Both Artisan Press and Headley Brothers reported significant reductions in litho print sales in their 2013 accounts, leading to increased losses and notes from their auditors highlighting material uncertainties that could affect their ability to continue as a going concern.
Artisan reported a net loss of £3.8m (2012 net loss: £437,115) on turnover of £32.5m (2012: £37.4m) for the year ended 31 October 2013, following a £2.1m writedown in the value of its fixed assets.
The company's directors highlighted a 19% drop in print volume, from 14.4bn pages in 2012 to 11.5bn in 2013, together with an 18.3% decrease in the quantity of books bound, from 103.2m to 84.3m.
Artisan has entered negotiations with its workforce about a reduction in manning levels in order to reduce its wage bill by more than £1.7m per annum.
In addition, the Leicester-based firm has increased its banking facilities from £2.9m to £4.9m via a new £2m overdraft facility that will be used to help finance a cost-cutting programme and performance review.
"Although further losses are anticipated for 2013-14 due to redundancy costs and the delay in the cost reduction taking effect, the directors believe that the company will return to profitability in 2014-15," the firm's directors said.
Meanwhile, while Headley Brothers' digital arm continued to perform strongly, growing turnover by 20% to £851,257 and more than doubling pre-tax profit to £84,780 for the 61 weeks to 7 December 2013 (versus prior 52 week period), its litho arm and bindery suffered from similar declines in volume to Artisan.
On a pro-rata basis, turnover at Headley Brothers was down £1.5m from £20.2m in 2012, while gross margin at £3.3m was also "well down"; the company made a pro-rata loss after tax of £941,266 (2012 loss: £68,767).
In the directors' report the company said that "litho print sales were very depressed during the first 11 months of the period, with consequent pressure on pricing", adding that volume increases in September to November 2013 had been insufficient to make a significant difference to the results.
"The single main factor causing the losses was a shortage of work," the company added.
Headley Brothers carried out "substantial work...during the period to realign costs and develop new revenue streams" including the closure of its Invicta Direct binding facility and relocation of its main equipment to the Invicta Press site that houses the Headley Brothers litho print operation.
Turnover at the bindery was down 21% for the year to £905,699 and while gross margin rose 14%, shutdown costs resulted in a 13% greater loss before tax of £341,501.
In May 2014, the group switched its invoice discounting from Lloyds Commercial Finance to Close Invoice Finance as part of new invoice discounting and asset finance arrangements that were said to have had a "significant cashflow benefit for the group".
