TIDMJSG
RNS Number : 2952K
Johnson Service Group PLC
01 September 2021
1 September 2021
AIM: JSG
Johnson Service Group PLC
('JSG' or 'the Group')
Interim Results for the Six Months ended 30 June 2021
"Improving markets, strong balance sheet and confident of
long-term growth."
Operational Performance Through the COVID-19 Crisis
- At all times our priority has remained the health, safety and wellbeing of our people.
- Workwear continued to operate throughout the various lockdowns
with volumes remaining fairly robust and reaching 98% of normal
levels in June 2021. Customer retention levels were 95% during the
period to the end of July.
- As previously reported, the majority of HORECA sites were
mothballed throughout the first half lockdown period with volumes
at some 11% of normal in the first quarter. Volumes climbed rapidly
from mid-April to reach over 70% in June and over 80% in August,
with some sites in tourist areas back to 2019 levels.
- All HORECA sites, including the new Leeds site, were operational by May.
- Coronavirus Job Retention Scheme (CJRS) ceased to be claimed
from the end of June 2021 with all employees now returned from
furlough.
- Strong balance sheet and liquidity with committed bank facilities of GBP175 million.
- Head of Sustainability appointed; refreshing and resetting our
Sustainability Strategy in early 2022.
Financial Performance
- Total revenue of GBP99.6 million (June 2020: GBP114.8 million).
- Organic revenue down 13.2% compared to H1 2020 and down 43.3% compared to H1 2019.
- Adjusted EBITDA(1) of GBP16.9 million (June 2020: GBP24.9
million) with Adjusted EBITDA(1) margin of 17.0% (June 2020:
21.7%).
- Adjusted loss before taxation(2) of GBP11.2 million (June 2020: GBP12.6 million).
- Loss before taxation of GBP14.0 million (June 2020: GBP18.6 million).
- Net debt (excluding IFRS 16 liabilities) at June 2021 of
GBP8.8 million (December 2020: net cash of GBP6.6 million).
- Net debt at June 2021 of GBP46.9 million (December 2020: GBP33.6 million).
- No interim dividend declared.
Notes
1 "Adjusted EBITDA" refers to operating loss excluding
amortisation of intangible assets (excluding software amortisation)
and exceptional items (defined as "Adjusted Operating Loss") plus
the depreciation charge for property, plant and equipment, textile
rental items and right of use assets plus software
amortisation.
2 "Adjusted Loss before Taxation" refers to Adjusted Operating Loss less total finance costs.
Peter Egan, Chief Executive Officer of Johnson Service Group,
commented:
"During the first half, we have experienced a consistently
robust performance from our Workwear business and a notable return
of demand in HORECA, particularly driven by the staycation activity
in early summer. It remains difficult to give guidance for the
coming months however, in the absence of increased restrictions, we
expect that we will announce results for the year towards the
higher end of current market expectations.
With our established customer base and well invested
infrastructure, coupled with a strong balance sheet and GBP175
million of committed bank facilities, we are well placed to drive
growth in our performance as we move through the remainder of the
year and beyond."
SELL-SIDE ANALYST MEETING
A virtual 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 will be available on the Company's website (
www.jsg.com ) following the meeting.
ENQUIRIES
Johnson Service Group PLC
Peter Egan, CEO
Yvonne Monaghan, CFO
Tel: 020 3757 4992 (on the day)
Tel: 01928 704 600 (thereafter)
Investec Investment Banking (NOMAD) Camarco (Financial PR)
David Flin Ginny Pulbrook
Carlton Nelson Toby Strong
Virginia Bull
Tel: 020 7597 5970 Tel: 020 3757 4992
Note: Throughout this statement 'adjusted operating loss/profit'
refers to continuing operating loss/profit before amortisation of
intangible assets (excluding software amortisation) and exceptional
items. 'Adjusted loss/profit before taxation' refers to adjusted
operating loss/profit less total finance cost. ' Adjusted EBITDA'
refers to adjusted operating loss/profit plus the depreciation
charge for property, plant and equipment, textile rental items and
right of use assets plus software amortisation. 'Adjusted EPS'
refers to earnings per share calculated based on adjusted
loss/profit after taxation. Underlying Adjusted EPS refers to
Adjusted EPS calculated to exclude the impact of the
'super-deduction' capital allowances introduced by HMRC for a
limited period. The Board considers that 'adjusted operating
loss/profit', 'adjusted loss/profit before taxation, 'adjusted
EBITDA' and 'adjusted EPS', all of which exclude the effects of
non-recurring items or non-operating events, provide useful
information for Shareholders on underlying trends and
performance.
OPERATIONAL AND FINANCIAL REVIEW
Following very strong performances over recent years the Group
has had a difficult period since March 2020 with the onset of the
COVID-19 pandemic. The Group has focused on protecting the business
through this unpredictable period and safeguarding our employees
and customers whilst strengthening our finances in readiness for a
return to more normal trading conditions.
Whilst our Workwear division continued to experience only a
modest impact on volumes, the HORECA division was again severely
impacted by the lockdown at the start of 2021. As restrictions
eased, volumes began to increase from mid-April and our focus from
that point has been to increase the capacity at our sites to
process the rapidly changing volumes.
Since March, we have recruited a significant number of employees
in order to match production capacity to increasing volumes. Whilst
this has presented some short-term challenges in terms of
efficiency and productivity, recruitment requirements have now
eased as capacity is more closely aligned to the current level of
demand.
FINANCIAL REVIEW
Financial Results
Our results for the first half of 2021 reflect the various
lockdown restrictions during the period. Half year revenue was
GBP99.6 million, down from GBP114.8 million in 2020. Adjusted
EBITDA was GBP16.9 million (June 2020: GBP24.9 million) giving a
margin of 17.0% (June 2020: 21.7%). The Group benefited from
Coronavirus Job Retention Scheme (CJRS) claims of GBP9.9 million
(June 2020: GBP16.6 million). With all employees now returned to
the business, no further claims are expected to be made in respect
of the second half of the year.
Total finance costs reduced to GBP1.6 million (June 2020: GBP3.1
million) in line with the reduction in bank debt. The period to
June 2020 also included a charge of GBP0.6 million relating to the
discontinuance of hedge accounting on interest rate swaps
previously designated as cashflow hedges.
The exceptional credit of GBP2.6 million relates to a further
interim settlement from the insurer, relating to capital items, in
respect of the 2020 Exeter fire and Treforest flood. The increased
cost of working for Exeter under the temporary arrangements
continues to be covered by Business Interruption insurance. We
anticipate a further exceptional credit in the second half of the
year as we reach a financial settlement with the insurer in
relation to the Exeter fire.
The adjusted loss before taxation was GBP11.2 million (June
2020: GBP12.6 million).
Statutory loss before taxation, after amortisation of
intangibles (excluding software amortisation) of GBP5.4 million
(June 2020: GBP5.5 million) and an exceptional credit of GBP2.6
million (June 2020: exceptional charge of GBP0.5 million) was
GBP14.0 million (June 2020: GBP18.6 million).
The tax rate on adjusted loss before taxation, excluding
exceptional items and the amortisation of software (excluding
software amortisation), was 23.1% ( June 2020 : 16.7% ) . The rate
is in line with the expected rate for the full year, excluding the
effect of the capital allowances super-deduction which offers 130%
first-year relief on qualifying main rate plant and machinery
investments until 31 March 2023.
Adjusted diluted loss per share was 1.9 pence (June 2020: 2.8
pence).
Dividend
An interim dividend in respect of 2021 is not being proposed.
The Board is aware of the importance of dividends to Shareholders
and will look to reinstate its dividend policy as trading returns
to more predictable and normalised levels.
Finances and Capital Structure
Free cash flow in the first half of the year, after capital
lease payments, was GBP5.7 million compared to GBP38.6 million in
the first half of 2020, with 2020 benefiting from a working capital
inflow of GBP16.8 million compared to an outflow of GBP7.4 million
in 2021. The outflow on working capital was as expected as the
business returns to more normal levels of trading.
Total net debt (excluding IFRS 16) at 30 June 2021 was GBP8.8
million (December 2020: net cash GBP6.6 million). After including
the impact of IFRS 16, net debt at June 2021 was GBP46.9 million
(December 2020: GBP33.6 million).
Bank covenants for 2021 are based on minimum EBITDA levels
(calculated as adjusted EBITDA excluding right of use asset
depreciation) with a return to gearing and interest cover covenants
from March 2022. From March 2022 the agreed gearing covenant is for
the ratio of total debt, including IFRS 16 liabilities, to adjusted
EBITDA to be not more than three times. The Group's medium to
long-term intention is to operate at gearing levels of between one
to two times.
Our Capital Allocation policy remains unchanged and we
acknowledge that we are carrying a lower than normal level of debt
in the short term, reflecting the continued macro-economic
uncertainty. Our periodic review of capital structure will take
into account maintaining a strong balance sheet, continuing capital
investment in our plants and in acquisitions, a progressive
dividend policy and distributing any surplus cash to
Shareholders.
Post-Employment Benefits
The recorded net deficit after tax for all post-employment
benefit obligations, calculated in accordance with IAS 19, was
GBP6.4 million at June 2021 compared to GBP12.1 million at December
2020. 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. We continue to have a significant portion
of scheme assets invested so as to hedge against movements in
liabilities, thereby reducing overall scheme volatility.
The triennial valuation of the defined benefit pension scheme as
at 30 September 2019 was completed in 2020. We are tracking ahead
of the recovery plan put in place at the previous valuation and we
have therefore agreed with the Trustee to continue with the
existing deficit recovery payments of GBP1.9 million per annum
until the result of the next review in September 2022.
BUSINESS REVIEW
Our Businesses
The Group comprises of Textile Rental businesses which trade
through a number of very well recognised brands, servicing the UK's
Workwear and Hotel, Restaurant and Catering ('HORECA') market
sectors. The 'Johnsons Workwear' brand predominantly provides
workwear rental, protective wear and laundry services to corporates
across all industry sectors. 'Stalbridge', 'London Linen' and
'South West Laundry' provide premium linen services to the
restaurant, hospitality and corporate events market and Johnsons
Hotel Linen, our high volume linen business, comprises of Johnsons
Hotel Linen by 'Afonwen', by 'PLS' and by 'Fresh'.
The changes made to ensure continuity of operations and to
manage the health, safety and welfare of our employees during the
early months of the pandemic have continued during 2021. We
continue to review our operations, update risk assessments and
implement new processes and procedures where necessary. We would
like to acknowledge the continuing commitment and efforts of our
employees and thank them for their support.
We are encouraged by the return of the hospitality market since
restrictions began to be lifted in mid-April. Volumes are
continuing to increase as more of the economy returns to normal
trading and office workers begin to return. We anticipate that, in
the absence of renewed restrictions, this trend will continue over
the coming months.
Workwear Division
Operating as Johnsons Workwear, we provide workwear rental and
laundry services to some 36,000 customers in the UK from small
local businesses to the largest companies covering food related and
other industrial sectors.
The total revenue for the Workwear division was GBP64.5 million
(June 2020: GBP64.6 million) reflecting the continuing impact of
COVID-19 on both our existing customers and winning new business.
Adjusted EBITDA was GBP23.0 million (June 2020: GBP24.4 million)
with a margin of 35.7% (June 2020: 37.8%). Adjusted operating
profit was GBP11.2 million (June 2020: GBP11.6 million) after
claiming a CJRS grant of GBP0.6 million (June 2020: GBP1.8
million).
The Workwear business continued to operate throughout the
pandemic with volumes returning to 98% of pre-Covid levels by June
2021. The various lockdowns over the last 18 months resulted in our
sales force being temporarily furloughed due to decreased demand
for changing workwear supplier. Revised working processes and
procedures to protect our employees and business have been
maintained despite recent Government announcements. Our personnel
have continued to fully support the business during such
unpredictable and challenging times, a reflection of the strong
service and family culture throughout our business.
Our Existing Customer Satisfaction Survey achieved the highest
results since our surveys began back in 2004, scoring 87.1%, a
credit to all our teams during such challenging times. Customer
retention levels also remain high at 95%.
The successful installation of automated processing equipment in
Basingstoke during 2020 has resulted in a commitment to similar
installations in both Perth and Hinckley. Work for both will be
completed in the second half of 2021. New washing machines ordered
will increase capacity in Letchworth and a new garment finishing
tunnel was installed in Hinckley during the second quarter.
Machinery installation is ongoing at our new Exeter plant, with an
expected soft opening in late September this year. The updating of
our commercial fleet is continuing along with the rebranding of
vehicles less than five years old. The first double decker trailer
and tractor unit for the Workwear division, which will operate
between Perth and Aberdeen and reduce the number of road journeys
between the two sites, was delivered in July 2021.
The installation of the new workwear laundry management IT
platform is on track. All business departments have constructively
contributed towards the functionality of the new system which
resulted in a successful conversion at our plant in Hull in June,
followed by Lancaster in July. Our thanks to the dedication of all
employees involved in achieving a smooth transition with no
negative impact to our customers or operations. The roll out
programme across all remaining sites will continue throughout 2021
and conclude in early 2022.
Eight of our sites have now successfully achieved certification
EN 14065, Biocontamination Control System for Laundry Processed
Textiles. This achievement demonstrates to our customers that our
laundry service has systems and processes in place to control
microbiological contamination in laundered textiles. The standard
compliments others already in place, especially for food and
pharmaceutical industries, as well as giving us the ability to
process isolation gowns and other healthcare products separately in
our sites. Plans are in place for the majority of our other sites
to also become accredited.
HORECA Division
The total revenue for the HORECA division was GBP35.1 million
(June 2020: GBP50.2 million) with both periods severely affected by
various lockdown restrictions. Adjusted EBITDA was a GBP3.5 million
loss (June 2020: GBP2.7 million profit). Adjusted operating loss
was GBP18.2 million (June 2020: GBP18.8 million) after claiming a
reduced CJRS grant of GBP9.3 million (June 2020: GBP14.8
million).
Volumes reached over 70% of normal in June 2021 and have
continued to increase during July and August to reach over 80%.
A significant proportion of employees were furloughed during the
first quarter of the year and many of our sites were mothballed. As
we approached the end of lockdown, we began to return employees
from furlough and the business proactively sought to recruit
additional resource as quickly as possible, in many cases in
advance of processing requirements. As well as utilising
traditional recruitment channels, we used social media and direct
mailings to ensure that we reached as many potential employees as
possible. This, combined with our strong reputation local to our
sites, has meant we have been successful in recruiting the
operational employees we require. We have successfully recruited
over 700 new employees in the period to date. Recruitment has been
more challenging than was anticipated and the competition for
labour in the employment market generally has resulted in increased
costs of production.
Our Stalbridge, South West Laundry and London Linen brands have
seen a strong recovery of volumes since the lifting of hospitality
venue restrictions in April and May. A strategic marketing campaign
was timed to coincide with hospitality reopening and this has
resulted in a significant number of new sales in the second
quarter. The outlook continues to be positive as the sales pipeline
remains strong.
New boiler installations during 2021 in Glasgow and Milborne
Port will deliver more efficient steam generation, whilst a
complete rewire of our Grantham factory will also reduce utility
consumption. New ironing lines being installed in Sturminster
Newton and Southall will maintain and improve quality, replacing
obsolete and high maintenance machinery.
Within Hotel Linen, 2021 commenced with the ongoing effect of
the national lockdown impacting upon volume and customer demand.
Whilst a significant number of hotels remained closed, many
remained open for key workers, particularly in the city centre
locations as well as a number of customers continuing to act as
quarantine hotels. During the quieter winter months, we continued
to maintain service and manage costs and also benefited from the
ability to furlough and flexi-furlough employees which helped to
reduce costs whilst continuing to protect jobs for those employees
who have remained with us.
Our local engineering teams fully utilised the quieter period to
complete both essential and planned maintenance schedules and plan
for the reopening of the business.
In addition, we continued with the upgrade and installation of
our laundry management IT platform with eight of our nine sites now
utilising the new system. The final site will be upgraded later
this year once the busy summer season is over. Following some
successful trials, and to further enhance the overall customer
experience, we plan to roll out a new web-based customer portal
system to an increasing number of customers over the coming months.
The portal will allow customers to benefit from moving to online
ordering and invoicing and a greater ability to automate the linen
management process.
We also commissioned our new GBP10 million production facility
in Leeds which is a long-term investment to increase capacity
across the Yorkshire and North East markets. Whilst the site will
take a period to reach optimum productivity and capacity, we are
confident of the strategic importance of the site. We anticipate
that we will deliver long-term operational success by balancing
volume and demand across our network of nine sites.
With the ending of the national lockdown and some uncertainty
over potential business in the coming months, we were encouraged by
the resilience of domestic consumer demand with a quicker recovery
than we, and our customer base, had anticipated. Operationally, the
significant incremental increases initially caused some service
challenges as we attempted to match resource to demand. These
challenges were experienced across the whole laundry sector. We
have, however, since returned our service levels to a more
normalised level and we wish to pay tribute to the dedication and
hard work of our people who rose to the challenge and worked
tirelessly to re-engage with customers and help meet demand.
We continue to benefit from ongoing sales and referrals for new
business, especially from new build hotels where the strength of
our longstanding reputation for service and quality continue to
help us win additional new business from current and new
customers.
EMPLOYEES
Our employees are the foundation of our business and the past
months have been extremely challenging for each and every one of
them. The Board would like to thank them for their support, hard
work and significant contribution to the business through these
difficult times.
RESETTING AND REFRESHING OUR SUSTAINABILITY APPROACH
Our Head of Sustainability, who brings with her over 15 years of
experience in developing and embedding sustainability strategies,
joined the Group in April 2021.
We are currently developing our refreshed sustainability
strategy, which we intend to apply across the Group. The strategy
will detail the long-term commitments we are making to address our
impacts and will enable us to measure our future performance by
developing and setting targets in key priority areas. Whilst we are
in the early stages of this process, we are already clear that, to
us, the term Sustainability must be used in the widest possible way
to encompass all our environmental and social impacts and
governance requirements.
Key Priorities and Ongoing Activities
Whilst we are still developing our strategy, we have already
identified some of our key priorities which will be reflected
within it and these include:
-- transition to a low carbon organisation;
-- a Group wide approach to Equality, Diversity & Inclusion
(ED&I);
-- a framework for engaging and managing our supply chain to
ensure alignment with our sustainability vision and goals;
-- a model for reducing our waste to landfill which will include
policies on end of life textile management opportunities and moving
towards elimination of single use plastics; and
-- a continuation of the focus on increasing water and energy
recycling.
A selection of some of the ongoing projects and initiatives we
have undertaken since our last report include:
-- We continue to trial a wastewater recycling solution at one
of our HORECA sites. This reverse osmosis method utilises hollow
fibre ceramic technology to allow for increased repeated use of
wash water. Early results were encouraging and we now await the
final stage conclusions.
-- We have reviewed our company car policy and are trialing
several electric vehicle options for those who are due to renew
their cars this year. At this stage electric vehicles are a
voluntary option however, if their deployment during this trial
period proves successful to both the organisation and our
colleagues, we anticipate a transitional EV Company Car policy to
be implemented over the coming months.
-- We are now part of the Prince's Responsible Business Network
having become members of Business in the Community. This membership
illustrates our commitment to learning and developing our
sustainability knowledge and practices and our aim of becoming a
leader for our industry.
-- An Employee Engagement survey will be undertaken across the
Group to allow all of our employees the opportunity to contribute
to the business.
OUTLOOK
Whilst HORECA volumes still remain less predictable than in the
past, primarily as a result of ongoing uncertainties around travel
and other restrictions, since the end of June we have continued to
experience increased demand across our sites. We anticipate that,
in the absence of further lockdowns or local restrictions, volumes
will continue to improve over the coming months.
Along with many other businesses, we are seeing inflationary
pressures on some of our costs. However, our existing scale and
focus on operational excellence means we are well placed to address
these challenges proactively without compromising our market share
opportunity.
It remains difficult to give guidance for the coming months but,
in the absence of increased restrictions, we expect that we will
announce results for the year towards the higher end of current
market expectations.
We continue to take proactive actions to adapt our operations
and we remain confident in our medium and long-term growth
prospects. We also anticipate that there will continue to be
further opportunities for consolidation of the market and, given
our strong balance sheet, we look forward to taking advantage of
opportunities as they arise.
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 interim
report is the responsibility of, and has been approved by, the
Directors.
The Directors confirm that to the best of their knowledge:
-- this financial information has 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 and description of 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 2020 and remain
unchanged with the exception of the retirement of Bill Shannon on 5
May 2021. Details of the Directors are available on the Johnson
Service Group PLC website: www.jsg.com
By order of the Board
Peter Egan Yvonne Monaghan
Chief Executive Officer Chief Financial Officer
1 September 2021 1 September 2021
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 Company'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 Half year Year ended
to to 31 December
30 June 30 June 2020
2021 2020 GBPm
Note GBPm GBPm
Revenue 2 99.6 114.8 229.8
Operating loss 2 (12.4) (15.5) (27.4)
Operating loss before amortisation of
intangible
assets (excluding software amortisation)
and exceptional items (9.6) (9.5) (12.1)
Amortisation of intangible assets (excluding
software amortisation) (5.4) (5.5) (11.0)
Exceptional items 3
* Restructuring costs - - (5.8)
* Insurance claims 2.6 - 2.5
* Impairment losses re insurance claims - (0.5) (1.0)
Operating loss 2 (12.4) (15.5) (27.4)
Finance cost 4 (1.6) (3.1) (4.9)
Loss before taxation (14.0) (18.6) (32.3)
Taxation credit 7 3.1 2.5 5.2
Loss for the period attributable to equity
holders (10.9) (16.1) (27.1)
--------------------------------------------- ------ --------- --------- ------------
Loss per share 8
Basic loss per share (2.5p) (4.2p) (6.6p)
--------------------------------------------- ------ --------- --------- ------------
Diluted loss per share (2.5p) (4.2p) (6.6p)
--------------------------------------------- ------ --------- --------- ------------
Adjusted basic loss per share (1.9p) (2.8p) (3.4p)
--------------------------------------------- ------ --------- --------- ------------
Adjusted diluted loss per share (1.9p) (2.8p) (3.4p)
--------------------------------------------- ------ --------- --------- ------------
Consolidated Statement of Comprehensive Income
Restated
Half year to Half year Year ended
30 June to 30 June 31 December
2021 2020 2020
Note GBPm GBPm GBPm
Loss for the period (10.9) (16.1) (27.1)
----------------------------------------------------------- ----------- ----------- ------------
Items that will not be subsequently
reclassified to profit or loss
Re-measurement and
experience gains
/ (losses) on
post-employment benefit
- obligations 14 5.7 (2.6) (9.4)
Taxation in respect of re-measurement
- and experience (gains) / losses (1.5) 0.5 1.7
Change in deferred tax due to change in
tax rate 0.7 0.2 0.2
Items that may be subsequently reclassified
to profit or loss
- fair value gain
Cash flow hedges /
- (net of taxation) (loss) 0.8 (2.8) (2.9)
- transfers to administrative
expenses 0.2 0.9 1.8
- transfers to
finance
cost - 0.7 0.6
---------------------------------------- ----------------- ------------ ----------- ------------
Other comprehensive income / (loss) for
the period 5.9 (3.1) (8.0)
-----------------------------------------------------------
Total comprehensive loss for the period (5.0) (19.2) (35.1)
----------------------------------------------------------- ------------ ----------- ------------
The notes on pages 15 to 30 form an integral part of these
condensed consolidated interim financial statements.
Consolidated Statement of Changes in Shareholders' Equity
Capital Restated
Share Share Merger Redemption Hedge Retained Total
Capital Premium Reserve Reserve Reserve Earnings Equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Restated balance at 1
January 2020 37.0 16.1 1.6 0.6 (0.5) 152.7 207.5
--------- --------- --------- ------------ --------- ---------- --------
Loss for the period - - - - - (16.1) (16.1)
Other comprehensive loss
for the period - - - - (1.2) (1.9) (3.1)
-------------------------------- --------- --------- --------- ------------ --------- ---------- --------
Total comprehensive loss
for the period - - - - (1.2) (18.0) (19.2)
-------------------------------- --------- --------- --------- ------------ --------- ---------- --------
Share options (value
of employee services) - - - - - 0.5 0.5
Deferred tax on share
options - - - - - (0.3) (0.3)
Issue of share capital 7.4 - - - - 75.3 82.7
Transactions with Shareholders
recognised directly in
Shareholders' equity 7.4 - - - - 75.5 82.9
-------------------------------- --------- --------- --------- ------------ --------- ---------- --------
Balance at 30 June 2020 44.4 16.1 1.6 0.6 (1.7) 210.2 271.2
-------------------------------- --------- --------- --------- ------------ --------- ---------- --------
Loss for the period - - - - - (11.0) (11.0)
Other comprehensive income
/ (loss) for the period - - - - 0.7 (5.6) (4.9)
-------------------------------- --------- --------- --------- ------------ --------- ---------- --------
Total comprehensive income
/ (loss) for the period - - - - 0.7 (16.6) (15.9)
-------------------------------- --------- --------- --------- ------------ --------- ---------- --------
Share options (value
of employee services) - - - - - (0.1) (0.1)
Deferred tax on share
options - - - - - 0.1 0.1
Issue of share capital - 0.2 - - - - 0.2
-------------------------------- --------- --------- --------- ------------ --------- ---------- --------
Transactions with Shareholders
recognised directly in
Shareholders' equity - - - - - - 0.2
-------------------------------- --------- --------- --------- ------------ --------- ---------- --------
Balance at 31 December
2020 44.4 16.3 1.6 0.6 (1.0) 193.6 255.5
-------------------------------- --------- --------- --------- ------------ --------- ---------- --------
Loss for the period - - - - - (10.9) (10.9)
Other comprehensive income
for the period - - - - 1.0 4.9 5.9
-------------------------------- --------- --------- --------- ------------ --------- ---------- --------
Total comprehensive income
/ (loss) for the period - - - - 1.0 (6.0) (5.0)
-------------------------------- --------- --------- --------- ------------ --------- ---------- --------
Share options (value
of employee services) - - - - - 0.4 0.4
Purchase of own shares
by EBT - - - - - (0.1) (0.1)
Issue of share capital 0.1 0.5 - - - - 0.6
Transactions with Shareholders
recognised directly in
Shareholders' equity 0.1 0.5 - - - 0.3 0.9
-------------------------------- --------- --------- --------- ------------ --------- ---------- --------
Balance at 30 June 2021 44.5 16.8 1.6 0.6 - 187.9 251.4
-------------------------------- --------- --------- --------- ------------ --------- ---------- --------
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
2021, the EBT held 9,024 shares (June 2020: 8,388 shares; December
2020: 8,388 shares).
Consolidated Balance Sheet
Restated
As at As at As at
30 June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
Note
Non-current assets
Goodwill 9 130.9 130.5 130.9
Intangible assets 10 22.3 32.8 27.7
Property, plant and equipment 11 112.4 108.8 107.2
Right-of-use assets 12 36.1 37.9 38.5
Textile rental items 13 39.4 44.6 35.6
Trade and other receivables 0.2 0.8 0.4
Deferred income tax assets 0.8 2.3 -
342.1 357.7 340.3
------------------------------------ ------ --------- -------- -------------
Current assets
Inventories 1.2 1.9 1.4
Trade and other receivables 43.0 35.3 31.3
Current income tax assets 2.5 2.3 3.0
Cash and cash equivalents 6.8 7.3 7.8
53.5 46.8 43.5
------------------------------------ ------ --------- -------- -------------
Current liabilities
Trade and other payables 77.8 64.2 64.8
Borrowings 8.6 7.4 1.0
Lease liabilities 5.2 5.7 5.5
Derivative financial liabilities 0.1 0.8 0.1
Provisions 1.7 1.0 2.0
93.4 79.1 73.4
------------------------------------ ------ --------- -------- -------------
Non-current liabilities
Post-employment benefit obligations 14 8.3 9.0 14.9
Deferred income tax liabilities - 5.8 1.2
Trade and other payables 0.9 1.2 0.4
Borrowings 7.0 - -
Lease liabilities 32.9 34.0 35.1
Derivative financial liabilities 0.2 2.1 2.0
Provisions 1.5 2.1 1.3
50.8 54.2 54.9
------------------------------------ ------ --------- -------- -------------
NET ASSETS 251.4 271.2 255.5
------------------------------------ ------ --------- -------- -------------
Capital and reserves attributable to the
Company's Shareholders
Share capital 15 44.5 44.4 44.4
Share premium 16.8 16.1 16.3
Merger reserve 1.6 1.6 1.6
Capital redemption reserve 0.6 0.6 0.6
Hedge reserve - (1.7) (1.0)
Retained earnings 187.9 210.2 193.6
------------------------------------ ------ --------- -------- -------------
Total equity 251.4 271.2 255.5
------------------------------------ ------ --------- -------- -------------
The notes on pages 15 to 30 form an integral part of these
condensed consolidated interim financial statements. The condensed
consolidated interim financial statements on pages 11 to 30 were
approved by the Board of Directors on 1 September 2021 and signed
on its behalf by:
Yvonne Monaghan
Chief Financial Officer
Consolidated Statement of Cash Flows
Half year Half year Year ended
to to 31 December
30 June 30 June 2020
2021 2020 GBPm
Note GBPm GBPm
Cash flows from operating activities
Loss for the period (10.9) (16.1) (27.1)
Adjustments for:
Taxation credit 7 (3.1) (2.5) (5.2)
Total finance
cost 1.6 3.1 4.9
Depreciation 26.4 34.3 66.2
Amortisation 5.5 5.6 11.2
Loss on disposal of tangible fixed
assets 0.1 0.5 0.8
Loss on disposal of textile rental
items - - 0.2
Decrease in inventories 0.2 0.4 0.9
(Increase) / decrease in trade and
other receivables (11.7) 19.4 23.7
Increase / (decrease) in trade and
other payables 4.1 (3.0) (0.2)
Deficit recovery payments in respect
of post-employment benefit obligations (0.9) (0.9) (1.9)
Share-based payments 0.4 0.5 0.4
Commodity swaps not qualifying as
hedges (0.3) - 0.3
Exceptional items relating to investing
activities (2.6) - (2.5)
(Decrease) / increase in provisions (0.2) 0.3 0.2
-------------------------------------------- ------ --------- --------- ------------
Cash generated from operations 8.6 41.6 71.9
Interest paid (1.7) (2.4) (4.0)
Taxation received / (paid) 0.5 (4.3) (3.4)
-------------------------------------------- ------ --------- --------- ------------
Net cash generated from operating
activities 7.4 34.9 64.5
-------------------------------------------- ------ --------- --------- ------------
Cash flows from investing activities
Acquisition of business (net of cash
and cash equivalents acquired) 16 (0.8) (0.7) (0.9)
Purchase of other intangible assets 10 - (1.3) (1.2)
Purchase of property, plant and equipment (8.4) (8.0) (20.4)
Proceeds from insurance claims 2.6 - 2.5
Purchase of software (0.3) (0.5) (1.0)
Proceeds from sale of property, plant
and equipment - - 0.2
Purchase of textile rental items (14.6) (17.6) (28.1)
Proceeds received in respect of special
charges 0.8 1.0 2.1
Net cash used in investing activities (20.7) (27.1) (46.8)
-------------------------------------------- ------ --------- --------- ------------
Cash flows from financing activities
Proceeds from borrowings 10.0 58.0 58.0
Repayments of borrowings (3.0) (143.0) (143.0)
Capital element of leases (2.9) (3.0) (6.1)
Purchase of own shares by EBT (0.1) - -
Net proceeds from issue of Ordinary
shares 0.6 82.7 82.9
Net cash generated from / (used in)
financing activities 4.6 (5.3) (8.2)
-------------------------------------------- ------ --------- --------- ------------
Net (decrease) / increase in cash
and cash equivalents (8.7) 2.5 9.5
Cash and cash equivalents at beginning
of the period 6.6 (2.9) (2.9)
-------------------------------------------- ------ --------- --------- ------------
Cash and cash equivalents at end
of the period 18 (2.1) (0.4) 6.6
-------------------------------------------- ------ --------- --------- ------------
Cash and cash equivalents comprise:
Cash 6.8 7.3 7.8
Overdraft (8.9) (7.7) (1.2)
Cash and cash equivalents at end
of the period (2.1) (0.4) 6.6
-------------------------------------------- ------ --------- --------- ------------
The notes on pages 15 to 30 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 UK.
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 1 September 2021.
1 BASIS OF PREPARATION
These condensed consolidated interim financial statements of the
Group are for the half year ended 30 June 2021. 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 2020 Annual Report and Accounts, which
have been prepared in accordance with International Financial
Reporting Standards as adopted by the European Union.
Financial information for the year ended 31 December 2020
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 in note 23, financial information for
the half year ended 30 June 2020 included herein is derived from
the condensed consolidated interim financial statements for that
period.
Going Concern Assessment
The current and plausible future impact of COVID-19 and the
related macroeconomic environment on the Group's activities and
performance has been considered by the Board in preparing its going
concern assessment. The Group has prepared a Base Case scenario,
reflecting an initial set of assumptions around financial
projections and trading performance, together with various, more
pessimistic, expectations for market developments over the
remainder of 2021 and 2022 to reflect subdued trading
conditions.
After considering the current financial scenarios, the severe
but plausible sensitivities 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
next 12 months from the date of approving the condensed
consolidated interim financial statements. As a consequence, 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.
The process and key judgements in coming to this conclusion are
set out below. The Board is required to assess going concern at
each reporting period. These assessments are significantly more
difficult currently given the uncertainties about the impact of
COVID-19 on the markets in which we operate. The level of judgement
to be applied has therefore increased considerably. The Directors
have considered three main factors in reaching their conclusions on
going concern, as set out below.
1) Cash Flows and Sensitivity Analysis
In assessing going concern, the Directors considered a variety
of scenarios in the context of the COVID-19 pandemic. These
scenarios are not the forecasts of the Company but are designed to
stress test liquidity and covenant compliance. EBITDA used within
the scenarios is that used for bank covenant purposes which, for
2021, is defined as adjusted operating profit before property,
plant and equipment depreciation, rental stock depreciation and
software amortisation. In 2022, the definition is amended to also
exclude right of use asset depreciation. The three most relevant
scenarios, in ascending order of severity, reviewed to test going
concern are as follows:
Base Case Scenario
This scenario assumes that the HORECA market continues to
improve following the full lifting of restrictions on 19 July 2021.
Volumes in June were over 70% of normal and are assumed to continue
to increase month on month thereafter, reaching between 80% and 90%
of normalised levels by December 2021, such range reflecting the
nuances of specific sub-markets within the overall HORECA market,
for example, restaurants, hotels and contract catering. Further
modest monthly increases are then assumed throughout 2022.
Limited Social Distancing Measures Scenario
This scenario assumes summer trading in line with the Base Case,
but with the winter months seeing a return to restrictions akin to
those in place during June 2021 i.e. hotels and indoor hospitality
are open but are limited to table service and a maximum group of
six. Volumes processed within HORECA have, therefore, been reduced
to some 70% of normal activity, such level of activity being that
which was achieved in June 2021. For the purpose of this scenario,
these restrictions are assumed to be in place for the six months
from October 2021 through to March 2022 inclusive.
Severe but Plausible Scenario
Given the ongoing and successful vaccine rollout, a full
lockdown scenario is not envisaged. Instead, this scenario builds
upon the 'Limited Social Distancing Measures' scenario above, by
introducing further restrictions during the winter. Management have
assumed that during the months of December 2021 to February 2022,
hotels are closed and only outdoor hospitality is permitted
resulting in subdued volumes, based upon a percentage of normalised
activity, in-line with that achieved prior to the opening of hotels
and indoor hospitality on 17 May 2021. Volumes in October 2021,
November 2021 and March 2022 are as per the 'Limited Social
Distancing Measures' scenario above.
2) Covenants
As previously announced, in addition to extending its bank
facilities in May 2020, the Group also renegotiated its banking
covenants such that the pre-existing covenants were replaced, up to
and including until the December 2021 covenant test date, with a
maximum net debt and a minimum EBITDA threshold. From March 2022,
the covenants will revert to a leverage and interest covenant
test.
In all three scenarios above, the financial projections indicate
that the Group would remain in compliance with the financial
covenants in its bank facilities. A decline in underlying EBIT /
EBITDA well in excess of that contemplated in the scenarios would
need to persist throughout the period for a covenant breach to
occur. The Directors do not consider such a scenario plausible.
The Group also has a number of mitigating actions under its
control (not all of which were included in the scenarios) including
minimising capital expenditure to critical requirements, further
reducing levels of discretionary spend and rationalising its
overhead base in order to be able to meet the covenant tests.
3) Liquidity
The Group extended its committed debt facilities in May 2020.
The facilities comprise a GBP135 million revolving credit facility,
which matures in August 2023, together with an additional GBP40
million revolving credit facility, which is due to mature in May
2022 but which may be extended for a further one year, subject to
lender approval. Quarterly covenant tests allow for maximum bank
borrowings of GBP155 million at each quarter end through to
September 2021, reducing to GBP145 million for the quarter ending
December 2021. Thereafter, the maximum net debt covenant falls away
and is effectively replaced with a leverage covenant. The bank
facilities available to the Group provide ample liquidity in all
scenarios modelled.
2 SEGMENT ANALYSIS
Segment information is presented in respect of the Group's
operating segments, which are based on the Group's management and
internal reporting structure as at 30 June 2021. These segments are
the same as those included within the 2020 Annual Report and
Accounts.
The chief operating decision-maker has been identified as the
Board of Directors (the 'Board'). The Board reviews the Group's
internal reporting in order to assess performance and allocate
resources. The Board determines the operating segments based on
these reports and on the internal reporting structure. For
reporting purposes, in accordance with IFRS 8, the Board aggregates
operating segments with similar economic characteristics and
conditions into reporting segments, which form the basis of the
reporting in the Annual Report and Accounts. The Board has
identified two main reporting segments, being Workwear and Hotel,
Restaurant and Catering ('HORECA'). Discontinued Operations are
reported separately. Results, assets, liabilities and other
information not included within Workwear, HORECA or Discontinued
Operations are reported separately within All Other Segments.
The Board 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. Segment results include items directly
attributable to a segment as well as those that can be allocated on
a reasonable basis. Any right-of-use assets, lease liabilities and
depreciation relating to internal property leases with Johnson
Group Properties PLC are eliminated on consolidation. Interest
income and expenditure are not included in the result for each
reporting segment that is reviewed by the Board.
Other information provided to the Board is measured in a manner
consistent with that in the financial statements. Segment assets
exclude deferred income tax assets, current income tax assets and
cash and cash equivalents, all of which are managed on a central
basis. Segment liabilities include non-bank borrowings but exclude
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.
The reporting segment results for the half year ended 30 June
2021, together with comparative figures, are as follows:
All Other
Half year to 30 June 2021 Workwear HORECA Segments Total
GBPm GBPm GBPm GBPm
Revenue
Rendering of services 63.0 35.1 - 98.1
Sale of goods 1.5 - - 1.5
----------------------------------------------------------------- ------------- --------- ------- ---------- --------
64.5 35.1 - 99.6
----------------------------------------------------------------- ------------- --------- ------- ---------- --------
Operating profit / (loss) before amortisation
of intangible assets (excluding software
amortisation) 11.2 (18.2) (2.6) (9.6)
Amortisation of intangible assets
(excluding software amortisation) - (5.4) - (5.4)
Exceptional items 2.6 - - 2.6
Operating profit / (loss) 13.8 (23.6) (2.6) (12.4)
Finance costs (1.6)
Loss before taxation (14.0)
Taxation 3.1
----------------------------------------------------------------- ------------- --------- ------- ---------- --------
Loss for the period attributable
to equity holders (10.9)
Discontinued All Other
Operations Workwear HORECA Segments Total
GBPm GBPm GBPm GBPm GBPm
Balance sheet information
Segment assets - 138.6 245.7 1.2 385.5
Unallocated assets: Deferred income
tax assets 0.8
Current income tax assets 2.5
Cash and cash equivalents 6.8
Total assets 395.6
----------------------------------------------------------------- ------------- --------- ------- ---------- --------
Segment liabilities (3.7) (49.7) (62.9) (3.7) (120.0)
Unallocated liabilities: Bank
borrowings (15.6)
Deferred income -
tax liabilities
Derivative
financial
liabilities (0.3)
Post-employment
benefit
obligations (8.3)
------------------------------------------------------------------ ------------- --------- ------- ---------- --------
Total liabilities (144.2)
----------------------------------------------------------------- ------------- --------- ------- ---------- --------
Discontinued All Other
Operations Workwear HORECA Segments Total
GBPm GBPm GBPm GBPm GBPm
Other information
Non-current asset additions
- Property, plant and equipment - 9.2 4.0 - 13.2
- Right of use assets - - 0.2 - 0.2
- Textile rental items - 9.7 10.3 - 20.0
- Intangible software - 0.1 - - 0.1
Depreciation and amortisation
expense
- Property, plant and equipment - 2.5 5.4 - 7.9
- Right of use assets - 1.1 2.0 - 3.1
- Textile rental items - 8.1 7.3 - 15.4
- Intangible software - 0.1 - - 0.1
- Customer contracts - - 5.4 - 5.4
All Other
Half year to 30 June 2020 Workwear HORECA Segments Total
GBPm GBPm GBPm GBPm
Revenue
Rendering of services 63.4 50.2 - 113.6
Sale of goods 1.2 - - 1.2
----------------------------------------------------------------------- ------------- --------- ------- ---------- ----------
64.6 50.2 - 114.8
----------------------------------------------------------------------- ------------- --------- ------- ---------- ----------
Operating profit / (loss) before amortisation
of intangible assets (excluding software
amortisation) 11.6 (18.8) (2.3) (9.5)
Amortisation of intangible assets (excluding
software amortisation) (0.1) (5.4) - (5.5)
Exceptional items (0.5) - - (0.5)
Operating profit / (loss) 11.0 (24.2) (2.3) (15.5)
Finance cost (3.1)
Loss before taxation (18.6)
Taxation 2.5
----------------------------------------------------------------------- ------------- --------- ------- ---------- ----------
Loss for the period attributable
to equity holders (16.1)
Discontinued All Other Restated
Operations Workwear HORECA Segments Total
GBPm GBPm GBPm GBPm GBPm
Balance sheet information
Segment assets - 138.9 250.9 2.8 392.6
Unallocated assets: Deferred income
tax assets 2.3
Current income tax assets 2.3
Cash and cash equivalents 7.3
--------------------------------------------------------------------------------------- --------- ------- ----------
Total assets 404.5
----------------------------------------------------------------------- ------------- --------- ------- ---------- ----------
Segment liabilities (3.4) (44.6) (54.2) (6.0) (108.2)
Unallocated liabilities: Bank
borrowings (7.4)
Deferred income tax
liabilities (5.8)
Derivative financial
liabilities (2.9)
Post-employment benefit
obligations (9.0)
------------------------------------------------------------------------ ------------- --------- ------- ---------- ----------
Total liabilities (133.3)
----------------------------------------------------------------------- ------------- --------- ------- ---------- ----------
Discontinued All Other
Operations Workwear HORECA Segments Total
GBPm GBPm GBPm GBPm GBPm
Other information
Non-current asset additions
- Property, plant and equipment - 3.1 10.2 - 13.3
- Right of use assets - 0.4 0.8 - 1.2
- Textile rental items - 7.6 4.2 - 11.8
- Intangible software - 0.4 - - 0.4
- Customer contracts - - 1.3 - 1.3
Depreciation and amortisation
expense
- Property, plant and equipment - 2.5 5.5 - 8.0
- Right of use assets - 1.0 2.2 0.1 3.3
- Textile rental items - 9.2 13.8 - 23.0
- Intangible software - 0.1 - - 0.1
- Customer contracts - 0.1 5.4 - 5.5
All Other
Year ended 31 December 2020 Workwear HORECA Segments Total
GBPm GBPm GBPm GBPm
Revenue
Rendering of services 127.1 100.3 - 227.4
Sale of goods 2.4 - - 2.4
--------------------------------------------------------------------- ----- ------------- --------- ------- ---------- --------
129.5 100.3 - 229.8
--------------------------------------------------------------------- ----- ------------- --------- ------- ---------- --------
Operating profit / (loss) before amortisation
of intangible
assets (excluding software amortisation)
and exceptional items 23.3 (31.5) (3.9) (12.1)
Amortisation of intangible assets (excluding
software amortisation) (0.1) (10.9) - (11.0)
Exceptional items (0.1) (4.2) - (4.3)
Operating profit / (loss) 23.1 (46.6) (3.9) (27.4)
Finance cost (4.9)
Loss before taxation (32.3)
Taxation 5.2
---------------------------------------------------------------------------- ------------- --------- ------- ---------- --------
Loss for the period attributable
to equity holders (27.1)
---------------------------------------------------------------------------- ------------- --------- ------- ---------- --------
Discontinued All Other
Operations Workwear HORECA Segments Total
GBPm GBPm GBPm GBPm GBPm
Balance sheet information
Segment assets - 132.1 239.1 1.8 373.0
Unallocated assets: Deferred
income tax assets 3.0
Cash and cash
equivalents 7.8
----------------------------------------------------------------------- --- ------------- --------- ------- ---------- --------
Total assets 383.8
-------------------------------------------------------------------- ------ ------------- --------- ------- ---------- --------
Segment liabilities (3.5) (47.1) (55.0) (3.5) (109.1)
Unallocated liabilities: Bank
borrowings (1.0)
Derivative financial
liabilities (2.1)
Post-employment benefit
obligations (14.9)
Deferred income tax
liabilities (1.2)
---------------------------------------------------------------------------- ------------- --------- ------- ---------- --------
Total liabilities (128.3)
-------------------------------------------------------------------- ------ ------------- --------- ------- ---------- --------
Discontinued All Other
Operations Workwear HORECA Segments Total
GBPm GBPm GBPm GBPm GBPm
Other information
Non-current asset additions
- Property, plant and equipment - 6.0 14.7 - 20.7
- Right of use assets - 3.4 1.8 - 5.2
- Textile rental items - 14.1 9.8 - 23.9
- Intangible software - 1.0 - - 1.0
- Customer contracts - - 1.2 - 1.2
Depreciation, impairment
and amortisation expense
- Property, plant and equipment - 5.3 11.2 - 16.5
- Right of use assets depreciation - 2.2 4.5 0.1 6.8
- Right of use assets impairment - 0.1 - - 0.1
- Textile rental items depreciation - 17.7 24.5 - 42.2
- Textile rental items impairment - - 0.6 - 0.6
- Intangible software - 0.2 - - 0.2
- Customer contracts - 0.1 10.9 - 11.0
3 EXCEPTIONAL ITEMS
Half year Half year Year ended
to to 31 December
30 June 30 June 2020
2021 2020
GBPm GBPm GBPm
Restructuring costs - - (5.8)
Insurance claims 2.6 - 2.5
Impairment losses re insurance
claims - (0.5) (1.0)
Total exceptional items 2.6 (0.5) (4.3)
-------------------------------- ----------- ---------- -------------
Current year exceptional items
During the half year to 30 June 2021, further interim insurance
proceeds of GBP2.0 million were received relating to a fire in
January 2020 at a Workwear processing site. Final insurance
proceeds of GBP0.6 million were also received relating to a flood
in February 2020 at a further Workwear site.
Prior year exceptional items
Restructuring costs
In the prior year, restructuring costs included GBP4.7 million
of redundancy costs relating to the realignment of the workforce in
response to the impact of COVID-19 and GBP1.1 million in respect of
the closure of the Workwear site in Newmarket, of which GBP0.4
million related to redundancy costs. There were no restructuring
costs in the period to 30 June 2020.
Insurance claims and impairment losses
During the prior year, a Workwear processing site was destroyed
as a result of a fire. Plant and equipment with a net book value of
GBP0.5 million (charged in the period to 30 June 2020) and Textile
Rental items with a net book value of GBP0.2 million were destroyed
and were written off. Interim insurance proceeds of GBP1.5 million
were also received.
A further Workwear processing site was damaged as a result of
flooding during the prior year. Plant and equipment with a net book
value of GBP0.3 million were written off. Interim insurance
proceeds of GBP1.0 million were also received.
4 FINANCE COST
Half year to Half year Year ended
30 June to 31 December
2021 30 June 2020
GBPm 2020 GBPm
GBPm
Interest payable on bank loans
and overdrafts 0.6 1.3 2.0
Discontinuance of hedge accounting on interest
rate
swaps previously designated as cashflow
hedges - 0.6 0.6
(Gain) / loss on interest rate swaps not
qualifying as hedges (0.1) - 0.1
Amortisation of bank facility fees 0.2 0.2 0.4
Finance costs on lease liabilities 0.8 0.9 1.7
Notional interest on post-employment benefit
obligations 0.1 0.1 0.1
1.6 3.1 4.9
------------------------------------------------ ------------- ---------- -------------
5 ALTERNATIVE PERFORMANCE MEASURES (APMs)
Adjusted loss after taxation Half year Half year Year ended
to to 31 December
30 June 30 June 2020
2021 2020 GBPm
GBPm GBPm
Loss before taxation (14.0) (18.6) (32.3)
Amortisation of intangible assets (excluding
software amortisation) 5.4 5.5 11.0
Exceptional items (2.6) 0.5 4.3
Adjusted loss before taxation (11.2) (12.6) (17.0)
Taxation on adjusted loss 2.6 2.2 3.2
---------------------------------------------- ---------- ---------- -------------
Adjusted loss after taxation (8.6) (10.4) (13.8)
---------------------------------------------- ---------- ---------- -------------
Adjusted EBITDA Half year Half year Year ended
to to 31 December
30 June 30 June 2020
2021 2020 GBPm
GBPm GBPm
Operating loss before amortisation
of intangible assets (excluding software
amortisation) and exceptional items (9.6) (9.5) (12.1)
Software amortisation 0.1 0.1 0.2
Property, plant and equipment depreciation 7.9 8.0 16.5
Right of use asset depreciation 3.1 3.3 6.8
Textile rental items depreciation 15.4 23.0 42.2
-------------------------------------------- ---------- -------------
Adjusted EBITDA 16.9 24.9 53.6
-------------------------------------------- ---------- ---------- -------------
6 DIVIDS
Whilst the Board recognises the importance of dividends to
Shareholders, this has to be balanced with the impact that COVID-19
has had on our business. As previously guided, and in order to
conserve cash resources in response to the pandemic, the Board does
not propose to declare an interim dividend in respect of 2021, nor
did it declare a dividend in respect of 2020. The Board will keep
future dividends under review and will look to reinstate its
dividend policy as trading returns to more normal levels.
7 TAXATION
Half year Half year Year ended
to to 31 December
30 June 30 June 2020
2021 2020 GBPm
GBPm GBPm
Current tax
UK corporation tax credit for the
period - (2.4) (3.7)
Adjustment in relation to previous
periods - (0.1) (0.4)
--------------------------------------- ---------- ---------- -------------
Current tax credit for the period - (2.5) (4.1)
Deferred tax
Origination and reversal of temporary
differences (3.6) (0.8) (1.9)
Changes in statutory tax rate 0.5 0.7 0.7
Adjustment in relation to previous
years - 0.1 0.1
Deferred tax credit for the period (3.1) - (1.1)
--------------------------------------- ---------- ---------- -------------
Total credit for taxation included
in the income statement (3.1) (2.5) (5.2)
--------------------------------------- ---------- ---------- -------------
Taxation in relation to amortisation of intangible assets
(excluding software amortisation) has increased the credit for
taxation on continuing operations in the half year to 30 June 2021
by GBP0.6 million ( June 2020 : GBP0.3 million; December 2020 :
GBP1.2 million). Taxation in relation to exceptional items in the
half year to 30 June 2021 has reduced the credit by GBP0.1 million
(June 2020: GBPnil; December 2020: GBP0.8 million increase to the
credit).
During the half year to 30 June 2021, a GBP1.1 million charge
relating to deferred taxation (June 2020: GBP0.4 million credit;
December 2020: GBP1.7 million credit) has been recognised in other
comprehensive income.
During the half year to 30 June 2021, GBPnil relating to
deferred taxation (June 2020: GBP0.3 million charge; December 2020:
GBP0.2 million charge) has been recognised directly in
Shareholders' equity.
Reconciliation of effective tax rate
Taxation on non-exceptional items for the half year to 30 June
2021 is calculated based on the estimated average annual effective
tax rate (excluding the impact of the capital allowances
super-deduction) of 23.1% (June 2020: 16.7%; December 2020: 20.0%).
This compares to the weighted average tax rate expected to be
enacted or substantively enacted at the balance sheet date of 19.0%
(June 2020: 19.0%; December 2020: 19.0%). Taxation on exceptional
items is calculated based on the actual tax charge or credit for
each specific item. The exclusion of the impact of the capital
allowances super-deduction, which offers 130% first-year relief on
qualifying main rate plant and machinery investments until 31 March
2023, is due to the additional 30% permanent difference on our
Textile Rental items significantly distorting the estimated average
annual effective rate. Instead the super deduction will be applied
to the period from which it will impact the Group, the six months
to 31 December 2021.
Changes to the UK corporation tax rates, which were
substantively enacted as part of Finance Bill 2021 on 24 May 2021,
include an increase to the main rate from 19% to 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.
Management has performed an assessment, for all material deferred
income tax assets and liabilities, to determine the period over
which the deferred income tax assets and liabilities are forecast
to be realised, which has resulted in an average deferred income
tax rate of 22.3% being used to measure all deferred tax balances
as at 30 June 2021 (June 2020: 19.0%; December 2020: 19.0%).
Further differences between the estimated average annual
effective tax rate and statutory rate include, but are not limited
to, the effect of non-deductible expenses. The adjustment for under
or over provisions in previous years is recognised when the amounts
are agreed.
8 LOSS PER SHARE
Half year Half year Year
to to ended
30 June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
Loss for the period attributable to
Shareholders (10.9) (16.1) (27.1)
Amortisation of intangible assets (net
of taxation) 4.8 5.2 9.8
Exceptional items (net of taxation) (2.5) 0.5 3.5
Adjusted loss attributable to Shareholders (8.6) (10.4) (13.8)
-------------------------------------------- ------------ ------------ --------------
Number Number Number
of shares of shares of shares
Weighted average number of Ordinary
shares 444,644,046 381,549,911 412,947,064
Potentially dilutive options* 408,058 969,267 835,491
-------------------------------------------- ------------ ------------ --------------
Fully diluted number of Ordinary shares 445,052,104 382,519,178 413,782,555
-------------------------------------------- ------------ ------------ --------------
Pence Pence Pence
Basic loss per share per share per share per share
Basic loss per share (2.5p) (4.2p) (6.6p)
Adjustment for amortisation of intangibles
assets 1.1p 1.4p 2.4p
Adjustment for exceptional items (0.5p) - 0.8p
Adjusted basic loss per share (1.9p) (2.8p) (3.4p)
-------------------------------------------- ------------ ------------ --------------
Diluted loss per share
Diluted loss per share (2.5p) (4.2p) (6.6p)
-------------------------------------------- ------------ ------------ --------------
Adjustment for amortisation of intangibles
assets 1.1p 1.4p 2.4p
Adjustment for exceptional items (0.5p) - 0.8p
Adjusted diluted loss per share (1.9p) (2.8p) (3.4p)
-------------------------------------------- ------------ ------------ --------------
* Includes outstanding share options granted to employees.
Basic earnings per share is calculated using the weighted
average number of Ordinary shares in issue during the year,
excluding those held by the Employee Benefit Trust, based on the
profit for the year 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 year. 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 2020 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 each period presented above, potentially dilutive
Ordinary shares have not been treated as dilutive, as their
inclusion in the diluted earnings per share calculation decreases
the loss 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
As at As at As at
30 June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
Cost
Brought forward 130.9 130.5 130.5
Business combinations - - 0.4
Closing 130.9 130.5 130.9
------------------------ --------- --------- -------------
In accordance with International Financial Reporting Standards,
goodwill is not amortised, but instead is tested at least annually
for impairment 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
2020 and, as such, no impairment review has been carried out as at
30 June 2021. 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
2021 2020 2020
GBPm GBPm GBPm
Opening net book value 2.7 1.9 1.9
Additions 0.1 0.4 1.0
Amortisation (0.1) (0.1) (0.2)
Closing net book value 2.7 2.2 2.7
------------------------ --------- --------- -------------
Other intangible assets
As at As at As at
30 June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
Opening net book value 25.0 34.8 34.8
Additions - 1.3 1.2
Amortisation (5.4) (5.5) (11.0)
Closing net book value 19.6 30.6 25.0
------------------------ --------- --------- -------------
Total 22.3 32.8 27.7
------------------------ --------- --------- -------------
Other intangibles assets comprise of customer contracts and
relationships.
11 PROPERTY, PLANT AND EQUIPMENT
As at As at As at
30 June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
Opening net book value 107.2 104.0 104.0
Additions 13.2 13.3 20.7
Depreciation (7.9) (8.0) (16.5)
Disposals (0.1) (0.5) (1.0)
Closing net book value 112.4 108.8 107.2
------------------------ --------- --------- -------------
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
2021 2020 2020
GBPm GBPm GBPm
Software - 0.9 0.1
Property, plant and equipment 11.5 5.6 10.3
------------------------------- --------- --------- -------------
12 RIGHT OF USE ASSETS
As at As at As at
30 June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
Opening net book value 38.5 39.0 39.0
Additions 0.2 1.2 5.2
Reassessment/modifications 0.5 1.0 1.9
Depreciation (3.1) (3.3) (6.8)
Impairment - - (0.1)
Disposals - - (0.7)
Closing net book value 36.1 37.9 38.5
---------------------------- --------- --------- -------------
13 TEXTILE RENTAL ITEMS
As at As at As at
30 June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
Opening net book value 35.6 56.8 56.8
Additions 20.0 11.8 23.9
Depreciation (15.4) (23.0) (42.2)
Impairment losses - - (0.6)
Disposals - - (0.2)
Special charges (0.8) (1.0) (2.1)
Closing net book value 39.4 44.6 35.6
------------------------ --------- --------- -------------
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.
In the half year to 30 June 2021 deficit recovery payments of
GBP0.9 million were paid by the Group to the defined benefit scheme
( June 2020 : GBP0.9 million; December 2020: GBP1.9 million).
Following discussions with the Group's appointed actuary, a
re-measurement gain of GBP5.7 million has been recognised in the
half year to 30 June 2021. 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.
Within the Group's 2020 Interim Report and Accounts, disclosures
were made in respect of the actuarial pension valuation as at 30
June 2020. As disclosed within note 25 of the Group's 2020 Annual
Report and Accounts, on subsequent review of the support
information provided for the purposes of the disclosure, an error
was identified. The impact of the error was an overstatement of the
fair value of scheme assets, as at 30 June 2020, by GBP10.3
million. Comparative figures have, therefore, been restated. For
further details see note 23 of these condensed consolidated interim
financial statements.
The post-employment benefit obligation and associated deferred
income tax asset thereon are shown below:
Restated
As at As at As at
30 June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
Post-employment benefit obligation (8.3) (9.0) (14.9)
Deferred income tax asset thereon 1.9 1.7 2.8
------------------------------------ ---------- --------- --------------
(6.4) (7.3) (12.1)
------------------------------------ ---------- --------- --------------
The reconciliation of the opening gross post-employment benefit
obligation to the closing gross post-employment benefit obligation
is shown below:
Restated
As at As at As at
30 June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
Opening post-employment benefit obligation (14.9) (7.3) (7.3)
Notional interest (0.1) (0.1) (0.1)
Employer contributions 0.9 0.9 1.9
Re-measurement gains / (losses) 5.7 (2.6) (9.4)
Utilisation of healthcare provision 0.1 0.1 -
-------------------------------------------- ---------- --------- --------------
Closing post-employment benefit obligation (8.3) (9.0) (14.9)
-------------------------------------------- ---------- --------- --------------
15 SHARE CAPITAL
Issued share capital is as follows:
Half year Half year Year ended
to to 31 December
30 June 30 June 2020
2021 2020
GBPm GBPm GBPm
Share capital at the start of the period 44.4 37.0 37.0
New shares issued 0.1 7.4 7.4
------------------------------------------ ---------- ---------- -------------
Share capital at the end of the period 44.5 44.4 44.4
------------------------------------------ ---------- ---------- -------------
In the half year to 30 June 2021, 480,673 SAYE scheme options
were exercised with a total nominal value of GBP48,067 (June 2020:
GBPnil; December 2020: GBP23,509). Proceeds in excess of the
nominal value were credited to Share Premium. In the half year to
30 June 2021, 465,000 shares were allotted to the Employee Benefit
Trust, with a nominal value of GBP46,500, in order to satisfy the
exercise of 464,364 LTIP options. In the half year to 30 June 2020,
300,000 shares were allotted to the Employee Benefit Trust, with a
nominal value of GBP30,000, in order to part satisfy the exercise
of 304,080 LTIP options.
During the prior period, the Company placed 73.9 million
Ordinary shares (the '2020 Placing') with existing and new
institutional investors raising net proceeds of GBP82.7 million
(gross proceeds of GBP85.0 million less costs of GBP2.3 million) of
which GBP7.4 million was credited to share capital. The 2020
Placing shares represented approximately 19.99 per cent. of the
Company's existing share capital. The 2020 Placing price of 115
pence per share was equal to a discount of 7 per cent. to the
10-day average closing mid-market price of 123.6 pence per share,
and 2 per cent. to the 10-day volume weighted average price of
117.5 pence per ordinary share both ending on 28 May 2020, being
the last practicable day prior to the publication of the
announcement.
The 2020 Placing was undertaken using a cash box structure. As a
result, the Company was able to take relief under section 612 of
the Companies Act 2006 from crediting share premium and instead
transfer the net proceeds in excess of the nominal value to
retained earnings.
16 BUSINESS COMBINATIONS
There have been no business combinations in the half year to 30
June 2021 or in the year ended 31 December 2020.
In the half year to 30 June 2021, GBP0.8 million of deferred
consideration was paid relating to the acquisition of Fresh Linen
in 2019.
17 BORROWINGS
As at 30 June 2021, borrowings were secured and drawn down under
a committed facility dated 21 February 2014, as amended from time
to time, comprising a GBP135.0 million rolling credit facility
(including an overdraft) which runs to August 2023 and a GBP40.0
million rolling credit facility which runs to May 2022 with the
option, subject to agreement from the lenders, for a one year
extension.
Individual tranches were drawn down, in sterling, for periods of
up to six months at LIBOR rates of interest prevailing at the time
of drawdown, plus the applicable margin. The margin varies between
1.25% and 2.25%, but for the period to 31 March 2022 is fixed at
2.00%.
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.
As at 30 June 2021, the Group has in place the following hedging
arrangements which have the effect of replacing LIBOR with fixed
rates as follows:
-- for GBP15.0 million of borrowings, LIBOR is replaced with
1.144% from 30 January 2019 to 31 January 2022; and
-- for GBP15.0 million of borrowings, LIBOR is replaced with
0.805% from 8 January 2020 to 9 January 2023.
Following the equity placing in June 2020 which raised GBP82.7
million, the Group repaid its loans outstanding at that date. Hedge
accounting was therefore discontinued at that date as the Group no
longer had any loans for the Group's interest rate swaps to
economically hedge.
Borrowings are stated net of unamortised issue costs of GBP0.3
million (30 June 2020: GBP0.6 million; 31 December 2020: GBP0.4
million).
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.
At 1 At 30
January Cash Non-cash June
June 2021 2021 Flow Changes 2021
GBPm GBPm GBPm GBPm
Debt due within one year 0.2 0.1 - 0.3
Debt due after more than
one year 0.2 (7.0) (0.2) (7.0)
Lease liabilities (40.6) 2.9 (0.4) (38.1)
----------------------------- --------- ------- ----------- -------
Total debt and lease
financing (40.2) (4.0) (0.6) (44.8)
Cash and cash equivalents 6.6 (8.7) - (2.1)
----------------------------- --------- ------- ----------- -------
Net debt (33.6) (12.7) (0.6) (46.9)
----------------------------- --------- ------- ----------- -------
At 1 At 30
January Cash Non-cash June
June 2020 2020 Flow Changes 2020
GBPm GBPm GBPm GBPm
Debt due within one year 0.3 0.1 (0.1) 0.3
Debt due after more than
one year (84.7) 85.1 (0.1) 0.3
Lease liabilities (40.4) 3.0 (2.3) (39.7)
--------------------------------- --------- ------ --------- -------
Total debt and lease financing (124.8) 88.2 (2.5) (39.1)
Cash and cash equivalents (2.9) 2.5 - (0.4)
--------------------------------- --------- ------ --------- -------
Net debt (127.7) 90.7 (2.5) (39.5)
--------------------------------- --------- ------ --------- -------
At 1 At 31
January Cash Non-cash December
December 2020 2020 Flow Changes 2020
GBPm GBPm GBPm GBPm
Debt due within one year 0.3 0.1 (0.2) 0.2
Debt due after more than
one year (84.7) 85.1 (0.2) 0.2
Lease liabilities (40.4) 6.1 (6.3) (40.6)
--------------------------------- --------- ------ ----------- ----------
Total debt and lease financing (124.8) 91.3 (6.7) (40.2)
Cash and cash equivalents (2.9) 9.5 - 6.6
--------------------------------- --------- ------ ----------- ----------
Net debt (127.7) 100.8 (6.7) (33.6)
--------------------------------- --------- ------ ----------- ----------
The unamortised fees due after more than one year at 30 June
2020 and 31 December 2020 have been shown within non-current trade
and other receivables as there are no borrowings at the end of the
period for the fees to be offset against. As at 30 June 2021, the
relevant fees are deducted from debt due within one year.
The cash and cash equivalents figures are comprised of the
following balance sheet amounts:
As at
30 As at As at
June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
Cash (Current assets) 6.8 7.3 7.8
Overdraft (Borrowings, Current liabilities) (8.9) (7.7) (1.2)
(2.1) (0.4) 6.6
--------------------------------------------- ------ --------- -------------
Lease liabilities are comprised of the following balance sheet
amounts:
As at
30 As at As at
June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
Amounts due within one year (Lease liabilities,
Current liabilities) (5.2) (5.4) (5.5)
Amounts due within one year (Lease liabilities,
Non-current liabilities) (32.9) (34.3) (35.1)
(38.1) (39.7) (40.6)
------------------------------------------------- ------- --------- -------------
19 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Half year Half Year ended
to year 31 December
30 June to 2020
2021 30 June
2020
GBPm GBPm GBPm
(Decrease) / increase in cash in the
period (8.7) 2.5 9.5
(Increase) / decrease in debt and lease
financing (4.0) 88.2 91.3
----------------------------------------- ---------- --------- ---------------------
Change in net debt resulting from cash
flows (12.7) 90.7 100.8
Lease liabilities recognised during the
period (0.4) (2.3) (6.3)
Movement in unamortised issue costs of
bank loans (0.2) (0.2) (0.4)
Movement in net debt during the period (13.3) (88.2) 94.1
Opening net debt (33.6) (127.7) (127.7)
----------------------------------------- ---------- --------- ---------------------
Closing net debt (46.9) (39.5) (33.6)
----------------------------------------- ---------- --------- ---------------------
20 RELATED PARTY TRANSACTIONS
Transactions during the year 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 2020. There have been no material
changes in these relationships in the half year to 30 June 2021 or
up to the date of this Report.
21 CONTINGENT ASSETS
During the prior year the Group made claims against its
insurance policy in relation to a fire and a flood at two Workwear
processing sites. GBP3.6 million of insurance claim proceeds have
been recognised within the Consolidated Income Statement during the
half year to 30 June 2021 (June 2020: GBP0.5 million, December 2020
GBP4.4 million). GBP2.6 million (June 2020; GBP0.5 million:
December 2020: GBP2.5 million) of this income has been recognised
in exceptional items as it relates to capital items and GBP1.0
million (June 2020: GBPnil; December 2020; GBP1.9 million) is
included within adjusted operating profit offsetting against an
equal value of associated business interruption costs.
Work is ongoing with the insurers such that the claims will
likely be finalised during the second half of 2021. The insurance
proceeds relating to capital items expected to be received during
the second half of 2021 are between GBP4.4 million and GBP5.4
million.
22 CONTINGENT LIABILITIES
The Group operates from a number of sites across the UK. 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 GBP28.0 million to the Trustee
ranking pari passu with up to GBP155.0 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 GBP0.2 million per annum,
reduced pro rata as guarantees are released. Such liabilities are
not expected to give rise to any significant loss.
As a condition of the sale of the Facilities Management division
in August 2013, the Group has put in place indemnities, to the
purchaser, in relation to any future amounts payable in respect of
contingent consideration related to the Nickleby acquisition
completed in February 2012. As set out in the 2012 Annual Report
and Accounts the maximum amount payable under the terms of the
indemnity could be up to GBP5.0 million. The Directors believe the
risk of settlement at, or near, the maximum level to be remote.
23 PRIOR PERIOD RESTATEMENT
The Interim Statements for the half year ended 30 June 2020 have
been restated following the identification of an error within the
support information provided for the purposes of the
post-employment benefit disclosure (note 14). The impact of the
error was an overstatement of the fair value of scheme assets, as
at 30 June 2020, by GBP 10.3 million. As a result, the
post-employment benefit obligations at 30 June 2020 should have
been a GBP9.0 million liability compared to the reported GBP1.3
million asset and the deferred tax asset thereon should have been
GBP1.7 million compared to the reported deferred tax liability of
GBP0.3 million. As a result, both retained earnings and net assets
should have been GBP8.3 million lower. The error had no impact on
the Consolidated Income Statement or the Consolidated Statement of
Cash flows .
The following tables shows the adjustments made to the
Consolidated Statement of Comprehensive Income and the Consolidated
Balance Sheet for the half year to 30 June 2020. All other periods
remain unaffected.
Line items that were not affected by the changes have not been
included. As a result, the subtotals and totals disclosed cannot be
recalculated from the numbers provided.
Restated
Half year
Half year to to
30 June 30 June
2020 Adjustment 2020
Note GBPm GBPm GBPm
Items that will not be subsequently
reclassified to profit or loss
Re-measurement and
experience gains
/ (losses) on
post-employment benefit
- obligations 14 7.7 (10.3) (2.6)
Taxation in respect of re-measurement
- and experience (gains) / losses (1.5) 2.0 0.5
---------------------------------------------- ----------- ---------- ----------
Other comprehensive income / (loss) for
the period 5.2 (8.3) (3.1)
-------------------------------------------------------------------
Total comprehensive loss for the period (10.9) (8.3) (19.2)
------------------------------------------------------------------- ----------- ---------- ----------
Restated
As at as at
30 June 30 June
2020 Adjustment 2020
GBPm GBPm GBPm
Non-current assets
Post-employment benefit
assets 2.3 (2.3) -
Deferred tax assets 0.6 1.7 2.3
Non-current liabilities
Post-employment benefit
obligations (1.0) (8.0) (9.0)
Deferred tax liabilities (6.1) 0.3 (5.8)
------------------------------- --------- ------------ --------
Net assets 279.5 (8.3) 271.2
------------------------------- --------- ------------ --------
Retained earnings 218.5 (8.3) 210.2
------------------------------- --------- ------------ --------
Total Shareholder's
Funds 279.5 (8.3) 271.2
------------------------------- --------- ------------ --------
24 ACCOUNTING POLICIES
Except as described below, 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 2020.
(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.
25 EVENTS AFTER THE REPORTING PERIOD
There have been no events that require disclosure in accordance
with IAS10, 'Events after the balance sheet date'.
26 PRINCIPAL RISKS AND UNCERTAINTIES
The Group operates a structured risk management process, which
identifies and evaluates risks and uncertainties and reviews
mitigation activity. The Group sets out in its 2020 Annual Report
and Accounts the principal risks and uncertainties that could
impact its performance:
Principal Risk Risk Rating
Economic Conditions High
Failure of Strategy High
Loss of a Processing Facility High
Cost Inflation Medium
Insufficient Processing Capacity Medium
Customer Sales and Retention Medium
Competition and Disruption Medium
Recruitment, Retention and Motivation Medium
of Employees
Health and Safety Medium
Compliance and Fraud Medium
Information Systems and Technology Medium
Climate Change and Energy Costs Medium
At that time, we also stated that whilst we had not established
a new principal risk specifically in respect of the COVID -19
pandemic, the Board had considered how the above principal risks
and uncertainties had been impacted by it. Relevant disclosures
were provided in the 2020 Annual Report and Accounts.
The Directors have reviewed the above principal risks and
uncertainties during the period, together with the impact of
COVID-19, and concluded that they remain applicable to the current
financial year with no overall material change to the risk
environment . Key considerations relating to the review of
principal risks and uncertainties during the period are set out
below:
Principal Considerations
Risk
Recruitment, As reported, r ecruitment has been more challenging
Retention than was anticipated and the competition for labour
and Motivation in the employment market generally has meant that
of Employees costs of production have seen an increase. We would
expect the situation to improve in the second half
of the year as COVID-19 unemployment reliefs come
to an end.
-----------------------------------------------------------------
Customer As the various lockdown restrictions began to ease,
Sales and we experienced a quicker recovery in HORECA volumes
Retention than we, and our customer base, had anticipated. Operationally,
the significant incremental increases initially caused
some service challenges as we attempted to match resource
to demand. These challenges were experienced across
the whole laundry sector. We have, however, since
returned our service levels to a more normalised level
and we continue to work closely with our customers
in order that we can match resource and production
with demand.
COVID-19 may lead to a higher number of customer closures
than we would ordinarily experience and customers
may delay opening until they are confident of demand
for their own services having returned to more normalised
levels. Our business model is structured so that we
are not reliant on one particular customer or group
of customers and we have limited concentration of
credit risk with regard to trade receivables given
the diverse nature of the Group's customer base.
-----------------------------------------------------------------
Cost Inflation Along with many other businesses, we are seeing inflationary
pressures on some of our costs however, our existing
scale and focus on operational excellence means we
are well placed to address these challenges proactively
without compromising our market share opportunity.
-----------------------------------------------------------------
Health and The Group has followed all relevant guidelines to
Safety ensure that facilities are COVID-19 safe. While the
potential risk due to COVID-19 remains, the Directors'
assessment is that this has been mitigated by the
measures already implemented.
-----------------------------------------------------------------
Information Fraudsters have tried to capitalise on the disruption
Systems of the COVID-19 pandemic and ransomware attacks are
and Technology becoming ever more prevalent. The Group is continuing
to take action to assess and manage the effectiveness
of its security infrastructure and our ability to
effectively defend against current and future cyber
risks by using analysis tools and experienced professionals
to evaluate and mitigate potential impacts.
-----------------------------------------------------------------
The Board strongly believes that effective risk management is
critical to the achievement of our strategic objectives and the
long-term sustainable growth of the Group. The Board will continue
to take a proactive approach to recognising and mitigating risk
with the aim of protecting its employees and customers and
safeguarding the interests of the Group and its stakeholders.
Further details of the Principal Risks and Uncertainties facing
the Group, together with details of how they have been impacted by
COVID-19, are detailed on pages 38 to 45 of the 2020 Annual Report
and Accounts.
27 PUBLISHED FINANCIAL STATEMENTS
As previously announced, there is no longer a 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 .
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 or visit 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.
END
IR DFLFXFVLFBBV
(END) Dow Jones Newswires
September 01, 2021 02:00 ET (06:00 GMT)
Johnson Service (LSE:JSG)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Johnson Service (LSE:JSG)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024
