6th Oct 2015 16:45
LONDON (Alliance News) - Grafenia PLC Tuesday said it has completed the sale of its Dutch subsidiary, which will "materially reduce" its operations in the short term, leading to its Chief Executive Tony Rafferty to resign.
The printed materials and services company also said trading "softened" in July and August and said although second half trading is expected to meet expectations, the weak first half will mean underlying earnings for the full year will be "materially lower than previously expected on a like-for-like basis", it said.
Grafenia said it has completed the sale of its Dutch subsidiary, Grafenia BV, for a total of EUR2.4 million to Rosso BV. Grafenia acquired the Dutch subsidiary in 2010 for EUR2.0 million.
Grafenia BV operates the online channels Flyerzone.nl, Drukland.nl and Drukland.be. The online channels Flyerzone UK, Ireland and France do not form part of the sale and are retained by the Grafenia.
"Taking into account cash generated from operations since the acquisition, this venture has provided a satisfactory return on that investment. The Board has taken the decision to sell Grafenia BV because the strengthening of sterling against the Euro has made the ongoing supply of print to the Eurozone less attractive," it said in a statement.
"The group will now focus on the development of its new and existing channels in the UK and Ireland. The sale proceeds will be applied to supporting the group's partner networks, its online trade site Marqetspace, other online channels and its cross media offerings Brambl and Nettl," it added.
Grafenia said as a result of the sale, its operations will "materially reduced" in the short term. The company said Chief Executive Tony Rafferty has resigned with immediate effect but said he intends to retain his stake in the business "for the foreseeable future".
Grafenia has appointed Peter Gunning as acting chief executive. Gunning has been the company's chief technical officer since 2010. Grafenia said it has also appointed Conrad Bona as a non-executive director.
"Tony's decision to step down is consistent with the group's reduced size and Peter's appointment will ensure a seamless transition providing reassurance to our many partners in the UK and internationally of our ongoing commitment," said Chairman Les Wheatley.
Grafenia also said trading "softened" in July and August but said September was in line with internal expectations. The company has already previously said that trading in 2015 will be second half weighted.
"Trading in the second half of the year for the group's continuing operations is anticipated to be in line with the board's expectations. However, the weakness in the first half is likely to result in underlying earnings for the full year being materially lower than previously expected on a like-for-like basis," it said.
Grafenia shares closed up 0.7% to 20.40 pence per share on Tuesday.
By Joshua Warner; [email protected]; @JoshAlliance
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