04 September 1998

CHAIRMAN'S STATEMENT TO 1998 AGM

The past year has been one of significant change for the Group. We have firmly set our sights on maximising our skills in our distribution services sector, which has supported the profits and cash flow of the Group for many years. We believe that there is considerable opportunity to grow our business there. The recent moves we have made have certainly strengthened the defensive qualities of the Group, and since January we have sold the John Menzies Retail business, and we are in the process of selling Smythons. The new management of the Early Learning has been in office for almost a year, and is focused on revitalising this business, with a view to demerging it when the time is right. Like for like sales in ELC have been encouraging, but the Christmas trading period will still be a critical test. Our distribution operations are also managing change. John Menzies Wholesale, which earlier this year successfully seized the opportunity to renegotiate long term supplier contracts, is absorbing the effects of the margin concessions already announced, together with some slowing down of the recent phenomenal growth in the magazine sector. We intend to continue to expand our involvement in the Airport Services sector, following the opening of the London Cargo Centre, our joint venture with Lufthansa, on 1st July. However, both LCC and AMI are affected by the reduction in Far East trading, and are not helped by the well publicised difficulties in the new Hong Kong airport. Action is being taken at THE to improve both stock controls and service levels, and this will require some rationalisation. THE Games is very dependent on Christmas, but trading and product availability look promising. The elimination of the first half losses of John Menzies Retail from our Interim Results in January next year will clearly result in a much improved picture from last year, and will emphasise the increasing distribution profile of the Group. The process of change is exciting, but results take time to come through and are only achieved with diligent attention to detail. I am confident that with our concentration on core activities we are not unduly exposed to prevailing international and domestic uncertainties. We have the right strategy and the right skills to drive this business forward in the years ahead. I thank all our shareholders for their continuing support.

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