Partners Holdings - Final Results
June 15 1998 - 3:30AM
UK Regulatory
RNS No 8780m
PARTNERS HOLDINGS PLC
15th June 1998
Partners Holdings plc
'Partners'
Preliminary Results for the year ended 31 March 1998
Partners Holdings plc, the operator of 103 specialist retail
stationery stores, today announces preliminary results for the
year ended 31 March 1998.
* From an enlarged estate of 103 stores, turnover increased
16% to #35.6m.
* Proposed final dividend of 1.0p per ordinary share, which
together with the interim dividend of 0.5p makes a total
dividend for the year of 1.5p.
* Review of brand positioning, merchandise ranges and store
layout to be completed later this year.
* New Board structure in place.
* Relocation of distribution centre to new purpose built
facility.
* EPOS implementation in all stores.
Michael Scorey, Chairman, said:
"Despite a difficult year a great deal has happened within the
group that will benefit future performance. We are in the
process of refining our retail concept and this with other
initiatives will position the company for future growth in
sales and profits."
Enquiries:
Partners Holdings Plc
Michael Scorey, Chairman Tel: 0171 589 4020
Peter Davey, Chief Executive Tel: 01270 505 888
Alan Goodwin, Finance Director Tel: 01270 505 888
College Hill Tel: 0171 457 2020
Matthew Smallwood
Partners Holdings plc
Chairman's Statement
Results
As anticipated at the time of our interim and Christmas
trading statements, profits for the year were held back as a
result of a sales performance which was below our expectations
and a planned increase in costs in respect of new stores and
the relocation of our distribution centre.
23 new stores were opened during the year, an increase of 12
over the 11 stores opened in 1997. The results also include
costs relating to a marketing consultancy assignment, which
was commissioned to re-assess Partners' image and marketing
strategies for the future.
Turnover at #35.6 million increased by 16.0%. Pre tax profit
for the year was #755,000, compared with #2,003,000 last year.
Share Capital
On the 28 April 1997 the Company successfully placed 5,626,666
ordinary shares on the London Stock Exchange raising a net
#3.01 million for the Company.
Dividends
An interim dividend of 0.5p per ordinary share was declared by
the Board at the half year and a final dividend of 1.0p is now
proposed which, subject to shareholders' approval, will be
paid on 31 August 1998.
In the year to 31st March 1997, principally as a result of the
capital reorganisation, total dividends of #954,000 were paid
being #200,000 on "A" and "B" ordinary shares, #600,000 on
preferred ordinary shares and #154,000 on preference shares.
Board
I am delighted to welcome Alan Goodwin, Finance Director and
Mark Tompkins, Non-Executive Director to our Board. These new
Directors will strengthen our Board bringing both retail
experience and a strong strategic and operational balance to
our team.
I would also like to express my thanks to Nicholas Ward for
his contribution to the business during the past year.
Current Developments
As indicated above the Board has commissioned a marketing and
design consultancy assignment to reassess the image of our
stores and help determine our future marketing strategies.
This will involve a review of our Brand positioning,
merchandise ranges, store layouts and marketing systems and
will be completed later this year. Until then the Group has
scaled back its planned store opening programme and now
anticipates that 6 new stores will open in 1998/99. In
addition 3 under-performing stores will be closed.
I am pleased to report that our EPOS system, which was
installed in stores during last year, is fully operational
throughout the Group. It is now being used to carry out
automatic replenishment to stores on volume lines and will be
expanded to include all lines within the next few months.
Outlook
Despite a difficult year a great deal has happened within the
Group that will benefit future performance. We have
strengthened our Board, and the efficiencies of our new
distribution centre and implementation of EPOS, whilst adding
short term cost will provide the platform for our future
growth. The marketing consultancy assignment currently being
undertaken will help us refine our retail concept and allow us
to grow the business on a solid foundation.
The current year has started satisfactorily with overall sales
increasing by 18% to the end of May and like for like sales
showing positive growth on the previous year. However, this
year will nonetheless be a year of transition as the Group
positions itself for future growth in both sales and profits.
Michael Scorey
Chairman
Partners Holdings plc
Chief Executive's Review
Results
The year ended March 1998 has been a difficult one for
everyone at Partners with under-performance in our sales, the
relocation of our distribution centre, the implementation of
EPOS all closely following our flotation last year. Despite
an increase in sales of 16.0% to #35.6 million our pre tax
profits were #755,000 compared with #2,003,000 last year. A
disappointing result for a Company that had achieved seven
consecutive years of profits growth up to 1997. Net cash
inflow for the year from operating activities was #283,000 and
group net assets were #5.9 million. Capital investment for
the year was #4.6 million incurred principally in the
acquisition of new stores, the relocation of our distribution
centre and the implementation of EPOS.
As announced in our post Christmas trading statement we have
scaled back our planned store opening programme in order to
refocus our marketing strategy. Additionally we have
recognised other issues that the Group faces and have taken
steps to address each area as detailed in the review below.
PLC Board Structure
Since the year end a number of appointments have been made to
the Board of Partners Holdings plc. Alan Goodwin FCA was
appointed as Group Finance Director, having previously held a
similar position at Thorntons PLC. Mark Tompkins, was
appointed as a Non-Executive Director following the retirement
of Nicholas Ward in April 1998. Alan and Mark have had
extensive experience in retail and their appointment to our
board will both strengthen and add balance to our team. We
are also in the process of recruiting a Marketing Director.
Stores
Our sales performance in like for like stores was
disappointing, being partly affected by management staffing
issues and some disruption in the supply chain following the
relocation of the distribution centre. We have taken action
to resolve staffing issues by implementing enhanced
recruitment procedures including candidate profiling and new
store open days. These have now improved the situation
considerably.
During the year we planned to open 20 stores and actually
opened 23 bringing the total number of stores at the year end
to 103. This represented an increase of 23% in selling space.
Additionally we reopened our Manchester store, which was
closed for over 12 months following the bombing of the city
centre in 1996.
Our policy continues to be to fit-out new stores to a very
high specification. Coupled with our perceived ability to
encourage customer "foot-fall", this has reinforced our
attractiveness to developers and landlords alike. As in
previous years, we have maintained a continuous programme of
keeping older units fully up to date.
Following the scaling back of our acquisition programme we now
plan to open 6 stores in the current financial year whilst
closing three under-performing stores including our Hanley
Potteries Centre store which closed in April 1998. The
slowing down of our expansion plan has been achieved with the
full co-operation of our landlords, with whom we maintain
excellent relationships.
Logistics
During the year the Group relocated its distribution centre to
a purpose built, computer controlled facility in Crewe. This
facility was designed to provide capacity to support business
growth over the next few years.
We have also appointed a logistics specialist to facilitate
further efficiencies in the logistics area by maximising
automation and improving our procedures in automatic store
replenishment.
In view of the short term scaling back of our new store
programme we shall have excess capacity in our distribution
centre for a period. To minimise costs it is our intention in
the short term to sub-let approximately 33% of our available
pallet spaces.
Electronic Point of Sale
During the year EPOS equipment, has been introduced into all
stores within the Group.
The implementation was completed prior to the "Back to School"
promotion in 1997 and consequently detailed sales information
has now been collected for both our major sales periods last
year. This detailed level of information is invaluable for
management and is allowing us to plan in the current year with
greater certainty.
Automatic allocation of stock is now being utilised in all
stores on high volume selling lines and on all lines in two
stores. Initial indications are encouraging and we intend,
once fully operational across all product lines, to minimise
store stockholdings with consequent improvements in space
utilisation and working capital requirements.
The benefits of this extensive investment programme will start
to be seen in the current year. However, it is in future
years that the full benefits will be seen through improved
service, reduced stockholdings and reduced administration in
our stores.
Marketing
Partly in response to our sales performance last year the
Board commissioned a firm of marketing consultants to
undertake a research project into our retail positioning. The
research embraced branding, merchandise ranging, store layouts
and image. The initial findings of this research are now
available and are being evaluated by management prior to
further consultancy work being undertaken.
We have however already taken initial steps, in line with the
research findings, to rationalise and strengthen our existing
product range whilst optimising space management.
Partners' TV advertising campaign during both the "Back to
School" and Christmas promotions was not as successful as had
been anticipated and the decision has been made not to
continue with this method of advertising in the current year.
We will continue to advertise on a local basis through
leaflets and newspapers.
Buying
Our buying team have continued to work aggressively both in
the UK and abroad to source high quality products that can be
sold at competitive prices whilst enhancing our margins.
Direct importing has successfully been expanded during the
year. It remains a key priority of the buying team to pursue
this approach in the future utilising, where cost justified,
the increased capacity of our new warehouse facility to hold
imported merchandise.
Management and Staff
I would like to acknowledge the exceptional efforts of all
management and staff for their hard work and continued loyalty
throughout what has been probably the most eventful year in
the Group's history.
Outlook
After the disappointment of our results for 1997/98 we have
implemented considerable change in our business, from the
strengthening of our Board to the review of our retail
marketing strategies. The current year will be a year of
consolidation as we seek to implement further change in the
business to meet the demanding requirements of our customers
in the future.
I believe that we have created a solid foundation for future
growth and all our energies must now be concentrated on
achieving the sales and profit growth that the business is
capable of delivering.
Peter Davey
Chief Executive
Partners Holdings plc
Group Profit And Loss Account
for the year ending 31 March 1998
Year to Year to
31 March 31 March
1998 1997
Notes #'000 #'000
Turnover 35,641 30,713
Cost of sales (32,352) (26,750)
Gross Profit 3,289 3,963
Distribution costs (369) (296)
Administration expenses (2,232) (1,693)
688 1,974
Other net operating income 40 42
Operating Profit 728 2,016
Interest receivable 49 15
Interest payable (22) (28)
Profit On Ordinary Activities
Before Taxation 1 755 2,003
Tax on profit on ordinary (286) (762)
activities
Profit For The Financial Year 469 1,241
Dividends on non-equity shares - (154)
Dividends on equity shares (280) (800)
189 287
Other appropriations: premium
on redemption of preference - (40)
shares
Retained Profit For The Year 189 247
Earnings per share 2 2.5p 7.0p
There are no recognised gains or losses other than the profit
for the year.
Partners Holdings plc
Group Balance Sheet
as at 31 March 1998
Year to Year to
31 March 31 March
1998 1997
#'000 #'000
Fixed Assets
Tangible assets 7,157 3,941
Current Assets
Stock 4,763 3,570
Debtors 1,958 2,495
Cash at bank and in hand 57 94
6,778 6,159
Creditors: amounts falling due within (6,895) (6,275)
one year
Net Current Liabilities (117) (116)
Total Assets Less Current Liabilities 7,040 3,825
Provisions For Liabilities And Charges
Deferred Taxation (253) (139)
Accurals And Deferred Income
Deferred income (840) (905)
(1,093) (1,044)
5,947 2,781
Capital And Reserves
Called up share capital 187 50
Share premium account 5,691 2,851
Revaluation reserve - -
Capital redemption reserve 9 9
Goodwill write-off reserve (883) (883)
Profit and loss account 943 754
Shareholders' funds
Equity 5,947 814
Non-equity - 1,967
5,947 2,781
Partners Holdings plc
Group Cash Flow Statement
for the year ending 31 March 1998
Year to Year to
31 March 31 March
1998 1997
#'000 #'000
Net Cash Inflow From Operating Activities 283 2,658
Returns On Investments And Servicing
Of Finance
Non equity dividends paid - (154)
Interest paid (22) (28)
Interest received 49 15
Redemption premium paid on preference - (40)
shares
Net Cash Inflow/(Outflow) From Returns On
Investments And Servicing Of Finance 27 (207)
Taxation
Corporation tax paid (including ACT) (574) (629)
Capital Expenditure And Financial
Investments
Purchase of tangible fixed assets (4,505) (1,308)
Sale of tangible fixed assets 882 26
Net Cash Outflow From Investing (3,623) (1,282)
Activities
Equity Dividends Paid (93) (800)
Financing
Issue of ordinary shares 5,500 -
Share issue costs (521) -
Deferred ordinary share issue costs (35) -
Issue of Deferred ordinary shares - 1,967
Redemption of Deferred ordinary shares (1,967) -
New loans raised - 99
Repayments of capital element of finance
lease rentals and hire purchase contract (39) (20)
payments
Repayment of loans (320) (164)
Redemption of Preference shares - (2,047)
Net Cash Inflow/(Outflow) From Financing 2,618 (165)
Decrease In Cash (1,362) (425)
Notes
1. Taxation March 98 March 97
#'000 #'000
Based on the profit for the year:
UK Corporation tax 210 750
Deferred tax 114 (2)
324 748
Adjustments relating to prior years:
Corporation tax (over)/under provided
in earlier periods (38) 14
286 762
2. Earnings per share March 98 March 97
#'000 #'000
The calculation of earnings per
ordinary share is based upon the
following:
Profit for the year after preference
dividends of #nil (1997:#0.154 million)
and other appropriations of #nil
(1997: #0.04 million) but before
ordinary dividends 469 1,047
Weighted average number of shares
adjusted for the bonus issue of
shares in April 1997 (shares 000's) 18,667 15,000
Earnings per share 2.5p 7.0p
3. Dividends
An interim dividend of 0.5p per ordinary share was paid on
31 December 1997. The Directors recommend a final dividend
of 1.0p per ordinary share making a total for the year of
1.5p.
If approved, the final dividend will be paid on 31 August
1998, to shareholders on the register at the close of
business on 3 August 1998.
4. Annual Report 1998
The summary of results is an abridged version of the
Company's full consolidated accounts, which have been
reported on by the Company's auditors. The Annual Report
will be posted to shareholders on 25 June 1998.
Copies for general release are available from The Company
Secretary, Partners Holdings plc, Savoy House, Savoy Road,
Crewe, Cheshire CW1 6NA.
END
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