Company name Oakhill Group PLC
Headline Interim Results

 

Oakhill Group plc

Unaudited Interim Results of Oakhill Group plc

for the six months ended 30 June 2006

           

 

Financial summary

 

 

H1 2006
H1 2005

Change

 

Unaudited
Unaudited

 

 

€’000

€’000

%

Revenue

 

 

 

Managed services

11,601

10,926

+6

Books & journals

5,213

4,752

+10

 

 

 

 

 

16,814

15,678

+7

 

 

 

 

 

 

 

 

Operating profit *

 

 

 

Managed services

136

657

-79

Books & journals

651

649

-

Centre costs

(625)

(688)

-9

 

 

 

 

 

162

618

-74

 

 

 

 

 

 

 

 

Loss after tax **

(110)

(7,174)

 

 

 

 

 

Loss per share (cent) **

(0.19)

(12.71)

 

 

 

 

 

Adjusted (loss)/earnings per share (cent)*

(0.19)

0.45

 

 

 

 

 

Net debt

6,074

3,887

 

 

 

 

 

Equity

7,799

7,830

 

 

 

 

 

Debt / equity ratio

78%

50%

 

 

 

*  before goodwill impairment provision 

** including goodwill impairment provision

 

 

Income statement

 

In the six months to 30 June 2006 revenues are €16.814 million an increase of 7% compared with 2005. Operating profit (before goodwill impairment provision) is €0.162 million compared to €0.618 million in 2005. Ongoing pricing pressures have negatively impacted margins.    

After tax and interest there is a loss of €0.110 million and the adjusted loss per share is (0.19) cent per share compared to adjusted earnings of 0.45 cent in 2005.

 


 

Operating review

 

Managed Services

 

This division offers a comprehensive portfolio of card and print based products and services. Card services has three main market areas: Telco, Membership and Retail. Print services offer a range of litho, digital print and fulfilment services.

 

Financial information

2006

2005

 

€’000

€’000

Revenue

11,601

10,926

Operating profit

136

657

Net operating assets *

7,896

7,007

 

*net operating assets includes property, plant and equipment, inventories, trade and other receivables and payables and excludes corporate tax and net debt.

 

In Managed Services, sterling revenues have increased by 6%, comprised of a 15% increase in card services revenues to £6.493 million and a 21% decrease in marketing materials third party print revenues to £1.478 million.

 

The Group previously reported on an apparent problem with a specialised product in Managed Services. A resolution of this matter has been substantially agreed. Although the final costs cannot be fully determined at this point the results include a provision of €102,000.

 

There is continuing downward price pressure across all products and services. The sectoral decline in plastic card based electronic top-up for the UK Telco market is being replaced by the emerging gift card market, which is building more slowly than originally expected. Margins in the newer product areas are lower than historic levels in card services and revenues are more seasonal with an increasing emphasis on the second half of the year.

 

Excluding the impact of the provision referred to above operating profit in Cards is 9% behind last year. In Print there has been a very significant decrease with the results approximately £0.25 million behind last year.

 

Prospects in Managed Services are mixed. There have been a number of encouraging signs in the cards business with new contracts having been won and the sales outlook becoming stronger. However, the revenue prospects in marketing materials are less encouraging and operating losses have increased in spite of the cost savings from the reorganisation in 2004. A further review of our print activities and associated cost base is in progress and a process has commenced to refocus the print activities and concentrate on more profitable customers and products. This will involve a number of redundancies and a related cost estimated at €250,000 with expected annualised cost savings in excess of this. The Group has invested in new capability to both reduce production costs through improved efficiency and productivity and to develop new products and services to increase revenue and replace declining products.

 

 

Books & Journals

 

This business comprises the printing of academic books and journals in the United Kingdom.

 

Financial information

2006

2005

 

€’000

€’000

Revenue

5,213

4,752

Operating profit

651

649

Net operating assets *

8,077

6,957

 

*net operating assets includes property, plant and equipment, inventories, trade and other receivables and payables and excludes corporate tax and net debt.

 

In Books & Journals, sterling revenue is 10% ahead of last year and operating profit is in line with 2005. Increased revenues from litho print books and journals contributed 3.4% of this and digital print made a small contribution to revenue. Low margin paper sales contributed 4.5% to the increased revenue.


 

Book and journal volumes are continuing to increase but margins are being reduced by the ongoing price decreases. The upgrading of capability in previous years gives the business the opportunity to introduce new products to its portfolio and increase its sales in an increasingly competitive environment and to react to downward pricing pressures.

 

 

Net interest expense

 

Net interest expense for the first half of 2006 is higher than 2005 mainly as a result of higher borrowings due to capital expenditure.

 

 

Cash flow and net debt

 

The table below summarises the cash flow for the period.

 

 

Half year

Half year

Year

 

2006

2005

2005

 

€’000

€’000

€’000

 

 

 

 

Operating profit *

162

618

1,367

Exceptional operating costs

-

(109)

(291)

Depreciation

991

848

1,885

Net working assets including pension

(1,113)

(643)

(654)

 

 

 

 

Operating cash flow

40

714

2,307

 

 

 

 

Net interest

(323)

(257)

(561)

Tax paid

(18)

(73)

(91)

Capital expenditure net (including leased assets)

(1,193)

(2,836)

(4,977)

 

 

 

 

 

(1,494)

(2,452)

(3,322)

 

 

 

 

Opening net debt

(4,649)

(1,278)

(1,278)

Currency

69

(157)

(49)

 

 

 

 

Closing net debt

(6,074)

(3,887)

(4,649)

 

 

 

 

 

* Operating profit from continuing activities before impairment provision

 

Capital expenditure in the period was €1.2 million of which €1.1 million is in Managed Services and €0.1 million is in Books & Journals.

 
The increase in working capital reflects sales and trading trends in the first half of 2006. In July 2006 working capital in the operations decreased by €0.8 million and Group net debt at 31 July 2006 was €5.3 million.
 
At 30 June 2006 the net debt was as follows:
 
 
 
Centre
€’000
Managed
Services
€’000
Books &
Journals
€’000
 
Group
€’000
 
 
 
 
 
Cash
5,349
164
47
5,560
Cash flow finance
-
(1,003)
(1,258)
(2,261)
Term debt
-
(3,653)
(679)
(4,332)
Asset finance
-
(2,376)
(2,665)
(5,041)
 
 
 
 
 
 
5,349
(6,868)
(4,555)
(6,074)
 

Trading Outlook

 

Both Managed Services and Books & Journals are targeting a strong revenue performance in the second half of the year but falling prices and reduced margins will continue to be an issue for both businesses.


 

Consolidated income statement

                               

 

 

Half year ended

Half year ended

Year ended

 

 

30 June

30 June

31 Dec

 

 

2006

2005

2005

 

 

Unaudited

Unaudited

Audited

 

Notes

€’000

€’000

€’000

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

 

 

 

Revenue