United Kingdom
Runcorn-based textile services giant Johnson Service Group plc (JSG) today announced details of its plans to raise shares at a discount of around £ 85m as the company continues to experience a "significant." “Amount of disruption recorded across its markets. As part of its response to the effects of the coronavirus, the company has expanded its banking facilities by £ 40m.
The company proposed that 73,915,188 shares be issued at 115 pence per share, which represents a discount of approximately 7% on the average 10-day closing price of 123.6 pence per common share at the end of the game on May 28, 2020.
The proceeds from the placement are intended to serve to improve the Group's liquidity position and further strengthen the JSG balance sheet, the Group said in an announcement. The planning is based on the fact that the hospitality division will only reach 75% of typical activities by the end of this year and will only return to the previous level in spring 2022. However, the group expects the workwear division to improve to around 90% of typical activities this year and predicts that it will take the whole of 2021 for earnings to normalize.
As announced on May 5, 2020, the Group continues to see significant disruptions in its markets. Trading in the first two months of the year before the effects of Covid-19 was in line with expectations.
The workwear business, which offers clothing rental, protective clothing and laundry services, continues to supply key industries and all processing sites remain open. Trading in the first two months of the year met management expectations. Organic sales in the workwear business were slightly negative in the first quarter and decreased by around 12% in April 2020. The first signs of some customers reopening were in May.
In most of the 18 locations, the group has stopped processing in the hospitality markets. Organic growth was particularly strong at 9% in the first two months of the year, supported by Gleneagles and Jurys Inn. However, volume declined in March 2020, resulting in negative organic growth of 27% per month. In April sales declined organically by 97% as the vast majority of the Group's hotel customers were closed. Revenue in May 2020 is expected to be slightly ahead of April 2020 as a small number of customers will reopen.
The Group has taken appropriate mitigation measures to manage the cost base and protect cash flows. These measures include the leave of absence of a significant part of the employees under the Coronavirus Job Retention Scheme (CJRS), especially in the HORECA department, where the vast majority of the locations were mothballed. The April CJRS claim is approximately £ 5.4m;
At the same time, the Board of Directors and the Senior Management Team accepted a 20% temporary salary reduction, initially for a period of three months from April 1, and certain other support and administrative personnel who were not on leave accepted a temporary salary reduction of 10%, initially for the same period.
