The owner of dry cleaning business Johnsons today said it had secured new banking facilities through to April 2013.
Johnson Service Group, which has more than 500 outlets, agreed the £78.5m facility with Lloyds Banking Group, Royal Bank of Scotland, Barclays and Abbey owner Santander. The previous agreement was due to expire next December.
The Cheshire-based firm said it had successfully reduced debt over the last year, with borrowing falling from £78.5m in December last year to £69m at the end of this month. It expects a further reduction next year.
Executive chairman John Talbot said: “We are delighted to have continued support from our banks.
“We have generated sufficient cash over the last eighteen months to significantly reduce the level of facilities required whilst maintaining an adequate level of headroom.”
Shares rose 3% following the update, even though analysts said the margin on the new facility is around 1% higher than the current rate.
Robert Morton, of Investec Securities. reduced his profits forecast for next year and 2011 to reflect a £1m a year increase in finance charges. He is now looking for £12.3m in 2010, rising to £13.5m in 2011.
In September, Johnson returned to the black after achieving profits of £5.4m in the six months to June 30, against losses of £7.5m a year ago.
The turnaround was driven by a crackdown on costs, with some of the savings achieved from a reduction in hours for staff at the dry cleaners.
Trading conditions have remained tough, with like-for-like sales in September down 5.3% at Johnsons and 10.6% at high-end Jeeves of Belgravia.
Its dry cleaning estate reduced from 523 stores at the end of June to 512 after it shut 14 loss-making stores and opened three new locations.
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