Profits at Adare Printing Group are well spread over 19 operations and the group is looking forward to the remainder of the year with confidence, shareholders were told at the annual general meeting yesterday. The group finance director, Mr Peter Lynch, said the recent acquisition of the Birmingham-based printing company, Kalamazoo Security Print, would enable Adare to use a well-recognised brand name for other business lines. Adare has a strong presence in Britain, with 15 of its operations based there earning 83 per cent of its profits. The chairman, Mr Denis Bergin, said the Kalamazoo acquisition would enhance Adare's standing in the business systems and brands markets. But he sounded a note of caution for the flat sheet printing area, saying plans were under review.
"The group does not have significant market scale in this sector, margins are under pressure and the operations are not meeting return on capital criteria," he said. In his annual report statement, he says the group has set itself a £200 million turnover target by 1999 and it has increased opportunities for organic growth. It has a three-year £24 million capital expenditure programme for achieving this. The group currently has a £130 million turnover.
Organic growth of £10 million sterling per annum is projected for the direct mail sector following a £5 million sterling investment in Pillings Printing, Lexicon and Great Northern Envelope. "A programme is going into place which will call for some £8 million of capital expenditure in each of the next three years to achieve the group's growth ambitions," Mr Bergin's statement says. Last year Adare acquired the British Prontaprint company for £23 million sterling, but lost its contract to supply computer manuals to Microsoft Corporation, which saw its share price drop to 470p.
In April Adare acquired Platignum, the stationery division of Mentmore Abbey, and recently finalised its acquisition of Kalamazoo Security Print (KSP) for £12 million sterling. At the meeting, a shareholder asked the directors how they expected to get value out of Kalamazoo. Mr Lynch said Kalamazoo had a new management team which expected to increase profits in the security print area, which includes items such as football fixture tickets.
Kalamazoo had a high quality name, a hundred years of trade behind it, and access to a new range of clients, he said. The company could also qualify for the £8 million capital expenditure plan for the current year. "If we adopt the Kalamazoo name and use it on some of our unbranded business forms, we will find that a much easier way of selling our business lines," he said. He added that the strong value of sterling against the pound had boosted profits.
