4th Jul 2006 07:01
Davis Service Group PLC04 July 2006 FOR IMMEDIATE RELEASE 4 July 2006 THE DAVIS SERVICE GROUP PLC PERIOD-END TRADING UPDATE The Board of Davis Service Group plc ("Davis" or "the Group") announces thefollowing period-end update on trading for the six months to 30 June 2006. Current Trading The Group is trading in line with expectations and the Board continues to expectto deliver a satisfactory outcome for 2006. Continental Europe In Continental Europe, which accounted for approximately 60% of 2005 revenues,we are making further good progress, growing both organically and throughbolt-on acquisitions. The markets in which we operate, particularly inScandinavia and Poland, are showing stronger growth in 2006 and the level of newcontract wins is encouraging. The healthcare business in Germany remains ourmost challenging market but is holding up well during a period of considerablechange. We have made 14 acquisitions so far in 2006 for a total of £16 million,which we are in the process of integrating and the pipeline of acquisitiontargets remains promising. Overall, we expect margins to progress further inthe first half and we are confident in our outlook for the remainder of theyear. UK and Ireland We are also seeing some organic revenue growth and increased volumes in the UKand Ireland. Following Rentokil Initial's exit from the textile market, we havetaken on contracts but only where there are acceptable pricing levels, and theseare underpinning revenue growth in line with our expectations. Overall, thesemarkets remain competitive and pricing is challenging, particularly in workwear.So far in 2006 we have made acquisitions for a total consideration of £16million, which are making a useful contribution to revenue. The integration ofthese is progressing smoothly with associated costs incurred in the first half,and we expect these acquisitions to contribute to profits from the second halfof this financial year. In spite of our focus on operational efficiency andplant restructuring, the increase in labour and energy costs which came throughin the second half of 2005 continues to impact our margins, particularly whencomparing the first half of 2006 with the equivalent period last year. Financing and other In May 2006 we concluded a private placement transaction to provide the groupwith additional sources of financing, to extend the term of committed fundingand to increase the level of fixed borrowing. The private placement was with USinstitutions for $250 million at attractive rates, which we swapped principallyinto fixed Euro, Danish krone and Swedish krona borrowings. We used these torepay amounts drawn under our Revolving Credit Facility, which remains at £420million. We now have the Sterling equivalent of £215 million of borrowingsfixed in three tranches through to 2010, 2016 and 2018, at a blended rate of3.97% in these currencies. Our gross debt at 31 December 2005 was £332 million,with a net debt of £214 million. In June 2006 we purchased 825,000 Davis shares in the market for a total cost of£3.5 million, which we hold as treasury shares. These purchases are expected toprovide a small enhancement to 2006 earnings per share (note1). Interim result date The Group's interim results for the period ended 30 June 2006 are expected to beannounced on Friday 8 September 2006. For further information contact: Davis Service Group Financial Dynamics Roger Dye, Chief Executive Richard Mountain/Harriet KeenKevin Quinn, Finance Director Telephone 020 7269 7291Telephone 020 7259 6663 Notes 1 This statement should not be taken to mean that the earnings pershare for Davis will necessarily match or exceed the historical earnings pershare of Davis and no forecast is intended or implied. 2 Statements made in this announcement that look forward in time orthat express management's beliefs, expectations or estimates regarding futureoccurrences are "forward-looking statements" within the meaning of the UnitedStates federal securities laws. These forward-looking statements reflect Davis'scurrent expectations concerning future events and actual results may differmaterially from current expectations or historical results. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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