Design Group Regulatory News (IGR)

11 Feb 2008 07:01

International Greetings PLC11 February 2008 11 February 2008 INTERNATIONAL GREETINGS PLC ("International Greetings" or "the Group") Trading Statement International Greetings PLC, the designer, manufacturer and distributor ofgreetings, stationery and licensed published products, today announces an updateon its strategic review, current trading and future prospects. Strategic Review As stated in the Interim Results announcement on 13 December 2007, the recentlyrestructured Board of International Greetings has been conducting an extensivereview of its operations, with particular emphasis on the difficulties beingexperienced in the UK Greetings Division. Based on initial findings, it is nowclear that the UK manufacturing facilities, together with those in EasternEurope and China, cannot in their current form deliver acceptable profitmargins. With immediate effect, these manufacturing units are being restructuredwhich will lead to a rationalisation of the business, and in due course certainfixed assets will be disposed of. In future, the UK Greetings Division will havea market-led rather than volume driven business model, and this revised approachshould deliver stronger margin levels more in line with the Group's other UKtrading activities. In addition to the UK Greetings Division, all other businesses within the Grouphave been reviewed. It is the Board's intention to focus on its core profitableactivities and to exit those businesses which are either not performing toexpectations or are considered not of strategic importance for the future. With the Group's focus now on maximising the potential of existing businessesincluding recent acquisitions, International Greetings now has a strong platformto achieve growth organically in all its geographical territories of operation. The reduction of in-house manufacturing in the UK Greetings Division will leadto a significant decrease in capital requirements and expenditure from previouslevels. Current Trading Since the announcement of the interim results, it has become clear that thetrading performance of the Group in the current year will be worse thananticipated. The key factors are a reduction in the final uptake of Christmasgoods in the latter part of December, the slowdown in consumer spending duringthe first quarter of this calendar year, and following the review of the UKGreetings Division, much worse than expected results for that business. Elementscontributing to this Division's poor performance include manufacturinginefficiencies, additional freight costs, higher than anticipated bad debts andincreased stock provisions due to reduced Christmas orders. As a result, theDirectors anticipate that International Greetings' financial performance beforeexceptional reorganisation costs and other items, will be significantly belowmarket expectations for the year ending 31st March 2008. In light of the current trading position and anticipated full year outlook, theBoard has decided that it would be inappropriate for them to recommend a finaldividend for the current financial year. Thereafter, the Company wouldanticipate resuming paying dividends on a progressive and sustainable basis. Future Prospects The Group is now in its selling season for Christmas 2008 which will bereflected in the March 2009 year end results and early indications have beenencouraging. The forward order book in those unaffected areas of the business islooking strong illustrating the resilience and defensive nature of thesebusinesses within the Group. With the reduction of the cost base and refocus ofthe UK manufacturing division, a significantly improved performance is expectedfrom this area of the business. In the USA, the merger of Glitterwrap Inc into the existing operations isproceeding well, on time and within budget, and the synergy benefits of thismerger are expected during the next financial year. Conclusion Following this major review of the business, the Board of InternationalGreetings is committed to resolving the short term difficulties in the UKGreetings Division, and ensuring that all other businesses within the Group areclearly focussed on delivering to their maximum potential through first classproduct innovation and service to its customers. For further information: International Greetings PLC: Tel: 01707 630630Nick Fisher, Chief ExecutiveMark Collini, Finance Director Arden Partners plc:Richard Day Tel: 020 7398 1632Colin Smith 0121 423 8940 Tavistock Communications: Tel: 020 7920 3150Matt Ridsdale Rachel Drysdale This information is provided by RNS The company news service from the London Stock Exchange