BASIS OF PREPARATION

Throughout this statement, and consistent with prior years, a number of alternative performance measures ('APMs') are used to describe the Group's performance.  APMs are not recognised under UK-adopted international accounting standards.  Whilst the Board uses APMs to manage and assess the performance of the Group, and believes they are representative of ongoing trading, facilitate meaningful year-on-year comparisons, and hence provide useful information to stakeholders, it is cognisant that they do have limitations and should not be regarded as a complete picture of the Group's financial performance.  APMs, which include adjusted operating profit, adjusted profit before taxation, adjusted EBITDA, adjusted EPS and net debt excluding IFRS 16 lease liabilities, are defined within note 1 (Basis of Preparation) and are reconciled to statutory reporting measures in notes 2, 5, 8 and 18.

PERFORMANCE

Total Group revenue increased by 5.5% to £257.5 million (2024: £244.1 million).  Organic revenue growth was 1.4% compared to the first half of 2024.  Within Hotel, Restaurant and Catering ('HORECA'), and as highlighted in our trading update on 10 July 2025, we experienced a slower than anticipated start to the summer months, reflecting the challenges in the wider hospitality market, although the slight improvement in volumes we reported in early July was maintained.  Workwear revenue increased slightly during the first half of the year, trading in line with our expectations, and, encouragingly, revenue is expected to continue to increase in the second half reflecting recent customer installations.

Recent increases in employment costs, in particular the increase in UK National Insurance, have added to cost pressures.  Energy, as a percentage of revenue, has continued to reduce but remains a significantly higher cost than has been experienced historically.  Our stated policy of proactively fixing prices for the coming months to obtain and manage some degree of certainty over the cost of supply is being maintained giving us visibility of a further reduction as a percentage of revenue in the second half. Both labour and energy costs are being proactively managed through investment in our estate which increases productivity efficiencies and lowers energy usage.

Adjusted operating profit margin increased by 80 basis points to 11.1% (June 2024: 10.3%), reflecting a 170 basis points increase in labour costs to 46.4% of revenue (2024: 44.7%), offset by a 160 basis points reduction in energy costs to 7.8% of revenue (June 2024: 9.4%) and a 90 basis points reduction in all other costs.  We are continuing to streamline our operations, improve capacity at existing sites and implement price increases and, accordingly, the Board remains of the opinion that the overall Group adjusted operating profit margin will reach at least 14.0% by 2026.

Overall, we are encouraged with the Group's performance and improving margin.

FINANCIAL REVIEW

Financial Results

Revenue in the period increased by 5.5% to £257.5 million (June 2024: £244.1 million).  Adjusted EBITDA was £75.4 million (June 2024: £69.2 million) giving an improved margin of 29.3% (June 2024: 28.3%).  Adjusted operating profit increased by 13.9% to £28.7 million (June 2024: £25.2 million).

Total finance costs were £3.8 million (June 2024: £3.7 million) reflecting higher borrowings over the period, most notably as a result of the £16.8 million cash outflow as part of the recent £30.0 million share buyback programme.

Adjusted profit before taxation increased by 15.8% to £24.9 million (June 2024: £21.5 million).  Statutory profit before taxation, after amortisation of intangible assets (excluding software amortisation) of £4.0 million (June 2024: £2.8 million) and an exceptional charge of £1.0 million (June 2024: £nil) was £19.9 million (June 2024: £18.7 million).

The tax rate on the adjusted profit before taxation, excluding exceptional items and amortisation of intangible assets (excluding software amortisation), was 24.1% (June 2024: 24.7%).  The rate is below the headline UK corporation tax rate for the full year of 25.0%, due to the effect of expenses not deductible for taxation being offset by short-term timing differences and the impact of the lower rate of 12.5% applied to profits generated in the Republic of Ireland.

Adjusted diluted earnings per share was 4.6 pence (June 2024: 3.9 pence).

Dividend Reflecting Confidence in the Future

An increased interim dividend of 1.6 pence per share (June 2024: 1.3 pence per share) will be paid on 4 November 2025 to those Shareholders on the register of members on 3 October 2025.  The ex-dividend date is 2 October 2025.  The increased dividend maintains our dividend cover of 2.5 times and is in line with our stated capital allocation policy.

Cash Flow and Net Debt

Free cash flow (calculated as net cash generated from operating activities, less net spend on textile rental items, less the capital element of leases) in the first half of the year was £25.0 million compared to £24.5 million in the first half of 2024.

Bank debt at 30 June 2025 was £99.0 million (December 2024: £68.6 million).  The increase is largely attributed to significant capital investment in the business and £16.8 million of funds utilised in the share buyback.  After including the impact of IFRS 16 lease liabilities, net debt at 30 June 2025 was £145.0 million (December 2024: £115.6 million).

Bank Facility

In July 2025, the Group increased its revolving credit facility to £135.0 million, by exercising the remaining £15.0 million accordion option.  The facility, which expires in August 2027, is in excess of our anticipated borrowing requirements and provides sufficient liquidity for current commitments and plans.

The current margin on the facility is 1.45% over SONIA or the relevant EURIBOR rate, as applicable.  Covenants remain unchanged and comprise a leverage covenant (total debt to EBITDA) of less than three times and interest cover of not less than four times.  At 30 June 2025, the leverage ratio was 0.9 times.

Return on Capital Employed ('ROCE')

ROCE, calculated as rolling 12-month adjusted operating profit divided by the average of opening and closing Shareholders' equity, net debt and post-employment benefit obligations for the same 12-month period, was 15.5% (June 2024: 14.8%; December 2024: 15.5%).

Defined Benefit Pension Scheme ('the Scheme')

The recorded surplus for the Scheme, calculated in accordance with IAS 19, was £6.7 million at June 2025, compared to a surplus of £3.8 million at December 2024.  The improvement in the position is due, in part, to a higher discount rate assumed on liabilities and a lower assumed inflation rate.  The Scheme continues to have a significant portion of assets invested so as to hedge against movements in liabilities, thereby reducing overall volatility with the hedged target increasing to 85% in July 2025.

The next triennial valuation of the Scheme is due as at 30 September 2025.  We have agreed with the Trustee to cease deficit contributions to the Scheme at least until the results of that triennial valuation are known, as we work towards a buy out of the Scheme in the medium term.

Capital Structure and Share Buyback

Our capital allocation policy remains unchanged.  The Group's objective is to employ a disciplined approach to investment, returns and capital efficiency to deliver sustainable compounding earnings growth whilst also maintaining a strong balance sheet and increasing ROCE.  We continue to see exciting opportunities to deploy capital organically whilst our inorganic growth strategy continues to be supported by an ongoing M&A pipeline.

In the period since September 2022, we have undertaken three share buyback programmes returning £65.3 million to Shareholders, established a presence in the Republic of Ireland through the £27.1 million acquisition of Harkglade Limited, established our Johnsons Luxury Linen business through the £5.8 million acquisition of Regency Laundry Limited and the £20.6 million acquisition of Empire Linen Services Limited, invested in the opening of a new site in Crawley and undertaken significant capital investment across many of our other sites.  Even after taking into consideration these investments and the payment of dividends, the Group continues to have significant headroom under its committed facilities and target leverage of 1-1.5 times to continue to pursue investment opportunities, both organic and inorganic, as they arise.

Accordingly, the Board is pleased to confirm that it intends to undertake a further share buyback over the period to March 2026 to return up to £25.0 million, based on currently available resources, to Shareholders.  The Board will continue to actively review its options once this programme is completed.

OPERATIONAL REVIEW

Our Businesses

The Group provides textile rental and related services throughout the UK and Republic of Ireland.

Within our Hotel, Restaurant and Catering ('HORECA') division, 'Johnsons Hotel Linen', our high-volume linen business, primarily serves group and independent large hotel customers, 'Johnsons Hotel, Restaurant and Catering Linen' provides premium linen services to restaurant, hospitality and corporate event customers whilst 'Johnsons Luxury Linen', which comprises of Empire and Regency, provides bespoke linen predominantly to four and five-star luxury hotels.  Also, within HORECA, 'Johnsons Ireland' serves both hospitality and healthcare customers.  Our Workwear division comprises solely of 'Johnsons Workwear', which predominantly provides workwear rental, protective wear and laundry services to UK corporates across all industry sectors.

Cost challenges, particularly in relation to labour, remain not only for ourselves but also for our competitors and our customers.  Following a strong first quarter, the effect of increased labour costs has impacted some of our end customers, particularly within the hospitality market, and price increases and renewals are more challenging.  Whilst the market remains competitive, we are focused on continuing to deliver an excellent service which is commensurate with our pricing levels.  We are also continuing to focus on improving efficiencies, driven by capital investment and process changes, but will, like many other businesses, need to pass on some of the additional cost through price increases.  Although such discussions are challenging, the basis of excellent customer service delivery is an advantage and supports pricing across our laundry estate.

Energy

Energy costs (comprising gas, electricity and fuel) still remain at higher levels than historically.  Costs for the first half of 2025 represented 7.8% of revenue and, encouragingly, were lower than the equivalent period in 2024 but remain higher than in 2019 (June 2024: 9.4%; June 2019: 6.5%).  We anticipate a further modest reduction in this percentage in the second half such that the full year cost, as a percentage of revenue, will be slightly lower than at the half year.

Our policy continues to be to fix gas and electricity prices on a rolling basis, building a position so that the upcoming months are largely fixed.  This provides certainty but also means that costs do not immediately reflect falls, or increases, in spot prices.  We currently have on average, some 75% of our anticipated electricity usage and some 90% of our anticipated gas usage fixed for the remainder of 2025.  Looking ahead, approximately 50% of our anticipated electricity requirement is fixed for 2026 with around 30% for 2027.  Similarly, we have fixed pricing in place for some 60% of our anticipated gas requirement in 2026 and some 40% for 2027.  We will continue to follow our current policy as we go forward.

Labour

In the six months to 30 June 2025, labour, as a percentage of revenue, increased to 46.4% compared to 44.7% in the six months to 30 June 2024, reflective of increases to the National Minimum Wage and Pay Related Social Insurance in January 2025 in the Republic of Ireland and increases in the National Living Wage and National Insurance in the UK in April 2025.  We are confident that labour, as a percentage of revenue, will remain relatively stable for the second half of 2025 and into 2026.

HORECA Division

Total revenue for the HORECA division increased by 7.2% to £185.4 million from £172.9 million in 2024.   Organic growth was 1.4%.  Adjusted EBITDA was £53.7 million (June 2024: £48.1 million) giving an improved margin of 29.0% (June 2024: 27.8%).  Adjusted operating profit was £22.5 million (June 2024: £18.4 million), an increase of 22.3%.

The cost increases being experienced across UK businesses are encouraging some of our smaller, independent competitors to review their business strategy and, as a result, we have added contracts with an annualised revenue of some £4.0 million to the division during the first half of 2025.  We anticipate that further opportunities will continue to arise.

Johnsons Hotel Linen

Trading performance and volumes for the first six months of 2025 were in line with our expectations overall, although forecasting volume remains challenging due to a continuing change in linen management by customers, geographical variances and unpredictable hotel occupancy rates.

Continued provision of an excellent professional service, on time and in full, remains at the forefront of the business, as well as building long-term professional partnerships with customers.

Pwllheli and Edinburgh benefited from large capital investment to replace sorting systems and automatic dryers, as well as stand-alone washing machines and dryers being upgraded in most sites.  New boilers and the replacement of older ironers for newer models have also been actioned in five of our sites as we strive to continually upgrade our facilities to improve operational efficiency and capacity whilst at the same time reducing our carbon emissions.

The driver monitoring system trialled at Chester and Reading has been successfully rolled out throughout the business and is contributing to a reduction in the rate of accidents.  Our Enfield depot has now fully relocated to South Mimms, supporting and improving our delivery capability into London and the surrounding areas.

Plastic wrapping of clean, delivered product has been removed from both our Chester and Birmingham sites, a programme in line with our sustainability objectives.  Instead, linen is now delivered in reusable, washable bags which can also be used for linen storage at customers' premises.  Roll out across the estate will continue in 2025.

Johnsons Hotel, Restaurant & Catering

Our new location in Crawley began processing in March 2025 and, since then, we have moved a significant number of customers located in London and the Southeast into the site.  There, they will enjoy a laundry process that consumes half of the energy of a traditional laundry, provides significant water recycling opportunities, utilises renewable energy sources and undertakes deliveries using vehicles powered by HVO, which is 90% carbon free.  This, combined with investment in new, more efficient, boiler installations in Wrexham and Shaftesbury, continued water recycling in Hayle and Shaftesbury and reductions in plastic packaging across the estate, means we are making significant and lasting progress towards our sustainability targets.

Our sales pipeline remains consistently strong and, accordingly, we are on track to achieve targeted new sales for the full year.  The focus of the second half remains to move further volume into our Crawley site to improve efficiency.

Johnsons Luxury Linen

The Luxury Linen business is continuing to focus on growth in five-star luxury hotel customers and has seen both strong retention levels and significant high profile wins in recent months.  The new sales pipeline continues to be encouraging.

The £1.3 million investment in plant and machinery at our Corsham site at the end of 2024, which increased processing capacity there by almost 20%, is now being utilised as the plant hits record volumes and efficiencies.  The luxury linen sector is seeing occupancy levels in line with 2024 and plans for increased capacity are being developed to further expand this part of our business.

The Empire business, acquired in September 2024, continues to transition well into the Group.  The local management team have embraced change and are now working within more formal operating frameworks and leading best practice methodologies.

Johnsons Ireland

Johnsons Ireland comprises Johnsons Celtic Linen in the south and Johnsons Belfast in the north.

In hospitality, volumes were as expected with some regional variations in volume being offset by the addition of over 1,300 rooms.  Healthcare volumes have also been as expected with an increase in day procedures performed by hospitals as demand grows from caring for a growing and ageing population.

The capital investment of £6.3 million in Wexford and Naas that started in 2024 has been completed.  This investment includes the installation of a state-of-the-art sortation system, a high-speed ironer line, a continuous batch washer system, additional drying capacity and a new automated chemical dosing system.  These new pieces of equipment help to optimise washing throughput and energy efficiency and will increase capacity in Wexford by some 20% and in Naas by some 40%.  In addition to installing new processing equipment, we have also upgraded employee welfare facilities and offices.

We continue to roll out our Johnsons Ireland rebranding, with the first rebranded commercial vehicles now on the road.  Our website and social media presence will follow and our sites have already been rebranded as we continue to solidify the business as being part of the overall Johnsons Family.

We are also introducing a new information technology infrastructure across the three sites, completing stage one of this in Belfast with a further roll out in Wexford and Naas due for completion later this year.  This will ensure we have consistency across the business, provide a more resilient operating environment and allow us to move forward in our digital journey.

To help drive our operational strategy and support further growth, the management team has been strengthened.  Recruitment and employee retention remain strong and training programmes are in place at all levels.

Workwear Division

Revenue for the Workwear division was £72.1 million (June 2024: £71.2 million).  Adjusted EBITDA increased by 5.7% to £25.9 million (June 2024: £24.5 million), giving an improved margin of 35.9% (June 2024: 34.4%).  Adjusted operating profit was £10.4 million (June 2024: £10.2 million).

The first half of the year has seen measured progress within the division, with gains across a range of focus areas. We have seen good momentum in new business sales, improving levels of customer retention and the effective delivery of key projects. Collectively, these have fostered a positive environment across the teams, marked by a strong sense of alignment and clarity around divisional priorities.

The sales team has delivered a good performance in the first half of the year and momentum has continued into recent months.  One new large food customer required urgent garment installation, and our flexible approach meant that ten of their processing sites were installed six months ahead of schedule.  This achievement highlights not only the team's commercial strength but also our ability to deliver complex implementations with speed and precision, further strengthening our reputation for operational excellence.

Customer retention is now 94% and trending towards historic levels, validating the strength of our customer relationships, the consistent delivery of our service and our responsiveness to evolving customer needs.  The renewal rate also reflects the effectiveness of our proactive engagement strategy, built around personalised account management and ongoing customer interaction.

Capital expenditure in the first half included spend on new commercial vehicles, laundry processing equipment and boiler systems at several sites, all of which deliver operational resilience whilst at the same time assist in reducing our carbon footprint.  The project to relocate operations from Lancaster to Manchester has been successfully implemented, with no disruption to delivery service, ensuring a smooth transition.  The cost of the project in the first half was £0.3 million and has been charged to exceptional costs.  The full year cost is expected to be £1.2 million.

At the end of June 2025 our small industrial workwear processing unit in Bristol suffered a fire which has rendered that part of the site inoperable.  Work is being processed at our sites in Exeter and Treforest and, importantly, there has been no disruption to customer service.  An insurance claim has been made and is being progressed, the net impact of which is not expected to be material.

EMPLOYEES

Our employees are key to the continuing success of our business.  The Board would like to thank them for their support, hard work and significant contribution to the progress of the business over the last six months.  The teamwork, dedication and determination demonstrated to deliver a professional and on time service to our customers is a credit to each and every one of them.

Employee engagement activity remains ongoing, supporting our people and providing clean, safe and enjoyable environments to work in.  The scores from our employee engagement surveys were outstanding, reflecting the commitment and enthusiasm of our employees across all of our operating locations.

SUSTAINABILITY

The Board, as a whole, has overall responsibility for environmental and social matters and we recognise our duty to stakeholders to operate the business in an ethical and responsible manner.  We are committed to developing our environmental and social responsibility agenda and continue to make excellent progress with embedding our sustainability programme across the Group.

We are continuing to work with both our customers and suppliers as we make progress in meeting our goals and we have recently published our fourth Sustainability Report which sets out the progress we have made and the targets we have set ourselves.  The report can be found on our website at www.jsg.com.

The reduction in consumption of single use plastics is a key focus across the business and we have already made progress this year.

We have been awarded a silver medal by EcoVadis, the world's most trusted provider of business sustainability ratings.

OUTLOOK

The Board is pleased with the further progress made by the Group in the first half of the year and with the results reported today.

During the first six months we have continued to increase efficiency and capacity across the business through our ongoing capital investment plan.  This investment, combined with our resilient business model, will help us to deliver our margin target and offset the challenges created by the increasing cost of labour.

We have a strong balance sheet, with a highly cash generative model, so are well placed to capitalise on appropriate opportunities as they arise.  In accordance with our stated capital allocation policy, we intend to launch a further share buyback programme, based on currently available resources, for up to £25.0 million over the period to March 2026.

Notwithstanding the uncertainty of the current economic environment, we expect to report another year of progress.  We are confident in reporting a full year adjusted operating profit in line with current market expectations and achieving an overall Group adjusted operating profit margin of at least 14.0% by 2026.

RESPONSIBILITY STATEMENT

The condensed consolidated interim financial statements comply with the Disclosure Guidance and Transparency Rules ('DTR') of the United Kingdom's Financial Conduct Authority in respect of the requirement to produce a half-yearly financial report.  The condensed consolidated interim financial statements are the responsibility of, and have been approved by, the Directors.

The Directors confirm that to the best of their knowledge:

§ the condensed consolidated interim financial statements have been prepared in accordance with IAS 34, 'Interim Financial Reporting' as adopted by the United Kingdom;

§ this interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months of the financial year and a description of the principal risks and uncertainties for the remaining six months of the year); and

§ this interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

The Directors of Johnson Service Group PLC are listed in the Johnson Service Group PLC Annual Report for 2024 and remain unchanged.  Details of the Directors are available on the Johnson Service Group PLC website: www.jsg.com

By order of the Board

Peter Egan                                            Yvonne Monaghan

Chief Executive Officer                          Chief Financial Officer

2 September 2025                                  2 September 2025

Forward Looking Statements

Certain statements in these condensed consolidated interim financial statements constitute forward-looking statements.  Any statement in this document that is not a statement of historical fact including, without limitation, those regarding the Group's future expectations, operations, financial performance, financial condition and business is a forward-looking statement.  Such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially.  These risks and uncertainties include, among other factors, changing economic, financial, business or other market conditions.  These and other factors could adversely affect the outcome and financial effects of the plans and events described in these condensed consolidated interim financial statements.  As a result, you are cautioned not to place reliance on such forward-looking statements.  Nothing in this document should be construed as a profit forecast.