Investors back flotation of buoyant Athlone Extrusions

Shareholders in Athlone Extrusions have approved its plans to float on the Dublin and London exchanges, as the company reported a one-third rise in net annual profits to £3.21 million. Athlone, which is a leading producer of thermoplastic sheet and film, will go public next month.

The shares have not been priced yet, but will be in the 85p-95p range. This will value Athlone at between £45 million and £50 million.

The company's results to the end of September 1997 show an 11 per cent rise in turnover to £24.3 million compared to the same period in 1996. Operating profit rose 29 per cent to £3.75 million. Profit after tax and minority interests was £3.21 million compared to £2.43 million. The company's net cash amounted to £440,000, compared to a net debt of £1.17 million in 1996.

Athlone's chief executive, Mr James McGee, said the strong results reflect the continued successful growth of Athlone Extrusions over the past seven years. "The group is well-positioned to undertake further profitable expansion in new product and market development, in line with our strategy to enhance shareholder value."

Athlone was the subject of a management buyout in 1990, having been established in 1971. The company converts polystyrene and ABS granules into coloured sheet and film, and sells it on to other manufacturers.

The sheets are then moulded for use in a wide range of products. These include the interior trims of cars, caravans, fridges, facings for kitchen furniture and sanitary ware such as shower screens.

Shareholders at an extraordinary general meeting in Athlone yesterday approved the flotation of up to 40 per cent of the company. They also approved the setting aside of approximately £750,000 profits for the purchase of company shares for employees. About half the workforce are said to hold shares currently.

The existing shares are held by senior management executives (28 per cent), institutional investors (35 per cent), the family interests of the late managing director Mr Pat Ryan (30 per cent) and the remainder are held by various employees.

Institutional investors include a group of Riada investors led by Mr Pat Plunkett (total holding around 20 per cent); Irish Life holds 10 per cent and New Ireland 4.5 per cent.

Mr McGee is the largest single management shareholder with a 10 per cent stake. He said it was likely that senior executives in the company would retain the majority of their stakes.

Mr McGee said the company hoped to grow organically, but would also be in the market for acquisitions. Mr Pat Landy of NCB, which is sponsoring the listing, said the market for polystyrene in Europe was 800,000 tonnes a year.

However, Athlone, which produces around 20,000 tonnes a year, is concentrating on niche markets in Europe, which account for around 130,000 tonnes a year.