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A company that shows the power of scale in the laundry service sector
Thursday 01 Mar 2018 Author: David Stevenson

Johnson Service (JSG:AIM) 136.2p

Loss to date 3.9%

Original entry point : Buy at 141.74p, 14 September 2017

Our bullish stance on textile rental firm Johnson Service (JSG:AIM) may not have been rewarded by share price gains yet but we’re still backers of this business. Its 2017 results released on 27 February show a company improving revenue and profit while reducing its net debt at the same time.

Its revenue was up 13.3% to £290.9m while adjusted pre-tax profit improved 17.5% to £39.7m (both on a year-on-year basis).

Chief executive Chris Sanders tells Shares his company’s share of the UK’s hotel, restaurant and catering laundry sector is 27%, or £168m a year.

Johnson has big ticket clients such as BMW and Ford for which it provides and services work wear. Sanders says that the average value of contracts are £36 per week. The company has 34,000 clients ranging from the aforementioned international names to small guest houses.

Sanders also tells Shares that while the average client contract is agreed for three years, it typically retains customers for around 15 years. This implies good visibility on future revenue.


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