Johnson Service Group H1 2025 Earnings Report

Johnson Service Group EPS Results

• Actual EPS: GBX 4.60
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Johnson Service Group Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Johnson Service Group Announcement Details

• Quarter: H1 2025
• Date: 9/2/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, September 2, 2025
• Conference Call Time: 2:00AM ET

Johnson Service Group (LON:JSG) provides high quality textile rental and related services across a range of sectors throughout the UK. Our family of high quality businesses includes “Johnsons Workwear”, “Johnsons Hotel Linen”, “Johnsons Hotel, Restaurant & Catering Linen” and “Johnsons Restaurant & Catering Linen”, each of which provides a high-quality and reliable service combined with outstanding customer care. Across our entire family, our priorities are always clear and everything we do centres on the core values of Johnson Service Group – quality, reliability and service. A strategy to consistently create value for shareholders, deliver outstanding customer service and offer fulfilling careers to employees lies at the heart of our business.

Johnson Service Group H1 2025 Earnings Call Transcript

Key Takeaways

• Neutral Sentiment: H1 organic revenue grew by 1.4% in Horiker and 1.3% in Workwear, driven by modest price increases and volume shifts.
• Positive Sentiment: Adjusted operating margin rose to 11.1% (from 10.3% a year ago) and management reaffirms a full-year margin trajectory toward 14% by 2026.
• Negative Sentiment: Energy costs remain elevated at 7.8% of revenue despite hedging ~90% of gas and 75% of electricity for H2, versus a historic 6.5% level.
• Negative Sentiment: Labor expenses climbed to 46.4% of revenue following a 6.7% minimum-wage hike and increased insurance, pressuring margins.
• Positive Sentiment: Strong cash flow supported £65.3 m of buybacks since 2022 and a new £25 m program, with net debt at 0.9× leverage, underpinning capital return and M&A capacity.

Presentation

[Peter Egan, CEO & Director at Johnson Service Group PLC]

So good morning, everyone. Ivo and myself will take you through the operational and financial results for H1. So I'll start with some highlights on the operational side. Organically organic growth in Hoharika, 1.4% and in Workwear, 1.3%, respectively, details of which we'll go through in a few moments. Volumes. We mentioned earlier in July that a slightly slow start to the season and things began to pick up from July onwards, and that was maintained throughout the summer period to date.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Crawley, pleased with Crawley. The site has opened earlier in the year. We've started production clearly. We've moved work in, continue to move that work in from our current estate and new business, One, continues to move into that site as well. Workwear retention, pleased with the workwear retention levels at 94%, almost back to historic levels of 95.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Energy costs continue to improve, albeit remain slightly elevated. As a reminder, we forward purchase on our energy. Yvon will go through that in detail in slides to come. From an investment perspective, we continue to invest in productivity and improvements and innovations where we can. We've invested over the last number of years in Workwear and our Workwear facilities and in some of our flat work facilities that I'll touch upon in capital allocation in a few moments.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Back in March, we started our consultation with regards to moving to main market, and that has been successful. And we spoke with a number of investors and explained the move. And then also, we continued with our share buyback. And this morning, we announced a further €25,000,000 buyback to start. So all of that brings us confidence that in reporting the full year, adjusted operating margin in line with current market expectation and adjusted operating profit margin improvement on track for at least 14% into 2026.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

I'll hand over to Yvonne now to take us through the financial highlights.

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

Yes. So just on the summary on Page six. As we said, revenue increased to GBP $257,000,000, reflecting both price increases and the acquisitions, made last year and some contracts this year. Organic growth overall 1.4%. Adjusted EBITDA increased to 75,400,000.0, given an improved margin of 29.3%.

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

Last year, was 28.3% in the first half. Adjusted operating profit, 28.7%, with an improved margin of 11.1%, and that compared to 10.3% last year for the first half. Adjusted PBT, 24.9 after an interest charge of 3.8. EPS, 4.6p, an increase of 17.9%, and this morning, declared an interim dividend of 1.6p. And the next slide, just a reminder of where we've come from over the last five years or so, improving, return on capital employed, and then leverage remaining below one times.

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

You know, we've said our our target is one to one and a half, so just below one at the moment. And then share buybacks, so that's 65,300,000.0 returned since 2022 to date. And then as we've just said, another 25,000,000 at launch this morning. In terms of costs and cost pressures, so we've we've been sort of demonstrated there the impact of, cost pressures on the margin and margin recovery as we've gone through. So we're still saying the 14%.

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

Energy costs are slowing slowly reducing with 7.8% of revenue in the first half. That compares to 9.4 in the first half last year. A reminder though, they were only six and a half percent of revenue back in nineteen first half. So trending down, but still, quite a bit ahead. Continuing to fix gas and electricity prices such that we're approximately 90% fixed for gas and 75% for electricity for the second half of this year.

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

And then we're building positions as we normally do with '26 and '27. So we're 60 or 60% or 50% fixed for gas and electric in '26, and 4030 into '27. And we will continue to build those as we go through. Hedged diesel prices, and they were 95 percent fixed or hedged, technically hedged for this year and 80% into '26. So disappointingly, labor costs have increased as a percentage of revenue, and it was 46.4%.

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

And that so that reflects the increase in minimum wage, the six percent six point seven percent increase that we dealt with in April, and not to mention the ash insurance costs, which are costing us about £6,000,000 per annum. So we're continuing to try to drive efficiencies through the plants to try and offset that. And I'd expect it mainly to slightly tick down in the second half and then being maintained. We're doing our best on energy and labor as we go through to try and improve that margin back. In terms of cash flow, so cash generative business and hence the share buybacks. Net debt at the June was GBP 145,000,000 including IFRS 16 or GBP 99,000,000 without, and that's after completing 16,800,000.0 in terms of cash in the first half of the 30,000,000, and the balance has gone out by the August. Debtor days, forty two, which are pretty consistent. Now. They've been forty to forty two days for some time. Rental stock depreciation slightly higher to 30,000,000, just over 30,000,000.

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

And rental stock spend is about the same, similar amount as depreciation, so, net impact on cash. And then PPE spend, we spent 23,000,000 or so in the first half, probably similar amount in the second half, but I am expecting CapEx on PPE to drop in '26. Most of the big projects we have completed. Tax payments slowly increasing, so we spent 3,300,000.0 in the first half, similar amount in the second half, and then it will increase in '26. There's a benefit of the first year allowances worked through the system and how it all pans out with, deferred tax.

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

And then the 25,000,000 buyback, obviously, with that going out, depending on the timing of that, so we've set up to March 26, but, it could go out sooner than that. So depending on that, I'd expect debt to be slight if it all goes out in this calendar year, I'd expect debt to be slightly higher by the June December. Sorry. And then just a few other bits and pieces. So total interest, 3,800,000.0.

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

Our bank facility was increased to the 135. That's drawing down the accordion that we had in place. Margin is still 1.45% on both sterling and euro borrowings. Gearing, as we said, was point nine times of June, and I'd expect it to be similar at the December. Tax rate, 24.1%, just slightly lower than the 25 UK rate, And in part, that's due to the ROI rate, which is only at 12 and a half percent.

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

And then just a quick word on pension scheme. So our surplus has increased. So net of tax is about 5,000,000 at June. With no deficit contributions going into the scheme at present. There's a valuation due at the end of this month.

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

Return on capital employed, 15.5%. I'd expect it to be slightly higher by the end of the year.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Thank you. Moving on to Slide 12. Investments I touched on earlier, and as I also mentioned earlier, we've invested heavily in our workwear plant over the last number of years in automation, and we've invested clearly in Crawley, bringing on more capacity within Horika in H1 of this year. In Ireland, in particular, in our plants in Wexford to our South Of Dublin and Nathes Road, just outside of Dublin, we've invested in both those complexes to generate more capacity and to drive more efficiencies, and they're coming to completion as we speak. And also, we have a number of other investments as we continue with ongoing CapEx and refurbishing CapEx within our wider estate, including new commercial vehicles.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Moving on to sustainability on Slide 14. So continuing to work with our suppliers and meeting our goals and our targets that we set there for 02/1930. We were awarded Silver Medal for EcoVadis, which we're pleased with and continue to work on that. We published our fourth sustainability report just recently and continue with our reduction of using plastic within our estate, having removed plastic from two of our sites with our target to have zero plastic use in our estate by 02/1930. Clearly, we brought Crawley on board.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

And as you would imagine, being able to open a new plant, a new facility, we've done a lot of work there with regards to heat recovery, water recovery and sustainability ESG overall. We're also looking at some investments in within solar, particularly in our sites that have got freeholds, and we'll continue to look at those projects for the back end of this year. And then 8% of our fleet, as we stand at the moment, are running on HVO, and we've got a number of vehicles running on electric where the payload allows us to do that. Moving on to Slide 16, operational performance financials.

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

Yes. So in Horiker, revenue for the division increased by 7.2% to GBP 185,400,000.0. That's a combination of the acquisitions in '24 and some contracts added. Organic growth, 1.4%. It's probably split about 2% price increase and point 6% down in, volume as a rough guide.

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

EBITDA margin was 29% compared to 27.8% in the '24, so good improvement. Operating margin improved to 12.1%, benefiting from lower energy costs, which Horiker uses more energy than Workwear, but so we're 8.7% of revenue compared to 10.5 in '24. And so Empire business, which we acquired back in September, almost twelve months ago now, has settled in well, and we're pleased with that performance. And we're expecting the margins to continue to improve as we continue to invest in the plants and we go through the rest of this year and into next year.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Moving on to Slide 17, operational performance in Harrogate. We touched on the 1.4% organic growth. Sales pipeline remains strong. We deliver the service on time and in full, which is the foundation of everything that we do. We deliver on what we say we're going to deliver and I've got good relationships with our customer base throughout.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

As you know, we opened a new depot in a hotel Linen site just outside of of London to help us penetrate further into the London area. And our new Qualysite, as I already mentioned, is live, up and running and producing, and we'd love to get that plant into breakeven into 2026. Rebranding with recent acquisitions. So Ireland is well underway. Johnson's Celtic Linen branding within Ireland, both for vehicles, plants and general marketing over there.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

And then we look to Empire and Regency as we go through within the luxury linen element as well. As I said earlier, we continue to invest in our sites in all of our locations and particularly in areas that we have and can see increasing capacity or improving our efficiencies. And then any investments that we do within Horeca are workwear, we look through the lens clearly of sustainability and what that might give us in return as well. So overall, from an operational performance, I guess, in Haurika, as I said earlier, volumes are a little light earlier in the summer. That was improved into July and maintained throughout.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Could have been stronger, but I think the whole industry in The UK and Ireland could have been stronger in hospitality. But be that as it may, we're still confident in delivering our adjusted profit margin for the end of this year and into next year with good tight control on costs. Workwear financials, Slide 18.

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

Yes. Revenue increased to GBP 72,100,000.0, which is 1.3% increase, and an improved EBITDA margin of 35.9%. Adjusted operating profit, 10,400,000.0, giving a margin operating margin of 14.4%. Rental stock depreciation was £11,000,000 in the first half, slightly higher than '24 but expected to remain stable as we go through the year. Energy costs in Workwear, as I mentioned, are lower than in Horiker, and we're about 5.5% of revenue.

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

Last year, we're about 6.7%, so that has helped the margin and has largely offset the increased labor cost. The Lancaster work, if you remember, we announced the, closure of the Lancaster site, small plant up in the Northwest, and that work has now been moved into the Manchester site with no impact on customers, pleased to say. New sales in the first half were encouraging and new installations are starting to come on stream. I think we were pleased with the organic growth in Workwear. You know, if you look back, that's, the best increase we've had for quite a few years now.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

And then on to slide 19, staying with Workwear operational. I'm both pleased with the organic growth in worker. Also pleased with the retention levels, 94%. If you remember, we used to be at 95, 96% historically. 94% is a very good result.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Shows our customers stay with us. We retain them. And on the back of delivering a really good service. Yvonne already mentioned we moved Lancaster into Manchester at the back of investment in Manchester on more productivity and more innovation. Also one thing to note, we had a unit fire in our Bristol plant in our workwear to the in our workwear section.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

So in our industrial workwear units within our workwear plant in Bristol, we had a fire that took out part of the plant, and it's continually it's not operational. We have moved work out to an airborne plant in line with our business interruption. We had no knock on effect to our customers. So overall, work we're pleasing with the recovery to date. Outlook, more of the same, continue to do proactive management of costs.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Generally, what we do, we do it well. We're laundry operators. We know how to run laundries, and we know how to adjust our cost base even in sometimes in a challenging environment. Adjusted operating margin will continue to improve and hit our expectations for the end of this year and into next. Our strategy of acquisition will continue as well in the absence of acquisition, looking at potentially where we can add on capacity if it's needed and where it's needed.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Strong balance sheet, as we mentioned earlier, to support good organic investments and M and A and obviously look at return to shareholders as well by way of buyback that we've been consistently doing over the last couple of years. So confidence in the medium and long term growth of our prospects and of our business and remain confident in reporting full year operating margin in line with expectation. And on that slide, mentioned buybacks that I've already covered in previous slides. Just to Slide 23. Again, we just put the slide in as a reminder of how our business has evolved from 2012 to current state, where we are truly a Horatown workwear business and dedicated textile rental provider and in line with the number of acquisitions that we have done.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

We're laundry operators. We know how to manage in the laundry environment, and we'll look for further opportunities to add to our estate. On to Slide 24, essential provider. I already mentioned we provide an on time and in full service. Without our service, hotels can't service the rooms, cancel the rooms, but it's important that they also appreciate that we provide that service with a very, very good quality and on time and in full.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

We provide a local service. We're a national operator. Of course, we are across The UK and Ireland, where we look at providing the local service nationally. How you drive good customer service and good delivery of the service. Sustainability, you know that we are working and have been working hard on that with regards to our sustainability policies and our reports that we have done generated within the targets that we set within sustainability.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

And then limited substitutions, I guess, in the market for our service, particularly on the flat work side, hotel side. Moving to Slide 25. Again, it's just a recap of organic growth revenue, consistent track record of delivering organic growth underpinned by really, really good service and long term relationships. We have a good relationship with our customer base. Operating margin, we continue to look at that.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

We continue to recover our margin. And as I said, we're in line for this year and looking to next year for the 14%. And from a capital allocation perspective, we're strong balance sheet. We're cash generative. We invest back into our business.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

We invest in innovation. We ensure that we keep ourselves agile. We're looking for opportunity within acquisition. And also, we return to our investors, excess cash to our investors, and we'll continue to monitor and review that. And that brings us through to the end of the slide deck.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Thank you very much for listening, and happy to take any questions.

[Tom Callan, Equity Analyst, Support Services at Investec]

Thanks. Tom Carlin at Investor Day. Just one on sort of the organic investment program. So I just wondered if you could give us an idea as to maybe medium to long term view where the opportunities are in terms of organic investment beyond BAU maintenance CapEx? Where can you invest to drive improved productivity, increased automation, whatever it is?

[Tom Callan, Equity Analyst, Support Services at Investec]

Are there any obvious blank spaces where you can fill in?

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Well, we'll clearly continue to look at any innovations. And given the business of our size and shape, you'd expect us to look at any machinery or equipment that's out there that potentially is coming to the market that we're happy to test. And as I've touched on earlier, we've invested in innovations, particularly within Workwear over the last number of years on robotic tile folders. All of that, we look through the prism of sustainability and what it can get return, whether it's a saving on gas, electricity, water. And that brings us, I guess, to also look at other innovations within sustainability, for example, solar panels I mentioned earlier, particularly in our states where we've got freeholds.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Look at the return on those, I guess, with the most improvements over with panels over the the last number of years. It's something that's on our radar at the moment as well, so can we benefit from that even further. And I guess the question, it's a little of everything. It's a good deployment of CapEx to see where we can eke out better return and better efficiencies. Chris?

[Christopher Bamberry, Equities Analyst at Peel Hunt]

Chris Bambry, Peel Hunt. I've got three questions on Horiker. Just do one of the times that's okay. Could you perhaps give us a little bit more on the variations in terms of geographical performance and any difference between performance of luxury against volume in there?

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Geographical performance, not significantly. So we didn't have any particular slowdown in the North versus the South. I think it's just performance overall in hospitality. It's been a little a little quieter than we would have liked given the summer that we've we've had weather wise. If you remember last year, we had quite strong volumes, but a quite wet summer.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

This summer, we've had yeah. Not volumes. They were good, but they could have been stronger. But it was across the piece, UK and Ireland, I think cross hospitality overall, not just JSG. The luxury side held up quite well overall.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

We've got two luxury plants, Regency and Empire, but different climates, I guess, for those type customers, but they held up quite a lot.

[Christopher Bamberry, Equities Analyst at Peel Hunt]

And in the second half, does that mean you've gone from negative volumes to positive volumes so far with the

[Peter Egan, CEO & Director at Johnson Service Group PLC]

We don't look at it that way. We'll look at it and we'll have an expectation of where we want to see where we expect to see volumes as we go through the summer period and then into the autumn period. Even now in in September, have some of our plants that will actually get quite busy as the kids return to school. People take the opportunity to to have a staycation, and that's good for us. But we look at volumes in line with what we expect within the geographic within the type of work and the actual mix of work coming from different customers.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

So as I said, we'd expect to see that to continue throughout the year. But, again, it could have been stronger, but be that as of May, we'll we'll see what the next the rest of the year brings.

[Christopher Bamberry, Equities Analyst at Peel Hunt]

And finally, in Ireland, added 1,300 rooms, I think. Was that new customers, existing customers, or a mix? Just a little bit more A

[Peter Egan, CEO & Director at Johnson Service Group PLC]

little bit of both.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Yeah. A little bit of both. And we've invested in Ireland, as I said, in the Wexford plant and in Nayth Road. Nayth Road Wexford plant is a health care and hospitality plant. Nayth Road is a hospitality plant, so we've increased the capacity there given its proximity to Dublin, but volume increases have come from both internal and external.

[Christopher Bamberry, Equities Analyst at Peel Hunt]

Thank you very much.

[James Fletcher, Equity Research Analyst at Berenberg]

James Fletcher from Berenberg. Just a couple, if I may. Just can we talk about pricing expectations, particularly in Huroka, kind of how they've gone thus far this year versus your earlier expectations? Has there been tougher conversations or have customers been quite receptive given the kind of cost headwinds? And then just one on the buyback.

[James Fletcher, Equity Research Analyst at Berenberg]

You've done quite a lot of buyback activity over the last few months. I wonder if that means on M and A, there's kind of nothing kind of short, medium term or that's reading it wrong.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Thank you. I'll take the second part of the question or second question first. No, it's not an indication that everything has slowed down. We generate and have been generating quite a lot of cash. And clearly, we've had done a number of buybacks over the last two years.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

With our capital allocation waterfall, nothing has changed. Acquisitions don't come along one after another. You know, you may have none for a short period, then you have two come together. But there's nothing that we do particularly even with the buybacks that's restricting our opportunity on acquisition, and we still see opportunity there. Price expectation, Yvonne?

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

Yeah. So I think you said, Horoco was about 2% price in terms of that organic growth number. I think it has been more difficult to get price increases through, and I think we do say that in a statement. It's been challenging. But, you know, having a good service reputation, good service level is, you know, is one way of trying to push price increases through.

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

So, you know, I think we are we are seeing some resistance, but we have managed to get some pricing increases through. It'd always be nice to get more, obviously.

[James Fletcher, Equity Research Analyst at Berenberg]

Thank you.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Hi.

[Benjamin Wild, Vice President at Deutsche Numis]

Benoit from Deutsche Numis. And first of all, congratulations, Yvonne. I think this is your last set of results with Johnson. So congratulations. Three questions really for me.

[Benjamin Wild, Vice President at Deutsche Numis]

Firstly, on a shorter term basis, pricing in Workwear, is that running at a similar level to the 2% in Horeca? And in terms of that customer retention, can you maybe discuss the drivers? You talked about service. Is there any pricing element to driving higher retention as well? I think secondly, on on capital allocation, since the last set of results, Synergy was acquired by K Bro.

[Benjamin Wild, Vice President at Deutsche Numis]

You you talked in the past about looking at entering the health care sector in The UK. Is that still feasible for you with synergy, out of the picture? And then coming back to the share buyback and the size, with that larger deal now off the table, did you consider or would you consider doing a larger share buyback given the headroom that you have on the balance sheet?

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Okay.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Thank you. I'll take those in reverse order. The share buyback, we'll consider at each, I guess, milestone of when the previous one is completed and what market conditions are and what the opportunities, back to the previous question, the evolving opportunity increases or decreases those levers we can pull and remain quite fluid on those. With regards to health care, yeah, we've we've never met any secret of it. We are most into the health care market providing the entry levels are at the right point for us.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

And if they're at the right points for us on entry levels, then we would not rule out movement into health care. And don't forget, we've got a significant health care portfolio in Ireland both private and public in Celticlin and John's Celticlin in Ireland that we've run very well. So no we would never rule that out. And then on the retention within Workwear, Workwear retention, our customer base, it really is about the the customer service, being close to your customer, delivering on the on on the expectation from that customer. If you try and drive retention by reducing your costs, it's a it's a short gain or reducing your prices, sorry.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

That's a that's a short gain. So we look at driving retention on ensuring that our customers are satisfied with what we do, hence why we do an annual customer survey on asking our customers, are they satisfied with a number of questions? And, also, we'll review those questions on an ongoing basis with our customers as well. But pleased that we are and have continued to improve our retention and workwear. Pricing, Yvonne, do you wanna touch on that price increase?

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

Yeah. So I think, we've probably nested around 3% on price in Workwear. And you know, it's a it's a bit of a mixture, so it might be a bit higher on some customers, a bit lower on others, average about three. And that is tough as well. You know, we are not the cheapest in the market, and we sell on service.

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

And, you know, we don't want to be the cheapest, but we do want to give a good service. So it's a balance, and it's convincing customers that it's value for money. To paying a bit more on the on the per piece price, but that's it. I suppose it's our simple invoicing structure, etcetera. So it's convincing customers that that is the best way to do it.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Thank you. Yep. Tom? Yeah.

[Tom Callan, Equity Analyst, Support Services at Investec]

Just picking up on the on the energy price, dynamic as well. Just based on that 14% margin target that you you put into the market for next year, where do you think energy as a percentage of revenue needs to get to based on my consensus at the moment?

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

Yeah. So I think, you know, 7.8% in the first half. For the full year, it should be slightly lower than that. And then I'm expecting it to be lower again in '26. Yeah.

[Yvonne Monaghan, CFO & Director at Johnson Service Group PLC]

We're already locked in to a certain extent for '26, over half locked in. So I'd expect it to be low sevens. Yeah.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Yep. Chris?

[Christopher Bamberry, Equities Analyst at Peel Hunt]

Thank you. You reduced the other cost bucket by 90 bps to 16 and a half percent revenue. Just wondering if there's anything particular within there you could identify.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Within the cost reduction?

[Christopher Bamberry, Equities Analyst at Peel Hunt]

Yes.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Again, a multitude across the piece of just trying to ensure that we become and stay as efficient as possible. We adjust our plans with volume. We adjust our plans with what's happening in the in the local environment, and we've got good operators.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

And we've we've got good operators that can flex up and down. And clearly, that's challenging as Yvonne said. You know, price increases are challenging and are all going to be challenging. We've got cost headwinds we've got to deal with, but national insurance, we've got to deal with increases, living wage, everything that comes with it. But we've structurally all set our plans up to deliver an on time and full service efficient efficiently as possible, and we're constantly looking for those marginal gains, little marginal gains that can help us with reducing our cost base.

[Christopher Bamberry, Equities Analyst at Peel Hunt]

Thank you.

[Peter Egan, CEO & Director at Johnson Service Group PLC]

Thank you. I think that wraps up the questions. Thank you very much, everyone. Appreciate everyone in the room and and your support, and thank you to everyone online.

Participants

Executives

• Peter Egan, CEO & Director
• Yvonne Monaghan, CFO & Director

Analysts

• Tom Callan, Equity Analyst, Support Services at Investec
• Christopher Bamberry, Equities Analyst at Peel Hunt
• James Fletcher, Equity Research Analyst at Berenberg
• Benjamin Wild, Vice President at Deutsche Numis