In the year to 30 September 2014, sales at Polestar Print Holdings fell by £22.5m, or 9.4%, to £216.4m. Polestar said that lower sales of paper accounted for £11.3m of the decline, with the remaining £11.2m – the equivalent to £933,000 a month – caused by “falling run lengths and pagination levels”.
EBITDA (earnings before interest, taxes, depreciation and amortisation) was down to £34.9m (2013: £37m), while the group was back in the red at the operating level after posting an operating profit of £1.8m in the prior year. The operating loss for 2014 was £5.4m, and the pre-tax loss for the year increased by £5.6m to £14.9m.
Polestar said its Sheffield gravure site had been forced to take on lower-margin commercial work in the face of declining contractual demand from key newspaper clients.
The firm stated: “This transition away from gravure reinforces the group’s strategy of investing in more flexible, higher-speed large pagination web offset presses."
The year involved considerable change and upheaval at the business. Polestar became sole supplier to publisher Time Inc UK from July 2014, and the first of its two new 96pp Goss Sunday 5000 presses began printing two months later.
Polestar said: “The investment programme will impact on underlying EBITDA with considerable efficiency gains in material usage, labour reduction and overhead savings, which will materialise in 2015 and beyond and will support underlying earnings growth.”
The short-grain 64pp Goss web that completed the first tranche of its £50m web offset reinvestment plan started up at the beginning of this year.
The firm spent £10.8m on redundancies, business reorganisation and relocation, and asset writedowns as a result of restructuring its old print sites, which included the closure of Polestar Colchester and Polestar Petty in Leeds. The total number of employees reduced by 129 to 1,718.
Polestar also produced £94,000 of work for River Publishing, which was acquired by Polestar's owner Sun Capital in May 2014. Further similar M&A deals could be on the cards.
“Polestar and its ultimate parent company Sun Capital, have entered into discussions with a number of businesses in related but growing sectors of the market… Polestar, Sun and River will continue to look at opportunities in this sector to consolidate the market and strengthen ties with its customer base,” the group said.
Polestar refinanced in April 2015 with new credit facilities from Barclays and a £90m loan from Proventus Capital Partners.
Polestar was unavailable for further comment at the time of writing.
