Adare keeps focus on debt reduction

The Adare Group managed to produce a profit margin of approximately 10 per cent in 2005 while reducing debt by more than £14 million (€20.4 million), the company has said.

The group is concentrating on reducing debt and growing the business while a strategic review is being conducted that could include a suggested sale.

The accounts for 2005, filed recently, show the print management and packaging group made an operating profit of more than £17 million on a turnover of £177.8 million. The £17 million figure is before goodwill, amortisation and impairment is deducted and when exceptional costs totalling £2.3 million are factored back in.

Profits before interest and tax were £8.27 million but interest payments were £8 million.

The group incurred significant debts in 2000 when it was delisted and taken over by a consortium led by its chief executive, Nelson Loane.

In 2005 net debt was reduced to £82.5 million from £96.73 million. In 2003, when the debt was refinanced, the figure stood at £109 million.

Finance director Cormac Ó'Tighearnaigh described 2005 as a "very solid year" for the group "in what is a very competitive marketplace".

He said the group is refocusing away from the commodity end of its business and towards the more attractive end which includes such areas as supply chain management and data base management.

"We have fairly high investment in IT and are looking to provide solutions to blue chip customers."

The group has commissioned Mazars to draft a report on the strategic options available for it.

A number of operations, which were responsible for losses of £2 million, were discontinued during the year.

The closures created exceptional costs, including redundancy payments, of £2.3 million.

The group disposed of Adare Pressicon Ltd, Fairfield Graphics Ltd, and Great Northern Envelope Company Ltd.

Mr Ó'Tighearnaigh said the group's move from commodity areas and constant focus on costs were key factors in creating the "exceptional" margins achieved in 2005.

Mr Nelson owns 9 per cent of the group and other management own another 10 per cent.

Private equity company Allen McGuire and Partners owns more than 50 per cent and another, unnamed institutional investor also has a shareholding.

Mr O'Tighearnaigh said a value will be put on the shares on the dispersal of the group. He said there was no timescale governing the eventual disposal.

During 2005 the average number of employees was 1,342, at a total cost of £45.3 million. Directors' remuneration (excluding pension payments) was £511,000, with the highest paid director receiving £186,000.

Mr Ó'Tighearnaigh said the directors' remuneration was "very modest for a group of this size". This reflected the focus on incentivising the management by way of its shareholding.

The bulk of the group's business is in the UK, where its customers include the Inland Revenue, HBOS, and the Economist Group.

Its business here includes the C J Fallon education publisher and a number of franchised Prontoprint outlets.