Johnson Service Group Reports Strong H1 2025 Growth with Dividend Hike and New Share Buyback

Johnson Service Group’s H1 2025: steady growth, fatter margins, bigger cash returns

Johnson Service Group’s half-year update packs in what retail investors like to see: growth, margin progress, a dividend hike and another share buyback on the way. Trading was resilient despite a softer start to the summer for hospitality, and management is holding the line on its 2026 margin target.

Quick refresher on jargon: “adjusted” numbers strip out non-cash amortisation of acquired intangibles and exceptional items to show underlying trading; “bps” means basis points (100 bps = 1 percentage point).

Headline numbers investors should care about

Metric	H1 2025	H1 2024	Change
Revenue	£257.5m	£244.1m	+5.5%
Adjusted operating profit	£28.7m	£25.2m	+13.9%
Adjusted operating margin	11.1%	10.3%	+80 bps
Adjusted EBITDA margin	29.3%	28.3%	+100 bps
Adjusted PBT	£24.9m	£21.5m	+15.8%
Adjusted diluted EPS	4.6p	3.9p	+17.9%
Statutory PBT	£19.9m	£18.7m	+6.4%
Interim dividend	1.6p	1.3p	+23.1%

Organic revenue growth was 1.4%. That’s not fireworks, but mix and operational discipline did the heavy lifting on profit.

Divisional scorecard: HORECA outperforms, Workwear grinds higher

Division	Revenue	YoY	Adj. operating profit	Margin
HORECA (hotels, restaurants, catering, incl. Ireland and Luxury)	£185.4m	+7.2%	£22.5m	12.1% (up 150 bps)
Workwear	£72.1m	+1.3%	£10.4m	14.4% (up 10 bps)

Despite a slower-than-expected start to the summer season, HORECA delivered the goods with a 22.3% jump in adjusted operating profit. Workwear ticked up modestly and continues to rebuild, helped by improving retention.

Cash returns: bigger dividend and another buyback

• Interim dividend lifted to 1.6p, payable 4 November 2025 (ex-dividend 2 October, record date 3 October). Dividend cover remains 2.5x.
• £30.0 million buyback completed in H1; total returned via buybacks since 2022 now £65.3 million. A fresh buyback of up to £25.0 million is planned over the period to March 2026.

Opinion: the combination of a higher dividend and another buyback signals confidence in cash generation and balance sheet headroom. Bear in mind that buybacks reduce the share count, which can support EPS over time.

Balance sheet, debt and liquidity: more leverage, still conservative

• Free cash flow was £25.0 million (H1 2024: £24.5 million).
• Bank debt rose to £99.0 million (December 2024: £68.6 million), reflecting capex and £16.8 million cash out for the buyback. Net debt including leases was £145.0 million (December 2024: £115.6 million).
• Leverage ratio stands at 0.9x, well under the covenant of less than 3x.
• Revolving credit facility increased by £15.0 million to £135.0 million, expiring August 2027. Current margin is 1.45% over SONIA/EURIBOR.

This is sensible use of the balance sheet in my view: borrowings up for investment and buybacks, but leverage remains low and facilities are ample.

Margins and costs: energy easing, labour tightening

Adjusted operating margin nudged up to 11.1%. The moving parts are worth noting:

• Labour cost rose 170 bps to 46.4% of revenue, reflecting UK and ROI wage and National Insurance changes.
• Energy fell 160 bps to 7.8% of revenue, still above 2019’s 6.5% but moving the right way.
• Other costs reduced by 90 bps.

On hedging, JSG has around 75% of electricity and 90% of gas fixed for the rest of 2025; for 2026, c.50% electricity and c.60% gas are fixed, with some coverage into 2027. That policy smooths volatility and offers reasonable visibility for further margin work.

Operational highlights: new capacity and service wins

• Crawley site came on stream in March and is taking London and Southeast volumes. It’s designed to use around half the energy of a traditional laundry, with water recycling and HVO-powered deliveries.
• HORECA added contracts with an annualised £4.0 million of revenue as smaller competitors reassess their strategies.
• Luxury Linen saw strong retention and high-profile wins; the Corsham upgrade is lifting capacity and efficiencies.
• Ireland completed £6.3 million of investment at Wexford and Naas, increasing capacity by c.20% and c.40% respectively.
• Workwear customer retention improved to 94% (December 2024: 93%). The Lancaster-to-Manchester move is complete; £0.3 million of exceptional cost booked in H1 with £1.2 million expected for the full year.
• A small Bristol unit suffered a fire; service was maintained and the net impact is not expected to be material.

Main Market move: a maturity marker

On 1 August 2025, JSG’s shares moved from AIM to the Main Market via introduction (no new money raised). It is a neat signal of scale and maturity and should, over time, broaden the investor base. The company booked £0.3 million of listing-related exceptional costs in H1 and expects a further £1.5 million in H2.

Strategy and capital allocation: invest, optimise, consolidate

Management’s playbook is consistent: invest to boost capacity and efficiency, push service-led pricing, and add selectively via M&A. Since 2022 JSG has returned £65.3 million via buybacks, bought Harkglade in Ireland for £27.1 million, built out Luxury Linen through Regency and Empire (£26.4 million combined), and opened Crawley. The target leverage remains 1.0–1.5x, leaving headroom for further opportunities.

Outlook: full year on track; 2026 margin goal reiterated

The Board guides to full year adjusted operating profit in line with market expectations and remains “on track” for an adjusted operating margin of at least 14.0% in 2026. With energy as a percentage of revenue still trending down and new capacity bedding in, that looks achievable if hospitality volumes behave.

My take: positives and watch-outs

• Positives: robust HORECA profit growth, improving group margins, rising cash returns, strong liquidity, and tangible efficiency gains from new sites.
• Watch-outs: labour remains elevated at 46.4% of revenue; organic growth was only 1.4%; net debt stepped up; and there are additional listing costs in H2. The hospitality market is still a touch unpredictable.

What to monitor next

• H2 volumes in HORECA as summer fully washes through.
• Ramp-up of Crawley and further mix benefits in Luxury Linen.
• Energy as a percentage of revenue and the impact of hedges into 2026.
• Pace and pricing of new contract wins and Workwear retention above 94%.
• Progress of the £25.0 million buyback and any bolt-on M&A.

Want the source materials?

The company says the analyst presentation and audio replay will be available on its website after the meeting. You can visit the Johnson Service Group site at www.jsg.com. The latest Sustainability Report is also hosted there.