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Menzies reveals £25m growth fund

John Menzies shrugged off a £2 million hit from the strength of sterling in the third quarter and has taken on another £25m of debt to target bolt-on acquisitions.

The Edinburgh-based airport contractor and print distributor said its aviation division was growing in line with expectations, reporting a 7.8% rise in ground-handling volumes, or 2.7% on a like-for-like basis in the year to date, better than the first-half, as contract wins came through.

The more cyclical cargo market was "stable but soft", the group said, with volumes up 2.5% reflecting the annualisation of contracts won last year, though like-for-like volumes were down 2.5%.

Paul Dollman, finance director, commented: "In constant currency terms, profits would have been ahead of expectations."

Menzies said the re-structure of the loss-making UK cargo business, including the closure of its Glasgow operation with the transfer of all staff to new operator Servisair, was complete. That allows the division to concentrate its main cargo offering on a single facility at Heathrow, integrated with the stronger ground-handling service in a similar way to other, successful airport operations.

At Menzies Distribution, where the Olympics provided a boost, trading is broadly in line with last year, with newspaper sales ahead of expectations following cover price increases and new business gains from News International and DC Thomson. Weekly titles sales however were proving "particularly challenging", Menzies said.

Mr Dollman said: "It's a tougher environment than a year ago but there is room for growth, both organic and by acquisition." He said the group's £50m banking facility had been renewed and extended to £75m, "in case anything comes along". He said that applied to small bolt-on acquisitions in both divisions.

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