One to watch: JSG poised for recovery

JOHNSON Service Group (JSG) operates in two principal areas, textile-related services and facilities management. Its activities include textile rental services, providing workwear and linen for the hotel, catering and corporate hospitality markets and dry-cleaning, through some 520 stores nation wide.

The facilities management side is involved in delivering facilities and property management services to public, commercial and retail organisations.

Johnson Services' shares are a shadow of what they were five years ago, when they were trading at about 450p. Debt ballooned and the company suffered badly during the downturn. However, there are grounds for believing that the prospects for this under-researched company are beginning to improve. The recent trading update, ahead of the closed pre-results season, said the company is trading "satisfactorily despite the challenging conditions within the UK".

Following JSG's acquisition of SGP Property Services (SGP), the facilities' management business has been able to absorb the consequences of the failure of Threshers and has been increasing its customer base in the pubs and restaurants arena in addition to its traditional retail market.

Unlike some facilities management groups, SGP acts as an agent, putting customers in touch with specialists rather than retaining their own staff. Its core business also seems to be doing well, focused on re-branding some dry-cleaning stores as "Greener" after acquiring the exclusive UK licence for a more environmentally friendly cleaning process.

At current levels, Johnson Services' share price owes more to the travails of the past than the potential that could be unlocked.

The value of your investment could fall and you may get back less than you invested. You should take professional advice if you have any doubt about the suitability of this company for your portfolio.

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