Johnson Service 1H Trading In Line, FY To Meet Board Expectations

30th Jun 2010 07:39

LONDON (Dow Jones)--Johnson Service Group PLC (JSG.LN), which provides workwear and textile rental, drycleaning and facilities to consumer and businesses, said Wednesday that trading conditions in the first half remain in line with comments made at the time of the preliminary results in March and it continues to expect to achieve a result which is in line with the Board's expectations for 2010. MAIN FACTS: -Johnson has also completed the acquisition of three PFI contracts, together with two related Special Purpose Companies, or SPCs, from Jarvis PLC (in administration); Three contracts generated revenue of £4.0m in the year ended March, and each have over 15 years on the contract term remaining. -Johnson has also reached agreement with Jarvis to manage, under license, a further five facilities management, or FM, contracts, together with the related SPCs, pending acquisition; The five contracts generated revenue of £6.5m in the year ended March, and each have over 15 years on the contract term remaining. -Aggregate consideration for all of the eight contracts and seven related SPCs is expected to be £3.0m in cash on completion and will be financed from existing bank facilities, of which £1.2m plus costs has been incurred to date. -Acquisitions to be earnings enhancing in the second half of 2010 and beyond; The eight contracts will add some 35% to SGP revenue (excluding customer recharges) in a full year and will significantly increase its presence in the PFI market. -SGP has maintained revenue (excluding customer recharges) and adjusted operating profit at broadly similar levels to the first half of 2009 despite investment in additional overhead to support accelerated growth in revenue and profitability in the medium and longer term. -Drycleaning was significantly impacted by the severe winter weather in the first six weeks of the year; anticipate like for like sales for the first half will be down 5% although during the last 12 weeks the like for like sales decrease has fallen to 1.4% which is more representative of the second half. -To close 20 loss making Johnson Cleaners stores over and above those at lease expiry. -Following the closure of Johnson Cleaners stores, as well as those with lease expiry during 2010, the portfolio, including planned new store openings, is expected to be 470 at Dec. 31. -Review has identified a further eight stores which it is uneconomic to close at the present time but which are unlikely to restore to profitability and in respect of which are making a provision for likely future losses and asset impairment. -Total exceptional cost to be recognized for the restructuring of the division is anticipated to be £6.5m of which £0.7m is non cash. -It is estimated that £2.4m will be expended in cash in 2010 with the remaining cash outflow over the next five years; Majority of the cash outflow is in respect of existing property lease commitments which will remain until the locations are disposed of. Textile Rental division has performed well in difficult markets and is expected to show a further improved adjusted operating profit performance despite market pressures on revenue. -New sales have been slower but remain encouraging and cost savings have more than offset the impact of reduced revenue. -Net debt at the end of June is anticipated to be approximately £65.0m (December 2009: £67.7m) after a cash outflow of £1.3m on acquisitions and related costs and a corporation tax repayment of £2.0 million. -Shares closed Tuesday at 18.5 pence valuing the company at GBP46.13 million. -By Ian Walker, Dow Jones Newswires; 44-20-7842-9296; [email protected] (END) Dow Jones Newswires June 30, 2010 02:39 ET (06:39 GMT)