Trading Statement

RNS Number : 3420T

Johnson Service Group PLC

24 November 2021

 

24 November 2021

AIM:  JSG

Johnson Service Group PLC

('JSG' or 'the Group')

Trading Update

"Outlook for the full year in line"

JSG, a leading UK textile services provider, today releases an update on trading.

The Group has continued to trade in line with management expectations in the period since we announced our half year results in September and expects to report full year results in line with the expectations referred to in our Interim Statement.

Revenue

Workwear volumes have remained similar to August, at 98% of normal levels.  Workwear revenue for the 10 months to 31 October 2021 was £107.1 million (October 2020: £107.6 million).  Our sales team had all returned from furlough by May and are gaining momentum in winning new business, with a particular focus on new to rental sales.

HORECA volumes have also remained at a similar level to August, at over 80% of normal.  Some of our markets, such as contract catering and airport hotel locations, have not yet returned to normal and continue to lag behind restaurants and hotels which cater more for leisure travellers.  HORECA revenue for the 10 months to 31 October 2021 was £107.1 million (October 2020: £90.1 million) whilst organic revenue in the 4 months to 31 October 2021 was up 79.2% compared to 2020 and down 14.6% compared to 2019.

Cost Pressures

In line with all businesses across the UK we have seen inflationary pressure on our cost base and are taking action to mitigate the impact.

In terms of energy pricing, we are protected to a large extent from the current volatility in gas prices with some 90% of our gas supply at fixed prices for the final quarter of 2021 and over 80% fixed throughout 2022, with reducing amounts fixed into 2023.  We are also continuing our investment into capital equipment which both reduces energy usage and supports our ESG agenda.

We have reacted to the challenges of the labour market to ensure that we have the correct level of resources to cope with the current and expected demand over the coming months.  Addressing this has, however, had an impact on the cost of production.

Our focus on operational excellence means we are well placed to address these challenges proactively without compromising our market share opportunity.  Our customers are, more than ever, aware of the critical service that we provide to support their business.

Investment

Our new Workwear plant in Exeter is now fully operational and will provide additional processing capacity in the South.

Plans for the upgrading of the Bourne hotel linen plant, which is our largest plant, have been finalised and work is now underway.  The anticipated cost of the project is £4.2 million and is expected to be fully commissioned in the first half of 2022.

Northern Ireland

On 30 September 2021 we completed the acquisition of the entire issued share capital of Lilliput (Dunmurry) Limited ('Lilliput') for a cash consideration of £6.175 million on a debt free, cash free basis and subject to an adjustment for normalised working capital. 

Lilliput, which has some 130 employees and operates from a 25,000 square foot leasehold processing facility based in Dunmurry, Belfast, is the market leader within the Textile Services sector in Northern Ireland.  The business regularly supplies over 0.5 million pieces per week to its customers, predominantly across the Hotel, Restaurant and Catering (HORECA) markets but also services Belfast's largest hospital.

This acquisition provides the Group with a presence in a geographical area where we were not previously represented and which offers further opportunity for growth.  We are developing plans to expand the capacity of the site in order to take advantage of the expanding Northern Ireland hospitality market as well as further healthcare opportunities.

Lilliput's pre-COVID annualised revenue, including the revenue from customer contracts acquired from a competitor in 2020, was some £7.3 million.

The acquisition provides the opportunity to further diversify the customer profile base within the Group portfolio.  Lilliput also shares a number of common customers in both Northern and Southern Ireland with the Group, which will help to strengthen our plans to expand the business and to secure further work in the future.

Outlook

In the absence of any new Covid-19 restrictions affecting the hospitality sector in the remainder of the year, we expect the profit before taxation for the year to be in line with the market expectations referred to in our September statement.  Revenue is expected to slightly out-perform offsetting the additional cost pressures referred to above.

We anticipate further recovery of hospitality volumes into 2022 although it remains difficult to predict the exact timing.

ENQUIRIES

Johnson Service Group PLC
Peter Egan, CEO
Yvonne Monaghan, CFO
Tel: [phone] (on the day)
Tel: [phone] (thereafter)
Investec Investment Banking (NOMAD)	Camarco (Financial PR)
David Flin	Ginny Pulbrook
Carlton Nelson	Rosie Driscoll
Virginia Bull	Toby Strong
Tel: [phone]	Tel: [phone]

 

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