A 80-page manroland Lithoman press will be the centrepiece of a new greenfield web offset operation to be established by the recently expanded Ive Group in Sydney later this year. It will join the already announced manroland Rotoman in the creation of a print super site.
“Our intention is to have the greenfield site up and running by the middle of the year,” says Geoff Selig, CEO Ive Group. “It will be a very automated, low cost, high quality production facility. One of the presses going in there will be a brand new 80-page manroland that's been ordered and will arrive later this year."
More details of Ive’s $30 million integration and expansion plan emerged as it released strong half-yearly results – the first since the company's $116 million takeover of large format web offset competitors Franklin Web and AIW in December.
Ive's revenue in the six months to December 2016 increased by 5.9 per cent to $208 million compared to the prior corresponding period (pcp), with earnings before tax up 8.1 per cent to $24 million.
“We’re very pleased with the result and we believe the business has good momentum,” says Selig. “Revenues are up six percent, gross profit is stable, EBITDA is up eight per cent and we’re maintaining our dividend policy. We’ve had a lot of activity on the customer front. We’ve secured a number of new contracts and we’re rolled over a number of existing relationships, which has been good.”
Selig says all the key components of the Franklin Web/AIW integration plan are on track to be completed in less than 12 months.
“The acquisitions of Franklin Web and AIW have been extremely well received by all key stakeholders and our expansion plans are well underway and on track. Things are going very well so far. We’re going to have our integration and expansion plans complete at the latest by the end of September this year.”
Selig says Franklin Web’s success in securing of the lucrative Coles Supermarkets catalogue contract [from IPMG] provided the company with a significant boost.
“When we announced these acquisitions in December we said we’d be expanding our geographic footprint into NSW to support national retailers and that was always our intention. Certainly, securing the Coles contract supports that but probably more importantly validates our decision.”
Other major contract wins of note over the past six months included: L'Oréal, Diageo, BP and Blackmores in the Iveo division; Norwegian Cruise Lines, Globus, HelloWorld, Nestle, Suncorp, Lovatts Media Group in the Bue Star division; and Foxtel, Just Group, AXA and Treasury Wine Estates in the Kalido division.
Ive told the ASX that key components of the $30 million expansion include:
A greenfields large format web offset operation will be established in Sydney by the middle of the year.
Significant press upgrade in Blue Star Web based in Sydney.
Further enhancement to Franklin’s post press capacity through the installation of a high speed perfect binding line.
Expansion of our retail display capacity in Victoria.
Meanwhile, Ive’s private equity backer Wolseley and Caxton Print Holdings (Trustee for the Selig Family Trust) announced a major sell down of shares.
Wolseley Private Equity has cashed in its entire holding in Ive, selling 16.8 million shares, and Caxton has sold four million shares, representing about 28 per cent of its total shares in Ive.
The IVE shares have been sold at a price of $2.40 per share to a number of high quality institutional investors, the company said in an announcement to the ASX.
While Wolseley Private Equity will no longer be a shareholder, the Board is delighted that James Todd [Wolseley’s founder and managing director] will remain on the Board as an independent non-executive director.
Wolseley's 16,879,304 shares sold for $2.40 per share would total $40.5 million. In September 2016, Wolseley sold half of the shares it then held in Ive for a reported $35 million.
Once the latest deals are completed, Caxton will be the largest shareholder of Ive Group with 8.4 per cent.