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Return to offices spells brighter outlook for dry cleaners

Activity in city centres may not be back to pre-Covid levels just yet, but it’s getting there as more people make a full-time return to the office.

A return to office life should spell an improvement in fortunes for Johnson Service Group, the company best known for its high street dry cleaning chain.

It endured a tough year in 2020, as its business providing linen to hotels, restaurants and the catering industry saw demand plummet to just 3 per cent of normal levels between March and June last year.

The group slumped to a £32.3m pre-tax loss from a previous year profit of £38.1m in 2020 as revenue fell by more than a third to £230m. Sales declined by a further 13 per cent in the half-year to June 30, as the linen supply business continued to suffer disruption, with most hotels and restaurants remaining closed until May. However, they were back up to 80 per cent of normal levels by the end of August.

The improving outlook tempted chair Jock Lennox and chief executive Peter Egan to make purchases last week, with each buying 25,000 shares at around £1.30 per share. JSG, which raised £82.7m through a placing last year, had seen its shares make year-to-date gains of almost 30 per cent by late June, but a sell-off in recent weeks means they closed the week ending October 15 down 7 per cent since the start of the year.

Fintel chair sells £5.9m of shares 

If, as the popular supposition goes, data is the new oil, then financial data is its jet fuel. The premium attached to financial data companies can be demonstrated by the quick profit that private equity house Blackstone made on Refinitiv. It bought the former financial and risk data business of Thomson Reuters for $20bn in October 2018 and sold it on to the London Stock Exchange for $27bn less than a year later.

Fintel, a UK-listed company that owns the Defaqto business which rates financial products and investment funds, hasn’t performed as spectacularly. Trading in its shares has been largely flat over the past six months but it has made gains of about 48 per cent over the past year. The company, which also owns the SimplyBiz brand that provides compliance advice and other support services to financial advisers, made a pre-tax profit of £5m in the six months to June 30, as revenue grew 10 per cent to £31.7m. 

It bought DeFaqto for £74.3m in 2019, borrowing about half of the money to complete the deal. However, recent disposals, in the form of employee benefits business Zest Technology in July for £10m, and the Verbatim funds business in September for £5.8m, have allowed it to bring down net debt to just 0.2-times earnings, the company said last month.

Last week, trusts owned by interim chair Ken Davy, who founded SimplyBiz and also owns the Huddersfield Giants rugby league club, sold almost 2.7m shares in the company, securing £5.9m in proceeds. He still owns more than 26m Fintel shares and has given an undertaking not to sell any more within the next six months. The sale “provides . . . additional opportunity for new shareholders to participate in Fintel’s tremendous story”, Davy said.

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