Plastics Capital Plc (AIM;PLA), a fast-growing acquisitive plastics products manufacturer focused on proprietary products for niche markets, is pleased to announce the acquisition of Palagan and its associated companies, located in Dunstable, Bedfordshire, for total consideration of £6.4m. The acquisition is being funded from Plastics Capital's existing cash resources together with an increase in senior debt facilities from Royal Bank of Scotland, whilst £0.5m of the consideration will be deferred for 2 years.
Palagan is a long established producer of high performance film packaging solutions. Palagan customises its products to between 4,000 and 5,000 different specifications. The ability to tailor products to customers' requirements and turn design solutions into in-line automated production is a key success factor and accounts for Palagan's marketplace success.
Turnover for the year ended 30 October 2007 is £8.8 million. Sales have increased at a rate of 6.4% p.a. over the last seven years. In the financial year to 30 October 2007, Palagan had audited EBITDA of £1.07m - these accounts included certain costs that would not be continuing under Plastics Capital's ownership. Net assets acquired amount to £3.5m at completion. Palagan employs 40 staff and has a customer base of 500, with the largest customer accounting for 4.5% of sales.
The Board of Plastics Capital intends to continue operating Palagan as a stand alone subsidiary of the Company. The current owner and founder, Graham Taylor, will be retiring, but the business has an ambitious and capable management team who will continue to operate Palagan as part of Plastics Capital.
Since its interim results reported in December, Plastics Capital has traded in line with expectations. Certain adjustments have been made to the rationalisation programme relating to the integration of Channel and Trimplex, but the net financial impact of this is expected to be neutral. Also, the recent strengthening of the Euro will, if it continues, lead to a translation loss at 31 March year end, but due to the Group's hedging strategy there will be a compensating benefit for trading performance in the medium term.
Faisal Rahmatallah, Chairman and Chief Executive, commented:
"This is an exciting acquisition for Plastics Capital. It is a profitable business with strong organic growth and an attractive acquisition multiple. We expect the acquisition to be earnings enhancing in the first year. The film packaging market is full of opportunity for a flexible, innovative and technically adept manufacturer like Palagan. The acquisition fits our strategy as explained at IPO and is in line with our strategy of being a fast-growing and acquisitive Group."
For further information, please contact:
Faisal Rahmatallah / Nick Ball
0207 326 8423
Cenkos Securities plc
Stephen Keys / Elizabeth Bowman
020 7397 8924
Richard Darby / Susanna Gale / Christian Goodbody
0207 466 5000