City round-up: Johnson Service Group; K3 Business Technology

Runcorn-based workwear and hospitality industry textile business, Johnson Service Group, unveiled strong results for the year to December 31, 2022, which it said reflected the resilience of its business model.

Revenues jumped from £271.4m the previous year to £385.7m, while a pre-tax profit of £30.3m is compared with £5.1m in 2021.

A full year dividend of 2.4p per share has been recommended, compared with no dividend payment the previous year.

The group said it has a strong balance sheet and capacity for further investment. It is carrying out an ongoing £27.5m share buyback programme, with £11.4m deployed to date.

And the board said it expects the result for 2023 to be in line with market expectations.

During the financial year, the group said its HORECA (hotel, restaurant and catering) volumes improved to reach 93% of normal in the final quarter, compared with lockdown periods, and the board expects volumes to continue to increase through 2023.

Workwear customer retention levels remained strong at 94.3%, while price increases and other actions were implemented throughout 2022 to help offset cost inflation.

Further mitigating actions are ongoing to offset cost pressures.

Regency Laundry was acquired on February 13, 2023, and a new leasehold site was secured to expand HORECA capacity in the South East.

Chief executive, Peter Egan, said: “The improved performance we are reporting today demonstrates the resilience of JSG’s business model, operational expertise and strength of our relationships with our customers and business suppliers, alongside the hard work of our employees.

“We have invested £22.4m in our sites to not only improve productivity and processes, but also to attract and retain employees with enhanced working environments.

“Post the year end we supplemented our organic growth plans with the acquisition of a luxury hotel linen rental business, in line with our acquisition strategy, and the signing of a new lease to increase our capacity in the South East for HORECA.

“We will continue to assess investment opportunities which will provide supplementary quality services and earnings enhancing outcomes.”

He added: “We are confident that the actions we have taken have placed the group in a favourable position as markets continue to recover.

“After considering the current economic environment, including the recent, and possibly further, increases in UK interest rates and the subsequent impact on our cost of borrowing, the board expects the result for the year to be in line with market expectations.”

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Salford software group K3 Business Technology Group, which provides business‐critical software solutions focused on fashion and apparel brands, has signed its largest ever software licence contract for its flagship fashion product, K3 fashion.

The three-year software contract has a gross value of €1.6m and has been agreed with a global luxury apparel group.

The luxury retailer was secured as a new customer last January 2022 via K3’s channel partner network.

At that time, the customer bought €30,000 of software licences in a 12-month contract covering the piloting of the product. With the success of the pilot, the software contract has been expanded substantially, with this sales process being typical for K3 fashion.

The new contract has significantly increased the total value of annualised recurring contracts of strategic products.

K3 fashion is an enterprise solution, based on Microsoft Dynamics 365 and was specifically developed for the fashion and apparel markets.

It is endorsed by Microsoft as its globally recommended ‘add-on’ for the fashion sector.

It is a comprehensive ‘concept-to-consumer’ solution that enables customers to manage more effectively all processes connected to product design, manufacturing, supply and returns.

Its modules also specifically address customers’ sustainability issues, including supply chain traceability and enable seamless engagement with end-customers across all sales channels, digital and physical. It is typically bought as a cloud-based Software-as-a-Service (SaaS) solution.