TIDMJSG
RNS Number : 8825L
Johnson Service Group PLC
05 May 2020
5 May 2020
AIM: JSG
Johnson Service Group PLC
AGM Statement and Update on Further Actions in Response to
COVID-19
Johnson Service Group PLC (the "Company" or the "Group"), a
leading UK textile services provider, provides an update on its
strong financial and liquidity position and the actions taken in
response to COVID-19 since its previous announcement on 20 March
2020.
Trading Update
The Group is continuing to see a significant amount of
disruption across its markets, prompting the Board to implement
appropriate mitigating actions.
Our Workwear business, which provides garment rental, protective
wear and laundry services is continuing to supply key industries
and all our processing sites remain open. Whilst trading for the
first two months of the year was in line with our expectations, we
subsequently saw a reduction in requirements from certain, mainly
blue collar, industries although we are seeing some increased
demand from our food customers which partly offsets this. Organic
growth within our Workwear business for the first quarter overall
was slightly negative and trading in April was some 12% down.
Within HORECA, which serves the Hotel, Restaurant and Catering
markets, we have ceased processing at the vast majority of our 18
sites as the demand for linen has significantly reduced from most
sections of the hospitality market. Organic growth for the first
two months of the year was particularly strong at 9%, however,
March saw volumes reduce resulting in a negative organic growth in
the month of 27%. In April, revenue fell by some 97% on an organic
basis due to the closure of the vast majority of our hospitality
customers.
Due to the reduction in demand we have furloughed a significant
proportion of our employees, most notably in the HORECA division.
The Board and Senior Management Team have all accepted a temporary
salary reduction of 20%, initially for a three-month period from 1
April 2020, and the majority of other employees in support and
administration roles who have not been furloughed have accepted a
salary reduction of 10%, initially for the same period.
The above measures, together with a hold on capital investment
and the cancellation of all non-essential revenue expenditure, are
aimed at conserving cash within the business.
Net debt, excluding IFRS 16, at the end of March 2020 was in
line with December 2019 at GBP87.7 million, resulting in a net debt
to adjusted EBITDA leverage ratio, calculated in accordance with
our bank facilities, of 1.3:1 (December 2019: GBP87.7 million and
1.3:1 respectively).
Government Support Initiatives
In addition to accessing the Coronavirus Job Retention Scheme,
the Group has welcomed the VAT and PAYE payment deferrals announced
by the Government.
Financing, Liquidity and Covenants
The Group has always adopted a prudent approach to its cost base
and capital allocation and, with the benefit of its ordinarily cash
generative business model, has maintained a strong financial
position.
We are currently engaged in constructive discussions with our
three principal banks and have agreed that, although we expect to
achieve the June 2020 covenants, they will waive that test. No fee
has been charged for this waiver demonstrating the strong
relationship we continue to have with our lenders.
Alongside discussions with our principal banks for the drawing
of the GBP40 million Accordion Facility, we are also pursuing a
resetting of covenants into 2021 to reflect the significant changes
we are currently experiencing in trading, particularly within our
HORECA business, and the continuing uncertainty around the length
of time that the current containment measures may be in place.
We are also exploring the availability and suitability of other
Government funding initiatives and a further announcement will be
made as appropriate.
Dividend
As announced on 20 March 2020, given the current need for
prudent cash management, the Board will, at today's Annual General
Meeting, withdraw Resolution 3 in the Notice of Annual General
Meeting relating to the final dividend payment in respect of the
year ended 31 December 2019 of 2.35 pence per Ordinary share. The
cash benefit to the Group of this action will be some GBP8.7
million which will further ensure the Group's financial
resilience.
Furthermore, the Board anticipates that no dividend will be
payable in respect of the current financial year.
Outlook
As a result of the significant uncertainty surrounding the
impact of COVID-19, the Board is unable to provide financial
guidance until the expected duration of the current stay at home
measures, as well as the details of how and over what timeframe
they will be relaxed thereafter, becomes clearer.
In the meantime, our priority remains the health and wellbeing
of our employees and customers and we are continuing to ensure that
we have the appropriate measures and precautions in place for their
safety. We would like to recognise our employees' commitment during
this challenging time.
The Board remains confident in the prospects and viability of
the Group and is focussed on taking action to maintain its strong
cash and liquidity position and ensuring the business is ready to
return to more normal levels of operation.
For further information, please contact:
ENQUIRIES
Johnson Service Group PLC (www.jsg.com)
Peter Egan, CEO
Yvonne Monaghan, CFO
Tel: 01928 704 600
Investec Investment Banking (NOMAD) Camarco (Financial PR)
David Flin Ginny Pulbrook
Carlton Nelson Ben Woodford
Virginia Bull Oliver Head
Tel: 020 7597 4000 Tel: 020 3757 4992
About Johnson Service Group PLC
www.jsg.com
Headquartered in Preston Brook, Cheshire, JSG provides textile
services across the UK. The Group is the leading supplier of
workwear and protective wear in the UK. It also provides premium
linen services for the hotel, catering and hospitality markets, and
high-volume hotel linen services. With its core values of quality,
reliability and service, the Group aims to provide customers with
an outstanding level of customer care.
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END
AGMZZGGKNDMGGZM
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May 05, 2020 05:21 ET (09:21 GMT)
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