Last checked at 20 Mar 2020 07:00
20 March 2020
AIM: JSG
Johnson Service Group PLC ("JSG")
Update on Impact of COVID-19
As reported on 2 March 2020, JSG's trading up to that date had been in line with management's expectations, building on the strong profitable growth seen in the financial year ended 31 December 2019.
In recent weeks the Group has started to experience a slowdown in certain areas of its operations linked to COVID-19, particularly within our HORECA business, which serves the Hotels, Restaurant and Catering markets. These market segments have seen reduced demand which has resulted in a significant reduction in our processing volumes, particularly in the last few days. Our Workwear business has seen limited impact to date, although it is reasonable to expect that some Workwear customers will see an impact from COVID-19 in due course.
As a reminder our debt, excluding the impact of IFRS 16, at the end of 2019 was £87.7 million, resulting in a leverage ratio (calculated in accordance with our bank facilities) of 1.3:1 against a bank covenant requirement of not more than 3:1. Debt has remained at a similar level to date and our committed bank facilities are £135 million, running to August 2023.
We have taken immediate action to limit capital expenditure on both plant and equipment and on new textile rental items and have cancelled all non-essential revenue expenditure. We have also commenced discussions with our banks regarding increased bank facilities.
Actions are being taken to reduce operational costs, particularly in the businesses most affected by the drop off in volumes, but also in the wider Group.
Given the current need for prudent cash management, the Board has decided that it will, at the forthcoming Annual General Meeting on 5 May 2020, withdraw Resolution 3 in the Notice of Annual General Meeting relating to the final dividend payment of 2.35p per Ordinary share.
While the full implications of COVID-19 on the financial performance for the current financial year are difficult to determine at this stage, the Board remains confident in the future prospects and viability of the Group.
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.
ENQUIRIES
Johnson Service Group PLC (www.jsg.com) |
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Peter Egan, CEO |
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Yvonne Monaghan, CFO |
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Tel: 01928 704 600 |
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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, processing over 1.7 million items per week. It also provides premium linen services for the hotel, catering and hospitality markets, and high-volume hotel linen services, processing over 600 million items a year. With its core values of quality, reliability and service, the Group aims to provide customers with an outstanding level of customer care.