Johnson Service confident in outlook despite tougher first half

Textile services provider Johnson Service Group reported total revenue of £99.6m in its first half on Wednesday, down from £114.8m year-on-year, as the board described its markets as improving.

The AIM-traded firm said organic revenue was down 13.2% year-on-year in the six months ended 30 June, and down 43.3% compared to the first half of 2019, pre-pandemic.

Adjusted EBITDA totalled £16.9m, down from £24.9m a year earlier, with its adjusted EBITDA margin slipping to 17% from 21.7%.

Its adjusted loss before tax totalled £11.2m, narrowing slightly from £12.6m year-on-year, while its total loss before tax was £14m, compared to £18.6m in the first half of last year.

Net debt, excluding IFRS 16 liabilities, as at 30 June was £8.8m, swinging from net cash of £6.6m at the end of December, while total net debt at the end of June was £46.9m, widening from £33.6m on the last day of 2020.

The board declared no interim dividend.

On the operational front, Johnson Service Group said its workwear division continued to operate throughout the various lockdowns with volumes remaining “fairly robust”, reaching 98% of normal levels in June.

Customer retention levels, meanwhile, were 95% during the period to the end of July.

As it had previously reported, the majority of hotel, restaurant and cafe (HoReCa) sites were mothballed throughout the first half lockdown period, with volumes at about 11% of normal in the first quarter.

Volumes there climbed rapidly from mid-April, to reach over 70% in June and over 80% in August, with some sites in tourist areas back to 2019 levels.

All HoReCa sites, including the new Leeds site, were operational by May.

The company said it had ceased claiming Coronavirus Job Retention Scheme (CJRS) funds from the end of June, with all employees now returned from furlough.

Its board described the balance sheet as “strong”, with committed bank facilities of £175m.

“During the first half, we have experienced a consistently robust performance from our workwear business and a notable return of demand in HoReCa, particularly driven by the ‘staycation’ activity in early summer,” said chief executive officer Peter Egan.

“It remains difficult to give guidance for the coming months however, in the absence of increased restrictions, we expect that we will announce results for the year towards the higher end of current market expectations.

“With our established customer base and well invested infrastructure, coupled with a strong balance sheet and £175m of committed bank facilities, we are well placed to drive growth in our performance as we move through the remainder of the year and beyond.”

At 0816 BST, shares in Johnson Service Group were up 1.49% at 150p.