Johnson Service returns to black

Johnson Service Group, which operates a dry-cleaning chain and rents work wear, returned to the black after two years of restructuring and reinstated its final dividend.

John Talbot, the executive chairman brought in to turn the business round, said the company was on track and making money. "We have enjoyed a good year in spite of what has been going on in the economy."

Group revenues fell from £252.3m to £236.4m ($354.1m) in the year to December 31. But the bottom line turned from a loss of £6.8m to pre-tax profits of £20.6m, helped by the end of restructuring charges, a pension credit of £12m and a 50 per cent fall in interest costs. Net debt has been cut from £78.5m to £67.7m.

The work-wear rental business suffered a squeeze on margins as customers cut their workforces, but Stalbridge Linen Services, which supplies hotels, restaurants and caterers to such events as the Cheltenham Gold Cup, swung from an operating loss of £500,000 to profits of £1.2m.

The chain of more than 500 dry cleaners suffered a decline in volumes in line with lower High Street spending. Operating profits fell 26 per cent to £3.1m.

But the facilities management division edged revenues ahead to £28.9m and operating profits rose 6.5 per cent to £3.3m. Mr Talbot said business lost to former customers such as Woolworths and Threshers had been recuperated through new clients, although all were spending less.

Pre-tax profits adjusted for exceptionals more than doubled to £12.1m. City analysts are starting to rekindle an interest in the stock. However only Investec, the company broker, is putting out a forecast - adjusted pre-tax profits to rise to £13.3m this year and £14.4m next.

Basic earnings per share from continuing operations were 6.1p, compared with a previous loss of 3.4p. The proposed final dividend of ½p takes the total payout for the year to ?p.

The shares, priced at 20p for a placing in 2008, closed up 1p at 19?p.

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