JOHN Menzies has hailed a strong first half performance from the aviation services business it has decided to focus on while claiming the distribution arm it is offloading remains a solid business.

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Edinburgh based Menzies said the aviation unit grew underlying profits by nine per cent in the six months to June 30, to £23.7 million from £21.7m.

The distribution division, which transports newspapers and magazines across the UK, grew profits by 6.5% to £11.5m from £10.8m. Menzies noted the division enjoyed a boost from handling collectibles relating to the 2018 World Cup and performed well, despite cost and volume pressures.

Chairman Dermot Smurfit said: “Menzies Distribution remains a solid business.”

The results came three weeks after the 185-year-old Menzies announced it had agreed to sell the distribution arm to the Endless private equity firm, in a deal worth £74.5m.

The sale followed agitation from investors who argued the aviation and distribution arms did not belong together.

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Menzies incurred around £23 million exceptional costs related to the disposal in the first half.

However, directors underlined their belief the decision to sell Menzies Distribution to focus on the aviation services market was sound.

Menzies Aviation chief Forsyth Black said the division had made good progress in recent years and achieved a strong performance in the first half.

He noted Menzies had maintained its interim dividend at 6p per share in spite of the prospect of having to do without the cash generated by the distribution business.

Menzies expects to benefit from structural growth in the size of the aviation market and to increase its share of the business available.

Corporate affairs director John Geddes noted: “Menzies Distribution has fairly good growth ambitions in retail logistics and the high street but that needs investment.

“In the aviation side we’ve got lots and lots of opportunities as well. As a board we believe that’s got a higher return for shareholders.”

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Asked if he thought Menzies had struck a good deal to sell the distribution arm, Mr Geddes said: “I think so. We went through an extensive process run by Rothschild (investment bank) and we’re happy with the outcome.”

Shareholders will vote on the deal on August 22. It is expected to complete in September.

The distribution business will remain based in Edinburgh. Mr Geddes noted it has agreed a five year lease on space in the group’s Edinburgh Park offices.

He added: “Very little has changed for distribution. They will keep the brand’s going to have a new owner and hopefully it can pursue its growth ambitions.”

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Menzies sees plenty of scope to use further acquisitions to help grow the aviation business.

The company said the integration of the fuelling and the ground handling business acquired with ASIG in a £165m deal 2017 is largely complete. Synergies have been delivered ahead of expectations.

Mr Geddes shrugged off the setback Menzies suffered last week, when the Competition and Markets Authority expressed concern about the possible impact of its planned acquisition of Airline Services in areas such as de-icing at airports including Edinburgh and Glasgow.

The CMA has launched a Phase 2 enquiry into the takeover. Such probes can result in it imposing tough measures, which can include unwinding deals.

Mr Geddes said: “In the wider scheme of our entire business it’s relatively small. We’re disappointed with the decision but we’ll go through phase two and make our arguments. We hope to get an acceptable outcome.”

Menzies lost £2.9m after £26m total exceptionals in the first half. It made £0.5m profit last time. Revenues rose to £1.25bn from £1.22bn.

John Menzies shares closed unchanged at 645p.

Menzies has not disclosed the price of the Airline Services deal.

It noted yesterday: “Investments by the Group in the period were £15.4m, primarily relating to the acquisition of the trade and assets of Airline Services Limited.”