IQ-AI Regulatory News (IQAI)

18 Sep 2006 07:01

Flying Brands Limited18 September 2006 18 September 2006 Flying Brands Limited FLYING BRANDS ACQUIRES GREETINGS DIRECT FOR £11.9m Flying Brands Limited ("Flying Brands" or the "Group"), the Jersey based multibrand home shopping specialist (ticker: FBDU), today announces the acquisitionof the entire share capital of direct greeting card businesses Greetings DirectLimited, Greetings Direct International and Greetings Direct Trading Limited(together "Greetings Direct"), for a cash consideration of £11.9m, of which£1.8m is deferred and will be payable subject to satisfaction of certainconditions. The consideration is being funded by £2.4m of existing cashresources and a new £9.5m debt facility. Greetings Direct is being acquired fromits current private shareholders who include Marten Nilsson, its ManagingDirector. Greetings Direct will form part of a larger Gifts Division alongside FlyingFlowers. • Greetings Direct, trading as "Cards For All Occasions", sells a range of greeting cards through direct continuity marketing channels. Customers are automatically sent a package of selected cards each month which they may choose to purchase or return. • Greetings Direct operates in the UK and Republic of Ireland, and following a recently completed successful trial campaign in Holland will commence trading there this Autumn. • Greetings Direct has a database of 700,000 customers, of whom 52,000 are currently receiving monthly card packs. The database has a similar profile to that of Flying Brands' with female customers representing over 90% of the total. • Greetings Direct is a high margin, cash generative, profitable business and in the financial year ended 31 August 2005, generated turnover of £8.5m , with EBIT of £1.2m. Estimated turnover for the financial year ended 31 August 2006 is £11.8m, with an estimated EBIT of £2.0m. The gross assets of Greetings Direct at 31 August 2006 were £5.7m. • Most of Greetings Direct's customers are recruited from targeted rented external databases. Greetings Direct currently has a negligible online presence. • Greetings Direct employs eight management staff to oversee product sourcing, marketing and operations; all other functions, including finance, mailings, order processing, fulfilment and despatch are outsourced. • Greetings Direct ships products from Guernsey and benefits from Low Value Consignment Relief ("LVCR"). • Greetings Direct was established in 2002 by Marten Nilsson. He will continue as Managing Director of Greetings Direct and the other seven members of staff will all remain with the business post acquisition. Some of Greetings Direct's outsourced functions will be integrated within the Group's current operations over time. • The management of Flying Brands believes the UK greeting card business is worth approximately £1.3bn per annum. The Flying Brands' Board believes that Greetings Direct is an excellentstrategic fit and in particular believes that: • The acquisition represents an important step in Flying Brands' strategy to enhance and strengthen the Group's product offering to its customers; • Greetings Direct is cash generative and will be immediately earnings enhancing; • Greetings Direct will complement the Flying Flowers offering within an enlarged Gifts Division; • The Group can exploit the opportunity to cross-sell other brand offerings to the enlarged database of customers; • The continuity nature of Greetings Direct will contribute to more predictable year round sales and reduces the Group's reliance on seasonal offerings; • Greetings Direct has significant growth potential, both in the UK and in other international markets. Commenting on the acquisition, Flying Brands' Chief Executive, Mark Dugdale,said: "This acquisition fits our ongoing strategy perfectly. Greetings Direct hasgrown strongly since it was established in 2002 and has the potential tocontinue this growth both in the UK and in other markets. There are excellentsynergies with our existing databases for cross selling products, which,combined with good cash generation and a strong management team, should continueto enhance our overall value." Marten Nilsson, Managing Director of Greetings Direct, commented: "When our shareholders were considering the sale of our business, Flying Brandswas identified as a very good fit with us. I am therefore delighted that we havebeen able to bring the businesses together and am greatly looking forward to thenext phase in Greetings Direct's exciting and profitable growth." There is a conference call for analysts at 9.30am today hosted by Mark Dugdale,Chief Executive. The dial in number is 0845 245 3471 and the conference ID is6774707. For further information, please contact: Flying Brands Limited Tel. 01376 575 010 / m.07785 346935Mark Dugdale, Chief ExecutiveGraham Norton, Finance Director Smithfield Consultants Tel. 020 7360 4900John KielyGeorge Hudson Bridgewell Limited Tel. 020 7003 3136Calvin Man Notes to editors Jersey based Flying Brands Limited (LSE: FBDU) is a multi brand home shoppingspecialist. Founded in 1981, it was admitted to the Official List of the LondonStock Exchange in 1993. The Group operates the following divisions: • Gifts (Flying Flowers, the UK's largest flowers by post brand, despatching nearly one million bouquets a year) • Garden (Gardening Direct, one of the UK's largest mail order bedding plants and gardening products operations; Garden Bird Supplies, a leading provider of food and accessories for birds and other wildlife) • Entertainment (Listen2Books, the leading mail order audio books, DVD and video publisher and distributor; Benham, the first day cover stamps and coins collectables specialist; Silverminds Direct, the nostalgic music business) More information can be found at: www.flyingbrands.com This information is provided by RNS The company news service from the London Stock Exchange