23rd Jan 2007 07:01
Johnson Service Group PLC23 January 2007 23 January 2007 Johnson Service Group PLC Trading Statement Johnson Service Group PLC, the textile related services and facilitiesmanagement Group, announces the following trading update prior to entering itsclose period. Overall, the Group has traded satisfactorily since the last update on 20thNovember 2006. Over the last 2 months, several significant measures have been taken torationalise the Group's operational management. Actions taken include thereduction of Group costs by £2 million per annum, following the streamlining ofthe executive Board, the removal or downsizing of several Group functions andthe closure of the London Head Office. Each of the four divisions is now underthe leadership of a Managing Director, currently reporting directly to theExecutive Chairman, with a clear focus on tight operational management and cashgeneration. Rental Despite an improving performance from our garment rental business, JohnsonsApparelmaster, the Rental division overall has performed below our expectationsduring the year. This is due to issues previously identified at our linen rentalbusiness, Stalbridge, and at our events rental business, Johnson HospitalityServices. As previously announced, the Group disposed of the majority of JohnsonHospitality Services in December, with the remainder closed by the year-end. Issues that were identified and previously reported to the market in Novemberregarding Stalbridge continue to be addressed, and although sales remain strong,profitability has been affected by higher than expected costs. The reducedmargin is subject to ongoing investigation, with actions being taken. No furthersignificant matters have arisen regarding the implementation of our ERP system. Johnsons Apparelmaster has performed to expectations with revenue growthcontinuing through market share gains and price increases, albeit, as previouslyindicated, at a reduced margin as cost pressures have increased. The performancefor 2007 is expected to be enhanced by the acquisition of Texicare Limited on10th January 2007, for a cash consideration of £3 million. Chris Sander has been appointed Managing Director of the Rental division. Drycleaning The Drycleaning division has performed strongly during the second half of theyear with like-for-like retail sales picking up from a 2.3% fall in the firsthalf of the year to a 1.1% rise for the full year. Corporatewear Corporatewear has continued to win contracts, although as previously reported, adelay in a roll-out has affected the 2006 results. The integration of supportfunctions across the division is expected to be completed by the summer. Facilities Management The Facilities Management division continued to perform in line with ourexpectations. Johnson Workplace Management is being integrated into SGP, undertheir management. Group As a result of the reorganisation measures, the Group is expecting to incursignificant exceptional costs. These will be partly offset by the gain on thesale and leaseback of the property transaction made in the first half of theyear. The cash element of these costs which will outflow during 2007 is expectedto be in the region of £7 million. Net debt at the end of 2006 was slightly below £150 million and is expected torise to around £170 million at the half year, before falling back to circa £150million at the end of 2007. The increase in debt at the half year is due to thecash outflows arising from the exceptional costs, deferred payment for 2006capital expenditure, and the normal weighting of the Group's profitabilitytowards the second half of the year. We are in the process of recruiting a new Chief Executive, and will update themarket when appropriate. Simon Sherrard, Executive Chairman of Johnson Service Group, commented: "2006 was a difficult year for the Group. However, we believe that the issueshave been identified and that radical and quick actions have been taken toresolve them. These actions have given operational management the energy andsense of purpose required to ensure that the problems are resolved and that theexpected financial results for 2007 are delivered." The Group will be announcing its preliminary results for the full year to 31stDecember 2006 on 23 March 2007. For further information, please contact: Hudson Sandler Michael Sandler / Sandrine Gallien Telephone: 020 7796 4133 For more information on the Johnson Service Group PLC: www.johnsonplc.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Johnson Service