Johnson Service Group PLC Pre-Close Trading Statement and Drycleaning Review (3298B)
06 Janeiro 2015 - 5:00AM
UK Regulatory
TIDMJSG
RNS Number : 3298B
Johnson Service Group PLC
06 January 2015
6th January 2015
Johnson Service Group PLC
Pre-Close Trading Statement and Drycleaning Strategy Review
Overall Group trading results for the year ended 31st December
2014 are expected to be slightly ahead of expectations and
significantly ahead of the prior year following our successful
acquisition of Bourne in early 2014. This acquisition was a key
part of our strategy to expand into the volume hotel linen market
and was immediately earnings enhancing.
Textile Rental
Textile Rental, by far the largest part of the Group, has
continued to perform well, with improved margins, increased
customer retention and strong new sales which have resulted in
additional investment in rental stocks.
The GBP8.2 million investment in our new plant in Leeds is on
schedule to be operational in early 2015 and will be the UK's most
automated garment processing plant.
Drycleaning
Drycleaning continues to operate in a difficult high street
environment and despite several initiatives to reach new customers
the like for like sales increase we achieved in 2013 has not been
maintained in 2014. Notwithstanding this we anticipate the result
for 2014 to be in line with expectations.
Our strategy to develop alternative, more convenient collection
and delivery locations has progressed particularly well through our
partnership with Waitrose. We were represented in 78 Waitrose
stores at the end of December 2014 with a further 46 locations
anticipated to be opened in the first quarter of this year.
We have also established collection and delivery points in
office premises with a high concentration of staff, thereby
increasing convenience to customers. In addition, for higher value
or bulky items, we will be launching a new online home collection
and delivery service from mid 2015.
In parallel with these new initiatives we have reviewed the
lease profile of our current 307 branches and have identified 109
branches, the majority of which have leases expiring within the
next two years, where renewal will not be financially viable. We
are commencing a consultation exercise with affected employees and
anticipate that branches will close during the first half of the
year.
The remaining 198 better performing premium branches are in more
convenient locations with an infrastructure capable of receiving
Drycleaning from various collection and delivery points.
Restructuring Cost
The estimated charge to the Group's income statement for the
planned restructuring of the Drycleaning business and associated
property provisions is, in aggregate, approximately GBP6.5 million
net, and will be treated as an exceptional item in the first half
of 2015. This estimated cost will, due to the timing of the
decision to implement the strategy being after 31st December 2014,
be reported as a post balance sheet event in the Annual Report for
the year ended 31st December 2014.
Of the estimated charge, GBP0.4 million is non-cash and only
GBP1.4 million is an additional cash requirement relating to the
restructuring cost, as the balance is already contractually
committed cash spend in the current and future years (including
rent, rates, insurance and dilapidations) irrespective of the
restructuring plan.
Net Debt
Net debt at the end of December is expected to be approximately
GBP29.0 million compared to GBP31.7 million at June 2014. The
reduction is despite the significant investment in the new Leeds
plant.
Outlook
The Board is pleased with the performance of Textile Rental,
which is the core of the Group's operations and sees additional
opportunities for further investment and growth.
In Drycleaning, the opportunity to streamline the branch network
and improve the convenience of our services for many customers is
expected to drive increased margin in the medium term.
Overall, the Board expects the positive momentum in the Textile
Rental business achieved in 2014 to continue into 2015 and the
Drycleaning business to benefit from the actions being
implemented.
The Group expects to release the results for the year to 31st
December 2014 on 3rd March 2015.
Enquiries:
Johnson Service Group PLC
Chris Sander, CEO
Yvonne Monaghan, CFO
Tel: 01928 704600
Investec Investment Banking (NOMAD) Newgate Threadneedle
James Rudd John Coles
David Flin
Matt Lewis
Tel: 020 7597 4000 Tel: 020 7653 9850
This information is provided by RNS
The company news service from the London Stock Exchange
END
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