Wace says worst not over in UK

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The Independent Online
WACE Group, the print and pre- press services company formerly run by John Clegg, reported a 29 per cent drop in taxable profits to pounds 5.6m for the half-year to 30 June.

The results, which were above City estimates, have been overshadowed by a DTI investigation into dealings in Wace's shares.

The controversy led to the resignation of Mr Clegg as managing director this year.

He has since received a pounds 425,000 pay-off and is living in the US.

The results reflect difficult trading conditions in Wace's principal markets in advertising in the UK, where operating profits fell from pounds 6.8m to pounds 4.3m. However, US profits climbed by 55 per cent to pounds 3.7m and Europe was marginally higher at pounds 2.2m.

The group's pre-press operations improved trading profits from pounds 6.3m worldwide, but the printing division's contribution slumped from pounds 5m to pounds 3.55m.

Interest costs soared by more than a third to pounds 4.6m as net borrowing climbed from pounds 82.4m to pounds 91m. The company sold a surplus property for its book value of pounds 950,000.

There was an extraordinary deficit of pounds 2.2m, representing losses on the disposal of an Italian colour laboratory operation and closures of some print and publishing operations.

Earnings slumped from 5.2p to 2.9p but the interim dividend is held at 2.25p.

Frans ten Bos, chairman, said: 'While trading conditions in Europe and the US suggest the worst may be past, in the UK no such signs have appeared.'

However, Louise Barton, media analyst with the brokers Henderson Crosthwaite, has increased her full-year profit forecast from pounds 16m to pounds 16.5m before tax, against pounds 18.3m last year.

The shares closed 1p higher at 90p. About 12 months ago they were trading at 270p.