Pre-close Trading Update and Acquisition of Fresh Linen Holdings Limited
“A year of strong strategic and operational performance”
JSG, a leading UK textile services provider, is pleased to provide a trading update for the year ended 31 December 2019.
Our £10.0 million investment plan in our 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.
We remain positive about the future prospects for the business and we expect to announce full year results slightly ahead of market expectations.
On 30 November 2019 we completed the acquisition of the entire issued share capital of Fresh Linen Holdings Limited (“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 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.
The acquisition meets with our continuing growth strategy to increase the size and scale of our hospitality services in the UK and extend our geographical reach as well as further diversifying the customer profile base within the Johnsons Hotel Linen portfolio. This transaction demonstrates our ability to acquire good quality businesses offering complementary services to our existing locations and clients.
We expect to announce the full year results on Monday 2 March 2020.
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.”
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