Six months ago I wrote a piece about Goodhead Group, asking if it was the biggest single print investment by a private individual anywhere in the world. Looking at the group's latest results the answer appears to be a resounding "yes".
The group's owner Sir John Madejski is of course a very wealthy chap, and he can do what he likes with his money. So far he's committed something like 15% of his fortune to this printing business. Unfortunately no matter how much money he chucks at it, the numbers keep going backwards.
I had posited that the company appeared to be losing £1m a month, and it now emerges that they have actually out-performed my expectations considerably. The bottom line loss of £18.3m equates to more than £1.5m a month. Once again it is the gross and operating profit figures that really tell the story.
Gross profit margin has further declined to 13%. Three years ago it was 21.4%. The operating loss, pre-exceptionals, has increased by 59% to the best part of £8m, on sales down 3% at £46m. The "metamorphosis" cited by the directors seems to have involved going from profit to ever-greater losses.
I have to take issue with the commentary in the directors' report stating that Madejski's millions have created "...the largest, most modern and unit cost efficient commercial web offset facility in the UK". The business has some fabulous kit, and some very good people. But I'm not sure how having your bindery located 20 miles or so up the road is "unit cost efficient". A topic for further discussion and exploration, perhaps, as it's certainly an interesting claim.
The comments from PrintWeek readers on the current news story about the results are, as always, illuminating. I agree that come the upturn the BGP facility should indeed be well-placed to benefit from improved market conditions - if they can get their pricing right. However, just as with the hundreds of millions of Investcorp pounds swallowed by Polestar during its transformation, I can't see how Madejski will ever get any of his sunk money back.
