Johnson Service (JSG) has cleaned up its act recently with a concerted effort to focus on core strengths, shore-up the balance sheet and restructure underperforming businesses. The disposal of its facilities management division, which was completed in August, leaves the company focused on its original core business of textiles. Moreover, a major restructuring of its dry cleaning business, which led to branch closures, is now largely complete.
These first-half results suggest the company's restructuring efforts have paid off with adjusted operating profit having risen 29 per cent to £7.5m. The textile rental arm grew adjusted operating profit 12 per cent to £8.6m with last year's acquisition of Cannon Textiles now fully integrated. The dry cleaning division reported adjusted operating profit of £0.7m against a £0.1m loss last year, with the focus now on a national marketing campaign to boost brand awareness.
The facilities management disposal has slashed net debt from its current £53.6m to £25.6m on a pro forma basis, and the company is actively seeking acquisitions. Executive chairman John Talbot sees plenty of opportunities in textile rental, particularly within the hotel segment: "We see consolidation here; we want to be a major player."
Broker Investec Securities expects adjusted full-year pre-tax profit of £13.3m, giving EPS of 3.7p (from £10.7m and 3.4p in 2012).
JOHNSON SERVICE (JSG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 48p | MARKET VALUE: | £123m | |
| TOUCH: | 48p-49p | 12-MONTH HIGH: | 51p | LOW: 28p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | na | |
| NET ASSET VALUE: | 24p* | NET DEBT: | 89% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 97.1 | 1.40 | 0.60 | 0.36 |
| 2013 | 96.1 | 4.40 | 1.30 | 0.40 |
| % change | -1 | +214 | +117 | +11 |
Ex-div: 9 Oct Payment: 8 Nov *Includes intangible assets of £55.7m, or 22p a share | ||||
