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

3

16,814

15,678

32,847

Cost of sales

 

(13,285)

(11,887)

(24,951)

 

 

 

 

 

Gross profit

 

3,529

3,791

7,896

 

 

 

 

 

Selling and distribution costs

 

(1,309)

(1,212)

(2,273)

Administration expenses

 

(2,058)

(1,961)

(4,256)

 

 

 

 

 

Operating profit before exceptional operating costs and impairment provision

 

3

 

162

 

618

 

1,367

 

 

 

 

 

Impairment provision

4

-

(7,430)

(7,455)

 

 

 

 

 

Operating profit/(loss)

 

162

(6,812)

(6,088)

 

 

 

 

 

Finance costs

5

(454)

(395)

(874)

Finance income

5

131

140

315

 

 

 

 

 

Loss before tax

 

(161)

(7,067)

(6,647)

 

 

 

 

 

Taxation

6

51

(107)

(226)

Loss for the period attributable to equity shareholders

 

(110)

(7,174)

(6,873)

 

 

 

 

 

Loss per share

 

 

 

 

 -    Basic and diluted (cent)

7

(0.19)

(12.71)

(12.18)

Adjusted (loss)/earnings per share *

 

 

 

 

-    Basic and diluted (cent)

7

(0.19)

0.45

1.03

 

*  before goodwill impairment provision


 

Consolidated balance sheet

 

 

30 June

30 June

31 Dec

 

2006

2005

2005

 

Unaudited

Unaudited

Audited

 

€’000

€’000

€’000

 

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

12,126

11,131

12,043

Goodwill

-

-

-

 

 

 

 

 

12,126

11,131

12,043

 

 

 

 

Current assets

 

 

 

Inventories

1,538

1,405

1,663

Trade and other receivables

8,716

7,812

8,073

Cash and cash equivalents

5,560

6,703

7,048

 

 

 

 

 

15,814

15,920

16,784

 

 

 

 

Total assets

27,940

27,051

28,827

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

6,804

7,034

7,403

Borrowings

4,735

3,665

4,137

Current tax liabilities

706

811

743

 

 

 

 

 

12,245

11,510

12,283

 

 

 

 

Non-current liabilities

 

 

 

Borrowings

6,899

6,925

7,560

Deferred tax

676

586

720

Retirement benefit obligations

321

200

331

 

 

 

 

 

7,896

7,711

8,611

 

 

 

 

Total liabilities

20,141

19,221

20,894

 

 

 

 

Net assets

7,799

7,830

7,933

 

 

 

 

 

 

 

 

Equity

 

 

 

Ordinary share capital

5,644

5,644

5,644

Share premium

5,950

5,950

5,950

Other reserves

282

394

312

Accumulated deficit

(4,077)

(4,158)

(3,973)

 

 

 

 

Total equity

7,799

7,830

7,933

 

 

 

 

 

 

 


Consolidated statement of recognised income and expense

 

 

Half year

ended

Half year

ended

Year

ended

 

30 June

30 June

31 Dec

 

2006

2005

2005

 

Unaudited

Unaudited

Audited

 

€’000

€’000

€’000

 

 

 

 

Actuarial gain/(loss) on defined benefit pension plan

(net of tax)

 

6

 

-

 

(116)

Exchange movement

(30)

513

431

 

 

 

 

Net (expense)/income recognised directly within equity

(24)

513

315

 

 

 

 

Loss for the period

(110)

(7,174)

(6,873)

 

 

 

 

Total recognised expense relating to the period

(134)

(6,661)

(6,558)

 

 

Reconciliation of movements in group equity

 

 

Half year

ended

Half year

ended

Year

ended

 

30 June

30 June

31 Dec

 

2006

2005

2005

 

Unaudited

Unaudited

Audited

 

€’000

€’000

€’000

 

 

 

 

Total recognised expense relating to the period

(134)

(6,661)

(6,558)

 

 

 

 

Opening group equity

7,933

14,491

14,491

 

 

 

 

Closing group equity

7,799

7,830

7,933


 

Consolidated cash flow statement

 

 

Half year

ended

Half year

ended

Year

ended

 

30 June

30 June

31 Dec

 

2006

2005

2005

 

Unaudited

Unaudited

Audited

 

€’000

€’000

€’000

Operating activities

 

 

 

Cash generated from operations (note 8(a))

40

714

2,307

Taxation paid

(18)

(73)

(91)

 

 

 

 

Net cash inflow from operating activities

22

641

2,216

 

 

 

 

Investing activities

 

 

 

Purchase of property, plant and equipment

(455)

(1,102)

(769)

Proceeds from sale of property, plant and equipment

-

-

45

Interest received

131

138

314

 

 

 

 

Net cash outflow from investing activities

(324)

(964)

(410)

 

 

 

 

Financing activities

 

 

 

Proceeds from borrowings

678

743

820

Repayments of borrowings

(592)

(612)

(1,188)

Capital element of finance lease rental payments

(775)

(388)

(963)

Interest paid

(278)

(299)

(629)

Finance lease interest

(176)

(96)

(246)

 

 

 

 

Net cash outflow from financing activities

(1,143)

(652)

(2,206)

 

 

 

 

Net decrease in cash and bank overdrafts

(1,445)

(975)

(400)

 

 

 

 

Cash and bank overdrafts at beginning of period

7,048

7,257

7,257

Effect of exchange rate changes

(43)

261

191

 

 

 

 

Cash and bank overdrafts at end of period

5,560

6,543

7,048

Cash and bank overdrafts comprise:

 

 

 

Cash and cash equivalents

5,560

6,703

7,048

Bank overdrafts

-

(160)

-

 

5,560

6,543

7,048


 Notes to the financial statements

 

 

1.       Basis of preparation

The financial information included in the interim report has been prepared on the basis of the recognition and measurement requirements of International Financial Reporting Standards (IFRS) and interpretations of the International Financial Reporting Interpretation Committee (IFRIC).

 

The transition date for implementation of IFRS by the Group was 1 January 2004. Further details of the accounting policies adopted by the Group on the implementation of IFRS, and of the impact on the reported results and balance sheet of the Group of the transition to IFRS, are set out in the 2005 Annual and Interim Reports, which are available on the Group website.

 

The financial information set out in the interim statement is un-audited and does not constitute statutory accounts. The statutory accounts for the year ended 31 December 2005, which received an unqualified audit opinion have been filed with the Registrar of Companies. 

 

 

2.       Exchange rates

 

 

Half year

ended

Half year

ended

Year

ended

 

30 June

30 June

31 Dec

 

2006

2005

2005

 

 

 

 

Average rate for the period (income statement and cash flow)

 

 

 

£ Sterling

0.6871

0.6861

0.6839

 

 

 

 

Period-end rate (balance sheet)

 

 

 

£ Sterling

0.6921

0.6742

0.6853

 

 

3.       Analysis of revenue and operating results by business segment

 

 

Half year ended

30 June 2006

Half year ended

30 June 2005

Year ended

31 Dec 2005

 

Unaudited

Unaudited

Audited

 

€’000

€’000

€’000

€’000

€’000

€’000

 

Revenue

Result #

Revenue

Result #

Revenue

Result #

 

 

 

 

 

 

 

Managed Services

11,601

136

10,926

657

22,629

1,385

Books & Journals

5,213

651

4,752

649

10,218

1,376

Centre

 

(625)

 

(688)

 

(1,394)

 

 

 

 

 

 

 

 

16,814

162

15,678

618

32,847

1,367

 

# The operating result is operating profit before goodwill impairment provision.

 

 

4.       Impairment provision

 

 

Half year

ended

Half year

ended

Year

ended

 

30 June

30 June

31 Dec

 

2006

2005

2005

 

Unaudited

Unaudited

Audited

 

€’000

€’000

€’000

 

 

 

 

Managed Services

-

(6,252)

(6,292)

Books & Journals

-

(1,178)

(1,163)

 

 

 

 

 

-

(7,430)

(7,455)

 

A review of the carrying value of the two business divisions was carried out during 2005 in accordance with international financial reporting standards. This review took account of the prevailing market conditions and trading performance and the outlook for the markets in which the businesses operate. Arising from this review an impairment provision was made in respect of goodwill, which wrote the total carrying value of goodwill down to zero in the Group accounts. 


 

5.       Net finance costs

 

 

Half year

ended

Half year

ended

Year

ended

 

30 June

30 June

31 Dec

 

2006

2005

2005

 

Unaudited

Unaudited

Audited

 

€’000

€’000

€’000

 

 

 

 

Interest income

131

140

315

Interest expense

(454)

(395)

(874)

 

 

 

 

 

(323)

(255)

(559)

 

Interest income and interest expense are inclusive of the net pensions financing credit and debit.

 

 

6.       Taxation

 

 

Half year

ended

Half year

ended

Year

ended

 

30 June

30 June

31 Dec

 

2006

2005

2005

 

Unaudited

Unaudited

Audited

 

€’000

€’000

€’000

 

 

 

 

Current tax

 

 

 

Irish tax

-

-

-

Overseas tax

14

(113)

(177)

Adjustments in respect of previous periods

-

-

105

 

 

(113)

(72)

Deferred tax

 

 

 

Timing differences

37

6

(154)

 

 

 

 

 

51

(107)

(226)

 

 

7.       (Loss)/earnings per share

 

 

Half year

ended

Half year

ended

Year

ended

 

30 June

30 June

31 Dec

 

2006

2005

2005

 

Unaudited

Unaudited

Audited

 

€’000

€’000

€’000

 

 

 

 

Loss for the period attributable to equity shareholders

(110)

(7,174)

(6,873)

Impairment provision

-

7,430

7,455

 

 

 

 

Adjusted (loss)/profit for the period attributable to equity shareholders

 

(110)

 

256

 

582

 

 

 

 

Basic and diluted (loss)/earnings per share

 

 

 

Loss per share (cent)

(0.19)

(12.71)

(12.18)

Impairment provision

-

13.16

13.21

 

 

 

 

Adjusted (loss)/earnings per share (cent)

(0.19)

0.45

1.03

 

 

 

 

 

 

 

 

Weighted average number of shares (‘000)

56,439

56,439

56,439

 


 

8.       Cash flow statement

 

(a) Cash generated from operations

 

 

Half year

ended

Half year

ended

Year

ended

 

30 June

30 June

31 Dec

 

2006

2005

2005

 

Unaudited

Unaudited

Audited

 

€’000

€’000

€’000

 

 

 

 

Loss before taxation

(161)

(7,067)

(6,647)

Adjustments for:

 

 

 

Net finance costs

323

255

559

Impairment of goodwill

-

7,430

7,455

Depreciation

991

848

1,885

Exceptional operating costs non cash movement

-

(109)

(291)

Movement in post employment obligations

(4)

2

2

Decrease/(increase) in inventories

108

(186)

(424)

(Increase)/decrease in trade and other receivables

(639)

244

(226)

Decrease in trade and other payables

(578)

(703)

(6)

 

 

 

 

 

40

714

2,307

 

 

 (b) Reconciliation of net decrease in cash and cash equivalents to movement in net debt

 

 

Half year

ended

Half year

ended

Year

ended

 

30 June

30 June

31 Dec

 

2006

2005

2005

 

Unaudited

Unaudited

Audited

 

€’000

€’000

€’000

 

 

 

 

Decrease in cash and cash equivalents

(1,445)

(975)

(400)

 

 

 

 

Financing

 

 

 

New borrowings

(678)

(743)

(820)

Repayment of borrowings

592

612

1,188

Lease repayments

775

388

963

 

(756)

257

1,331

 

 

 

 

New finance leases

(738)

(1,734)

(4,253)

 

 

 

 

Effect of exchange rate changes

69

(157)

(49)

 

 

 

 

Movement in net debt in the period

(1,425)

(2,609)

(3,371)

 

 

 

 

Net debt at beginning of period

(4,649)

(1,278)

(1,278)

 

 

 

 

Net debt at end of period

(6,074)

(3,887)

(4,649)

 

 

(c) Analysis of net debt

 

 

30 June

30 June

31 Dec

 

2006

2005

2005

 

Unaudited

Unaudited

Audited

 

€’000

€’000

€’000

 

 

 

 

Cash and cash equivalents including overdrafts

5,560

6,543

7,048

Cash flow finance

(2,261)

(1,552)

(1,601)

Term debt and other loans

(4,332)

(5,630)

(4,966)

Obligations under finance leases

(5,041)

(3,248)

(5,130)

 

 

 

 

 

(6,074)

(3,887)

(4,649)

 


 

9.         Interim report

This interim report was approved by the Board of Directors on 27 September 2006.

 

The interim report will be included on the Company’s website (www.oakhillplc.ie) and copies are available from the Company’s registered office at 2A Sandymount Green, Sandymount, Dublin 4.

 

 

Contacts:

Oakhill Group plc

Alan Jordan

353 1 240 1400

 

 

27 September 2006

END