JSG Johnson Service Group Plc

RNS Number:9595P
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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