StockMarketWire.com - Textile rental and cleaning group Johnson Service scrapped its dividend and said it was talking to its banks about credit, as the Covid-19 outbreak hurts demand from hospitality customers.

The company had planned to pay a final dividend for 2019 of 2.35p per share.

One of Johnson Service's main businesses, HORCEA, serves the hotels, restaurant and catering markets.

'These market segments have seen reduced demand, which has resulted in a significant reduction in our processing volumes, particularly in the last few days,' the company said.

Its workwear business, meanwhile, had seen limited impact to date, though it said it was 'reasonable to expect' that some workwear customers would see an impact from Covid-19 in due course.

Johnson Service said its debt at the end of 2019 was £87.7, resulting in a leverage ratio of 1.3:1 against a bank covenant requirement of not more than 3:1.

Debt has remained at a similar level to date and its committed bank facilities were £135m, running to August 2023.

'We have taken immediate action to limit capital expenditure on both plant and equipment and on new textile rental items and have cancelled all non-essential revenue expenditure,' the company said.

'We have also commenced discussions with our banks regarding increased bank facilities.'

'Actions are being taken to reduce operational costs, particularly in the businesses most affected by the drop off in volumes, but also in the wider group.'

'While the full implications of Covid-19 on the financial performance for the current financial year are difficult to determine at this stage, the board remains confident in the future prospects and viability of the group.'


At 2:52pm: [LON:JSG] Johnson Service Group PLC share price was +12.2p at 104.2p



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