JSG will also transfer some overheads to Alsico, including leases over fixed assets and CCM’s warehouse at Fulwood, Preston.
The initial consideration will be approximately £2.6 million in cash, with further cash payments in quarterly instalments over a three year period up to a maximum of approximately £200,000, dependent on the level of sales achieved.
The decision to sell the assets was taken following a long-term review that determined that it would be difficult for CCM to grow its business by winning new clients in the UK textile rental sector, many of whom compete directly with Johnsons Apparelmaster, the Group’s market leading workwear rental business.
The transaction will deliver cash proceeds to the Group, while securing long-term supply arrangements for the Johnsons Apparelmaster business.
The operating profit attributable to the assets sold was approximately £2.3m for the year to 31 December 2006, of which some £1.1m related to profit on the internal supply of garments to Johnsons Apparelmaster.
The gross value of the assets was recorded as £2.7m at 31 December 2006. The proceeds of the sale will be used for general corporate purposes.
The sale will result in a write-down of goodwill of approximately £11.8m in the financial year to 31 December 2007.
