Johnson Service Group PLC Disposal of Drycleaning Activities (3779T)
05 January 2017 - 6:00PM
UK Regulatory
TIDMJSG
RNS Number : 3779T
Johnson Service Group PLC
05 January 2017
5 January 2017
AIM: JSG
Johnson Service Group PLC
("JSG" or "the Company" or "the Group")
Disposal of Drycleaning Activities
JSG announces the sale of its retail Drycleaning business to
Timpson Group PLC for a consideration of GBP8.25 million on a debt
free, cash free basis and subject to adjustments for normalised
working capital (the "Disposal"). A separate pre-close trading
update has also been issued today.
The initial proceeds of the Disposal, net of transaction costs
of some GBP0.5 million, will be approximately GBP6.25 million, with
up to a further GBP1.0 million of deferred consideration
potentially receivable within 12 months of completion, dependant on
the satisfaction of certain conditions.
The retail Drycleaning activities are undertaken within Johnson
Cleaners UK Limited ("JCUK"), Jeeves of Belgravia Limited ("JOB")
and its subsidiary Jeeves International Limited ("JI"). The
transaction is for the sale of the entire issued share capital of
JCUK and JOB. The total external revenue of the Drycleaning
activities for the year ended 31 December 2015 was GBP46.2 million
and adjusted operating profit was GBP2.0 million. The reported
segmental net assets relating to Drycleaning activities as at 31
December 2015 were GBP2.3 million. The results for the Drycleaning
business will be reported as Discontinued Operations for the
financial year ended 31 December 2016. Current trading for
Drycleaning has been in line with the Board's expectations.
The initial net cash proceeds arising from the Disposal will be
used to pay an additional deficit contribution to the Defined
Benefit Pension Scheme of GBP1.5 million with the balance used to
reduce net debt. The Disposal is expected to be modestly earnings
dilutive in the short term, pending any re-investment of the
proceeds into our Textile Rental activities.
Under the terms of the Disposal agreement, in addition to the
normal warranties and indemnities, there is a specific indemnity to
cover the potential costs for closed stores for which the lease
expired prior to 30 June 2016. As at 31 December 2016 the estimated
provision for such stores within the Drycleaning businesses, was
GBP1.8 million.
Over the last four years the Board has been refocusing the
Group's activities to concentrate on, and expand, the higher margin
Textile Rental business. At the same time, there has been a
significant reduction in the store portfolio of the retail
Drycleaning business, from some 500 stores down to 200 stores, to
create a sustainable and profitable business.
We believe there is further potential to expand Textile Rental
organically and through acquisition, which will provide us with
greater geographical reach and opportunities to consolidate service
distribution. This Disposal enables us to wholly focus on driving
our expansion plans as well as further strengthen the Group's
balance sheet, enhancing our platform for future growth.
Chris Sander, CEO, commented:
"We continue to successfully implement our strategic growth
plan, with the disposal of the Drycleaning business enabling us to
focus our efforts on the ongoing expansion of our Textile Rental
activities.
I would like to thank the whole of the Drycleaning team, under
the leadership of Paul Ogle, for the contribution they made to the
Group and wish them every success for the future."
Enquiries:
Johnson Service Group PLC
Chris Sander, CEO
Yvonne Monaghan, CFO
Tel: 01928 704600
Investec Investment Banking (NOMAD) KTZ Communications (Financial PR)
David Flin Katie Tzouliadis
Matt Lewis Emma Pearson
James Rudd
Tel: 020 7597 4000 Tel: 020 3178 6378
www.jsg.com
This information is provided by RNS
The company news service from the London Stock Exchange
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