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Johnson Service Group sees markets recovering after tough first half
2nd Sep 2020 08:50
(Sharecast News) - Johnson Service Group described an "encouraging" start to the year in its interim results on Wednesday, as total revenue fell to £114.8m from £167.1m.
The AIM-traded firm said its organic revenue was down 34.7% for the six month period ended 30 June, although it was up 5.6% in the two months to February, before the widespread outbreak of Covid-19.
Adjusted EBITDA fell to £24.9m from £55.2m a year earlier, with the company's adjusted EBITDA margin sliding to 21.7% from 33%.
Johnson swung to an adjusted loss before tax of £12.6m, from an adjusted profit of £20.1m in the first half of 2019, while its total loss before tax was £18.6m, compared to a profit before tax of £15.2m a year earlier.
Net debt pre-IFRS 16 stood at £0.2m at period end, narrowing from £87.7m at the end of December, as the board declared no interim dividend for the first half.
Looking at its operations, Johnson said its workwear division continued to operate throughout lockdown with a 12% reduction in volume in April, steadily improving to 6% in August.
Customer retention levels there were 93.8% at the end of July.
The company mothballed the majority of its Horeca plants throughout the lockdown period, it confirmed.
It used the UK government's Coronavirus Job Retention Scheme (CJRS), to enable the continued employment of furloughed employees.
The board said the balance sheet and liquidity was strengthened, with bank facilities increased to £175m, temporary alternative financing arranged through the Covid Corporate Financing Facility (CCFF), and an £82.7m equity placing completed in June.
It added that it was undergoing the phased reopening of Horeca plants, as volumes began to increase to 25% of typical levels in July, climbing to 45% in August.
"Our performance during the period reflects the challenging market conditions inflicted on the business by Covid-19, following a strong start to the year," said chief executive officer Peter Egan.
"The management team have been highly active in addressing the impact, by taking decisive action to ensure the long-term preservation of the business, shoring up the group's finances and mothballing sites to ensure that JSG is well placed to react quickly as end markets continue to recover."
Egan said the company's new Leeds high-volume linen plant was scheduled to open in October, adding that it had identified a new workwear site to replace the Exeter plant destroyed by fire in January, which should open mid-2021.
"Both of these investments demonstrate our long-term commitment to investing for future growth.
"It remains very difficult to predict with any accuracy the timing of a recovery to pre-Covid levels.
"However, with our strong balance sheet, established market position and reputation for quality service, we remain confident in the group's medium-term growth prospects as the economy and markets that we serve recover."
At 0845 BST, shares in Johnson Service Group were up 2.7% at 106.6p.
The AIM-traded firm said its organic revenue was down 34.7% for the six month period ended 30 June, although it was up 5.6% in the two months to February, before the widespread outbreak of Covid-19.
Adjusted EBITDA fell to £24.9m from £55.2m a year earlier, with the company's adjusted EBITDA margin sliding to 21.7% from 33%.
Johnson swung to an adjusted loss before tax of £12.6m, from an adjusted profit of £20.1m in the first half of 2019, while its total loss before tax was £18.6m, compared to a profit before tax of £15.2m a year earlier.
Net debt pre-IFRS 16 stood at £0.2m at period end, narrowing from £87.7m at the end of December, as the board declared no interim dividend for the first half.
Looking at its operations, Johnson said its workwear division continued to operate throughout lockdown with a 12% reduction in volume in April, steadily improving to 6% in August.
Customer retention levels there were 93.8% at the end of July.
The company mothballed the majority of its Horeca plants throughout the lockdown period, it confirmed.
It used the UK government's Coronavirus Job Retention Scheme (CJRS), to enable the continued employment of furloughed employees.
The board said the balance sheet and liquidity was strengthened, with bank facilities increased to £175m, temporary alternative financing arranged through the Covid Corporate Financing Facility (CCFF), and an £82.7m equity placing completed in June.
It added that it was undergoing the phased reopening of Horeca plants, as volumes began to increase to 25% of typical levels in July, climbing to 45% in August.
"Our performance during the period reflects the challenging market conditions inflicted on the business by Covid-19, following a strong start to the year," said chief executive officer Peter Egan.
"The management team have been highly active in addressing the impact, by taking decisive action to ensure the long-term preservation of the business, shoring up the group's finances and mothballing sites to ensure that JSG is well placed to react quickly as end markets continue to recover."
Egan said the company's new Leeds high-volume linen plant was scheduled to open in October, adding that it had identified a new workwear site to replace the Exeter plant destroyed by fire in January, which should open mid-2021.
"Both of these investments demonstrate our long-term commitment to investing for future growth.
"It remains very difficult to predict with any accuracy the timing of a recovery to pre-Covid levels.
"However, with our strong balance sheet, established market position and reputation for quality service, we remain confident in the group's medium-term growth prospects as the economy and markets that we serve recover."
At 0845 BST, shares in Johnson Service Group were up 2.7% at 106.6p.