Johnson Service Regulatory News (JSG)

11 Apr 2008 18:25

Johnson Service Group PLC11 April 2008 FOR IMMEDIATE RELEASE JOHNSON SERVICE GROUP PLC ("Johnson Service Group" or the "Company") 11 April 2008 PROPOSED DISPOSAL OF JOHNSON CLOTHING LIMITED FOR £82.5 MILLION AGREEMENT OF NEW DEBT FACILITIES Highlights • Proposed Disposal of the Group's corporate clothing business to an entity controlled by divisional management and Gresham LLP, an independent UK mid-market private equity specialist. The Proposed Disposal is subject to Shareholder approval • New medium-term debt facilities agreed with the Group's existing banks. If Shareholders do not approve the Proposed Disposal, an event of default under the new facilities will be triggered • Aggregate purchase price of £82.5 million, subject to adjustment post Completion, of which £2.1 million to be paid to the Group staff pension scheme and £13.2 million to be placed in escrow to cover certain potential tax liabilities • Remaining proceeds of £64.6 million (after transaction costs), together with an amount of approximately £0.4 million from the Company's current resources to be applied to reduce the Group's indebtedness and financial leverage • The Proposed Disposal and arrangement of new medium-term debt facilities represent a significant step towards establishing a stable financial basis for the Group • New debt facilities become significantly less expensive and offer further benefits in the event of an equity fundraising of at least £25 million before 31 March 2009 • Johnson Service Group to seek Shareholder approval for admission to AIM • The Group continues to trade satisfactorily in the current year Simon Sherrard, Chairman of Johnson Service Group, commented: "We are pleased to announce today that we have secured new medium-term debtfacilities with our existing banks and that, following our strategic review, wehave agreed the disposal of Johnson Clothing Limited for an aggregate purchaseprice of £82.5 million. This refinancing and the sale of Johnson Clothing Limited are both major stepsin securing financial stability for the Group, thus allowing us to optimise thepotential of our other market leading businesses, which are continuing to tradesatisfactorily." Enquiries: Johnson Service Group 020 7290 0390Simon Sherrard, ChairmanJohn Talbot, Chief Executive Close Brothers (Financial Adviser to Johnson Service Group) 020 7655 3100David BezemMatthew PrestGuy Ballantine Investec (Joint Financial Adviser and broker to Johnson Service Group) 020 75975000Erik AndersonMichael Lacey-Solymar Hudson Sandler 020 7796 4133Michael SandlerSandrine GallienFran Read This summary should be read in conjunction with the full text of the followingannouncement. Close Brothers Corporate Finance Limited, which is authorised and regulated inthe United Kingdom by the Financial Services Authority, is acting exclusivelyfor Johnson Service Group PLC and for no one else in relation to the ProposedDisposal and is not advising any other person and accordingly will not beresponsible to anyone other than Johnson Service Group PLC for providing theprotections afforded to the customers of Close Brothers Corporate FinanceLimited or for providing advice in relation to the Proposed Disposal. Investec, which is authorised and regulated in the UK by the Financial ServicesAuthority, is acting for Johnson Service Group PLC and for no one else inconnection with the Proposed Disposal and will not be responsible to anyoneother than Johnson Service Group PLC for providing the protections afforded toclients of Investec nor for providing advice to any other person in relation tothe Proposed Disposal. JOHNSON SERVICE GROUP PLC FOR IMMEDIATE RELEASE 11 April 2008 PROPOSED DISPOSAL OF JOHNSON CLOTHING LIMITED FOR £82.5 MILLION AGREEMENT OF NEW DEBT FACILITIES Introduction Johnson Service Group PLC today announces that it has entered into a conditionalagreement to sell its corporate clothing business comprising the entire issuedand to be issued share capital of Johnson Clothing Limited to the Purchaser, anewly formed company established and controlled by Gresham LLP and the JohnsonClothing Limited management team led by Simon Hughes. The total amount payableby the Purchaser in cash on Completion will be £82.5 million (subject toadjustment post Completion) plus an amount equal to any cash balances of JohnsonClothing Limited on Completion. £2.1 million of this amount will be used to funda liability of Johnson Clothing Limited to the Johnson Service Group staffpension scheme arising on the sale. The Proposed Disposal, because of its size relative to the Group, is a class 1transaction under the Listing Rules and is therefore conditional upon theapproval of Shareholders at an extraordinary general meeting. In addition, theDirectors intend to transfer the Company's stock exchange listing from theOfficial List to AIM. As a result, the Company intends to request thecancellation of the listing of the Shares on the Official List. Under theListing Rules, the cancellation requires the prior approval of Shareholders. A circular will be sent to Shareholders in due course, setting out full detailsof the Proposed Disposal and convening extraordinary general meetings at whichShareholder approval for the Proposed Disposal and transfer to AIM will besought. Importance of the vote and working capital Completion of the Proposed Disposal is conditional only upon Shareholders'approval being obtained at the Disposal Extraordinary General Meeting. IfShareholders do not approve the Proposed Disposal, an event of default under thenew facilities will be triggered, which would allow the Company's banks to makean immediate demand for repayment of the amounts drawn down under the newfacilities and also allow the banks and the pension trustee to enforce thesecurity that they hold over the assets of the Group. As a consequence of such ademand and enforcement, the Group would have no access to working capital and assuch, would not have sufficient working capital for its present requirements,that is for at least 12 months from the date of the circular. If an event of default were to be triggered, in order to provide sufficientworking capital for the Company's requirements, the Board would immediately needto agree a grace period with its banks within which to negotiate a waiver of theevent of default or new debt facilities. The Board is not confident that anysuch grace period would be granted by the Company's banks, or that anynegotiations to secure a waiver or new debt facilities would be successful. Anyfailure following an event of default to agree a grace period and, within thatperiod, to agree a waiver or new debt facilities, could leave the Companywithout sufficient working capital for its trading requirements and would verylikely lead to the imminent insolvency of the Company. The terms of any facilities which might be agreed following an event of defaultcould result in significantly higher financing costs to the Company than thosewhich pertain under the new facilities agreed today with the Company's existingbanks. If Shareholders do not approve the Proposed Disposal, the Company could,provided that it is able to agree a grace period with its banks, also berequired to raise funds by undertaking the disposal of some of its otherbusinesses. The Directors believe that a number of the businesses within theGroup would be attractive targets for potential acquirors. However, theDirectors are not confident that such disposals would be successfully completedin a timely manner, or at all, if a grace period were granted, or that theproceeds of such disposals would be sufficient to provide working capital forthe Company's present requirements. In addition, a decision by the Company'sbanks to make an immediate demand for repayment following an event of defaultwould mean that there would be insufficient time to complete such disposals. If Shareholders approve the Disposal Resolution, the event of default describedabove will not be triggered. Principal terms of the Proposed Disposal Under the Disposal Agreement, which was signed on 11 April 2008, the Company hasconditionally agreed to sell the entire issued share capital of Johnson ClothingLimited to the Purchaser. The total amount payable by the Purchaser in cash on Completion is £82.5 million(subject to certain adjustments post Completion as described below), togetherwith an amount equal to the aggregate cash balances of the Disposal Group as atCompletion. The Disposal Agreement provides for post Completion adjustments forworking capital, reconciled cash balances and third party indebtedness, suchthat Johnson Clothing Limited is acquired on a debt-free, cash-free basisincluding a level of working capital sufficient for the operation of thebusiness. In addition, the Purchaser has agreed to refund certain items ofexpenditure incurred by the Disposal Group prior to Completion. The Directors donot expect any post Completion adjustments to be material in the context of theProposed Disposal. The Purchaser has agreed to pay approximately £16.4 million in respect of theentire issued share capital of Johnson Clothing Limited and approximately £64.0million in respect of the intra-group debt owed by the Disposal Group to theContinuing Group as at Completion which the Purchaser has agreed to procure theDisposal Group will repay at Completion (subject to adjustment between the twonumbers post Completion depending on the actual intra-group debt as atCompletion). In addition, the Purchaser will procure that Johnson ClothingLimited will pay £2.1 million (being the balance of the total amount payable bythe Purchaser in cash on Completion) to the Group staff pension scheme to takeaccount of certain liabilities arising in respect of Johnson Clothing Limitedceasing to participate in the Group staff pension scheme after the ProposedDisposal and the agreement reached with the trustee of the Group staff pensionscheme It has also been agreed with the Purchaser that an amount of £13.2 million ofthe proceeds of the Proposed Disposal will be placed in escrow to coverpotential tax liabilities arising in the Disposal Group as a result of theProposed Disposal which the Company has agreed to bear. If these tax liabilitiesdo not crystallise, this amount will be released to the Continuing Group andapplied in repayment of a portion of the debt facilities of the Company. The Proposed Disposal, which is expected to complete on or around 30 April 2008is conditional only on the approval of the Shareholders at the DisposalExtraordinary General Meeting. If the condition to the Proposed Disposal is notsatisfied, the Proposed Disposal will not proceed. Background to and reasons for the Proposed Disposal In 2003 the Company embarked on a strategy of broadening its range of businessto business services and made a number of acquisitions both in the facilitiesmanagement and corporate clothing areas as well as adding to the Company'sexisting activities. These acquisitions were made for cash. In 2006 the Board decided to reduce the financial gearing of the Company bydisposing of the dry cleaning business. No offer for this business was receivedwhich the Directors felt they could recommend to Shareholders. In addition, theCompany proposed to sell a number of smaller businesses which were notconsidered core to the Company's strategy. No offers materialised which wereconsidered satisfactory by the Board. Towards the end of 2006 a number of problems emerged which have had adetrimental effect on the Company's financial position. The Company was adversely affected by costs associated with the implementationof an Enterprise Resource Planning IT system, which had been intended for useacross the Company's businesses. In the six months ended 30 June 2007,expenditure on this system totalled £2.3 million and the decision to limit theimplementation of this system led to a write-down of £15.9 million in relationto expenditure in 2007 and earlier periods. Stalbridge Linen Services, which supplies linen to the premium hotel, cateringand corporate hospitality markets, incurred losses in 2006 and 2007 as a resultof an unsuccessful expansion into the high volume linen market and was impactedby stock write-downs. This business has since been brought under the managementof the Company's Apparelmaster division and has reverted to its traditionalactivities, however further costs have been incurred as a result of thisreorganisation, particularly in connection with a laundry built for high volumelinen which will now be used for processing garments. The Company was also adversely affected by management and operational issues inJohnson Hospitality Services, a former division which provided furniture andcatering equipment to the contract catering market. This division incurredsubstantial losses during 2006 which resulted in the businesses within thedivision being sold or closed at the end of 2006, thus incurring additionalcosts. On 8 November 2007, the Company announced that, as a result of lower thanexpected profits for 2007 and 2008, and in the absence of any proceeds from theproposed sale of three non-core businesses, the Board expected that the Companywould breach the existing covenants in its banking agreement. Following a numberof management changes over the previous 15 months, in December 2007 the Companyretained the services of John Talbot, an expert in the reorganisation ofcompanies, to minimise the impact of the Company's financial difficulties on thetrading and competitive position of its businesses. John Talbot was subsequentlyappointed Interim Chief Executive Officer of the Company. Concurrently, the Company entered into negotiations with its banking group andagreed a waiver of its year end covenant tests in exchange for, amongst otherthings, the granting of security over the Company's assets (together with theassets of certain of its subsidiaries) and the agreement to pay the bankinggroup a fee and incur increased interest costs. The Company also agreed toextend the benefit of a proportion of such security to the trustees of itspension funds. These arrangements, announced on 28 December 2007, also requiredthe Company to negotiate new banking facilities with its banking group before 30April 2008. During the period following the 8 November 2007 announcement, the Boardundertook a review of the Company's operations in order to determine the mostappropriate strategic direction for the Company. One of the conclusions of thisreview was that the Board should investigate opportunities to reduceindebtedness and financial gearing whilst working to secure medium-term funding. In November 2007, the Board received a formal proposal from Gresham LLPregarding a potential acquisition of Johnson Clothing Limited which, in theBoard's view, represented an attractive valuation for the business and wasdeliverable within a short time frame due to the familiarity with, and knowledgeof, Johnson Clothing Limited's markets obtained by Gresham LLP through theirprevious ownership of Dimensions, one of the businesses within the DisposalGroup. The Board therefore decided to pursue this proposal further, and enteredinto negotiations with Gresham LLP which have led to the Proposed Disposal forwhich the approval of Shareholders will be sought at the Disposal ExtraordinaryGeneral Meeting. In light of the Company's financial position, the Board believes that theProposed Disposal offers an opportunity both to achieve an attractive valuationfor Johnson Clothing Limited and to reduce the Group's indebtedness andfinancial leverage. The Board also anticipates that the Proposed Disposal willresult in significantly reduced financing costs for the Group over the mediumterm. Furthermore, the Board believes that the simplified structure of the Groupfollowing Completion will allow management to focus on maximising the potentialof the remaining businesses. Accordingly, the Board has concluded that the Proposed Disposal is in the bestinterests of Shareholders. New debt facilities In order to refinance the Group's existing facilities and provide ongoingworking capital for the Continuing Group, the Company has negotiated amedium-term facility agreement with its existing banks. This comprises fourseparate tranches that are available to the Company: •The first tranche is a £65 million term loan to be used to bridge a portion of the proceeds from the Proposed Disposal. The applicable rate of interest is LIBOR plus 4 per cent. per annum for the period to 31 May 2008, and LIBOR plus 15 per cent. per annum (comprising a combination of 2.5 per cent. cash pay interest and 12.5 per cent. capitalised interest payments) thereafter. The final repayment date of the first tranche is 31 October 2009. If completion of the Proposed Disposal occurs, the Board expects to repay the first tranche in full by 30 April 2008 out of current resources and the proceeds of the Proposed Disposal, thereby avoiding the significant increase in the interest rate on this tranche which occurs after 31 May 2008. •The second tranche is a £65 million amortising term loan to be used to refinance the existing indebtedness of the Group. The applicable rate of interest is LIBOR plus 2.5 per cent. per annum. An amount of £2 million will be repayable on 30 June 2009, with further repayments quarterly thereafter. The final repayment date of the second tranche is 31 December 2010. •The third tranche is an amortising revolving credit facility with an initial amount of £25 million to be used for general corporate purposes, £5 million of which will be provided by way of an overdraft. The applicable rate of interest is LIBOR plus 2.5 per cent. per annum. The final repayment date of the third tranche is 31 December 2010. The amount available to the Company under the third tranche will reduce to £22.5 million on 30 June 2009 and then to £20 million on 31 December 2009. •The fourth tranche is a £50 million non-amortising term loan to be used to refinance the existing indebtedness of the Group. The applicable rate of interest is LIBOR plus 9 per cent. per annum (comprising a combination of 2.5 per cent. cash pay interest and 6.5 per cent. capitalised interest payments). In the event that the Company does not raise at least £25 million (net of costs but together with accrued interest on that amount) from the proceeds of an equity raising by 31 March 2009, the applicable rate of interest will increase to LIBOR plus 15 per cent. per annum thereafter (comprising a combination of 2.5 per cent. cash pay interest and 12.5 per cent. capitalised interest payments). The final repayment date of the fourth tranche is 31 December 2010. The facility agreement also provides that a number of its terms will be adjustedin favour of the Company in the event that the Company raises at least £25million (net of costs and together with capitalised accrued interest on thatamount) from the proceeds of an equity raising by 31 March 2009. These include: •the reduction of the applicable rate of interest on the fourth tranche to LIBOR plus 4 per cent. per annum; •the removal of any restrictions on the Company's ability to pay dividends contained in the facility agreement; •the removal of any right of the lenders to appoint an observer to attend meetings of the Board; and •the ability thereafter to offset any subsequent prepayments of the facilities against the fourth tranche in priority to the second. On 11 April 2008, the Company issued to its existing lender banks, in connectionwith the renegotiation of the Company's debt facilities, warrants over 2,957,636Shares, representing approximately 4.7 per cent. of the fully diluted sharecapital of the Company as at that date. The warrants are exercisable from 11April 2008 until 31 December 2011 at an exercise price of 10 pence per Share,which represents the par value of the Shares. Financial effects of the Proposed Disposal and use of disposal proceeds Transaction costs in connection with the Proposed Disposal are expected to totalapproximately £2.6 million. As noted above, it has been agreed with thePurchaser that an amount of £13.2 million of the proceeds of the ProposedDisposal will be placed in escrow to cover certain potential tax liabilitiesand, if these tax liabilities do not crystallise, that this amount will bereleased to the Continuing Group and applied in repayment of a portion of thedebt facilities of the Company. In addition, the Purchaser will procure that anamount of £2.1 million will be contributed by Johnson Clothing Limited to theGroup staff pension scheme to take account of certain pensions liabilities. The Directors intend to use the expected remaining net proceeds of approximately£64.6 million, together with an amount of approximately £0.4 million from theCompany's current resources, to repay the first tranche of the new debtfacilities to reduce the Company's indebtedness. The Board anticipates that theProposed Disposal will result in lower financial leverage, significantly reducedfinancing costs and greater financial certainty for the Group over the mediumterm. The Proposed Disposal is expected to be dilutive to pre-amortisation earningsfor the 52 weeks ending 31 December 2008 and, after recognition of the potentialtax liabilities of £13.2 million referred to above, will result in therecognition of a non-cash loss on disposal. Information on Johnson Clothing Limited Johnson Clothing Limited is the UK's largest provider of corporate clothing, andoperates through the following brands: DimensionsDimensions designs, sources and distributes branded corporate clothing to largeorganisations. Dimensions has a diverse client portfolio encompassing both thepublic and private sectors, with leading UK market positions in the retail,travel and leisure, distribution and logistics and hospitality industries. DCCDCC provides a managing agency primarily for clothing to clients in thefinancial services sector. DCC also operates DCC Direct, a catalogue business,which offers ready to wear styles to organisations of a variety of sizesrequiring smaller volumes of corporate clothing. Boyd CooperBoyd Cooper specialises in the sourcing and supply of uniforms and clothing toclients in the healthcare sector, including hospitals and private medicalpractices. YaffyYaffy is the leading supplier of high performance technical outerwear to UKpolice authorities. It holds long-term contracts to design or supply outerwearand body armour carriers to UK police forces. Wessex TextilesWessex Textiles is a supplier of specialist corporate clothing to the medicaland ambulance sectors in the UK. CCMOn 19 March 2008, the Company announced the disposal for a maximum considerationof £2.8 million of certain assets previously owned by the Company's CCM garmentsourcing business which, together with the Disposal Group, comprised theCompany's Corporatewear division. The Disposal Group does not include CCM or anyof its trade or assets. In 2007, the Disposal Group recorded turnover of £74.6 million and operatingprofit before exceptional items, amortisation and impairment of goodwill of £9.7million as extracted without material adjustment from the accounting recordsused to prepare the audited financial statements of Johnson Clothing Limited forthe year ended 31 December 2007. Budgeted operating profit for the DisposalGroup, before exceptional items, amortisation and impairment of goodwill in theyear ending 31 December 2008 is modestly below this level. The Disposal Group had gross assets of £89.5 million as at 31 December 2007, asextracted without material adjustment from the accounting records used toprepare the audited financial statements of Johnson Clothing Limited for theyear ended 31 December 2007. The audited financial statements of Johnson Clothing Limited for the year ended31 December 2007 contain a modified opinion, which notes the existence of amaterial uncertainty which may cast significant doubt about the ability ofJohnson Clothing Limited to continue as a going concern. The Board considersthat, in the event that Shareholders approve the Proposed Disposal, theauditors' opinion referred to above is not a matter of significance forShareholders, as, following Completion, Shareholders will no longer be exposedto any financial risks associated with Johnson Clothing Limited. In the eventthat Shareholders do not approve the Proposed Disposal, an event of default willbe triggered under the new facilities, and the Group would likely have no accessto working capital. In light of this, the Board considers that the auditors'opinion referred to above is not a matter of significance in the event thatShareholders do not approve the Proposed Disposal. Your attention is drawn tothe paragraph headed "Importance of the vote and working capital" above, whichincludes information which should be considered by Shareholders in relation tovoting at the Disposal Extraordinary General Meeting. The key individuals important to Johnson Clothing Limited and their functionsare as follows: Name PositionSimon Hughes Chief ExecutiveRichard Pearson Financial DirectorNeil Glacken Operations DirectorHelen McLoughlin Customer Services DirectorHayley Brooks Sales and Marketing DirectorSteven Cassapi Logistics Director Information on the Purchaser The Purchaser, Ensco 645 Limited, is a newly formed company established andcontrolled by Gresham LLP and the Johnson Clothing Limited management team ledby Simon Hughes. Gresham LLP is an independent UK mid-market private equityspecialist, focusing on buyouts of up to £100 million in value. From December2000 to July 2004, Gresham LLP was the owner of Dimensions, one of thebusinesses within the Disposal Group. Future strategy of the Continuing Group Following the Proposed Disposal, the Company intends to focus on providingservices to business and retail customers through its remaining businessesoperating primarily in the textile rental, facilities management and drycleaning markets. Current trends in trading and prospects Further to the trading update announced on 30 January 2008 the Continuing Groupand Johnson Clothing Limited continue to trade satisfactorily. The Company expects to release its preliminary results for the year ended 31December 2007 on or around 29 April 2008. It is expected that operating profit,before operating exceptional items, amortisation and impairment of goodwill andintangibles (excluding software), will be approximately £30 million. This figurerepresents a decrease in the Board's expectations since 30 June 2007, but it isline with current market expectations. Net debt stood at approximately £169million as at 31 December 2007, and at approximately £181 million as at 29February 2008. Further, operating exceptional items for the year ended 31 December 2007, whichwill include various restructuring costs, professional fees associated with thenegotiation of new debt facilities, onerous lease and environmental costs,write-off of rental stock and software development costs and net of gainsarising on property disposals, are expected to be approximately £41 million,representing an increase compared with the Board's expectations as at 30 June2007. Of this amount, related future cash expenditure is expected to beapproximately £8 million. Amortisation and impairment of goodwill and intangibles (excluding software) forthe year ended 31 December 2007 will include a write-down of goodwill of £11.8million in respect of the disposal of the Company's CCM garment sourcingbusiness, which was announced on 19 March 2008, together with a charge ofapproximately £9.4 million arising from the review for impairment performed onthe remainder of the Group's goodwill and intangibles (excluding software)balance, and approximately £6.0 million of intangibles amortisation (excludingsoftware). The aggregate impairment charges of approximately £21.2 millionreferred to above represents an increase compared with the Board's expectationsas at 30 June 2007. In addition to normal interest charges of approximately £11.6 million incurredin 2007 on borrowings and notional interest on post-retirement obligations, theCompany has expensed the £1.5 million fee paid to its existing banks for thewaiver granted on 28 December 2007 and the remaining £1.2 million of unamortisedfacility fees relating to the facility agreement dated 21 July 2005 and relatedsupplemental agreements. The expected results of the Group for the year ended 31 December 2007, set outabove, have been prepared using the accounting polices adopted by the Company inthe preparation of its interim financial statements for the six months ended 30June 2007 and have been prepared on a going concern basis, which assumes thatthe Company will continue in operational existence for the foreseeable future.The validity of this assumption depends, amongst other matters, on Shareholdersapproving the Proposed Disposal. If Shareholders do not approve the ProposedDisposal, it may not be possible for the Company to prepare its financialstatements on a going concern basis. In the event that the Company is unable toprepare its financial statements on a going concern basis, adjustments wouldhave to be made to reduce the balance sheet value of the Group's assets to theirrecoverable amounts, which may result in a reduction in the Group'sprofitability as compared with the expected results set out above. Transfer of trading to AIM The Company today announces its intention to seek a transfer of the Company'sstock exchange listing from the Official List to AIM. The Directors anticipatethat as an AIM quoted company, recurring savings will be made by the Company onits ongoing costs of administration and in effecting certain corporatetransactions due to the less onerous regulations on AIM. The proposed transfer to AIM will be subject to the approval of Shareholders atan extraordinary general meeting. Further announcements in connection with theproposed transfer to AIM will be made in due course. Enquiries: Johnson Service Group 020 7290 0390Simon Sherrard, ChairmanJohn Talbot, Chief Executive Close Brothers (Financial Adviser to Johnson Service Group) 020 7655 3100David BezemMatthew PrestGuy Ballantine Investec (Joint Financial Adviser and broker to Johnson Service Group) 020 75975000Erik AndersonMichael Lacey-Solymar Hudson Sandler 020 7796 4133Michael SandlerSandrine GallienFran Read Close Brothers Corporate Finance Limited, which is authorised and regulated inthe United Kingdom by the Financial Services Authority, is acting exclusivelyfor Johnson Service Group PLC and for no one else in relation to the Disposaland is not advising any other person and accordingly will not be responsible toanyone other than Johnson Service Group PLC for providing the protectionsafforded to the customers of Close Brothers Corporate Finance Limited or forproviding advice in relation to the Disposal. Investec, which is authorised and regulated in the UK by the Financial ServicesAuthority, is acting for Johnson Service Group PLC and for no one else inconnection with the Proposed Disposal and will not be responsible to anyoneother than Johnson Service Group PLC for providing the protections afforded toclients of Investec nor for providing advice to any other person in relation tothe Proposed Disposal. DEFINITIONS The following definitions apply throughout this announcement unless the contextrequires otherwise: "AIM" the AIM market operated by the London Stock Exchange; "Board" the board of directors of Johnson Service Group; "Close Brothers" Close Brothers Corporate Finance Limited; "Completion" completion of the Proposed Disposal in accordance with the terms of the Disposal Agreement; "Continuing Group" Johnson Service Group and its subsidiaries and subsidiary undertakings following Completion; "Directors" the directors of the Company as at the date of this Circular; "Disposal Agreement" the conditional sale agreement dated 11 April 2008 among the Vendors, the Company and the Purchaser relating to the Proposed Disposal; "Disposal Extraordinary General the general meeting of the CompanyMeeting" to be convened to approve the Proposed Disposal (or any adjournment thereof); "Disposal Group" Johnson Clothing Limited and its subsidiary undertakings; "Group" Johnson Service Group and its subsidiaries and subsidiary undertakings; "Johnson Clothing Limited" Johnson Clothing Limited, a company incorporated in England and Wales with registered number 454264 and having its registered office at 2 Boundary Court, Willow Farm Business Park, Castle Donington, Derbyshire, DE74 2NN; "Johnson Service Group" or "the Johnson Service Group PLC, aCompany" company incorporated in England and Wales with registered number 523335 and having its registered office at 3rd Floor, 4 Harley Street, London, W1G 9PB; "Johnsons Apparelmaster" Johnsons Apparelmaster Limited, a company incorporated in England and Wales with registered number 464645 and having its registered office at Pittman Way, Fulwood, Preston, Lancashire PR2 9ZD; "Listing Rules" the Listing Rules of the UK Listing Authority; "Official List" the official list of the UK Listing Authority; "Proposed Disposal" Johnson Service Group's proposed disposal of Johnson Clothing Limited pursuant to the Disposal Agreement; "Purchaser" Ensco 645 Limited, a company incorporated in England and Wales with registered number 6471761 and having its registered office at One Eleven Edmund Street, Birmingham B3 2HJ; "Shareholders" the holders of any issued shares in the share capital of the Company from time to time; "Shares" the ordinary shares in the capital of Johnson Service Group; and "Vendors" Semara Contract Services Limited, Johnson Investment Limited and Semara Nominees Limited. This information is provided by RNS The company news service from the London Stock Exchange