	0.4
Purchase of shares by the EBT*		-			-	-	-	-	(0.9)	(0.9)
Current tax on share options	-				-	-	-	-	1.2	1.2
Deferred tax on share options	-				-	-	-	-	(1.0)	(1.0)
Issue of share capital	3.8				0.4	-	-	-	10.2	14.4
Dividend paid	-				-	-	-	-	(3.9)	(3.9)
Transactions with Shareholders recognised directly in Shareholders' equity	3.8				0.4	-	-	-	6.0	10.2
Balance at 31st December 2014	30.0				14.5	1.6	0.6	(0.4)	33.7	80.0

*     The Group has an Employee Benefit Trust (EBT) to administer share plans and to acquire shares, using funds contributed by the Group, to meet commitments to employee share schemes.  At 31st December 2014, the EBT held 20,739 shares (2013: 31,000).

Consolidated Balance Sheet

Note		As at 31 December 2014	As at 31 December 2013
		£m	£m
ASSETS
NON-CURRENT ASSETS
Goodwill		56.2	52.4
Intangible assets		11.7	3.0
Property, plant and equipment		51.3	36.0
Textile rental items		30.5	26.0
Trade and other receivables		3.3	3.4
Deferred income tax assets		4.6	4.5
		157.6	125.3
CURRENT ASSETS
Inventories		2.1	2.0
Trade and other receivables		30.3	28.8
Cash and cash equivalents		0.2	3.4
		32.6	34.2
LIABILITIES
CURRENT LIABILITIES
Trade and other payables		43.7	37.6
Current income tax liabilities		1.5	0.3
Borrowings		6.9	0.8
Provisions		4.6	4.2
		56.7	42.9
NET CURRENT LIABILITIES		(24.1)	(8.7)
NON-CURRENT LIABILITIES
Post-employment benefit obligations	9	18.5	4.3
Deferred income tax liabilities		1.8	-
Other non-current liabilities		0.9	0.9
Borrowings		21.8	27.1
Derivative financial liabilities		0.4	0.3
Provisions		10.1	13.5
		53.5	46.1
NET ASSETS		80.0	70.5
CAPITAL AND RESERVES ATTRIBUTABLE TO THE COMPANY'S SHAREHOLDERS
Share capital		30.0	26.2
Share premium		14.5	14.1
Merger reserve		1.6	1.6
Capital redemption reserve		0.6	0.6
Hedge reserve		(0.4)	(0.3)
Retained earnings		33.7	28.3
TOTAL SHAREHOLDERS EQUITY		80.0	70.5

 Consolidated Statement OF Cash Flows

Note		Year ended 31 December 2014	Year ended 31 December 2013
		£m	£m
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year		8.6	0.7
Adjustments for:
Income tax charge / (credit)   - continuing operations	6	3.0	2.4
- discontinued operations	10	(0.7)	0.3
Total finance cost                  - continuing operations	4	1.8	3.6
- discontinued operations                                                  10		-	0.7
Depreciation		28.3	24.9
Amortisation		1.6	2.0
Decrease in inventories		0.2	0.2
Decrease in trade and other receivables		0.6	2.5
Increase in trade and other payables		1.6	0.5
Loss on sale of property, plant and equipment		-	0.2
Loss / (profit) on disposal of business		0.4	(1.1)
Impairment of assets held for resale		-	9.0
Costs in relation to business acquisition activity		0.6	-
Deficit recovery payments in respect of post-employment benefit obligations		(2.0)	(1.9)
Share-based payments		0.4	0.5
Post-employment benefit obligations		4.6	(1.1)
Decrease in provisions		(3.1)	(6.8)
Cash generated from operations		45.9	36.6
Interest paid		(2.0)	(3.0)
Taxation paid		(0.1)	(1.3)
Net cash generated from operating activities		43.8	32.3
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of business (net of cash acquired)		(22.4)	-
Proceeds from sale of business (net of  cash disposed)		0.1	26.7
Purchase of property, plant and equipment		(11.6)	(4.8)
Proceeds from sale of property, plant and equipment		0.1	0.4
Purchase of intangible assets		(0.1)	(0.2)
Purchase of textile rental items		(24.9)	(19.1)
Proceeds received in respect of special charges		1.9	2.2
Net cash (used in) / generated from investing activities		(56.9)	5.2
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings		66.0	12.0
Repayment of borrowings		(70.0)	(43.0)
Capital element of finance leases		(0.8)	(0.7)
Purchase of own shares by Employee Benefit Trust		(0.9)	(0.4)
Net proceeds from issue of Ordinary shares		14.4	0.8
Dividend paid		(3.9)	(2.9)
Net cash generated from / (used in) financing activities		4.8	(34.2)
Net (decrease) / increase in cash and cash equivalents		(8.3)	3.3
Cash and cash equivalents at beginning of period		3.4	0.1
Cash and cash equivalents at end of period		(4.9)	3.4

NOTES TO THE PRELIMINARY STATEMENT

1          BASIS OF PREPARATION

The financial information contained within this Preliminary Statement has been prepared on a going concern basis in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS), IFRS Interpretations Committee (IFRS IC) 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 2014 Annual Report.

The financial information set out within this Preliminary Statement does not constitute the Company's statutory accounts for the years ended 31st December 2013 or 31st December 2014 within the meaning of Section 434 of the Companies Act 2006, but is derived from those accounts.

Statutory accounts for 2013 have been delivered to the Registrar of Companies, and those for 2014 will be delivered as soon as practicable but not later than 30th April 2015.  The auditor has reported on those accounts; the reports were unqualified and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

2          SEGMENT ANALYSIS

Segment information is presented in respect of the Group's operating segments, which are based on the Group's management and internal reporting structure as at 31st December 2014.

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 assesses the performance of the operating segments based on a measure of operating profit, both including and excluding the effects of non-operating or 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 Johnson Group Properties PLC is credited back, where appropriate, to the paying company for the purpose of segmental reporting.  There have been no changes in measurement methods used compared to the prior year.

Other information provided to the Board is measured in a manner consistent with that in the financial statements.  Segment assets exclude deferred income tax assets, current income tax assets and cash and cash equivalents, all of which are managed on a central basis.  Segment liabilities include non-bank borrowings but exclude deferred income tax liabilities, current income tax liabilities, bank borrowings and derivative financial liabilities, all of which are managed on a central basis.  These balances are part of the reconciliation to total assets and liabilities.

The exceptional items have been included within the appropriate operating segment as shown on pages 12 to 13.

The Group comprises the following segments:

Textile Rental Supply and laundering of workwear garments, premium linen to the hotel, catering and corporate hospitality markets, linen to the volume hotel market and sale of ancillary items.		§ Apparelmaster § Stalbridge § Bourne
Drycleaning Provision of drycleaning, laundry and ironing services, carpet cleaning, upholstery cleaning, wedding dress cleaning and suede & leather cleaning.		§ Johnson Cleaners § Jeeves
All Other Segments Comprising of central and head office costs.

NOTES TO THE PRELIMINARY STATEMENT (continued)

2          SEGMENT ANALYSIS continued

Year ended 31st December 2014	Textile Rental		Drycleaning	All Other Segments	Total
	£m		£m	£m	£m
REVENUE
Continuing	155.0		55.4	-	210.4
Total revenue					210.4
RESULT
Operating profit before amortisation and impairment of intangible assets (excluding software amortisation) and exceptional items		23.8	1.6	(3.6)	21.8
Amortisation and impairment of intangible assets (excluding software amortisation)	(1.6)		-	-	(1.6)
Exceptional items:
- Restructuring and other costs	(1.3)		-	-	(1.3)
- Costs in relation to business acquisition activity	(0.6)		-	-	(0.6)
- Pension costs	-		-	(4.9)	(4.9)
Operating profit / (loss)	20.3		1.6	(8.5)	13.4
Total finance cost					(1.8)
Profit before taxation					11.6
Taxation					(3.0)
Profit for the period - continuing operations					8.6
Result for the period - discontinued operations (note 10)					-
Profit for the period					8.6

	Discontinued Operations	Textile Rental	Drycleaning	All Other Segments	Total
	£m	£m	£m	£m	£m
OTHER INFORMATION
Non-current asset additions
- Property, plant and equipment	-	13.7	1.0	-	14.7
- Textile rental items	-	24.9	-	-	24.9
- Intangible software	-	-	0.1	-	0.1
Depreciation and amortisation expense
- Property, plant and equipment	-	6.0	2.0	0.2	8.2
- Textile rental items	-	20.1	-	-	20.1
- Customer contracts	-	1.6	-	-	1.6
BALANCE SHEET INFORMATION
Segment assets	1.1	148.5	20.9	14.9	185.4
Unallocated assets:    Deferred income tax assets					4.6
Cash and cash equivalents					0.2
Total assets					190.2
Segment liabilities	(4.1)	(37.2)	(17.7)	(3.4)	(62.4)
Unallocated liabilities: Deferred income tax liabilities					(1.8)
Bank borrowings					(25.6)
Current income tax liabilities					(1.5)
Derivative financial liabilities					(0.4)
Post-employment benefit obligations					(18.5)
Total liabilities					(110.2)
Return on Capital Employed		42.0%	33.7%

The results, assets and liabilities of all segments arise in the Group's country of domicile, being the United Kingdom.

NOTES TO THE PRELIMINARY STATEMENT (continued)

2          SEGMENT ANALYSIS continued

Year ended 31st December 2013	Textile Rental		Drycleaning	All Other Segments	Total
	£m		£m	£m	£m
REVENUE
Continuing	136.2		57.4	-	193.6
Discontinued					29.0
Total revenue					222.6
RESULT
Operating profit before amortisation and impairment of intangible assets (excluding software amortisation) and exceptional items		18.9	1.6	(3.5)	17.0
Amortisation and impairment of intangible assets (excluding software amortisation)	(0.6)		-	-	(0.6)
Exceptional items:
- Restructuring and other costs	-		(1.2)	-	(1.2)
- Pension credits	-		-	0.6	0.6
Operating profit / (loss)	18.3		0.4	(2.9)	15.8
Total finance cost					(3.6)
Profit before taxation					12.2
Taxation					(2.4)
Profit for the period - continuing operations					9.8
Loss for the period - discontinued operations (note 10)					(9.1)
Profit for the period					0.7

	Discontinued Operations	Textile Rental	Drycleaning	All Other Segments	Total
	£m	£m	£m	£m	£m
OTHER INFORMATION
Non-current asset additions
- Property, plant and equipment	0.1	4.7	1.4	-	6.2
- Textile rental items	-	19.5	-	-	19.5
- Intangible software	0.2	-	-	-	0.2
Depreciation and amortisation expense
- Property, plant and equipment	0.2	4.2	2.1	0.2	6.7
- Textile rental items	-	18.2	-	-	18.2
- Intangible software	0.2	-	-	-	0.2
- Customer contracts	1.2	0.6	-	-	1.8
BALANCE SHEET INFORMATION
Segment assets	2.2	116.4	22.4	10.6	151.6
Unallocated assets:    Deferred income tax assets					4.5
Cash and cash equivalents					3.4
Total assets					159.5
Segment liabilities	(5.0)	(31.1)	(19.4)	(3.6)	(59.1)
Unallocated liabilities: Deferred income tax liabilities					-
Bank borrowings					(25.0)
Current income tax liabilities					(0.3)
Derivative financial liabilities					(0.3)
Post-employment benefit obligations					(4.3)
Total liabilities					(89.0)
Return on Capital Employed		42.9%	22.1%

The results, assets and liabilities of all segments arise in the Group's country of domicile, being the United Kingdom.

NOTES TO THE PRELIMINARY STATEMENT (continued)

3          EXCEPTIONAL ITEMS

	2014	2013
	£m	£m
Restructuring and other costs                - Textile Rental	(1.3)	-
- Drycleaning	-	(1.2)
	(1.3)	(1.2)
Costs in relation to business acquisition activity	(0.6)	-
Pension (costs) / credits	(4.9)	0.6
Total exceptional items	(6.8)	(0.6)

CURRENT YEAR EXCEPTIONAL ITEMS

Restructuring and other costs - Textile Rental

A new processing facility has been constructed to replace an existing Textile Rental plant in Leeds.  The total cost of this relocation, excluding the capital investment, is expected to be £2.3 million, of which, £1.3 million has been charged to exceptional items in the year with a further £1.0 million expected to be charged to exceptional items in 2015.  Of the total costs, £0.7 million was non-cash, relating to the impairment of property, plant and equipment.

Costs in relation to business acquisition activity

During the year, costs relating to business acquisition activity of £0.6 million have been recognised.  Professional fees of £0.4 million and Stamp Duty of £0.1 million were paid relating to the acquisition of Bourne.  The remainder of the cost relates to fees and expenses incurred during negotiations with other undisclosed targets.

Pension costs and credits

During the year, the Group closed its defined benefit pension scheme, the Johnson Group Defined Benefit Scheme (JGDBS) to future accrual.   The resulting past service cost of £4.7 million has been recognised as an exceptional cost together with £0.2 million of associated fees.

Prior year exceptional items

Restructuring and other costs - Drycleaning

In July 2012, the Group announced a review of the Drycleaning business.  This review resulted in a total exceptional charge to the Income Statement of £23.9 million; of this amount £22.7 million was charged in 2012, with the remaining £1.2 million charged during 2013.

Pension costs and credits

During the prior year, the Group merged the existing three defined benefit pension schemes into a single new defined benefit scheme, the Johnson Group Defined Benefit Scheme (JGDBS).  As part of the merger, members with small benefits were offered the option of taking their benefits as a 'winding up lump sum'.  The resulting settlement gain (net of associated fees) was recognised as an exceptional credit of £0.6 million.

4          TOTAL FINANCE COST

		2014	2013
		£m	£m
Finance cost:
- Interest payable on bank loans and overdrafts		(1.2)	(2.1)
- Amortisation of bank facility fees		(0.2)	(0.5)
- Provision discount unwind		(0.1)	(0.1)
- Interest payable on obligations under finance leases		(0.1)	(0.1)
Finance cost before notional interest on post-employment benefit obligations		(1.6)	(2.8)
Notional interest on post-employment benefit obligations:
- Pension scheme liability		(0.1)	(0.7)
- Private healthcare		(0.1)	(0.1)
		(0.2)	(0.8)
Total finance cost		(1.8)	(3.6)

In addition, interest of £nil (2013: £0.7 million) has been charged to discontinued operations (see note 10).

NOTES TO THE PRELIMINARY STATEMENT (continued)

5          ADJUSTED PROFIT BEFORE AND AFTER TAXATION

		2014	2013
Continuing Operations		£m	£m
Profit before taxation		11.6	12.2
Amortisation and impairment of intangible assets (excluding software amortisation)		1.6	0.6
Restructuring and other costs		1.3	1.2
Costs in relation to business acquisition activity		0.6	-
Pension costs / (credits)		4.9	(0.6)
Adjusted profit before taxation		20.0	13.4
Taxation on adjusted profit		(4.5)	(2.9)
Adjusted profit after taxation		15.5	10.5

6              TAXATION

	2014	2013
	£m	£m
Current tax
UK corporation tax charge for the year	2.9	1.4
Adjustment in relation to previous years	(0.4)	(0.1)
Current tax charge for the year	2.5	1.3
Deferred tax
Origination and reversal of temporary differences	(0.1)	1.5
Changes in statutory tax rate	-	0.3
Adjustment in relation to previous years	0.6	(0.7)
Deferred tax charge for the year	0.5	1.1
Total charge for taxation included in the Income Statement for continuing operations	3.0	2.4

The tax charge for the period is higher (2013: lower) than the effective rate of Corporation Tax in the UK of 21.50% (2013: 23.25%).  The differences are explained below:

	2014	2013
	£m	£m
Profit before taxation per the Income Statement	11.6	12.2
Profit before taxation multiplied by the effective rate of UK Corporation Tax	2.5	2.8
Factors affecting taxation charge for the year:
Tax effect of expenses not deductible for tax purposes	0.3	0.2
Changes in statutory tax rate	-	0.2
Adjustments to tax in respect of prior periods	0.2	(0.8)
Total charge for taxation included in the Income Statement for continuing operations	3.0	2.4

Taxation in relation to amortisation and impairment of intangible assets (excluding software amortisation) has reduced the charge by £0.4 million (2013: reduced charge by £0.1 million).  Taxation on the exceptional items in the current year has reduced the charge for taxation relating to continuing operations by £1.1 million (2013: reduced charge by £0.4 million) of which £0.2 million charge (2013: £0.3 million credit) relates to the prior year.

The tax charge for the year is based on the effective rate of UK Corporation Tax for the period of 21.50% (2013: 23.25%).  The statutory rate of UK Corporation Tax reduced from 23% to 21% on 1st April 2014 and will reduce to 20% on 1st April 2015.  The impact of these changes was reflected in the opening tax balances and these changes have therefore had no impact on the tax recognised in the Income Statement, Statement of Comprehensive Income or directly to Shareholders' equity in the year.

During the year a £1.2 million credit relating to current taxation (2013: £0.2 million) and a debit of £1.0 million relating to deferred taxation (2013: credit of £1.0 million) have been recognised directly in Shareholders' equity.

NOTES TO THE PRELIMINARY STATEMENT (continued)

7          EARNINGS PER SHARE

	2014	2013
	£m	£m
Profit for the financial year from continuing operations attributable to Shareholders	8.6	9.8
Result / (loss) for the financial year from discontinued operations attributable to Shareholders	-	(9.1)
Amortisation and impairment of intangible assets from continuing operations (net of taxation)	1.2	0.5
Amortisation and impairment of intangible assets from discontinued operations (net of taxation)	-	0.9
Exceptional costs from continuing operations (net of taxation)	5.7	0.2
Exceptional costs from discontinued operations (net of taxation)	(0.2)	9.2
Exceptional finance costs from discontinued operations (net of taxation)	-	0.5
Adjusted profit attributable to Shareholders relating to continuing operations	15.5	10.5
Adjusted profit attributable to Shareholders relating to discontinued operations	(0.2)	1.5
Adjusted profit attributable to shareholders	15.3	12.0
Weighted average number of Ordinary shares	291,829,363	258,032,874
Dilutive potential Ordinary shares*	5,001,228	16,455,525
Fully diluted number of Ordinary shares	296,830,591	274,488,399
Basic earnings per share
From continuing operations	2.9p	3.8p
From discontinued operations	-	(3.6p)
From continuing and discontinued operations	2.9p	0.2p
Adjustment for amortisation and impairment of intangible assets (continuing operations)	0.4p	0.2p
Adjustment for amortisation and impairment of intangible assets (discontinued operations)	-	0.4p
Adjustment for exceptional items (continuing operations)	2.0p	-
Adjustment for exceptional items (discontinued operations)	-	3.6p
Adjustment for exceptional finance costs (discontinued operations)	-	0.2p
Adjusted basic earnings per share (continuing operations)	5.3p	4.0p
Adjusted basic earnings per share (discontinued operations)	-	0.6p
Adjusted basic earnings per share from continuing and discontinued operations	5.3p	4.6p
Diluted earnings per share
From continuing operations	2.9p	3.6p
From discontinued operations	-	(3.4p)
From continuing and discontinued operations	2.9p	0.2p
Adjustment for amortisation and impairment of intangible assets (continuing operations)	0.4p	0.2p
Adjustment for amortisation and impairment of intangible assets (discontinued operations)	-	0.3p
Adjustment for exceptional items (continuing operations)	1.9p	-
Adjustment for exceptional items (discontinued operations)	-	3.4p
Adjustment for exceptional finance costs (discontinued operations)	-	0.2p
Adjusted diluted earnings per share (continuing operations)	5.2p	3.8p
Adjusted diluted earnings per share (discontinued operations)	-	0.5p
Adjusted diluted earnings per share from continuing and discontinued operations	5.2p	4.3p

* Includes outstanding share options granted to employees.

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

Adjusted earnings per share figures are given to exclude the effects of amortisation and impairment of intangible assets (excluding software amortisation), exceptional items and exceptional finance costs, all net of taxation, and are considered to show the underlying performance 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 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 point, from a continuing operations level, when their conversion to Ordinary shares would decrease earnings per share or increase loss per share from continuing operations.  For the years ended 31st December 2014 and 31st December 2013, 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. 

There were no events occurring after the balance sheet date that would have changed significantly the number of Ordinary shares or dilutive 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 STATEMENT (continued)

8          DIVIDENDS

			2014		2013
Dividend per share
Final dividend proposed			1.20p		-
Interim dividend paid			0.50p		0.40p
Final dividend paid			‑		0.81p
				2014		2013
				£m		£m
Shareholders' equity utilised
Final dividend proposed				3.6		-
Interim dividend paid				1.5		1.0
Final dividend paid				-		2.4

The Directors propose the payment of a final dividend in respect of the year ended 31st December 2014 of 1.20 pence per share.  This will utilise Shareholders' equity of £3.6 million and will be paid, subject to Shareholder approval, on 15th May 2015 to Shareholders on the register of members on 17th April 2015.  The trustee of the EBT has waived the entitlement to receive dividends on the Ordinary shares held by the Trust.  In accordance with IAS 10 there is no payable recognised at 31st December 2014 in respect of this proposed dividend.

9          POST-EMPLOYMENT BENEFIT OBLIGATIONS

The Group has applied the requirements of IAS 19(R), 'Employee Benefits' (revised June 2011) to its employee pension schemes and post-employment healthcare benefits.

During the prior year the Company established a new pension scheme, the Johnson Group Defined Benefit Scheme ("JGDBS") and on 6th April 2013 transferred the assets and liabilities of the Johnson Group Staff Pension Scheme ("Staff Scheme"), the Semara Augmented Pension Plan ("SAPP") and the WML Final Salary Pension Scheme ("WML Scheme") to this new scheme.

As part of the Group's objective to reduce its overall pension liability, deficit recovery payments of £2.0 million, £nil and £nil (2013: £0.4 million, £1.3 million and £0.2 million) were paid to the JGDBS, Staff Scheme and the WML Scheme respectively, during the year to 31st December 2014. 

A net re-measurement and experience loss of £11.5 million (2013: net re-measurement and experience gain of £11.7 million) has been recognised in the year to 31st December 2014.  This is as a result of the schemes' assets and liabilities performing differently to previous assumptions and changes to the assumptions used in calculating liabilities of the schemes.

The gross post-employment benefit obligation and associated deferred tax asset thereon is shown below:

	2014 £m	2013 £m
Gross post-employment benefit obligation	18.5	4.3
Deferred tax asset thereon	(3.7)	(0.9)
Net liability	14.8	3.4

Amounts recognised in the Balance Sheet are as follows:

	2014 £m	2013 £m
Present value of funded pension obligations	215.5	188.0
Fair value of pension scheme assets	(198.3)	(185.0)
Post-employment healthcare obligations	1.3	1.3
Gross post-employment benefit obligation	18.5	4.3

The reconciliation of the opening gross post-employment benefit obligation to the closing gross post-employment benefit obligation is shown below:

	2014	2013
	£m	£m
Opening gross post-employment benefit obligation	4.3	18.2
Current service cost	0.3	0.5
Assets distributed on settlements	-	3.9
Liabilities extinguished on settlements	-	(5.1)
Past service cost	4.7	-
Notional interest	0.2	0.8
Employer contributions	(2.5)	(2.2)
Re-measurement and experience losses / (gains)	11.5	(11.7)
Utilisation of healthcare provision	-	(0.1)
Closing gross post-employment benefit obligation	18.5	4.3

NOTES TO THE PRELIMINARY STATEMENT (continued)

10        BUSINESS COMBINATIONS AND DISCONTINUED OPERATIONS

BUSINESS COMBINATIONS

On 2nd March 2014 the Group acquired the entire share capital of Bourne Services Group Limited along with its subsidiary Bourne Textile Services Limited (together "Bourne") for gross consideration of £26.7 million plus fees.

Bourne's operations are focussed on the volume hotel linen market.  Bourne operates from purpose built freehold premises which cover four acres and has a total of 90,000 sq ft of production capacity located in Bourne, Lincolnshire.  Bourne services hotel customers in the Midlands, South Yorkshire, East Anglia, North London and the Home Counties. 

The Bourne business has been included in the Textile Rental operating segment.

Since acquisition, Bourne has generated a profit of £2.4 million on revenue of £16.1 million.  Had the business been acquired at the start of the period it is estimated that profit of £2.5 million would have been generated on revenue of £18.6 million.

The fair values of the assets and liabilities acquired are as follows:

		Net assets acquired	Fair value adjustments	Accounting policy realignment	Fair value of assets acquired
		£m	£m	£m	£m
Intangible assets - Goodwill		-	3.8	-	3.8
Intangible assets - Customer lists and contracts		-	10.2	-	10.2
Property, plant and equipment		9.1	-	(0.2)	8.9
Textile rental items		1.8	-	(0.2)	1.6
Inventories		0.3	-	-	0.3
Trade and other receivables		2.5	-	-	2.5
Cash		4.9	-	-	4.9
Trade and other payables		(2.3)	-	-	(2.3)
Current income tax liability		(0.4)	-	-	(0.4)
Deferred income tax liability		(0.2)	(2.6)	-	(2.8)
		15.7	11.4	(0.4)	26.7

Goodwill represents the deferred income tax arising on the recognition of the customer lists and contracts plus the expected benefits to the wider Group arising from the acquisition.  None of the acquired goodwill is expected to be deductible for tax purposes.

The acquired property, plant and equipment includes a freehold building that was impaired immediately prior to the acquisition.  The carrying value of the freehold building included within the net assets acquired column above reflects the impairment.

Trade and other receivables includes gross contractual amounts for trade receivables of £2.2 million of which £nil is expected to be uncollectable.

The cash flows in relation to business acquisition activity are summarised below:

					2014	2013
					£m	£m
Consideration paid					26.7	-
Cash acquired					(4.9)	-
Cost in relation to business acquisition activity					0.6	-
					22.4	-

There were no business combinations during 2013.

DISPOSALS AND DISCONTINUED OPERATIONS

There were no business disposals in the year.

On 30th June 2013 the assets and liabilities of the Facilities Management division were classed as a disposal group and, as a result, the value of the assets held for resale was impaired by £9.0 million.  On the 7th August 2013 the Facilities Management division was disposed of for a total consideration of £37.7 million (including £1.5 million of deferred and contingent consideration), of which £36.2 million was received at completion, resulting in a profit on disposal of £1.1 million.  Full details of the assets and liabilities disposed of are provided in the 2013 Annual Report.  

At the point of acquisition, the deferred and contingent consideration of £1.5 million represented £0.8 million of deferred consideration and £1.4 million of contingent consideration less a provision of £0.7 million representing the Group's best estimate of the contingent consideration to be received.  The deferred consideration of £0.8 million, together with £0.2 million of the contingent consideration, is expected to be received in 2015.  Contingent consideration of £0.1 million has been received in the period.  A further £0.4 million of provision against contingent consideration has been recognised in the year.

NOTES TO THE PRELIMINARY STATEMENT (continued)

10        BUSINESS COMBINATIONS AND DISCONTINUED OPERATIONS continued

DISPOSALS AND DISCONTINUED OPERATIONS continued

Of the total disposal costs of £2.2 million, payments totalling £1.9 million were made in 2013.  As at 31st December 2014 there is an outstanding creditor in relation to the costs of disposal of £0.3 million.  This is expected to be paid in 2015.

In 2014, discontinued operations includes the following items:

·      Additional provisions of £0.3 million relating to future lease commitments on properties, along with the related taxation credit.

·      A revision of the best estimate of the contingent consideration receivable which has resulted in a loss of £0.4 million.

·      A tax credit of £0.6 million relating to the disposal of the Facilities Management division in 2013.

In 2013, discontinued operations includes the following items:

·      The results for the Facilities Management division up to the point of disposal, including taxation thereon.

·      Exceptional finance costs of £0.1 million of unamortised fees written off on the prepayment of bank loans.

·      Exceptional interest costs of £0.6 million relating to the cost of settling interest rate hedge arrangements as a result of the disposal. 

·      The impairment of assets held for resale prior to the sale of the Facilities Management division.

·      The profit on disposal of the Facilities Management division.

The total result / (loss) relating to discontinued operations is as follows: 

		2014	2013
		£m	£m
Revenue from discontinued operations		-	29.0
Operating (loss) / profit before amortisation and impairment of intangible assets (excluding software amortisation) and exceptional items		(0.3)	2.3
Amortisation and impairment of intangible assets (excluding software amortisation)		-	(1.2)
Exceptional items		-	(1.3)
Loss before exceptional finance cost and taxation from discontinued operations		(0.3)	(0.2)
Exceptional finance cost		-	(0.7)
Taxation credit / (charge)		0.1	(0.3)
Loss for the period		(0.2)	(1.2)
Pre-tax (loss) / profit on disposal		(0.4)	1.1
Impairment of assets held for resale		-	(9.0)
Taxation credit		0.6	-
Gain / (loss) on disposal		0.2	(7.9)
Retained result / (loss) from discontinued operations		-	(9.1)

Cash flows from discontinued operations

The cash flows from discontinued operations included within the Consolidated Statement of Cash Flows are as follows:

		2014	2013
		£m	£m
Proceeds from disposal		0.1	36.2
Payment of costs relating to disposals		-	(1.9)
Cash disposed of		-	(7.6)
Net proceeds from sale of business		0.1	26.7
Net cash (used in) / generated from operating activities		(0.8)	2.1
Interest paid		-	(0.6)
Net cash flow		(0.7)	28.2

NOTES TO THE PRELIMINARY STATEMENT (continued)

11         ANALYSIS OF NET DEBT

Net debt is calculated as total borrowings less cash and cash equivalents (excluding Lifecycle funds prior to the disposal of the Facilities Management division on 7th August 2013), less unamortised bank facility fees.  Non-cash changes represent the effects of the recognition and subsequent amortisation of fees relating to the bank facility, changing maturity profiles and new finance leases entered into during the year.

	At 1st January 2014	Cash Flow	Non-cash Changes	At 31st December 2014
	£m	£m	£m	£m
Cash and cash equivalents - per Statement of Cash Flows	3.4	(8.3)	-	(4.9)
Debt due within one year	-	(1.0)	0.2	(0.8)
Debt due after more than one year	(25.0)	5.0	0.3	(19.7)
Finance leases	(2.9)	0.8	(1.0)	(3.1)
	(24.5)	(3.5)	(0.5)	(28.5)

	At 1st January 2013	Cash Flow	Other Non-cash Changes	At 31st December 2013
	£m	£m	£m	£m
Cash and cash equivalents - per Statement of Cash Flows	0.1	3.3	-	3.4
Less: Lifecycle funds	(1.3)	1.3	-	-
Cash and cash equivalents (excluding lifecycle funds)	(1.2)	4.6	-	3.4
Debt due within one year	(8.1)	8.5	(0.4)	-
Debt due after more than one year	(47.3)	22.5	(0.2)	(25.0)
Finance leases	(1.9)	0.7	(1.7)	(2.9)
	(58.5)	36.3	(2.3)	(24.5)

12         RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT

	2014	2013
	£m	£m
(Decrease) / increase in cash per the Consolidated Statement of Cash Flows	(8.3)	3.3
Movement in lifecycle funds	-	1.3
(Decrease) / increase in cash excluding lifecycle funds	(8.3)	4.6
Cash outflow on change in debt and lease financing	4.8	31.7
Change in net debt resulting from cash flows	(3.5)	36.3
Movement in unamortised bank facility fees	0.5	(0.6)
New finance leases	(1.0)	(1.7)
Movement in net debt	(4.0)	34.0
Opening net debt	(24.5)	(58.5)
Closing net debt	(28.5)	(24.5)

13        EVENTS AFTER THE REPORTING PERIOD

Drycleaning Restructuring

As previously announced on 6th January 2015, the Drycleaning business continues to operate in a difficult high street environment and, despite several initiatives to reach new customers, the like for like sales increase achieved in 2013 has not been maintained in 2014.

In parallel with our strategy to develop alternative, more convenient collection and delivery locations, the lease profile of our existing estate was reviewed and 109 branches were identified, the majority of which have leases expiring within the next two years, where renewal will not be financially viable.  A consultation exercise with affected employees is underway and it is anticipated that the affected branches will close during the first half of 2015.

The estimated charge to the Group's Income Statement for the planned restructuring of the Drycleaning business and associated property provisions is, in aggregate, approximately £6.5 million net, and will be treated as an exceptional item in the first half of 2015.

NOTES TO THE PRELIMINARY STATEMENT (continued)

14         FORWARD LOOKING STATEMENTS

Certain statements in this Preliminary Statement are forward-looking. The terms 'expect', 'should be', 'will be' and similar expressions identify forward looking statements. Although the Board believes that the expectations reflected in these forward-looking statements are reasonable, such statements are subject to a number of risks and uncertainties and actual results and events could differ materially from those expressed or implied by these forward-looking statements.

15        DIRECTORS' RESPONSIBILITIES STATEMENT

The Directors are responsible for preparing the Annual Report in accordance with applicable law and regulations.  Having taken advice from the Audit Committee, the Board considers the Annual Report, taken as a whole, to be fair, balanced and understandable and that it provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

The Company's Annual Report for the year ended 31st December 2014, which will be posted to Shareholders on or before 13th March 2015, contains the following statement regarding responsibility for the Strategic Report, the Directors' Report (including the Corporate Governance Report), the Board Report on Remuneration and the financial statements included within the Annual Report:

"Each of the Directors confirms that to the best of their knowledge:

§  the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and result of the Group;

§  the Strategic Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces;

§  there isno relevant audit information of which the Company's auditors are unaware; and

§  he/she has taken all the steps that he/she ought to have taken as a Director in order to make himself/ herself aware of any relevant audit information and to establish that the Company's auditors are aware of that information."

16        PRELIMINARY STATEMENT

A copy of this Preliminary Statement 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 Statement can also be accessed at www.jsg.com.

The 2014 Annual Report will be distributed to Shareholders on or before 13th March 2015.

17        APPROVAL

The Preliminary Statement was approved by the Board of Directors on 3rd March 2015.

 

END

 

 

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