So, come the end of the year it will be farewell then, Steve Vaughan. I'm not entirely clear whether his three-phase revamp strategy at Communisis has been completed or not, what is clear is that this morning's interim results from the group are awful.
Along with a collapse in profits, debt has almost doubled to £24.8m from £13.1m. The group is burning cash and there was a reversal in cashflow to the tune of £14.6m. A working capital outflow of £8.8m contributed to the debt increase. The pension deficit has doubled, and this must be a concern re the group's statement about being "well within both our new bank facilities and covenant limits". Interesting to see in the small print that it only has £11m of headroom on its net assets test.
Despite the positive noises about the outlook for the second half, and 2010, I'm absolutely amazed they've maintained the divi.
Sales doubled at its high-margin technology and services wing, but the operating profit hardly moved. Still, a margin of 27.7% is not to be sniffed at. If it could grow sales in this area ten-fold maybe everything would be ok. Transactional print also held up, comparatively.
Print sourcing sales, which were decimated by major contract losses and cutbacks in the bombed out financial sector, provide a stark illustration of the dead-end into which anybody involved in a pure print management play is headed. Communisis made just £193k on sales down 47% at £29.1m.
Assuming Gurdev Singh will have something to do with the direct mail business (sales down 25%, operating margin of 1.4%) when he takes up his new role, I hope he's equipped with some of those special underpants that are worn over trousers. Come to think of it, perhaps new CEO Andy Blundell will need some of those too.
Last but not least, I wonder what Simon Biltcliffe will make of all this? Could be some sport if it sparks some sort of move from him.
