Disposal

2 December 2013

Journey Group plc

(the "Company" and together with its subsidiaries the "Group")

Disposal of MNH Sustainable Cabin Services Ltd

Cost saving measures

Trading update

Journey Group plc, a leading provider of in-flight products and catering services to the international airline and travel industries, today announces the disposal of its wholly-owned subsidiary, MNH Sustainable Cabin Services Ltd ("MNHL") along with its wholly-owned subsidiary, MNH Sustainable Cabin Services Pty Ltd (together "MNH") by way of a management buyout. The Company also announces it has identified cost savings to take effect from 2014 and provides the market with a trading update.

Highlights

· Consideration of £900,000, £500,000 received, £400,000 deferred

· MNH provides specialist supply chain solutions to the travel sector for headsets, amenity kits and laundry

· MNH is considered non-core to the Company, with its activities no longer synergistic with those of the rest of the Group

· For the 10 months ended 31 October 2013, MNH's turnover amounted to £4,997,000 and its operating profit was £202,000 after deducting management charges of £94,000

· The management buy out team is led by Matt Rance, MNH's Managing Director, with a 70% equity interest, and includes Stephen Yapp, the Executive Chairman of the Company, with a 30% equity interest

· Cost savings in excess of £300,000 for the year ending 31 December 2014 identified

· Trading for the Company continues to be in line with market expectations

Cost saving measures

Along with the disposal of MNH, cost saving measures have been taken that are expected to result in savings during the year ended 31 December 2014 in excess of £300,000 in respect of which there will be a one-off charge of approximately £114,000 in the current year. These savings are before taking into consideration the loss of an earnings contribution from MNH.

Trading update

During the 10 month period ended 31 October 2013 the Group has continued to trade well and in line with the Directors' expectations. On the basis of the Group's results including those of MNH (which will be treated as discontinued operations for financial reporting purposes), the Directors expect profit before tax for the year to be in line with market expectations.

Carl Fry, Chief Financial Officer, commented

"I am pleased to announce this disposal. MNH has successfully developed its business model and operations over recent years and during the current year has renewed its contracts with its two principal customers located in the UK and Australia. However, with the Group's increasing focus on its US-based in-flight catering activities, MNH's activities are no longer synergistic and, therefore, this non-core disposal is a logical step in concentrating the Group's resources more effectively to optimise growth.

We continue to be pleased with the Company's trading performance and look forward to 2014 with confidence."

For further information please contact:

Carl Fry

Journey Group plc

Tel: +44 (0) 20 8606 2000

[email protected]

N+1 Singer (Nominated Advisor & Broker)

Jonny Franklin-Adams

Matt Thomas

Tel: +44 (0) 20 7496 3000

Management buyout of MNH Sustainable Cabin Services Ltd 

The purchaser, MNH Grp Ltd ("MNH Grp"), is controlled by Matt Rance, MNH's Managing Director and Stephen Yapp, the Executive Chairman of the Company. As Stephen Yapp is a director of the Company he is a related party under the AIM Rules for Companies ("AIM Rules"). Due to the size of the transaction, the disposal constitutes a related party transaction for the purposes of AIM Rule 13. Stephen Yapp has a 30% equity interest in MNH Grp.

The consideration of £900,000 has been satisfied by MNH Grp by the payment to the Company today of £500,000 in cash and the issue by MNH Grp of a loan note to the Company in respect of the deferred consideration amounting to £400,000 (the "Note"). The consideration has been agreed on the basis of a cash and debt free transaction and an agreed normal level of working capital with any amount due to or by the Company to MNH Grp to be settled following agreement of completion accounts (the "Completion Adjustment") as at 29 November 2013.

The Note is repayable in cash in four instalments of £100,000 on the calendar quarter end dates commencing on 31 March 2014. The Note is interest bearing at a fixed rate of 5% per annum with interest payable in cash on the calendar quarter end dates commencing on 31 March 2014. The repayment of the Note is guaranteed by MNHL and is secured by a first ranking debenture held by the Company over the assets and undertaking of MNH Grp and a second ranking debenture held by the Company over the assets and undertaking of MNHL.

The net proceeds of the disposal following the Completion Adjustment and after deducting the costs of the transaction will further strengthen the Group's cash position.

For the year ended 31 December 2012, MNH's turnover amounted to £6,258,000 and its operating profit for the year then ended amounted to £118,000 after deducting group management charges of £45,000. According to its management accounts, for the 10 months ended 31 October 2013, MNH's turnover amounted to £4,997,000 and its operating profit for the period then ended amounted to £202,000 after deducting group management charges of £94,000.

Based on the Group's management accounts for the period ended 31 October 2013, the net assets of MNH amounted to £303,000 and the carrying value of goodwill relating to MNH was £1,442,000. Accordingly, had the disposal of MNH completed on 31 October 2013, after taking into consideration the proforma Completion Adjustment at that date and after deducting the estimated costs of the transaction, there would have been a surplus on disposal of approximately £351,000 before deducting the goodwill of £1,442,000 to give a total exceptional loss on disposal of approximately £1,091,000.

The directors of the Company, other than Stephen Yapp who is a related party, consider, having consulted with the Company's Nominated Adviser, N+1 Singer LLP, that the terms of the disposal are fair and reasonable insofar as the Company's shareholders are concerned.