International Greetings PLC Major Investment and Pre Close Trading Statement (5138C)
17 Abril 2013 - 3:00AM
UK Regulatory
TIDMIGR
RNS Number : 5138C
International Greetings PLC
17 April 2013
17(th) April 2013
International Greetings PLC ("the Company" or "the Group")
Major Investment and Pre Close Trading Statement
International Greetings PLC, one of the world's leading
designers, innovators and manufacturers of gift packaging &
greetings, stationery and creative play products, is pleased to
today announce a major new investment initiative, new banking
facilities and a trading update.
Highlights
-- A major capital investment proceeding in the Company's UK
gift-wrap manufacturing facilities in South Wales and at its
manufacturing facilities in Savannah, Georgia, USA.
-- Bank support secured for the investment; improved and extended facilities agreed
-- Key target of double digit growth to adjusted EPS (fully
diluted pre-exceptional earnings per share) for FY13 substantively
in line with expectations
-- Current year order book is developing well including
contracts for the supply of Christmas gift packaging with all four
of the UK's leading Supermarket multiple retailers
Major New Investment funded by New Bank Facilities
The Board is pleased to announce that it has secured funding for
and commenced the implementation of a majorcapital investment (c
GBP6m net of grants) in the Company's gift-wrap manufacturing
facilities in the UK. This involves the rationalisation of
gift-wrap printing to one site instead of two, the retirement of
old presses and investment in new state of the art printing
equipment. This investment will enhance the quality and
environmental footprint of the Company's products whilst sustaining
its competitive position in a core product category. Execution of
the investment will take 12 months, after which point pay-back is
expected to be approximately three years, excluding the potential
to subsequently dispose of a surplus freehold site valued in excess
of GBP1m.
The Company is also undertaking a smaller scale, but faster pay
back investment of GBP0.5m at its manufacturing facilities in
Savannah, Georgia, USA.
The combined effect of the initiatives to update the
manufacturing capability within the Group, including residual costs
relating to the transition in China, creates an additional
exceptional charge in FY12/13 of just under GBP1m. Further
exceptional charges relating to accelerated depreciation on
equipment to be replaced, decommissioning and other associated
costs will also arise in later years.
The Board is also pleased to confirm its bank's support for
these pivotal investments. To finance the initiatives the Company
has entered into renewed and extended facilities in the UK,
providing greater flexibility at lower all-in cost and representing
a like-for-like saving of 0.8 per cent per annum on core
facilities. The ability of the Company to enter into more
attractive facilities with its bank reflects the debt repayment
profile of the Group over the past few years and the improved cash
generation profile of the Group once the capital expenditure
associated with the above investment has been completed. The
funding of these important incremental investments with debt will
slightly defer the achievement of our leverage target of less than
2x Debt/EBITDA but this remains a key goal.
Trading Update
The Board is pleased to confirm its key target of adjusted EPS
(fully diluted pre-exceptional earnings per share) for the full
year should be substantively in line with expectations. This has
been achieved principally through strong growth to aggregate profit
in the Company's wholly owned businesses, in particular the USA. In
addition, pressure on margins due to geographical sales mix and
higher freight costs has been mitigated through effective overhead
initiatives and modest top line growth. However, the impact of
lower sales and contribution from our Australian JV will result in
only a marginal increase in reported profit before exceptional
items and tax on the prior year.
The completed relocation of our production facilities within
China as well as a strong order book provides the Company with
operationally compelling low season manufacturing opportunities in
all regions. In order to pursue these opportunities the Company has
increased its working capital investment in February and March,
which has translated into reported net debt (at constant exchange
rates) and leverage at the end of the March 2013 being at a similar
level to the prior year.
Outlook
The current year order book is developing well including
contracts for the supply of Christmas gift packaging with all four
of the UK's leading Supermarket multiple retailers, as well as
material new contracts with a leading UK GBP1 retailer and Canada's
largest $1 store chain.
The investments highlighted above together with less buoyant
markets in Australia will however impact growth in the new
financial year. Post completion of the investment the Board expects
to see a sharp acceleration in both earnings and net debt reduction
as the return on investment comes through and new growth
opportunities are seized.
The Group expects to publish its preliminary results for the
year ended 31 March 2013 on 3 July 2013.
Paul Fineman, CEO commented:
"We are encouraged that the Group is delivering double digit EPS
growth at a time of fiercely competitive global markets, reflecting
the importance of our continued focus on creating efficiencies,
leveraging scale and balancing the geographical, product category
and seasonality of our activities. We are confident that these
important new investments will ensure the Group is well placed to
achieve our 3 year plan of double digit average EPS growth whilst
also remaining committed to our debt reduction programme to reduce
leverage to below 2x Debt/EBITDA."
- ENDS-
For further information, please contact:
International Greetings plc Tel: 01525 887 310
Paul Fineman, Chief Executive
Anthony Lawrinson, Chief Financial
Officer
Cenkos Securities plc Tel: 0207 397 8900
Bobbie Hilliam (NOMAD)
Alex Aylen (Sales)
FTI Consulting Tel: 020 7831 3113
Jonathon Brill
Georgina Goodhew
This information is provided by RNS
The company news service from the London Stock Exchange
END
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