REG - Johnson Service Grp. - Interim Results
03/09/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240903:nRSC6046Ca&default-theme=true
RNS Number : 6046C Johnson Service Group PLC 03 September 2024
3 September 2024
AIM: JSG
Johnson Service Group PLC
('JSG' or 'the Group')
Interim Results for the Six Months ended 30 June 2024
"Continuing strong organic growth and £20.6m acquisition of Empire Linen
Services Limited.
Confidence for the full year and for longer-term growth."
FINANCIAL HIGHLIGHTS
H1 2024 H1 2023 % increase FY 2023
Adjusted results(1)
Revenue £244.1m £215.0m 13.5% £465.3m
Adjusted operating profit £25.2m £19.0m 32.6% £50.5m
Adjusted operating profit margin 10.3% 8.8% - 10.9%
Adjusted EBITDA margin 28.3% 26.8% - 28.3%
Adjusted profit before taxation £21.5m £16.4m 31.1% £44.5m
Adjusted diluted earnings per share 3.9p 2.9p 34.5% 7.8p
Statutory results
Operating profit £22.4m £16.1m 39.1% £43.6m
Profit before taxation £18.7m £13.5m 38.5% £37.6m
Diluted earnings per share 3.3p 2.3p 43.5% 6.4p
Dividend 1.3p 0.9p 44.4% 2.8p
- Bank Facility of £120.0 million extended to August 2027.
- Strong balance sheet and cash generation; capital available for
further organic and inorganic investment.
OPERATIONAL HIGHLIGHTS
- Organic revenue up 5.7% compared to H1 2023.
- Increasing new sales activity and strengthening pipeline in both
HORECA and Workwear.
- Energy costs reducing as a % of revenue; costs largely fixed for
remainder of 2024.
- Margin improvement on track for target of 14% in 2026.
- New Crawley site expected to commence processing in Q4 2024.
- Enfield depot in operation to improve access to hotel customers in
London and the South East.
- £20.6 million acquisition of Empire Linen Services Limited ('Empire')
on 2 September 2024 expands our service offering to luxury hotels in London
and the South East.
- Full year outturn, before the benefit from Empire, expected to be in
line with current market expectations.
Notes
1 'Adjusted EBITDA' refers to operating profit before amortisation of
intangible assets (excluding software amortisation) and exceptional items
(defined as 'adjusted operating profit') plus the depreciation charge for
property, plant and equipment, textile rental items and right of use assets
plus software amortisation.
2 'Adjusted profit before taxation' refers to adjusted operating profit
less total finance costs.
3 'Adjusted diluted earnings per share' refers to earnings per share
calculated based upon adjusted profit after taxation.
Peter Egan, Chief Executive Officer of Johnson Service Group PLC, commented:
"The Group is reporting a strong financial and operational performance for the
period, having delivered a significant uplift in year-on-year profitability.
This result is testament to the resilience of our business model, the strength
of our relationships with our customers and suppliers and the hard work of our
employees.
We remain focused on organic growth initiatives, optimising operational
efficiencies through a combination of targeted capital investment and
continuous improvement of our working practices whilst also continuing to
expand our geographical coverage through the successful execution of earnings
enhancing acquisitions, as demonstrated by the acquisition of Empire,
announced today, which represents a further step in our strategy to expand the
range and scale of services we offer.
Whilst continuing to closely manage variable costs, our team has ensured that
customer retention has remained strong. We have had some significant
independent and group sales wins during the second quarter of 2024 which will
positively impact the remainder of the year and into 2025.
We expect to exit 2024 with strong progression towards previous levels of
adjusted operating margin and adjusted operating profit for the year, before
the benefit from Empire, in line with current market expectations."
SELL-SIDE ANALYSTS' MEETING
A presentation for sell-side analysts will be held today at 09:30, details of
which will be distributed by Camarco. A copy of the presentation and
recording of the meeting will be available on the Group's website (www.jsg.com
(http://www.jsg.com) ) following the meeting.
ENQUIRIES
Johnson Service Group PLC
Peter Egan, CEO
Yvonne Monaghan, CFO
Tel: 020 3757 4992/4981 (on the day)
Tel: 01928 704 600 (thereafter)
Investec Bank plc (NOMAD) Camarco (Financial PR)
David Flin Ginny Pulbrook
Carlton Nelson Letaba Rimell
Virginia Bull
Tel: 020 7597 5970 Tel: 020 3757 4992/4981
Financial And Operational Review
BASIS OF PREPARATION
Throughout this statement, and consistent with prior years, a number of
alternative performance measures ('APMs') are used to describe the Group's
performance. APMs are not recognised under UK-adopted international
accounting standards. Whilst the Board uses APMs to manage and assess the
performance of the Group, and believes they are representative of ongoing
trading, facilitate meaningful year-on-year comparisons, and hence provide
useful information to stakeholders, it is cognisant that they do have
limitations and should not be regarded as a complete picture of the Group's
financial performance. APMs, which include adjusted operating profit,
adjusted profit before taxation, adjusted EBITDA, adjusted EPS and net debt
excluding IFRS 16 lease liabilities, are defined within note 1 (Basis of
Preparation) and are reconciled to statutory reporting measures in notes 2, 5,
8 and 18.
PERFORMANCE
Organic revenue growth was 5.7% compared to the first half of 2023. Within
Hotel, Restaurant and Catering ('HORECA'), and despite the unseasonably poor
weather in the second quarter, volumes have continued to increase, largely
reflecting additional rooms being serviced, and are now following more
predictable patterns which allows for improving operational efficiencies.
Workwear remained stable during the first half of the year, trading in line
with our expectations, and, encouragingly, some positive momentum on sales to
both new and existing customers has started to materialise.
Cost pressures remain, particularly in relation to energy and, to a lesser
extent, labour. Energy continued to be a significantly higher cost than has
been experienced historically although we have proactively fixed prices for
the coming months to obtain and manage some degree of certainty over cost of
supply.
Adjusted operating profit margin increased by 150 basis points to 10.3% (June
2023: 8.8%), reflecting a 90 basis points reduction in energy costs to 9.4% of
revenue (June 2023: 10.3%) and a 40 basis points reduction in labour costs to
44.7% of revenue (June 2023: 45.1%). As we continue to improve the
recovery of these costs, through increasing volumes, efficiencies and price
increases, the Board remains of the opinion that the overall Group adjusted
operating margin will reach at least 14.0% by 2026.
The additional costs incurred in respect of Crawley amounted to some £1.0
million in the first half and are expected to be some £3.5 million for the
full year.
Overall, we are encouraged with the Group's performance as we plan to further
expand capacity in each of our businesses.
ACQUISITION OF EMPIRE
On 2 September 2024, we acquired the entire issued share capital of Empire
Linen Services Limited ('Empire') for a consideration of £20.6 million on a
debt free, cash free basis and subject to normalised working capital. Empire
provides linen services to luxury hotels in London and the South East.
Revenue and profit before tax for the year ended 30 June 2023, as shown in the
unaudited statutory accounts, were £10.9 million and £0.9 million,
respectively. The revenue and profit before tax as shown in the management
accounts for the year ended 30 June 2024 were £13.9 million and £2.8
million, respectively. The business employs some 170 employees and operates
from a 26,000 square foot leasehold site in Tottenham.
The transaction is expected to be immediately earnings enhancing and, in
addition to collaboratively sharing best practice across the enlarged Group,
will complement, and allow us to implement operational synergies with, the
Regency business acquired in 2023.
FINANCIAL REVIEW
Financial Results
Revenue in the period increased by 13.5% to £244.1 million (June 2023:
£215.0 million). Adjusted EBITDA was £69.2 million (June 2023: £57.7
million) giving an improved margin of 28.3% (June 2023: 26.8%). Adjusted
operating profit increased by 32.6% to £25.2 million (June 2023: £19.0
million).
Total finance costs were £3.7 million (June 2023: £2.6 million) reflecting
higher interest rates and borrowing over the period.
Adjusted profit before taxation increased by 31.1% to £21.5 million (June
2023: £16.4 million). Statutory profit before taxation, after amortisation
of intangible assets (excluding software amortisation) of £2.8 million (June
2023: £2.6 million) and, in 2023, an exceptional charge of £0.3 million, was
£18.7 million (June 2023: £13.5 million).
The tax rate on the adjusted profit before taxation, excluding exceptional
items, amortisation of intangible assets (excluding software amortisation) was
24.7% (June 2023: 25.1%). The rate is below the headline UK corporation tax
rate for the full year of 25%, due to the effect of expenses not deductible
for taxation and short-term timing differences combined with the impact of the
lower rate of 12.5% applied to profits generated in the Republic of Ireland
('ROI').
Adjusted diluted earnings per share was 3.9 pence (June 2023: 2.9 pence).
Dividend Reflecting Confidence in the Future
An interim dividend of 1.3 pence per share (June 2023: 0.9 pence per share)
will be paid on 1 November 2024 to those Shareholders on the register of
members on 4 October 2024. The ex-dividend date is 3 October 2024. The
increased dividend is in line with our progressive dividend policy to reduce
dividend cover from our historical level of cover of 3 times in 2022 to 2.5
times in financial year 2024.
Cash Flow and Net Debt
Free cash flow (calculated as net cash generated from operating activities,
less net spend on textile rental items, less the capital element of leases) in
the first half of the year was £24.5 million compared to £17.6 million in
the first half of 2023. This improvement is largely reflective of the
continuing improvement in trading performance.
Total net debt (excluding IFRS 16 liabilities) at 30 June 2024 was £74.1
million (December 2023: £61.7 million). The increase is largely attributed
to significant capital investment in the business. After including the
impact of IFRS 16, net debt at June 2024 was £117.7 million (December 2023:
£104.9 million).
Bank Facility
In May 2024, the Group extended the tenure of its existing £120.0 million
revolving credit facility by 12 months such that it now expires in August
2027.
In addition to the above, the terms of the facility provide for an option to
increase the facility by up to a further £15.0 million, subject to bank
consent.
The current margin on the facility is 1.45% over SONIA or the relevant EURIBOR
rate, as applicable. Covenants remain unchanged and comprise a leverage
covenant (total debt to EBITDA) of less than three times and interest cover of
not less than four times. At 30 June 2024, the leverage ratio was 0.8
times. On a pro-forma basis, to include the approximate impact of Empire had
it been acquired on that date, the leverage ratio would have been 0.9 times.
Return on Capital Employed ('ROCE')
ROCE, calculated as rolling 12-month adjusted operating profit divided by the
average of opening and closing Shareholders' equity, net debt and
post-employment benefit obligations for the same 12-month period, increased to
14.8% (June 2023: 13.5%; December 2023: 13.9%).
Capital Structure
Our Capital Allocation policy remains unchanged. The Group's objective is to
employ a disciplined approach to investment, returns and capital efficiency
to deliver sustainable compounding growth whilst also maintaining a strong
balance sheet. We continue to see exciting opportunities to deploy capital
organically and have a strong M&A pipeline. In the period since
September 2022, we have completed share buyback programmes returning £35.5
million to Shareholders, invested in the opening of a new site in Crawley and
undertaken significant capital investment in many of our other sites. The
acquisition of Regency in February 2023, Celtic Linen in August 2023 and now
Empire in September 2024 has further utilised over £53.0 million of available
capital. Even after taking into consideration these investments and the
payment of dividends, the Group will have significant headroom under its
committed facilities and target leverage of 1-1.5 times by the end of 2024 to
continue to pursue investment opportunities, both organic and inorganic, as
they arise.
Defined Benefit Pension Scheme ('the Scheme')
The recorded net surplus after tax for the Scheme, calculated in accordance
with IAS 19, was £2.6 million at June 2024, compared to £nil at December
2023. The improvement in the position is due, in part, to a higher discount
rate assumed on liabilities offset, to a lesser extent, by higher assumed
inflation. The Scheme continues to have a significant portion of assets
invested so as to hedge against movements in liabilities, thereby reducing
overall volatility.
The triennial valuation of the Scheme, as at 30 September 2022, showed a small
surplus on the Technical Provisions basis. We have agreed with the Trustee
to cease deficit contributions to the Scheme at least until the results of the
next triennial valuation, as we work towards a buy out of the Scheme in the
medium term.
OPERATIONAL REVIEW
Our Businesses
The Group provides textile rental and related services to the Hotel,
Restaurant and Catering ('HORECA') and Workwear sectors throughout the UK and
Republic of Ireland.
Within our HORECA division, 'Johnsons Hotel Linen', our high-volume linen
business, primarily serves group and independent large hotel customers,
'Johnsons Hotel, Restaurant and Catering Linen' provides premium linen
services to restaurant, hospitality and corporate event customers whilst
'Regency' and, following its acquisition on 2 September 2024, 'Empire' provide
bespoke linen to four- and five-star luxury hotels. Also, within HORECA,
'Celtic Linen' in the Republic of Ireland and 'Johnsons Belfast' in Northern
Ireland serve both hospitality and healthcare customers.
Our Workwear division comprises solely of 'Johnsons Workwear', which
predominantly provides workwear rental, protective wear and laundry services
to UK corporates across all industry sectors.
Energy
Energy costs (comprising gas, electricity and diesel) have been less volatile
over the period and, although energy unit prices have gradually fallen, still
remain at higher levels than historically. Costs for the first half of 2024
represented 9.4% of revenue and, encouragingly, were lower than the equivalent
period in 2023 but remain higher than in 2019 (June 2023: 10.3%; June 2019:
6.5%). We anticipate a further reduction in this percentage in the second
half such that the full year cost will be approximately 9.0% of revenue.
Our policy in the UK has always been to fix gas and electricity prices on a
rolling basis, building a position so that the upcoming months are largely
fixed. This provides certainty but also means that costs do not immediately
reflect falls, or increases, in spot prices. We currently have, on average,
some 90% of our anticipated electricity usage and some 87% of our anticipated
gas usage fixed for the remainder of 2024. Looking ahead, approximately 62%
of our anticipated electricity requirement is fixed for 2025 with around 30%
for 2026. Similarly, we have fixed pricing in place for some 61% of our
anticipated gas requirement in 2025 and some 25% for 2026. We will continue
to follow our current policy as we go forward.
Whilst ongoing geopolitical events have resulted in current forward market
rates being adverse to those set out in our AGM Statement, released on 1 May
2024, the weighted average price of our current fixed arrangements when
combined with the current forward market rates for the remaining proportion of
our anticipated energy usage remain broadly in line with those previously
disclosed.
Labour
In the six months to 30 June 2024, labour as a percentage of revenue reduced
to 44.7%, compared to 45.1% in the six months to 30 June 2023, although this
was still higher than the 43.2% in the six months to 30 June 2019.
Notwithstanding the increase in the National Living Wage in January 2024 in
ROI and in April 2024 in the UK, we are confident that labour, as a percentage
of revenue, will remain stable for 2024.
HORECA Division
Total revenue for the HORECA division increased significantly to £172.9
million from £143.9 million in 2023. Despite the unseasonably poor
weather in the second quarter, organic growth was 8.5% reflecting both
improved price per piece and increasing volume. Adjusted EBITDA was £48.1
million (June 2023: £36.3 million) giving an improved margin of 27.8% (June
2023: 25.2%). Adjusted operating profit was £18.4 million (June 2023:
£10.9 million).
The Hotel, Restaurant and Catering Linen business has continued to invest to
become more sustainable, improve processes and quality, and to continue a
refurbishment programme in some of our employee welfare spaces to improve the
employee experience at work.
A new continuous batch washer and driers in our Southall operation have
resulted in increased productivity, and replacement ironers in Glasgow and
Grantham are being installed to further enhance the capacity and efficiency of
operations in those locations.
Our water recycling systems in Hayle and Shaftesbury continue to deliver
reductions in water consumption and effluent production, with reduced net
energy usage through heat recovery processes.
Our new location in Crawley, which is due to begin processing in the final
quarter of 2024, will be one of the most sustainable and energy efficient
laundries of scale in the UK and will allow for accelerated growth. We have
undertaken an initial marketing campaign which has shown encouraging results
in terms of new sales, with further campaigns planned.
Volumes in a number of holiday destinations, particularly in the South West,
were slightly lower than expected in the first half but have seen some
seasonal improvement during July and August. Our sales pipeline remains
strong and we have had some significant independent and group sales wins
during the second quarter of 2024 which will positively impact the remainder
of the year and into 2025.
All of our sites will benefit from us agreeing to transfer and perform
contracts previously operated by a chefs' wear provider with effect from 1
July 2024, adding annual revenue of some £4.5 million to the business.
Regency continues to make good ground in new business wins, having secured
some 200 new rooms in the first half, including securing some key 5-star
clients, both in areas they already serve as well as bringing the Regency
brand into new geographical regions. We have introduced five upgraded, newly
liveried, commercial vehicles into the fleet to further promote the brand.
The £1.4 million capital investment into Regency's site has been completed to
budget and the associated efficiency gains and increased capacity provides an
exciting growth opportunity.
Trading performance and volumes within Hotel Linen for the first six months of
2024 were in line with our expectations. May volumes were particularly
strong, partly due to the bank holidays, with the last week resulting in the
highest volume ever delivered by our business.
Our service is reliable and professional with deliveries on time and in full,
with good quality linen provided to all customers. Our customer service
teams continue to make regular contact with customers via proactive telephone
calls and pre-arranged visits, collating customer feedback via integrated
systems. Our consistent service delivery and partnership approach are key
strengths of our offering and contribute to us achieving successful business
retention, organic growth and new business wins.
A significant number of capital investment programmes were undertaken during
the first quarter to prepare for the year ahead. Major works included £3.5
million at our Bourne site to create additional capacity, new hoists, sorting
conveyors and bulk detergent tanks installed in Cardiff and various works
undertaken in Edinburgh to improve our wash systems. In addition,
investments in various new standalone washing machines, dryers and other
machinery to improve our carbon footprint are underway, as is the ongoing
improvement of employee welfare facilities across the estate.
Chester and Reading successfully trialled a 'driving behaviour monitoring
system' with encouraging results which will be rolled out across the business
during the remainder of 2024. New vehicles, all fitted with camera systems
including in cab monitoring, achieved target delivery dates and four new
double deck units have joined the fleet to support the successful opening of
our new depot in Enfield.
Employee retention and stability within our workforce are much improved, with
competency-based pay being well received, initially in production and service
and now throughout our engineering departments. Employee engagement
initiatives are a regular part of our business operations reflecting our
appreciation for their hard work and support. Investment in training
continues across all disciplines within our business and will be complemented
by the installation of a new learning and development software platform
enabling personnel to monitor their progress, receive reminders for training
and assess further development opportunities.
Support from all departments contributes to the continued success of our
business. Various projects to continue delivering innovation, both to our
Hotel Linen operations and service delivery, are planned to underpin our
objectives of being easy to do business with and the linen services provider
of choice.
Trading in Ireland for the first half of the year has been in line with our
expectations. The new business from hotel customers installed in Q4 2023 and
the addition of 696 rooms in 2024 has more than offset the impact of recent
bad weather on hotel bookings. Healthcare volumes remain stable, with a
strong focus on consistent supply and accommodating the changing patterns of
day procedures.
Customer retention remains strong and although the market is extremely
competitive, our focus is on continued customer service and attention to
detail.
Capital investment in the first half of the year has been in washing capacity,
particularly with the installation of four new washer extractors, as table
linen demand increases and we focus on a tailored service to our five-star
customers. Our Belfast site has seen the delivery of four new vehicles,
updating our fleet and allowing further development. We have also installed
a new ironer in Belfast, focusing on the quality and processing efficiency of
our duvet covers.
Our integration of the three sites in Belfast, Naas and Wexford is ongoing.
We are currently reviewing all associated systems to establish consistency and
implement benchmarking, sharing best practice ideas with the rest of the
Group.
Workwear Division
Revenue for the Workwear division was £71.2 million (June 2023: £71.1
million). Adjusted EBITDA was £24.5 million (June 2023: £24.4 million)
giving a margin of 34.4% (June 2023: 34.3%). Adjusted operating profit was
£10.2 million (June 2023: £11.1 million), the year-on-year reduction largely
reflective of some £1.0 million of additional rental stock depreciation
incurred in respect of new customer installations and existing customer
renewals.
Our strategic shift in the call centre, focusing on targeted outbound calls,
has significantly improved our conversion ratio. This enhancement has
increased the efficiency of our sales teams, keeping the sales pipeline robust
and ensuring high activity across all industry sectors. The marketing and
sales team continue to focus on the new-to-rental market ensuring a steady
flow of new customers experiencing our services. New-to-rental customers
represented 25% of our total new sales sold in the period. The development
of our new website, which is due to be launched in the second half of the
year, is on track and will further enhance the introduction of our services to
new-to-rental customers.
Our continuing commitment to enhancing customer service is evident in the
latest customer survey result of 86.2%, up from 82.9% achieved in early 2023.
This positive shift can be attributed to the dedicated effort by our service
teams in addition to investment in customer service training programs.
Customer retention for the 12 months to June 2024 was 92.4% and is trending
positively for the full year, testament to our local and national service
teams who continue to build strong relationships with our customers. In
conjunction with our survey partners, a new web portal for our management and
service teams has been developed. The portal, which went live in June,
allows us to react quickly and positively with customers.
A significant £4.0 million capital investment project has started in our
Manchester site. The new system is expected to be fully operational later
this month and will fully automate the production process, adding an extra 40%
of capacity to the site. New washer extractors and folders have been
installed in several sites across the country, notably in Letchworth,
providing an additional 10% capacity in the South East to support future
growth.
Working in collaboration with our suppliers, several initiatives have been
implemented to improve our wash processes, reducing the use of energy, water,
and detergents. Additionally, we are committed to enhancing energy
efficiency by installing upgraded burners and optimising power correction
factor units, which improve the effective use of both gas and electricity.
This commitment not only reduces energy waste but also contributes to a more
sustainable future by minimising our carbon footprint.
Our ongoing fleet replacement programme will see almost 40 commercial vehicles
replaced this year, maintaining service reliability to our customers whilst at
the same time reducing carbon emissions. As part of this programme, we have
introduced our first small electric vehicle into our commercial fleet,
specifically for customer installations and small deliveries. A second
electric vehicle will soon follow.
EMPLOYEES
Our employees are key to the continuing success of our business. The Board
would like to thank them for their support, hard work and significant
contribution to the progress of the business over the last six months. The
teamwork, dedication and determination demonstrated in order to deliver a
professional and on time service to our customers is a credit to each and
every one of them. The Board also welcomes the employees of Empire into the
Johnsons family.
Employee engagement and training are a key focus in the development of our
team and in further improving service levels. The focus on training and
development has allowed a number of our employees to progress to more senior
roles within the business.
CHANGE OF REMUNERATION COMMITTEE CHAIR
As separately announced today, the Board has resolved to appoint Kirsty Homer
as Chair of the Remuneration Committee and designated Non-Executive Director
for Workforce Engagement in succession to Nick Gregg, with effect from 1
November 2024. Nick will remain in his role as an independent Non-Executive
Director until 31 December 2024 whereupon he will retire from the Board,
having served nine years as an independent Non-Executive Director.
SUSTAINABILITY
We are committed to developing our responsible business agenda and continue to
make excellent progress with embedding our sustainability programme across the
Group and establishing the standards to which others aspire.
Key highlights of the programme so far this year include:
§ We have recently published our third Sustainability Report, which can be
found on our website at www.jsg.com (http://www.jsg.com) .
§ We have further developed our non-financial data capture, recording and
reporting processes, implemented a new internal assurance process and are
finalising plans to obtain third-party limited assurance from an independent
auditor over certain of our non-financial data.
§ Enhanced employee engagement activity remains ongoing, supporting our
communities through our "Local Communities Initiative" and an employee
volunteering programme in partnership with Neighbourly, which we are renewing
for a second year, Group wide.
§ In alignment with our approach towards a circular economy, we have
successfully transitioned to a single waste management provider for the
majority of our UK operations. Within Workwear, we have also fully
transitioned to a single provider for end-of-life textile management whilst
within HORECA we are exploring new technologies and partnerships to help
develop innovative solutions for textile recycling.
§ Our Workwear division has successfully sourced and trialled a washable and
reusable bag that meets our standards for durability and functionality which,
from June 2024, is being rolled out to eliminate single use plastic bags for
our industrial use garments.
§ We continue to increase the percentage of sustainable content in our
product offerings by working with suppliers on recycled materials and
biopolymers. We are currently developing a Sustainable Content roadmap to
outline how we intend to achieve this goal.
§ We have seen improvements in our external Sustainability ratings, including
our submission to CDP Climate Change, where we achieved a "B-" rating. In
Water Security, we maintained a "C" rating. Our Sustainalytics ESG Risk
rating is "Low," and we received a score of 16.7, representing significant
improvement.
FORTHCOMING INVESTOR ACTIVITIES
We are committed to clearly communicating our strategy and activities to our
stakeholders, in order that they receive a balanced and complete view of our
performance. As previously stated, a recording of the sell-side analysts'
meeting, which will be held today at 09:30, will be made available on the
Group's website (www.jsg.com (http://www.jsg.com) ) following the conclusion
of the meeting. Furthermore, the Board currently anticipates that
a London-based investor event, to update the market on the future growth and
financial plans for the Group, will now be held in the first half of 2025.
Further details will be announced in due course.
OUTLOOK
The Board is pleased with the further progress made by the Group in the first
half of the year and with the results reported today.
During the first six months, we have completed the £16.0 million investment
in a new site in Crawley to accelerate growth and give greater access to
London and the South East for our HORECA business, have opened a depot in
Enfield for our Hotel Linen operation and continued to improve efficiency and
capacity at several other locations through ongoing investment. We continue
to believe that investing in our estate will give us an advantage in the
market in delivering unrivalled service to our customers in the most efficient
way.
Our investment in a leading linen business in the Republic of Ireland in 2023,
which itself is a growing market, represents a significant step in our
strategy to expand the range and scale of services we offer and with our
Northern Ireland business, can now service the whole of the island of Ireland.
As announced today, we have also acquired Empire which, combined with
Regency acquired in 2023, gives us further opportunity to expand our servicing
of luxury hotels in London and the South East.
We expect to exit 2024 with strong progression towards previous levels of
adjusted operating margin and adjusted operating profit for the year, before
the benefit from Empire, in line with current market expectations. The Board
remains confident that, as energy costs stabilise to lower levels and as
operational efficiencies are further improved, divisional margins will
continue to return towards those achieved in 2019, with an overall Group
adjusted operating margin of at least 14.0% being achieved in 2026.
RESPONSIBILITY STATEMENT
The condensed consolidated interim financial statements comply with the
Disclosure Guidance and Transparency Rules ('DTR') of the United Kingdom's
Financial Conduct Authority in respect of the requirement to produce a
half-yearly financial report. The condensed consolidated interim financial
statements are the responsibility of, and have been approved by, the
Directors.
The Directors confirm that to the best of their knowledge:
§ the condensed consolidated interim financial statements have been prepared
in accordance with IAS 34, 'Interim Financial Reporting' as adopted by the
United Kingdom;
§ this interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months of the financial year and a description of the principal risks and
uncertainties for the remaining six months of the year); and
§ this interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related party transactions and changes
therein).
The Directors of Johnson Service Group PLC are listed in the Johnson Service
Group PLC Annual Report for 2023 and remain unchanged. Details of the
Directors are available on the Johnson Service Group PLC website: www.jsg.com
(http://www.jsg.com)
By order of the Board
Peter
Egan
Yvonne Monaghan
Chief Executive Officer
Chief Financial Officer
3 September
2024 3
September 2024
Forward Looking Statements
Certain statements in these condensed consolidated interim financial
statements constitute forward-looking statements. Any statement in this
document that is not a statement of historical fact including, without
limitation, those regarding the Group's future expectations, operations,
financial performance, financial condition and business is a forward-looking
statement. Such forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially. These
risks and uncertainties include, among other factors, changing economic,
financial, business or other market conditions. These and other factors
could adversely affect the outcome and financial effects of the plans and
events described in these condensed consolidated interim financial
statements. As a result, you are cautioned not to place reliance on such
forward-looking statements. Nothing in this document should be construed as
a profit forecast.
Consolidated Income Statement
Half year to Half year to Year ended
30 June 30 June 31 December
2024 2023 2023
Note £m £m £m
Revenue 2 244.1 215.0 465.3
Impairment loss on trade receivables (0.5) (0.5) (1.7)
All other costs (221.2) (198.4) (420.0)
Operating profit 2 22.4 16.1 43.6
Operating profit before amortisation of intangible assets (excluding software 25.2 19.0 50.5
amortisation) and exceptional items
Amortisation of intangible assets (excluding software amortisation) (2.8) (2.6) (5.3)
Exceptional items 3 - (0.3) (1.6)
Operating profit 2 22.4 16.1 43.6
Finance cost 4 (3.7) (2.6) (6.0)
Profit before taxation 18.7 13.5 37.6
Taxation charge 7 (4.9) (3.5) (10.4)
Profit for the period from continuing operations 13.8 10.0 27.2
Profit for the period from discontinued operations - - 0.1
Profit for the period attributable to equity holders 13.8 10.0 27.3
Earnings per share 8
Basic earnings per share 3.3p 2.3p 6.4p
Diluted earnings per share 3.3p 2.3p 6.4p
See note 8 for Adjusted basic earnings per share and Adjusted diluted earnings
per share.
Consolidated Statement of Comprehensive Income
Half year to Half year to 30 June Year ended
30 June 2023 31 December
2024 2023
Note £m £m £m
Profit for the period 13.8 10.0 27.3
Items that will not be subsequently reclassified to profit or loss
- Re-measurement and experience gains on post-employment benefit obligations 14 3.5 8.8
1.6
Taxation in respect of re-measurement and experience gains (0.9) (0.4) (2.2)
Items that may be subsequently reclassified to profit or loss
- Cash flow hedges (net of taxation) - fair value gains / (losses) 0.3 (0.8) (0.5)
- transfers to administrative expenses 0.1 0.3 0.4
Net gain / (loss) on hedge of a net investment 0.6 - (0.3)
Exchange differences on translation of foreign operations (0.5) - 0.3
Other comprehensive income for the period 3.1 0.7 6.5
Total comprehensive income for the period 16.9 10.7 33.8
The notes on pages 17 to 32 form an integral part of these condensed
consolidated interim financial statements.
Consolidated Statement of Changes in Shareholders' Equity
Share Share Merger Capital Redemption Reserve Hedge Retained Earnings Total
Capital Premium Reserve Reserve Equity
£m £m £m £m £m £m £m
Balance at 1 January 2023 43.9 16.8 1.6 1.2 (0.5) 221.6 284.6
Profit for the period - - - - - 10.0 10.0
Other comprehensive (loss) / income - - - - (0.5) 1.2 0.7
Total comprehensive (loss) / income for the period - - - - (0.5) 11.2 10.7
Share options (value of employee services) - - - - - 0.3 0.3
Share buybacks (1.7) - - 1.7 - (19.7) (19.7)
Dividend paid - - - - - (6.8) (6.8)
Transactions with Shareholders (1.7) - - 1.7 - (26.2) (26.2)
recognised directly in Shareholders' equity
Balance at 30 June 2023 42.2 16.8 1.6 2.9 (1.0) 206.6 269.1
Profit for the period - - - - - 17.3 17.3
Other comprehensive income - - - - 0.4 5.4 5.8
Total comprehensive income for the period - - - - 0.4 22.7 23.1
Share options (value of employee services) - - - - - 0.7 0.7
Share buybacks (0.8) - - 0.8 - (10.1) (10.1)
Deferred tax on share options - - - - - 0.1 0.1
Dividend paid - - - - - (3.8) (3.8)
Transactions with Shareholders (0.8) - - 0.8 - (13.1) (13.1)
recognised directly in Shareholders' equity
Balance at 31 December 2023 41.4 16.8 1.6 3.7 (0.6) 216.2 279.1
Profit for the period - - - - - 13.8 13.8
Other comprehensive income - - - - 0.4 2.7 3.1
Total comprehensive income for the period - - - - 0.4 16.5 16.9
Share options (value of employee services) - - - - - 0.6 0.6
Dividend paid - - - - - (7.9) (7.9)
Transactions with Shareholders - - - - - (7.3) (7.3)
recognised directly in Shareholders' equity
Balance at 30 June 2024 41.4 16.8 1.6 3.7 (0.2) 225.4 288.7
The Group has an Employee Benefit Trust (EBT) to administer share plans and to
acquire shares, using funds contributed by the Group, to meet commitments to
employee share schemes. As at 30 June 2024, the EBT held 9,024 shares (June
2023: 9,024 shares; December 2023: 9,024 shares).
Consolidated Balance Sheet
As at As at As at
30 June 30 June 31 December 2023
2024 2023
£m £m £m
Note
Non-current assets
Goodwill 9 144.2 137.0 144.4
Intangible assets 10 15.8 9.5 19.1
Property, plant and equipment 11 154.5 122.4 134.5
Right-of-use assets 12 40.0 40.5 40.0
Textile rental items 13 70.3 67.3 71.9
Trade and other receivables 0.4 0.3 0.4
Post-employment benefit assets 14 3.5 - -
428.7 377.0 410.3
Current assets
Inventories 2.5 2.2 1.9
Trade and other receivables 85.4 74.2 83.3
Reimbursement assets 2.8 4.5 3.9
Current income tax assets - 1.4 -
Cash and cash equivalents 10.0 6.0 9.6
100.7 88.3 98.7
Current liabilities
Trade and other payables 87.6 85.0 92.8
Borrowings 3.1 6.7 8.3
Current income tax liabilities 0.8 - 0.5
Lease liabilities 5.8 5.1 5.5
Derivative financial liabilities 0.2 1.4 0.6
Provisions 3.5 5.1 4.9
101.0 103.3 112.6
Non-current liabilities
Post-employment benefit obligations 14 0.3 7.8 0.3
Deferred income tax liabilities 19.5 5.9 15.0
Trade and other payables 0.2 0.6 0.3
Borrowings 81.0 39.8 63.0
Lease liabilities 37.8 38.1 37.7
Derivative financial liabilities - - 0.2
Provisions 0.9 0.7 0.8
139.7 92.9 117.3
NET ASSETS 288.7 269.1 279.1
Capital and reserves attributable to the Company's Shareholders
Share capital 15 41.4 42.2 41.4
Share premium 16.8 16.8 16.8
Merger reserve 1.6 1.6 1.6
Capital redemption reserve 3.7 2.9 3.7
Hedge reserve (0.2) (1.0) (0.6)
Retained earnings 225.4 206.6 216.2
Total equity 288.7 269.1 279.1
The notes on pages 17 to 32 form an integral part of these condensed
consolidated interim financial statements. The condensed consolidated
interim financial statements on pages 13 to 32 were approved by the Board of
Directors on 3 September 2024 and signed on its behalf by:
Yvonne Monaghan
Chief Financial Officer
Consolidated Statement of Cash Flows
Half year to Half year to Year ended
30 June 30 June 31 December
2024 2023 2023
Note £m £m £m
Cash flows from operating activities
Profit for the period 13.8 10.0 27.3
Adjustments for:
Taxation charge - continuing 7 4.9 3.5 10.4
Finance cost 3.7 2.6 6.0
Depreciation 43.7 38.5 80.6
Amortisation 3.1 2.8 5.7
Profit on disposal of property, plant and equipment - (0.1) (0.1)
(Increase) / decrease in inventories (0.6) (0.4) 0.4
Increase in trade and other receivables (8.2) (12.9) (10.2)
Increase in trade and other payables 1.5 10.7 9.5
Deficit recovery payments in respect of post-employment benefit - (0.9) (1.6)
obligations
Share-based payments 0.6 0.3 1.0
Decrease in provisions (0.2) (0.1) (0.3)
Cash generated from operations 62.3 54.0 128.7
Interest paid (3.8) (2.3) (5.7)
Taxation paid (1.1) (1.6) (1.6)
Net cash generated from operating activities 57.4 50.1 121.4
Cash flows from investing activities
Acquisition of business (including net of cash acquired) - (5.0) (29.7)
Purchase of property, plant and equipment (29.8) (12.9) (31.1)
Proceeds from sale of property, plant and equipment 0.1 0.2 0.2
Purchase of textile rental items (30.8) (31.1) (61.9)
Proceeds received in respect of special charges 1.2 1.5 3.3
Net cash used in investing activities (59.3) (47.3) (119.2)
Cash flows from financing activities
Proceeds from borrowings 37.0 52.0 100.6
Repayments of borrowings (18.5) (27.2) (54.6)
Capital element of leases (3.3) (2.9) (7.6)
Share buyback - (19.8) (29.9)
Dividends paid to company shareholders (7.9) (6.8) (10.6)
Net cash generated from / (used in) financing activities 7.3 (4.7) (2.1)
Net increase / (decrease) in cash and cash equivalents 5.4 (1.9) 0.1
Cash and cash equivalents at beginning of the period 0.9 0.8 0.8
Cash and cash equivalents at end of the period 18 6.3 (1.1) 0.9
Cash and cash equivalents comprise:
Cash 10.0 6.0 9.6
Overdraft (3.7) (7.1) (8.7)
Cash and cash equivalents at end of the period 6.3 (1.1) 0.9
The notes on pages 17 to 32 form an integral part of these condensed
consolidated interim financial statements.
Notes to the Condensed Consolidated Interim Financial Statements
Johnson Service Group PLC (the 'Company') and its subsidiaries (together 'the
Group') provide textile rental and related services across the United Kingdom
('UK') and the Republic of Ireland ('ROI').
The Company is incorporated and domiciled in the UK, its registered number is
523335 and the address of its registered office is Johnson House, Abbots Park,
Monks Way, Preston Brook, Cheshire, WA7 3GH. The Company is a public limited
company and has its primary listing on the AIM division of the London Stock
Exchange.
The condensed consolidated interim financial statements were authorised for
issue by the Board on 3 September 2024.
1 BASIS OF PREPARATION
Overview
These condensed consolidated interim financial statements of the Group are for
the half year ended 30 June 2024. They have been prepared in accordance with
the Disclosure and Transparency Rules of the Financial Conduct Authority and
with IAS 34, 'Interim Financial Reporting', as adopted by the United Kingdom.
The condensed consolidated interim financial statements have not been reviewed
or audited, nor do they comprise statutory accounts for the purpose of Section
434 of the Companies Act 2006, and do not include all of the information or
disclosures required in the annual financial statements and should therefore
be read in conjunction with the Group's 2023 Annual Report and Accounts, which
was prepared in accordance with UK-adopted international accounting standards.
Financial information for the year ended 31 December 2023 included herein is
derived from the statutory accounts for that year, which have been filed with
the Registrar of Companies. The auditors' report on those accounts was
unqualified, did not contain an emphasis of matter paragraph and did not
contain a statement under Section 498 of the Companies Act 2006.
Other than as described below, financial information for the half year ended
30 June 2023 included herein is derived from the condensed consolidated
interim financial statements for that period.
Accounting Policies, Presentation and Computation
The condensed consolidated interim financial statements have been prepared
applying the accounting policies, presentation and methods of computation
applied by the Group in the preparation of the published consolidated
financial statements for the year ended 31 December 2023.
(a) Taxation
Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to expected total annual earnings before exceptional
items. Taxation on exceptional items is accrued as the exceptional items are
recognised. Prior year adjustments in respect of taxation are recognised
when it becomes probable that such adjustment is needed.
(b) Seasonality of operations
Seasonality or cyclicality could affect all of the businesses to varying
extents however, the Directors do not consider such seasonality or cyclicality
to be significant in the context of the condensed consolidated interim
financial statements.
(c) Critical accounting estimates and assumptions
The preparation of the condensed consolidated interim financial statements
requires management to make judgments, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from these
estimates.
Going Concern
Background and Summary
After careful assessment, the Directors have adopted the going concern basis
in preparing these condensed consolidated interim financial statements. The
process and key judgments in coming to this conclusion are set out below.
The Group's business activities, together with details of the financial
position of the Group, its cash flows, liquidity position and borrowing
facilities, are described in the Financial and Operating Review.
Going Concern Assessment
Cash Flows, Covenants and Stress Testing
For the purposes of the going concern assessment, the Directors have prepared
monthly cash flow projections for the period to 31 December 2025 (the
assessment period). The Directors consider 18 months to be a reasonable
period for the going concern assessment as it enables them to consider the
potential impact of macroeconomic and geopolitical factors over an extended
period. The cash flow projections show that the Group has significant
headroom against its committed facilities and can meet its financial covenant
obligations.
The Group has also performed a reverse stress test against the base monthly
cash flow projections referred to above in order to determine the performance
level that would result in a reduction in headroom against its committed
facilities to nil or a breach of its covenants. The interest cover covenant
would be breached in the event that adjusted operating profit reduced to
approximately 40% of 2023 levels. The Directors do not consider this
scenario to be likely.
As a further stress test, the Group considered the impact of increasing
interest rates. The Directors do not consider the magnitude of the increase
in interest rates that would be required in order for a covenant to be
breached to be plausible.
Each of the stress tests assume no mitigating actions are taken. Mitigating
actions available to the Group, should they be required, include reductions in
discretionary capital expenditure and ceasing dividend payments.
1 BASIS OF PREPARATION (continued)
Liquidity
The Group has access to a committed Revolving Credit Facility of £120.0
million (the 'Facility') which matures in August 2027. The terms of the
Facility provide an option to increase the Facility by up to a further £15.0
million, with bank consent. The Facility is considerably in excess of our
anticipated borrowings and provides ample liquidity for current commitments.
Going Concern Statement
After considering the monthly cash flow projections, the stress tests and the
facilities available to the Group, the Directors have a reasonable expectation
that the Group has adequate resources for its operational needs, will remain
in compliance with the financial covenants set out in the bank facility
agreement and will continue in operation for at least the period to 31
December 2025. Accordingly, and having reassessed the principal risks and
uncertainties, the Directors considered it appropriate to adopt the going
concern basis in preparing the condensed consolidated interim financial
statements.
Alternative Performance Measures (APMs)
Overview of APMs
Throughout this Interim Statement, and consistent with prior years, we refer
to a number of APMs. APMs are used by the Group to provide further clarity
and transparency of the Group's financial performance. The APMs are used
internally by management to monitor business performance, budgeting and
forecasting, and for determining Directors' remuneration and that of other
management throughout the business. The APMs, which are not recognised under
UK-adopted international accounting standards, are:
§ 'adjusted operating profit', which refers to continuing operating
profit/(loss) before amortisation of intangible assets (excluding software
amortisation), and exceptional items;
§ 'adjusted profit before taxation', which refers to adjusted operating
profit less finance cost;
§ 'adjusted EBITDA', which refers to adjusted operating profit plus the
depreciation charge for property, plant and equipment, textile rental items
and right of use assets, plus software amortisation;
§ 'adjusted diluted EPS', which refers to EPS calculated based on adjusted
profit after taxation; and
§ 'net debt excluding IFRS 16 lease liabilities'
The Board considers that the above APMs, all of which exclude the effects of
non-recurring items or non-operating events, provide useful information for
stakeholders on the underlying trends and performance of the Group and
facilitate meaningful year on year comparisons.
Limitations of APMs
The Board is cognisant that APMs do have limitations and should not be
regarded as a complete picture of the Group's financial performance.
Limitations of APMs may include, inter alia:
§ similarly named measures may not be comparable across companies;
§ profit-related APMs may exclude significant, sometimes recurring,
business transactions (e.g. restructuring charges and acquisition-related
costs) that impact financial performance and cash flows; and
§ adjusted operating profit, adjusted profit before taxation, adjusted
EBITDA, adjusted EPS and adjusted EPS excluding super-deduction all exclude
the amortisation of intangibles acquired in business combinations, but do not
similarly exclude the related revenue.
Reconciliation of APMs to Statutory Performance Measures
Reconciliations between the above APMs and statutory performance measures are
reconciled within this Interim Statement as follows:
§ Adjusted operating profit - note 2
§ Adjusted profit before taxation - note 5
§ Adjusted EBITDA - note 5
§ Adjusted EPS - note 8
§ Net debt excluding IFRS 16 lease liabilities - note 18
2 SEGMENT ANALYSIS
Segment information is presented based on the Group's management and internal
reporting structure as at 30 June 2024.
The chief operating decision-maker (CODM) has been identified as the Executive
Directors. The CODM reviews the Group's internal reporting in order to
assess performance and allocate resources. The CODM determines the operating
segments based on these reports and on the internal reporting structure.
For reporting purposes, the CODM considered the aggregation criteria set out
within IFRS 8, 'Operating Segments', which allows for two or more operating
segments to be combined as a single reporting segment if:
1) aggregation provides financial statement users with information
that allows them to evaluate the business and the environment in which it
operates; and
2) they have similar economic characteristics (for example, where
similar long-term average gross margins would be expected) and are similar in
each of the following respects:
§ the nature of the products and services;
§ the nature of the production processes;
§ the type or class of customer for their products and services;
§ the methods used to distribute their products or provide their services;
and
§ the nature of the regulatory environment (i.e. banking, insurance or
public utilities), if applicable.
The CODM deems it appropriate to present two reporting segments (in addition
to 'Discontinued Operations' and 'All Other Segments'), being:
1) Hotel, Restaurant and Catering ('HORECA'): comprising of our
Johnsons Hotel, Restaurant and Catering Linen, Johnsons Hotel Linen, Regency
and Ireland businesses, each of which are a separate operating segment.
2) Workwear: comprising of our Workwear business only; and
The CODM's rationale for aggregating the Johnsons Hotel, Restaurant and
Catering Linen, Johnsons Hotel Linen, Regency and Ireland operating segments
into a single reporting segment is set out below:
§ the gross margins of each operating segment are within a similar range,
with the long-term average margin expected to further align;
§ the nature of the customers, products and production processes of each
operating segment are very similar;
§ the nature of the regulatory environment is the same due to the similar
nature of products, processes and customers involved; and
§ distribution is via exactly the same method across each operating segment.
The CODM assesses the performance of the reporting segments based on a measure
of operating profit, both including and excluding the effects of non-recurring
items from the reporting segments, such as restructuring costs and impairments
when the impairment is the result of an isolated, non-recurring or
non-operating event. Interest income and expenditure are not included in the
result for each reporting segment that is reviewed by the CODM. Segment
results include items directly attributable to a segment as well as those that
can be allocated on a reasonable basis, for example rental income received by
Johnson Group Properties PLC (the property holding company of the Group) is
credited back, where appropriate, to the paying company for the purpose of
segmental reporting. There have been no changes in measurement methods used
compared to the prior year.
Other information provided to the CODM is measured in a manner consistent with
that in the financial statements. Segment assets exclude deferred income tax
assets, post-employment benefit assets, derivative financial assets, current
income tax assets and cash and cash equivalents, all of which are managed on a
central basis. Segment liabilities include lease liabilities but exclude
current income tax liabilities, bank borrowings, derivative financial
liabilities, post-employment benefit obligations and deferred income tax
liabilities, all of which are managed on a central basis. These balances are
part of the reconciliation to total assets and liabilities.
2 SEGMENT ANALYSIS (continued)
The reporting segment results for the half year ended 30 June 2024, together
with comparative figures, are as follows:
Half year to 30 June 2024 HORECA Workwear All Other Segments Total
£m £m £m £m
Revenue
Rendering of services 172.9 69.5 - 242.4
Sale of goods - 1.7 - 1.7
Total revenue 172.9 71.2 - 244.1
Operating profit / (loss) before amortisation of intangible assets (excluding 18.4 10.2 (3.4) 25.2
software amortisation) and exceptional items
Amortisation of intangible assets (excluding software amortisation) (2.6) (0.2) - (2.8)
Operating profit / (loss) 15.8 10.0 (3.4) 22.4
Finance cost (3.7)
Profit before taxation 18.7
Taxation charge (4.9)
Profit for the period attributable to equity holders 13.8
All of the above revenues are generated in the United Kingdom, with the
exception of £16.9 million generated within the Republic of Ireland.
HORECA Workwear All Other Segments Total
£m £m £m £m
Balance sheet information
Segment assets 362.6 152.0 1.3 515.9
Unallocated assets: Post-employment benefit 3.5
assets
10.0
Cash and cash equivalents
Total assets 529.4
Segment liabilities (93.7) (36.6) (5.5) (135.8)
Unallocated liabilities: Bank borrowings (84.1)
(0.2)
Derivative financial liabilities
(0.3)
Post-employment benefit obligations
(0.8)
Current income tax liabilities
(19.5)
Deferred income tax liabilities
Total liabilities (240.7)
HORECA Workwear All Other Segments Total
£m £m £m £m
Other information
Non-current asset additions
- Property, plant and equipment 27.4 3.7 - 31.1
- Right of use assets (including reassessment / modification) 3.3 0.3 - 3.6
- Textile rental items 17.3 11.7 - 29.0
Depreciation and amortisation expense
- Property, plant and equipment 8.0 2.8 - 10.8
- Right of use assets 2.4 1.2 - 3.6
- Textile rental items 19.2 10.1 - 29.3
- Capitalised software 0.1 0.2 - 0.3
- Customer contracts and brands 2.6 0.2 - 2.8
With the exception of non-current assets of £11.6 million (June 2023: £nil;
December 2023: £11.3 million) which were located in the Republic of Ireland,
all non-current assets of the Group reside in the Group's country of domicile,
the United Kingdom.
2 SEGMENT ANALYSIS (continued)
HORECA Workwear All Other Segments Total
Half year to 30 June 2023
£m £m £m £m
Revenue
Rendering of services 143.9 69.2 - 213.1
Sale of goods - 1.9 - 1.9
Total revenue 143.9 71.1 - 215.0
Operating profit / (loss) before amortisation of intangible assets (excluding 10.9 11.1 (3.0) 19.0
software amortisation) and exceptional items
Amortisation of intangible assets (excluding software amortisation) (2.4) (0.2) - (2.6)
Exceptional items (0.3) - - (0.3)
Operating profit / (loss) 8.2 10.9 (3.0) 16.1
Finance cost (2.6)
Profit before taxation 13.5
Taxation charge (3.5)
Profit for the period attributable to equity holders 10.0
All of the above revenues are generated in the United Kingdom, with the
exception of £0.3 million generated within the Republic of Ireland.
HORECA Workwear All Other Segments Total
£m £m £m £m
Balance sheet information
Segment assets 327.2 129.2 1.5 457.9
Unallocated assets: Current income tax 1.4
assets
6.0
Cash and cash equivalents
Total assets 465.3
Segment liabilities (90.0) (40.0) (4.6) (134.6)
Unallocated liabilities: Bank borrowings (46.5)
(1.4)
Derivative financial liabilities
(7.8)
Post-employment benefit obligations
(5.9)
Deferred income tax liabilities
Total liabilities (196.2)
HORECA Workwear All Other Segments Total
£m £m £m £m
Other information
Non-current asset additions
- Property, plant and equipment 10.0 2.1 - 12.1
- Right of use assets (including reassessment / modification) 8.6 1.7 0.1 10.4
- Textile rental items 17.6 12.1 - 29.7
Depreciation and amortisation expense
- Property, plant and equipment 7.3 2.9 - 10.2
- Right of use assets 1.9 1.2 - 3.1
- Textile rental items 16.1 9.1 - 25.2
- Capitalised software 0.1 0.1 - 0.2
- Customer contracts and brands 2.4 0.2 - 2.6
All non-current assets of the Group reside in the Group's country of domicile,
the United Kingdom.
2 SEGMENT ANALYSIS (continued)
Year ended 31 December 2023 HORECA Workwear All Other Segments Total
£m £m £m £m
Revenue
Rendering of services 322.6 138.9 - 461.5
Sale of goods 0.1 3.7 - 3.8
Total revenue 322.7 142.6 - 465.3
Operating profit / (loss) before amortisation of intangible assets (excluding 36.0 21.4 (6.9) 50.5
software amortisation) and exceptional items
Amortisation of intangible assets (excluding software amortisation) (4.9) (0.4) - (5.3)
Exceptional items (1.6) - - (1.6)
Operating profit / (loss) 29.5 21.0 (6.9) 43.6
Finance cost (6.0)
Profit before taxation 37.6
Taxation charge (10.4)
Profit for the period from continuing operations 27.2
Profit for the period from discontinued operations 0.1
Profit for the period attributable to equity holders 27.3
All of the above revenues are generated in the United Kingdom, with the
exception of £11.0 million generated within the Republic of Ireland.
HORECA Workwear All Other Segments Total
£m £m £m £m
Balance sheet information
Segment assets 345.9 152.1 1.4 499.4
Unallocated assets: 9.6
Cash and cash equivalents
Total assets 509.0
Segment liabilities (95.2) (43.5) (3.3) (142.0)
Unallocated liabilities: Bank borrowings (71.3)
(0.8)
Derivative financial liabilities
(0.3)
Post-employment benefit obligations
(0.5)
Current income tax liabilities
(15.0)
Deferred income tax liabilities
Total liabilities (229.9)
HORECA Workwear All Other Segments Total
£m £m £m £m
Other information
Non-current asset additions
- Property, plant and equipment 20.8 6.1 - 26.9
- Right of use assets (including reassessment / modifications) 10.6 2.7 0.1 13.4
- Textile rental items 37.5 23.5 - 61.0
Depreciation, impairment and amortisation expense
- Property, plant and equipment 15.1 5.9 - 21.0
- Right of use assets depreciation 4.0 2.5 0.1 6.6
- Textile rental items depreciation 34.5 18.5 - 53.0
- Capitalised software 0.1 0.3 - 0.4
- Customer contracts 4.9 0.4 - 5.3
With the exception of non-current assets of £11.3 million (2022: £nil) which
were located in the Republic of Ireland, all non-current assets of the Group
reside in the Group's country of domicile, the United Kingdom.
3 EXCEPTIONAL ITEMS
Half year to Half year to Year ended
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Costs in relation to business acquisition activity - 0.3 1.6
Total exceptional items - 0.3 1.6
Prior year exceptional items
In the year ended 31 December 2023, professional fees of £1.4 million (June
2023: £0.3 million) were incurred relating to the acquisitions of Regency and
Celtic Linen, of which £1.2 million were paid in the year. A further
£0.2 million was incurred and paid in respect of other business acquisition
related activities.
4 FINANCE COST
Half year to Half year to Year ended
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Interest payable on bank loans and overdrafts 2.4 1.3 3.1
Amortisation of bank facility fees 0.2 0.1 0.3
Finance costs on IFRS 16 lease liabilities 1.1 1.0 2.1
Notional interest on post-employment benefit obligations - 0.2 0.5
Finance cost 3.7 2.6 6.0
5 ALTERNATIVE PERFORMANCE MEASURES (APMs)
Adjusted profit before and after taxation (continuing) Half year to Half year to Year ended
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Profit before taxation (continuing) 18.7 13.5 37.6
Amortisation of intangible assets (excluding software amortisation) 2.8 2.6 5.3
Exceptional items - 0.3 1.6
Adjusted profit before taxation (continuing) 21.5 16.4 44.5
Taxation thereon (5.3) (4.1) (11.5)
Adjusted profit after taxation (continuing) 16.2 12.3 33.0
Adjusted EBITDA Half year to Half year to Year ended
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Operating profit before amortisation of intangible assets (excluding 25.2 19.0 50.5
software amortisation) and exceptional items
Software amortisation 0.3 0.2 0.4
Property, plant and equipment depreciation 10.8 10.2 21.0
Right of use asset depreciation 3.6 3.1 6.6
Textile rental items depreciation 29.3 25.2 53.0
Adjusted EBITDA 69.2 57.7 131.5
6 DIVIDENDS
Half year to Half year to Year ended
30 June 30 June 31 December
2024 2023 2023
Dividend per share (pence)
2024 Interim dividend proposed 1.3 - -
2023 Interim dividend proposed and paid - 0.9 0.9
2023 Final dividend proposed and paid - - 1.9
1.3 0.9 2.8
Half year to Half year to Year ended
30 June 30 June 31 December
2024 2023 2023
Shareholders' funds committed (£m)
2024 Interim dividend proposed 5.4 - -
2023 Interim dividend proposed and paid - 3.8 3.8
2023 Final dividend proposed and paid - - 7.9
On 10 May 2024, a final dividend in respect of the year ended 31 December 2023
of 1.9 pence per share was paid to Shareholders, utilising £7.9 million of
Shareholders' funds.
The Directors are proposing an interim dividend in respect of the year ended
31 December 2024 of 1.3 pence per Ordinary share which, based on the number of
shares in issue as at the date of this report, will reduce Shareholders' funds
by £5.4 million. The dividend will be paid on 1 November 2024 to
Shareholders on the register of members at the close of business on 4 October
2024. The trustee of the EBT has waived the entitlement to receive dividends
on the Ordinary shares held by the trust. Given the intention of the
Directors to launch a second share buyback programme later this month, it is
anticipated that the actual distribution will be less than the amount stated
above.
In accordance with IAS 10, there is no payable recognised at 30 June 2024 in
respect of this proposed dividend.
7 TAXATION
Half year to Half year to Year ended
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Current tax
UK corporation tax charge for the period 1.3 - 1.7
Current tax charge for the period 1.3 - 1.7
Deferred tax
Origination and reversal of temporary differences 3.6 3.5 8.4
Adjustment in relation to previous years - - 0.3
Deferred tax charge for the period 3.6 3.5 8.7
Total charge for taxation included in the Consolidated Income Statement for 4.9 3.5 10.4
continuing operations
Taxation in relation to the amortisation of intangible assets (excluding
software amortisation) has reduced the charge for taxation on continuing
operations in the half year to 30 June 2024 by £0.4 million (June 2023: £0.6
million; December 2023: £1.0 million). Taxation in relation to exceptional
items has decreased the charge for taxation on continuing operations by £nil
(June 2023: £nil; December 2023: £0.1 million).
During the half year to 30 June 2024, a £0.2 million charge relating to
deferred taxation (June 2023: £0.2 million; December 2023: £2.3 million) has
been recognised in other comprehensive income.
Reconciliation of effective tax rate
Taxation on non-exceptional items for the half year to 30 June 2024 is
calculated based on the estimated average annual effective tax rate of 24.7%
(June 2023: 25.1%; December 2023: 25.8%). This compares to the UK weighted
average tax rate at the balance sheet date of 25.0% (June 2023: 23.5%;
December 2023: 23.5%). The effective tax rate is impacted by a number of
factors, including expenses not deductible for taxation, non-UK taxable
profits and short-term timing differences, with first year capital allowances
in the period reflecting the full expensing relief announced in the
Chancellor's Spring Budget, impacting upon the estimated pattern of reversal
of the Group's deferred tax assets and liabilities.
The UK corporation tax rate, which was substantively enacted as part of
Finance Bill 2021 on 24 May 2021, is a main rate of 25% with effect from 1
April 2023. Deferred income taxes at the balance sheet date have been
measured at the tax rate expected to be applicable at the date the deferred
income tax assets and liabilities are realised. Accordingly, an average
deferred income tax rate of 25.0% has been used to measure all deferred tax
balances as at 30 June 2024 (June 2023: 25.0%; December 2023: 25.0%).
8 EARNINGS PER SHARE
Half year to Half year to Year ended 31 December
30 June 30 June 2023
2024 2023 £m
£m £m
Profit for the period attributable to Shareholders 13.8 10.0 27.2
Amortisation of intangible assets from continuing operations (net of taxation) 2.4 2.0 4.3
Exceptional items from continuing operations (net of taxation) - 0.3 1.5
Adjusted profit from continuing operations attributable to Shareholders 16.2 12.3 33.0
Profit from discontinued operations attributable to Shareholders - - 0.1
Total adjusted profit from all operations attributable to Shareholders 16.2 12.3 33.1
Number Number Number
of shares of shares of shares
Weighted average number of Ordinary shares 414,433,764 429,246,079 424,327,473
Potentially dilutive Ordinary shares 368,547 95,000 406,218
Diluted number of Ordinary shares 414,802,311 429,341,079 424,733,691
Pence Pence Pence
Basic earnings per share per share per share per share
From continuing operations 3.3p 2.3p 6.4p
From discontinued operations - - -
From total operations 3.3p 2.3p 6.4p
Adjustment for amortisation of intangibles assets (continuing) 0.6p 0.5p 1.0p
Adjustment for exceptional items (continuing) - 0.1p 0.4p
Adjusted basic earnings per share (continuing) 3.9p 2.9p 7.8p
Adjusted basic earnings per share from total operations 3.9p 2.9p 7.8p
Diluted earnings per share
From continuing operations 3.3p 2.3p 6.4p
From total operations 3.3p 2.3p 6.4p
Adjustments for amortisation of intangibles assets (continuing) 0.6p 0.5p 1.0p
Adjustment for exceptional items (continuing) - 0.1p 0.4p
Adjusted diluted earnings per share (continuing) 3.9p 2.9p 7.8p
Adjusted diluted earnings per share from total operations 3.9p 2.9p 7.8p
Basic earnings per share is calculated using the weighted average number of
Ordinary shares in issue during the period, excluding those held by the
Employee Benefit Trust, based on the profit for the period attributable to
Shareholders.
Adjusted earnings per share figures are given to exclude the effects of
amortisation of intangible assets (excluding software amortisation) and
exceptional items, all net of taxation, and are considered to show the
underlying performance of the Group.
For diluted earnings per share, the weighted average number of Ordinary shares
in issue is adjusted to assume conversion of all potentially dilutive Ordinary
shares. The Company has potentially dilutive Ordinary shares arising from
share options granted to employees. Options are dilutive under the SAYE
scheme, where the exercise price together with the future IFRS 2 charge of the
option is less than the average market price of the Company's Ordinary shares
during the period. Options under the LTIP schemes, as defined by IFRS 2, are
contingently issuable shares and are therefore only included within the
calculation of diluted earnings per share if the performance conditions, as
set out in the Directors' Remuneration Report within the 2023 Annual Report
and Accounts, are satisfied at the end of the reporting period, irrespective
of whether this is the end of the vesting period or not.
Potentially dilutive Ordinary shares are dilutive at the point, from a
continuing operations level, when their conversion to Ordinary shares would
decrease earnings per share or increase loss per share. For the periods
ended 30 June 2024 and 30 June 2023, and the year ended 31 December 2023,
potentially dilutive Ordinary shares have been treated as dilutive, as their
inclusion in the diluted earnings per share calculation decreases the earnings
per share from continuing operations.
There were no events occurring after the balance sheet date that would have
changed significantly the number of Ordinary shares or potentially dilutive
Ordinary shares outstanding at the balance sheet date if those transactions
had occurred before the end of the reporting period.
9 GOODWILL
12 As at As at As at
30 June 30 June 31 December 2023
2024 2023
£m £m £m
Cost
Brought forward 145.8 135.2 135.2
Impact of foreign exchange translation (0.2) - 0.1
Business combinations (note 16) - 3.2 10.5
145.6 138.4 145.8
Impairment
Brought forward 1.4 1.4 1.4
Impairment - - -
1.4 1.4 1.4
Closing 144.2 137.0 144.4
In accordance with UK-adopted international accounting standards, goodwill is
not amortised, but instead is tested annually for impairment, or upon the
existence of indicators of impairment per IAS 36, and carried at cost less
accumulated impairment losses.
Management have reviewed the indicators of impairment per IAS 36 and do not
believe that any have been triggered since 31 December 2023 and, as such, no
impairment review has been carried out as at 30 June 2024. In line with the
requirements of IAS 36, a full impairment review will be performed during the
second half of the year.
10 INTANGIBLE ASSETS
Capitalised software
As at As at As at
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Opening net book value 1.2 1.6 1.6
Amortisation (0.3) (0.2) (0.4)
Closing net book value 0.9 1.4 1.2
Other intangible assets
As at As at As at
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Opening net book value 17.9 9.3 9.3
Business combinations (note 16) - 1.4 13.8
Foreign exchange differences (0.2) - 0.1
Amortisation (2.8) (2.6) (5.3)
Closing net book value 14.9 8.1 17.9
Total 15.8 9.5 19.1
Other intangibles assets comprise of customer contracts and relationships and
brands.
11 PROPERTY, PLANT AND EQUIPMENT
As at As at As at
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Opening net book value 134.5 119.6 119.6
Foreign exchange differences (0.2) - -
Additions 31.1 12.1 26.9
Business combinations (note 16) - 1.0 6.4
Transfers from right of use assets - - 2.7
Depreciation (10.8) (10.2) (21.0)
Disposals (0.1) (0.1) (0.1)
Closing net book value 154.5 122.4 134.5
The transfer of assets from right of use assets represents the
reclassification of the cost of assets from right of use assets where the
lease was repaid in the year and the asset is now owned.
CAPITAL COMMITMENTS
Orders placed for future capital expenditure contracted but not provided for
in the financial statements are shown below:
As at As at As at
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Software 0.1 - -
Property, plant and equipment 9.6 23.4 27.2
12 RIGHT OF USE ASSETS
As at As at As at
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Opening net book value 40.0 31.7 31.7
Additions 1.9 10.4 9.7
Business combinations (note 16) - 1.5 4.2
Reassessment/modifications of assets previously recognised 1.7 - 3.7
Transfers to property, plant and equipment - - (2.7)
Depreciation (3.6) (3.1) (6.6)
Closing net book value 40.0 40.5 40.0
13 TEXTILE RENTAL ITEMS
As at As at As at
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Opening net book value 71.9 63.8 63.8
Foreign exchange differences (0.1) - -
Additions 29.0 29.7 61.0
Business combinations (note 16) - 0.5 3.4
Depreciation (29.3) (25.2) (53.0)
Special charges (1.2) (1.5) (3.3)
Closing net book value 70.3 67.3 71.9
14 POST-EMPLOYMENT BENEFIT OBLIGATIONS
The Group has applied the requirements of IAS 19, 'Employee Benefits' to its
employee pension schemes and post-employment healthcare benefits.
We have agreed with the Trustee of the defined benefit scheme to cease deficit
contributions until at least the results of the next triennial valuation.
Accordingly, in the half year to 30 June 2024, no deficit recovery payments
were paid by the Group to the defined benefit scheme (June 2023: £0.9
million; December 2023: £1.6 million).
Following discussions with the Group's appointed actuary, a re-measurement
gain of £3.5 million has been recognised in the half year to 30 June 2024.
The improvement in the position is mainly driven by an increase in the
discount rate assumption from 31 December 2023 (due to increases in corporate
bond yields) and a decrease in the commutation and early retirement factors.
The post-employment benefit asset / (obligation) and associated deferred
income tax (liability) / asset thereon are shown below:
As at As at As at
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Post-employment benefit asset / (obligation) 3.2 (7.8) (0.3)
Deferred income tax (liability) / asset thereon (0.8) 1.9 0.1
2.4 (5.9) (0.2)
The reconciliation of the opening gross post-employment benefit obligation to
the closing gross post-employment benefit asset / (obligation) is shown below:
As at As at As at
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Opening post-employment benefit obligation (0.3) (10.2) (10.2)
Notional interest - (0.2) (0.5)
Deficit recovery payments - 0.9 1.6
Re-measurement and experience gains 3.5 1.6 8.8
Utilisation of healthcare provision - 0.1 -
Closing post-employment benefit surplus / (obligation) 3.2 (7.8) (0.3)
Post-employment benefit assets / (obligations) are comprised of the following
balance sheet amounts:
As at As at As at
30 June 30 June 31 December 2023
2024 2023
£m £m £m
Post-employment benefit assets (Non-current assets) 3.5 - -
Post-employment benefit obligations (Non-current liabilities) (0.3) (7.8) (0.3)
3.2 (7.8) (0.3)
15 SHARE CAPITAL
Issued share capital is as follows:
Half year to Half year to Year ended
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Share capital at the start of the period 41.4 43.9 43.9
Share buybacks - (1.7) (2.5)
Share capital at the end of the period 41.4 42.2 41.4
Full details of the buybacks completed in the year to 31 December 2023 are
shown in the 2023 Annual Report and Accounts.
16 BUSINESS COMBINATIONS
There have been no business combinations in the half year to 30 June 2024.
During 2023, the Group acquired 100% of the share capital of Regency Laundry
Limited ('Regency') for a net consideration of £5.3 million (being gross
consideration of £5.75 million on a debt free, cash free basis, subject to a
level of normalised working capital) plus associated fees.
The Group also acquired 100% of the share capital of Harkglade Limited,
together with its trading subsidiaries Celtic Linen Limited and Millbrook
Linen Limited (together, 'Celtic Linen'), for a net consideration of £25.2
million (being a gross consideration of £27.1 million on a debt free, cash
free basis, subject to a locked box mechanism and a normalised level of
working capital) plus associated fees.
Full details of the acquisitions are provided in the 2023 Annual Report and
Accounts.
17 BORROWINGS
At 30 June 2024, borrowings were secured and drawn down under a committed
facility dated 8 August 2022. The facility comprises a £120.0 million
rolling credit facility (including an overdraft) which runs to August 2027,
and an option, subject to bank consent, to increase the facility by up to an
additional £15.0 million.
Individual tranches are drawn down, in Sterling or Euros, for periods of up to
six months at SONIA or Euribor rates of interest respectively, prevailing at
the time of drawdown, plus the credit adjustment spread and the applicable
margin. The margin on the facility ranges between 1.45% and 2.45% and was
1.45% at 30 June 2024. Margin is determined on the achievement of leverage
ratios.
The secured bank loans are stated net of unamortised issue costs of £0.7
million (30 June 2023: £0.6 million; 31 December 2023: £0.6 million) of
which £0.4 million is included within current borrowings (30 June 2023: £0.4
million; 31 December 2023: £0.4 million) and £0.3 million is included within
non-current borrowings (30 June 2023: £0.2 million; 31 December 2023 £0.2
million). Details of the security are provided in note 21 to the Condensed
Consolidated Interim Financial Statements.
The Group has three net overdraft facilities for £5.0 million, £3.0 million
and €1.5 million (£1.3 million) with its three principal bankers.
Amounts drawn under the revolving credit facility have been classified as
either current or non-current depending upon when the loan is expected to be
repaid.
18 ANALYSIS OF NET DEBT
Net debt is calculated as total borrowings net of unamortised bank facility
fees, less cash and cash equivalents. Non-cash changes represent the effects
of the recognition and subsequent amortisation of fees relating to the bank
facility, changing maturity profiles, debt acquired as part of an acquisition
and the recognition of lease liabilities entered into during the period.
June 2024 At Cash Non-cash Foreign Exchange Adjustments At
1 January 2024 Flow Changes 30 June
2024
£m £m £m £m £m
Debt due within one year 0.4 0.3 (0.3) - 0.4
Debt due after more than one year (63.0) (18.5) 0.1 0.6 (80.8)
Lease liabilities (43.2) 3.3 (3.7) - (43.6)
Total debt and lease financing (105.8) (14.9) (3.9) 0.6 (124.0)
Cash and cash equivalents 0.9 5.4 - - 6.3
Net debt (104.9) (9.5) (3.9) 0.6 (117.7)
June 2023 At Cash Non-cash Foreign Exchange Adjustments At
1 January 2023 Flow Changes 30 June
2023
£m £m £m £m £m
Debt due within one year 0.2 0.3 (0.1) - 0.4
Debt due after more than one year (14.7) (24.9) (0.2) - (39.8)
Lease liabilities (34.3) 2.9 (11.8) - (43.2)
Total debt and lease financing (48.8) (21.7) (12.1) - (82.6)
Cash and cash equivalents 0.8 (1.9) - - (1.1)
Net debt (48.0) (23.6) (12.1) - (83.7)
At Cash Non-cash Foreign Exchange Adjustments At 31 December
December 2023 1 January 2023 Flow Changes 2023
£m £m £m £m £m
Debt due within one year 0.2 2.0 (1.8) - 0.4
Debt due after more than one year (14.7) (47.6) (0.3) (0.4) (63.0)
Lease liabilities (34.3) 7.6 (16.5) - (43.2)
Total debt and lease financing (48.8) (38.0) (18.6) (0.4) (105.8)
Cash and cash equivalents 0.8 0.1 - - 0.9
Net debt (48.0) (37.9) (18.6) (0.4) (104.9)
As at As at As at
30 June 30 June 31 December 2023
2024 2023
£m £m £m
Net debt (117.7) (83.7) (104.9)
Add back: IFRS 16 lease liabilities 43.6 43.2 43.2
Net debt excluding IFRS 16 lease liabilities (74.1) (40.5) (61.7)
18 ANALYSIS OF NET DEBT (continued)
The cash and cash equivalents figures are comprised of the following balance
sheet amounts:
As at As at As at
30 June 30 June 31 December 2023
2024 2023
£m £m £m
Cash (Current assets) 10.0 6.0 9.6
Overdraft (Borrowings, Current liabilities) (3.7) (7.1) (8.7)
6.3 (1.1) 0.9
Lease liabilities are comprised of the following balance sheet amounts:
As at As at As at
30 June 30 June 31 December 2023
2024 2023
£m £m £m
Amounts due within one year (Lease liabilities, Current liabilities) (5.8) (5.1) (5.5)
Amounts due after more than one year (Lease liabilities, Non-current (37.8) (38.1) (37.7)
liabilities)
(43.6) (43.2) (43.2)
19 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Half year to Half year to Year ended
30 June 30 June 2023 31 December
2024 2023
£m £m £m
Increase / (decrease) in cash in the period 5.4 (1.9) 0.1
Increase in debt and lease financing (14.9) (21.7) (38.0)
Change in net debt resulting from cash flows (9.5) (23.6) (37.9)
Debt acquired through business combinations (note 16) - (1.8) (5.1)
Lease liabilities recognised during the period (3.7) (10.2) (13.2)
Non-cash movement in unamortised bank facility fees (0.2) (0.1) (0.3)
Foreign exchange adjustments 0.6 - (0.4)
Movement in net debt during the period (12.8) (35.7) (56.9)
Opening net debt (104.9) (48.0) (48.0)
Closing net debt (117.7) (83.7) (104.9)
20 RELATED PARTY TRANSACTIONS
Transactions during the period between the Company and its subsidiaries, which
are related parties, have been conducted on an arm's length basis and
eliminated on consolidation. Full details of the Group's other related party
relationships, transactions and balances are given in the Group's Annual
Report and Accounts for the year ended 31 December 2023. There have been no
material changes in these relationships in the half year to 30 June 2024 or up
to the date of this Report.
21 CONTINGENT LIABILITIES
The Group operates from a number of sites across the UK and the Republic of
Ireland. Some of the sites have operated as laundry sites for many years and
historic environmental liabilities may exist. Such liabilities are not
expected to give rise to any significant loss.
The Group has granted its Bankers and Trustee of the Pension Scheme (the
'Trustee') security over the assets of the Group. The priority of security
is as follows:
§ first ranking security for £28.0 million to the Trustee ranking pari passu
with up to £155.0 million of bank liabilities; and
§ second ranking security for the balance of any remaining liabilities to the
Trustee ranking pari passu with any remaining bank liabilities.
During the period of ownership of the Facilities Management division the
Company had given guarantees over the performance of contracts entered into by
the division. As part of the disposal of the division the purchaser has
agreed to pursue the release or transfer of obligations under the Parent
Company guarantees and this is in process. The sale and purchase agreement
contains an indemnity from the purchaser to cover any loss in the event a
claim is made prior to release. In the period until release the purchaser is
to make a payment to the Company of £0.2 million per annum, reduced pro rata
as guarantees are released. Such liabilities are not expected to give rise
to any significant loss.
22 EVENTS AFTER THE REPORTING PERIOD
On 2 September 2024, the Group acquired the entire issued share capital of
Empire Linen Services Limited ('Empire') for a consideration of £20.6 million
on a debt free, cash free, basis and subject to normalised working capital.
Empire provides linen services to luxury hotels in London and the South
East. Revenue and profit before tax for the year ended 30 June 2023, as
shown in the unaudited statutory accounts, were £10.9 million and £0.9
million, respectively. The revenue and profit before tax as shown in the
management accounts for the year ended 30 June 2024 were £13.9 million and
£2.8 million, respectively. The business employs some 170 employees and
operates from a 26,000 square foot leasehold site in Tottenham.
There have been no other events that require disclosure in accordance with
IAS10, 'Events after the balance sheet date'.
23 PRINCIPAL RISKS AND UNCERTAINTIES
Approach to Risk Management
The Board has overall accountability for ensuring that risk is effectively
managed across the Group and, on behalf of the Board, the Audit Committee
coordinates and reviews the effectiveness of the Group's risk management
process.
Risks are reviewed by all of our businesses on an ongoing basis and are
measured against a defined set of likelihood and impact criteria. This is
captured in consistent reporting formats enabling the Audit Committee to
review and consolidate risk information and summarise the principal risks and
uncertainties facing the Group. Wherever possible, action is taken to
mitigate, to an acceptable level, the potential impact of identified principal
risks and uncertainties.
The Board formally reviews the most significant risks facing the Group at its
March and August meetings, or more frequently should new matters arise.
Throughout 2024 to date, the overall risk environment remained largely
unchanged from that reported within the Group's 2023 Annual Report.
Risk Appetite
The Board interprets appetite for risk as the level of risk that the Group is
willing to take in order to meet its strategic goals. The Board communicates
its approach to, and appetite for, risk to the business through the strategy
planning process and the internal risk governance and control frameworks. In
determining its risk appetite, the Board recognises that a prudent and robust
approach to risk assessment and mitigation must be carefully balanced with a
degree of flexibility so that the entrepreneurial spirit which has greatly
contributed to the success of the Group is not inhibited. Both the Board and
the Audit Committee remain satisfied that the Group's internal risk control
framework continues to provide the necessary element of flexibility without
compromising the integrity of risk management and internal control systems.
Emerging Risks
The Board has established processes for identifying emerging risks, and
horizon scanning for risks that may arise over the medium to long term.
Emerging and potential changes to the Group's risk profile are identified
through the Group's risk governance frameworks and processes, and through
direct feedback from management, including changing operating conditions,
market and consumer trends. During the first half of the year, the Board, in
conjunction with management, considered the potential impact on the Group of a
change in government. Whilst no immediate actions have been identified to
date, the Board will continue to monitor developments.
Principal Risks and Uncertainties
The principal risks and uncertainties affecting the Group are summarised
below:
§ Economic and Political Conditions § Pandemic or Other National Crisis
§ Cost Inflation § Health & Safety
§ Failure of Strategy § Compliance and Fraud
§ Recruitment, Retention and Motivation of Employees § Insufficient Processing Capacity
§ Loss of a Processing Facility § Customer Sales and Retention
§ Competition and Disruption § Climate Change and Energy Costs
§ Information Systems and Technology
Full details of the above risks, together with details on how the Board takes
action to mitigate each risk, were provided in our 2023 Annual Report. These
risks and uncertainties do not comprise all of the risks that the Group may
face and are not necessarily listed in any order of priority. Additional
risks and uncertainties not presently known to the Board, or deemed to be less
material, may also have an adverse effect on the Group.
In accordance with the provisions of the UK Corporate Governance Code, the
Board has taken into consideration the principal risks and uncertainties in
the context of determining whether to adopt the going concern basis of
preparation and when assessing the future prospects of the Group.
24 PUBLISHED FINANCIAL STATEMENTS
There is no regulatory requirement to send out half-yearly reports to all
Shareholders or to advertise the content in a national newspaper. In order
to reduce costs, the Company has taken advantage of this reporting regime and
no longer publishes half-yearly reports for individual circulation to
Shareholders. Information that would normally be included in a half-yearly
report is made available on the Company's website at www.jsg.com
(http://www.jsg.com) .
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR QLLFBZKLXBBDRecent news on Johnson Service
See all newsREG - Johnson Service Grp. - Holding(s) in Company
AnnouncementREG - Johnson Service Grp. - Holding(s) in Company
AnnouncementREG - Johnson Service Grp. - Total Voting Rights
AnnouncementREG - Johnson Service Grp. - Holding(s) in Company
AnnouncementREG - Johnson Service Grp. - Interim Results
Announcement