25th Jun 2008 07:00
FOR IMMEDIATE RELEASE
25 June 2008
THE DAVIS SERVICE GROUP PLC
Pre Close Trading Update
Prior to The Davis Service Group Plc ('the Group') entering its half year close period it releases the following trading update. The Group's half year results for the period ending 30 June 2008 will be announced on Friday 29 August 2008.
The growth trends seen in the first quarter have continued, with reported revenue for the first six months of the year expected to be approximately 20% ahead of the comparable period and operating profit to show high single digit growth. As anticipated, the first half will produce a lower comparable margin, reflecting the contribution of the Clinical Solutions business and the investments we have made in the first half; however these factors are expected to result in stronger profit growth in the second half.
During the period we have benefitted from stronger exchange rates when translating the revenue and operating profits of Continental Europe, from where the majority of our profits come. The organic revenue growth trends have continued in most of this region's businesses, although the performance of German Healthcare continues to hold back the Continent region, where we are seeing strong results elsewhere.
In UK and Ireland region we continue to see modest improvement in margin in core textiles and we have achieved financial close on 2 surgical decontamination contracts as previously announced, further strengthening the contractual base of the business. Deferred consideration payments of £7 million have been made in accordance with the agreement for the acquisition of the Clinical Solutions and Decontamination businesses in June 2007. We have also made some initial investments in relation to these contracts. Elsewhere in the Group we have continued to invest in plant and textiles to capture the growth opportunities we are seeing.
Our interest costs are higher, reflecting the acquisitions we have made, the effect of foreign exchange and the higher variable rates on the Continent. Our debt remains committed for periods up to 10 years.
Overall the Group has continued its good start to 2008 and we therefore expect to report a result for the first six months in line with our expectations. Our growth plans for the year remain on track, with a stronger second half anticipated.
For further information contact:
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The Davis Service Group Roger Dye, Chief Executive Kevin Quinn, Finance Director Telephone 020 7259 6663
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Financial Dynamics Richard Mountain/Harriet Keen Telephone 020 7269 7121 |
Notes:
1. Davis Service Group is a focused European textile maintenance business with leading positions in most of the countries in which it operates. As a focused business we are able to mobilise our resources to drive our strategies in our core area of expertise.
2. Sourced from management accounts; operating profit before exceptional items and amortisation of customer contracts and intellectual property rights.
3. Statements made in this announcement that look forward in time or that express management's beliefs, expectations or estimates regarding future occurrences are "forward-looking statements" within the meaning of the United States federal securities laws. These forward-looking statements reflect the Group's current expectations concerning future events and actual results may differ materially from current expectations or historical results.
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