Johnson Service Group (JSG), the UK textile rental services provider, has released a trading update for the year ended 31 December 2019. The Group confirmed the completion on 30 November of its acquisition of the entire issued share capital of Fresh Linen Holdings (Fresh), together with its trading subsidiary Fresh Linen Limited, for a cash consideration of £12.5 million on a debt free, cash free basis and subject to an adjustment for normalised working capital. The consideration includes the freehold site.
As reported in the audited, statutory accounts for the year ended 30 June 2019, Fresh generated revenue of £16.7 million and profit before taxation of £1.1 million. The results for Fresh are reported on the basis of the accounting policies of the business and will be aligned to the rest of the Group post completion. Reported net assets at 30 June 2019 were £4.3 million, including a freehold site with a net book value of £1.7 million.
The business, which has some 340 employees and operates from its freehold main site in Clacton-on-Sea in Essex and through a transport distribution hub in Rainham, London, regularly supplies over 900,000 items of linen a week, predominantly to hotels and gym clubs in the hospitality market in the South East of England.
JSG said that the acquisition meets with its continuing growth strategy to increase the size and scale of its hospitality services in the UK and extend geographical reach as well as further diversifying the customer profile base within the Johnsons Hotel Linen portfolio.
JSG also said that its £10.0 million investment plan for its new high volume linen plant in Leeds remains on target for opening in the Spring of this year. This will provide extra processing capacity ahead of the busy summer months.
The group remains positive about the future prospects for the business and expects to announce full year results on Monday 2 March slightly ahead of market expectations.
Peter Egan, Chief Executive Officer of JSG, commented:
“This has been a strong trading period despite the general uncertainty in the UK economy. We have achieved consistent organic growth and, with this latest acquisition in the South East, are expanding into a new geographical area where we are currently under represented for servicing our high volume linen customers.
“We are delighted that 2020 will see the opening of the new plant in Leeds providing further capacity and are confident that with these new geographies, our established client base and operational expertise, we will continue to deliver future organic growth.”