Johnson Service Group PLC

164958 Johnson Annual Report Cover_2014 Johnsons AR Covers  06/03/2015  16:38  Page 1

Annual Report 
and Accounts

2014

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Johnson House, 
Abbots Park, Monks Way
Preston Brook
Cheshire WA7 3GH

Tel:
+44 (0)1928 704 600
Fax: +44 (0)1928 704 620
Email: enquiries@jsg.com

 
 
 
 
 
 
 
 
 
164958 Johnson Annual Report Cover_2014 Johnsons AR Covers  06/03/2015  22:13  Page 2

Johnson Service Group PLC  Annual Report and Accounts 2014

Annual Report and Accounts 2011 Johnson Service Group PLC  2

Annual Report and Accounts 2014 Johnson Service Group PLC

THE ESTABLISHED NAME 
IN THE TEXTILE RENTAL AND
DRYCLEANING SECTORS

Design: mediasterling.com
Production: sterlingfp.com

This annual report is printed using vegetable
inks on paper from an ISO 14001 certified
manufacturer, and is made with ECF pulp
sourced from carefully managed and 
renewed forests.

Electronic Communications

The Company offers Shareholders the
opportunity to receive communications such as
notices of Shareholder meetings and the annual
report and accounts electronically. The Company
encourages the use of electronic communication
as, not only does it save the Company printing
and mailing costs, it is also a more convenient
and prompt method of communication.

If you decide to receive communications
electronically, you will be sent an email message
each time a new Shareholder report or notice 
of meeting is published. The email will contain
links to the appropriate website where
documents can be viewed. It is possible 
to change your instruction at any time by
amending your details on the register.

If you would like to receive electronic
communications, you will need to register your
email address by accessing the Shareholder
Services page within the Investor Relations
section of the Company’s website at
www.jsg.com. 

This will link you to the service offered by the
Company’s Registrar. If you decide not to register
an email address with the Registrar, you will
continue to receive all communications in hard
copy form.

Those Shareholders who are CREST members
and who wish to appoint a proxy or proxies
utilising the proxy voting service please refer to
Note 2 of the Notice of Annual General Meeting.

www.jsg.com

If you have any queries regarding electronic communications, please contact the
Company’s registrar, Capita Asset Services, on 0871 664 0300 (calls cost 10p
per minute plus network extras, lines are open 8.30am-5.30pm Mon-Fri).

164958 Johnson Annual Report Pt1_2014 Johnson AR_Pt1  06/03/2015  21:30  Page 1

Annual Report and Accounts 2014 Johnson Service Group PLC  1

12

14

16

29

33

34

49

50

51

59

95

96

97

Financial Review

Corporate Social Responsibility Statement

Principal Risks and Uncertainties

Audit Committee Report

Nomination Committee Report

Board Report on Remuneration

Consolidated Balance Sheet

Consolidated Statement of Cash Flows

Statement of Significant Accounting Policies

Notes to the Consolidated Financial Statements

Company Statement of Cash Flows

Statement of Significant Accounting Policies

Notes to the Company Financial Statements

02

04 

06

08

20

21

23

24

42

47

48

48

91

93

94

94

103

108

108

Group Overview and Highlights

Strategic Review

Chairman’s Statement

Chief Executive’s Operating Review

Board of Directors

Directors’ Report

Directors’ Responsibilities Statement

Corporate Governance Report

Consolidated Independent Auditors’ Report

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Statement of Changes in Shareholders’ Equity

Company Independent Auditors’ Report

Company Balance Sheet

Company Statement of Comprehensive Income

Company Statement of Changes in Shareholders’ Equity

Notice of Annual General Meeting

Directors and Advisors

Financial Calendar

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164958 Johnson Annual Report Pt1_2014 Johnson AR_Pt1  06/03/2015  16:44  Page 2

2 Johnson Service Group PLC  Annual Report and Accounts 2014

GROUP OVERVIEW AND HIGHLIGHTS

TEXTILE RENTAL
PROVIDING WORKWEAR AND
LINEN RENTAL AND LAUNDRY
SERVICES THROUGHOUT THE UK.

DRYCLEANING
PROVIDING DRYCLEANING AND
SPECIALIST GARMENT CARE
SERVICES THROUGHOUT THE UK.

Apparelmaster
The UK’s market leading workwear rental, protective wear and workplace hygiene 
services provider with some 40,000 UK-based customers operating in a wide 
cross-section of industries.

www.apparelmaster.co.uk

Johnsons Cleaners
The UK’s number one drycleaner with a network of conveniently located branches
nationwide. Leaders in drycleaning, specialist textile and garment aftercare services.

www.johnsoncleaners.com

Stalbridge
Providing a wide range of high quality products to the premium hotel, catering and
corporate hospitality markets, including chefswear, crisp white bed linen, fluffy towels and 
a range of table linen.

www.stalbridge-linen.com

LONDON’S FINEST DRY CLEANERS

Jeeves
Jeeves is a respected luxury brand offering premium quality services to customers
including haute-couture houses, a wide range of City and bespoke-service-seeking
individuals and is the holder of a Royal Warrant.

www.jeevesofbelgravia.co.uk

Bourne
Providing high quality linen to a complete cross section of hotels, including city and town
centre establishments, holiday village resorts and many hotels in the rapidly growing budget
hotel sector.

www.bournegroup.co.uk

164958 Johnson Annual Report Pt1_2014 Johnson AR_Pt1  06/03/2015  16:44  Page 3

Annual Report and Accounts 2014 Johnson Service Group PLC  3

STRONG PERFORMANCE IN A
CHALLENGING ENVIRONMENT

210.4m

21.8m

REVENUE
Increased to £210.4m (2013: £193.6m) 

ADJUSTED OPERATING PROFIT 1
Increased to £21.8m (2013: £17.0m) 

20.0m

1.8m

ADJUSTED PROFIT BEFORE TAX 2
Increased to £20.0m (2013: £13.4m) 

FINANCE COSTS
Reduced to £1.8m (2013: £3.6m) 

5.2p

1.70p

ADJUSTED FULLY DILUTED EPS 3
Increased to 5.2p (2013: 3.8p) 

FULL YEAR DIVIDEND
Increased to 1.70p (2013: 1.21p) 

1 Before amortisation and
impairment of intangible
assets (excluding software
amortisation) and
exceptional items

2 Adjusted operating profit,
less total finance cost

3 Calculated using
adjusted profit before tax,
and deducting the charge
to, or adding the credit for
taxation thereon

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164958 Johnson Annual Report Pt1_2014 Johnson AR_Pt1  06/03/2015  16:44  Page 4

4 Johnson Service Group PLC  Annual Report and Accounts 2014

STRATEGIC REVIEW
TIM MORRIS

THE ESTABLISHED
NAME IN THE 
TEXTILE RENTAL
AND DRYCLEANING
SECTORS

The Group’s Strategic Report comprises the Group 
Overview and Highlights, the Strategic Review, the
Chairman’s Statement, the Chief Executive’s 
Operating Review, the Financial Review, the 
Corporate Social Responsibility Statement and 
the Principal Risks and Uncertainties.

Principal Activities and Business Overview
Johnson Service Group PLC (the “Company”) and its
subsidiaries (together, the “Group”) provide textile related
services to both businesses and consumers.  The
Company is incorporated and domiciled in the UK, its
registered number is 523335 and the address of its
registered office is Johnson House, Abbots Park, Monks
Way, Preston Brook, Cheshire, WA7 3GH.  The Company
is a public limited company and has its primary listing on
the AIM division of the London Stock Exchange.

The Group has two distinct operating segments:

Textile Rental
Provision and laundering of workwear, roller towels,
corporate apparel, dust mats, premium linen for the hotel,
catering and hospitality markets, linen for the high volume
hotel market and the direct sale of associated products.

Drycleaning
Provision of retail and commercial drycleaning and other
associated support services.

Mission
➔ Enable our people and businesses to achieve their
true potential from a stable financial platform.

Vision
➔ Achieve and maintain market leadership in all sectors

in which we have a major focus.

Values
➔ To behave, and to be recognised, as a good citizen in
the communities in which our businesses operate.
➔ To believe in the talents and energy of those who

work in our businesses, to encourage them wherever
possible to take responsibility and to give them the
power to follow through on the decisions they take.

Targets
➔ Be recognised as market leader across all our brands.
➔ Provide leading edge customer service in all of 

our businesses.

➔ Continuously strive to minimise the environmental

impact of our operations.

➔ Continually increase Total Shareholder Return (TSR).

Our Business Model
For some time now, the Board’s strategy has been to
refocus the Group on our original core business of Textile
Services, as well as to reduce net debt.  The disposal of
the Facilities Management division in August 2013
followed by the acquisition of Bourne Services Group
Limited in March 2014 and the restructuring of the
Drycleaning business announced in January 2015,
represent major steps in achieving this goal.

The Group’s business model, which supports this strategy
and aims to increase both profitability and shareholder
value, focuses on delivering exceptional customer service
across all of our businesses in order to increase
customer satisfaction and loyalty, and in turn cement the
Group as No.1 in the markets in which we operate.

Key to this is our biggest asset, our employees, who are
the face of our business.  The investment we make in the
training and development of our employees supports our
business model and we seek the views and opinions of
employees, at all levels, to continuously develop the way
we operate such that we support our people and the
operations of the Group.

Further to growing the underlying Group we continue to
actively pursue strategic acquisition opportunities within
the Textile Rental sector and to identify businesses which
broaden our services and add value for Shareholders.

Key Performance Indicators (KPIs)
The Group refers to certain KPIs to assess the
performance of the Group as a whole, and of the
individual businesses.  Further details of the KPIs are set
out within the Financial Review on page 13.

Future Prospects
All companies with a Premium Listing of equity shares in
the UK are required under the Listing Rules to comply
with the Financial Reporting Council’s UK Corporate
Governance Code (the “Code”).  A new edition of the
Code was issued in September 2014, applies to

164958 Johnson Annual Report Pt1_2014 Johnson AR_Pt1  06/03/2015  16:44  Page 5

OUR TARGETS

TO BE RECOGNISED 
AS MARKET
LEADER ACROSS
ALL OF OUR
BRANDS.

TO PROVIDE
LEADING EDGE
CUSTOMER
SERVICE IN ALL OF
OUR BUSINESSES.

TO CONTINUOUSLY
STRIVE TO
MINIMISE THE
ENVIRONMENTAL
IMPACT OF OUR
OPERATIONS.

TO CONTINUALLY
INCREASE TOTAL
SHAREHOLDER
RETURN (TSR).

reporting periods beginning on or after 1st October 2014
and is intended to enhance the quality of information
investors receive about the long-term health and strategy
of listed companies, and raises the bar for risk
management.

As a Company trading on AIM, Johnson Service Group
PLC is not required to comply with the Code, however,
the Board is acutely aware that whether or not an entity
is a going concern, and therefore likely to continue in
operation for the foreseeable future, is of vital importance
to all stakeholders.  As a consequence a statement, on
behalf of the Board, is set out below on the future
prospects of the Group. This statement has not been
prepared to comply with the requirements of the new
Code but embraces the core principles of the new
reporting requirements.

“The Directors confirm that, based upon the information
and knowledge of which they can be reasonably
expected to be aware, they have a reasonable
expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due for a
period of not less than 36 months from the date of this
report, and that it is, therefore, appropriate to adopt the
going concern principle in preparing these financial
statements”.

Whilst the Directors expect the future prospects of the
Group to extend beyond the 36 month period referred to
above, this period has been selected, for the purpose of
this statement, based upon the following:

➔ the Group has a committed bank facility, with

significant headroom both in terms of covenant
compliance and availability, through to May 2018;

➔ interest rate risk is mitigated through hedging

arrangements which, currently and until January 2016,
replace LIBOR with a fixed rate of 1.79% over £20.0
million of borrowings.  The Directors will consider
additional hedging arrangements in advance of the
existing arrangement expiring;

➔ our Textile Rental business, which forms the largest
part of the Group, has a diversified customer base of
some 40,000 customers, the majority of which have a
formal contract in place, with varying expiry dates of
up to five years, and hence providing a secure future
income stream;

Annual Report and Accounts 2014 Johnson Service Group PLC  5

➔ given the diverse and unrelated nature of the 

Group’s customer base, there is limited concentration
of credit risk;

➔ the Group has prepared a three year financial budget,
which has been reviewed, challenged and approved by
the Board, that projects positive earnings under all
reasonably possible scenarios;

➔ the Group continuously strives to seek out and invest
in plant and equipment that will help drive operational
efficiencies;

➔ the majority of the Group’s key processing sites are
owned on either a freehold or long leasehold basis
thereby providing security of tenure;

➔ the wide geographic spread of processing sites

mitigates the effect of a loss of any single processing
facility and, furthermore, appropriate insurance cover
is in place such that the increased cost of working
following a loss of processing capacity may, in some
circumstances, be recovered; and

➔ the Group continuously reviews the adequacy and
strength of its management teams to ensure that
appropriate experience and training is given and
develops succession planning as part of the
development programmes for our people.

Although the Board is confident of the future prospects
of the Group, there remain a number of risks and
uncertainties, which are often beyond the control of the
Directors, which could mean that actual results and
events may differ from those budgeted.

Strategic Report Approval
The Strategic Report, outlined on pages 2 to 19,
incorporates the Group Overview and Highlights, the
Strategic Review, the Chairman’s Statement, the Chief
Executive’s Operating Review, the Financial Review, the
Corporate Social Responsibility Statement and the
Principal Risks and Uncertainties.

By order of the Board

Tim Morris
Company Secretary
3rd March 2015

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6 Johnson Service Group PLC  Annual Report and Accounts 2014

CHAIRMAN’S STATEMENT
PAUL MOODY

OUR STRONG
PERFORMANCE
CONTINUES

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 on
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 from 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.

164958 Johnson Annual Report Pt1_2014 Johnson AR_Pt1  06/03/2015  16:44  Page 7

Annual Report and Accounts 2014 Johnson Service Group PLC  7

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

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 has increased to £14.8 million from
£3.4 million at 31st December 2013.  This increase in
deficit is disappointing given the actions taken in previous
years. This 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 to 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 BOARD EXPECTS THAT THE GROUP WILL CONTINUE TO DELIVER 
A STRONG PERFORMANCE AND SUCCESSFULLY IMPLEMENT ITS
STRATEGY FOR 2015”

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164958 Johnson Annual Report Pt1_2014 Johnson AR_Pt1  06/03/2015  16:44  Page 8

8 Johnson Service Group PLC  Annual Report and Accounts 2014

CHIEF EXECUTIVE’S OPERATING REVIEW
CHRIS SANDER

2014 HAS SEEN 
SOME SIGNIFICANT
ACHIEVEMENTS

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 levels.
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 with 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 both 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.

164958 Johnson Annual Report Pt1_2014 Johnson AR_Pt1  06/03/2015  16:44  Page 9

Annual Report and Accounts 2014 Johnson Service Group PLC  9

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155.0m

Textile Rental revenue
Increased 13.8% from
£136.2m in 2013

23.8m

Textile Rental adjusted 
operating profit
Increased 25.9% from
£18.9m in 2013

55.4m

Drycleaning revenue
Decreased from £57.4m 
in 2013

1.6m

Drycleaning adjusted 
operating profit
Maintained at £1.6m

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

 
 
 
 
 
 
 
164958 Johnson Annual Report Pt1_2014 Johnson AR_Pt1  06/03/2015  16:44  Page 10

10 Johnson Service Group PLC  Annual Report and Accounts 2014

A BREAKTHROUGH 
FOR THE DRYCLEANING
INDUSTRY

GreenEarth® is an environmentally safe drycleaning
process that uses liquid silicone, a gentle solution
made from one of the earth's safest and most
abundant natural resources.

Using water as the washing agent, as most of us do in
our homes, is termed wet cleaning.  Legend has it that
drycleaning was discovered accidentally in France during
the late 1800s.  Apparently, someone spilled turpentine
on a tablecloth with set in stains, and every stain the
turpentine touched came clean.  Thus, the idea of
“drycleaning” fabric in a liquid other than water was born.

As drycleaners, we work hard, and successfully, to reduce
emissions and control many of the risks associated with
the use of petrochemical solvents.  But we always hoped
for a better alternative.  One that would meet the needs
of customers and drycleaners whilst protecting the
communities in which we live.

GreenEarth® is the solution the industry has been waiting
for.  GreenEarth® is an environmentally safe drycleaning
process that uses liquid silicone, a gentle solution made
from one of the earth's safest and most abundant natural
resources: silica, or sand.  The same natural sand the
earth has been creating for over six billion years.  When
released to the environment, it safely breaks down into its
three natural elements, sand (SiO2) and trace amounts of
water and carbon dioxide.  So GreenEarth® is safe for the
air, water and soil.  GreenEarth® is safe for people too.  If
you wanted to, you could safely rub it on your skin.  In fact
you probably already do.  Liquid silicone is the base
ingredient in many everyday shampoos, conditioners and
lotions.

Johnson Service Group has now installed GreenEarth®
Cleaning systems in 100% of its drycleaning processing
estate.  As a leading public company, Johnson Service
Group takes its responsibilities seriously - to employees,
customers and the environment as a whole.

Quite simply, because we care about the environment we
have converted to GreenEarth® cleaning.

164958 Johnson Annual Report Pt1_2014 Johnson AR_Pt1  06/03/2015  16:44  Page 11

Annual Report and Accounts 2014 Johnson Service Group PLC  11

THE BENEFITS OF
GREENEARTH®
CLEANING

CLEANING
BENEFITS
SAFE FOR
DELICATE FABRICS,
COLOURS DON’T
FADE AND WHITES
DON’T GREY.

COMPOSITION 
AND
PROPERTIES
MODIFIED LIQUID
SILICONE.
CHEMICALLY 
INERT, CLEAR,
ODOURLESS
LIQUID.

SAFETY AND
ENVIRONMENTAL
BENEFITS
BREAKS DOWN
INTO SAND, 
WATER AND
CARBON DIOXIDE.

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164958 Johnson Annual Report Pt1_2014 Johnson AR_Pt1  06/03/2015  16:44  Page 12

12 Johnson Service Group PLC  Annual Report and Accounts 2014

FINANCIAL REVIEW
YVONNE MONAGHAN

2014 HAS BEEN A
YEAR OF SIGNIFICANT
INVESTMENT FOR 
THE GROUP

This Financial Review should be read in conjunction
with the Chairman’s Statement and the Chief
Executive’s Operating Review, which set out
comments on revenue, earnings and dividends.

Overview
Our financial performance continues to reflect the strong
performance in Textile Rental and the investment we
have made in new businesses, through acquisition, and in
increased processing capacity for our main workwear
rental business.

Details of the segmental results are given in note 1 of the
consolidated financial statements.

Taxation
The effective continuing tax rate, excluding exceptional
items and the amortisation and impairment of intangible
assets (excluding software amortisation), was 22.4%
(2013: 22.6%) and above the effective tax rate of 21.5%
(2013: 23.25%).  We would expect our tax rate to reduce
in 2015 but remain slightly above the effective rate of
20.25%.

Cash Flow
We continue to generate strong cash flow with net cash
generated from operating activities increasing by 35.6%
to £43.8 million (2013: £32.3 million).  Of this cash
generation we invested £11.6 million in the purchase of
property, plant and equipment including £6.6 million of
cash spend on our new workwear processing facility in
Leeds.  This significant investment in Leeds, amounting to
£8.5 million in total, is in line with our strategic plan of
continually investing in facilities which are both close to
our customers and enable us to deliver a high quality
service.

We invested £22.3 million, net of cash acquired, in the
acquisition of Bourne Services Group Limited (Bourne)

our first entry into the volume hotel linen market.
An equity raising in March 2014 raised £12.8 million of
net cash, allowing us to reduce our gearing levels during
the year and giving headroom for further investment.

Bank Facilities and Finance Costs
The Group’s bank facility was renewed in February 2014
with the incumbent banks.  The new facility comprised a
Revolving Credit Facility (RCF) of £60.0 million running
to May 2018 together with a short term £10.0 million
RCF which was repaid and cancelled in November 2014.

The current facilities give significant headroom both in
terms of covenant compliance and availability to 
allow further investment to be made in the Textile 
Rental business.

Hedging arrangements over £20.0 million of the facility
remain in place such that LIBOR is replaced by a fixed
rate of 1.79% for the period January 2013 to January
2016.  The remaining borrowings will be subject to
LIBOR at market rates at the point of drawdown.  Interest
charges include an average margin of 1.83%, for 2014, a
significant reduction from the average margin of 2.61%
in 2013.  The margin is subject to a quarterly covenant
test and is dependent upon the gearing ratio at each
quarter end and, based on the actual gearing ratio at
December 2014, will be initially 1.50% for the first
quarter of 2015.

Total finance costs in 2014 included £0.2 million (2013:
£0.8 million) of notional interest (non-cash) on post-
employment benefit obligations.  This cost is fixed at the
start of the year and is dependent on the level of the
pension deficit at the previous year end. The cost for
2015 will increase to £0.6 million.

The bank covenants within the facility agreement
measure interest cover and gearing ratios and contain
some restrictions on pension fund deficit recovery
payments. 

Investment in Textile Rental Items
2014 saw an unprecedented level of investment in new
textile rental items with additions increasing from £19.5
million in 2013 to £24.9 million in 2014.  £2.1 million of
this increase was in respect of new linen purchased by
Bourne in the ten months since acquisition, with the
balance being as a result of strong new business wins
together with contract renewals by existing rental
customers.

Defined Benefit Pension Scheme Liabilities
Following the completion of the merger of the three
historic defined benefit pension schemes into one new
scheme in 2013, the original schemes have been wound
up.  We are working with the independent Corporate
Trustee of the remaining scheme to ensure that the
scheme will be adequately funded.  We have closed the
scheme to future accrual with effect from 31st December
2014 and affected employees have been offered
membership of the Group’s defined contribution

164958 Johnson Annual Report Pt1_2014 Johnson AR_Pt1  06/03/2015  16:44  Page 13

Annual Report and Accounts 2014 Johnson Service Group PLC  13

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210.4m

Revenue
Increased from £193.6m 
in 2013

21.8m

Adjusted operating profit
Increased from £17.0m 
in 2013

5.2p

Adjusted diluted 
earnings per share
Increased from 3.8p 
in 2013

43.8m

Net Cashflow
Increased from £32.3m 
in 2013

arrangements.  As a direct result of the decision to cease
future accrual, there has been an increase in the
calculated pension liabilities of the scheme of £4.7
million.  This, together with related expenses of £0.2
million, has been recognised as an exceptional item in the
Income Statement.

As at 31st December 2014, the scheme’s assets had
increased by £13.3 million, to £198.3 million even after
the payment of £10.2 million of benefits.  Despite the
higher than expected return on scheme assets, the deficit
has increased by £14.2 million to £17.2 million, primarily
driven by a reduction in the discount rate applied in the
calculation of scheme liabilities.

The first triennial valuation of the new scheme as at 5th
October 2013 was finalised during the year and, at that
time, indicated a deficit (on a funding basis) of £19.1
million.  We have agreed with the Trustee that deficit
recovery payments of £1.9 million per annum will be paid
into the scheme for an estimated nine year period.

Clearly, the deficit calculated under both the provisions of
IAS19(R) and under the statutory funding objective is
sensitive to changes in the discount rate, based on
corporate bond or gilt yields as appropriate.

Balance Sheet
Net assets of the Group have increased to £80.0 million
(2013: £70.5 million) through a combination of retained
earnings and new equity offset by the significant increase
in the pension scheme deficit.

Customer Rebates
In response to the Financial Reporting Council’s (the
“FRC”) recent announcement in relation to accounting for
complex customer arrangements, the Group has taken
the opportunity to disclose its policy in relation to this
area.   The Group has a small number of rebate
arrangements in place with its key customers, which are
in line with prior years and which the Directors do not

consider to be complex in nature as they do not require
significant estimates and judgements.  The Group gives
annual rebates to certain key customers which are
calculated as a percentage of the value of services
provided to customers in the year.  Rebate costs are
generally accrued in the year in which the services are
provided based on the terms agreed with customers and
therefore require little judgement in their calculation. The
Group’s accounting policy for customer rebates is set out
on page 53.

Key Performance Indicators (KPIs)
The main KPIs used as part of the assessment of
performance of the Group, and of the individual business,
referred to within this Financial Review, Chairman’s
Statement, Chief Executive’s Operating Review or
segmental information on pages 59 to 61 are growth in
revenue, adjusted operating profit, adjusted fully diluted
earnings per share and return on capital employed.  Non-
financial KPIs include our employee and customer survey
results.

Summary
2014 has been a year of significant investment for the
Group both in terms of acquisition and investment in
processing capacity whilst improving Balance Sheet
strength.

We are well placed to pursue further opportunities in
Textile Rental over the coming months.

Yvonne Monaghan
Chief Financial Officer
3rd March 2015

 
 
 
 
 
 
 
164958 Johnson Annual Report Pt1_2014 Johnson AR_Pt1  06/03/2015  16:44  Page 14

14 Johnson Service Group PLC  Annual Report and Accounts 2014

CORPORATE SOCIAL RESPONSIBILITY STATEMENT

OUR DUTY TO
SHAREHOLDERS

We recognise our duty to stakeholders to operate the
business in an ethical and responsible manner. 
We are committed to developing our Corporate Social
Responsibility (CSR) agenda, recognising that it can
play a major part in leading and influencing all of our
people and operations.

We work to ensure that we provide the right resources,
energy and focus to meet the expectations of all of our
stakeholders in relation to CSR.

This report does not contain information about any
policies of the Group in relation to human rights issues
since it is not considered essential for an understanding
of the development, performance or position of the
Group’s business activities.

Work Place
We recognise that our people are key to the success of
the Group and we value the contribution of each and
every one of our employees.  We strive to create an
inspiring working environment where everyone is
engaged and motivated.

Employment Policies
The employment policies of the Group embody the
principles of equal opportunity and are tailored to meet
the needs of its different businesses and the locations in
which they operate.

The Group’s employment policies and procedures are
described in detail in its Staff Handbook, a copy of which
is available to all employees.  This Handbook takes
account of relevant employment legislation and best
practice.  New policies, procedures and related training
are developed and delivered as required.

Code of Ethics and Bribery
The Group has a written code on business ethics (the
“Ethics Code”), which is reviewed regularly by the Board
and sets out guidelines for all employees to enable the 
Group to meet the highest standards of conduct in
business dealings, including those with overseas
suppliers.  On joining the Group, whether by way of
acquisition or otherwise, all employees are made aware 
of these standards and procedures to ensure 
compliance is achieved.

Senior employees are required to sign an annual
statement of compliance with the Ethics Code.  A
confidential hotline service is available to employees
should anyone wish to report perceived improprieties.
Arrangements are in place to ensure that any reports are
followed up and the appropriate action taken.

The Group’s anti-bribery policy sets out how employees
must act to ensure that our zero tolerance approach to
bribery and corruption is upheld.

Diversity
We are committed to equal opportunities and the creation
of an entirely non-discriminatory working environment.
The aim of our diversity policy is to ensure that no job
applicant, or employee, receives less favourable treatment
because of, amongst other matters, gender, marital status,
race, age, sexual orientation, religion, belief or disability.
All decisions are based on the merits of the individual
concerned.  The Group is dedicated to undertaking its
business operations in a way which respects individual
human rights, treats individuals with dignity and allows
freedom of association.

Procedures are in operation to support the Group’s policy
that disabled persons, whether registered or not, shall be
considered for employment and subsequent training,
career development and promotion on the basis of their
aptitudes and abilities.  Where members of staff become
disabled every effort is made to ensure that they are
retrained according to their abilities.

Health and Wellbeing
In order to meet employees’ needs for support both at
work and at home the Group offers occupational health
benefits across its operating companies.

Employee Communication
Each Operating Company takes responsibility for
fostering employee engagement through appropriately
structured communications, training and incentive
arrangements.  Employee views are sought by
management and taken into consideration when making
decisions that may affect the employees’ interests.  A
broader understanding of the Group and opportunities
within it are made available to employees through a
Group wide magazine.

Share Schemes
The Group’s ongoing desire for employees to be able to
share in the performance and success of the Group as a
whole is afforded through an approved Sharesave Plan,
which has now operated for over 20 years.

Environment
We recognise our responsibilities to achieve good
environmental practice and to continue to strive for
improvement in areas of environmental impact.  Our
approach is to work through education, communication
and direct action wherever possible.

164958 Johnson Annual Report Pt1_2014 Johnson AR_Pt1  06/03/2015  16:44  Page 15

Annual Report and Accounts 2014 Johnson Service Group PLC  15

Health and Safety
The Board is aware of its responsibilities on all matters
relating to the health, safety and welfare of employees,
visitors and customers on Group premises, and to others
affected by the Group’s activities.

Board Responsibility
The Board takes seriously its responsibilities with regard
to health and safety and has nominated Chris Sander,
Chief Executive Officer, as the Director responsible for
such matters.

Health and safety matters are a permanent agenda item
at all Group and Operating Company Board Meetings.  A
summary report outlining Operating Company activities is
provided on a regular basis for Board Meetings, including
up to date statistics relating to accidents and incidents
that have occurred since the last report.

Health and Safety Policies
All Operating Companies are required to have clearly
defined health and safety policies and procedures
relevant to their operations and risks.  They are required
to implement all defined policies and procedures into the
work environment which are audited annually by Group
representatives to ensure their fitness for purpose.  These
audits, the results of which are notified to the Board, are
in addition to each company’s own protocols.

The Group health and safety policy statement is brought
to the attention of all employees and copies of the
statement are available upon request to all interested
parties.

Safety Management Systems
Each individual Operating Company has developed a
safety management system appropriate to their
operations and in accordance with either HS(G)65 or
OHSAS 18001.

All Operating Companies have arrangements in place to
consult with employees on matters which may affect their
health and safety.  The Group is in regular contact with
regulatory bodies both directly, and via industry trade
associations.  The health and safety performance of all
Operating Companies is collectively benchmarked
against other companies operating in similar business
sectors.  All new companies acquired by the Group
undergo a stringent audit of their Safety Management
Systems to establish compliance with appropriate
legislation and Group policy.

Board Responsibility
The Board is aware of its responsibilities with regard to
the environment, receives regular reports on all
environmental matters and has nominated Chris Sander,
Chief Executive Officer, as the Director responsible for
such matters.

Environmental Risk Assessment
Potential areas of risk are identified through the Group’s
risk assessment programme and mitigated wherever
possible.  Key operating divisions undertake quantitative
audits which enable a measure of environmental
improvement to be made.  The Operating Companies
have achieved, or are working towards, ISO 14001:2004
Environmental Management System Certification.

Greenhouse Gas Emissions & Carbon Footprint
The Group is party to a Climate Change Agreement
(CCA), is constantly looking for new ways to reduce its
carbon footprint and has put various initiatives in place,
including continued investment in energy efficient capital
equipment and the gradual rollout of passive ultra low-
energy LED lighting. It is also party to a Climate Change
Agreement (CCA).

Furthermore, the majority of cars available to employees
as part of the Group’s car scheme are currently subject to
a CO2 restriction of 130g/km.  The average CO2 of our
non-commercial fleet as at the end of 2014 reduced to
108g/km from 115g/km at the end of 2013.  Further
detail is provided in the table below:

CO2 Emissions (g/km)

< 95

96 to 110

111 to 130

131 to 160

>160

2014

23%

45%

25%

7%

-

2013

13%

37%

32%

16%

2%

Use of Solvents
Perchloroethylene, a petrochemical solvent, is traditionally
used in the drycleaning process.  We have worked hard,
and successfully, to control many of the risks associated
with the use of petrochemical solvents and, during 2013,
completed the rollout across our entire retail drycleaning
estate of GreenEarth® Cleaning systems.  GreenEarth® is
an environmentally safe drycleaning process that uses
liquid silicone, a gentle solution made from sand.  When
released to the environment, it safely breaks down into its
three natural elements, sand, water and carbon dioxide.

Community
The Group believes that the interests of responsible
businesses need to be aligned to the interests of the
local communities where they operate and to that end,
tries to give back to the community where it can,
contributing to charitable causes and local groups during
the year.

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164958 Johnson Annual Report Pt1_2014 Johnson AR_Pt1  06/03/2015  16:44  Page 16

16 Johnson Service Group PLC  Annual Report and Accounts 2014

PRINCIPAL RISKS AND UNCERTAINTIES

“We believe that effective risk management is critical to
the achievement of our strategic objectives and the 
long-term sustainable growth of our business. The Board
continues to take a proactive approach to recognising and
mitigating risk with the aim of protecting its employees
and customers and safeguarding the interests of the
Company and its Shareholders”.

Our Approach to Risk Management
The Board has overall accountability for ensuring that risk is effectively
managed across the Group and, on behalf of the Board, the Audit
Committee coordinates and reviews the effectiveness of the Group’s risk
management process.

Risks are reviewed by all of our businesses on an ongoing basis and are
measured against a defined set of likelihood and impact criteria. This is
captured in consistent reporting formats enabling the Audit Committee
to review and consolidate risk information and summarise the principal
risks facing the Group.  Wherever possible, action is taken to mitigate, 
to an acceptable level, the potential impact of identified principal risks
and uncertainties.

The Board formally reviews the most significant risks facing the Group at
its February and August meetings, or more frequently should new
matters arise. 

The principal risks and uncertainties affecting the Group are highlighted
below, together with details on how the Board take action to mitigate
each risk.  These risks and uncertainties do not comprise all of the risks
that the Group may face and are not listed in any order of priority.
Additional risks and uncertainties not presently known to the Board or
deemed to be less material at the date of this Annual Report may also
have an adverse effect on the Group.

Risk Classifications

HIGH

D
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HIGH

Class A

MEDIUM

Class B

LOW

Class C

IMPACT

MEDIUM

Class B

Class C

Class D

LOW

Class C

Class D

Class D

Class A - Immediate action with Risk Management Plan

Class B - Consider action and make contingency plans

Class C and D - Review periodically

164958 Johnson Annual Report Pt1_2014 Johnson AR_Pt1  06/03/2015  16:44  Page 17

Annual Report and Accounts 2014 Johnson Service Group PLC  17

Financial Risk

Economy

Mitigation

Our business could be susceptible to adverse changes in economic
conditions and employment levels, impacting our profitability and cash
flow.

With the variable and flexible nature of our cost base, it is generally
possible to contain the impact of these adverse conditions.

Each business continually reviews its routes to market, changes in
customer demands and expectations and cost base so that it can react
appropriately to the impact of the wider economy.

Any adverse impact on cash flow could be mitigated in the short term by
controls over capital expenditure.

Cost Inflation

Our objective is always to deliver the right level of service in the most
efficient way.  An increase in the cost of labour or supplies could
constitute a risk to our ability to maintain efficiencies.

We seek to manage inflation through continuing to drive greater
efficiencies through supplier rationalisation, labour scheduling and
productivity.

Cost indexation in certain of our contracts also gives us the contractual
right to review pricing with our customers.

Interest Rate Fluctuations 

The Group finances its operations through a mixture of retained profit,
bank borrowings and lease arrangements.  Fluctuations in the rates of
applicable interest could adversely impact the profitability of the Group.

The Group borrows at both fixed and floating rates and normally has
hedging products in place to provide fixed rate interest payments for a
proportion of its floating rate debt over a specified period. This enables the
Group to forecast borrowing costs with a degree of certainty.

At 31st December 2014, the Group’s bank borrowings incurred interest at
rates linked to LIBOR, although hedging arrangements were in place such
that in respect of £20.0 million of the facility, LIBOR rates are substituted
by fixed rates through to January 2016.

Liquidity Risk

Our key sources of liquidity in the foreseeable future are likely to be cash
generated from operations and borrowings through committed bank
facilities.  Adverse changes in credit markets or our credit rating could
increase the cost of borrowing and banks may be unwilling to renew
credit facilities on existing terms.

The Group’s policy on liquidity is to ensure that it has committed bank
facilities available to provide continuity of funding.  Appropriate facilities
are in place through to May 2018.

Pension Scheme Deficit

Asset valuations are based on the fair value of the assets.  The valuation
of the liabilities of the scheme is based on statistical and actuarial
calculations, using various assumptions including discount rates, pension
increases, life expectancy of scheme members and cash commutations.
The actuarial assumptions may differ materially from actual experience
due to changes in economic and market conditions, variations in actual
mortality, higher or lower cash withdrawal rates and other changes in
factors assessed.  Any of these differences could adversely impact the
assets or liabilities recognised in the Balance Sheet in future periods.

The Group has taken action to reduce the quantum of liabilities through
various initiatives, including: the freezing of pensionable salaries for active
members; offering pension increase exchanges for certain pension
benefits in payment; and offering enhanced transfer values to certain
categories of members.  Furthermore, the scheme was closed to future
accrual on 31st December 2014.

Asset allocations were reviewed during 2014 and changes made to more
appropriately match assets against the remaining scheme liabilities and
to reduce risk to a more acceptable level.

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164958 Johnson Annual Report Pt1_2014 Johnson AR_Pt1  06/03/2015  16:44  Page 18

18 Johnson Service Group PLC  Annual Report and Accounts 2014

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

Operational Risk

Failure of Strategy

Mitigation

Our current business model sets out our intentions to expand the Group
by actively pursuing strategic acquisition opportunities within the Textile
Rental market.  Failure to identify suitable targets, or to convert suitable
targets into acquisitions, would adversely impact our growth plans.

There is considerable knowledge and expertise within the Group with
regard potential acquisitions.  An experienced acquisition team, together
with external advisors where appropriate, is engaged in all acquisition
activity.

Customers

For our businesses to grow organically, we are reliant on securing and
retaining a diverse range of customers.  A reliance on any one particular
customer or group of customers may present a risk to the future cash
flows of the Group should they not be retained.

Adverse economic conditions may lead to an increased number of our
customers and clients being unable to pay for existing or additional
products and services.

We have strategies which strengthen our long term relationships with our
customers based on quality, value and innovation.

Our business model is structured so that we are not reliant on one
particular customer or group of customers.

The Group has limited concentration of credit risk with regard to trade
receivables given the diverse and unrelated nature of the Group’s 
customer base.

Competition

We operate in a competitive marketplace.  Aggressive pricing from our
competitors could cause a reduction in our revenues and margins.

We aim to minimise this by continuing to promote our differentiated
propositions and focusing on our points of strength, such as 
transparency of our pricing, flexibility in our cost base, quality and value of
service and innovation.

Retention and Motivation

As a service orientated Group, attracting, retaining and motivating the
best people with the right skills, at all levels of the organisation, is key to
the long term success of the Group.  Short term disruption could occur if
a key member of our team was lost at short notice, either on a temporary
or permanent basis.

The Group aims to mitigate this risk by efficient, time critical resource
management. 

The Group has established training, development, performance
management and reward programmes to retain, develop and motivate our
best people. 

The Group regularly reviews the adequacy and strength of its
management teams to ensure that appropriate experience and training is
given such that there is not over reliance on any one individual. 

Furthermore, the Group has continued to develop succession planning as
part of the development programmes for our people.

Loss of a Processing Facility 

The loss of a key processing facility could result in significant disruption
to our business, due to the high utilisation of plant capacity.

A wide geographic spread of processing facilities mitigates the effect of a
loss of any single processing facility.

Furthermore, appropriate insurance cover is in place such that the
increased cost of working following a loss of processing capacity, may in
some circumstances, be recovered.

164958 Johnson Annual Report Pt1_2014 Johnson AR_Pt1  06/03/2015  16:44  Page 19

Annual Report and Accounts 2014 Johnson Service Group PLC  19

Operational Risk

Information Systems and Technology

Mitigation

The digital world creates many risks for a business including technology
failures, loss of confidential data and damage to brand reputation.

We seek to assess and manage the maturity of our enterprise risk and
security infrastructure and our ability to effectively defend against current
and future cyber risks by using analysis tools and experienced
professionals to evaluate and mitigate potential impacts.
The Group relies on a variety of IT systems in order to manage and deliver
services and communicate with our customers, suppliers and employees. 

We are focused on the need to maximise the effectiveness of our
information systems and technology as a business enabler and to reduce
both cost and exposure as a result.

Regulatory Risk

Health and Safety

Mitigation

Health and safety is our number one operational priority.  We are
focussed on protecting people’s wellbeing, as well as avoiding serious
business interruption and potential damage to our reputation.

The Group has policies, procedures and standards in place to ensure
compliance with legal obligations and industry standards.

All management meetings throughout the Group feature a health and
safety update as an agenda item.

Compliance and Fraud

Ineffective compliance management with laws and regulations, or
evidence of fraud, could have an adverse effect on the Group’s reputation
and could result in an adverse impact on the Group’s performance if
significant financial penalties are levied or a criminal action is brought
against the Company or its Directors.

The Group’s zero tolerance based Codes of Business Conduct and
Ethics govern all aspects of our relationships with our stakeholders. 
All alleged breaches of the Codes, including any allegations of fraud, 
are investigated. 

The Group’s procedures include regular operating reviews, underpinned
by a continual focus on ensuring the effectiveness of internal controls. 

Regulation and compliance risk is also considered as part of our annual
business planning process.

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164958 Johnson Annual Report Pt1_2014 Johnson AR_Pt1  06/03/2015  16:44  Page 20

20 Johnson Service Group PLC  Annual Report and Accounts 2014

BOARD OF DIRECTORS

1

2

3

1. Paul Moody (age 57)
Chairman
Paul was appointed Non-Executive
Chairman on 1st May 2014 having joined
the Board as a Non-Executive Director on
10th March 2010.  Prior to his retirement on
26th February 2013, Paul was the Chief
Executive of Britvic PLC, having been
Director of Sales from 1996 to 2005.  Prior
to that, he held a number of senior
appointments in varied roles in HR and sales
with such companies as Mars Inc. and Grand
Metropolitan.  Paul is also a Non-Executive
Director of Pets at Home Group PLC.

2. Chris Sander (age 56)
Chief Executive Officer
Chris was appointed as Chief Executive
Officer on 3rd January 2014.  He joined the
Group in 1984 and has significant
experience in the Textile Services industry.
Chris was appointed Managing Director of
the Textile Rental business on 1st January
2008, joined the Board on 9th September
2008 and assumed responsibility for the
Drycleaning business as part of the
combined Textile Services division at the
time of the restructuring of the Drycleaning
in business in 2012. Chris is also a Director
of the European Textile Services Association.

3. Yvonne Monaghan (age 56)
Chief Financial Officer
Yvonne has significant experience in the
Textile Services industry having joined the
Group as Group Management Accountant in
1984 after qualifying as a Chartered
Accountant with Deloitte Haskins and Sells.
She was appointed as Company Secretary
and Financial Controller in 1985 and joined
the Board as Chief Financial Officer on 31st
August 2007.  Yvonne is also a Non-
Executive Director and Chair of the Audit
Committee of NWF Group PLC.

4

5

6

4. Michael Del Mar (age 68)
Senior Independent Non-Executive Director
Michael joined the Board as a Non-
Executive Director on 12th May 2004.  Until
December 2003 he was with UBS
Investment Bank, having joined S G Warburg
in 1990.  He is also a Non-Executive
Director of Regional Airports Limited and
Treloar Trust.

6. Tim Morris (age 38)
Company Secretary
Tim was appointed as Company Secretary on
1st January 2014, in addition to his existing
role of Group Financial Controller.  Having
qualified as a Chartered Accountant with
KPMG LLP in 2003, Tim joined the Group in
2005 as Group Financial Accountant.  He
also held the position of Finance Director at
SGP Property & Facilities Management
Limited prior to the Group disposing of that
business in August 2013.

5. Bill Shannon (age 65)
Non-Executive Director
Bill joined the Board as a Non-Executive
Director on 8th May 2009.  He is a Chartered
Accountant (Scotland) and began his career
with Whitbread PLC in 1974, where he served
as a Board Director for 10 years until his
retirement in 2004.  Bill has significant PLC
board experience, and is currently Non-
Executive Chairman of St. Modwen
Properties PLC and Deputy Chairman of LSL
Property Services PLC (where he is also
Chairman of both the Nomination Committee
and Remuneration Committee, having
previously served as Non-Executive Chairman
of Aegon UK PLC and Non-Executive
Director of Rank Group PLC, Barratt
Developments PLC and Matalan PLC.

164958 Johnson Annual Report Pt2_164958 Johnson Annual Report Pt2  06/03/2015  16:42  Page 21

DIRECTORS’ REPORT

The Directors have pleasure in presenting their Annual Report and the
audited Consolidated and Company financial statements for the year
ended 31st December 2014.

The Corporate Governance Report on pages 24 to 28, and the
Corporate Social Responsibility Statement on pages 14 to 15 (with
regard to information about the employment of disabled persons,
employee involvement and share schemes) are also incorporated into
this Report by reference.

Principal Activities and Business Overview
The principal activities and business overview of the Group are set out
within the Strategic Review.

Results and Dividends
The Group retained profit after taxation for the year from all operations
amounted to £8.6 million (2013: £0.7 million).

The dividend comprises an interim dividend of 0.50 pence (2013:
0.40 pence) per Ordinary share and a proposed final dividend of
1.20 pence (2013: 0.81 pence) per Ordinary share. This total dividend of
1.70 pence (2013: 1.21 pence) per Ordinary share will, subject to the
approval of Shareholders, amount to a distribution for the year of
£5.1 million (2013: £3.4 million).

Share Capital
The authorised share capital of the Company at 31st December 2014
comprised of 383,025,739 Ordinary shares of 10 pence each (2013:
383,025,739 Ordinary shares of 10 pence each). The total issued share
capital at the end of the year and the outstanding share options are
given in note 26 to the consolidated financial statements.

Acquisition and Disposal of Businesses
Details of acquisitions and disposals during the current and preceding
year are given in note 31 and 32 to the consolidated financial statements.

Events after the Reporting Period
On 6th January 2015, the Company announced that it had identified
109 branches within its Drycleaning business where renewal of leases
would not be financially viable and, as a consequence, has embarked
upon a consultation exercise with affected employees and anticipates
that the affected branches will close during the first half of 2015. 
Further details are set out within note 36 of the consolidated 
financial statements.

There were no other events occurring after the balance sheet date 
that require disclosing in accordance with IAS10, ‘Events after the 
reporting period’.

Annual Report and Accounts 2014 Johnson Service Group PLC  21

Major Interests in the Company’s Share Capital

At 2nd March 2015, being the latest practicable date prior to
publication of this document, the Company had been advised of the
following interests, of a material nature, in its share capital:

Shareholding (%)

Cumulative
Shareholding (%)

Schroders plc
Henderson Global Investors Limited
SFM UK Management LLP
Ruffer LLP
Polar Capital European Forager Fund Ltd
Other Shareholders

24.00
11.89
5.74
4.99
3.01
50.37

24.00
35.89
41.63
46.62
49.63
100.00

Shareholders’ Authority for the Purchase by the Company of its own Shares
At the 2014 Annual General Meeting, Shareholders authorised the
Company to make market purchases of up to a maximum aggregate of
26,253,940 Ordinary shares, which represented approximately 10% of
the Company’s issued Ordinary share capital on the latest practicable
date prior to publication of the 2014 Notice of Annual General Meeting.
The minimum price allowed for such purchases is 10 pence and the
maximum is 105% of the average of the middle market quotation of
such shares for the five business days immediately preceding the day of
purchase. Except for amending the maximum number of shares subject
to the authority, the Directors intend to seek renewal of this authority,
which is due to expire at the conclusion of the 2015 Annual General
Meeting. Further details are given in the Notice of the Annual General
Meeting.

Directors
A list of the Directors of the Company is shown on pages 20 and 108.
They all held office throughout the year and up to the date of signing this
report. In addition, John Talbot held office as Executive Chairman up until
his retirement on 1st May 2014.

Directors’ Interests
Share Capital
The interests of the Directors who were in office at 31st December
2014, together with the interests of their close family, in the shares 
of the Company at the commencement or, if later, date of appointment, 
and close of the financial year are disclosed in the Board Report on
Remuneration on pages 34 to 39. Details of the Company’s interest 
in its own shares are disclosed in note 29 to the consolidated
financial statements.

Contracts
None of the Directors have any material interests in contracts of the
Company or the Group.

Directors’ Indemnity
In accordance with the Articles of Association and to the extent
permitted by the laws of England and Wales, the Directors are granted
an indemnity from the Company in respect of liabilities incurred as a
result of their office. In respect of those matters for which the Directors
may not be indemnified, the Company maintained a directors’ and
officers’ liability third party insurance policy throughout the financial year
and up to the date of approval of these financial statements. Neither the
indemnity nor the insurance provides cover in the event that a Director is
proven to have acted dishonestly or fraudulently. No claim was made
under this provision during the year.

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164958 Johnson Annual Report Pt2_164958 Johnson Annual Report Pt2  06/03/2015  16:42  Page 22

The Group currently has adequate financial resources and long term
relationships with a number of customers and suppliers across many
industries throughout the UK. The Group’s forecasts and projections,
taking account of reasonably possible changes in trading performance,
show that there is not a substantial doubt that the Group should be able
to operate within the level of its current facilities.

A statement on the future prospects of the Group is included within the
Strategic Review.

By order of the Board

Tim Morris
Company Secretary
3rd March 2015
Johnson Service Group PLC Registered in England and Wales No.523335

22 Johnson Service Group PLC  Annual Report and Accounts 2014

DIRECTORS’ REPORT CONTINUED

Political Donations
It is the Company’s policy not to make political donations. The Directors
confirm that no donations for political purposes were made during the
year (2013: £nil).

Independent Auditors
The auditors, PricewaterhouseCoopers LLP (PwC), have indicated their
willingness to continue in office. In accordance with the recommendation
of the Audit Committee, as disclosed on page 31, and as required by
Section 489 of the Companies Act 2006, a resolution to reappoint the
auditors will be proposed at the Annual General Meeting.

Policy on Payment to Suppliers
The Company and its subsidiaries fully support the CBI initiative on
payments to suppliers and have continued to apply the Prompt Payment
Code in respect of all suppliers. The main features of the Code are that
payment terms are agreed at the outset of a transaction and are adhered
to; that there is a clear and consistent policy that bills will be paid in
accordance with the contract; and that there are no alterations to
payment terms without prior agreement. Copies of the Code can be
obtained from the CBI.

Half Yearly Reporting
As previously reported, the Company no longer publishes half yearly
reports for individual circulation to Shareholders. Information that would
normally be included in a half yearly report is made available on the
Company’s website at www.jsg.com.

2015 Annual General Meeting
The Company’s AGM will be held at the Doubletree by Hilton Chester,
Warrington Road, Hoole, Chester CH2 3PD on Thursday 7th May 2015
at 11am. An explanation of the resolutions to be proposed at the
meeting is included in the Notice of Annual General Meeting
accompanying this Annual Report.

Corporate Governance
The Company’s statement on corporate governance can be found in the
Corporate Governance Report on pages 24 to 28 of these financial
statements. The Corporate Governance Report forms part of this
Directors’ Report and is incorporated into it by reference.

Going Concern
The Group’s business activities, together with the factors likely to affect
its future development, performance and position are set out in the
Strategic Review, the Chairman’s Statement and Chief Executive’s
Operating Review. The financial position of the Group, its cash flows,
liquidity position and borrowing facilities are described in the Financial
Review. In addition, note 24 to the consolidated financial statements
includes the Group’s objectives, policies and processes for managing its
capital, its financial risk management objectives, details of its financial
instruments and hedging activities, and its exposure to credit risk and
liquidity risk.

164958 Johnson Annual Report Pt2_164958 Johnson Annual Report Pt2  06/03/2015  16:42  Page 23

Annual Report and Accounts 2014 Johnson Service Group PLC  23

DIRECTORS’ RESPONSIBILITIES STATEMENT

The Directors are responsible for preparing the Annual Report, the
Strategic Report, the Directors’ Report (including the Corporate
Governance Report), the Board Report on Remuneration and the
financial statements in accordance with applicable laws and regulations.

Company law requires the Directors to prepare financial statements for
each financial year. Under that law the Directors have prepared the
Group and Company financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the
European Union. Under company law the Directors must not approve the
financial statements unless they are satisfied that they give a true and
fair view of the state of affairs of the Group and the Company and of the
profit or loss of the Group and the Company for that period.

In preparing the financial statements, the Directors are required to:
➔ select suitable accounting policies and then apply them consistently;
➔ make judgements and accounting estimates that are reasonable 

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.

This confirmation is given and should be interpreted in accordance with
the provisions of Section 418 of the Companies Act 2006.

On behalf of the Board

Paul Moody
Chairman
3rd March 2015

Chris Sander
Chief Executive Officer
3rd March 2015

and prudent;

➔ state whether applicable International Financial Reporting Standards
(IFRSs) as adopted by the European Union have been followed,
subject to any material departures disclosed and explained in the
financial statements; and

➔ prepare the financial statements on the going concern basis unless 

it is inappropriate to presume that the Company will continue 
in business.

The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Group’s and Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and Company and enable them to ensure
that the financial statements and the Board Report on Remuneration
comply with the Companies Act 2006 and, as regards the Group
financial statements, Article 4 of the IAS Regulation. They are also
responsible for safeguarding the assets of the Group and the Company
and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.

The Directors are also responsible for the maintenance and integrity of
the Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.

The Directors consider that the Annual Report and Accounts, taken as a
whole, is fair, balanced and understandable and provides the information
necessary for Shareholders to assess a Company’s performance,
business model and strategy.

Each of the Directors, whose names and functions are disclosed on
page 20, confirms that at the date of this Report and 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 is no 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.

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164958 Johnson Annual Report Pt2_164958 Johnson Annual Report Pt2  06/03/2015  16:42  Page 24

24 Johnson Service Group PLC  Annual Report and Accounts 2014

CORPORATE GOVERNANCE REPORT

“We are committed to high standards of corporate governance which we
consider are critical to business integrity and to maintaining investors’ trust in
us. We expect all our directors, employees and suppliers to act with honesty,
integrity and fairness. Our business principles set out the standards we set
ourselves to ensure we operate lawfully, with integrity and with respect for
others”.
All companies with a Premium Listing of equity shares in the UK are
required under the Listing Rules to comply with the Financial Reporting
Council’s UK Corporate Governance Code (the “Code”) or, state the
areas in which they do not comply.

The Code is a guide to a number of key components of effective board
practice, the main principles, or sections, being:
➔ Leadership
➔ Effectiveness
➔ Accountability
➔ Remuneration
➔ Relations with Shareholders

Our Governance Structure 

A new edition of the Code was issued in September 2014 (the “2014
Code”) and applies to reporting periods beginning on or after
1st October 2014. The 2014 Code is intended to enhance the quality of
information investors receive about the long-term health and strategy of
listed companies, and raises the bar for risk management. Companies
with reporting periods beginning before 1st October 2014 should
continue to report against the Code issued in September 2012
(the “2012 Code”).

As a Company trading on AIM, Johnson Service Group PLC is not
required to comply with the 2012 Code, nor will it be required to comply
with the 2014 Code. Notwithstanding this, the Board does expect all
directors, employees and suppliers to act with honesty, integrity and
fairness and our business principles set out the standards we set
ourselves to ensure that we operate lawfully, with integrity and with
respect for others. The Board is committed to high standards of
corporate governance, which it considers are critical to business integrity
and to maintaining investors’ trust, and as a result has reviewed the
procedures to comply with the provisions of the 2012 Code, which are
set out below.

Chairman - Paul Moody

Key objectives:
• leadership, operation and governance of the Board
• setting the agenda and direction for the Board

The Board of Johnson Service Group PLC

Membership comprises the Chairman, two Executive Directors and two 
Non-Executive Directors (including the Senior Independent Director)
Chairman: Paul Moody
Key objectives:
• responsible for the overall conduct of the Group’s business
• setting the Group’s strategy

Audit Committee

Nomination Committee

Remuneration Committee

Membership comprises the Chairman 
and Non-Executive Directors

Membership comprises the Chairman 
and Non-Executive Directors

Membership comprises the Chairman 
and Non-Executive Directors

Chief Executive

Chris Sander

Chairman: Bill Shannon
Key objectives:
• management of the Group’s system 
of internal control, business risks 
and related compliance activities

• to review the activity and 

performance of the internal audit 
function and external auditors
• to provide effective governance 
over the Group’s financial results

Chairman: Paul Moody
Key objectives:
• to ensure the Board comprises 

individuals with the necessary skills, 
knowledge and experience

• to give consideration to succession 
planning and the leadership needs 
of the Group

Chairman: Michael Del Mar
Key objective:
• to assess and make 

recommendations to the Board on 
the policy of executive remuneration

Key objectives:
• responsible for the overall

management of the business

• responsible for the implementation of 

strategy and policy

Group Management Board

Membership comprises the two Executive Directors, divisional Managing 
Directors and Group function heads
Chairman: Chris Sander
Key objectives:
• implementation of the Board’s strategy
• monitoring financial and competitive performance
• business development and projects
• succession planning across the business

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Annual Report and Accounts 2014 Johnson Service Group PLC  25

Compliance with the 2012 Code

The Company has complied with the material provisions of the 2012
Code throughout the year ended 31st December 2014, other than
the provisions in relation to the following:

Provision Explanation
A.2.1 Division of responsibility of Chairman and Chief Executive

Since the 8th September 2008, John Talbot held the role of
Executive Chairman. Chris Sander was appointed Chief
Executive Officer on 3rd January 2014. John Talbot retired
from the Board on 1st May 2014 and on the same date, Paul
Moody commenced as Non-Executive Chairman. The
Company did comply with this provision with effect from
3rd January 2014.

E.1.1 Non-attendance by the Senior Non-Executive Independent Director

(SID) at meetings with major Shareholders
The Chief Executive Officer, the Chief Financial Officer and, up
until his retirement on 1st May 2014, the Executive Chairman
regularly meet with the Company’s major Shareholders and the
Board is of the opinion that additional regular meetings, other
than those specifically requested by Shareholders, with the
SID would not assist further in dialogue with Shareholders. The
SID, and also the Non-Executive Chairman, are available to
meet with Shareholders, at their request, and the Board
believes this arrangement to be sufficient.

The Company’s compliance with the 2012 Code has been reviewed
by the auditors and their report is given on pages 42 to 46.

Section A: Leadership

Main principles:
➔ Every company should be headed by an effective board which is
collectively responsible for the long-term success of the company.
➔ There should be a clear division of responsibilities at the head of
the company between the running of the board and the executive
responsibility for the running of the company’s business. No one
individual should have unfettered powers of decision.

➔ The chairman is responsible for leadership of the board and

ensuring its effectiveness on all aspects of its role.

➔ As part of their role as members of a unitary board, non-executive

directors should constructively challenge and help develop
proposals on strategy.

Composition of the Board
The Board currently consists of the Non-Executive Chairman (the
“Chairman”), two Executive Directors and two Non-Executive Directors.
The Chairman and Non-Executive Directors are considered to be
independent in character and judgement and are a strong element within
the Board, with their views carrying significant weight in the decision
making process.

Members of the Board, who are detailed on page 20, all held office
throughout the year and to the date of signing this report.

Division of Responsibility of Chairman and Chief Executive Officer
The 2012 Code requires that there is a clear division of responsibility
between the Chairman and the Chief Executive Officer, each of which
has clearly defined roles. The Chairman should be responsible for the
effective running of the Board whilst the Chief Executive Officer is

responsible for operating the business and implementing the Board’s
strategies and policies.

The role of the Chairman is set out in writing and agreed by the Board.
The Chairman is responsible for:
➔ the effective leadership, operation and governance of the Board;
➔ ensuring the effectiveness of the Board;
➔ setting the agenda, style and tone of Board discussions; and
➔ ensuring the Directors receive accurate, timely and clear information.

The role of the Chief Executive Officer is set out in writing and agreed by
the Board. The Chief Executive Officer is responsible for:
➔ management of the Group’s business;
➔ implementation of the Company’s strategy and policies;
➔ maintaining a close working relationship with the Chairman; and
➔ chairing the Group Management Board meetings.

Note that from 8th September 2008, up until the appointment of Chris
Sander as Chief Executive Officer on 3rd January 2014, the roles of
Chairman and Chief Executive Officer had been combined.

Responsibilities of the Board
The Board, in addition to routine consideration of both financial and
operational matters, determines the strategic direction of the Group. The
Board has a formal schedule of matters specifically reserved for its
decision which can only be amended by the Board itself.

The specific responsibilities reserved for the Board include:
➔ approval of the Group’s long-term objectives, overall strategy, mission,

vision, values and targets;

➔ approval and monitoring of the annual operating budget;
➔ approval of major acquisitions, disposals and capital expenditure;
➔ dividend policy;
➔ approval of appointments to the Board and of the Company Secretary;
➔ consideration of succession planning for key members of the

management team; and

➔ determining the terms of reference for the Board committees.

The following responsibilities have been delegated to 
Executive Management:
➔ the development of strategic plans that reflect the longer term

objectives and priorities established by the Board;

➔ implementation of strategies and policies as determined by 

the Board;

➔ monitoring of operational and financial performance against plans

and budgets; and

➔ developing and implementing risk management systems.

Board Committees
The Committees of the Board are:
➔ the Audit Committee;
➔ the Nomination Committee; and
➔ the Remuneration Committee.

Current membership of each Committee consists wholly of the Chairman
and the two Non-Executive Directors. Each Committee has written terms
of reference, which are available on the Company’s website. Separate
reports for each of these Committees are included in this Annual Report.

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26 Johnson Service Group PLC  Annual Report and Accounts 2014

CORPORATE GOVERNANCE REPORT CONTINUED

Group Management Board
The Group Management Board meets under the chairmanship of the
Chief Executive Officer. Topics covered by the Group Management
Board include:
➔ An update by the Chief Executive Officer on the business and

Induction, Training & Knowledge
Appropriate training is available to Directors upon appointment and as
required on an ongoing basis. Furthermore, on appointment, Directors
participate in a customised induction programme to familiarise them with
the Group.

business environment;

➔ divisional Managing Director updates;
➔ Group function heads’ updates;
➔ substantial business developments and projects;
➔ talent and succession planning;
➔ competitor analysis; and
➔ strategy.

Annually, the Group Management Board conducts a strategy review to
identify key strategic issues to be presented to the Board. The agreed
strategy is then used as a basis for developing the upcoming budget and
three year operating plans.

Section B: Effectiveness

Main principles:
➔ The board and its committees should have the appropriate

balance of skills, experience, independence and knowledge of the
company to enable them to discharge their respective duties and
responsibilities effectively.

➔ There should be a formal, rigorous and transparent procedure for

the appointment of new directors to the board.

➔ All directors should be able to allocate sufficient time to the
company to discharge their responsibilities effectively.

➔ All directors should receive induction on joining the board and
should regularly update and refresh their skills and knowledge.
➔ The board should be supplied in a timely manner with information
in a form and of a quality appropriate to enable it to discharge its
duties.

➔ The board should undertake a formal and rigorous annual

evaluation of its own performance and that of its committees and
individual directors.

➔ All directors should be submitted for re-election at regular
intervals, subject to continued satisfactory performance.

The Directors have access to the advice and services of the Company
Secretary and it is acknowledged that individual Directors may wish to
seek independent professional advice in connection with their
responsibilities and duties. The Company will meet reasonable expenses
incurred in this regard.

Supply of Information
To assist the Board in performing its responsibilities, information,
appropriate in quality and timeliness, is received in an agreed format, for
each full Board meeting.

Performance Evaluation
A performance evaluation of the Chairman was conducted in respect of
2014 by the Non-Executive Directors, after taking into account the views
of the Executive Directors. The Chairman has conducted an appraisal of
each member of the Board, Board composition and the format and
effectiveness of the Board meetings in respect of 2014. In addition, the
Remuneration Committee regularly reviews Executive Director
performance in connection with their performance objectives.

The Board conducted an internal Board evaluation during the year. This
process was led by the Chairman and each Director completed an in-
depth questionnaire which covered, inter alia:
➔ performance of the Board (including consideration of how the Board

works together as a unit);

➔ processes which underpin the Board’s effectiveness (including

consideration of the balance of skills, experience, independence and
knowledge of the persons on the Board);

➔ strategy;
➔ performance of the Audit, Nomination and Remuneration

Committees; and

➔ individual performance (giving consideration to whether each director

continues to contribute effectively and show commitment).

Board Meetings and Attendance
The Board met formally six times during 2014 and, additionally, held a further three unscheduled meetings in relation to, inter alia, the acquisition of
Bourne Services Group Limited, the refinancing of the Company’s bank facility and the equity raising.

Individual attendance at the meetings, including Audit Committee, Nomination Committee and Remuneration Committee attendance, is set out in the
table below. Where n/a appears in the table, the individual is not a Committee member.

Paul Moody
Chris Sander
Yvonne Monaghan
Michael Del Mar
Bill Shannon
Number of Meetings

Board
(Scheduled)

Board
(Unscheduled)

Audit
Committee

Nomination
Committee *

Remuneration
Committee
(Scheduled)

Remuneration
Committee
(Unscheduled)

6
6
6
6
6
6

2
3
3
1
3
3

3
n/a
n/a
3
3
3

–
n/a
n/a
–
1
1

3
n/a
n/a
3
3
3

3
n/a
n/a
3
3
3

*

The Nomination Committee meeting was held prior to the resignation of John Talbot as Executive Chairman. John Talbot was a member of the Nomination Committee and
attended the meeting. The meeting was quorate.

In addition, the Chairman and the Non-Executive Directors have met during the year without the Executive Directors.

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Annual Report and Accounts 2014 Johnson Service Group PLC  27

The completed questionnaires were reviewed on an individual basis by
the Chairman, who then had discussions with each Director. The results
of the review (including progress against the previous year’s
recommended actions) were summarised by the Chairman and
considered in detail by the Board. This year’s review found that
performance of the Board and its Committees continued to be effective
in dealing with both day-to-day and ongoing strategic issues and that the
Board and Committee structure ensured that the governance
requirements of the business were met.

As a result of these reviews, it is considered that the performance of
each Director continues to be effective and that each Director
demonstrates sufficient commitment to their role.

Re-election of Directors
The Directors comply with the requirements of the 2012 Code and
submit themselves for re-election every year, if they wish to continue
serving and are considered by the Board to be eligible. Accordingly, the
whole Board will be proposed for re-election at this year’s AGM.

Service Agreements
The service agreements of the Executive Directors and copies of the
letters of appointment of the Chairman and the Non-Executive Directors
are available for inspection during business hours on any weekday
(excluding Saturdays, Sundays and public holidays) at the registered
office of the Company and will be available for inspection for fifteen
minutes prior to, and during, the AGM.

External Appointments
The Executive Directors may accept outside appointments provided that
such appointments do not in any way prejudice their ability to perform
their duties as Executive Directors of the Company. The commitments of
each Executive Director are set out on page 20.

The role of a Non-Executive Director requires a time commitment in the
order of 15 days per annum plus additional time as necessary to properly
discharge their duties. There is no restriction on outside appointments
provided that they do not prevent the Directors from discharging their
responsibilities effectively.

Section C: Accountability

Main principles:
➔ The board should present a fair, balanced and understandable

assessment of the company’s position, performance and prospects.
➔ The board is responsible for determining the nature and extent of
the significant risks it is willing to take in achieving its strategic
objectives. The board should maintain sound risk management
and internal control systems.

➔ The board should establish formal and transparent arrangements
for considering how they should apply the corporate reporting, risk
management and internal control principles and for maintaining an
appropriate relationship with the company’s auditor.

Audit Committee
The Board should present a fair, balanced and understandable
assessment of the Company’s position, performance and prospects,
maintaining sound risk management and internal control systems and
managing an appropriate relationship with the Company’s auditors. The
Board has delegated these responsibilities to the Audit Committee.

The work undertaken by the Audit Committee, supported by the internal
audit function, helps to enable the Board to make the below statements
relating to internal control and the going concern statement on page 22.

Further information is detailed in the Audit Committee Report on
pages 29 to 32.

Internal Control
The Board is responsible for the Group’s system of internal control and
for reviewing its effectiveness, which has been undertaken during the
year. Such a system is designed to manage rather than eliminate the risk
of failure to achieve business objectives and can only provide reasonable
and not absolute assurance against material misstatement or loss.

There is an on-going process for identifying, evaluating and managing
the Group’s principal risks that has been in place throughout the year
ended 31st December 2014 and up to the date of approval of the
financial statements and which complies with the Turnbull guidance. This
process has been regularly reviewed by the Board. The Audit Committee
receives reports setting out key performance and risk indicators and
considers possible control issues brought to its attention through early
warning mechanisms which are embedded within the Operating
Companies and are reinforced by risk awareness training.

The Audit Committee also receives regular reports from the internal audit
function and recommendations for improvement are considered. The
Audit Committee’s role in this area is confined to a high level review of
the arrangements for internal control.

The Board’s agenda includes a bi-annual consideration of risk and
control and it receives reports thereon from the Audit Committee. The
emphasis is on obtaining the relevant degree of assurance and not
merely reporting by exception. The main features of the internal control
framework are detailed below.

Financial Reporting
The Board reviews the strategies of the Group and of the Operating
Companies. There is a detailed budgeting system with the annual budget
both challenged and, ultimately, approved by the Board. Monthly results
are reported against the corresponding figures for the budget and the
previous year with corrective and/or investigative action initiated by the
Board as appropriate.

Treasury Management
The Group’s treasury activities are operated within Board approved
guidelines. Facilities are approved by the Board and all transactions are
controlled and monitored. Monthly summaries of treasury management
activities are prepared for the Board. Speculative transactions are 
not undertaken.

Risk Management
The identification of major business risks is carried out in conjunction
with operating management and reviewed by the Audit Committee and
the Board. The Board regularly assesses the financial implications and
effectiveness of the control process in place to mitigate or eliminate
these risks. The Group has insurance cover where it is considered
appropriate and cost effective.

Financial Control
Each business maintains financial controls and procedures appropriate
to its own operating environment. The Group has a centralised internal
audit function, which can second additional resources from Operating

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28 Johnson Service Group PLC  Annual Report and Accounts 2014

CORPORATE GOVERNANCE REPORT CONTINUED

Companies, and which reviews the systems and procedures in all
Operating Companies and reports regularly to the Audit Committee. A
review of control procedures is undertaken in respect of all new
acquisitions, within the first three months of ownership where possible,
and action taken where necessary to bring the controls up to the level
required by the Group. The Group has clearly defined guidelines for the
review and approval of capital expenditure projects. These include annual
budgets and designated levels of authority.

Shareholders, however, the Senior Independent Director is available to
meet with Shareholders, at their request.

Feedback is provided to the Board on any issues raised at these
meetings. External brokers’ reports are circulated to the Directors. The
Shareholders’ views of the investor meetings following the interim and
final results are obtained by the Group’s brokers and circulated to 
the Board.

The Board welcomes private and Institutional Shareholders to the Annual
General Meeting, which is normally attended by all Directors, to discuss
appropriate topics during the meeting or with the Directors after the
formal proceedings have ended. The Board considers that the
Preliminary Statement, the Annual Report, including the Strategic Report
contained therein, the Interim Report and trading update statements
made during the year present a balanced and clear assessment of the
Group’s position and prospects.

The Audit Committee Report and the Nomination Committee Report also
form part of the Corporate Governance Report.

By order of the Board

Tim Morris
Company Secretary
3rd March 2015

Section D: Remuneration

Main principles:
➔ Levels of remuneration should be sufficient to attract, retain and
motivate directors of the quality required to run the company
successfully, but a company should avoid paying more than is
necessary for this purpose. A significant proportion of executive
directors’ remuneration should be structured so as to link rewards
to corporate and individual performance.

➔ There should be a formal and transparent procedure for

developing policy on executive remuneration and for fixing the
remuneration packages of individual directors. No director should
be involved in deciding his or her own remuneration.

Remuneration Committee
The Remuneration Committee is responsible for overseeing the policy
regarding executive remuneration. Further details are outlined in the
Board Report on Remuneration.

Section E: Relations with Shareholders

Main principles:
➔ There should be a dialogue with shareholders based on the

mutual understanding of objectives. The board as a whole has
responsibility for ensuring that a satisfactory dialogue with
shareholders takes place.

➔ The board should use the AGM to communicate with investors

and to encourage their participation.

Investor Relations
We are committed to communicating our strategy and activities clearly to
our Shareholders and, to that end, we maintain an active dialogue with
investors through a planned programme of investor relations activities.
The investor relations programme includes:
➔ formal presentations of full year and half-year results;
➔ briefing meetings with major institutional Shareholders after the half-
year results and preliminary statement, to ensure that the investor
community receives a balanced and complete view of our
performance and the issues we face;

➔ regular meetings between institutional investors and analysts and the

Chief Executive Officer and Chief Financial Officer to discuss
business performance;

➔ hosting investors and analysts sessions at which senior management
from relevant operating companies deliver presentations which
provide an overview of each of the individual businesses and
operations; and

➔ attendance by senior executives across the business at relevant

meetings throughout the year.

The Board is of the opinion that additional routine meetings with the
Senior Independent Director would not assist further in the dialogue with

164958 Johnson Annual Report Pt2_164958 Johnson Annual Report Pt2  06/03/2015  16:43  Page 29

AUDIT COMMITTEE REPORT

Recent years have seen a large number of corporate failures and
subsequently, and not surprisingly, a number of regulatory changes which
have reinforced the role of the Audit Committee, on behalf of the Board,
in ensuring that the Annual Report, taken as a whole, is fair, balanced
and understandable.

Section C of the Financial Reporting Council’s UK Corporate
Governance Code requires that:
➔ the board should present a fair, balanced and understandable

assessment of the company’s position, performance and prospects;
➔ the board is responsible for determining the nature and extent of the
significant risks it is willing to take in achieving its strategic objectives.
The board should maintain sound risk management and internal
control systems; and

➔ the board should establish formal and transparent arrangements for
considering how they should apply the corporate reporting, risk
management and internal control principles and for maintaining an
appropriate relationship with the company’s auditor.

The Board has delegated these responsibilities to the Audit Committee
(the “Committee”) and this report sets out how the Committee has
discharged its responsibilities.

Members of the Committee have continued to take an active role,
understanding certain aspects of the business and the risks and
challenges it faces, including spending time with the operations teams in
the field and also participating in key discussions on areas of financial
judgement. These actions have allowed the Committee to have an even
greater input, for example in the design of the internal audit programme,
and to develop greater awareness of the day-to-day challenges that the
business faces and the potential consequences of such challenges.

Set out below are details on the processes we have in place to
safeguard the independence and objectivity of our relationship with the
external auditors and the role played by internal audit to ensure we have
effective control and risk management processes.

Composition of the Committee
The Committee meets at least three times per year and also meets in
private with the external auditor. The Committee was chaired during the
year by myself, with the Chairman of the Board and the Senior
Independent Non-Executive Director both being members of the
Committee. Membership of the Committee is, therefore, in accordance
with the 2012 Code.

During the year, a formal evaluation of the Committee was conducted by
means of a questionnaire being sent to members of the Committee. The
responses were reviewed by myself and, where appropriate, actions to
improve the effectiveness of the Committee are agreed and
implemented accordingly. The results of these reviews were discussed
by the Board as a whole, with action taken as appropriate.

By virtue of my former executive and current non-executive roles (full
details of which are set out on page 20), together with the results of 
the questionnaire, the Board considers that I have recent and relevant
financial experience and also that all members of the Committee 
are independent.

Responsibilities of the Committee
The Committee is responsible for:
➔ ensuring that the interests of Shareholders are protected in relation

to financial reporting and internal control;

Annual Report and Accounts 2014 Johnson Service Group PLC  29

➔ monitoring the financial reporting process, the consolidation process
and the integrity of the annual and interim financial statements;
➔ monitoring any formal announcements relating to the Company’s

financial performance;

➔ reviewing and challenging, as necessary, the judgements and actions

of management in relation to the financial statements;

➔ monitoring, reviewing and concluding upon the system of internal

control, including the work of internal audit;

➔ ensuring the maintenance of a control environment and the

appropriate management of risk;

➔ recommendation of appointment of and liaison with the 

external auditor;

➔ reviewing and setting the terms of engagement and the remuneration

of the external auditor;

➔ annual review and monitoring of external auditor independence and

objectivity and the effectiveness of the audit process;

➔ development and implementation of policy on the engagement of the

external auditor to supply non-audit services;

➔ reviewing the Group’s systems and controls for the prevention and

detection of fraud or bribery; and

➔ reviewing of arrangements under which employees may, in

confidence, raise concerns about possible improprieties in matters of
financial reporting or other matters ensuring that arrangements are in
place for the proportionate and independent investigation and
appropriate follow-up action.

The Committee reports to the Board on how we have discharged 
our responsibilities.

The full terms of reference are available on the Company’s website, or on
request to the Company Secretary.

What the Committee did in 2014
In 2014, the Committee discharged its responsibilities by:
➔ reviewing the Group’s draft financial statements, preliminary

statement and interim results statement prior to Board approval and
reviewing the external auditors’ reports thereon;

➔ reviewing the plan of the external auditor for the audit of the Group

accounts, confirmations of auditor independence and proposed audit
fee and approving terms of engagement for the audit;

➔ considering the effectiveness and independence of the external
auditor and recommending to the Board the re-appointment of
PricewaterhouseCoopers LLP as external auditor;
➔ considering and agreeing the annual internal audit plan;
➔ reviewing internal audit’s progress and reports on its work during 

the year;

➔ considering the review of material business risks, including reviewing
internal control processes used to identify and monitor principal risks
and uncertainties;

➔ reviewing the Executive and Non-Executive Directors’ expenses;
➔ monitoring the reporting, and follow up of items reported, on the
employee hotline established in line with the Code of Ethics; and

➔ reviewing the Committee’s composition and confirming that 
there is sufficient expertise and resource for it to fulfil its 
responsibilities effectively.

The Committee considered the 2014 Annual Report and Accounts in
the context of whether they were fair, balanced and understandable and
were able to report to the Board that the 2014 Annual Report and
Accounts, when taken as a whole, were fair, balanced and
understandable on the basis that the description of the business agrees
with our own understanding, the risks reflect the issues that concern us,
appropriate weight has been given to the ‘good and bad’ news, the
discussion of performance properly reflects the ‘story’ of the year and

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30 Johnson Service Group PLC  Annual Report and Accounts 2014

AUDIT COMMITTEE REPORT CONTINUED

that there is a clear and well-articulated link between all areas 
of disclosure.

Significant Issues Considered in Relation to the Financial Statements
During the year the Committee, management and the external auditor
considered and concluded on what the significant risks and issues 
were in relation to the financial statements and how these would 
be addressed.

Impairment Reviews
As part of the year end process, the Group tests whether goodwill has
suffered any impairment, in accordance with the accounting policy stated
within this Annual Report. The impairment test is undertaken at a cash
generating unit (“CGU”) level – being Textile Rental and Drycleaning. The
Committee considered the impairment review process in detail.

It was acknowledged that the pre-tax discount rate used in the 2014
calculation is 4.83%, compared to a prior year rate of 6.87%. The
discount rate takes into account, inter alia, the risk free rate of return
(derived from a 20 year government bond rate) and a predictive Beta
factor for the Group, both of which have reduced in the current year
although the decrease in the Beta factor is more noticeable.

The Beta factor used in the 2014 calculation was 0.37 compared to
0.65 in the prior year. The Committee were satisfied that the rate had
been obtained from a third party source and is used for both CGUs. The
Committee considered whether it was appropriate to use the same Beta
factor for both CGUs and, on the basis that the Beta factor at the end of
January 2015 was 0.34, which suggests the Drycleaning restructuring
announcement in January 2015 had little, if any, impact, concluded that it
was appropriate.

The recoverable amount of a CGU is based on value-in-use calculations.
The Committee were satisfied that, with regards to the Textile Rental
CGU, the discounted net present value of future cash flows provides
significant headroom over the goodwill carrying value, and hence no
impairment was required.

The Committee also noted that, within the Drycleaning CGU, the
recoverable amount exceeded the carrying value by only £1.3 million, and
hence a sensitivity analysis had subsequently been performed that
showed if the discount rate was to increase by 0.6%, or long term
growth reduce by 1.0%, then the recoverable amount would equal the
carrying value. Given the low level of headroom and the changes in
assumptions required to reduce this headroom to nil, an alternative
valuation method had then been considered. Using fair value less costs
to dispose, which allows for the benefit of the restructuring announced in
January 2015 to be taken into account, the headroom increased to
£9.8m. For this headroom to reduce to nil either the discount rate would
need to increase to 8.75% or the growth rate reduce to negative 3.25%.
As a result of this, the Committee were satisfied that no impairment
should be recognised within these financial statements and that
appropriate disclosures had been provided.

Additionally, there are further provisions for onerous property leases 
held by the Group. The Committee considered the additional provisioning
and utilisation of these provisions during the year, together with the
remaining provision as at 31st December 2014, and concluded that they 
were reasonable.

The Group continues to recognise provisions for remediation costs to be
incurred in relation to environmental issues identified at a number of the
Group’s properties. The Committee considered the movement in the
provision during the year together with the level of provision remaining as
at the year end and concluded that they were reasonable.

Acquisition Accounting
On 3rd March 2014, the Group acquired 100% of the share capital of
Bourne Services Group Limited, along with its subsidiary Bourne Textile
Services Limited (together ‘Bourne’), for total gross consideration of
£26.7 million.

The Committee considered the methodology and assumptions used by
management in determining the fair value of the customer contracts and
relationships acquired, as this was considered by the Committee to be
the area of most significant judgement. The Committee were satisfied
that the fair value had been calculated based upon relevant historical and
prospective information and financial data specific to the business
combination, with an appropriate discount factor applied. The Committee
further considered the accounting policy realignment adjustments and,
again, considered them to be reasonable.

The Committee also reviewed the disclosures relating to 
the acquisition included within the Annual Report and were in agreement
that the requirements of IFRS 3, ‘Business Combinations’ had been
satisfied.

Post-employment Benefit Obligations
The valuation of pension scheme liabilities is based on statistical and
actuarial calculations, using various assumptions including discount rates,
inflation, life expectancy of scheme members and cash commutations.
The Committee reviewed the actuarial assumptions underpinning the
valuation and were satisfied that all assumptions are within ranges
considered generally acceptable given the size, demographic and
duration of the scheme.

The Committee also considered the effect of the Johnson Group
Defined Benefit Scheme (“JGDBS”) closing to future accrual, on
31st December 2014. As a result of the closure, benefits for previously
active members will now be linked to inflationary increases and this
change has resulted in liabilities increasing (as pensionable salaries were
frozen in 2010). The impact of the closure has been recorded as a past
service cost and has been presented as an exceptional item within the
Income Statement. The Committee considered the measurement of the
past service cost and the disclosures included within the Annual Report
and, having regard to advice from the Group’s actuary, were satisfied
they were appropriate.

Property and Environmental Provisions
The restructuring of the Drycleaning segment in 2012 resulted in a total
exceptional charge to the Income Statement of £23.9 million, with
£22.7 million being recognised in 2012 and the remaining £1.2 million
incurred in 2013. The remaining provision as at 31st December 2014
totalled £8.7 million. The Committee considered the movement in the
provision during the year together with the level of provision remaining as
at the year end and concluded that they were reasonable.

Accounting for Complex Customer Arrangements
As in previous years, the Group offers rebates to certain key customers
based on agreed fixed rates relating to the volumes of services provided
and goods purchased. The Committee does not consider the Group’s
rebates to be highly complex as: they are volume related; there are
written agreements with customers; and historically rebates estimates
have been seen to be accurate. However, following recent FRC guidance
this has been highlighted as an area of focus. The Committee has

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Annual Report and Accounts 2014 Johnson Service Group PLC  31

discussed any judgements made in accruing customer rebates with
management and the auditors. The Committee is satisfied that the
amounts of expense accrued are appropriate.

Income Taxes
Judgement is required in determining the provision for income taxes as
there are many transactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business. The
Committee discussed the effective tax rate for the year and noted that it
was higher than the standard rate of UK taxation, primarily as a result of
adjustments made in respect of prior years and the affect of expenses
that were not deductible for tax purposes. The Committee concluded
that the judgements made in relation to taxation were reasonable.

Going Concern
The Group has to comply with a number of financial covenants that
relate to its financing structure. Reaching a conclusion on the reliability of
the budgets prepared by management is considered important to the
Committee to ensure that covenants will not be breached and the Group
will remain a going concern.

The Committee therefore reviewed, challenged and concluded upon the
Group’s going concern review including giving due consideration to the
appropriateness of key judgements, assumptions and estimates
underlying the budgets that underpin the review and a review of
compliance with key financial covenants.

Assessment of External Auditor Effectiveness
The Committee reviewed the external auditor’s performance and on-
going independence, taking into account input from management,
consideration of responses to questions from the Committee and the
audit findings reported to the Committee.

Based on this information the Committee concluded that the external
audit process was operating effectively and PricewaterhouseCoopers
LLP continued to prove effective in its role as external auditor.

Appointment of the External Auditor and Approach to how Objectivity and
Independence are Safeguarded
The Company has adopted a policy on the independence of auditors
which is consistent with the ethical standards published by the Audit
Practices Board. A key issue for the Committee that may impair auditor
independence, and the auditor’s objective opinion on the Group’s
financial statements, is the engagement of the external auditor for the
provision of non-audit services.

Non-Audit Services
The Committee has adopted a policy on the engagement of the external
auditor for the provision of non-audit services and reviews this annually.
The policy is designed to ensure that such engagements do not result in
the creation of a mutuality of interest between the external auditor and
the Company, that a transparent process and reporting structure is
established to enable the Committee to monitor policy compliance and
that unnecessary restrictions on the engagement of auditors for non-
audit services is avoided where the provision of advice is commercially
sensible and is more cost effective than other providers. The policy
categorises the provision of non-audit services into three areas:
➔ normally performed by the auditor;
➔ may be performed by the auditor; and
➔ that normally performed by another provider.

With reference to this policy, the selection of professional service firms
for non-audit work is at the discretion of the management, taking into
account which firm is best placed to perform such work to meet the
interests of the Company and Shareholders and with regard to ensuring
that independence is not compromised.

The total fees invoiced by the external auditor during the year under
review amounted to £592,000 (2013: £1,299,000), of which £303,000
(2013: £940,000) related to non-audit services. Of these non-audit
services, fees of £174,000 (2013: £816,000) related to one-off and
non-recurring services, largely in relation to the acquisition of Bourne
Services Group Limited in 2014 and, following a competitive tender
process, the disposal of the Facilities Management division in 2013, and
where it was considered by the Committee to be commercially sensible
and more cost effective to use PricewaterhouseCoopers LLP than an
alternative provider. Full details are set out in Note 3 to the consolidated
financial statements.

Independence Safeguards
In accordance with best practice and professional standards, the external
auditor is required to adhere to a rotation policy whereby the Senior
Statutory Auditor (audit engagement partner) is rotated after five years.
The current Senior Statutory Auditor was appointed in 2010 and will
step down later this year. The external auditor is also required to assess
periodically whether, in their professional opinion, they are independent
and those views are shared with the Committee. The Committee has
authority to take independent advice as it determines necessary in order
to resolve issues on auditor independence. No such advice was required
during the year.

Independence Assessment by the Committee
The Committee is satisfied that the independence of the external auditor
is not impaired due to the fact that the audit engagement partner
rotation policy has been complied with; the level of fees paid for non-
audit services was of a level that does not present any on-going threat to
their independence and separate external firms are appointed for certain
other advisory services. In addition, the Committee meets with the
external auditor during the year without the presence of management
and I have had regular contact with the audit engagement partner during
the year.

Re-appointment of the External Auditor
The re-appointment of PricewaterhouseCoopers LLP as the Group’s
external auditor was reviewed during the year. The Committee has
assessed the performance, objectivity and independence of the external
auditor which underpins its recommendation to the Board, to propose to
shareholders, the re-appointment of PricewaterhouseCoopers LLP as
auditor until the conclusion of the AGM in 2016. There are no
contractual restrictions over choice of auditor.

Role of Internal Audit
Internal audit has a Group-wide remit and is independent of the business
operations. It undertakes an on-going programme to provide assurance
on the adequacy of internal control and risk management processes
across the Group’s operations. Internal audit is responsible for reviewing
and reporting on the effectiveness of internal controls and risk
management systems to the Committee and, ultimately, the Board.
Internal audit attend Committee meetings to present the findings of such
reviews at regular intervals throughout the year and report on
performance against the agreed annual internal audit plan, such plans
being agreed during the year by the Committee.

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32 Johnson Service Group PLC  Annual Report and Accounts 2014

AUDIT COMMITTEE REPORT CONTINUED

Internal Control and Risk Management
The Board is ultimately responsible for the overall system of internal
control for the Group and for reviewing its effectiveness. The Board has
delegated day to day responsibility for this to the Committee. The
Committee carries out a review, at least annually, covering all material
controls including financial, operational and compliance controls and risk
management systems. The system of internal control is designed to
mitigate rather than eliminate the risk of failure to achieve business
objectives and can only provide reasonable and not absolute assurance
against material misstatement or loss.

challenged and approved by the Board. Monthly results are reported
against the corresponding figures for the budget and the previous 
year with corrective action initiated by the Board as appropriate. All
financial information published by the Group is subject to approval by 
the Committee.

The Group’s treasury activities are operated within Board approved
guidelines. Facilities are approved by the Board and all transactions are
controlled and monitored. Monthly summaries of treasury management
activities are prepared for the Board. Speculative transactions are 
not undertaken.

There is an on-going process for identifying, evaluating and managing the
Group’s significant risks that has been in place throughout the year ended
31st December 2014 and up to the date of approval of the financial
statements. The Committee receives reports setting out key performance
and risk indicators and considers possible control issues brought to its
attention by early warning mechanisms which are embedded within the
operational units and reinforced by risk awareness training.

The key elements of the Group’s on-going processes for the provision of
effective internal control and risk management systems, in place
throughout the year and at the date of this Report, include:
➔ regular Board meetings to consider matters reserved for

Directors’ consideration;

➔ regular management reporting, providing a balanced assessment of

key risks and controls;

➔ an annual Board review of corporate strategy, including a review of
material business risks and uncertainties facing the business;
➔ established organisational structure with clearly defined lines of

responsibility and levels of authority;

➔ an internal audit function which implements the annual internal audit
plan and provides independent assurance to executive management,
the Committee and the Board on the effectiveness of internal
controls and risk management;

➔ documented policies and procedures;
➔ regular review by the Board of financial budgets, forecasts and
covenants with performance reported to the Board monthly; and
➔ a detailed investment process for major projects, including capital
investment coupled with a post investment appraisal analysis.

In reviewing the effectiveness of the system of internal control the
Committee has:
➔ received six-monthly reports, compiled by the Head of Internal Audit
following discussion with key senior managers, that set out the key
risks facing the Group and indicate whether controls and risk
management processes in each business unit have operated
satisfactorily. These returns are reviewed in detail, challenged 
where appropriate and approved by the Committee for use in the
Annual Report;

➔ regularly reviewed the financial and accounting controls;
➔ reviewed the internal audit reports;
➔ monitored management’s responsiveness to the findings and

recommendations of the Head of Internal Audit; and

➔ met with internal audit, without management being present, to

discuss internal audits remit and any issues arising from internal
audits carried out.

No significant issues were identified.

In respect of Group financial reporting, the finance department is
responsible for preparing the Group financial statements using a well-
established consolidation process and ensuring that accounting policies
are in accordance with International Financial Reporting Standards.
There is a detailed budgeting system with an annual budget both

There have been no changes in the Company’s internal control over
financial reporting during the year under review that have materially
affected, or are reasonably likely to materially affect, the Company’s
control over financial reporting.

The Board, with advice from the Committee, is satisfied that an effective
system of internal controls and risk management processes are in place
which enable the Company to identify, evaluate and manage key risks.
These processes have been in place since the start of the financial year
and up to the date of approval of the accounts. Further details of risk
management frameworks and specific material risks and uncertainties
facing the business can be found on pages 16 to 19.

Bribery Act 2010
The Bribery Act 2010 (the ‘Act’) came into force on 1st July 2011, and
repeals all previous statutory and common law provisions in relation to
bribery, instead replacing them with the crimes of bribery, being bribed,
the bribery of foreign public officials, and the failure of a commercial
organisation to prevent bribery on its behalf. However, a defence to any
such corporate failure offence is possible if it can be shown that
adequate procedures were in place at the time.

The Group is committed to conducting its business with the highest
degree of integrity. This commitment includes a zero tolerance approach
towards all forms of bribery, corruption, fraud and theft.

Prior to the above date, the Group conducted a preliminary risk
assessment, adopted an appropriate policy and re-enforced its code of
ethics. Appropriate Board approved procedures are now in place to
prevent employees and other associated persons committing offences
under the Act. Engaging in fraud, bribery or corruption is unlawful and
any employee, director or officer found to have breached the code of
conduct will be liable to disciplinary action which may result in dismissal
or other serious sanctions. Breaches of the code of conduct by third
parties may result in immediate termination for breach of all contracts
with the Group. These procedures are subject to regular monitoring 
and review.

Whistleblowing
The Group has in place a whistleblowing policy which encourages
employees to report any malpractice or illegal facts or omissions or
matters of similar concern by other employees or former employees,
contractors, suppliers or advisers using internal mechanisms for reporting.
The policy acts as a mechanism to report any ethical wrongdoing or
malpractice or suspicion which may amount to ethical wrongdoing or
malpractice. Examples of ethical wrongdoing or malpractice include
bribery, corruption, fraud, dishonesty and illegal practices which may
endanger employees or other parties. There have been no material
instances of whistleblowing during the year under review.

Bill Shannon
Chairman, Audit Committee
3rd March 2015

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Annual Report and Accounts 2014 Johnson Service Group PLC  33

Diversity
Whilst we pursue diversity, including gender diversity, throughout the
business, and although the Board endorses the aspirations of the Davies
Review on Women on Boards, we are not committing to any specific
targets. Instead, and when applicable, we will seek to use executive
search firms who have signed up to the voluntary code of conduct
setting out the seven key principles of best practice to abide by
throughout the recruitment process and we will continue to follow a
policy of appointing talented people at every level to deliver high
performance. We will also ensure that our development in this area is
consistent with our own strategic objectives and is enhancing in terms of
Board effectiveness.

Paul Moody
Chairman, Nomination Committee
3rd March 2015

NOMINATION COMMITTEE REPORT

The Nomination Committee (the “Committee”) is responsible for
monitoring the performance, appropriateness and future succession of
the Company’s executive and Board talent.

Appointments to the Board are recommended, as appropriate, by the
Committee. Board appointments are subject to approval by the Board as
a whole.

The Committee met once during 2014.

Composition
In compliance with the 2012 Code, the members of the Committee are
wholly independent and comprise the Chairman and the Non-Executive
Directors. Prior to his retirement as Executive Chairman on 1st May
2014, John Talbot chaired the Committee. Following John’s retirement,
the Committee was chaired by myself.

Roles and Responsibilities
The principal responsibilities of the Committee are:
➔ reviewing the Board structure, size and composition;
➔ identifying and nominating candidates to fill Board vacancies;
➔ keeping up to date and fully aware of the strategic and commercial
changes affecting the Group and the markets in which it operates;
➔ keeping under review the leadership needs of the business with a
view to ensuring the continued ability to compete effectively in 
the marketplace;

➔ considering the continuing service of a Director; and
➔ providing recommendations for reappointment of Directors retiring 

by rotation.

The Committee undertakes its responsibilities proactively, recognising it
is important to plan Board succession well in advance, and to ensure that
the Company’s Board and executive leadership skills are fully aligned to
the Company’s long-term strategy. The Committee therefore takes care
to ensure that there is a continuous pipeline of high-performing and
executive talent beneath Board level.

What the Committee did in 2014
The main focus of the Committee’s work in 2014 included:
➔ selecting suitable candidates to succeed John Talbot, previously

Executive Chairman, in the separate roles of Chief Executive Officer
and Non-Executive Chairman:
(cid:129)

the Committee recommended to the Board the appointment of
Chris Sander, previously Managing Director of the Textile Services
Division, to the role of Chief Executive Officer. The Board
approved the recommendation on 3rd January 2014 and Chris
was appointed Chief Executive Officer with immediate effect; and
the Committee recommended to the Board the appointment of
myself, previously a Non-Executive Director of the Group, to the
role of Non-Executive Chairman. The Board approved the
recommendation on 7th February 2014 and I commenced in my
role as Non-Executive Chairman on 1st May 2014;

(cid:129)

➔ reviewing the senior management structure and talent below Board

level; and

➔ reviewing the Committee’s terms of reference, and conducting the

annual review of the Committee’s performance.

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34 Johnson Service Group PLC  Annual Report and Accounts 2014

BOARD REPORT ON REMUNERATION

Prior to 13th December 2013, Premium Listed companies incorporated in the
UK were required to fully apply the Listing Rules of the Financial Conduct
Authority (the “Listing Rules”) with respect to the disclosure of directors’
remuneration. From 13th December 2013, whilst certain aspects of the Listing
Rules remain in force with respect to the disclosure of directors’
remuneration, most remuneration-related disclosures for Premium Listed
companies incorporated in the UK will only need to comply with the new BIS
Directors’ Remuneration Reporting Regulations (the “Remuneration
Regulations”) when making disclosures regarding directors’ remuneration.

that a significant portion of total remuneration is performance related,
based on a mixture of internal targets linked to the Company’s strategic
business drivers (which can be easily measured, understood and
accepted by both executives and Shareholders) and appropriate external
comparator groups.

The Committee considers that the targets set for the different elements
of performance related remuneration are both appropriate and
demanding in the context of the business environment and the
challenges with which the Group is faced.

As an AIM listed company, the Company is not required to fully apply
either the Listing Rules or the Remuneration Regulations, and hence is
not required to present a Board Report on Remuneration in accordance
with those rules. Nevertheless, the Board considers it appropriate for the
Company to provide Shareholders with information with respect to
Executive remuneration.

As an AIM listed company, the Company does not require Shareholder
approval for the adoption of new employee share plans, however,
proposals for new schemes are discussed with major Shareholders to
gain their views before being implemented. Full details of all schemes are
included within this report, which is subject to approval by Shareholders
at the Annual General Meeting.

The information presented within this Board Report on Remuneration has,
therefore, been prepared on a consistent basis with that in prior years.
This report is unaudited, except where otherwise stated.

Remuneration Committee
The Remuneration Committee (the “Committee”) currently consists of
the Chairman and the Non-Executive Directors. The Committee is
chaired by myself. None of the members of the Committee have or had
any personal financial interests in the Company (other than as
Shareholders), conflicts of interests arising from cross-directorships or
day to day involvement in running the business.

The Committee is responsible for overseeing the policy regarding
Executive remuneration and for determining the remuneration packages
for the Executive Directors.

Periodically, the Committee engage PricewaterhouseCoopers LLP (PwC)
to provide guidance on standard market practice with regard to
Executive remuneration. PwC has also provided factual reward surveys,
based on a comparator group determined by the Remuneration
Committee, which were utilised for benchmarking purposes.

Remuneration Policy
The Committee reviews the Company’s remuneration philosophy and
structure each year to ensure that the remuneration framework remains
effective in supporting the Company’s business objectives, in line with
best practice, and fairly rewards individuals for the contribution that they
make to the business, having regard to the size and complexity of the
Group’s operations and the need to retain, motivate and attract
employees of the highest calibre.

The Committee intends that base salary and total remuneration of
Executive Directors should be in line with the market. Remuneration is
benchmarked against rewards available for equivalent roles in a suitable
comparator group with the aim of paying neither significantly above nor
below the median for each element of remuneration. The Committee
also considers general pay and employment conditions of all employees
within the Group and is sensitive to these, to prevailing market
conditions, and to governance trends when assessing the level of
salaries and remuneration packages of Executive Directors.

The total remuneration package links corporate and individual
performance with an appropriate balance between short and long term
elements, and fixed and variable components. The policy is designed to
incentivise executives to meet the Company’s strategic objectives, such

Malus and Clawback
To reflect emergent best practice and to align with Shareholder interests,
the Committee considers it appropriate to introduce malus and clawback
provisions in relation to all prospective annual bonus and LTIP schemes
(together “Awards”).

The provisions, which only apply to Awards granted on or after
1st January 2015 enable the Committee to decide, up until the second
anniversary of an Award becoming payable, in circumstances in which
the Committee considers it appropriate, to reduce the quantum of an
Award, cancel an Award or impose further conditions on an Award. The
provisions also enable the Committee to decide, up until the second
anniversary of an Award becoming payable that, in the relevant
circumstances, the participant must repay to the Company (or any
person nominated by the Company) some or all of the cash or shares
received under an Award.

The circumstances in which the Committee may apply the “malus” and
“clawback” provisions include, but are not limited to, a material
misstatement of the Company’s audited financial results, a miscalculation
of the extent to which a performance target, applying to any Award
granted on or after 1st January 2015, has been met, a material failure of
risk management by the Company or any group company and serious
reputational damage to the Company or any group company.

Personal Shareholding Requirement and Holding Periods
In order that their interests are linked with those of Shareholders,
Executive Directors are expected to build up and maintain a personal
shareholding in the Company, equal to at least the value of base salary.
Non-Executive Directors are encouraged, but are not required, to hold a
personal shareholding in the Company.

The Committee has considered whether Executive Directors should be
required to hold any shares for a further period after vesting or exercise,
subject to the need to finance any costs of acquisition and associated
tax liabilities. It was determined, for the present time at least, that a
further restriction over the personal shareholding requirement 
was unnecessary.

Components of Executive Remuneration
The current remuneration of Executive Directors comprises the following
five components:
➔ basic salary;
➔ annual bonus;
➔ taxable benefits;

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➔ share options (including the Long-Term Incentive Plan (Approved and

Unapproved sections) and the Sharesave Plan); and
➔ pension arrangements (only basic salary is pensionable).

Details of how the various components of remuneration are delivered are
set out below.

Basic Salary
Basic salary represents a value which reflects the Remuneration
Committee’s assessment of the market rate for relevant positions and
the individual Director’s experience and value to the business. Annual
reviews are considered against published information for similar sized
groups and the level of increases awarded to staff throughout the Group.

Annual Bonus
The Group operates a Short Term Incentive Programme (STIP) for senior
executives, which provides for a performance related bonus based on
the Group’s results and, in certain cases, the result of the relevant
businesses for which they may be responsible. The individual targets for
the Executive Directors are established by the Committee with a view to
maximising Shareholder value and meeting other Group objectives.
Subject to the achievement of the targets, the annual performance
related bonus can represent up to a maximum of 100% of basic salary.

The Chairman and the Non-Executive Directors are not eligible to
participate in the STIP.

The Committee reviews, on an annual basis, the performance criteria for
each Executive Director to ensure that they remain appropriate.

Taxable Benefits
Taxable benefits, which are not performance related, principally 
include the provision of a car, private medical insurance and, when
necessary, payments for the curtailment of holiday as a result of 
business requirements.

Share Options
2009 Long-Term Incentive Plan (the ‘LTIP’)
To incentivise certain employees to maximise Shareholder value and to
ensure the employees’ services are secured, the Company has adopted
the LTIP, which was approved by a resolution of the Board on 7th May
2009. The rules of the LTIP largely mirror the Johnson Service Group
Long-Term Growth Plan which was approved by Shareholders on
4th July 2008. All employees (including Executive Directors) of the
Group are eligible to participate in the LTIP, although in practice,
participants will be limited to Executive Directors and Senior
Management. Participants in the LTIP will be selected by the
Remuneration Committee.

Eligible participants 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. Vesting
of awards granted under the LTIP will normally occur after a three year
performance period.

2011 Award
Awards were granted to Executive Directors and certain Senior
Management on 6th January 2011 with an exercise price of nil. The
performance period ran from the date of grant until the end of the
30 day period following the announcement of the Company’s preliminary
results for the year ended 31st December 2013. The performance
conditions were linked to the Company’s Total Shareholder Return

(“TSR”) which, for the purpose of this 2011 Award only, is defined as the
Company’s share price plus any dividends paid on or after 16th
November 2009 and any other capital distributions over the
performance period.

The 2011 Award would vest in two tranches:
➔ One third of the award would vest if at any time during the

performance period, the average TSR was equal to, or exceeded, 40
pence over any consecutive 30 day period (Floating TSR).

➔ The remaining two thirds of the award would vest by reference to the

Company’s average TSR for the 30 day period following
announcement of the Company’s preliminary results for the year
ending 31st December 2013 (Final TSR). None of the remaining two
thirds of the award would vest if the average Final TSR was equal to
or less than 40 pence. The whole of the remaining two thirds of the
award would vest if the average Final TSR was equal to or greater
than 60 pence. Vesting of the award would be on a straight line basis
between these points.

Floating TSR could be tested at any time during the performance period.
Final TSR could only be tested once, following the announcement of the
Company’s preliminary results for the year ending 31st December 2013.

The performance conditions outlined above were selected to incentivise
award holders to maximise Shareholder value. The chart below
demonstrates the effect on vesting of the above performance conditions:

Vesting
33.33%

Vesting
100%

40p

JSG TSR

60p

The Floating TSR condition was achieved in September 2013 and one
third of the award vested. The Final TSR condition was tested at the end
of the 30 day period following announcement of the Company’s
preliminary results for the year ending 31st December 2013 and the
remaining two thirds of the award vested in full.

With the exception of one member of senior management, all Approved
LTIP awards have been exercised or have lapsed as at the date of this
report.

2014 Award
Awards were granted to Executive Directors and certain Senior
Management on 13th March 2014 with an exercise price of nil. The
performance period is the three financial years starting 1st January
2014 and ending 31st December 2016. The performance conditions
are linked to the Company’s Total Shareholder Return and Earnings 
per Share.

The 2014 Award will vest in two tranches:
➔ 50 per cent of the award will vest by reference to the annualised

growth in the Company’s net return index (“TSR”) over the

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36 Johnson Service Group PLC  Annual Report and Accounts 2014

BOARD REPORT ON REMUNERATION CONTINUED

performance period relative to the annualised growth in the FTSE
AIM All-Share Industrial Goods and Services net return index (the
“Index”) over the performance period. None of the award will vest if
the TSR growth is less than the Index growth. One quarter of the
award will vest if the TSR growth is equal to the Index growth. The
whole of the award will vest if the TSR growth is at least seven per
cent above the Index growth. Vesting of the award will be on a
straight line basis between these points.

➔ The remaining 50 per cent of the award will vest by reference to the
annualised growth in the Company’s adjusted fully diluted earnings
per share from continuing operations (“EPS”) over the performance
period relative to the annualised growth in the retail price index
(“RPI”) over the performance period. None of the remaining award will
vest if the EPS growth is less than three per cent above the RPI
growth. One quarter of the remaining award will vest if the EPS
growth three per cent above the RPI growth. The whole of the
remaining award will vest if the EPS growth is at least eight per cent
above the RPI growth. Vesting of the remaining award will be on a
straight line basis if EPS growth is between three per cent and
eight per cent above the RPI growth.

For the purpose of calculating TSR and Index growth, the average of the
net return index over the dealing days falling in the period of one month
ending on the last day of the performance period will be compared to the
average of the net return index over the dealing days falling in the period
of one month immediately preceding the first day of the performance
period, in each respect of the Company and for the FTSE AIM All-Share
Industrial Goods and Services index.

For the purpose of calculating EPS growth, the Company’s adjusted fully
diluted earnings per share from continuing operations for the final
financial year in the performance period will be compared to the
Company’s adjusted fully diluted earnings per share from continuing
operations for the financial year immediately before the start of the
performance period.

For the purpose of calculating RPI growth, the retail prices index value
for the last month of the final financial year in the performance period
will be compared to the retail prices index value for the last month of the
financial year immediately before the start of the performance period.

As was the case with the 2011 Award, the performance conditions for
the 2014 Award have been selected to incentivise award holders to
maximise Shareholder value. The charts below demonstrate the effect on
vesting of the above performance conditions:

Vesting
25% Vesting
100%

+3%

+8%

Relative Annualised EPS Growth

Vesting
25%

Vesting
100%

+0%

+7%

Relative Annualised TSR Growth 

2009 Long-Term Incentive Plan Approved Section (the ‘Approved LTIP’)
The Approved LTIP was approved by a resolution of the Board on 7th
May 2009, and received approval from HM Revenue & Customs on 25th
June 2009. The Approved LTIP is linked to the LTIP award referred to
above. The linked awards give the holder the same potential gross gain
as if they had just received the LTIP award, however, as the Approved
LTIP is tax favoured, in certain circumstances all or part of any gain on
the LTIP award will be received through the Approved LTIP and therefore
taxed at a lower rate or even zero.

The actual number of shares the award holder will receive when
exercising options will depend on the date of exercise, whether the
performance conditions of the LTIP are achieved and the extent to which
they are achieved, and also on how much of the gain (if any) can be
delivered through the Approved LTIP. Part of the total award will be
forfeited once the gain is determined, however, this will still leave the
holder with the same gross gain that would have been received had only
an award been made under the LTIP arrangement.

On 7th January 2011, the Executive Directors (excluding the Executive
Chairman) and certain Senior Management were granted awards under
the Approved LTIP, linked to the awards granted on 6th January 2011
under the LTIP, at an exercise price of 30.75 pence. With the exception
of one member of Senior Management, all Approved LTIP awards have
been exercised or have lapsed as at the date of this report.

Sharesave Plan (the ‘SAYE Scheme’)
The SAYE Scheme is open to all employees, including Executive
Directors who have completed two year’s service at the date of invitation
and who open an approved savings contract.

When the savings contract is started, options are granted to acquire the
number of shares that the total savings will buy when the savings
contract matures. Details of the exercise periods and normal expiry dates
are given in note 26 of the consolidated financial statements.

Fixed and Variable Remuneration
As stated above, the Company’s policy is to provide a total remuneration
package that links corporate and individual performance with an
appropriate balance between short and long term elements, and fixed
and variable components.

By way of illustration, the balance between the fixed and variable
elements for the Executive Directors who were in office at
31st December 2014 is shown in the charts below for varying levels of
vesting of the 2009 Long-Term Incentive Plan that was granted in 2011,
and subsequently vested partly in 2013 and partly in 2014. Broadly,

164958 Johnson Annual Report Pt2_164958 Johnson Annual Report Pt2  06/03/2015  16:43  Page 37

Annual Report and Accounts 2014 Johnson Service Group PLC  37

The above illustration of the current Executive Directors’ percentage of
fixed and variable remuneration is based on a number of assumptions:
➔ fixed remuneration includes basic salary only, and represents actual

annual salary for 2014;

➔ variable remuneration includes annual bonus (assumed at actual
achievement for 2014 within this illustration) and vested share
options (LTIP); and

➔ the amount included in respect of the LTIP represents:

there is a 59:41 split between fixed and variable pay if none of the LTIP
were to vest and a 29:71 split between fixed and variable pay at
maximum performance, showing the high proportion of performance-
related pay that is ‘at risk’ in the total remuneration package.

41%

59%

No LTIP vesting

52%

48%

LTIP vesting at a TSR of 40 pence 

29%

71%

LTIP vesting at a TSR of 60 pence 

Variable

Fixed

(cid:129)

an annualised gross gain over the three year performance period
at an assumed TSR of less than 40 pence, at 40 pence and at
60 pence; and

(cid:129) exercise at the end of the three year performance period at a

share price assumed to be equal to TSR.

Non-Executive Directors
The Chairman and Non-Executive Directors receive fees which are set
by the Board and which are commensurate with their experience and
contribution to the Group. The Chairman and Non-Executive Directors do
not participate in decisions regarding their own remuneration. They do
not participate in any of the Group’s pension, share option or
performance related bonus schemes.

Service Contracts
In the event of termination, without cause, the Company has a
contractual obligation to compensate the Director for the unexpired
period of his or her notice. The Company will seek to reduce this
payment by means of the Director’s duty to mitigate this payment
wherever possible.

Executive Directors
Chris Sander is employed under a service agreement dated 6th July
2004, as amended by a Variation Letter dated 20th October 2009 and
as further amended on the appointment to Chief Executive Officer on
3rd January 2014, which has no fixed expiry date and provides that the
Company is required to give twelve months’ notice and Chris Sander is
required to give six months’ notice.

Yvonne Monaghan is employed under a service agreement dated
14th January 2004, as amended with the appointment to Chief Financial
Officer on 31st August 2007, which has no fixed expiry date and
provides that the Company is required to give twelve months’ notice and
Yvonne Monaghan is required to give six months’ notice.

Chairman and Non-Executive Directors
The Chairman and Non-Executive Directors each have fixed term appointments. Each has a letter of appointment, dated as set out below, which
requires the Company to provide three months’ notice, the Chairman to provide at least three months’ notice and each Non-Executive Director to
provide at least one months’ notice.

At 31st December 2014, the unexpired terms of the Chairman and Non-Executive Directors letters of appointment were:

Paul Moody
Michael Del Mar
Bill Shannon*

Date of Latest Letter
of Appointment

30th April 2014
26th February 2014
28th February 2012

Service Agreement
Start Date

1st May 2014
1st June 2014
8th May 2012

Service Agreement
End Date

Unexpired Term at
31st December 2014

30th April 2017
31st May 2015
7th May 2015

2 years 4 months
5 months
4 months

* On 24th February 2015, a new letter of appointment was issued which extended the unexpired term above by 12 months.

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38 Johnson Service Group PLC  Annual Report and Accounts 2014

BOARD REPORT ON REMUNERATION CONTINUED

Interests in Share Capital
The interests of the Directors who were in office at 31st December 2014, together with the interests of their close family, in the shares of the
Company at the commencement, or date of appointment if later, and close of the financial year, were as follows:

Beneficial
Paul Moody
Chris Sander
Yvonne Monaghan
Michael Del Mar
Bill Shannon

Issued share capital *
Directors’ share holding
Non Beneficial
Yvonne Monaghan, Chris Sander and others

* Issued share capital is as at the Balance Sheet date

31st December 2014
Ordinary shares of 10p each

31st December 2013
Ordinary shares of 10p each

100,000
525,930
764,086
200,000
125,000

1,715,016
299,985,593
0.6%

100,000
238,655
143,478
200,000
125,000

807,133
262,326,451
0.3%

588,452

588,452

There have been no changes in the Directors’ interests in the shares of the Company during the period 31st December 2014 up until the time of
signing this report.

Performance Graph
Over the five years to December 2014 the Company has outperformed the FTSE AIM Industrial Goods and Services Index, the FTSE AIM All-Share
Index and the FTSE Support Services Index with a net total shareholder return of 212% against a net total shareholder return of 73%, 12% and
100% respectively.

Over the two years to December 2014 the Company has outperformed the FTSE AIM Industrial Goods and Services Index, the FTSE AIM All-Share
Index and the FTSE Support Services Index with a net total shareholder return of 82% against a net total shareholder return of 47%, 1% and 
31% respectively.

These indices have been selected for this comparison as, in the opinion of the Directors, they represent the general and specific sectors in which the
Company operates.

TSR 5 Year Performance

TSR 2 Year Performance

350

300

250

200

150

100

50

200

150

100

50

Dec-09

Dec-10

Dec-11

Dec-12

Dec-13

Dec-14

Dec-12

Dec-13

Dec-14

JSG

FTSE AIM All-Share

FTSE Support Services

FTSE

AIM Industrial Goods & Services

164958 Johnson Annual Report Pt2_164958 Johnson Annual Report Pt2  06/03/2015  16:43  Page 39

Annual Report and Accounts 2014 Johnson Service Group PLC  39

Directors’ Remuneration (Audited)

Executive Directors
Chris Sander
Yvonne Monaghan

Non-Executive Directors
Paul Moody
Michael Del Mar
Bill Shannon

Former Directors
John Talbot
Kevin Elliott

Note

1
1,2

3

4
5

Basic
Salary/Fees
2014
£000

280
235

67
36
35

33
–

686

Bonus/
Allowance
2014
£000

194
163

–
–
–

–
–

357

Cash in
Lieu of
Pension
2014
£000

50
42

–
–
–

–
–

92

Taxable
Benefits
2014
£000

25
28

–
–
–

–
–

Total
2014
£000

549
468

67
36
35

33
–

53

1,188

Total
2013
£000

407
436

30
35
34

275
398

1,615

Note 1: Details of the amounts included in the table above for Chris Sander and Yvonne Monaghan under ‘Cash in Lieu of Pension’ are set out on page 41.

Note 2: As set out within the Director biographies on page 20, Yvonne Monaghan is also a Non-Executive Director of NWF Group PLC. For the period

7th August 2013, being her start date with NWF Group PLC, to 31st December 2013 she received, and retained, fees of £17,000 for her services.
During 2014, Yvonne Monaghan received, and retained, fees of £36,500 for her services.

Note 3: Paul Moody was appointed Non-Executive Chairman of the Board on 1st May 2014. The figure included in the table above for 2014 reflects the

increased amount paid in respect of his additional responsibility in his new role, together with the amount paid prior to that date in his previous role as
a Non-Executive Director. The figure included in the table above for 2013 reflects the amount paid in his role as a Non-Executive Director.

Note 4: John Talbot retired as Executive Chairman on 1st May 2014. The figure included in the table above for 2014 reflects the amount paid up until the

date of retirement.

Note 5: Kevin Elliott resigned as an Executive Director on 7th August 2013. The figure included in the table above for 2013 reflects the amount paid up until

the date of resignation. Full details were provided in the 2013 Annual Report.

No Director waived any emoluments in respect of the years ended 31st December 2014 and 31st December 2013.

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40 Johnson Service Group PLC  Annual Report and Accounts 2014

BOARD REPORT ON REMUNERATION CONTINUED

Beneficial Interests in Share Options (Audited)
The interests of the Directors, who have served during the year, in share options of the Company at the commencement and close of the financial
year (or date of resignation if earlier) were as follows:

At 31st
December
2013

Options
Granted
During Year

Options
Lapsed
During Year

Options
Cancelled
During Year

Options
Exercised
During Year

At 31st
December
2014

Date of Grant

Current Directors
Chris Sander
Scheme 1
Scheme 2
Scheme 3
Scheme 1

Yvonne Monaghan
Scheme 1
Scheme 2
Scheme 3
Scheme 1

Previous Directors
John Talbot
Scheme 1

6th January 2011
7th January 2011
1st October 2013
13th March 2014

1,333,334
97,560
17,526
–

6th January 2011
7th January 2011
1st October 2013
13th March 2014

1,666,667
97,560
17,526
–

–
–
–
461,855

–
–
–
387,628

(46,059)
–
–
–

(46,059)
–
–
–

6th January 2011

5,000,000

–

–

–
–
–
–

–
–
–
–

–

Scheme 1 – 2009 Long-Term Incentive Plan (the “2009 LTIP”)
Scheme 2 – 2009 Long-Term Incentive Plan Approved Section (the “2009 Approved LTIP”)
Scheme 3 – Sharesave Plan (“SAYE Scheme”)

Option
Price

nil
30.75p
43.75p
nil

nil
30.75p
43.75p
nil

(1,287,275)
(97,560)
–
–

(1,620,608)
(97,560)
–
–

–
–
17,526
461,855

–
–
17,526
387,628

(5,000,000)

–

nil

Details of the 2009 LTIP, the 2009 Approved LTIP and the SAYE Scheme are given on pages 35 and 36 of the Board Report on Remuneration.

Director Gains (Audited)
During the year, certain Directors each exercised options over shares in the Company. Further details are provided in the table below:

Director

Chris Sander
Chris Sander
Chris Sander

Yvonne Monaghan
Yvonne Monaghan
Yvonne Monaghan

John Talbot
John Talbot

Scheme

Scheme 1
Scheme 1
Scheme 2

Scheme 1
Scheme 1
Scheme 2

Scheme 1
Scheme 1

Date of
Exercise

No. of
Options
Exercised

3rd April 2014
3rd April 2014
3rd April 2014

1,000,000
287,275
97,560

3rd April 2014
3rd April 2014
3rd April 2014

1,000,000
620,608
97,560

3rd April 2014
3rd April 2014

3,000,000
2,000,000

Option
price (p)

nil
nil
30.75

Nil
Nil
30.75

nil
nil

Sale
Price (p)

55.00
Note 1
55.00

55.00
Note 1
55.00

55.00
Note 1

Gross
Gain (£)

550,000
167,338
23,658

740,996

550,000
361,504
23,658

935,162

1,650,000
1,165,000

2,815,000

Note 1: On 3rd April 2014, Chris Sander, Yvonne Monaghan and John Talbot each exercised the number of options shown in the table above and

elected to retain the shares. The relevant gross gain shown in the table above is based upon the closing mid market price on the date of
exercise of 58.25 pence.

Other Details
The mid market price of the Ordinary shares of 10 pence each on 31st December 2014 and 31st December 2013 was 62.00 pence and
53.63 pence respectively. During the year, the mid market price of the Ordinary shares of 10 pence each ranged between 52.00 pence and 64.00
pence (2013: 35.75 pence and 53.63 pence).

None of the terms or conditions of the share options were varied during the year.

There have been no changes in the Directors’ interests during the period 31st December 2014 to 3rd March 2015, this being the date of this report.

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Annual Report and Accounts 2014 Johnson Service Group PLC  41

Pension Benefits of Executive Directors (Audited)
Executive Directors are entitled to receive retirement benefits, which are calculated on basic salary, under one or more of the Group’s contributory
defined benefit or defined contribution schemes. Details of the schemes are given in note 23 of the consolidated financial statements.

Each Executive Director, who served during the current year has left active pensionable service and is entitled to a preserved benefit under the
Johnson Group Defined Benefit Scheme (the “JGDBS”), which is of the defined benefit type. The accrued pension entitlement shown below is the
amount that would be paid annually on retirement (at normal retirement age). This pension is calculated based on the total period of pensionable
service to the Company, both before and after becoming a Director.

Chris Sander
Yvonne Monaghan

Accrued pension 
entitlement at 
December 2014
£000

57
47

Accrued pension
entitlement at
December 2013
£000

56
46

From 1st April 2011, Chris Sander opted to become a deferred member of the JGDBS and receive a monthly cash amount equal to 16.0% of his
monthly salary. From 1st January 2014, the monthly cash amount increased JGDBS to 17.8% of his monthly salary.

From 1st January 2012, Yvonne Monaghan opted to become a deferred member of the JGDBS and receive a monthly cash amount equal to 17.8%
of her monthly salary.

The amounts payable in the year to Chris Sander and Yvonne Monaghan under the above arrangements were £49,840 and £41,830 respectively
(2013: £33,913 and £39,008 respectively).

Both Executive Directors took a partial transfer of benefits on 31st March 2012.

Annual General Meeting
A resolution will be proposed at the Annual General Meeting to seek approval of the Board Report on Remuneration.

Michael Del Mar
Chairman, Remuneration Committee
3rd March 2015

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42 Johnson Service Group PLC  Annual Report and Accounts 2014

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
JOHNSON SERVICE GROUP PLC

Report on the Group financial statements
Our opinion
In our opinion, Johnson Service Group PLC’s Group financial statements (the “financial statements”):
➔ give a true and fair view of the state of the Group’s affairs as at 31st December 2014 and of its profit and cash flows for the year then ended;
➔ have been properly prepared in accordance with International Financial Reporting Standards (“IFRSs”) as adopted by the European Union; and
➔ have been prepared in accordance with the requirements of the Companies Act 2006 and article 4 of the IAS Regulation.
What we have audited
Johnson Service Group PLC’s financial statements comprise:
➔ the Consolidated Balance Sheet as at 31st December 2014;
➔ the Consolidated Income Statement and Consolidated Statement of Comprehensive Income for the year then ended;
➔ the Consolidated Statement of Cash Flows for the year then ended;
➔ the Consolidated Statement of Changes in Shareholders’ Equity for the year then ended;
➔ the Statement of Significant Accounting Policies; and
➔ the notes to the financial statements, which include other explanatory information.

Certain required disclosures have been presented elsewhere in the Annual Report and Accounts (the “Annual Report”), rather than in the notes to the
financial statements. These are cross-referenced from the financial statements and are identified as audited.

The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and IFRSs as adopted by the
European Union.
Our audit approach
Overview
➔ Overall group materiality: £1.1 million which represents 5% of Adjusted Operating Profit.
➔ Within the Textile Rental segment, we focused our work on Johnsons Apparelmaster, Johnson Stalbridge Linen Services and the Bourne Services

Group, which account for 100% of the segmental revenue, and more than 95% of the segmental Adjusted Operating Profit.

➔ Within the Drycleaning segment, we focused our work on Johnson Cleaners, which accounts for more than 90% of the segmental revenue and

75% of the segmental Adjusted Operating Profit.

➔ Our work described above together with additional procedures performed on three head office companies and the consolidation accounted for

more than 95% of Adjusted Operating Profit.

➔ Provisions for restructuring of the Drycleaning segment.
➔ Goodwill impairment assessment.
➔ Accounting for the acquisition of the Bourne Services Group.
➔ Accounting for complex customer arrangements.
The scope of our audit and our areas of focus
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) (“ISAs (UK & Ireland)”).

We designed our audit by determining materiality and assessing the risks of material misstatement in the financial statements. In particular, we looked
at where the Directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls,
including evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.

The risks of material misstatement that had the greatest effect on our audit, including the allocation of our resources and effort, are identified as
“areas of focus” in the table below. We have also set out how we tailored our audit to address these specific areas in order to provide an opinion on
the financial statements as a whole, and any comments we make on the results of our procedures should be read in this context. This is not a
complete list of all risks identified by our audit.

Area of focus
Provisions for restructuring of the Drycleaning division
Refer to page 30 of the Audit Committee Report, page 56 of the
Statement of Significant Accounting Policies and Note 22 of the
consolidated financial statements.

In 2012, the restructuring of the Drycleaning division gave rise to an
exceptional charge in the Income Statement of £22.7 million, with an
additional charge of £1.2 million recognised in 2013, and £11.2 million
remaining as a provision as at 31st December 2013. The provision
continued to be utilised in 2014, with £8.7 million remaining as at
31st December 2014, which represents the costs to be incurred
including rent, rates, dilapidations and other costs of exiting the
remaining stores identified for closure.

How our audit addressed the area of focus

We tested the Directors’ key assumptions and estimates in determining
the required level of provision by:
➔ agreeing rent and rate costs provided for to lease agreements,
invoices and rent review documentation without identifying any
exceptions;

➔ challenging the assumptions in relation to whether a sublease can be
achieved at a vacant store, and if so, the value of a sublease, by using
our understanding of the factors impacting each individual store, for
example its location and lease end date to develop our own
expectations, which we confirmed were consistent with the Directors’
assumptions;

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Annual Report and Accounts 2014 Johnson Service Group PLC  43

Area of focus
We focused on this area because it is material in the context of the
financial statements and estimating the extent of the remaining provision
necessary involves subjective judgements, in particular estimates on
future expected property costs on a store by store basis in relation to
dilapidations costs and sublease assumptions. Therefore, there is a risk
that the provision is incorrectly valued.

Goodwill impairment assessment
Refer to page 30 of the Audit Committee Report, page 54 of the
Statement of Significant Accounting Policies and Note 12 of the
consolidated financial statements.

The goodwill balance of £56.2 million relates to both the Textile Rental
and Drycleaning segments, which are tested annually for impairment. No
impairment charge has been recognised against these balances in the
current financial year. The risk we focused on is that goodwill balances
may be overstated and that an impairment charge may be required.

Of the £56.2 million goodwill balance, £47.1 million relates to the Textile
Rental segment with £9.1 million relating to the Drycleaning segment.
Given the trading performance of the Textile Rental business in the
current and prior years and the significant headroom in the Directors’
impairment review, we focused our risk on the Drycleaning segment, 
due to the reduced level of headroom in the value in use impairment
model and the historical trading performance of the segment. As
headroom based on a value in use model was not significant, the
Directors have also determined the recoverable amount of the
Drycleaning segment on a fair value less costs of disposal basis. The fair
value less costs of disposal valuation increased headroom to £9.8 million
as this valuation took into account the benefits of the restructuring
announced during January 2015.

How our audit addressed the area of focus
➔ testing changes in the dilapidations estimates through understanding
the condition of stores on a store by store basis, including visiting a
number of stores to corroborate the Directors’ assessment; and
➔ assessing the other associated costs of exit, in relation to insurance

and legal costs where we identified no material exceptions.

In addition, we assessed the Directors’ historical forecasting accuracy
with respect to the cost of store closures by comparing provisions
previously recognised with actual costs incurred following store closures,
and did not find any material inaccuracies.

We tested whether the costs allocated to the provision in 2014 were
consistent with the purpose of the provision, by tracing expenditure to
source documentation. Our testing did not identify any costs that were
inappropriately allocated against the provision.

We evaluated and challenged the Group’s future cash flow forecasts, and
the process by which they were prepared, including comparing them to
the latest Board approved budgets, and testing the underlying
calculations. In doing so, we:
➔ challenged the Board approved budget, including assessing the
revenue and costs included in those forecasts based on our
understanding of the Group, and through considering historical like
for like sales growth, customer contracts wins and losses, new sales
initiatives and assumed profit margins, finding the assumptions
underpinning the budget to be consistent with our evidence;
➔ tested the Directors’ historical budgeting accuracy by evaluating

whether previous budgets had been achieved and found that past
material adverse variances from budgets were because of events that
could not have reasonably been foreseen;

➔ tested the Directors’ key assumptions for long-term growth rates

outside the forecast period, by comparing them to and finding them
consistent with forecast inflation rates in the UK; and

➔ considered the discount rate by successfully testing the inputs into

the calculation, including the cost of debt, equity risk premium and the
beta factor.

We obtained the Directors’ sensitivity analysis and also performed our
own sensitivities over the key drivers of the cash flow forecasts being
revenue and margin growth, and the discount rate used. Having
ascertained the extent of change in those assumptions that either
individually or collectively would be required for the goodwill to be
impaired, we considered whether such a movement in those key
assumptions arising was reasonably likely, and concluded that, after
considering the Director’s fair value less costs to sell model, no
reasonably likely change would result in the goodwill being impaired. We
determined that the disclosure detailed within Note 12 is consistent with
the requirements of IAS 36 ‘Impairment of assets’.

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44 Johnson Service Group PLC  Annual Report and Accounts 2014

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
JOHNSON SERVICE GROUP PLC  CONTINUED

 Area of focus
Accounting for the acquisition of Bourne Services Group
Refer to page 30 of the Audit Committee Report, page 52 of the
Statement of Significant Accounting Policies and Note 31 of the
consolidated financial statements.

On 3rd March 2014 the Group completed the acquisition of the Bourne
Services Group for cash consideration of £26.7 million. We focused 
on this area because the accounting for the acquisition involved
management judgements and estimates that have a material 
impact on the amounts recognised in the consolidated financial 
statements, including:
➔ determining the fair value of the customer list acquired which the
directors valued at £10.2 million, and the useful economic life of
those contracts, which was assessed as 8 years; and

➔ the recognition of goodwill, the determination of what goodwill

represents, and consideration as to whether any other intangible
assets should have been recognised.

How our audit addressed the area of focus

To test the acquisition accounting, we obtained and read the relevant
terms of the purchase agreement to inform our further audit procedures
to test the accounting for the acquisition.

We then tested the recognition in the Group’s financial statements of the
fair value of the assets and liabilities acquired (and residual goodwill). In
doing so, we:
➔ assessed the Directors’ valuation of the acquired customer list

through determining whether the assumptions used in the calculation
were consistent with our understanding of the acquisition and
previous acquisitions made by the Group in this industry, including
estimated customer renewal rates, attrition rates and the discount
rate applied, and found that they were;

➔ considered whether any other intangible assets should have been
identified by the Directors, based on our understanding of the
transaction and the purchase agreement and discussions with the
Directors; we did not identify any.

Accounting for complex customer arrangements
Refer to page 30 of the Audit Committee Report, page 53 of the
Statement of Significant Accounting Policies.

The Group, primarily through the Textile Rental division, gives rebates to
certain key customers. These are contractual and vary by customer, but
largely relate to volume based rebates on sales made throughout the
financial year, with the value being determined by the level of spend.

We focused on this area because the amount of the customer rebates
payable in respect of the year is determined by the contract terms for
each customer, which are negotiated separately and, as a result, differ
from one another. This means that the calculation of the rebates
recognised in the income statement and as a payable at the year-end
relies on a manual process, which are inherently more prone to error than
systems-based processes.

To test customer rebates, we:
➔ recalculated the total customer rebates recognised within the Income
Statement in the year, and provided for at the balance sheet date;
➔ used sales recorded in the year (which we agreed through to our

detailed revenue testing) and the contractual arrangements agreed
with each customer and compared this to the Directors’ calculation,
finding it to be not materially different;

➔ performed a ‘look-back’ test, comparing the provision made at the
prior year end to the amounts paid in 2014 in respect of those
provisions, with no material differences identified;

➔ tested whether any rebate arrangements had been omitted from the
amounts charged in the year and liabilities held at the balance sheet
date, by checking the contractual arrangements with the Group’s
most significant customers by sales volume to make sure that all
rebate arrangements had been identified by the Directors and did not
identify any that had been omitted; and

➔ agreed amounts paid to customers post period end to source

documentation to check that it has been accounted for in the right
accounting period, and found no instances of amounts recorded in
the wrong period.

How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole,
taking into account the structure of the Group, the accounting processes and controls, and the industries in which the Group operates.

The Group is structured along two operating segments being Textile Rental and Drycleaning. For the Textile Rental segment, we performed an audit
of the complete financial information of Johnsons Apparelmaster, Johnson Stalbridge Linen Services and the Bourne Services Group, which together
make up 100% of the revenue and more than 95% of Adjusted Operating Profit for the segment. For the Drycleaning segment, which comprises
Johnson Cleaners and Jeeves, we focused our audit procedures on Johnson Cleaners (which makes up more than 90% of the segment’s revenue
and 75% of its Adjusted Operating Profit), and performed an audit of its complete financial information. Audits at the segmental level, together with
procedures performed over three head office companies and the consolidation entries, gave us the evidence we needed to form our opinion on the
consolidated financial statements as a whole and accounted for over 95% of Group revenue and Adjusted Operating Profit.

Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the
effect of misstatements, both individually and on the financial statements as a whole.

164958 Johnson Annual Report Pt2_164958 Johnson Annual Report Pt2  06/03/2015  16:43  Page 45

Annual Report and Accounts 2014 Johnson Service Group PLC  45

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Overall group materiality

£1.1 million (2013: £0.85 million).

How we determined it

5% of Adjusted Operating Profit, consistent with 2013.

Rationale for benchmark applied

Adjusted Operating Profit is the key measure used both internally by the Board and, we believe, through reading
Directors’ presentations to analysts, externally by shareholders in evaluating the performance of the Group. This
measure excludes interest, tax, amortisation of intangible assets (excluding software), exceptional items and
discontinued operations.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £54,000 (2013: £50,000) as
well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

Other required reporting
Consistency of other information

In our opinion:
➔ the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is

consistent with the financial statements; and

➔ the information given in the Corporate Governance Report set out on pages 24 to 28 with respect to internal control and risk management

systems and about share capital structures is consistent with the financial statements.

The Directors have chosen to voluntarily comply with the UK Corporate Governance Code (“the Code”) as if the company were a premium listed
company. Under ISAs (UK & Ireland) we are required to report to you if, in our opinion:

➔ information in the Annual Report is:

− materially inconsistent with the information in the audited financial statements; or
− apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group

acquired in the course of performing our audit; or

− otherwise misleading.

We have no exceptions to
report arising from this
responsibility.

➔ the statement given by the Directors on page 23, in accordance with provision C.1.1 of the Code, that they
consider the Annual Report taken as a whole to be fair, balanced and understandable and provides the
information necessary for members to assess the Group’s performance, business model and strategy is
materially inconsistent with our knowledge of the Group acquired in the course of performing our audit.

We have no exceptions to
report arising from this
responsibility.

➔ the section of the Annual Report on page 29, as required by provision C.3.8 of the Code, describing the work

of the Audit Committee does not appropriately address matters communicated by us to the Audit
Committee.

We have no exceptions to
report arising from this
responsibility.

Adequacy of information and explanations received
Under the Companies Act 2006 we are required to report to you if, in our opinion, we have not received all the information and explanations we
require for our audit. We have no exceptions to report arising from this responsibility.

Directors’ remuneration
Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of Directors’ remuneration specified by law are
not made. We have no exceptions to report arising from this responsibility.

Other voluntary reporting
Opinion on additional disclosures

The Company voluntarily prepares a corporate governance statement that includes the information with respect to internal control and risk
management systems and about share capital structures required by the Disclosure Rules and Transparency Rules of the Financial Conduct
Authority. The Directors have requested that we report on the consistency of that information with the financial statements.

In our opinion the information given in the Corporate Governance Report set out on pages 24 to 28 with respect to internal control and risk
management systems and about share capital structures is consistent with the financial statements.

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46 Johnson Service Group PLC  Annual Report and Accounts 2014

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
JOHNSON SERVICE GROUP PLC  CONTINUED

Matter on which we have agreed to report by exception

The Company’s voluntary Corporate Governance Statement includes details of the company’s compliance with the UK Corporate Governance Code.
The directors have requested that we review the parts of the Corporate Governance Statement relating to the company’s compliance with the ten
provisions of the UK Corporate Governance Code specified for auditor review by the Listing Rules of the Financial Conduct Authority as if the
company were a premium listed company. We have nothing to report having performed our review.

Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Directors’ Responsibilities Statement set out on page 23, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK & Ireland). Those
standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of
the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to
any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

What an audit of financial statements involves
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:
➔ whether the accounting policies are appropriate to the group’s circumstances and have been consistently applied and adequately disclosed;
➔ the reasonableness of significant accounting estimates made by the directors; and
➔ the overall presentation of the financial statements.

We primarily focus our work in these areas by assessing the Directors’ judgements against available evidence, forming our own judgements, and
evaluating the disclosures in the financial statements.

We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis
for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both.

In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial
statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by
us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications
for our report.

Other matter
We have reported separately on the Company financial statements of Johnson Service Group PLC for the year ended 31st December 2014 and on
the information in the Directors’ Remuneration Report that is described as having been audited.

Nicholas Boden (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Manchester
3rd March 2015

164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:45  Page 47

CONSOLIDATED INCOME STATEMENT

Revenue from continuing operations

Operating profit

Operating profit before amortisation and impairment of intangible assets (excluding 
software amortisation) and exceptional items
Amortisation and impairment of intangible assets (excluding software amortisation)
Exceptional items
– Restructuring and other costs
– Costs in relation to business acquisition activity
– Pension costs and credits

Operating profit

Finance cost
Notional interest

Total finance cost

Profit before taxation
Taxation charge*

Profit for the year from continuing operations

Result/(loss) for the year from discontinued operations

Profit for the year attributable to equity holders

Earnings per share
Basic earnings per share
From continuing operations
From discontinued operations

From continuing and discontinued operations

Fully diluted earnings per share
From continuing operations
From discontinued operations

From continuing and discontinued operations

Adjusted basic earnings per share
From continuing operations
From discontinued operations

From continuing and discontinued operations

Adjusted fully diluted earnings per share
From continuing operations
From discontinued operations

From continuing and discontinued operations

Note

1

2

1

6

2

23

7

9

32

11

Annual Report and Accounts 2014 Johnson Service Group PLC  47

Year ended
31 December
2014
£m

210.4

13.4

Year ended
31 December
2013
£m

193.6

15.8

21.8
(1.6)

(1.3)
(0.6)
(4.9)

13.4

(1.6)
(0.2)

(1.8)

11.6
(3.0)

8.6

–

8.6

2.9p
–

2.9p

2.9p
–

2.9p

5.3p
–

5.3p

5.2p
–

5.2p

17.0
(0.6)

(1.2)
–
0.6

15.8

(2.8)
(0.8)

(3.6)

12.2
(2.4)

9.8

(9.1)

0.7

3.8p
(3.6p)

0.2p

3.6p
(3.4p)

0.2p

4.0p
0.6p

4.6p

3.8p
0.5p

4.3p

The notes on pages 59 to 90 are an integral part of these financial statements.

*

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.

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48 Johnson Service Group PLC  Annual Report and Accounts 2014

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Profit for the year

Items that will not be subsequently reclassified to profit or loss
Re-measurement and experience (losses)/gains on post-employment benefit obligations
Taxation in respect of re-measurement and experience losses/(gains)
Change in deferred tax due to change in tax rate
Items that may be subsequently reclassified to profit or loss
Cash flow hedges (net of taxation) – fair value (loss)/gain

– transfers to finance cost

Other comprehensive (loss)/income for the year

Total comprehensive (loss)/income for the year

Note

23

Year ended
31 December
2014
£m

8.6

(11.5)
2.3
–

(0.4)
0.3

(9.3)

(0.7)

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

Balance at 1st January 2013
Profit for the period
Other comprehensive income

Total comprehensive income for the year

Share options (value of employee services)
Purchase of shares by EBT*
Current tax on share options
Deferred tax on share options
Issue of share capital
Dividend paid

Transactions with Shareholders recognised 
directly in Shareholders’ equity

Balance at 31st December 2013

Balance at 1st January 2014

Profit for the period
Other comprehensive loss

Total comprehensive loss for the year

Share options (value of employee services)
Purchase of shares by EBT*
Current tax on share options
Deferred tax on share options
Issue of share capital
Dividend paid

Transactions with Shareholders recognised directly in
Shareholders’ equity

Balance at 31st December 2014

Share
Capital
£m

25.6
–
–

–

–
–
–
–
0.6
–

0.6

26.2

26.2

–
–

–

–
–
–
–
3.8
–

3.8

30.0

Share
Premium
£m

13.9
–
–

–

–
–
–
–
0.2
–

0.2

14.1

14.1

–
–

–

–
–
–
–
0.4
–

0.4

14.5

Merger
Reserve
£m

1.6
–
–

Capital
Redemption
Reserve
£m

0.6
–
–

–

–
–
–
–
–
–

–

1.6

1.6

–
–

–

–
–
–
–
–
–

–

–

–
–
–
–
–
–

–

0.6

0.6

–
–

–

–
–
–
–
–
–

–

Hedge
Reserve
£m

(1.1)
–
0.8

0.8

–
–
–
–
–
–

–

(0.3)

(0.3)

–
(0.1)

(0.1)

–
–
–
–
–
–

–

1.6

0.6

(0.4)

Retained
Earnings
£m

20.4
0.7
8.8

9.5

0.5
(0.4)
0.2
1.0
–
(2.9)

(1.6)

28.3

28.3

8.6
(9.2)

(0.6)

0.4
(0.9)
1.2
(1.0)
10.2
(3.9)

6.0

33.7

Year ended
31 December
2013
£m

0.7

11.7
(2.3)
(0.6)

0.1
0.7

9.6

10.3

Total
Equity
£m

61.0
0.7
9.6

10.3

0.5
(0.4)
0.2
1.0
0.8
(2.9)

(0.8)

70.5

70.5

8.6
(9.3)

(0.7)

0.4
(0.9)
1.2
(1.0)
14.4
(3.9)

10.2

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).

164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:45  Page 49

CONSOLIDATED BALANCE SHEET

Assets
Non-current assets
Goodwill
Intangible assets
Property, plant and equipment
Textile rental items
Trade and other receivables
Deferred income tax assets

Current assets
Inventories
Trade and other receivables
Cash and cash equivalents

Liabilities
Current liabilities
Trade and other payables
Current income tax liabilities
Borrowings
Provisions

Net current liabilities

Non-current liabilities
Post-employment benefit obligations
Deferred income tax liabilities
Other non-current liabilities
Borrowings
Derivative financial liabilities
Provisions

Net assets

Equity
Capital and reserves attributable to the company’s shareholders
Share capital
Share premium
Merger reserve
Capital redemption reserve
Hedge reserve
Retained earnings

Total Shareholders’ equity

Annual Report and Accounts 2014 Johnson Service Group PLC  49

As at
31 December
2014
£m

As at
31 December
2013
£m

56.2
11.7
51.3
30.5
3.3
4.6

157.6

2.1
30.3
0.2

32.6

43.7
1.5
6.9
4.6

56.7

(24.1)

18.5
1.8
0.9
21.8
0.4
10.1

53.5

80.0

30.0
14.5
1.6
0.6
(0.4)
33.7

80.0

52.4
3.0
36.0
26.0
3.4
4.5

125.3

2.0
28.8
3.4

34.2

37.6
0.3
0.8
4.2

42.9

(8.7)

4.3
–
0.9
27.1
0.3
13.5

46.1

70.5

26.2
14.1
1.6
0.6
(0.3)
28.3

70.5

Note

12
13
14
15
17
21

16
17

18

20
22

23
21
19
20
24
22

26
28

The notes on pages 59 to 90 are an integral part of these financial statements.

The financial statements on pages 47 to 90 were approved by the Board of Directors on 3rd March 2015 and signed on its behalf by:

Yvonne Monaghan
Chief Financial Officer

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50 Johnson Service Group PLC  Annual Report and Accounts 2014

CONSOLIDATED STATEMENT OF CASH FLOWS

Cash flows from operating activities
Profit for the year
Adjustments for:

Income tax charge/(credit) – continuing operations

Total finance cost 

– discontinued operations
– continuing operations
– discontinued operations

Depreciation
Amortisation
Decrease in inventories
Decrease in trade and other receivables
Increase in trade and other payables
Loss on sale of property, plant and equipment
Loss/(profit) on disposal of business
Impairment of assets held for resale
Costs in relation to business acquisition activity
Deficit recovery payments in respect of post-employment benefit obligations
Share-based payments
Post-employment benefit obligations
Decrease in provisions

Cash generated from operations
Interest paid
Taxation paid

Net cash generated from operating activities

Cash flows from investing activities
Acquisition of business (net of cash acquired)
Proceeds from sale of business (net of cash disposed)
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of intangible assets
Purchase of textile rental items
Proceeds received in respect of special charges

Net cash (used in)/generated from investing activities

Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Capital element of finance leases
Purchase of own shares by EBT
Net proceeds from issue of Ordinary shares
Dividend paid

Net cash generated from/(used in) financing activities

Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Year ended
31 December
2014
£m

Year ended
31 December
2013
£m

8.6

3.0
(0.7)
1.8
–
28.3
1.6
0.2
0.6
1.6
–
0.4
–
0.6
(2.0)
0.4
4.6
(3.1)

45.9
(2.0)
(0.1)

43.8

(22.4)
0.1
(11.6)
0.1
(0.1)
(24.9)
1.9

(56.9)

66.0
(70.0)
(0.8)
(0.9)
14.4
(3.9)

4.8

(8.3)
3.4

(4.9)

0.7

2.4
0.3
3.6
0.7
24.9
2.0
0.2
2.5
0.5
0.2
(1.1)
9.0
–
(1.9)
0.5
(1.1)
(6.8)

36.6
(3.0)
(1.3)

32.3

–
26.7
(4.8)
0.4
(0.2)
(19.1)
2.2

5.2

12.0
(43.0)
(0.7)
(0.4)
0.8
(2.9)

(34.2)

3.3
0.1

3.4

Note

9
32
7
32

32
32
6

27
23

31
32

33

The notes on pages 59 to 90 are an integral part of these financial statements.

Cash and cash equivalents at the end of the period include cash of £0.2 million and an overdraft of £5.1 million (2013: £3.4 million and £nil
respectively).

164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:45  Page 51

Annual Report and Accounts 2014 Johnson Service Group PLC  51

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

Johnson Service Group PLC (‘the Company’) and its subsidiaries (together ‘the Group”) provide Textile Services to both businesses and the consumer.
The two services are textile rental and laundry and retail drycleaning.

The Company is incorporated and domiciled in the UK. The Company’s registered number is 523335. The address of its registered office is Johnson
House, Abbots Park, Monks Way, Preston Brook, Cheshire, WA7 3GH.

The Company is a public limited company and has its primary listing on the AIM division of the London Stock Exchange.

The Group consolidated financial statements were authorised for issue by the Board on 3rd March 2015.

Basis of Preparation
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently
applied to the information presented, unless otherwise stated.

The consolidated financial statements of the Group have been prepared on a going concern basis in accordance with International Financial
Reporting Standards as adopted by the European Union (IFRS), IFRS Interpretation Committee (IFRS IC) interpretations and the Companies Act
2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention,
as modified by the revaluation of financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity,
or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed below in the section entitled ‘Critical
accounting estimates and assumptions’.

New and amended standards adopted by the Group and/or Company

Changes in accounting policy and disclosures
(a)
The following standards have been adopted by the Group for the first time for the financial year beginning on 1st January 2014:
➔ IFRS 10, ‘Consolidated financial statements’ (effective 1st January 2013) (endorsed 1st January 2014)
➔ IFRS 11, ‘Joint arrangements’ (effective 1st January 2013) (endorsed 1st January 2014)
➔ IFRS 12, ‘Disclosures of interests in other entities’ (effective 1st January 2013) (endorsed 1st January 2014)
➔ IAS 27 (revised 2011) ‘Separate financial statements’ (effective 1st January 2013) (endorsed 1st January 2014)
➔ IAS 28 (revised 2011) ‘Associates and joint ventures’ (effective 1st January 2013) (endorsed 1st January 2014)
➔ Amendments to IFRS 10,11 and 12 on transition guidance (effective 1st January 2013) (endorsed 1st January 2014)
➔ Amendments to IFRS 10, 12 and IAS 27 on consolidation for investment entities (effective 1st January 2014)
➔ Amendments to IAS 32 on Financial instruments asset and liability offsetting (effective 1st January 2014)
➔ Amendment to IAS 36, ‘Impairment of assets’ on recoverable amount disclosures (effective 1st January 2014)
➔ Amendment to IAS 39 ‘Financial instruments: Recognition and measurement’, on novation of derivatives and hedge accounting

(effective 1st January 2014)

➔ IFRIC 21, ‘Levies' (effective 1st January 2014) (endorsed 17th June 2014)

The adoption of these standards has had no material impact on the Group’s financial statements

(b)
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group and/or Company.
The following standards have been published and are mandatory for accounting periods beginning after 1st January 2014 but have not been early
adopted by the Group or Company and could have a material impact on the Group and Company financial statements:
➔ IFRS 9, ‘Financial instruments’ (effective 1st January 2018)
➔ IFRS 15, ‘Revenue from contracts with customers’ (effective 1st January 2017)

At the time of preparing this report the Group continues to assess the possible impact of the adoption of these standards in future periods and
updates will be provided in a future annual report.

A number of other new standards and amendments to standards and interpretations are effective for annual periods beginning after 1st January
2014, and have not been applied in preparing these consolidated financial statements. None of these are expected to have a significant effect on the
consolidated financial statements of the Group.

Critical accounting estimates and assumptions
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related
actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below:

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52 Johnson Service Group PLC  Annual Report and Accounts 2014

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

Estimated impairment of goodwill

(a) 
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated on page 54. The
recoverable amounts of cash-generating units have been determined based on value-in-use calculations or, where considered it is necessary, fair
value less costs to dispose. These calculations require the use of estimates. For further information see note 12 of these consolidated financial
statements.

(b)  Other intangible assets
Other intangible assets comprise brands, customer contracts and relationships. The cost of the intangible asset is based upon management’s
assessments of projected cash flows. These calculations require the use of estimates.

Income taxes

(c)
The Group is subject to income taxes. Significant judgement is required in determining the provision for income taxes. There are many transactions
and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for
anticipated tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the
amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination
is made.

Post-employment benefit obligations

(d) 
The Group operates two post retirement defined benefit arrangements (note 23). Asset valuations are based on the fair value of the assets. The
valuations of the liabilities of the schemes are based on statistical and actuarial calculations, using various assumptions including discount rates,
future inflation rates and pension increases, life expectancy of scheme members and cash commutations. The actuarial assumptions may differ
materially from actual experience due to changes in economic and market conditions, variations in actual mortality, higher or lower cash withdrawal
rates and other changes in factors assessed. Any of these differences could impact the assets or liabilities recognised in the Balance Sheet in 
future periods.

(e)  Onerous leases, dilapidations and environmental costs
The Group makes provision for the anticipated net costs of onerous leases, dilapidations and environmental remediation costs. The timing of these
provisions coincides with the commitment to a formal plan of action or, if earlier, on divestment or on closure of inactive sites. The timing and value of
such payments are based on management estimates.

Forward looking statements
The terms ‘expect’, ‘should be’, ‘will be’, ‘is likely to’ 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 currently expressed or implied in such forward
looking statements.

Factors which may cause future outcomes to differ from those foreseen in forward looking statements include, but are not limited to: general
economic conditions and business conditions in the Group’s markets; exchange and interest rate fluctuations; customers’ acceptance of its products
and services; the actions of competitors; and legislative, fiscal and regulatory developments.

Consolidation
The Group controls an entity when the Group has power over an entity, is exposed to, or has rights to, variable returns from its involvement with the
entity and has the ability to affect these returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control ceases. The Group has applied IFRS 10 retrospectively in accordance
with transition provisions of IFRS 10.

The accounting periods of subsidiary undertakings are co-terminous with those of the Company. Inter-company transactions, balances and unrealised
gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Subsidiaries’ accounting policies have been changed, where necessary, to ensure consistency with the policies
adopted by the Group.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the
fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value at the acquisition date, irrespective of
the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets
acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the Group’s share of the net assets of the subsidiary acquired,
the difference is recognised directly in the Income Statement. Costs directly attributable to the cost of the acquisition are expensed to the Income
Statement as an exceptional item.

Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief
operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as
the Board of Directors.

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Annual Report and Accounts 2014 Johnson Service Group PLC  53

Revenue recognition
Revenue represents the fair value of consideration received or receivable for the sale of goods and services supplied in the ordinary course of the
Group’s activities, and is stated exclusive of VAT and similar taxes, but inclusive of discounts and rebates and after eliminating sales within the Group.
The Group recognises monies received from customers as at the balance sheet date, relating to services to be provided in future periods, as deferred
income which forms part of trade and other receivables. Interest receivable on bank deposits and other items is not classed as revenue but included
within finance income.

Rendering of services
Revenue is recognised on a per item basis for delivery of laundered textiles for hotels, restaurants and events. Revenue for the supply and laundering
of workwear is recognised on a regular basis in accordance with the terms of the contract. Drycleaning revenue is recognised at the time items 
are processed.

Sale of goods
Revenue is recognised when goods are sold from retail outlets or delivered to customers.

Rebates
Rebates payable to customers and receivable from suppliers, are recognised in line with relevant contractual terms. Rebates payable to customers are
charged directly to the Income Statement over the period to which they relate and are recognised as a deduction from revenue. Rebates receivable
from suppliers are either recognised directly in the Income Statement, or as a reduction in the value of acquired textile rental items, dependant on the
nature of goods acquired from suppliers. Supplier rebates recognised in the Income Statement are recognised within cost of sales.

Exceptional items
Items that are material in size and non-operating or non-recurring in nature are presented as exceptional items in the Income Statement, within the
relevant account heading. The Directors are of the opinion that the separate recording of exceptional items provides helpful information about the
Group’s underlying business performance. Events which may give rise to the classification of items as exceptional include, but are not restricted to,
restructuring of businesses, gains or losses on the disposal of Textile Rental or industrial properties, one off gains or losses relating to pension
liabilities and expenses incurred in relation to business acquisitions.

Post-employment benefits

Employee benefits
(i) 
Group companies operate various pension schemes. The schemes are funded through payments to insurance companies or trustee-administered
funds, determined by periodic actuarial calculations. The Group has both defined benefit and defined contribution plans.

A defined contribution plan is a pension plan under which the Group pays contributions to publicly or privately administered pension insurance plans
on a mandatory, contractual or voluntary basis. The Group has no legal or constructive obligations to pay further contributions if the fund does not
hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a
pension plan that is not a defined contribution plan. Typically defined benefit plans define an amount of pension benefit that an employee will receive
on retirement, usually dependent on one or more factors such as age, years of service and compensation.

The liability recognised in the Balance Sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the
balance sheet date, less the fair value of plan assets. The defined benefit obligation is calculated periodically by an independent actuary using the
projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows
using interest rates of high-quality corporate bonds that are denominated in the currency in which benefits will be paid, and that have terms to
maturity approximating to the terms of the related pension liability.

Current and past service costs are recognised immediately in the Income Statement. Interest cost on plan liabilities and interest income on plan
assets are recognised in finance costs. Curtailment gains arising from amendments to the terms of a defined benefit plan such that a significant
element of future service by current employees will no longer qualify for benefits, or will only qualify for reduced benefits, are recognised in the
Income Statement. Re-measurement gains and losses arising from experience adjustments and changes in actuarial and demographic assumptions
are charged or credited to the Consolidated Statement of Comprehensive Income in the period in which they arise.

For defined contribution plans, contributions are recognised as an employee benefit expense when they are due. Prepaid contributions are
recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

Other post-employment benefit obligations

(ii) 
Some Group companies provide unfunded post-retirement healthcare benefits to some retirees. The entitlement to these benefits is usually
conditional on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these
benefits are accrued over the period of employment using the same accounting methodology as used for defined benefit pension plans. The liability is
recognised on the Balance Sheet within ‘Post-employment benefit obligations’. Re-measurement gains and losses arising from experience
adjustments and changes in actuarial assumptions are charged or credited to equity in the Consolidated Statement of Comprehensive Income in the
period in which they arise.

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54 Johnson Service Group PLC  Annual Report and Accounts 2014

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(iii)  Share-based compensation
The Group operates a number of equity-settled, share-based compensation plans. The economic cost of awarding shares and share options to
employees is recognised as an expense in the Income Statement equivalent to the fair value of the benefit awarded. The fair value is determined by
reference to option pricing models, principally Binomial and Monte Carlo models. The fair value of the award is recognised in the Income Statement
over the vesting period of the award. At each balance sheet date, the Group revises its estimate of the number of options that are expected to
become exercisable. Any revision to the original estimate is reflected in the Income Statement with a corresponding adjustment to equity, immediately,
to the extent it relates to past service and the remainder over the rest of the vesting period. All options cancelled are fully expensed to the Income
Statement upon cancellation.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the
options are exercised.

Any amount charged or credited to the Income Statement by any of the Group’s subsidiaries is reflected in the books of the Company via an 
increase or decrease in investments, with a corresponding increase or decrease to equity. These entries are eliminated within the consolidated
financial statements.

(iv)  Bonus plans
The Group recognises an expense and a liability for bonuses based on the profit attributable to the Group or Business as appropriate and other pre-
determined performance criteria. The Group recognises a provision where it is contractually obliged or where there is a past practice that has created
a constructive obligation.

Termination benefits

(v) 
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts
voluntary redundancy. The Group recognises termination benefits when it is demonstrably committed to the termination of the employment of current
employees according to a detailed formal plan without possibility of withdrawal.

Discontinued operations and assets held for sale
Business components that represent separate major lines of business or geographical areas of operations are recognised as discontinued if the
operations have been disposed of, or meet the criteria to be classified as held for sale under IFRS 5. Assets and disposal groups are classified as
held for sale if their carrying amount will be principally recovered through a sale transaction rather than through continuing use. This condition is
regarded as met only when the sale is highly probable, expected to be completed within one year and the asset (or disposal group) is available for
immediate sale in its present condition. Disposal groups or assets held for sale are held at the lower of their carrying amount on the date they are
classified as held for sale and fair value less costs to sell.

Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are
subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to dispose and value in use. For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered
an impairment are reviewed for possible reversal of the impairment at each reporting date. Value in use calculations are first considered followed by
fair value less costs to dispose if it is deemed necessary. See note 12 for further information.

Intangible assets
Goodwill
For acquisitions since 28th December 2003, goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of
the identifiable net assets of the acquired business at the date of acquisition. For acquisitions prior to this date, goodwill is included at the amount
recorded previously under UK GAAP. For acquisitions prior to 1st January 2010, the cost of an acquisition includes related expenses but such costs
are excluded for acquisitions after this date.

Goodwill on business acquisitions is included in non-current assets. Negative goodwill arising on acquisition is recognised directly in the 
Income Statement.

Gains and losses on the disposal of a business include the carrying amount of goodwill relating to the business sold. Goodwill is tested annually for
impairment and carried at cost less accumulated impairment losses. Where an impairment is identified, it is charged to the Income Statement within
amortisation and impairment of intangible assets (excluding software). Impairment losses on goodwill are not reversed.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups
of cash-generating units that are expected to benefit from the business combination in which the goodwill arose.

Capitalised software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software, and are
included on the Balance Sheet within intangible assets. Costs are amortised, once commissioned, over their estimated useful lives (4 – 10 years).

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Annual Report and Accounts 2014 Johnson Service Group PLC  55

Costs associated with the general development and maintenance of computer software programs are recognised as an expense as incurred. Costs
that are directly associated with the production of identifiable and unique software products controlled by the Group, and that are expected to
generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Direct costs include the costs of employees
involved in software development and an appropriate portion of relevant overheads.

Computer software development costs recognised as assets are amortised over their estimated useful lives (not exceeding 10 years). Amortisation of
computer software is charged to operating profit before amortisation and impairment of intangible assets (excluding software) and exceptional items.

Other intangible assets
Other intangible assets comprise brands and customer contracts and relationships, recognised at cost or fair value. They have a finite useful life and
are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of the intangible
assets over their estimated useful lives (4 – 10 years).

Property, plant and equipment
Property, plant and equipment is stated at cost, less depreciation, which is calculated to write off these assets, by equal annual instalments, over their
estimated useful lives. Cost includes expenditure which is directly attributable to the acquisition of the asset. The estimated life of plant and fixtures is
two to fifteen years and of vehicles (included within plant and equipment) four to five years. Improvements to short leasehold properties are amortised
over the shorter of the terms of the leases and their useful life. The residual values and useful lives of assets are reviewed, and adjusted if appropriate,
at each balance sheet date.

Freehold and long leasehold buildings are depreciated over their estimated remaining useful life not exceeding 50 years commencing on
26th December 1999 or, if later, date of purchase. Land is not depreciated. The Group has not adopted a policy of revaluation but the carrying
amounts of freehold and long leasehold properties reflect previous valuations. In the event of an impairment in property value the deficit below cost is
charged to the Income Statement.

The fit out costs of new freehold or long leasehold industrial buildings are depreciated, in equal annual instalments, over their expected useful lives
which range from ten to twenty five years from the date on which the assets are fully commissioned.

Subsequent costs are included in the asset’s carrying amount, or recognised as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the
replaced part is derecognised. All other repairs and maintenance costs are charged to the Income Statement during the financial period in which they
are incurred.

No depreciation is provided for assets under the course of construction until they are completed and put in use as management intended.

Up until 31st December 2012, property, plant and equipment bought through acquisition of other businesses were accounted for as if they had been
owned by the Group since new. From 1st January 2013, the Group’s policy was amended such that for future acquisitions the fair value of assets
acquired will be the deemed cost of these assets.

Gains and losses on disposals are determined by comparing the net proceeds with the carrying amount and are recognised within the 
Income Statement.

Textile rental items
Textile rental items, which principally comprise workwear garments, cabinet towels, linen and dust mats, are initially treated as stock. On issue to
customers or into pool stock, rental items are transferred to non current assets and are stated at invoiced cost. Depreciation is calculated on a
straight line basis over the estimated lives of the items in circulation, which range from two to five years. Up until 31st December 2012, issued rental
items bought through acquisition of other businesses were accounted for as if they had been owned by the Group since new. From 1st January
2013, the Group’s policy was amended such that for future acquisitions the fair value of issued rental items acquired will be the deemed cost of 
these items.

Charges are levied in respect of lost or damaged items or where a customer terminates the service before the end of the contracted period. Such
charges are referred to as ‘special charges’. Where proceeds are received in respect of these special charges the amounts received are deducted
from the carrying value of those items.

Where proceeds are received in respect of textile rental items withdrawn from circulation these are deducted from the carrying value of those amounts.

Leased assets
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Rentals
payable in respect of operating leases (net of any incentives received from the lessor) are charged to the Income Statement on a straight line basis
over the lease term.

Where assets are financed by leasing or hire purchase arrangements, which give rights approximating to ownership, the assets are treated as if they
had been purchased outright and are capitalised at their fair value at the date of inception of the lease. The capital element of outstanding lease or

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56 Johnson Service Group PLC  Annual Report and Accounts 2014

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

hire purchase commitments is treated as a liability and disclosed as obligations under finance agreements. Interest is allocated to the Income
Statement over the period of the lease or hire purchase agreement and represents a constant proportion of the outstanding commitment.

Inventories
Stocks of materials, stores, goods for resale and new rental items are valued at the lower of cost and net realisable value. Cost is stated on either a
first in, first out basis or average cost basis and comprises invoiced cost in respect of the purchase of finished goods and materials, direct labour and
direct transportation costs in respect of garments for sale. It excludes borrowing costs.

Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. Costs of inventories
include the transfer from equity of any gains/losses on qualifying cash flow hedges of purchases of goods. Provision is made for obsolete, defective
and slow moving stock.

Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision
for impairment.

A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts
due according to the original terms of the receivables. Significant financial difficulties of the counterparty, probability that the counterparty will enter
bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The
amount of the provision is the difference between the carrying amount and the present value of estimated future cash flows of the asset, discounted,
where material, at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the
amount of the loss is recognised in the Income Statement within ‘administrative costs’. When a trade receivable is uncollectable, it is written off
against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against ‘administrative
costs’ in the Income Statement.

Cash and cash equivalents
Cash and cash equivalents in the Balance Sheet comprise cash at bank and in hand.

Where bank accounts have a right of set off the net position is shown as either a bank overdraft or a cash balance as appropriate. Bank overdrafts
are shown within borrowings in current liabilities on the Balance Sheet.

For the purpose of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net
of outstanding bank overdrafts.

Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Trade payables
are non interest bearing.

Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Transaction costs are amortised, as a finance cost, over the
expected term of the facility, using the effective interest method. Borrowings are classified on the Balance Sheet as either current or non-current
liabilities, dependent upon the maturity date of the loan.

Net debt
Net debt is defined as borrowings, less cash and cash equivalents but excluding balances relating to lifecycle funds up until the disposal of the
Facilities Management division on 7th August 2013. Lifecycle funds are excluded as these balances can only be used for certain contracted
expenditure and cannot be used to repay bank borrowings.

Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Provision is not made for future operating losses.

Property
Provision is made for the anticipated net costs of onerous leases on non-trading properties and for dilapidations and environmental remediation costs.
Liabilities for environmental costs are recognised as a property provision when environmental assessments or remediation are probable and the
associated costs can be reliably estimated. Generally, the timing of these provisions coincides with the commitment to a formal plan of action or, if
earlier, on divestment or on closure of inactive sites. The provision will be utilised by the payment of annual costs, shortfalls on sub-tenanted property,
expenses of early termination, environmental remediation operations and dilapidations.

Where management have identified a loss making trading property that is uneconomic to close at the present time, and it is unlikely to be restored to
profitability, a provision has been recognised for the least net cost of exiting these stores.

164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:45  Page 57

Annual Report and Accounts 2014 Johnson Service Group PLC  57

Self insurance
Provision is made for the expected costs of uninsured incidents arising prior to the balance sheet date and for the anticipated cost of benefits due to
existing claimants under the, now discontinued, self-insured incapacity payroll scheme.

Taxation
Current tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Deferred tax
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. Deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction,
other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined
using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and that are expected to apply when the
related deferred tax asset is realised or the deferred tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilised.

Foreign currency translation
The financial statements are presented in sterling, which is the functional and presentational currency of the Company.

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in the Income Statement, except where deferred in equity as qualifying cash
flow hedges, or where hedge accounting is applied, as explained below.

Derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value.
The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature
of the item being hedged. The Group designates certain derivatives as hedges of the variability of cash flows (cash flow hedge). Further information is
shown in note 24 of the consolidated financial statements.

The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk
management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception
and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the cash flows
of hedged items.

Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in equity. The gain
or loss relating to the ineffective portion is recognised immediately in the Income Statement.

Amounts accumulated in equity are recycled in the Income Statement in the periods when the hedged item will affect profit or loss (for example,
when the forecast transaction that is hedged takes place). However, when the forecast transaction that is hedged results in the recognition of a non-
financial asset (for example, inventory) or a liability, the gains and losses previously deferred in equity are transferred from equity and included in the
initial measurement of the cost of the asset or liability.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss
existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the Income Statement.
When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the
Income Statement.

Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Such derivatives are classified as at fair value through profit or loss, and changes
in their fair value are recognised immediately in the Income Statement.

Investment in own shares
Ordinary shares in the Company held by the Trustee of the Employee Benefit Trust (EBT) are recorded in the Balance Sheet as a reduction in
Shareholders’ funds.

Dividend distribution
Dividends to holders of equity instruments declared after the balance sheet date are not recognised as a liability as at the balance sheet date. Final
dividend distributions to the Company’s Shareholders are recognised in the Group’s financial statements in the period in which the dividends are
approved by the Company’s Shareholders. Interim dividends are recognised when paid.

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58 Johnson Service Group PLC  Annual Report and Accounts 2014

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.

Financial risk factors

Financial risk management
1
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, cash flow interest rate risk and fair value interest rate
risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk
exposures.

Risk management is carried out by a central treasury department (Group Treasury) under policies approved by the Board. Group Treasury identifies,
evaluates and hedges financial risks in close co-operation with the Group’s operating units. The Board provides written principles for overall risk
management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial
instruments and non-derivative financial instruments, and investment of excess liquidity.

(a)
(i)

Market risk
Currency risk

The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar and the Euro. Foreign
exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s
functional currency.

As further detailed in note 24, of these consolidated financial statements the Group, exposure to currency risk is minimal.

Cash flow and fair value interest rate risk

(ii)
As the Group has no significant interest-bearing assets, the Group’s income and operating cash flows are substantially independent of changes in
market interest rates.

The Group’s interest rate risk arises from its borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk.
Borrowings issued at fixed rates expose the Group to fair value interest rate risk.

Further details are provided in the Principal Risks and Uncertainties section. Note 24 to the consolidated financial statements provides additional
disclosures regarding cash flow and fair value interest rate risk.

Credit risk

(b) 
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks
and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables and committed transactions.

For banks and financial institutions, only independently rated parties with a minimum rating of ‘A-2’ are accepted. If wholesale customers are
independently rated, these ratings are used. If there is no independent rating, Management assesses the credit quality of the customer, taking into
account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with
limits set by the Board. The utilisation of credit limits is regularly monitored. Sales to retail customers are generally settled in cash or using major 
credit cards.

Note 24 provides both numerical and narrative disclosures regarding credit risk.

Liquidity risk

(c)
Prudent liquidity risk management involves maintaining sufficient cash reserves and maintaining the availability of funding through an adequate
amount of committed credit facilities. Due to the dynamic nature of the underlying businesses Group Treasury maintains flexibility in funding by
maintaining availability under committed credit lines.

Management monitors rolling forecasts of the Group’s liquidity reserve (comprising an undrawn borrowing facility (note 20) and cash and cash
equivalents (note 24)) on the basis of expected cash flow.

Capital risk management

2
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for
Shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

Further details are provided in note 24.

164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:45  Page 59

Annual Report and Accounts 2014 Johnson Service Group PLC  59

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Segment analysis

1
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-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 with 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 60 to 61.

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 and
leather cleaning.

➔ Johnsons Cleaners
➔ Jeeves

All Other Segments
Comprising of central and head office costs.

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60 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

1

Segment analysis continued

Year ended 31st December 2014

Revenue
Continuing

Total revenue

Result
Operating profit before amortisation and impairment of intangible assets 

(excluding software amortisation) and exceptional items

Amortisation and impairment of intangible assets (excluding software amortisation)
Exceptional items:
– Restructuring and other costs
– Costs in relation to business acquisition activity
– Pension costs

Operating profit/(loss)
Total finance cost

Profit before taxation
Taxation

Profit for the period – continuing operations
Result for the period – discontinued operations (note 32)

Profit for the period

Textile Rental
£m

Drycleaning
£m

All Other Segments
£m

155.0

55.4

–

23.8
(1.6)

(1.3)
(0.6)
–

20.3

1.6
–

–
–
–

1.6

(3.6)
–

–
–
(4.9)

(8.5)

Other information
Fixed asset additions
– Property, plant and equipment
– Textile rental items
– Intangible software
Depreciation and amortisation expense
– Property, plant and equipment
– Textile rental items
– Customer contracts

Balance sheet information
Segment assets
Unallocated assets: Deferred income tax assets
Cash and cash equivalents

Total assets

Segment liabilities
Unallocated liabilities: Deferred income tax liabilities

Bank borrowings
Current income tax liabilities
Derivative financial liabilities
Post-employment benefit obligations

Discontinued Operations
£m

Textile Rental
£m

Drycleaning
£m

All Other Segments
£m

–
–
–

–
–
–

13.7
24.9
–

6.0
20.1
1.6

1.0
–
0.1

2.0
–
–

–
–
–

0.2
–
–

1.1

148.5

20.9

14.9

(4.1)

(37.2)

(17.7)

(3.4)

Total liabilities

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.

Total
£m

210.4

210.4

21.8
(1.6)

(1.3)
(0.6)
(4.9)

13.4
(1.8)

11.6
(3.0)

8.6
–

8.6

Total
£m

14.7
24.9
0.1

8.2
20.1
1.6

185.4
4.6
0.2

190.2

(62.4)
(1.8)
(25.6)
(1.5)
(0.4)
(18.5)

(110.2)

164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:45  Page 61

Annual Report and Accounts 2014 Johnson Service Group PLC  61

1

Segment analysis continued

Year ended 31st December 2013

Revenue
Continuing
Discontinued (note 32)

Total revenue

Result
Operating profit before amortisation and impairment of intangible assets 
(excluding software amortisation) and exceptional items

Amortisation and impairment of intangible assets (excluding software amortisation)
Exceptional items:
– Restructuring and other costs
– Pension credit

Operating profit/(loss)
Total finance cost

Profit before taxation
Taxation

Profit for the period – continuing operations
Loss for the period – discontinued operations (note 32)

Profit for the period

Textile Rental
£m

Drycleaning
£m

All Other Segments
£m

136.2

57.4

–

18.9

(0.6)

–
–

18.3

1.6

–

(1.2)
–

0.4

(3.5)

–

–
0.6

(2.9)

Other information
Fixed asset additions
– Property, plant and equipment
– Textile rental items
– Intangible software
Depreciation and amortisation expense
– Property, plant and equipment
– Textile rental items
– Intangible software
– Customer contracts

Balance sheet information
Segment assets
Unallocated assets: Deferred income tax assets
Cash and cash equivalents

Total assets

Segment liabilities
Unallocated liabilities:  Deferred income tax liabilities

Bank borrowings
Current income tax liabilities
Derivative financial liabilities
Post-employment benefit obligations

Total liabilities

Return on Capital Employed

Discontinued Operations
£m

Textile Rental
£m

Drycleaning
£m

All Other Segments
£m

0.1
–
0.2

0.2
–
0.2
1.2

2.2

4.7
19.5
–

4.2
18.2
–
0.6

1.4
–
–

2.1
–
–
–

–
–
–

0.2
–
–
–

116.4

22.4

10.6

(5.0)

(31.1)

(19.4)

(3.6)

42.9%

22.1%

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

Total
£m

193.6
29.0

222.6

17.0

(0.6)

(1.2)
0.6

15.8
(3.6)

12.2
(2.4)

9.8
(9.1)

0.7

Total
£m

6.2
19.5
0.2

6.7
18.2
0.2
1.8

151.6
4.5
3.4

159.5

(59.1)
–
(25.0)
(0.3)
(0.3)
(4.3)

(89.0)

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62 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

2

Expenses by function

Revenue
Rendering of services
Sale of goods

Total revenue
Costs recharged to customers
Cost of sales
Administrative costs
Distribution costs

Operating profit/(loss) before amortisation and 

impairment of intangible assets (excluding software 
amortisation) and exceptional items

Amortisation and impairment of intangible assets 

(excluding software amortisation)

Exceptional items

Operating profit/(loss)

Continuing
2014
£m

205.4
5.0

210.4
–
(134.7)
(27.8)
(26.1)

21.8

(1.6)
(6.8)

13.4

Discontinued
2014
£m

Total
2014
£m

Continuing
2013
£m

Discontinued
2013
£m

–
–

–
–
–
(0.3)
–

(0.3)

–
–

(0.3)

205.4
5.0

210.4

––
(134.7)
(28.1)
(26.1)

21.5

(1.6)
(6.8)

13.1

189.0
4.6

193.6

(127.6)
(25.6)
(23.4)

17.0

(0.6)
(0.6)

15.8

29.0
–

29.0
(2.5)
(20.6)
(3.6)
–

2.3

(1.2)
(1.3)

(0.2)

The costs outlined below have been charged to the Income Statement in deriving operating profit/(loss):

Continuing
2014
£m

Discontinued
2014
£m

Employee benefit expense (Note 4)
Costs recharged to customers
Auditors’ remuneration (Note 3)
Amortisation of intangible assets:
– Software
– Other intangible assets
Depreciation and impairment of tangible fixed assets:
– Property, plant and equipment held under finance 

agreements

– Owned property, plant and equipment
– Textile rental items
Operating leases:
– Land and buildings
– Sublet rental income
– Plant and equipment

3

Auditors’ remuneration

91.9
–
0.6

–
1.6

0.9
7.3
20.1

12.5
(1.6)
2.7

–
–
–

–
–

–
–
–

0.5
(0.1)
–

Total
2014
£m

91.9

––

0.6

––

1.6

0.9
7.3
20.1

13.0
(1.7)
2.7

Continuing
2013
£m

Discontinued
2013
£m

86.2
2
0.5

0
0.6

0.7
5.8
18.2

13.5
(1.7)
2.9

7.9
.5
0.8

.2
1.2

–
0.2
–

0.8
(0.3)
0.1

Auditors’ remuneration
Fees payable for the audit of the Company
Fees payable for the audit of the Company’s subsidiaries and pension schemes
Fees payable for services relating to tax compliance
Fees payable for services relating to corporate finance transactions and transaction services

2014
£m

0.1
0.2
0.1
0.2

0.6

Total
2013
£m

218.0
4.6

222.6
(2.5)
(148.2)
(29.2)
(23.4)

19.3

(1.8)
(1.9)

15.6

Total
2013
£m

94.1
2.5
1.3

0.2
1.8

0.7
6.0
18.2

14.3
(2.0)
3.0

2013
£m

0.2
0.2
0.1
0.8

1.3

Included within the above is an amount of £53,600 (2013: £nil) in respect of fees payable to the Company’s auditors for services relating to the audit
of the Company’s pension schemes.

Fees payable for services relating to corporate finance transactions and transaction services are largely in relation to the acquisition of Bourne
Services Group Limited in 2014 and the disposal of the Facilities Management division in 2013.

164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:45  Page 63

Annual Report and Accounts 2014 Johnson Service Group PLC  63

4

Employee benefit expense

Continuing operations

Wages and salaries
Social security costs
Redundancy costs
Cost of employee share schemes (Note 27)
Private healthcare costs
Pension costs – defined benefit plans current service cost (Note 23)
Pension costs – defined contribution plans (Note 23)

Total

Employee benefit expenses relating to discontinued operations were £nil (2013: £7.9 million).

Redundancy costs of £nil (2013: £0.6 million) have been included within exceptional costs.

The monthly average number of persons (including Executive Directors) employed by the Group during the year was:

Continuing operations

Textile Rental
Drycleaning
All other segments 

Total

2014
£m

82.6
6.3
0.2
0.4
0.5
0.3
1.6

91.9

2014

2,959
1,747
17

4,723

2013
£m

76.1
6.7
0.7
0.5
0.5
0.5
1.2

86.2

2013

2,667
1,903
18

4,588

The monthly average number of persons (including Executive Directors) employed by the Group relating to discontinued operations was nil (2013: 537).

Directors’ emoluments

5
Detailed disclosures that form part of these financial statements are given in the Board Report on Remuneration on pages 34 to 41.

6

Exceptional items

Restructuring and other costs – Textile Rental

– Drycleaning

Costs in relation to business acquisition activity
Pension (costs)/credits

Total exceptional items

2014
£m

(1.3)
–

(1.3)
(0.6)
(4.9)

(6.8)

2013
£m

–
(1.2)

(1.2)
–
0.6

(0.6)

Exceptional items in relation to discontinued operations have been included within the result from discontinued operations (see note 32).

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. Of the total cost,
£0.7 million was non-cash relating to the impairment of property, plant and equipment. A further cost of £1.0 million is expected to be charged to
exceptional items in 2015.

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 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.

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A
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E
G

I

C

R
E
P
O
R
T

C
O
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P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E

G
R
O
U
P
F

I

I

N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S

C
O
M
P
A
N
Y

F

I

N
A
N
C
A
L

I

S
T
A
T
E
M
E
N
T
S

S
H
A
R
E
H
O
L
D
E
R

I

N
F
O
R
M
A
T
O
N

I

 
 
 
 
 
 
 
164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:45  Page 64

64 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

Exceptional items continued

6
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.

7

Total finance cost

Finance cost:
– Interest payable on bank loans and overdrafts
– Amortisation of bank facility fees
– Provision discount unwind
– Interest payable on obligations under finance leases

Total finance cost before notional interest on post-employment benefit obligations

Notional interest on post-employment benefit obligations:
– Pension scheme liability
– Private healthcare

Total finance cost

In addition, interest of £nil (2013: £0.7 million) has been charged to discontinued operations (see note 32).

8

Adjusted profit before and after taxation

Continuing operations

Profit before taxation
Amortisation and impairment of intangible assets (excluding software amortisation)
Restructuring and other costs
Costs in relation to business acquisition activity
Pension costs/(credits)

Adjusted profit before taxation
Taxation on adjusted profit

Adjusted profit after taxation

9

Taxation

Current tax
UK corporation tax charge for the year
Adjustment in relation to previous years

Current tax charge for the year

Deferred tax
Origination and reversal of temporary differences
Changes in statutory tax rate
Adjustment in relation to previous years

Deferred tax charge for the year

Total charge for taxation included in the Income Statement for continuing operations

2014
£m

(1.2)
(0.2)
(0.1)
(0.1)

(1.6)

(0.1)
(0.1)

(0.2)

(1.8)

2014
£m

11.6
1.6
1.3
0.6
4.9

20.0
(4.5)

15.5

2014
£m

2.9
(0.4)

2.5

(0.1)
–
0.6

0.5

3.0

2013
£m

(2.1)
(0.5)
(0.1)
(0.1)

(2.8)

(0.7)
(0.1)

(0.8)

(3.6)

2013
£m

12.2
0.6
1.2
–
(0.6)

13.4
(2.9)

10.5

2013
£m

1.4
(0.1)

1.3

1.5
0.3
(0.7)

1.1

2.4

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Annual Report and Accounts 2014 Johnson Service Group PLC  65

Taxation continued

9
The tax charge for the period is higher (2013:
differences are explained below:

lower) than the effective rate of Corporation Tax in the UK of 21.50% (2013: 23.25%). The

Profit before taxation per the Income Statement

Profit before taxation multiplied by the effective rate of UK Corporation Tax

Factors affecting taxation charge for the year:
Tax effect of expenses not deductible for tax purposes
Changes in statutory tax rate
Adjustments to tax in respect of prior periods

Total charge for taxation included in the Income Statement for continuing operations

2014
£m

11.6

2.5

0.3
–
0.2

3.0

2013
£m

12.2

2.8

0.2
0.2
(0.8)

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 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
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 recognised directly in 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.

10

Dividends

Ordinary dividends paid and proposed

Dividends per share
Final dividend proposed
Interim dividend paid
Final dividend paid

Shareholders’ funds utilised

Final dividend proposed
Interim dividend paid
Final dividend paid

2014

1.20p
0.50p
–

2014
£m

3.6
1.5
–

2013

–
0.40p
0.81p

2013
£m

–
1.0
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.

S
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I

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P
O
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T

C
O
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P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E

G
R
O
U
P
F

I

I

N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S

C
O
M
P
A
N
Y

F

I

N
A
N
C
A
L

I

S
T
A
T
E
M
E
N
T
S

S
H
A
R
E
H
O
L
D
E
R

I

N
F
O
R
M
A
T
O
N

I

 
 
 
 
 
 
 
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66 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

11

Earnings per share

Profit for the financial year from continuing operations attributable to Shareholders
Result/(loss) for the financial year from discontinued operations attributable to Shareholders
Amortisation and impairment of intangible assets from continuing operations (net of taxation)
Amortisation and impairment of intangible assets from discontinued operations (net of taxation)
Exceptional costs from continuing operations (net of taxation)
Exceptional (credit)/costs from discontinued operations (net of taxation)
Exceptional finance costs from discontinued operations (net of taxation)

Adjusted profit attributable to Shareholders relating to continuing operations
Adjusted (loss)/profit attributable to Shareholders relating to discontinued operations

Adjusted profit attributable to Shareholders

Weighted average number of Ordinary shares
Dilutive potential Ordinary shares*

Fully diluted number of Ordinary shares

Basic earnings per share
From continuing operations
From discontinued operations

From continuing and discontinued operations

Adjustments for amortisation and impairment of intangible assets (continuing operations)
Adjustments for amortisation and impairment of intangible assets (discontinued operations)
Adjustment for exceptional items (continuing operations)
Adjustment for exceptional items (discontinued operations)
Adjustment for exceptional finance costs (discontinued operations)

Adjusted basic earnings per share (continuing operations)
Adjusted basic earnings per share (discontinued operations)

Adjusted basic earnings per share from continuing and discontinued operations

Diluted earnings per share
From continuing operations
From discontinued operations

From continuing and discontinued operations

Adjustments for amortisation and impairment of intangible assets (continuing operations)
Adjustments for amortisation and impairment of intangible assets (discontinued operations)
Adjustment for exceptional items (continuing operations)
Adjustment for exceptional items (discontinued operations)
Adjustment for exceptional finance costs (discontinued operations)

Adjusted diluted earnings per share (continuing operations)
Adjusted diluted earnings per share (discontinued operations)

Adjusted diluted earnings per share from continuing and discontinued operations

* Includes outstanding share options granted to employees.

2014
£m

8.6
–
1.2
–
5.7
(0.2)
–

15.5
(0.2)

15.3

2013
£m

9.8
(9.1)
0.5
0.9
0.2
9.2
0.5

10.5
1.5

12.0

291,829,363
5,001,228

296,830,591

258,032,874
16,455,525

274,488,399

2.9p
–

2.9p

0.4p
–
2.0p
–
–

5.3p
–

5.3p

2.9p
–

2.9p

0.4p
–
1.9p
–
–

5.2p
–

5.2p

3.8p
(3.6p)

0.2p

0.2p
0.4p
–
3.6p
0.2p

4.0p
0.6p

4.6p

3.6p
(3.4p)

0.2p

0.2p
0.3p
–
3.4p
0.2p

3.8p
0.5p

4.3p

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.

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Annual Report and Accounts 2014 Johnson Service Group PLC  67

Earnings per share continued

11
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.

12

Goodwill

Cost
Brought forward
Business acquisitions (see note 31)
Transfer to assets held for resale

Carried forward

Accumulated impairment losses
Brought forward
Transfer to assets held for resale

Carried forward

Carrying amount
Opening

Closing

2014
£m

54.0
3.8
–

57.8

1.6
–

1.6

52.4

56.2

2013
£m

92.3
–
(38.3)

54.0

8.1
(6.5)

1.6

84.2

52.4

In accordance with International Financial Reporting Standards, goodwill is not amortised, but instead is tested annually for impairment and carried at
cost less accumulated impairment losses.

Impairment tests for goodwill
The allocation of goodwill to Cash Generating Units (CGUs) has been based upon operating segments as this is the level at which the Board monitors
goodwill, and is allocated as follows:

Textile Rental
Drycleaning

2014
£m

47.1
9.1

56.2

2013
£m

43.3
9.1

52.4

The recoverable amount of a CGU is primarily determined based on value-in-use calculations. These calculations use pre-tax cash flow projections
based on financial budgets, covering three years, which are approved by the Board. Income and costs within the budgets are derived on a detailed,
‘bottom up’ basis – all income streams and cost lines are considered and appropriate growth, or decline, rates are assumed for each, all of which are
then reviewed and challenged, firstly by senior management and ultimately by the Board. Income and cost growth forecasts are risk adjusted to
reflect specific risks facing each CGU and take into account the markets in which they operate. Cash flows beyond the budgeted period are
extrapolated using the estimated growth rate stated below. Anticipated cash flows beyond a period of 20 years have been ignored. Within the
Drycleaning operating segment, the benefit of the changes announced after the year end and disclosed in note 36, Events after the reporting period,
have not been included in the value-in-use calculations. The growth rate does not exceed the long-term average growth rate for the markets in which
the CGU operates. Further, it is assumed that there are no material adverse changes in legislation that would affect the forecast cashflows.

The pre-tax discount rate used within the recoverable amount calculations was 4.83% (2013: 6.87%) and is based upon the weighted average cost
of capital reflecting specific principal risks and uncertainties applicable to each CGU. The discount rate takes into account, amongst other things, the
risk free rate of return (derived from a 20 year government bond price), the market risk premium and a predictive Beta factor for the Group (from the
Barra Beta Book) which are used in deriving the cost of equity, and the cost of debt.

S
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I

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O
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T

C
O
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P
O
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A
T
E
G
O
V
E
R
N
A
N
C
E

G
R
O
U
P
F

I

I

N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S

C
O
M
P
A
N
Y

F

I

N
A
N
C
A
L

I

S
T
A
T
E
M
E
N
T
S

S
H
A
R
E
H
O
L
D
E
R

I

N
F
O
R
M
A
T
O
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I

 
 
 
 
 
 
 
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68 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

Goodwill continued

12
The same discount rate has been used for each CGU as the principal risks associated with the Group, as highlighted on pages 16 to 19 of this
report, as being the highest likelihood or impact, would also impact each CGU in a similar manner. The Board acknowledge that there are additional
factors that could impact the risk profile of each CGU given the difference in operations, customer base and trading performance over recent years.
These additional factors were considered by way of sensitivity analysis performed as part of the annual impairment tests. The level of impairment
recognised is predominantly dependent upon judgements used in arriving at future growth rates and the discount rate applied to cash flow
projections. Key drivers to future growth rates are dependent on the Group’s ability to maintain and grow income streams whilst effectively managing
operating costs. The level of headroom may change if different growth rate assumptions or if a different pre-tax discount rate was used in the cash
flow projections. 

Where the value-in-use calculations suggest an impairment, the Board consider alternative use values prior to realising any impairment. Alternative
use values may include, inter alia, fair value less costs to dispose.

The key assumptions used for value-in-use calculations are as follows:

2014

2013

Growth rate (after budget period)
Risk free rate of return
Market risk premium
Beta factor
Cost of debt
Textile Rental
Having completed the 2014 impairment review no impairment has been recognised in relation to the Textile Rental operating segment (2013: No
impairment). Sensitivity analysis has been performed in assessing the recoverable amounts of goodwill. There are no changes to the key assumptions
of growth rate or discount rate that are considered by management to be reasonably possible, which give rise to an impairment of goodwill relating to
the Textile Rental operating segment.

2.50%
2.91%
6.00%
0.37
3.02%

2.50%
3.50%
6.00%
0.65
4.10%

Drycleaning
Having completed the 2014 impairment review no impairment has been recognised in relation to the Drycleaning operating segment (2013: No
impairment). Sensitivity analysis has been performed in assessing the recoverable amounts of goodwill. The excess valuation of the recoverable
amount over the carrying value within the Drycleaning operating segment is £1.3 million. If either the discount rate was to increase by 0.6%, or the
growth rate (after the budgeted period) was to reduce by 1.0% then the recoverable amount would equal the carrying value.

Given the low level of headroom, and the relatively modest changes in assumptions required to reduce this headroom to nil, alternative valuation
methods have also been considered. Using a fair value less costs to dispose approach, which includes the benefit, and associated costs, of the
restructuring announced January 2015, the headroom is £9.8 million. For this headroom to reduce to nil either the discount rate would need to
increase to 8.75% or the growth rate reduce to a negative 3.25%. Neither of these changes are considered to be reasonably possible.

13

Intangible assets

Cost
At 31st December 2012

Additions
Disposals
Transferred to assets held for resale

At 31st December 2013

Business acquisitions (see note 31)
Additions

At 31st December 2014

Accumulated amortisation
At 31st December 2012

Charged during the year
Disposals
Transferred to assets held for resale

At 31st December 2013

Charged during the year

At 31st December 2014

Capitalised Software
£m

Customer contracts
£m

2.5

0.2
(0.1)
(2.1)

0.5

–
0.1

0.6

1.9

0.2
(0.1)
(1.5)

0.5

–

0.5

31.8

–
–
(20.6)

11.2

10.2
–

21.4

22.3

1.8
–
(15.9)

8.2

1.6

9.8

Total
£m

34.3

0.2
(0.1)
(22.7)

11.7

10.2
0.1

22.0

24.2

2.0
(0.1)
(17.4)

8.7

1.6

10.3

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Annual Report and Accounts 2014 Johnson Service Group PLC  69

13

Intangible assets continued

Carrying amount
At 31st December 2012

At 31st December 2013

At 31st December 2014

Capitalised Software
£m

Customer contracts
£m

0.6

–

0.1

9.5

3.0

11.6

Total
£m

10.1

3.0

11.7

Amortisation of capitalised software is included within administrative costs in the Income Statement in determining operating profit before exceptional
items. Amortisation and impairment of other intangible assets is shown separately on the face of the Income Statement.

Other intangible assets comprise of brands and customer contracts and relationships, as a result of business combinations. For assets resulting from
a business combination fair value is calculated based upon historical and prospective information and financial data specific to each business
combination, with an appropriate discount factor applied based upon weighted average cost of capital for the Group.

Other intangible assets have a finite useful life and are carried at cost less accumulated amortisation. Amortisation of other intangible assets is
calculated using the straight-line method to allocate the cost of the assets over their estimated useful lives (4 – 10 years). The longest estimated
useful life remaining at 31st December 2014 is 7 years.

14

Property, plant and equipment

Cost
At 31st December 2012

Additions
Disposals
Transfer
Transferred to assets held for resale

At 31st December 2013

Business acquisitions (see note 31)
Additions
Disposals

At 31st December 2014

Accumulated depreciation and impairment
At 31st December 2012

Charged during the year
Eliminated on disposals
Transfer
Transferred to assets held for resale

At 31st December 2013

Charged during the year
Eliminated on disposals

At 31st December 2014

Carrying amount
At 31st December 2012

At 31st December 2013

At 31st December 2014

Properties

Long
Leasehold
£m

Short
Leasehold
£m

Plant
and
Equipment
£m

5.1

–
(0.3)
–
–

4.8

–
–
–

4.8

1.8

–
(0.1)
–
–

1.7

–
–

1.7

3.3

3.1

3.1

3.0

–
–
–
–

3.0

–
1.4
–

4.4

1.9

0.1
–
–
–

2.0

0.1
–

2.1

1.1

1.0

2.3

91.4

6.2
(14.6)
(0.4)
(3.9)

78.7

5.0
13.1
(1.9)

94.9

63.8

6.5
(14.2)
(0.2)
(2.7)

53.2

7.5
(1.8)

58.9

27.6

25.5

36.0

Freehold
£m

10.8

–
–
0.4
–

11.2

3.9
0.2
–

15.3

4.5

0.1
–
0.2
–

4.8

0.6
–

5.4

6.3

6.4

9.9

Total
£m

110.3

6.2
(14.9)
–
(3.9)

97.7

8.9
14.7
(1.9)

119.4

72.0

6.7
(14.3)
–
(2.7)

61.7

8.2
(1.8)

68.1

38.3

36.0

51.3

S
T
R
A
T
E
G

I

C

R
E
P
O
R
T

C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E

G
R
O
U
P
F

I

I

N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S

C
O
M
P
A
N
Y

F

I

N
A
N
C
A
L

I

S
T
A
T
E
M
E
N
T
S

S
H
A
R
E
H
O
L
D
E
R

I

N
F
O
R
M
A
T
O
N

I

The value of assets under construction at 31st December 2014 was £1.5 million (2013: £0.2 million).

 
 
 
 
 
 
 
164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:45  Page 70

70 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

Property, plant and equipment continued

14
The net book value of plant and equipment held under finance leases is as follows:

Plant and equipment

15

Textile rental items

Cost
Brought forward
Additions
Business acquisition (see note 31)
Disposals
Special charges

Carried forward

Accumulated depreciation
Brought forward
Charged during the year
Disposals
Special charges

Carried forward

Carrying amount
Opening

Closing

16

Inventories

New textile rental items
Goods for resale
Raw materials and stores

The movement in the carrying value of inventories during the year is as follows:

Opening inventories
Purchases
Business acquisition (see note 31)
Amounts transferred to textile rental items
Amounts transferred to cost of sales
Amounts written off during the year
Provision utilised during the year

2014
£m

3.5

2014
£m

46.0
24.9
1.6
(17.0)
(3.8)

51.7

20.0
20.1
(17.0)
(1.9)

21.2

26.0

30.5

2014
£m

0.8
0.4
0.9

2.1

2014
£m

2.0
35.2
0.3
(24.9)
(10.4)
(0.1)
–

2.1

2013
£m

2.9

2013
£m

46.8
19.5
–
(15.9)
(4.4)

46.0

19.9
18.2
(15.9)
(2.2)

20.0

26.9

26.0

2013
£m

0.7
0.4
0.9

2.0

2013
£m

2.3
26.2
–
(19.5)
(7.0)
(0.1)
0.1

2.0

164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:45  Page 71

Annual Report and Accounts 2014 Johnson Service Group PLC  71

17

Trade and other receivables

Amounts falling due within one year:
Trade receivables
Less: provision for impairment of receivables

Trade receivables – net
Other receivables
Prepayments
Accrued income

Amounts falling due after more than one year:
Other receivables

2014
£m

24.2
(1.6)

22.6
2.3
3.1
2.3

30.3

3.3

33.6

During the year, the Group recognised a bad debt provision expense relating to continuing operations of £0.5 million (2013: £0.8 million).

The ageing of trade receivables, other receivables and accrued income is analysed below:

Trade receivables, other receivables and accrued income
– Not yet due and up to 3 months overdue
– 3 to 6 months past due
– 6 to 12 months past due
– Over 12 months past due

Gross
£m

30.7
0.7
0.2
0.5

32.1

Provision
£m

(0.8)
(0.1)
(0.2)
(0.5)

(1.6)

2014
Net
£m

29.9
0.6
–
–

30.5

Gross
£m

30.7
0.6
0.1
0.4

31.8

Provision
£m

(1.1)
(0.1)
(0.1)
(0.4)

(1.7)

2013
£m

22.1
(1.7)

20.4
2.6
2.1
3.7

28.8

3.4

32.2

2013
Net
£m

29.6
0.5
–
–

30.1

Trade and other receivables which are less than three months past due are not considered impaired unless specific information indicates otherwise.
Trade and other receivables greater than three months past due are considered for recoverability, and where appropriate, a provision is recognised.

All trade and other receivable balances at the balance sheet date are denominated in Sterling (2013: Sterling), and are held at amortised cost. Given
the short term nature there is deemed to be no difference between this and fair value.

There is limited concentration of credit risk with respect to trade receivables due to the diverse and unrelated nature of the Group’s customers.
Accordingly, the Directors believe that no further credit provision is required in excess of the provision for impairment of trade receivables.

The movement in the provision for trade and other receivables is analysed below:

At 1st January
Provisions for receivables impairment
Amounts unused reversed
Receivables written off during the year as uncollectable

At 31st December

2014
£m

(1.7)
(0.7)
0.2
0.6

(1.6)

2013
£m

(1.6)
(1.0)
0.2
0.7

(1.7)

The creation and release of the provision for impaired receivables has been included in ‘administrative costs’ in the Income Statement when related to
continuing activities. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.
The figures in the table above reflect both continuing and discontinued operations.

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable detailed within this note. The Group does not
hold any collateral as security.

S
T
R
A
T
E
G

I

C

R
E
P
O
R
T

C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E

G
R
O
U
P
F

I

I

N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S

C
O
M
P
A
N
Y

F

I

N
A
N
C
A
L

I

S
T
A
T
E
M
E
N
T
S

S
H
A
R
E
H
O
L
D
E
R

I

N
F
O
R
M
A
T
O
N

I

 
 
 
 
 
 
 
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72 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

18

Trade and other payables

Trade payables
Other payables
Other taxation and social security liabilities
Deferred income
Accruals

2014
£m

13.4
2.7
6.4
1.7
19.5

43.7

2013
£m

10.7
2.7
5.9
1.3
17.0

37.6

All trade and other payables balances at the balance sheet date are denominated in Sterling (2013: Sterling), and are held at amortised cost. Given
the short term nature there is deemed to be no difference between this and fair value.

19

Other non-current liabilities

Deferred income
Accruals

20

Borrowings

Current
Overdraft
Bank loans
Obligations under finance lease agreements

Non-current
Bank loans
Obligations under finance lease agreements

The maturity of non-current bank loans is as follows:
– Between one and two years
– Between two and five years
– Unamortised issue costs of bank loans

2014
£m

–
0.9

0.9

2014
£m

5.1
0.8
1.0

6.9

19.7
2.1

21.8

28.7

–
20.0
(0.3)

19.7

2013
£m

0.1
0.8

0.9

2013
£m

–
–
0.8

0.8

25.0
2.1

27.1

27.9

25.0
–
–

25.0

At the 31st December 2014, the bank loan was drawn under the facility entered into on 21st February 2014. This facility comprises a £60.0 million
revolving credit facility, including an overdraft, which runs to May 2018 together with an additional short term facility which was due to expire on
20th February 2015. The additional short term facility was, however, cancelled on 13th November 2014 such that available facilities at
31st December 2014 were £60.0 million (2013: available facility of £50.0 million).

The Group has two overdraft facilities for £5.0 million and £3.0 million with two of its principal bankers (2013: £5.0 million and £nil).

Prior to 21st February 2014 loans were drawn under the £50.0 million facility dated 7th August 2013.

Individual tranches were drawn down, in sterling, for periods of up to six months at LIBOR rates of interest prevailing at the time of drawdown, plus
the applicable margin which for the facility dated 21st February 2014 ranges from 1.50% to 2.25%. For the facility dated 7th August 2013 the
applicable margin ranged from 2.50% to 3.00%.

Amounts drawn under the revolving credit facility have been classified as either current or non current depending upon when the loan is expected to
be repaid.

164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:45  Page 73

Annual Report and Accounts 2014 Johnson Service Group PLC  73

Borrowings continued

20
The secured bank loans are stated net of unamortised issue costs of £0.5 million (2013: £nil). Details of the security are provided in note 25 of the
consolidated financial statements.

Finance leases
Obligations under finance lease agreements are as follows:

Not more than one year
Minimum lease payments
Interest element

Present value of minimum lease payments

Between one and five years
Minimum lease payments
Interest element

Present value of minimum lease payments

2014
£m

1.1
(0.1)

1.0

2.2
(0.1)

2.1

2013
£m

0.9
(0.1)

0.8

2.2
(0.1)

2.1

Finance lease obligations are secured on the assets to which they relate. Under the terms of the lease agreements, no contingent rents are payable.

Deferred taxation

21
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current income tax assets against current
income tax liabilities and when the deferred income taxes relate to the same fiscal authority. The offset amounts are as follows:

Deferred income tax balances in respect of:

Depreciation in excess of capital allowances
Employee share schemes
Post-employment benefit obligations
Derivative financial liabilities
Other short term timing differences
Separately identifiable intangible assets

Deferred Income
Tax Assets
––––––––––––––––––––––––––––––––––––––––––
2013
£m

2014
£m

Deferred Income
Tax Liabilities
––––––––––––––––––––––––––––––––––––––––––
2013
£m

2014
£m

0.3
0.1
3.7
0.1
0.4
–

4.6

2.4
1.0
0.9
0.1
0.1
–

4.5

–
–
–
–
–
1.8

1.8

–
–
–
–
–
–

–

The deferred income tax assets disclosed above are deemed to be recoverable.

Tax losses of approximately £23.7 million were acquired as part of the acquisition of Sketchley Limited in May 2004. The method of utilisation of the
losses has been formally agreed with HM Revenue & Customs; however there is no certainly that the tax relating to these losses will be recovered in
the future. Accordingly, no deferred income tax asset has been recognised within these financial statements in respect of the unutilised losses. At
31st December 2014, £1.4 million of these losses have been utilised, leaving future tax losses available of £22.3 million. Should the Group receive
relief for the losses at a future date, this will give rise to a liability to the vendor of Sketchley Limited of up to £2.6 million (assuming a corporation tax
rate of 20%), offsetting, in part, the tax benefit of the losses. Any payments due to the vendor are only payable when the Group has first received the
cash benefit of the losses. During 2014 none of these tax losses have been utilised (2013: £0.4 million).

S
T
R
A
T
E
G

I

C

R
E
P
O
R
T

C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E

G
R
O
U
P
F

I

I

N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S

C
O
M
P
A
N
Y

F

I

N
A
N
C
A
L

I

S
T
A
T
E
M
E
N
T
S

S
H
A
R
E
H
O
L
D
E
R

I

N
F
O
R
M
A
T
O
N

I

 
 
 
 
 
 
 
164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:45  Page 74

74 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

Deferred taxation continued

21
The following provides a reconciliation of the movement in each of the deferred income tax assets and liabilities:

At 31st December 2012

(Charge)/credit to income
Deferred income tax assets disposed of
Charge to other comprehensive income
Credit to Shareholders’ equity

At 31st December 2013

(Charge)/credit to income
Deferred income tax liabilities acquired
Credit to other comprehensive income
Charge to Shareholders’ equity

At 31st December 2014

Depreciation 
in excess of 
Capital 
Allowances
£m

Employee
Share
Schemes
£m

Post-
employment
Benefit
Obligations
£m

Derivative
Financial
Instruments
£m

Other
Short Term
Timing
Differences
£m

4.1

(0.4)
(1.3)
–
–

2.4

(1.3)
(0.8)
–
–

0.3

0.5

(0.5)
–
–
1.0

1.0

0.1
–
–
(1.0)

0.1

4.2

(0.4)
–
(2.9)
–

0.9

0.5
–
2.3
–

3.7

0.3

–
–
(0.2)
–

0.1

–
–
–
–

0.1

0.4

(0.3)
–
–
–

0.1

0.3
–
–
–

0.4

Intangible
Assets
£m

(0.2)

0.2
–
–
–

–

0.2
(2.0)
–
–

(1.8)

Total
£m

9.3

(1.4)
(1.3)
(3.1)
1.0

4.5

(0.2)
(2.8)
2.3
(1.0)

2.8

The deferred income tax charge to income in 2014 includes a credit of £0.3 million in respect of discontinued activities (2013: £0.3 million charge).

The rate of corporation tax in the UK reduced from 23% to 21% on 1st April 2014 and will reduce to 20% on 1st April 2015. As these changes were
reflected in the opening deferred income tax balances, this has had nil effect on the Income Statement, the Statement of Comprehensive Income or
taxation recognised directly in Shareholders’ equity.

22

Provisions

At 31st December 2012

Additional provision in the year
Provision discount unwind
Utilised during the year
Released during the year

At 31st December 2013

Additional provision in the year
Provision discount unwind
Utilised during the year

At 31st December 2014

Analysis of total provisions
Current
Non-current

Property
£m

23.6

0.4
0.1
(7.0)
(0.1)

17.0

0.7
0.1
(3.8)

14.0

Self
Insurance
£m

0.8

–
–
(0.1)
–

0.7

0.1
–
(0.1)

0.7

2014
£m

4.6
10.1

14.7

Total
£m

24.4

0.4
0.1
(7.1)
(0.1)

17.7

0.8
0.1
(3.9)

14.7

2013
£m

4.2
13.5

17.7

Property
The property provision includes the present value of onerous leases, expected lease dilapidation costs and the estimated remediation costs of
property where an environmental problem has been identified and the costs to rectify can be reliably measured. The estimates and judgements used
in determining the value of provisioning are continually evaluated and are based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances.

Self insurance
The self insurance provision is in respect of the estimated payments due to existing claimants under the self funded incapacity scheme over a period
of 16 years. This scheme is now closed.

164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:45  Page 75

Annual Report and Accounts 2014 Johnson Service Group PLC  75

Post-employment benefit obligations

23
The Group operates pension schemes of both the funded defined benefit and the defined contribution type for a substantial number of employees. In
addition, the Group also operates an unfunded defined benefit private healthcare scheme for eligible retirees. The disclosures below are in respect of
all of the Group schemes.

Pensions – defined contribution
The JSG Pension Plan is a defined contribution scheme. The total cost of employer contributions for the year for continuing operations was
£1.6 million (2013: £1.3 million of which £0.1 million relates to discontinued operations).

The SGP Property Services Group Pension Plan is a defined contribution scheme. This scheme left the Group with the disposal of the Facilities
Management division in August 2013, therefore the cost of employer contributions for the year was £nil (2013: £0.1 million).

Pensions – defined benefit
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, the Semara Augmented Pension Plan and the WML Final
Salary Pension Scheme to this new scheme.

A full actuarial valuation of the JGDBS was carried out at 5th October 2013 and has been updated to 31st December 2014 by an independent
qualified actuary. The JGDBS was closed to future accrual on 31st December 2014.

Johnson Group Defined Benefit Scheme (“JGDBS”)
The updated actuarial valuation at 31st December 2014 showed a deficit of £17.2 million (2013: £3.0 million). During the year, employer
contributions in respect of current service cost to the scheme were 9.4% of Pensionable Salaries, which equates to £0.5 million (2013: £0.3 million).

Deficit recovery payments of £2.0 million (period from 6th April 2013: £0.4 million) were made to the Scheme during the year. Further deficit
recovery payments of £1.9 million are expected to be made in 2015.

Johnson Group Staff Pension Scheme (“Staff Scheme”)
During the prior year the assets and liabilities of the Staff Scheme were transferred to the new JGDBS scheme effective 6th April 2013. In the
period to 5th April 2013 employer contributions were 9.4% of Pensionable Salaries. No deficit recovery payments were paid during 2014 (2013:
£1.3 million).

Semara Augmented Pension Plan (“SAPP Scheme”)
During the prior year the assets and liabilities of the SAPP Scheme were transferred to the new JGDBS scheme effective 6th April 2013. From April
2011 there were no longer any active members of this scheme. No deficit recovery payments were paid during 2014 (2013: £nil).

WML Final Salary Pension Scheme (“WML Scheme”)
During the prior year the assets and liabilities of the WML Scheme were transferred to the new JGDBS scheme effective 6th April 2013. The last
remaining active member left the WML scheme on 31st December 2012. No deficit recovery payments were paid during 2014 (2013: £0.2 million).

Actuarial assumptions
Considerations when calculating the IAS 19 liability
IAS19(R) sets out prescribed (qualitative) conditions for selecting the actuarial assumptions used to calculate the pension liabilities and pension
costs. A key assumption is the discount rate which is used to determine the value of pension liabilities at the balance sheet date. The selection of the
price inflation assumptions (both RPI and CPI) is also critical as these are relevant for the pre-retirement revaluation and pension increases in
payment assumptions.

These assumptions are based on market yields at the balance sheet date, and may not be borne out in practice due to the long-term expected
duration of the Schemes. The weighted average duration of the defined benefit obligation is approximately is 15 years (2013: 16 years). Within the
prescribed conditions however, assumptions must be mutually compatible and lead to the best estimate of the future cash flows in respect of 
pension liabilities.

S
T
R
A
T
E
G

I

C

R
E
P
O
R
T

C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E

G
R
O
U
P
F

I

I

N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S

C
O
M
P
A
N
Y

F

I

N
A
N
C
A
L

I

S
T
A
T
E
M
E
N
T
S

S
H
A
R
E
H
O
L
D
E
R

I

N
F
O
R
M
A
T
O
N

I

 
 
 
 
 
 
 
164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:45  Page 76

76 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

23
Post-employment benefit obligations continued
A summary of relevant considerations is set out below:

Assumption for valuing pension liabilities

Comments on prescribed conditions

Discount rate (pre and post retirement)

Retail Price inflation (RPI)

Based on yields on “high quality” corporate bonds of appropriate duration and currency, or a
suitable proxy. Our approach is to value sample pensioner and non-pensioner cash flows with
different durations using a yield curve approach and to calculate the single equivalent discount
rate for each set of cash flows

Based on the yield differential between index-linked bonds and fixed-interest bonds of
appropriate duration and of a similar credit standing (for example, using spot yields derived from
the inflation yield curve published by the Bank of England) with the allowance for an inflation
premium to reflect market conditions

Consumer Price Inflation (CPI)

Based on the RPI assumption with an adjustment to reflect the historic differences between
the RPI and CPI indices

Salary inflation

Pension increases

Assumed to be zero following the Pensionable Salary freeze introduced with effect from
6th April 2010 and closure to future accrual with effect from 31st December 2014

Based on the rate of price inflation below taking into account the effects of scheme rules and
valid expectations of discretionary increases based on past practice

Demographic assumptions
(e.g. rates of mortality and early retirement)

Based on assumptions that lead to a best estimate of future cash flows

Considerations when calculating the IAS19 expected return on Scheme assets
Under IAS19(R), the expected return on scheme assets (Interest income), is deemed to be the same as the rate used to discount scheme liabilities.

Assumptions used

Rate used to discount scheme liabilities
Retail price inflation
Consumer price inflation
Rate of increase of pensions in payment (5.0% RPI linked)
Rate of increase of pensions in payment (2.5% RPI linked)
Rate of increase of pensions in payment (2.5% CPI linked)
Rate of increase of pensions in deferment (JGDBS Scheme)
Rate of increase in pensionable salaries
Future service pension increases

2014

3.65%
2.95%
1.65%
2.85%
2.00%
1.50%
1.65%
0.00%
n/a

2013

4.60%
3.30%
2.30%
3.20%
2.15%
1.85%
2.30%
0.00%
2.15%

Life expectancy at age 60 for current male pensioners is assumed to be 26.7 years (2013: 26.1 years). Life expectancy at age 60 for future male
pensioners is assumed to be 27.4 years (2013: 26.5 years). “S1NXA CMI 2014 with a 1.0% long term trend rate” has been used to derive these
mortality rates (2013: “S1NXA CMI 2010 with a 0.5% long term trend rate” used).

It is assumed that 100% of non-retired members of the JGDBS will commute 25% of their pension at retirement (2013: 100% of members will
commute 25% of pension).

It has been assumed that 50% (2013: 33%) of future pensioners at retirement will exchange their non-statutory pension increases at retirement for a
higher, but non-increasing pension.

164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:45  Page 77

Annual Report and Accounts 2014 Johnson Service Group PLC  77

Post-employment benefit obligations continued

23
Sensitivity of key assumptions
The table below gives an approximation of the impact on the IAS19(R) pension scheme liabilities to changes in assumptions and experience. Note that
all figures are before allowing for deferred tax.

Item

Increase/reduce discount rate by 0.1%
Increase/reduce price inflation assumption by 0.1%
Increase/drop in equity markets by 5.0%

Approximate increase/(decrease) on
post-employment benefit obligation

(£3.1 million)/£3.1 million
£1.3 million/(£1.2 million)
(£3.3 million)/£3.3 million

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to
occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant
actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of
the reporting period) has been applied as when calculating the pension liability recognised within the Balance Sheet. The methods and types of
assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

Private healthcare
The Group operates an unfunded defined benefit private healthcare scheme for eligible retirees. At 31st December 2014, the deficit of the scheme
was £1.3 million (2013: £1.3 million). The Group accounted for a current service cost of £nil and a notional interest cost of £0.1 million in the Income
Statement (2013: £nil and £0.1 million respectively). Following the latest formal review, current service cost in 2015 is expected to be £2,000 with a
notional interest cost of £45,000.

The scheme is subject to a periodic independent actuarial review which assesses the cost of providing benefits for current and future eligible retirees.
The latest formal review was undertaken as at 31st December 2014, with the previous review being as at 31st December 2009.

The latest review was performed using the projected unit credit method, and a discount rate of 3.75% (2009: 5.80%). The main long term actuarial
assumptions used in the review were that the retirement age of eligible employees will be 60 for females and males and the rate of increase in
medical costs is to be 5.5% throughout (2009: 9.5% for 2010, reducing over the next 4 years to 4.5%). There have been no material changes in
circumstances since the last formal review.

An increase of 1% in the medical cost trend would increase the scheme liabilities by £0.1 million and the aggregate of the service cost and interest
cost by £4,000 per annum. A decrease of 1% in the medical cost trend would reduce the scheme liabilities by £0.1 million and the aggregate of the
service cost and interest cost by £4,000 per annum.

Post-employment benefit obligations disclosures
The amounts charged to the Income Statement are set out below:

Current service costs – charged to administrative costs
Past service costs (including associated expenses) – charged as an exceptional item
Settlement gain (net of associated expenses) – credited as an exceptional item
Net interest on defined benefit net liability

Total amounts charged to the Income Statement

2014
£m

0.3
4.9
–
0.2

5.4

2013
£m

0.5
–
(0.6)
0.8

0.7

Current service costs are charged or credited to the Income Statement in arriving at operating profit before amortisation and impairment of intangible
assets (excluding software amortisation) and exceptional items. Past service costs or credits and settlement gains or losses are charged or credited
to exceptional items.

Past service costs of £4.7 million, along with associated costs of £0.2 million, arose as a result of the closure of the JGDBS to future accrual as at
31st December 2014.

The prior year settlement gain (net of associated expenses) arose as a result of the winding up of the three pension schemes. Members with small
benefits were offered the option of taking their benefits as a ‘winding up lump sum’. The difference between the payments of £3.9 million and the
liabilities extinguished of £5.1 million was reflected in the Income Statement, net of £0.6 million of associated fees.

The interest income on scheme assets and the interest cost on scheme liabilities are included within total finance costs.

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78 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

Post-employment benefit obligations continued

23
In addition, the following amounts have been recognised in the Statement of Comprehensive Income:

Return on scheme assets (excluding interest income)
Re-measurement losses arising from changes in demographic assumptions
Re-measurement losses arising from changes in financial assumptions
Experience losses on liabilities

Total amounts recognised in the Statement of Comprehensive Income

Amounts recognised in the Balance Sheet are as follows:

Present value of funded obligations
Fair value of scheme assets

Net defined benefit pension obligations

Post-retirement healthcare obligations

Net post-employment benefit obligations

Movements in the fair value of scheme assets were as follows:

Fair value of scheme assets at beginning of the year
Interest income
Return on scheme assets (excluding interest income)
Employer contributions (including benefits paid and reimbursed)
Members’ contributions
Assets distributed on settlements
Benefits paid

Fair value of scheme assets at end of the year

Movements in the fair value of scheme liabilities were as follows:

Fair value of scheme liabilities at beginning of the year
Current service cost
Members’ contributions
Interest expense
Re-measurement losses from changes in demographic assumptions
Re-measurement losses from changes in financial assumptions
Experience losses on liabilities
Liabilities extinguished on settlements
Past service cost
Utilisation of healthcare provision
Benefits paid

Fair value of scheme liabilities at the end of the year

2014
£m

12.5
(2.0)
(17.0)
(5.0)

(11.5)

2014
£m

(215.5)
198.3

(17.2)

(1.3)

(18.5)

2014
£m

185.0
8.2
12.5
2.5
0.3
–
(10.2)

198.3

2014
£m

(189.3)
(0.3)
(0.3)
(8.4)
(2.0)
(17.0)
(5.0)
–
(4.7)
–
10.2

(216.8)

2013
£m

14.8
–
(3.1)
–

11.7

2013
£m

(188.0)
185.0

(3.0)

(1.3)

(4.3)

2013
£m

174.3
7.5
14.8
2.2
0.3
(3.9)
(10.2)

185.0

2013
£m

(192.5)
(0.5)
(0.3)
(8.3)
–
(3.1)
–
5.1
–
0.1
10.2

(189.3)

164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:46  Page 79

Annual Report and Accounts 2014 Johnson Service Group PLC  79

Post-employment benefit obligations continued

23
Movements in post-employment benefit obligations were as follows:

Opening post-employment benefit obligation
Current service cost
Assets distributed on settlements
Liabilities extinguished on settlements
Past service cost
Notional interest
Employer contributions
Re-measurement and experience (losses)/gains
Utilisation of healthcare provision

Closing post-employment benefit obligation

The major categories of scheme assets were as follows:

Equities
Bonds
Liability driven investments
Real return funds
Alternative return seeking assets
Cash and cash equivalents

Total market value of assets

Quoted
Market Price
Active Market
£m

No Quoted
Market Price
Active Market
£m

66.2
38.0
31.6
26.8
3.9
2.3

168.8

–
–
–
–
29.5
–

29.5

2014
£m

(4.3)
(0.3)
–
–
(4.7)
(0.2)
2.5
(11.5)
–

(18.5)

Quoted
Market Price
Active Market
£m

No Quoted
Market Price
Active Market
£m

92.2
33.1
–
–
4.8
2.2

–
24.6
–
–
28.1
–

52.7

2014
Total
Scheme

£m

66.2
38.0
31.6
26.8
33.4
2.3

198.3

132.3

2013
£m

(18.2)  
(0.5) 
(3.9) 
5.1
–
(0.8) 
2.2 
11.7 
0.1 

(4.3) 

2013
Total
Scheme

£m

92.2
57.7
–
–
32.9
2.2

185.0

Financial instruments 

24
Policies and strategies
Details of the Group’s policies and strategies in relation to financial instruments are given within this note and on page 58.

IAS 32, Financial Instruments: Presentation, IAS 39, Financial Instruments: Recognition and Measurement and IFRS 7, Financial Instruments:
Disclosures, also require numerical disclosures in respect of financial assets and liabilities and these are set out below and in note 17. Financial
assets and liabilities are stated at either amortised cost or fair value. Where stated at amortised cost, this is not materially different to the fair value
unless otherwise stated due to their short term nature.

Financial assets

Cash at bank and in hand
– Sterling
– Euros
– US Dollars

At 31st December

2014
£m

0.2
–
–

0.2

2013
£m

3.4
–
–

3.4

For interest purposes cash is offset against overdrafts through a pooling arrangement with each of the Group’s principal bankers. Surplus cash is
placed on Treasury Deposit with one or more of the Group’s principal bankers.

The cash balance as at 31st December 2014 is not subject to offset.

The cash balance as at 31st December 2013 of £3.4 million includes net balances subject to offset of £1.1 million. The balance comprises £2.8
million of cash balances and £1.7 million of overdraft balances. The remaining £2.3 million of cash balances are not subject to offset.

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80 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

Financial instruments continued

24
At the balance sheet date, cash was held with the following institutions:

Cash at bank and in hand
– Royal Bank of Scotland
– Lloyds Bank

Total cash and cash equivalents

Rating

A-2
A-1

2014
£m

0.2
–

0.2

2013
£m

3.4
–

3.4

The Group refers to Standard and Poor’s short-term issue credit ratings when determining with which financial institutions to deposit its surplus cash
balances. A short-term obligation rated ‘A-2’ indicates the obligor’s capacity to meet its financial commitment on the obligation is satisfactory. A short-
term obligation rated ‘A-1 indicates the obligor’s capacity to meet its financial commitment on the obligation is strong and is rated in the highest
Standard and Poor category.

Cash balances held with the Group’s principal bankers are used for working capital purposes. The Directors do not consider deposits at these
institutions to be at risk.

Financial liabilities

Overdraft
Bank loans*
Finance leases
Provisions
Derivative financial instruments

As per Balance Sheet
£m

Future Interest Cost
£m

2014
Total Cash Flows
£m

As per Balance Sheet
£m

Future Interest Cost
£m

2013
Total Cash Flows
£m

5.1
20.5
3.1
14.7
0.4

43.8

–
–
0.2
0.4
–

0.6

5.1
20.5
3.3
15.1
0.4

44.4

–
25.0
2.9
17.7
0.3

45.9

–
1.1
0.2
0.5
–

1.8

–
26.1
3.1
18.2
0.3

47.7

The overdraft of £5.1 million (2013: £nil) comprises cash balances of £2.6 million and overdraft balances of £7.7 million which are subject to offset.

* IFRS 7 requires the contractual future interest cost of a financial liability to be included within the above table. As disclosed in note 20 of these
consolidated financial statements, all the bank loans are currently drawn under an RCF arrangement and as such there is no contractual future
interest cost. Interest paid in the year in relation to bank loans drawn down amounted to £1.2 million, however interest is payable at a rate of LIBOR
prevailing at the time of drawdown plus the applicable margin, which ranges from 1.50% and 2.25%.

Liquidity risk
The maturity of financial liabilities based on contracted cash flows is shown in the table below.

This table has been drawn up using the undiscounted cash flows of financial liabilities based on the earliest date on which the Group is obliged to pay.
The table includes both interest and principal cash flows. Floating rate interest payments have been calculated using the relevant interest rates
prevailing at the year end.

As at 31st December 2014
Due within one year
Due within one to two years
Due within two to five years
Due after more than five years

As at 31st December 2013
Due within one year
Due within one to two years
Due within two to five years
Due after more than five years

Overdrafts
£m

5.1
–
–
–

5.1

–
–
–
–

–

Bank
Loans
£m

0.8
–
19.7
–

20.5

0.8
25.3
–
–

26.1

Finance
Leases
£m

Provisions
£m

Derivative
Financial
Instruments
£m

1.1
0.8
1.1
0.3

3.3

0.9
0.9
0.6
0.7

3.1

4.7
5.5
3.5
1.4

15.1

4.3
3.8
8.6
1.5

18.2

0.4
–
–
–

0.4

0.1
0.2
–
–

0.3

Total
£m

12.1
6.3
24.3
1.7

44.4

6.1
30.2
9.2
2.2

47.7

164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:46  Page 81

Annual Report and Accounts 2014 Johnson Service Group PLC  81

Fixed Rate 
Financial 
Liabilities
£m

23.1

22.9

Floating
Rate
Financial
Liabilities
£m

14.7

16.4

Financial
Liabilities
on which
no Interest
is paid
£m

6.0

6.6

Total
£m

43.8

45.9

Financial instruments continued

24
Interest rate risk profile

As at 31st December 2014
Sterling

As at 31st December 2013
Sterling

The Group’s creditors falling due within one year (other than bank and other borrowings) are excluded from the above tables either due to the
exclusion of short term items or because they do not meet the definition of a financial liability.

Fixed rate financial liabilities
At 31st December 2014 the Group’s fixed rate financial liabilities related to bank borrowings that are covered by interest rate swaps and assets held
under finance leases (2013: Interest rate swaps and assets held under finance leases).

For assets held under finance leases the average interest rate incurred is 3.6% (2013: 4.2%) and the weighted average period remaining is 46
months (2013: 45 months).

The Group has entered into a number of interest rate swaps, the effect of which is to classify £20.0 million (2013: £20.0 million) of the Group’s
borrowings as fixed rate. The details of current outstanding swaps are as follows:
➔ Interest swaps classifying £20.0 million of debt as fixed rate from 8th January 2013 to 8th January 2016. The rate, excluding margin is 1.79%.

Gains and losses recognised in the hedging reserve in equity on interest rate swap contracts as of 31st December 2014 will be continuously
released to the Income Statement within finance costs until the end of the hedged period.

Floating rate financial liabilities
Floating rate financial liabilities bear interest at rates based on relevant LIBOR equivalents. Loans are drawn and interest rates fixed for periods of
between one and six months. The weighted average period remaining for floating rate financial liabilities is 27 months (2013: 27 months).

The variation in the interest rate of floating rate financial liabilities (with all other variables held constant) required to increase post-tax profit for the
year by £0.1 million is 100 basis points (2013: 100 basis points). The variation in the interest rate of floating rate financial liabilities (with all other
variables held constant) required to decrease post-tax profit for the year by £0.1 million is 100 basis points (2013: 100 basis points).

Fair values of financial liabilities
Bank loans are drawn down and interest set for no more than a six month period (2013: six month period). In view of this the fair value of bank loans
is not materially different from the book value. The fair value of other financial liabilities was not materially different from the book value.

The Group recognises financial instruments that are held at fair value. Financial instruments have been classified as Level 1, Level 2 or Level 3
dependant on the valuation method applied in determining their fair value.

The different levels have been defined as follows:
➔ Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
➔ Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly

(that is, derived from prices) (Level 2).

➔ Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

The only financial instruments held at fair value by the Group relate to interest rate swaps on a portion of the Group’s long term borrowings and
commodity swaps.

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A
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A
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C
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A
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F

I

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A
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164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:46  Page 82

82 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

Financial instruments continued

24
For both the years ended 31st December 2014 and 31st December 2013 the liabilities arising from these instruments have been classified as
Level 2. The fair value of these instruments at each of the year ends was:

Derivative financial instruments held to manage the interest rate profile:
– Interest rate products
– Commodity products

Fair Value 2014
£m

Fair Value 2013
£m

(0.2)
(0.2)

(0.3)
–

Further information regarding interest rate products is provided in the fixed rate financial liabilities section above. Commodity products relate to fuel
derivatives in place to hedge against movements in the price of diesel used in the Group’s operations. The fuel derivatives hedge the underlying
commodity price risk.

The Group has hedged 2.4 million litres of diesel in the period to 31st December 2015 representing approximately 50% of its expected diesel
consumption. The hedged price is 41.55 pence per litre.

Where available, market rates have been used to determine fair value.

All financial instruments are Level 2 financial instruments for all years and there have been no transfers between either Level 1 and 2 or Level 2 and
3 in any year.

The fair value of the following financial assets and liabilities approximate their carrying amount:
➔ Trade receivables and other receivables
➔ Cash and cash equivalents
➔ Trade and other payables

Valuation techniques used to derive Level 2 fair values
Level 2 trading and hedging derivatives comprise interest rate swaps and commodity swaps. Interest rate swaps are fair valued using forward interest
rates extracted from observable yield curves. Commodity swaps are valued using mark to market valuations at the balance sheet date. The effects of
discounting are generally insignificant for Level 2 derivatives.

Group’s valuation processes
The Group’s finance function includes a treasury team that performs the valuations of financial assets required for financial reporting purposes,
including Level 3 fair values (as required). This team reports directly to the Chief Financial Officer (CFO). Discussions of valuation processes and
results are held between the CFO and the treasury team at least once every six months, in line with the Group’s reporting dates.

Foreign currency risk
The Group purchases such a small proportion in currencies other than Sterling that there is no reasonable change in exchanges rates that would
have a material effect on the Company.

Capital risk management
The Group’s objectives when managing its capital structure are to safeguard the Group’s ability to continue as a going concern in order to provide
appropriate returns to Shareholders and benefits to other stakeholders.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to Shareholders, return capital to Shareholders,
issue new shares or take other steps to increase share capital and reduce or increase debt facilities.

The Group manages its capital structure using a number of measures and taking into account future strategic plans. Such measures include its
interest cover and gearing ratios which are included in its banking covenants. The Group remains compliant with its banking covenants.

Contingent liabilities

25
The Group operates from a number of sites across the UK. Some of the sites have operated as laundry sites for many years and historic
environmental liabilities may exist. Such liabilities are not expected to give rise to any significant loss.

The Group has granted its Bankers and Trustee of the Pension Scheme security over the assets of the Group. The priority of security is as follows: for
the first £56.0 million the Bankers and Trustee rank pari passu; for the next £62.0 million in excess of £56.0 million the Bankers have priority and for
anything over £118.0 million the Bankers and Trustee rank pari passu.

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Annual Report and Accounts 2014 Johnson Service Group PLC  83

Contingent liabilities continued

25
During the period of ownership of the Facilities Management division the Company had given guarantees over the performance of contracts entered
into by the division. As part of the disposal of the division the purchaser has agreed to pursue the release or transfer of obligations under the Parent
Company guarantees and this is in process. The Sale and Purchase agreement contains an indemnity from the purchaser to cover any loss in the
event a claim is made prior to release. In the period until release the purchaser is to make a payment to the Company of £0.2 million per annum,
reduced pro rata as guarantees are released. Such liabilities are not expected to give rise to any significant loss.

As a condition of the sale of the Facilities Management division in August 2013, the Group has put in place indemnities, to the purchaser, in relation
to any future amounts payable in respect of contingent consideration related to the Nickleby acquisition completed in February 2012. As set out in
the 2012 Annual Report and Accounts the maximum amount payable under the terms of the indemnity could be up to £5.0 million. The Directors
believe the risk of settlement at, or near, the maximum level to be remote.

26

Called-up share capital

Authorised
383,025,739 (2013: 383,025,739) Ordinary shares of 10p each

Issued and Fully Paid

Ordinary shares of 10p each:
– At start of period
– New shares issued

– At end of period

Issue of Ordinary shares of 10p each
An analysis of the new shares issued in each period is shown below:

2014
£m

38.3

2014
£m

Shares

26.2
3.8

30.0

255,749,805
6,576,646

262,326,451

2013
£m

38.3

2013
£m

25.6
0.6

26.2

Shares

262,326,451
37,659,142

299,985,593

Issued and Fully Paid

Ordinary shares of 10p each:
– Placing
– EBT
– Approved LTIP
– SAYE
– Warrants

New shares issued

Shares

2014
£

Shares

2013
£

note 1
note 2
note 3
note 4
note 5

26,253,940
9,090,000
1,140,281
1,174,921
–

2,625,394
909,000
114,028
117,492
–

–
3,977,800
–
2,382,369
216,477

37,659,142

3,765,914

6,576,646

–
397,780
–
238,237
21,648

657,665

Note 1: During the period the Group placed 26,253,940 Ordinary shares with existing and new institutional investors raising net proceeds of

£12.8 million of which £2.6 million was credited to share capital. The placing was undertaken using a cash box structure. As a result, the
Company was able to take relief under section 612 of the Companies Act 2006 from crediting share premium and instead transfer the net
proceeds in excess of the nominal value to retained earnings.

Note 2: During the year, 9,090,000 (2013: 3,977,800) Ordinary shares were allotted to the EBT at nominal value to be used in relation to employee

share option exercises. The total nominal value received was £909,000 (2013: £397,780). At the time of allotment, the EBT already held
31,000 (2013: 1,286,531) Ordinary shares of 10 pence each which, together with the 9,090,000 (2013: 3,977,800) newly allotted Ordinary
shares of 10 pence each, were part used to satisfy the exercise of 9,100,261 (2013: 5,233,331) LTIP options.

Note 3: 1,140,281 (2013: nil) Approved LTIP options were exercised with a total nominal value of £114,028 (2013: £nil).

Note 4: 1,174,921 (2013: 2,382,369) SAYE Scheme options were exercised with a total nominal value of £117,492 (2013: £238,237).

Note 5: In 2013, 216,477 warrant instruments were exercised with a total nominal value of £21,648. These were the last remaining warrant

instruments to be exercised. Further information on the warrant instruments is set out below.

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A
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A
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A
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A
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M
E
N
T
S

C
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A
N
Y

F

I

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A
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A
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I

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A
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M
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N
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S

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84 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

Called-up share capital continued

26
The total proceeds received on allotment in respect of all of the above transactions were £14.4 million (2013: £0.8 million) and were credited as
follows:

Share capital
Share premium
Retained earnings

2014
£m

3.8
0.4
10.2

14.4

2013
£m

0.6
0.2
–

0.8

Potential issues of Ordinary shares of 10 pence each
As at the balance sheet date, certain senior executives hold options in respect of potential issues of Ordinary shares of 10 pence each granted
pursuant to the 2009 Long-Term Incentive Plan (the ‘LTIP’) and the 2009 Long-Term Incentive Plan Approved Section (the ‘Approved LTIP’) (together
referred to as ‘Executive Schemes’) at prices ranging from nil to 30.75 pence.

Certain Group employees also hold options in respect of potential issues of Ordinary shares of 10 pence each granted pursuant to the Johnson
Service Group Sharesave Plan (hereinafter referred to as the ‘SAYE Scheme’) at prices ranging from 18.00 pence to 43.75 pence.

Options granted under the SAYE Scheme are normally exercisable within six months from the date exercisable as shown below. Options under the
Executive Schemes are normally exercisable, subject to the achievement of performance conditions, three years after the date of grant and within
seven years from the date exercisable as shown below. Upon exercise, all options are generally settled in equity.

The number of shares subject to option under each scheme which were outstanding at 31st December 2014, the date on which they were granted
and the date from which they may be exercised are given below:

Scheme

LTIP
Approved LTIP
LTIP

SAYE Scheme
SAYE Scheme
SAYE Scheme
SAYE Scheme
SAYE Scheme

Date Options
Granted

6th January 2011
7th January 2011
13th March 2014

1st April 2010
6th October 2011
6th October 2011
1st October 2013
1st October 2013

Number
of Shares

46,500
97,560
1,089,483

1,233,543

468,893
137,913
484,618
1,481,021
436,098

3,008,543

4,242,086

Date
Exercisable

note 1
note 2
note 3

1st June 2015
1st December 2014
1st December 2016
1st December 2016
1st December 2018

Exercise Price
per Share

Nil
30.75p
Nil

18.00p
28.50p
28.50p
43.75p
43.75p

Note 1: Details of the performance conditions attached to the LTIP are set out within the Board Report on Remuneration. One third of the award

vested in September 2013 and became immediately exercisable. The remaining two thirds of the award vested in April 2014 and also
became immediately exercisable. As set out set out within the Board Report on Remuneration, the LTIP (granted on 6th January 2011 only)
is linked to the Approved LTIP. The Approved LTIP is tax favoured, such that in certain circumstances all or part of any gain on the LTIP will be
received through the Approved LTIP and taxed at a lower rate or even zero. The linked awards give the holder the same potential gross gain
as if they had just received the LTIP. The actual number of shares the award holder will receive when exercising options will depend on the
date of exercise, whether the performance conditions of the LTIP are achieved and the extent to which they are achieved, and also on how
much of the gain (if any) can be delivered through the Approved LTIP. Part of the total award will be forfeited once the gain is determined,
however, this will still leave the holder with the same gross gain that would have been received had only an award been made under the 
LTIP arrangement.

Note 2: Subject to meeting the performance conditions of any linked LTIP award, the Approved LTIP is ordinarily exercisable three years following the

date of grant.

Note 3: The LTIP options granted are subject to performance conditions linked to the Company’s Earnings Per Share and Total Shareholder Return

and will ordinarily vest three years from grant. Further details are set out within the Board Report on Remuneration.

164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:46  Page 85

Annual Report and Accounts 2014 Johnson Service Group PLC  85

Called-up share capital continued

26
Warrant Instruments
On 11th April 2008, the Company executed a warrant instrument pursuant to which it issued Warrants to its lending banks over 2,957,636 Ordinary
shares. The Warrants were originally exercisable from 11th April 2008 until 31st December 2011 at an exercise price of 10 pence per Ordinary
share, which represents the par value of an Ordinary share. On 18th December 2009 the exercise period of certain warrants was lengthened so that
it ended on 30th April 2013 rather than 31st December 2011.

On issue of the Warrants, the difference between the fair value of the Company’s Ordinary shares and the exercise price of the Warrant is deemed as
a cost to the Company under the provisions of IFRS 2, ‘Share-based Payment’; this cost was amortised over the term of the Bank Facility dated
11th April 2008. A warrant reserve for the total cost was recognised and was amortised as a finance cost through the Income Statement, with a
corresponding reserve transfer between the Warrant Reserve and retained earnings.

Movement in the number of Warrants is shown below:

Exercisable at beginning of period
Exercised during the period
Lapsed during the period

Exercisable at end of period

2014

–
–
–

–

2013

216,477
(216,477)
–

–

Share based payments

27
Executive Schemes
The 2009 Long-Term Incentive Plan (the ‘LTIP’) provides for a grant price of nil. The 2009 Long-Term Incentive Plan Approved Section (the ‘Approved
LTIP’) provides for a grant price equal to the quoted closing mid-market price of the Company shares on the business day immediately preceding the
date of grant. The exercise price is determined by the Remuneration Committee. The vesting period is generally three years. Both market based and
non-market based performance conditions are generally attached to the options, for which an appropriate adjustment is made when calculating the
fair value of an option. If the options remain unexercised after a period of 10 years from the date of grant, the options expire. Furthermore, options are
forfeited if the employee leaves the Group before the options vest, unless under exceptional circumstances.

SAYE Schemes
The Johnson Service Group Sharesave Plan provides for an exercise price equal to the average of the quoted mid-market price of the Company
shares on the business days immediately preceding the date of grant, less a discount of up to ten per cent. The vesting period under the scheme is
either three or five years and no performance conditions, other than remaining a Group employee, are attached to the options.

Disclosures
Movements in the current and prior period in respect of all share schemes are summarised below:

Executive schemes
Outstanding at beginning of the period
Granted during the period
Exercised during the period
Lapsed during the period

Outstanding at the end of the period
Exercisable at the end of the period

SAYE schemes
Outstanding at beginning of the period
Granted during the period
Exercised during the period
Lapsed during the period

Outstanding at the end of the period
Exercisable at the end of the period

2014
Weighted
Average Exercise
Price (p)

Number of 
Options

2013
Weighted
Average Exercise
Price (p)

Number of
Options

11,048,675
1,089,483
(10,240,542)
(664,073)

1,233,543
144,060

4,381,284
–
(1,174,921)
(197,820)

3,008,543
137,913

4p
–
3p
6p

2p
21p

33p
–
26p
25p

37p
29p

18,189,964
–
(5,233,331)
(1,907,958)

11,048,675
139,500

5,460,409
1,994,024
(2,382,369)
(690,780)

4,381,284
353,835

4p
–
–
20p

4p
–

23p
44p
17p
36p

33p
16p

For options outstanding at 31st December 2014, the exercise date and the exercise price are disclosed within note 26.

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86 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

Share based payments continued

27
During the year the Group recognised total expenses of £0.4 million (2013: £0.5 million) in relation to equity-settled share based payment transactions.

The average share price of Johnson Service Group PLC during the period was 57.8 pence (2013: 46.6 pence).

The aggregate gain made by Directors on the exercise of share options during the period was £4,491,158 (2013: £2,174,209). Further details are
disclosed within the Board Report on Remuneration on pages 34 to 41.

The fair value of options awarded to employees is determined by reference to option pricing models, principally Binomial models for SAYE schemes
and Monte Carlo models for all other schemes. The inputs into the Binomial and Monte Carlo models are as follows:

Weighted average share price (pence)
Weighted average exercise price (pence)
Weighted average fair value (pence)
Expected volatility (%)
Expected life (years)
Risk free interest rate (%)
Expected dividend yield (%)

Options Granted
During 2014

Options Granted
During 2013

61
–
43
23.3
3.0
1.1
2.8

49
44
10
25.6
3.7
1.1
2.5

Expected volatility and expected dividend yield were determined by calculating the historical volatility of the Company’s share price and the historical
dividend yield for a period akin to the expected life of each option scheme. The risk free rate of return is based on the rate for UK government gilts on
the date of grant, for a period akin to the expected life of the option.

28

Share premium

Balance brought forward
Received on allotment of shares

Balance carried forward

29

Own shares

Balance brought forward and carried forward

2014
£m

14.1
0.4

14.5

2014
£m

–

2013
£m

13.9
0.2

14.1

2013
£m

–

Own shares represent the cost of shares in Johnson Service Group PLC purchased in the market and held by the Trustee of the EBT, to satisfy
options under the Group’s share option schemes (see Note 26).

The number of shares and the market value at the balance sheet date are as follows:

Number of shares held

Market value £m

2014

20,739

–

2013

31,000

–

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Annual Report and Accounts 2014 Johnson Service Group PLC  87

2014
£m

8.6
(3.9)

4.7

14.4
0.4
(0.9)
(9.2)
–
1.2
(1.0)
(0.1)

9.5

70.5

80.0

2013
£m

0.7
(2.9)

(2.2)

0.8
0.5
(0.4)
9.4
(0.6)
0.2
1.0
0.8

9.5

61.0

70.5

30

Reconciliation of movements in Shareholders’ funds

Profit for the period
Dividends

Other recognised gains and losses relating to the year:
Issue of share capital
Share options (value of employee service)
Purchase of shares by Employee Benefit Trust
Re-measurement and experience (losses)/gains (net of taxation)
Change in deferred tax due to change in tax rate
Current tax on share options
Deferred tax on share options
Cash flow hedges movement

Net addition to Shareholders’ equity

Opening Shareholders’ equity

Closing Shareholders’ equity

Business combinations

31
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 focused on the volume hotel linen market. Bourne operates from purpose built freehold premises which cover four acres and
have 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:

Intangible assets – Goodwill
Intangible assets – Customer lists and contracts
Property, plant and equipment
Textile rental items
Inventories
Trade and other receivables
Cash
Trade and other payables
Current income tax liability
Deferred income tax liability

Net Assets 
Acquired
£m

Fair Value
Adjustments
£m

Accounting Policy
Realignment
£m

Fair Value of
Assets Acquired
£m

–
–
9.1
1.8
0.3
2.5
4.9
(2.3)
(0.4)
(0.2)

15.7

3.8
10.2
–
–
–
–
–
–
–
(2.6)

11.4

–
–
(0.2)
(0.2)
–
–
–
–
–
–

(0.4)

3.8
10.2
8.9
1.6
0.3
2.5
4.9
(2.3)
(0.4)
(2.8)

26.7

Goodwill represents the deferred income tax liability 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.

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88 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

Business combinations continued

31
The cash flows in relation to business acquisition activity are summarised below:

Consideration paid
Cash acquired
Cost in relation to business acquisition activity

There were no business combinations during 2013.

Disposals and discontinued operations
32
There were no business disposals in the year.

2014
£m

26.7
(4.9)
0.6

22.4

2013
£m

–
–
–

–

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 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.

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 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 finance 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:

Revenue from discontinued operations

Operating (loss)/profit before amortisation and impairment of intangible assets (excluding software amortisation) 

and exceptional items

Amortisation and impairment of intangible assets (excluding software amortisation)
Exceptional items

Loss before exceptional finance costs and taxation from discontinued operations
Exceptional finance costs
Taxation credit/(charge)

Loss for the period

2014
£m

–

(0.3)
–
–

(0.3)
–
0.1

(0.2)

2013
£m

29.0

2.3
(1.2)
(1.3)

(0.2)
(0.7)
(0.3)

(1.2)

164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:46  Page 89

Annual Report and Accounts 2014 Johnson Service Group PLC  89

32

Disposals and discontinued operations continued

Pre-tax (loss)/profit on disposal
Impairment of assets held for resale
Taxation credit

Gain/(loss) on disposal

Retained result/(loss) from discontinued operations

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

Proceeds from disposal
Payment of costs relating to disposals
Cash disposed of

Net proceeds from sale of business
Net cash (used in)/generated from operating activities
Interest paid

Net cash flow

2014
£m

(0.4)
–
0.6

0.2

–

2014
£m

0.1
–
–

0.1
(0.8)
–

(0.7)

2013
£m

1.1
(9.0)
–

(7.9)

(9.1)

2013
£m

36.2
(1.9)
(7.6)

26.7
2.1
(0.6)

28.2

Analysis of net debt

33
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.

December 2014

Cash and cash equivalents (per Consolidated Statement of Cash Flows)
Debt due within one year
Debt due after more than one year
Finance leases

December 2013

Cash and cash equivalents (per Consolidated Statement of Cash Flows)
Less: lifecycle funds

Cash and cash equivalents (excluding lifecycle funds)
Debt due within one year
Debt due after more than one year
Finance leases

At 1st January
2014
£m

3.4
–
(25.0)
(2.9)

(24.5)

At 1st January 
2013
£m

0.1
(1.3)

(1.2)
(8.1)
(47.3)
(1.9)

(58.5)

Cash Flow
£m

(8.3)
(1.0)
5.0
0.8

(3.5)

Cash Flow
£m

3.3
1.3

4.6
8.5
22.5
0.7

36.3

Non-cash
Changes
£m

At 31st December
2014
£m

–
0.2
0.3
(1.0)

(0.5)

(4.9)
(0.8)
(19.7)
(3.1)

(28.5)

Non-cash
Changes
£m

At 31st December
2013
£m

–
–

–
(0.4)
(0.2)
(1.7)

(2.3)

3.4
–

3.4
–
(25.0)
(2.9)

(24.5)

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90 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

34

Reconciliation of net cash flow to movement in net debt

(Decrease)/increase in cash (per the Consolidated Statement of Cash Flows)
Movement in lifecycle funds

(Decrease)/increase in cash excluding lifecycle funds
Cash outflow on change in debt and lease financing

Change in net debt resulting from cash flows
Movement in unamortised bank facility fees
New finance leases

Movement in net debt
Opening net debt

Closing net debt

2014
£m

(8.3)
–

(8.3)
4.8

(3.5)
0.5
(1.0)

(4.0)
(24.5)

(28.5)

Financial commitments

35
Capital expenditure
Contracts placed for future financial expenditure contracted but not provided for in the consolidated financial statements are shown below:

Property, plant and equipment

Revenue expenditure
Total future minimum lease payments under non-cancellable operating leases are as follows:

Land and buildings
– within one year
– between two and five years
– in five years or more

Plant and machinery
– within one year
– between two and five years

2014
£m

1.5

1.5

2014
£m

10.0
25.4
24.8

60.2

1.9
2.3

4.2

2013
£m

3.3
1.3

4.6
31.7

36.3
(0.6)
(1.7)

34.0
(58.5)

(24.5)

2013
£m

1.0

1.0

2013
£m

11.5
28.9
23.0

63.4

2.2
2.9

5.1

The total of future minimum sublease payments to be received under non-cancellable leases at the balance sheet date is £3.2 million (2013:
£3.0 million).

Events after the reporting period

36
The following events occurring after the balance sheet date have been disclosed in accordance with IAS 10, ‘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, like for like sales increase achieved in 2013 has not been maintained in 2014.

In parallel with the 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.

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Annual Report and Accounts 2014 Johnson Service Group PLC  91

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
JOHNSON SERVICE GROUP PLC

Report on the company financial statements
Our opinion
In our opinion, Johnson Service Group PLC’s company financial statements (the “financial statements”):
➔ give a true and fair view of the state of the company’s affairs as at 31st December 2014 and of its profit and cash flows for the year then ended;
➔ have been properly prepared in accordance with International Financial Reporting Standards (“IFRSs”) as adopted by the European Union; and
➔ have been prepared in accordance with the requirements of the Companies Act 2006.
What we have audited
Johnson Service Group PLC’s financial statements comprise:
➔ the Company Balance Sheet as at 31st December 2014;
➔ the Company Statement of Comprehensive Income for the year then ended;
➔ the Company Statement of Cash Flows for the year then ended;
➔ the Company Statement of Changes in Shareholders’ Equity for the year then ended;
➔ the Statement of Significant Accounting Policies; and
➔ the notes to the financial statements, which include other explanatory information.

Certain required disclosures have been presented elsewhere in the Annual Report and Accounts (the “Annual Report”), rather than in the notes to the
financial statements. These are cross-referenced from the financial statements and are identified as audited.

The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and IFRSs as adopted by the
European Union.

Other required reporting
Consistency of other information

In our opinion, the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are
prepared is consistent with the financial statements.

The directors have chosen to voluntarily comply with the UK Corporate Governance Code (“the Code”) as if the company were a premium listed
company. Under International Standards on Auditing (UK and Ireland) (“ISAs (UK & Ireland)”) we are required to report to you if, in our opinion,
information in the Annual Report is:
➔ materially inconsistent with the information in the audited financial statements; or
➔ apparently materially incorrect based on, or materially inconsistent with, our knowledge of the company acquired in the course of performing our

audit; or

➔ otherwise misleading.

We have no exceptions to report arising from this responsibility.

Adequacy of accounting records and information and explanations received
Under the Companies Act 2006 we are required to report to you if, in our opinion:
➔ we have not received all the information and explanations we require for our audit; or
➔ adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not

visited by us; or

➔ the financial statements are not in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Directors’ remuneration
Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of directors’ remuneration specified by law are
not made. We have no exceptions to report arising from this responsibility. 

Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Directors’ Responsibilities Statement set out on page 23, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK & Ireland). Those
standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of
the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to
any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

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164958 Johnson Annual Report Pt3_164958 Johnson Annual Report Pt3  06/03/2015  16:46  Page 92

92 Johnson Service Group PLC  Annual Report and Accounts 2014

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
JOHNSON SERVICE GROUP PLC CONTINUED

What an audit of financial statements involves
We conducted our audit in accordance with ISAs (UK & Ireland). An audit involves obtaining evidence about the amounts and disclosures in the
financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by
fraud or error. This includes an assessment of: 
➔ whether the accounting policies are appropriate to the company’s circumstances and have been consistently applied and adequately disclosed; 
➔ the reasonableness of significant accounting estimates made by the directors; and 
➔ the overall presentation of the financial statements. 

We primarily focus our work in these areas by assessing the directors’ judgements against available evidence, forming our own judgements, and
evaluating the disclosures in the financial statements.

We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis
for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both. 

In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial
statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by
us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications
for our report.

Other matter
We have reported separately on the group financial statements of Johnson Service Group PLC for the year ended 31st December 2014.

Nicholas Boden (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Manchester
3rd March 2015

164958 Johnson Annual Report Pt4_164958 Johnson Annual Report Pt4  06/03/2015  16:46  Page 93

Annual Report and Accounts 2014 Johnson Service Group PLC  93

COMPANY BALANCE SHEET

Assets
Non-current assets
Property, plant and equipment
Trade and other receivables
Deferred income tax assets
Investments

Current assets
Trade and other receivables
Current income tax assets
Cash and cash equivalents

Liabilities
Current liabilities
Trade and other payables
Borrowings

Net current liabilities

Non-current liabilities
Post-employment benefit obligations
Other non-current liabilities
Borrowings
Derivative financial liabilities

Net assets

Equity
Capital and reserves attributable to the company’s Shareholders
Share capital
Share premium
Merger reserve
Capital redemption reserve
Hedge reserve
Retained earnings

Total Shareholders’ equity

Note

2
5
3
4

5

6
7

8
9
7
10

12
13

As at
31 December
2014
£m

–
45.1
4.3
436.0

485.4

0.9
1.2
–

2.1

4.1
7.9

12.0

(9.9)

18.5
343.2
19.7
0.4

381.8

93.7

30.0
14.5
3.5
0.6
(0.4)
45.5

93.7

The financial statements on pages 93 to 102 were approved by the Board of Directors on 3rd March 2015 and signed on its behalf by:

Yvonne Monaghan
Chief Financial Officer

As at
31 December
2013
£m

0.1
47.3
2.1
470.0

519.5

0.8
1.3
0.5

2.6

4.8
–

4.8

(2.2)

4.3
408.6
25.0
0.3

438.2

79.1

26.2
14.1
3.5
0.6
(0.3)
35.0

79.1

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164958 Johnson Annual Report Pt4_164958 Johnson Annual Report Pt4  06/03/2015  16:46  Page 94

94 Johnson Service Group PLC  Annual Report and Accounts 2014

COMPANY STATEMENT OF COMPREHENSIVE INCOME

Profit/(loss) for the year

Items that will not be subsequently reclassified to profit or loss
Re-measurement and experience (losses)/gains on post-employment benefit obligations
Taxation in respect of re-measurement and experience losses/(gains)
Change in deferred tax due to change in tax rate
Items that may be subsequently reclassified to profit or loss
Cash flow hedges (net of taxation) – fair value (gains)/losses
– transfers to finance cost

Other comprehensive (loss)/income for the year

Total comprehensive income/(loss) for the year

Year ended
31 December
2014
£m

13.7

(11.5)
2.3
–

(0.4)
0.3

(9.3)

4.4

COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

Balance at 1st January 2013
Loss for the year
Other comprehensive income

Total comprehensive income/(loss) for the year

Share options (value of employee services)
Purchase of shares by Employee Benefit Trust
Reserve transfer
Current tax on share options
Deferred tax on share options
Issue of share capital
Dividends paid

Transactions with Shareholders recognised directly 

in Shareholders’ Equity

Balance at 31st December 2013

Balance at 1st January 2014
Profit for the year
Other comprehensive loss

Total comprehensive (loss)/income for the year

Share options (value of employee services)
Purchase of shares by Employee Benefit Trust
Current tax on share options
Deferred tax on share options
Issue of share capital
Dividends paid

Transactions with Shareholders recognised directly 

in Shareholders’ Equity

Balance at 31st December 2014

Share
Capital
£m

25.6
–
–

–

–
–
–
–
–
0.6
–

0.6

26.2

26.2
–
–

–

–
–
–
–
3.8
–

3.8

30.0

Share
Premium
£m

13.9
–
–

–

–
–
–
–
–
0.2
–

0.2

14.1

14.1
–
–

–

–
–
–
–
0.4
–

0.4

14.5

Merger
Reserve
£m

3.5
–
–

Capital
Redemption
Reserve
£m

0.6
–
–

–

–
–
–
–
–
–
–

–

3.5

3.5
–
–

–

–
–
–
–
–
–

–

–

–
–
–
–
–
–
–

–

0.6

0.6
–
–

–

–
–
–
–
–
–

–

Hedge
Reserve
£m

(1.1)
–
0.8

0.8

–
–
–
–
–
–
–

–

(0.3)

(0.3)
–
(0.1)

(0.1)

–
–
–
–
–
–

–

3.5

0.6

(0.4)

Capital
Reserve
£m

11.3
–
–

–

–
–
(11.3)
–
–
–
–

(11.3)

–

–
–
–

–

–
–
–
–
–
–

–

–

Retained
Earnings
£m

27.2
(10.5)
8.8

(1.7)

0.5
(0.4)
11.3
0.1
0.9
–
(2.9)

9.5

35.0

35.0
13.7
(9.2)

4.5

0.4
(0.9)
1.1
(0.9)
10.2
(3.9)

6.0

45.5

Year ended
31 December
2013
£m

(10.5)

11.7
(2.3)
(0.6)

0.1
0.7

9.6

(0.9)

Total
Equity
£m

81.0
(10.5)
9.6

(0.9)

0.5
(0.4)
–
0.1
0.9
0.8
(2.9)

(1.0)

79.1

79.1
13.7
(9.3)

4.4

0.4
(0.9)
1.1
(0.9)
14.4
(3.9)

10.2

93.7

Following a review in 2013 the Capital Reserve was reclassified to Retained Earnings.

All of the Retained Earnings reserve is considered to be distributable as at 31st December 2014 subject to the offset of the Hedge Reserve (2013:
all distributable subject to the offset of the hedge reserve).

164958 Johnson Annual Report Pt4_164958 Johnson Annual Report Pt4  06/03/2015  16:46  Page 95

COMPANY STATEMENT OF CASH FLOWS

Cash flows from operating activities
Profit/(loss) for the year
Adjustments for:

Income tax charge
Total finance cost
Dividend income
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
(Increase)/decrease in amounts due from subsidiary companies
Investment impairment
Intercompany loan waived
Loss on disposal of investments
Costs in relation to business acquisition activity
Deficit recovery payments in respect of post-employment benefit obligations
Share-based payments
Post-employment benefit obligations

Cash used in operations
Interest paid
Taxation received/(paid)

Net cash used in operating activities

Cash flows from investing activities
Acquisition of business (net of cash acquired)
Proceeds from sale of subsidiary
Dividends received
Interest received
Loans advanced to subsidiary companies

Net cash (used in)/generated from investing activities

Cash flows from financing activities
Loans received from subsidiary companies
Proceeds from borrowings
Repayments of borrowings
Net proceeds from issue of Ordinary shares
Purchase of own shares by EBT
Dividend paid

Net cash generated from/(used in) financing activities

Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Annual Report and Accounts 2014 Johnson Service Group PLC  95

Year ended
31 December
2014
£m

Year ended
31 December 
2013
£m

Note

13.7

(2.7)
2.8
(31.3)
–
(0.7)
(0.2)
60.8
(52.6)
0.4
0.6
(2.0)
0.3
4.6

(6.3)
(2.3)
0.1

(8.5)

(27.3)
0.1
31.3
1.1
(29.2)

(24.0)

19.3
66.0
(70.0)
14.4
(0.9)
(3.9)

24.9

(7.6)
0.5 

(7.1)

(10.5)

(1.1)
5.1
(8.0)
(0.9)
2.1
0.1
–
–
11.3
–
(1.9)
0.7
(2.6)

(6.1)
(3.3)
(1.3)

(10.7)

–
34.3
8.0
1.2
(12.8)

30.7

19.4
12.0
(43.0)
0.8
(0.4)
(2.9)

(13.7)

6.3
(5.8)

0.5

15

Cash and cash equivalents at the end of the period include cash of £nil and an overdraft of £7.1 million (2013: £0.5 million and £nil respectively).

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164958 Johnson Annual Report Pt4_164958 Johnson Annual Report Pt4  06/03/2015  16:46  Page 96

96 Johnson Service Group PLC  Annual Report and Accounts 2014

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The Company is incorporated and domiciled in the UK. The Company’s registered number is 523335. The address of its registered office is Johnson
House, Abbots Park, Monks Way, Preston Brook, Cheshire, WA7 3GH.

The Company is a public limited company and has its primary listing on the AIM division of the London Stock Exchange.

The Company financial statements were authorised for issue by the Board on 3rd March 2015.

Basis of preparation
The principal accounting policies applied in the preparation of the Company Financial Statements are the same as those used in the Consolidated
Financial Statements as set out on pages 51 to 58 with the addition of the policies set out below. These policies have been consistently applied to
the information presented, unless otherwise stated.

Investments
Investments in Group Undertakings are recorded at cost, which is the fair value of the consideration paid. Investments are tested for impairment and
carried at cost less accumulated impairment losses. Where an impairment is identified, it is charged to the Income Statement within intangibles
amortisation and impairment (excluding software). Investments that suffered an impairment are reviewed for possible reversal of the impairment at
each reporting date.

Share based compensation
The Company operates a number of equity-settled, share based compensation plans. The economic cost of awarding shares and share options to
employees is recognised as an expense in the employing company’s Income Statement equivalent to the fair value of the benefit awarded. The fair
value is determined by reference to option pricing models, principally Binomial and Monte Carlo models. The fair value of the award is recognised in
the employing company’s Income Statement over the vesting period of the award. The grant by the Company of options over its equity instruments to
the employees of the subsidiary undertakings is treated as a capital contribution. The fair value of employee services received, measured by reference
to the grant date fair value, is recognised over the vesting period as an increase to the investment in that subsidiary undertaking, with a corresponding
credit to equity in the Company’s accounts.

164958 Johnson Annual Report Pt4_164958 Johnson Annual Report Pt4  06/03/2015  16:46  Page 97

Annual Report and Accounts 2014 Johnson Service Group PLC  97

NOTES TO THE COMPANY FINANCIAL STATEMENTS

Company income statement

1
As permitted by Section 408(3) of the Companies Act 2006, the Income Statement of the Company is not presented with these financial
statements. The retained profit of the Company is shown in note 14 of the Company financial statements. Details of dividends paid are included in
note 10 of the consolidated financial statements.

2

Property, plant and equipment

Cost
At 31st December 2012, 2013 & 2014

Accumulated depreciation and impairment
At 31st December 2012 & 2013

Charged in the year

At 31st December 2014

Carrying Amount
At 31st December 2012 & 2013

At 31st December 2014

There were £nil assets under construction at 31st December 2014 (2013: £nil).

Deferred income tax assets

3
Deferred income tax assets attributable to the Company are as follows:

Deferred income tax balances in respect of:

Depreciation in excess of capital allowances
Post-employment benefit obligations
Derivative financial instruments
Employee Share Schemes
Other short term timing differences

2014
£m

0.2
3.7
0.1
–
0.3

4.3

The following provides a reconciliation of the movement in each of the deferred income tax assets:

At 31st December 2012

(Charge)/credit to income
Charge to other comprehensive income
Credit to equity

At 31st December 2013

(Charge)/credit to income
Credit to other comprehensive income
Charge to equity

At 31st December 2014

Depreciation in 
excess of 
Capital Allowances
£m

Post-employment
Benefit
Obligations
£m

Derivative
Financial
Instruments
£m

Employee
Share
Schemes
£m

Other
Short Term
Timing Differences
£m

0.3

(0.1)
–
–

0.2

–
–
–

0.2

4.5

(0.7)
(2.9)
–

0.9

0.5
2.3
–

3.7

0.3

–
(0.2)
–

0.1

–
–
–

0.1

0.4

(0.4)
–
0.9

0.9

–
–
(0.9)

–

–

–
–
–

–

0.3
–
–

0.3

Plant
And
Equipment
£m

0.3

0.2

0.1

0.3

0.1

–

2013
£m

0.2
0.9
0.1
0.9
–

2.1

Total
£m

5.5

(1.2)
(3.1)
0.9

2.1

0.8
2.3
(0.9)

4.3

The rate of corporation tax in the UK reduced from 23% to 21% on 1st April 2014 and will reduce to 20% on 1st April 2015. As these changes
were reflected in the opening deferred tax balances, this has had nil effect on the Income Statement, the Statement of Comprehensive Income or
taxation recognised directly in Shareholders’ Equity.

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164958 Johnson Annual Report Pt4_164958 Johnson Annual Report Pt4  06/03/2015  16:46  Page 98

98 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

4

Investments

Investment in subsidiary undertakings

Cost
Brought forward
Additions
Movement relating to share options
Disposal of subsidiaries

Carried forward

Accumulated impairment
Brought forward
Impairment

Carried forward

Carrying amount
Opening

Closing

2014
£m

480.1
26.7
0.1
–

506.9

10.1
60.8

70.9

470.0

436.0

2013
£m

507.0
–
(0.2)
(26.7)

480.1

10.1
–

10.1

496.9

470.0

Particulars of principal subsidiary undertakings are shown in note 20 of the Company financial statements.

During the year the Company acquired Bourne Services Group Limited for a cost of £26.7 million. Details of this acquisition are shown in note 31 of
the consolidated financial statements. In addition, investments in a number of non-trading companies were impaired following the cancellation of the
intercompany payable, due from the Company, relating to those companies, with a net impact on the Income Statement of £nil.

During 2013 the Company sold its investment in Johnson Workplace Management Limited, the parent company of the Facilities Management division.

5

Trade and other receivables

Amounts falling due within one year:
Receivables from subsidiaries
Other receivables
Prepayments and accrued income

Amounts falling due after more than one year:
Other receivables
Receivables from subsidiaries

2014
£m

0.1
0.7
0.1

0.9

2.6
42.5

45.1

2013
£m

–
0.7
0.1

0.8

1.6
45.7

47.3

Amounts owed by subsidiaries due within one year relate to invoiced services and are due according to the invoice terms.

Amounts owed by subsidiaries due after more than one year, are unsecured and have no fixed date of repayment.

Other receivables which are less than three months past due are not considered impaired unless specific information indicates otherwise. Trade 
and other receivables greater than three months past due are considered for recoverability, and where appropriate, a provision against bad debt 
is recognised.

All Company receivables (including those from related parties) are not yet due or impaired.

All receivable balances at the balance sheet date are denominated in Sterling (2013: Sterling), and are held at amortised cost. Given their short term
nature there is deemed to be no difference between this and their fair value.

164958 Johnson Annual Report Pt4_164958 Johnson Annual Report Pt4  06/03/2015  16:46  Page 99

Annual Report and Accounts 2014 Johnson Service Group PLC  99

2014
£m

0.5
1.8
0.2
1.6

4.1

2013
£m

0.2
2.1
0.8
1.7

4.8

6

Trade and other payables

Trade payables
Other payables
Other taxation and social security liabilities
Accruals

All trade and other payable balances at the balance sheet date are denominated in Sterling (2013: Sterling), and are held at amortised cost. Given
their short term nature there is deemed to be no difference between this and their fair value.

7

Borrowings

Current
Overdraft
Bank loans

Non-current
Bank loans

The maturity of non-current bank loans is as follows:
– Between one and two years
– Between two and five years
– Unamortised issue costs of bank loans

2014
£m

7.1
0.8

7.9

19.7

27.6

–
20.0
(0.3)

19.7

2013
£m

–
–

–

25.0

25.0

25.0
–
–

25.0

All Group bank loans are held by the Company. Full details of Group facilities are provided in note 20 of the consolidated financial statements.

The Group has two overdraft facilities for £5.0 million and £3.0 million with two if its principal bankers (2013: £5.0 million and £nil). Certain cash
balances in certain Group bank accounts can be offset with overdrawn balances in those bank accounts. The maximum amount any individual
Company may be overdrawn is £10.0 million and £5.0 million respectively (2013: £10.0 million and £nil).

Post-employment benefit obligations

8
Details of the Group’s pension schemes are provided in note 23 of the consolidated financial statements.

As at the 31st December 2014 and 31st December 2013 the entire Group liabilities under defined benefit schemes relate to the Company.

During the year the Company’s cost of defined contribution pension schemes was £0.1 million (2013: £0.1 million).

9 

Other non-current liabilities

Payables to subsidiaries

2014
£m

343.2

343.2

2013
£m

408.6

408.6

Amounts payable to subsidiaries are unsecured and have no fixed date of repayment.

Derivative financial liabilities

10
Details of derivative financial liabilities are shown in note 24 of the consolidated financial statements. All of the Group’s derivative financial liabilities
are held by the Company.

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164958 Johnson Annual Report Pt4_164958 Johnson Annual Report Pt4  06/03/2015  16:46  Page 100

100 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

Contingent liabilities

11 
The Company has guaranteed the banking facilities of certain UK subsidiary undertakings under a cross guarantee arrangement. No losses are
expected to result from this arrangement.

The Company has entered into 30 Rent Deposit Deeds for up to £1.7 million guaranteeing the payment of rent by its subsidiary undertaking, Johnson
Cleaners UK Limited, on specified properties included in a sale and leaseback transaction in June 2006. The guaranteed amount began to amortise
from December 2013 and expires in June 2016. No loss is expected to result from this arrangement.

During the period of ownership of the Facilities Management division the Company had given guarantees over the performance of contracts entered
into by the division. As part of the disposal of the division the purchaser has agreed to pursue the release or transfer of obligations under the Parent
Company guarantees and this is in process. The Sale and Purchase agreement contains an indemnity from the purchaser to cover any loss in the
event a claim is made prior to release. In the period until release the purchaser is to make a payment of £0.2 million per annum, reduced pro rata as
guarantees are released. Such liabilities are not expected to give rise to any significant loss.

As a condition of the sale of the Facilities Management division in August 2013, the Company has put in place indemnities, to the buyer, in relation to
any future amounts payable in respect of contingent consideration related to the Nickleby acquisition completed in February 2012. As set out in the
2012 Annual Report and Accounts the maximum amount payable under the terms of the indemnity could be up to £5.0 million. The Directors believe
the risk of settlement at, or near, the maximum level to be remote.

12

Called-up share capital

Authorised
383,025,739 (2013: 383,025,739) Ordinary shares of 10p each

Issued and Fully Paid

Ordinary shares of 10p each:
At start of period
New shares issued

At end of period

2014
£m

38.3

Shares

2014
£m

Shares

262,326,451
37,659,142

299,985,593

26.2
3.8

30.0

255,749,805
6,576,646

262,326,451

Full details relating to the issue of Ordinary shares in the year are shown in note 26 of the consolidated financial statements.

13

Share premium

Balance brought forward
Received on allotment of shares

Balance carried forward

2014
£m

14.1
0.4

14.5

2013
£m

38.3

2013
£m

25.6
0.6

26.2

2013
£m

13.9
0.2

14.1

164958 Johnson Annual Report Pt4_164958 Johnson Annual Report Pt4  06/03/2015  16:46  Page 101

Annual Report and Accounts 2014 Johnson Service Group PLC  101

2014
£m

13.7
(3.9)

9.8

14.4
0.4
(0.9)
(9.2)
–
1.1
(0.9)
(0.1)

14.6

79.1

93.7

2013
£m

(10.5)
(2.9)

(13.4)

0.8
0.5
(0.4)
9.4
(0.6)
0.1
0.9
0.8

(1.9)

81.0

79.1

14

Reconciliation of movements in Shareholders’ funds

Profit/(loss) for the period
Dividends

Other recognised gains and losses relating to the year:
Issue of share capital
Share option (value of employee services)
Purchase of shares by EBT
Re-measurement and experience (losses)/gains (net of taxation)
Change in deferred tax due to change in tax rate
Current tax on share options
Deferred tax on share options
Cash flow hedges movement

Net addition/(reduction) to Shareholders’ equity

Opening Shareholders’ equity

Closing Shareholders’ equity

Analysis of net debt

15
Net debt is calculated as total borrowings less cash and cash equivalents, less unamortised facility fees. Non-cash changes represent the effects of
the recognition and subsequent amortisation of issue costs relating to the bank facility and changing maturity profiles.

December 2014

Cash and cash equivalents (per Company Statement of Cash Flows)
Debt due within one year
Debt due after more than one year

December 2013

Cash and cash equivalents (per Company Statement of Cash Flows)
Debt due within one year
Debt due after more than one year

16

Reconciliation of net cash flow to movement in net debt

(Decrease)/Increase in cash in year (per Company Statement of Cash Flows)
Cash outflow on change in debt and lease financing

Change in net debt resulting from cash flows
Movement in bank facility fees

Movement in net debt in year
Opening net debt

Closing net debt

At 1st January 
2014
£m

0.5
–
(25.0)

(24.5)

At 1st January 
2013
£m

(5.8)
(8.1)
(47.3)

(61.2)

Cash Flow
£m

(7.6)
(1.0)
5.0

(3.6)

Cash Flow
£m

6.3
8.5
22.5

37.3

Other
Non-cash
Changes
£m

–
0.2
0.3

0.5

Other
Non-cash
Changes
£m

–
(0.4)
(0.2)

(0.6)

2014
£m

(7.6)
4.0

(3.6)
0.5

(3.1)
(24.5)

(27.6)

At 31st December
2014
£m

(7.1)
(0.8)
(19.7)

(27.6)

At 31st December
2013
£m

0.5
–
(25.0)

(24.5)

2013
£m

6.3
31.0

37.3
(0.6)

36.7
(61.2)

(24.5)

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164958 Johnson Annual Report Pt4_164958 Johnson Annual Report Pt4  06/03/2015  16:46  Page 102

102 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

Financial commitments

17
Capital expenditure
As at 31st December 2014 the Company had no contracts placed for future capital expenditure that were not provided for in the financial
statements (2013: £nil).

Revenue expenditure
Total future minimum lease payments under non-cancellable operating leases are as follows:

Land and buildings
– within one year
– between two and five years

Plant and machinery
– within one year

2014
£m

0.1
–

0.1

0.1

0.1

Related party transactions

18
Transactions during the year between the Company and its subsidiaries, which are related parties, are eliminated on consolidation.

The following significant transactions with subsidiary undertakings occurred in the year:

Intercompany loans payable waived
Dividends received
Interest received
Interest paid

2014
£m

52.6
31.3
1.0
(2.3)

82.6

2013
£m

0.1
0.1

0.2

0.1

0.1

2013
£m

–
8.0
1.2
(2.2)

7.0

The key management of the Company are considered to be only the Directors of the Company and details of their compensation is provided in the
Board Report on Remuneration. The Company did not enter into any form of loan arrangement with any Director during any of the years presented.

Events after the reporting period

19
There were no events occurring after the balance sheet date which should be disclosed in accordance with IAS 10, ‘Events after the reporting period’.

Principal subsidiaries

20
Principal subsidiary companies at the balance sheet date were as follows:

Company Name

Johnsons Apparelmaster Limited *
Johnson Cleaners UK Limited *
Jeeves of Belgravia Limited
Jeeves International Limited *
Johnson Group Properties PLC
Johnson Investment Limited
Semara Estates Limited *

Principal Activity

Textile and Linen Rental
Drycleaning
Drycleaning
Drycleaning Franchises
Property
Holding Company
Property

Johnson Service Group PLC owns directly or indirectly the entire share capital of each of these companies. The share capital of the companies
annotated * are held through intermediate holding companies. All companies above are incorporated in Great Britain and registered in England.

A full list of subsidiary undertakings will be annexed to the next Annual Return of Johnson Service Group PLC to be filed with the Registrar 
of Companies.

164958 Johnson Annual Report Pt4_164958 Johnson Annual Report Pt4  06/03/2015  16:46  Page 103

Annual Report and Accounts 2014 Johnson Service Group PLC  103

NOTICE OF ANNUAL GENERAL MEETING

Company Number: 00523335

This Document is important and requires your immediate attention. If
you are in any doubt as to any aspect of the contents of this Document
or the action you should take you are recommended to consult
immediately your stockbroker, solicitor, accountant or other
independent adviser authorised under the Financial Services and
Markets Act 2000 if you are resident in the United Kingdom or, if you
reside elsewhere, another appropriately authorised financial adviser.

If you have sold or otherwise transferred all of your shares in Johnson
Service Group PLC (‘JSG’ or the ‘Company’), please pass this
document together with the accompanying proxy form as soon as
possible to the purchaser or transferee, or to the person who arranged
the sale or transfer so they can pass these documents to the person
who now holds the shares.

NOTICE is hereby given that the Annual General Meeting of Johnson
Service Group PLC will be held at the Doubletree by Hilton Chester,
Warrington Road, Hoole, Chester, CH2 3PD on Thursday 7th May 2015
at 11am to transact the business set out in the Resolutions below.

Resolutions 1 to 11 (inclusive) will be proposed as Ordinary Resolutions
and Resolutions 12 to 13 (inclusive) will be proposed as Special
Resolutions.

The business of the meeting will be:

Ordinary Business
To consider and, if thought fit, pass the following resolutions which will
be proposed as Ordinary Resolutions:

1. To receive and adopt the financial statements for the year ended

31st December 2014 together with the reports of the Directors and
the auditor on those financial statements.

2. To approve the Board Report on Remuneration as set out on pages

34 to 41 of the 2014 Annual Report.

3. To confirm the payment of the interim dividend of 0.50 pence per
Ordinary Share and to declare a final dividend of 1.20 pence per
Ordinary Share for the year ended 31st December 2014.

7. To re-elect Mr. M. Del Mar who retires in accordance with Section
B.7.1 of the UK Corporate Governance Code and whom, being
eligible, offers himself for re-election as a Director.

8. To re-elect Mr. W. Shannon who retires in accordance with Section
B.7.1 of the UK Corporate Governance Code and whom, being
eligible, offers himself for re-election as a Director.

9. To re-appoint PricewaterhouseCoopers LLP as auditor to the

Company until the conclusion of the next general meeting at which
accounts are laid before the Company.

10.To authorise the Audit Committee to determine the remuneration of

the auditor.

Special Business
11.To consider and, if thought fit, pass the following resolution which will

be proposed as an Ordinary Resolution:

“That, in substitution for all existing and unexercised authorities and
powers, the Directors of the Company be and they are hereby
generally and unconditionally authorised for the purposes of section
551 of the Companies Act 2006 to exercise all powers of the
Company to allot equity securities (as defined in section 560 of the
Companies Act 2006) (“Equity Securities”) to such persons at such
times and on such terms and conditions as the Directors may
determine and subject always to the Articles of Association, provided
that the aggregate of the nominal amount of such Equity Securities
that may be allotted under this authority shall not exceed
£8,301,158.

This authority shall, unless previously renewed, varied or revoked by
the Company in general meeting, expire at the conclusion of the next
Annual General Meeting of the Company to be held after the passing
of this Resolution or, if earlier, on 1st July 2016, save that the
Directors of the Company may, before such expiry make an offer or
agreement which would or might require Equity Securities to be
allotted after such expiry and the Directors of the Company may allot
Equity Securities in pursuance of any such offer or agreement as if
the authority conferred hereby had not expired.

All unutilised authorities previously granted to the Directors of the
Company under section 551 of the Companies Act 2006 shall
cease to have effect at the conclusion of the Annual General
Meeting (save to the extent that the same are exercisable pursuant
to section 551(7) of the Companies Act 2006 by reason of any offer
or agreement made prior to the date of this resolution which would or
might require equity securities to be allotted on or after that date).”

4. To re-elect Mr. P. Moody who retires in accordance with Section B.7.1
of the UK Corporate Governance Code and whom, being eligible,
offers himself for re-election as a Director.

12.To consider and, if thought fit, pass the following resolution which will

be proposed as a Special Resolution:

5. To re-elect Mr. C. Sander who retires in accordance with Section
B.7.1 of the UK Corporate Governance Code and whom, being
eligible, offers himself for re-election as a Director.

6. To re-elect Mrs. Y. Monaghan who retires in accordance with Section

B.7.1 of the UK Corporate Governance Code and whom, being
eligible, offers herself for re-election as a Director.

“That, subject to and conditional upon the passing of the Ordinary
Resolution numbered 11 in this notice of Annual General Meeting of
the Company and in substitution for all existing and unexercised
authorities and powers, the Directors of the Company be and are
hereby generally and unconditionally empowered pursuant to section
570 of the Companies Act 2006 to allot Equity Securities pursuant
to the authority conferred upon them by Ordinary Resolution
numbered 11 in this notice of Annual General Meeting of the
Company as if section 561 of the Companies Act 2006 did not

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164958 Johnson Annual Report Pt4_164958 Johnson Annual Report Pt4  06/03/2015  16:46  Page 104

104 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTICE OF ANNUAL GENERAL MEETING CONTINUED

The authority hereby conferred shall, unless previously revoked or
varied, expire at the conclusion of the next Annual General Meeting
of the Company held after the passing of this Resolution or, if earlier,
on 1st July 2016 save in relation to purchases of Ordinary Shares
the contract for which was concluded before the expiry of this
authority and which will or may be executed wholly or partly after
such expiry, where the Company may make a purchase of Ordinary
Shares in pursuance of any such contract.

All previous unutilised authorities for the Company to make market
purchases of Ordinary shares are revoked, except in relation to the
purchase of shares under a contract or contracts concluded before
the date of this resolution and where such purchase has not yet 
been executed.”

All Shareholders will find enclosed with this document a form of
proxy to be used in connection with the Annual General Meeting. A
member entitled to attend and vote at the meeting may appoint one
or more proxies to attend and to speak and vote in his stead. The
proxy need not be a member of the Company.

By Order of the Board

Tim Morris
Company Secretary
Abbots Park
Monks Way
Preston Brook
Cheshire WA7 3GH

3rd March 2015

apply to any such allotment of Equity Securities, provided that this
power shall be limited to:

(i) the allotment of Equity Securities in connection with a rights issue
or similar offer to or in favour of ordinary shareholders where the
Equity Securities respectively attributable to the interests of all
ordinary shareholders are proportionate (as nearly as may be) to
the respective numbers of shares held by them on that date
provided that the Directors of the Company may make such
exclusions or other arrangements to deal with any legal or
practical problems under the laws of any territory or the
requirement of any regulatory body or any stock exchange or 
with fractional entitlements as they consider necessary or
expedient; and

(ii) the allotment (otherwise than pursuant to sub paragraph (i)

above) of Equity Securities pursuant to the authority granted
under Ordinary Resolution 11 in this notice of Annual General
Meeting up to an aggregate nominal amount of £1,500,071
(representing approximately 5% of the Company’s share capital
as at 2nd March 2015).

This power shall expire at the conclusion of the next Annual General
Meeting of the Company to be held after the passing of this
Resolution or, if earlier, on 1st July 2016, unless previously renewed,
varied or revoked by the Company in general meeting, save that the
Company may before such expiry make any offer or enter into any
agreement which would or might require Equity Securities to be
allotted after such expiry and the Directors of the Company may allot
Equity Securities in pursuance of any such offer or agreement as if
the power conferred hereby had not expired. All unutilised previous
authorities under Section 571 of the Companies Act 2006 shall
cease to have effect at the conclusion of the Annual General
Meeting.”

13.To consider and, if thought fit, pass the following resolution which will

be proposed as a Special Resolution:

“That, in accordance with article 11 of the Articles of Association and
in accordance with the Companies Act 2006, the Directors of the
Company be and are hereby generally and unconditionally authorised
for the purposes of section 701 of the Companies Act 2006 to
make market purchases (within the meaning of section 693(4) of the
Companies Act 2006) of Ordinary shares of 10 pence each in the
capital of the Company (“Ordinary Shares”) on such terms and in
such manner as the Directors of the Company may from time to time
determine, provided that:

(i) the maximum number of Ordinary Shares that may be purchased

under this authority is 30,001,416;

(ii) the minimum price which may be paid for an Ordinary Share is

10p exclusive of attributable expenses payable by the Company
(if any); and

(iii) the maximum price which may be paid for an Ordinary Share is an

amount equal to not more than 105% of the average of the
middle market quotations for the Ordinary Shares as derived from
the London Stock Exchange Daily Official List for the five
business days immediately preceding the day on which the
purchase is made exclusive of attributable expenses payable by
the Company (if any).

164958 Johnson Annual Report Pt4_164958 Johnson Annual Report Pt4  06/03/2015  16:46  Page 105

Annual Report and Accounts 2014 Johnson Service Group PLC  105

In order for a proxy appointment made by means of CREST to be
valid, the appropriate CREST message (a “CREST Proxy Instruction”)
must be properly authenticated in accordance with CRESTCo’s
specifications and must contain the information required for such
instructions, as described in the CREST Manual. The message
(regardless of whether it relates to the appointment of a proxy or to
an amendment to the instruction given to a previously appointed
proxy) must, in order to be valid, be transmitted so as to be received
by the issuer’s agent (ID “RA10”) by the latest time(s) for receipt of
proxy appointments specified in, or in a note to, the Notice of
Meeting. For this purpose, the time of receipt will be taken to be the
time (as determined by the timestamp applied to the message by the
CREST Applications Host) from which the issuer’s agent is able to
retrieve the message by enquiry to CREST in the manner prescribed
by CREST.

CREST members (and, where applicable, their CREST sponsors or
voting service providers) should note that CREST does not make
available special procedures in CREST for any particular messages.
Normal system timings and limitations will therefore apply in relation
to the input of CREST Proxy Instructions. It is the responsibility of the
CREST member concerned to take (or, if the CREST member is a
CREST personal member or sponsored member or has appointed a
voting service provider, to procure that his CREST sponsor or voting
service provider takes) such action as shall be necessary to ensure
that a message is transmitted by means of the CREST system by
any particular time. In this connection, CREST members (and, where
applicable, their CREST sponsors or voting service providers) are
referred, in particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and timings.

The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001.

3. The following documents will be available for inspection at the

Registered Office of the Company during normal business hours on
any business day (Saturdays, Sundays and public holidays excluded)
from the date of this Notice until the close of the meeting and at the
place of the meeting for 15 minutes prior to and during the meeting:

(i) the Register of Directors’ interests kept by the Company under

Section 809 of the Companies Act 2006;

(ii) copies of all service contracts between the Directors and the
Company together with other appropriate documentation; and

(iii) copies of the terms and conditions of appointment of the Non-

Executive Directors.

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4. The Company specifies that only those Shareholders registered in

the Register of Members of the Company as at 6.00pm on 5th May
2015, or in the event that the Meeting is adjourned, in the Register
of Members 48 hours before the time of any adjourned meeting,
shall be entitled to attend or vote at the Meeting in respect of the
number of shares registered in their name at the relevant time.
Changes to entries on the Register of Members after 6.00pm on
5th May 2015 or, in the event that the Meeting is adjourned, less
than 48 hours before the time of any adjourned meeting, shall be
disregarded in determining the rights of any person to attend or vote
at the Meeting.

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Accompanying Notes
1. A member of the Company entitled to attend and vote at the Annual
General Meeting may appoint one or more persons as his/her proxy
to exercise all or any of his/her rights to attend, speak and vote at
the Annual General Meeting of the Company. A member may appoint
more than one proxy in relation to the Annual General Meeting
provided that each proxy is appointed to exercise rights attached to a
different share or shares held by him/her. A proxy need not be a
member of the Company. The form of proxy is enclosed. The form of
proxy and power of attorney or other authority, if any, under which it is
signed or a certified copy of such power of authority must be
received by the Company’s Registrars, Capita Asset Services, The
Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU not later
than 48 hours prior to the commencement of the Annual General
Meeting. Completion of the form will not prevent you from attending
and voting at the meeting instead of the proxy, if you wish.

To appoint more than one proxy, additional proxy forms may be
obtained by contacting the Registrars or you may photocopy the
proxy form. Please indicate in the box next to the proxy holder’s
name the number of shares in relation to which they are authorised
to act as your proxy. Please also indicate by ticking the box provided
if the proxy instruction is one of multiple instructions being given. All
forms must be signed and returned in the same envelope.

Any corporation which is a member can appoint one or more
corporate representatives who may exercise on its behalf all of its
powers as a member provided that they do not do so in relation to
the same shares.

In order to facilitate voting by corporate representatives at the
meeting, arrangements will be put in place at the meeting so that (i)
if a corporate Shareholder has appointed the Chairman of the
meeting as its corporate representative with instructions to vote on a
poll in accordance with the directions of all of the other corporate
representatives for that Shareholder at the meeting, then on a poll
those corporate representatives will give voting directions to the
Chairman and the Chairman will vote (or withhold a vote) as
corporate representative in accordance with those directions; and (ii)
if more than one corporate representative for the same corporate
Shareholder attends the meeting but the corporate Shareholder has
not appointed the Chairman of the meeting as its corporate
representative, a designated corporate representative will be
nominated, from those corporate representatives who attend, who
will vote on a poll and the other corporate representatives will give
voting directions to that designated corporate representative.

Corporate Shareholders are referred to the guidance issued by the
Institute of Chartered Secretaries and Administrators on proxies and
corporate representatives – www.icsa.org.uk – for further details of
this procedure. The guidance includes a sample form of
representation letter if the Chairman is being appointed as described
in (i) above.

2. CREST members who wish to appoint a proxy or proxies by utilising

the proxy voting service may do so for the meeting (and any
adjournment thereof) by following the procedures described in the
CREST Manual. CREST Personal Members or other CREST
sponsored members (and those CREST members who have
appointed a voting service provider) should refer to their CREST
sponsor or voting service provider, who will be able to take the
appropriate action on their behalf.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
164958 Johnson Annual Report Pt4_164958 Johnson Annual Report Pt4  06/03/2015  16:46  Page 106

106 Johnson Service Group PLC  Annual Report and Accounts 2014

NOTICE OF ANNUAL GENERAL MEETING CONTINUED

5. As at 2nd March 2015 (being the last business day prior to

publication of this notice) the Company’s issued share capital
consists of 300,014,164 Ordinary Shares carrying one vote each.
The total voting rights in the Company as at 2nd March 2015 are,
therefore, 300,014,164.

6. Subject to the provisions of section 338 of the Companies Act 2006,
members representing at least 5% of the total voting rights of all
members (or at least 100 members who would have the right to vote
at the meeting and who hold shares on which there has been paid an
average sum per member of at least £100) may have the right to
require the Company (i) to give, to members of the Company entitled
to receive notice of the meeting, notice of a resolution which may
properly be moved and is intended to be moved at the meeting
and/or (ii) to include in the business to be dealt with at the meeting
any matter (other than a proposed resolution) which may be properly
included in the business. A resolution may properly be moved or a
matter may properly be included in the business unless (a) (in the
case of a resolution only) it would, if passed, be ineffective (whether
by reason of inconsistency with any enactment or the Company’s
constitution or otherwise), (b) it is defamatory of any person, or (c) it
is frivolous or vexatious.

Such a request may be in hard copy form or in electronic form, must
identify the resolution of which notice is to be given or the matter to
be included in the business, must be authenticated by the person or
persons making it, must be received by the Company not later than 6
weeks before the meeting, and (in the case of a matter to be
included in the business only) must be accompanied by a statement
setting out the grounds for the request.

Explanatory Notes
The following notes give an explanation of the proposed resolutions.

Resolutions 1 to 11 inclusive are proposed as Ordinary resolutions. This
means that for each of those resolutions to be passed, more than half of
the votes cast must be in favour of the resolution. Resolutions 12 to 13
inclusive are proposed as Special resolutions. This means that for each
of those resolutions to be passed, at least three-quarters of the votes
cast must be in favour of the resolution.

Your Directors consider the passing of all of the Resolutions to be in
the best interests of the Company and its Shareholders and
accordingly recommend that you vote in favour of these Resolutions as
they intend to do so in respect of their own shareholdings.

Report and Accounts (Resolution 1)
The Directors of the Company must present the accounts to the AGM.

Directors’ Remuneration Report (Resolution 2)
Although, as a company listed on AIM, there is no requirement for the
Board Report on Remuneration to be approved by members, the
Directors believe that it is best practice to do so. It is proposed,
therefore, that the Board Report on Remuneration for the financial year
ended 31st December 2014, as set out on pages 34 to 41 of the
Company’s Annual Report, be approved.

The Board Report on Remuneration contains, inter alia, details of the
Directors who were members of the Remuneration Committee, a
forward looking statement of the Company’s policy on Directors’
remuneration for subsequent financial years, a performance graph
showing the Company’s Total Shareholder Return compared with the
return on the FTSE AIM All-Share Index, the FTSE Support Services
Index and the FTSE Industrial Goods and Services Index, details of the
Directors’ service contracts and specific disclosures relating to each
Director’s remuneration.

Declaration of a Dividend (Resolution 3)
A final dividend can only be paid after the Shareholders at a general
meeting have approved it. A final dividend of 1.20 pence per Ordinary
Share is recommended by the Directors for payment to Shareholders
who are on the Register at the close of business on 17th April 2015. If
approved, the date of payment of the final dividend will be 15th May
2015. An interim dividend of 0.50 pence per Ordinary share was paid on
7th November 2014.

Re-election of Directors (Resolutions 4 to 8 inclusive)
Under the Company’s Articles of Association, and in line with the
recommendations of the UK Corporate Governance Code (the “Code”)
for non-FTSE 350 companies, all Directors are required to retire and
submit themselves for re-election every three years and all newly
appointed Directors are required to retire and submit themselves for re-
election at the first AGM following their appointment. Notwithstanding
the provisions of the Articles of Association, in the interests of good
corporate governance, the Directors have resolved that, each year, all
Directors will retire and offer themselves for re-election.

Biographical details of all the Directors are set out on page 20 of the
2014 Annual Report and are also available for viewing on the
Company’s website (www.jsg.com).

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Annual Report and Accounts 2014 Johnson Service Group PLC  107

Reappointment of the Auditor (Resolution 9)
The Company is required to appoint the auditor at each general meeting
at which accounts are presented, to hold office until the end of the next
such meeting. Resolution 9, which is recommended by the Audit
Committee, proposes the reappointment of the Company’s existing
auditor, PricewaterhouseCoopers LLP.

Remuneration of the Auditor (Resolution 10)
This Resolution follows best practice in corporate governance by
separately seeking authority for the Audit Committee to determine the
auditors’ remuneration.

Renewal of Directors’ Authority to Allot Securities (Resolution 11)
The Company’s Directors may only allot Ordinary Shares or grant rights
over Ordinary Shares if authorised to do so by Shareholders. The
authority granted at the last AGM under section 551 of the Companies
Act 2006 to allot relevant securities is due to expire at the conclusion of
this year’s AGM. Accordingly, this resolution seeks to grant a new
authority to authorise the Directors to allot shares in the Company or
grant rights to subscribe for, or convert any security into, shares in the
Company and will expire at the conclusion of the next AGM of the
Company in 2016 or, if earlier, the close of business on 1st July 2016.

If passed, the authority will be limited to an aggregate nominal value of
£8,301,158 of Ordinary Shares which represents approximately 27.7 per
cent of the Ordinary share capital in issue as at 2nd March 2015 (being
the latest practicable date prior to publication of this Notice).

Other than in respect of allotting Ordinary Shares in order to satisfy
employee share schemes, the Directors have no present intention of
exercising this authority. However, it is considered prudent to maintain
the flexibility that this authority provides. The Company’s Directors intend
to renew this authority annually.

Renewal of Disapplication Pre-emption Rights (Resolution 12)
Under section 561(1) of the Companies Act 2006, if the Directors wish
to allot any of the unissued shares or grant rights over shares or sell
treasury shares for cash (other than pursuant to an employee share
scheme) they must in the first instance offer them to existing
Shareholders in proportion to their holdings. There may be occasions,
however, when the Directors will need the flexibility to finance business
opportunities by the issue of shares without a pre-emptive offer to
existing Shareholders. This cannot be done under the Companies Act
2006 unless the Shareholders have first waived their pre-emption rights.

Resolution 12 asks the Shareholders to do this and, apart from rights
issues or any other pre-emptive offer concerning Equity Securities, the
authority will be limited to the issue of shares for cash up to a maximum
aggregate nominal value of £1,500,071 (which includes the sale on a
non pre-emptive basis of any shares held in treasury), which is
equivalent to approximately 5 per cent of the Company’s issued Ordinary
share capital as at 2nd March 2015 (being the latest practicable date
prior to publication of this Notice). The Company undertakes to restrict
its use of this authority to a maximum of 7.5 per cent of the Company’s
issued Ordinary share capital in any three year period. Shareholders will
note that this resolution also relates to treasury shares and will be
proposed as a Special resolution.

This resolution seeks a disapplication of the pre-emption rights on a
rights issue so as to allow the Directors to make exclusions or such
other arrangements as may be appropriate to resolve legal or practical
problems which, for example, might arise with overseas Shareholders. If

renewed, the authority will expire at the conclusion of the next AGM of
the Company in 2016 or, if earlier, the close of business on 1st July
2016. The Company’s Directors intend to renew this authority annually.

Renewal of Company’s authority to purchase Ordinary Shares (Resolution 13)
In certain circumstances it may be advantageous for the Company to
purchase its own shares and Resolution 13 seeks the authority from
Shareholders to continue to do so. Authority was given to the Company
to make market purchases up to an aggregate of 26,253,940 of its
Ordinary Shares at the AGM held on 1st May 2014 (being equal to
approximately 10 per cent of the Company’s issued Ordinary share
capital as at 28th February 2014, the latest practicable date prior to the
publication of the notice for the AGM held on 1st May 2014). This
authority is due to expire at the end of the AGM and it is proposed that
the Company be authorised to continue to make market purchases up
to an aggregate of 30,001,416 Ordinary Shares, representing
approximately 10 per cent of the Company’s issued Ordinary share
capital as at the 2nd March 2015, being the latest practicable date prior
to the publication of this Notice.

Renewing the authority for the Company to purchase Ordinary Shares in
the market is intended to allow your Board to take advantage of
opportunities that may arise to increase Shareholder value. The Directors
will exercise this power only when, in the light of market conditions
prevailing at the time, they believe that the effect of such purchases will
be to increase earnings per share and will be likely to promote the
success of the Company for the benefit of its members as a whole.
Other investment opportunities, appropriate gearing levels and the
overall position of the Company will be taken into account when
exercising this authority. The price paid for shares will not be less than
the nominal value of 10p per share nor more than 5% above the
average of the middle-market quotation of the Company’s Ordinary
Shares as derived from the London Stock Exchange Daily Official List
for the five business days immediately proceeding the day on which the
shares are purchased.

The Company may hold in treasury any of its own shares that it
purchases pursuant to the Companies Act 2006 and the authority
conferred by this resolution. This gives the Company the ability to
reissue treasury shares quickly and cost-effectively and provides the
Company with greater flexibility in the management of its capital base. It
also gives the Company the opportunity to satisfy employee share
scheme awards with treasury shares. The total number of options to
subscribe for Ordinary Shares that were outstanding at 2nd March 2015
(being the latest practicable date prior to publication of this Notice) was
4,213,515. The proportion of issued share capital that they represented
at that time was 1.4 per cent and the proportion of issued share capital
that they will represent if the full authority to purchase shares (existing
and being sought) is used is 1.6 per cent. Once held in treasury, the
Company is not entitled to exercise any rights, including the right to
attend and vote at meetings in respect of shares. Further, no dividend or
other distribution of the Company’s assets may be made to the
Company in respect of the treasury shares.

The Directors have no present intention of purchasing Ordinary Shares
in the market. The authority given under this Resolution will lapse, unless
renewed, at the conclusion of the next AGM of the Company in 2016,
or, if earlier, the close of business on 1st July 2016. It is the present
intention of the Directors to seek renewal of this authority annually.

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164958 Johnson Annual Report Pt4_164958 Johnson Annual Report Pt4  06/03/2015  16:46  Page 108

Advisors
Nominated Advisor, Financial Advisor and Stockbrokers
Investec Investment Banking
2 Gresham Street, London EC2V 7QP

Bankers
Lloyds Bank plc
40 Spring Gardens, Manchester M2 1EN

The Royal Bank of Scotland plc
10th Floor, The Plaza, 100 Old Hall Street, Liverpool L3 9QJ

Santander UK plc
298 Deansgate, Manchester M3 4HH

Lawyers
Hill Dickinson LLP
No1 St Paul’s Square, Liverpool L3 9SJ

Registrar and Transfer Office
Capita Asset Services
34 Beckenham Road, Beckenham BR3 4ZF

Independent Auditor
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
101 Barbirolli Square, Lower Mosley Street, Manchester M2 3PW

108 Johnson Service Group PLC  Annual Report and Accounts 2014

DIRECTORS AND ADVISORS

Directors
Paul Stephen Moody
Non-Executive Chairman
Chairman of Nomination Committee
Member of Remuneration Committee
Member of Audit Committee

Christopher Sander
Chief Executive Officer
Director responsible for Health, Safety and the Environment

Yvonne May Monaghan BSc (Hons), FCA
Chief Financial Officer

Michael Bernard Del Mar
Non-Executive Senior Independent Director
Chairman of Remuneration Committee
Member of Nomination Committee
Member of Audit Committee

William Mervyn Frew Carey Shannon CA
Non-Executive Director
Member of Remuneration Committee
Member of Nomination Committee
Chairman of Audit Committee

Company Secretary & Group Financial Controller
Timothy James Morris BA (Hons), FCA

Registered Office
Johnson House
Abbots Park
Monks Way
Preston Brook
Cheshire
WA7 3GH

FINANCIAL CALENDAR

Results for the year
Announced in March 2015

Results for the half year
Announced in September 2015

Annual General Meeting
To be held on 7th May 2015

Dividend payment dates
Interim 2014
Proposed Final 2014
Interim 2015

7th November 2014
15th May 2015
November 2015

164958 Johnson Annual Report Cover_2014 Johnsons AR Covers  06/03/2015  22:13  Page 2

Johnson Service Group PLC  Annual Report and Accounts 2014

Annual Report and Accounts 2011 Johnson Service Group PLC  2

Annual Report and Accounts 2014 Johnson Service Group PLC

THE ESTABLISHED NAME 
IN THE TEXTILE RENTAL AND
DRYCLEANING SECTORS

Design: mediasterling.com
Production: sterlingfp.com

This annual report is printed using vegetable
inks on paper from an ISO 14001 certified
manufacturer, and is made with ECF pulp
sourced from carefully managed and 
renewed forests.

Electronic Communications

The Company offers Shareholders the
opportunity to receive communications such as
notices of Shareholder meetings and the annual
report and accounts electronically. The Company
encourages the use of electronic communication
as, not only does it save the Company printing
and mailing costs, it is also a more convenient
and prompt method of communication.

If you decide to receive communications
electronically, you will be sent an email message
each time a new Shareholder report or notice 
of meeting is published. The email will contain
links to the appropriate website where
documents can be viewed. It is possible 
to change your instruction at any time by
amending your details on the register.

If you would like to receive electronic
communications, you will need to register your
email address by accessing the Shareholder
Services page within the Investor Relations
section of the Company’s website at
www.jsg.com. 

This will link you to the service offered by the
Company’s Registrar. If you decide not to register
an email address with the Registrar, you will
continue to receive all communications in hard
copy form.

Those Shareholders who are CREST members
and who wish to appoint a proxy or proxies
utilising the proxy voting service please refer to
Note 2 of the Notice of Annual General Meeting.

www.jsg.com

If you have any queries regarding electronic communications, please contact the
Company’s registrar, Capita Asset Services, on 0871 664 0300 (calls cost 10p
per minute plus network extras, lines are open 8.30am-5.30pm Mon-Fri).

164958 Johnson Annual Report Cover_2014 Johnsons AR Covers  06/03/2015  16:38  Page 1

Annual Report 
and Accounts

2014

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Johnson House, 
Abbots Park, Monks Way
Preston Brook
Cheshire WA7 3GH

Tel:
+44 (0)1928 704 600
Fax: +44 (0)1928 704 620
Email: enquiries@jsg.com