Danka profits plunge

Danka business Systems, the supplier of fax machines and photocopiers, said yesterday it was in talks with banks on a revised lending agreement as it reported an alarming slide in third-quarter profits.

Danka business Systems, the supplier of fax machines and photocopiers, said yesterday it was in talks with banks on a revised lending agreement as it reported an alarming slide in third-quarter profits.

The group said operating profits for the period to 31 December shrank to £2.9m, from £29.7m the previous year. That was before taking into account a £7.5m charge relating to a reduction of 1,200 jobs. The shares fell 2.25p to 11p.

The quarter's results were hit by a slump in sales in the United States and a £7.9m one-off cost after maintenance work was not properly invoiced. A further one-off charge of £10.9m is expected to be taken in the fourth quarter.

Michael Gifford, chief executive, said: "With assistance from our investment banking advisers, Houlihan Lokey Howard & Zukin, we are working... towards a long-term solution to our financing needs."

Under the group's agreement with a syndicate of 30 banks, led by Bank of America, it has until 28 March to pay back $551m (£375m) of senior debt, or negotiate a deadline extension. The company has already been granted two temporary waivers. At 31 December the group's debt net of cash was £468m.