Workwear group eyeing further acquisitions after strong year’s trading
Johnson Service Group, the Runcorn-based workwear and hospitality industry textile business, says it has a strong enough balance sheet to continue its growth strategy, including more acquisitions.
During the financial year to December 31, 2023, the business acquired Regency Laundry and Harkglade, along with its wholly owned subsidiaries Celtic Linen and Millbrook Linen.
The group announced annual results today that showed strong progress in both revenues and profits.
Turnover rose by 20.6% to £465.3m, while pre-tax profits of £37.6m grew from £30.3m the previous year.
The full year dividend has been declared at 2.8p per share, up from 2.4p in 2022.
The board said it expects 2024 adjusted operating profit to be in line with current market expectations, given the strong start to the new financial year.
Some £33m was invested through M&A activity in 2023 with a further £31.1m of capital investment across the estate.
A £10m share buyback was completed in the second half of 2023, with a total of £29.8m returned to shareholders,
The group’s bank facility increased to £120m with the tenure extended to August 2026.
Today’s results showed that HORECA (healthcare and hotel, restaurant and catering) volumes continued to improve with an increased number of locations being serviced.
Workwear customer retention levels were 91% while increased activity from prospective customers will have a positive impact into 2024.
A new HORECA site in Crawley remains on track to open in the second half of 2024.
Chief executive, Peter Egan, said: “We are pleased to report a strong performance for the year, demonstrating the resilience of our business model against a backdrop of macroeconomic pressures, the strength of our relationships with our customers and business suppliers and the hard work of our employees.
“During the year, significant investment has been made across the business with the improvement of existing sites, a new build to support future growth and the acquisitions of Regency and Celtic Linen.
“We remain focused on organic growth initiatives, optimising operational efficiencies and continuing to expand our geographical coverage through the successful execution of our strong M&A pipeline.”
He added: “2024 has started positively, with a larger business operating in an expanded geography. Our scale, expertise, operational excellence and strong balance sheet will allow the business to capitalise on future opportunities.
“Given the encouraging start to the year, the board expects adjusted operating profit for the year to be in line with current market expectations.”
Looking ahead, he said: “Our scale, expertise and operational excellence mean that we are well placed to capitalise on opportunities and the board remains confident about the growth opportunities available to the group.
“Whilst economic challenges and their impact on customer behaviour remain difficult to predict, we have a resilient business model to help mitigate these challenges and to address inflationary pressures which continue to impact the business.
“We have continued to fix a proportion of our future energy costs and improve the efficiency of our sites to help offset and stabilise our cost base and we are continuing to engage with our customers regarding the pricing of our services as we advance through 2024. New sales across the business are a focus, particularly in the regions where we are adding capacity.
“We have started 2024 positively, with a larger business operating in an expanded geography. We are continuing to focus on expanding the group through targeted investment in our existing sites together with identifying earnings enhancing acquisition opportunities. We have a strong balance sheet to support these plans.”
