SHARES IN Arklow-based bathroom products maker Qualceram Shires closed up more than 2 per cent yesterday at €1 after the company said it had received an "unsolicited preliminary expression of interest" from a third party.
The company did not name its suitor, but it is understood to be a trade group outside Ireland.
No price was placed on the approach, but Qualceram's market value at the close of trading last night was €22.2 million. In a note to clients yesterday, Goodbody Stockbrokers said a "starting point" for any bid is likely to be Qualceram's net asset value, which it estimates to be about 113 cent.
Management, which owns about 40 per cent of the company's shares, is not involved in the approach. Informed sources said the prospect of a management-led bid emerging was "low".
It is understood that Davy Corporate Finance, which is advising the company, has initiated contact with a number of potential trade and financial buyers in Ireland and abroad. Qualceram Shires is the number one supplier of bathroom products in the Irish market and is the number three player in Britain. News of the approach came as the company published its full-year results for 2007.
They showed that sales fell by 11.8 per cent to €90 million, while after-tax profits declined to just under €1.4 million from €3.5 million in 2006.
Its basic earnings per share last year was 6.14 cent, compared with 15.72 cent in 2006.
The company said 2008 would be a "challenging year" and that the board had taken "decisive action" to reduce its costs further to counteract the downturn in house building.
"Turnover for January and February of 2008 is 27 per cent down on the same period last year due to challenging market conditions in both our key markets," the company added.
Chief executive John O'Loughlin said the group had operated in a "volatile and uncertain property market" in 2007.
Housebuilding activity in the Republic declined by 16 per cent last year, while bookings with UK builders dropped by up to 20 per cent. "However, the recent disposal of the [ 13-acre] Arklow property for €30 million represented very good value for the group's shareholders," he added. Qualceram Shires said its exceptional gain from the sale of the Arklow property was €16.4 million.
The company's results show that Mr O'Loughlin and fellow directors John Byrne and Thomas Byrne were entitled to a pension contribution of €500,000 following the completion of the sale of the Arklow site. Qualceram will continue to occupy the property for 2½ years at a "nominal" rent. A new site for the business has been "identified" in the locality and is "under negotiation", the group added. "The company intends to develop a modern, state-of-the-art logistics, research and development and manufacturing facility for the business."
Qualceram took a charge of €6.7 million relating to restructuring and redundancy costs, including the closure of its shower enclosure and ceramics plants and a reorganisation of its distribution centres.
In addition, the group provided for losses relating to the disposal of its leasehold interest in properties in Stoke-on-Trent and Rochdale in England.
Qualceram: results
Turnover:€90 million (-11.8 per cent)
After-tax profit:€1.36 million (-61 per cent)
Earnings per share:6.14 cent (-61 per cent)
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