Tony Langley is smiling. In his Chairman’s Review of the Langley Holdings PLC Annual Report & Accounts 2012, which were published the first week in February, the eponymous founder, CEO and Chairman of this remarkable engineering group has much to smile about. It has been another record year for the group he has nurtured since 1975.
 
Revenues are €527 million, operating profits €116 million, bolstered €25 million by an uplift to market value of Manroland’s Offenbach property portfolio, and the group remains free of debt, reporting €208 million of cash in hand at the year-end.

Manroland Sheetfed meanwhile, reported to be “standing on its own feet” in Langley’s half-year statement, “continued to do so in the second half”. The Manroland Sheetfed Group, which comprises over 40 companies world-wide, is not included in the Langley figures, the press builder will report it's figures in March and it is planned to incorporate the Group into Langley Holdings later this year.      

 Looking closely into the accounts it can be seen that Langley paid around €80 million for the Manroland Sheetfed Group last February – €21 million for the Offenbach properties, roughly €59 million for everything else. What’s not clear is what he got for that on day one but the pro-forma Manroland accounts at 31st December 2012 included in the Chairman’s Review are showing net assets of €80million, after borrowing €57 million from Langley Holdings. Add the €25 million fair value adjustment on the German property in Langley Holdings’ books and the total net assets are €105 million; around €45 million of that in cash. Presumably the discount to net asset value was substantially more on day-one; the business has been re-structured since and only reached an underlying break-even towards the end of the year. Going forward Langley says he does not expect a significant contribution to Group results from Manroland in 2013; “….that will come later” he says, but with the press builder now structured to break even on €350 million of sales and having achieved €358 million in 2012, he expects to see “…something of an improvement in 2013.”
 
One year on, things are certainly different at the new Manroland Sheetfed. Langley and his team have been physically present in Offenbach for much of 2012 and it shows. Gone is the top-heavy AG management with its Vorstandt, Vice-Presidents, Executive Vice-Presidents and Senior Executive Vice-Presidents, along with their endless meetings, memo's and corporate expense accounts. In its place, a board headed by Langley himself, a few trusted lieutenants and, sole survivor of the former Manroland AG senior management, Rafael Penuela - now CEO. Around the place managers stifled by years of bureaucracy are getting on with well, “managing”. And on the shop floor there’s an air of optimism. “One year ago, before Herr Langley came along we had no future, today we have a future” said one worker.    
 
On day one Langley installed German operations veteran Alfred Rothlaender to head up the company and oversee a transition from the colossus the company once was to the lean organisation that is characteristic of Langley businesses. Rothlaender stepped down at the end of 2012 with "no stone left unturned" to return to retirement, his final assignment for Langley complete. During this time the company has been transformed from the train-crash that hit the buffers on 25th November 2011 and emerged from the wreckage on 9th February 2012, into a company that can now break even producing just 100 presses per year.
   
Times are still tough in the printing industry, not least at the heavy metal end of the business. A collapse in demand for new machines post Lehmann Brothers, combined with the glacial pace of adjustment to overcapacity by the main players has seen press prices dwindle and while Manroland Sheetfed has addressed the issue of over-capacity head on, many observers doubt whether the others have the financial clout to grasp the nettle, even if they were inclined. Inevitably,according to the age old law, when capacity exceeds demand, price goes down. Prices for presses are no more now than five years ago but Langley doesn’t seem overly concerned: “Whilst our competitors are losing money at current price levels, we are not. Our company’s cost base is much lower, so I am content to sit it out.”
 
And sit it out he will. This is no asset stripper or venture capital scavenger. Langley is a long-term player and having no other shareholders to answer to, he can afford to wait. He has thrived on buying good businesses at the bottom of the cycle, re-aligning costs and waiting. Langley hasn't sold a business yet and doesn't plan to start now. In the meantime apprentice intake is being maintained at the press builder and spending continues on R&D.    
 
In the past, the big three German producers were obsessed with market share. Langley isn’t playing that game. Judging by the CEO change at Heidelberg, neither are they any longer. Even KBA must be questioning the wisdom of trying to grab market share from the new Manroland Sheetfed. With Langley controlling things, Manroland has morphed into a strong niche player and “Roland” aficionados are not easily turned. “Why buy VW or Opel when for the same money you can have Mercedes S Class?” one said.
 
“Revenue for vanity, profit for sanity” goes the motto. That's certainly evident in Langley’s other divisions, two of which are also German. They sanely outperform the VDMA, the German machinery producers index, hands down. Not that the Langley group is exactly small; with Manroland revenues, this is getting on for a billion euro turnover business and it’s privately owned and it has substantial cash reserves and it has no debt.
 
A year on Manroland Sheetfed has a new shareholder, a new direction and is looking to the future with confidence. What a difference a year makes.