RNS Number:4702I
Oakhill Group PLC
07 March 2003
OAKHILL GROUP PLC
Announcement of the Unaudited Preliminary Results of Oakhill Group plc
for the year ended 31 December, 2002
Copies of the Preliminary Results Announcement are available from the Company at
its office:
2A Sandymount Green, Sandymount, Dublin 4
Telephone 240 1400
PRELIMINARY STATEMENT
Oakhill Group plc announces its preliminary results for the year ended 31
December 2002.
Financial summary
2002 2001 Change
Euro'000 Euro'000 %
Sales
Continuing operations
Managed services 25,299 21,142 +20
Specialty print 22,684 23,733 -4
---------- ----------
47,983 44,875 +7
Discontinued operations 17,132 29,391
---------- ----------
65,115 74,266
---------- ----------
Operating profit *
Continuing operations
Managed services 2,666 1,933 +38
Specialty print 1,529 1,827 -16
---------- ----------
4,195 3,760
Centre costs (1,336) (1,499)
---------- ----------
2,859 2,261 +26
Discontinued operations 1,374 1,488
---------- ----------
4,233 3,749 +13
---------- ----------
Loss after tax (16,853) (13,063)
Adjusted earnings per share (cent)* 4.46 2.11 +111
Net debt 8,748 16,225
Pro forma net debt ** 4,630 -
Shareholders' funds 14,325 33,151
Debt / equity ratio 61% 49%
Pro forma debt/equity ratio ** 32% -
* before exceptional operating costs, impairment provision, goodwill amortisation and disposal of
business units
** net debt after the disposal of Meridian Printing
Chairman's Statement
Summary
Oakhill Group plc is a leading provider of managed services and customer contact
solutions in cards and marketing materials ("Managed Services Division") and a
market leader in other specialty print products ("Specialty Print Division"),
with business units in Ireland and the United Kingdom.
The preliminary results of the Group for 2002 show sales from continuing
operations up 7% on 2001 and operating profit from continuing operations (before
exceptional operating costs, impairment provision, goodwill amortisation and
disposal of business units) up 26%.
Adjusted earnings per share of 4.46 cent are 111% higher than the 2.11 cent
reported in 2001.
In light of the difficult market conditions in 2001 the Board conducted a
fundamental review of strategy and during 2002 worked to improve the structure
of the Group's businesses, assets and balance sheet as well as the liquidity
position and the financial flexibility of the Group. This has involved, inter
alia, a refocusing on manufacturing strengths and a more cohesive alignment of
these to existing sales and marketing services, implementation of a cost
reduction programme and divestiture of peripheral assets or businesses.
Operating review
The Group is organised into two business divisions, Managed Services and
Specialty Print.
Managed Services
Card production, card services, printing of marketing materials and related
fulfilment services have been reorganised into one division with a greater
emphasis on providing a managed service offering to customers. This division is
evolving into a card services and document management business increasing the
proportion of sales derived from contract based revenue streams and
significantly reducing the Group's dependence on commercial print. Investment
has been made in equipment and management resources to support this strategy. In
the year under review, sales increased by 20% and operating profit by 38%. This
reflects a strong performance by the card services part of the division. Trading
in the commercial print side was more difficult although progress was made in
developing the services element of this business.
Specialty Print
This division, following the sale of Meridian Printing, includes book and
journal printing in the United Kingdom and self-adhesive label printing in
Ireland and the United Kingdom. The division is focusing on higher margin
opportunities within the respective business units and on improvements in
productivity and a reduced cost base. In the year under review sales decreased
by 4% and operating profit by 16%. The books and journals business performed
well with sales and operating profit in line with last year. The labels business
suffered from declining sales and depressed margins resulting in a substantial
drop in operating profit.
Meridian
The sale of Meridian Printing for a consideration of $6.25 million, of which
$0.25 million is a subordinated loan note, was approved by shareholders at an
EGM on 17 February 2003 and the transaction was completed on 19 February 2003.
The net cash consideration, after expenses, of $5.7 million was used to repay
bank debt.
Dividends
The Directors are unable to recommend a dividend in view of the deficit on
revenue reserves.
Exceptional costs and provisions
Exceptional items in total amount to Euro15.7 million net of taxation as follows:
Euro m
Impairment provisions (18.6)
Exceptional operating costs (0.3)
Closure costs (0.2)
Exceptional taxation 3.4
----------
(15.7)
----------
The exceptional item of Euro15.7 million includes an impairment provision of Euro1.9
million, net of taxation, in respect of Meridian, based on the selling price of
$6.25 million. A review of the carrying values of the remaining businesses has
been carried out by the Directors in light of current market conditions and the
trading performances of some of the individual businesses. Arising from this
review an impairment provision of Euro14.2 million, net of taxation, is included in
respect of the Group's continuing businesses.
In spite of the overall increase in Sales and Operating Profit in 2002 the
Directors consider these provisions to be necessary and prudent. Our competitors
and industry commentators are forecasting very difficult trading conditions for
the commercial print and label sectors for the foreseeable future and although
our strategy is to reduce dependence on general commercial print a provision of
Euro8.8 million is included in respect of the remaining general commercial print
businesses and Euro5.4 million, net of taxation, is included in respect of the
Specialty Print division.
Cash flow and net debt
Net debt at 31 December 2002 was Euro8.7 million a reduction of Euro25.3 million over
the past two years from Euro34.3 million at 31 December 2000. Operating cash flow
in 2002 was Euro7.6 million, in line with last year. Following the completion of
the sale of Meridian Printing the Group net debt is reduced to Euro4.63 million,
giving a debt/equity ratio of 32%.
The repayment date of the Group's existing facilities with a syndicate of banks
has been extended from 31 March 2003 to 31 March 2004. The Group has initiated
discussions with a number of banks to effect a refinancing of these facilities,
which will significantly lengthen the maturity profile of Group debt and release
financial resources to underpin the Group's strategic initiatives.
Trading Outlook
While the overall economic and competitive environment is expected to remain
difficult for the foreseeable future, the effect of the refocused product
offering, targeted investment in equipment and technical capability and the
continued implementation of the cost reduction programme are expected to
positively impact on the results going forward.
Martin Delany
Chairman
7 March 2003
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2002
2002 2001
Notes Euro'000 Euro'000
Sales
Continuing operations
Managed services 25,299400 21,142
Specialty print 22,684 23,733
---------- ----------
47,983 44,875
Discontinued operations 17,132 29,391
---------- ----------
65,115 74,266
---------- ----------
Operating profit before exceptional operating costs, impairment
provision and goodwill amortisation
Continuing operations
Managed services 2,666 1,933
Specialty print 1,529 1,827
---------- ----------
4,195 3,760
Centre costs (1,336) (1,499)
---------- ----------
2,859 2,261
Discontinued operations 1,374 1,488
---------- ----------
Operating profit before exceptional operating costs, impairment 4,233 3,749
provision and goodwill amortisation
---------- ----------
Exceptional operating costs 2 (255) (2,316)
Impairment provision 3 (18,620) (7,191)
Goodwill amortisation 4 (3,702) (3,574)
---------- ----------
Operating loss after exceptional operating costs, impairment
provision and goodwill amortisation
Continuing operations (15,969) (3,698)
Discontinued operations (2,375) (5,634)
(18,344) (9,332)
Disposal/closure of business units 5 (227) (2,355)
---------- ----------
Loss on ordinary activities before interest (18,571) (11,687)
Interest (1,054) (2,119)
---------- ----------
Loss on ordinary activities before taxation (19,625) (13,806)
Taxation 2,772 743
---------- ----------
Loss on ordinary activities after taxation (16,853) (13,063)
---------- ----------
Earnings/(loss) per share
- Basic and diluted (cent) 6 (29.86) (23.15)
Adjusted earnings per share
- Basic and diluted (cent) 6 4.46 2.11
UNAUDITED CONSOLIDATED BALANCE SHEET
31 Dec 31 Dec
2002 2001
Euro'000 Euro'000
Fixed assets
Tangible fixed assets 13,063 21,186
Intangible assets 9,260 28,072
---------- ----------
22,323 49,258
---------- ----------
Current assets
Stocks 1,740 3,106
Debtors and other current assets 11,178 15,943
Cash and bank balances 4,868 5,117
---------- ----------
17,786 24,166
---------- ----------
Creditors (amounts falling due within one year)
Trade and other creditors 10,667 13,266
Bank and other loans 6,267 8,535
Taxation 804 1,210
---------- ----------
17,738 23,011
---------- ----------
Net current assets 48 1,155
Total assets less current liabilities 22,371 50,413
Creditors (amounts falling due after one year)
Bank and other loans 7,349 12,807
Provision for liabilities and charges 697 4,455
---------- ----------
14,325 33,151
---------- ----------
Shareholders' funds
Share capital 5,644 5,644
Share premium 41,346 41,346
Other reserves 2,731 4,704
Profit and loss account (35,396) (18,543)
---------- ----------
14,325 33,151
---------- ----------
UNAUDITED SUMMARY CASH FLOW
FOR THE YEAR ENDED 31 DECEMBER 2002
2002 2001
Euro'000 Euro'000
Operating profit before goodwill amortisation and exceptional operating 4,233 3,749
costs
Depreciation 3,555 4,882
Net working assets 126 588
Exceptional operating costs (271) (1,580)
---------- ----------
Operating cash flow 7,643 7,639
Net interest (1,026) (1,780)
Taxation 219 (280)
Capital expenditure (1,800) (2,472)
Disposal/closure of business units 1,141 15,414
---------- ----------
6,177 18,521
Opening net debt (16,225) (34,021)
Currency 1,300 (725)
---------- ----------
Closing net debt (8,748) (16,225)
---------- ----------
NOTES TO THE PRELIMINARY RESULTS
1. Basis of Preparation
The preliminary financial statements for the year ended 31 December 2002
have been prepared in accordance with the accounting policies set out in the
financial statements for the year ended 31 December 2001, except for the
adoption of FRS 19, Deferred Taxation. This has not had any material effect
on the amounts presented. Comparative amounts have been regrouped and
restated, where necessary, on the same basis as the amounts for the current
period.
2. Exceptional Operating Costs
2002 2001
Euro'000 Euro'000
Continuing operations
Reorganisation costs (see (a) below) (255) (1,417)
Development costs (see (b) below) - (899)
---------- ----------
(255) (2,316)
---------- ----------
a. These costs were incurred in respect of the ongoing reorganisation of the
Group's activities.
b. These relate to costs in respect of the Group's development strategy to
move its activities into higher value added areas and include costs in
respect of systems development, market research and discontinued
acquisition activities.
1. Impairment provision
2002 2001
Euro'000 Euro'000
Provision in respect of impairment of goodwill
and fixed assets in:
Continuing operations
Specialty print (6,095) (1,608)
Commercial print (9,361) -
Discontinued operations
Meridian Printing (3,164) (5,583)
---------- ----------
(18,620) (7,191)
---------- ----------
2. Goodwill amortisation
2002 2001
Euro'000 Euro'000
Continuing operations (3,117) (2,035)
Discontinued operations (585) (1,539)
---------- ----------
(3,702) (3,574)
---------- ----------
3. Disposal/closure of business units
2002 2001
Euro'000 Euro'000
Speedprint (227) (3,559)
Packaging - 1,396
Keytech and Stinehour - (192)
---------- ----------
(227) (2,355)
---------- ----------
4. Earnings Per Share
2002 2001
Euro'000 Euro'000
Loss after taxation (16,853) (13,063)
Exceptional operating costs - net of tax 199 1,857
Impairment provision - net of tax 16,218 6,710
Goodwill amortisation 3,702 3,574
Disposal of business unit - net of tax 126 2,111
Exceptional tax credits (873) -
---------- ----------
Adjusted profit after tax 2,519 1,189
---------- ----------
Basic and diluted earnings per share
Loss per share (cent) (29.86) (23.15)
Exceptional operating costs - net of tax 0.35 3.29
Impairment provision - net of tax 28.73 11.90
Goodwill amortisation 6.56 6.33
Disposal of business unit - net of tax 0.22 3.74
Exceptional tax credits (1.54) -
---------- ----------
Adjusted earnings per share (cent) 4.46 2.11
---------- ----------
Weighted average number of shares ('000) 56,439 56,439
---------- ----------
5. Exchange Rates
2002 2001
Average rate for the period (profit and loss and cash flow)
US$ 0.9449 0.8956
Stg# 0.6288 0.6219
Period-end rate (balance sheet)
US$ 1.0487 0.8813
Stg# 0.6505 0.6085
6. Preliminary statement
The financial information set out in the announcement does not
constitute full accounts and is unaudited. Full accounts for the year
ended 31 December 2001, which received an unqualified audit report, have
been filed with the Irish Registrar of Companies.
Contacts : Oakhill Group plc 353 1 240 1400
Martin Delany 353 1 240 1400
Alan Jordan
Ends : 7 March, 2003
This information is provided by RNS
The company news service from the London Stock Exchange
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