Last year may come to be seen a watershed for Johnson Service (JSG). The textile service group complemented its existing Stalbridge brand through April's deal to acquire London Linen. The move was well received by the market, but we think that the subsequent acquisition of Lincolnshire-based Ashbon provides even greater logistical advantages in concert with improved processing capacity.
Ashbon was snapped up as recently as November, and while both acquisitions were already boosting earnings, the full impact of commercial synergies won't become apparent until the half-year figures. Even so, a 28 per cent jump in adjusted operating profit to £27.9m demonstrates that the group has also been driving through organic efficiencies.
The key textile rental segment continued to perform strongly, with revenue rising 21 per cent to £188m and operating margins edging up. New business wins and improved customer retention boosted the group's Stalbridge business, driving penetration into the increasingly lucrative hotel, restaurant and catering markets. The restructuring of the smaller dry cleaning arm was successfully completed through the year, with the resultant closure of 101 branches. However, the expanding partnership with supermarket group Waitrose has opened up a higher-margin avenue of the market.
Investec gives pre-tax profit of £27.5m this year, giving EPS of 6.6p, against £25.2m and 6.3p in 2015.
| JOHNSON SERVICE (JSG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 93p | MARKET VALUE: | £307m | |
| TOUCH: | 92.25-93.5p | 12-MONTH HIGH: | 95p | LOW: 72p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 32p* | NET DEBT: | 67% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 234 | 13.5 | 4.1 | 1.00 |
| 2012 | 199 | -15.3 | -4.6 | 1.10 |
| 2013 | 194 | 12.2 | 3.8 | 1.21 |
| 2014 | 210 | 11.6 | 2.9 | 1.70 |
| 2015 | 234 | 12.7 | 3.2 | 2.10 |
| % change | +11 | +9 | +10 | +24 |
Ex-div: 14 Apr Payment: 13 May *Includes intangible assets of £130m, or 39p a share | ||||
