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RNS Number : 7199G  IG Design Group PLC  30 April 2025

30 April 2025

IG Design Group plc

(the 'Group')

FY25 Post-Close Trading Update

IG Design Group plc, one of the world's leading designers, innovators and
manufacturers across various celebration and creative categories, provides an
update on its financial performance for the year ended 31 March 2025 and post
year end material developments.

FY25 Group Performance

The Group confirms that sales and profit for the year are expected to be in
line with the expectations set out in the trading update issued on 17 January
2025. Group revenue declined by 9% year-on-year, reflecting continued
challenges across key markets, the US in particular. The Group expects to
report an adjusted profit before tax of c$1 million, which is also in line
with those expectations.

DG Americas saw a 12% decline in revenue and was loss making, primarily driven
by a very competitive US retail environment. The division is facing into
softer consumer demand which has resulted in our customers reducing order
volumes. As previously disclosed, this was further compounded by bankruptcies
amongst our retail customer base, particularly of the division's 4(th) largest
customer.

DG International reported a slightly higher than expected 3% decline in
revenue but nevertheless is expected to deliver profits in line with
expectations, albeit 13% lower than the prior year on a reported currency
basis. Profitability in this division declined year-on-year due to a
combination of prolonged disruption within a major customer's supply chain,
weaker demand in some markets and categories, and high freight rates
particularly in the first half of the year.

DG Americas

Given the challenges that are impacting DG Americas' performance, following
the January trading update, management undertook an end-to-end review of the
businesses and categories within the division with the objective of arriving
at a more profitable and resilient business model and footprint within the
next two years. Unfortunately, that exercise has been largely overtaken by the
widely reported recent developments in trade tariffs.

Across the Group c60% of revenue is derived from the US market, with over half
of purchases made by DG Americas being sourced from China. The situation is
both complex and dynamic given the  geographic span of the Group's importing
activities and the evolving nature of the tariff regime. However, the Group is
beginning to see reductions in customer commitments, and a general reluctance
by retailers to accept in full the additional tariff costs. The nature and
extent of the impact of tariffs therefore remains difficult to predict. Since
the US administration began announcing its new tariff changes, the DG Americas
team has been working with customers and suppliers to mitigate the potential
impact these could have on the business. Notwithstanding this, tariffs have
the potential to have a significant adverse effect on the DG Americas
performance going forward.

This has compelled management to widen the range of strategic options it is
prepared to consider for DG Americas and accelerate their evaluation. This
includes also considering an exit of the division, and an update could be
expected before the publication of the full year results of the Group.

DG International

The recent short-term challenges that the division has faced are now largely
resolved and the outlook for this division is positive for the coming years.
DG International has a strong heritage and benefits from long established
relationships with major retailers with well-structured categories and product
ranges. There remain opportunities for growth beyond our traditional strength
in the thriving discount channel, particularly around expansion into other
channels and product categories given the fragmented competitive landscape,
especially across Continental Europe.

Financial position

As previously disclosed, given the performance and outlook of DG Americas, the
Group expects to recognise a very material write-down of its impaired
investment in that business. This will be treated as an adjusting item and is
a non-cash adjustment. The future financial performance of the Group, and its
outlook, will likely be significantly affected by any strategic decision made
by the Board on DG Americas.

The Group closed the year with a net cash balance of $84 million (FY24: $95
million), surpassing market expectations. The $11 million year-on-year
decrease in cash was primarily due to working capital outflows, notably within
DG International, where shipments delayed due to supply chain issues at a
major retailer hampered H2 sales and increased our inventory levels. Despite
the typical seasonal working capital fluctuations, the Group maintained a
positive average cash position throughout the year.

On 29 April 2025, the Group signed an amendment and extension of its
asset-backed-lending agreement which takes the financing arrangement to 5 June
2027.

Stewart Gilliland, Chair, commented:

"Over the past couple of years our work to rebuild DG Americas has been
frustrated by a series of external factors including the challenging US retail
environment, a number of our customers experiencing bankruptcy and now more
recently the evolving tariff situation. However, we believe that the strategic
actions being contemplated for DG Americas will fortify our overall business
model. Our businesses beyond the US remain robust, and we are committed to
growing them through our established customer relationships and through
exploring other investment opportunities to accelerate growth. We believe that
strategic action is warranted to maximise shareholder value and enable us to
deliver more consistently going forward."

 

For further information, please contact:

 IG Design Group Plc                            Tel: +44 (0)1525 887310

 Paul Bal, Chief Executive Officer

 Rohan Cummings, Chief Financial Officer

 Canaccord Genuity Limited (Nomad and Broker)   Tel: +44 (0)20 7523 8000

 Bobbie Hilliam

 Harry Pardoe

 Alma Strategic Communications                  Tel: +44 (0)20 3405 0209

 Rebecca Sanders-Hewett                         designgroup@almastrategic.com (mailto:designgroup@almastrategic.uk)

 Sam Modlin

 Will Merison

 

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