Couple of additional observations on those Communisis numbers from last week. I don't think I'm alone in finding the way they present their figures rather curious in parts. Whether this is a legacy of the Wallis/Jones era I'm not sure, although I do recall that Steve Vaughan made some changes to the way restructuring costs were reported to bring that more in line with normal conventions.
Anyhow, the line that I find rather odd is this “central costs” figure. On sales that were down 26% to £190.2m (partly because of the sale of what was Bath Business Forms), and operating profits that halved to £7.2m, central costs still amounted to the best part of £10m, and decreased by just 2.9%.
It would be illuminating to see the segmental review of sales and profits for the different business areas including the relevant apportioning of that £10m.
Technology & Services is definitely the golden child of the group, returning margins of 31% - it's not surprising that margins have fallen from the stellar levels of nearly 50% a couple of years ago, but the commentary states that the expectation is that this part of the business “will maintain a return in excess of 25% going forward”. All hail to that.
Direct mail, meanwhile, is currently sitting in a corner wearing a dunce's cap, however we can expect some changes there – it sounds like once this HP T300 press is up and running they'll be retiring some of the old iron at Chorleys toot suite. And of course there's a new (old) head of sales for DM with the return of Gurdev Singh. Can't help wondering if that's the job he thought he was going to be doing when Vaughan appointed him, only to exit rapidly stage left after those awful interims last summer. Perhaps a bigger potential prize has been dangled.
Last but certainly not least, the group did well to turn its cashflow around in the second half. One of the beneficiaries of this rather urgent requirement for more of the folding stuff being Integrity Print (the former Bath Business Forms), which saved itself £650k by paying off a £3m chunk of its remaining buyout debt early.
As ever, cash is the ultimate king, and if you've got it at the moment you can really make it work to your advantage.
