Partners Holdings - Final Results
June 14 1999 - 4:30AM
UK Regulatory
RNS No 7391x
PARTNERS HOLDINGS PLC
14 June 1999
Partners Holdings plc
'Partners'
Preliminary Results for the year ended 31 March 1999
Partners Holdings plc, the operator of 105 specialist retail
stationery stores, today announces preliminary results for
the year ended 31 March 1999.
* Sales for the year of #38.9million, up 9.1% (1998:
#35.6m).
* Loss before tax and exceptional item of #549,000 (1998:
Profit #755,000)
* Exceptional item of #406,000
* New trading concept showing better returns
* New Board structure in place.
* Year on Year sales for the current year to the end of
May increased by 12%
Michael Scorey, Chairman, said:
'We have made progress during the year in putting in place
the management team and marketing strategies to regenerate
growth, and the current year has started satisfactorily. We
will continue to work this year to complete the foundations
for future growth and will roll out our new store concept
progressively.'
Enquiries:
Partners Holdings Plc
Michael Scorey, Chairman Tel: 01270 505 888
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 indicated at the time of our interim and Christmas
trading statements our results for the year are
disappointing being significantly influenced by weak sales
throughout our first half year and over the crucial
Christmas trading period.
Nevertheless progress has been achieved in re-positioning
the business for future growth. Over the past year we have
considerably strengthened our management team, we have
implemented new marketing strategies and we have re-
engineered our store concept.
Turnover at #38.9m increased by 9.1%. Pre tax losses before
exceptional items were #549,000 compared with profits of
#755,000 last year.
After exceptional costs of #406,000 incurred in connection
with the initiatives noted above pre tax losses were
#955,000 giving a loss per share of 4.3 pence.
Dividends
An interim dividend of 0.5p per share was declared by the
Board at the half year. The Board has carefully considered
the payment of a final dividend. However, in the light of
our results, it has been decided that on this occasion a
final dividend would not be appropriate.
Board
I am delighted to welcome Mike Kilcourse to our Board as
Marketing Director. Phillip Birt resigned from the Board in
January 1999 and I would like to express my thanks to him
for his contribution to the business over many years.
Current Developments
Renewed sales growth in our core stores is a pre-requisite
for future financial success. The key focus of our
management team is to achieve this principally through the
restructuring of our product range to meet more precisely
the needs of our customers and to reflect our specialist
position in the market and through the development of our
new store concept.
Progress has already been made following detailed range
reviews and this is evidenced by the progress we have made
with our Computer consumables range which now represents a
significant element of our product mix. We have also seen
encouraging initial results from the four stores refurbished
into our new concept format. A cost effective version of
this concept is now being rolled out across the chain.
Outlook
The current year has started satisfactorily with overall
sales increasing by 12% to the end of May albeit at lower
than planned margins.
We expect that this will be a year of continued
restructuring as we lay the foundations for future growth.
Michael Scorey
Chairman
Partners Holdings plc
Chief Executive's Review
Results
The year ended March 1999 has been one of great change
within the business and it is disappointing to report a pre
tax loss, before exceptional items, of #549,000.
Sales for the year at #38.9m increased by 9.1%. Pre tax
losses for the year after exceptional items were #955,000
and Group net assets were #5.1m.
The costs of reorganising our Board and the various reviews
of our image and marketing strategies have been charged as
exceptional items during the year and amount to #406,000.
Pre tax losses before exceptional items were #549,000
compared with a profit last year of #755,000.
Our second half trading performance showed an improved
position on that reported in our Interim statement.
Operating profits in the second half were #673,000 compared
with #814,000 last year.
Finance
Net cash inflow from operating activities was #1.556m
compared with #283,000 last year. Of this amount #1.313m has
been generated by improved utilisation of our working
capital with a net stock investment at the end of the year
of #1.2m compared with #2.2m last year. Net borrowings were
#2.1m well within the facilities available to us.
Capital investment for the year was #1.2m incurred
principally in the acquisition of five new stores and the
refurbishment of four stores into the new store concept.
The Group principally finances itself through an overdraft
facility that is secured by a floating charge over all
assets. A small element of the Group's products are imported
and in order to avoid any commercial risks, foreign currency
dealings are dealt with using forward currency contracts
which are fixed at the point of product order.
Board Changes
As previously reported Alan Goodwin and Mark Tompkins joined
the Board in April last year. I am also pleased to welcome
Mike Kilcourse to our team as Marketing Director. Mike
joined us in November last year and brings extensive retail
marketing expertise gained with Dixons plc. and Boots plc.
At subsidiary board level Karen Griffiths resigned from her
position as Personnel Director with her responsibilities
being taken up by Bruce Pearson, Operations Director. I
would like to express my thanks to Karen for her
contribution to the business over many years.
Operations
During the year we opened 5 new stores and closed 3 under-
performing stores to leave 105 stores trading at the year
end. In addition 4 stores were fully refitted into our new
trading concept and 4 stores refitted to a lower cost
version which offers us better returns on capital invested
without compromising the main objectives of the refits.
Like for like sales increased by 4.6% over the year with
improved performances being shown during the second half
year largely as a result of the aggressive promotional
activity being undertaken during this period.
The action taken last year to improve our recruitment
processes and retain our existing management has proved
successful and this has enabled us to stabilise our store
management team.
Marketing
Following the market research undertaken earlier in the year
the last six months have seen a period of radical change as
the business has repositioned itself in the market. The
research has allowed us to better understand our customer
base and their requirements. As a consequence we have begun
to restructure our product ranges to reflect the market and
market trends much more rapidly than previously was the
case. This new focus has delivered some encouraging
performances in our core product ranges. Of particular note
has been our success in sales of computer consumables which
after being introduced in mid 1998 have grown to become a
useful element of our product mix.
At the same time we have worked with leading design
consultants to develop a new retail store concept from which
to market the business. The first four stores were fully
converted by November of last year and the performance
achieved gave us the confidence to begin a roll out, of a
lower cost version of the format throughout the chain. In
addition to the four stores initially converted a further 8
have been refitted by the end of May and we aim to upgrade
virtually the whole chain over the next two years.
We will continue to aggressively promote the business,
increasing our focus on category leading stationery ranges
and developing our merchandising techniques and our gross
margins. To achieve this we have been active in developing
our team both internally and through high quality external
recruitment.
Supply Chain
Following a review of our supply chain we have changed
responsibilities and strengthened our supply chain
management team. The team are now actively engaged in
reducing overall inventory levels whilst improving supply of
products to our stores. Utilising the information generated
by our EPOS systems we have implemented automatic allocation
of stock from the warehouse to all stores and across all
core product lines.
In logistics we have seen the benefits from our recent
investment in the new distribution centre and we anticipate
further efficiency improvements and greater stock picking
accuracy as a result of the impending introduction of
advanced warehousing IT systems including the use of radio
frequency terminals.
Within our warehouse excess capacity has been sublet for
external use and the income generated contributes towards
our overhead costs. These sublets are of a short term
nature and allow us to increase the amount of space
available for our own future requirements at short notice.
People
I would like to once again acknowledge the exceptional
efforts of all our management and staff for their hard work
and commitment during a year of great change within the
business.
Outlook
We now have in place both the management team and marketing
strategies to regenerate growth in our core stores and there
is evidence of progress. The current year has started well
with, at the end of May, a satisfactory 12% growth in sales
being achieved, although at lower margins than planned.
However, much remains to be done, and the current year will
be a year of further transition as we seek to create a solid
platform for future growth.
Peter Davey
Chief Executive
Partners Holdings plc
Group Profit And Loss Account
for the year ended 31 March 1999
Before
Excep- Excep- Totals Totals
tional tional 1999 1998
Notes Items Items #'000 #'000
1999 1999
#'000 #'000
Note 4
Turnover 38,880 38,880 35,641
Cost of sales (36,194) (104) (36,298) (32,352)
Gross Profit 2,686 (104) 2,582 3,289
Distribution costs (479) (479) (369)
Administration expenses (2,664) (302) (2,966) (2,232)
(457) (406) (863) 688
Other net operating income 38 - 38 40
Operating (Loss) / Profit (419) (406) (825) 728
Interest receivable 5 - 5 49
Interest payable (135) - (135) (22)
(Loss) / Profit On
Ordinary Activities
Before Taxation (549) (406) (955) 755
Tax on (loss)/profit on
ordinary activities 1. 87 64 151 (286)
(Loss) / Profit For The
Financial Year (462) (342) (804) 469
Dividends on equity shares (93) (280)
Retained (Loss) / Profit
For The Year (897) 189
(Loss) / Earnings per
share - basic and diluted 2. (4.30p) 2.55p
There are no recognised gains or losses other than the
results for each year shown above.
Partners Holdings plc
Group Balance Sheet
as at 31 March 1999
1999 1998
#'000 #'000
Fixed Assets
Tangible assets 6,848 7,157
Current Assets
Stock 5,788 4,763
Debtors 2,170 1,958
Cash at bank and in hand 58 57
8,016 6,778
Creditors: amounts falling due within (9,119) (6,895)
one year
Net Current Liabilities (1,103) (117)
Total Assets Less Current Liabilities 5,745 7,040
Provisions For Liabilities And Charges
Deferred Taxation (179) (253)
Accruals And Deferred Income
Deferred income (516) (840)
(695) (1,093)
5,050 5,947
Capital And Reserves
Called up share capital 187 187
Share premium account 5,691 5,691
Capital redemption reserve 9 9
Profit and loss account (837) 60
Shareholders' funds
Equity 5,050 5,947
Partners Holdings plc
Group Cash Flow Statement
for the year ended 31 March 1999
1999 1998
#'000 #'000
Net Cash Inflow From Operating Activities 1,556 283
Returns On Investments And Servicing
Of Finance
Interest paid
(135) (22)
Interest received 5 49
Net Cash (Outflow) / Inflow From Returns
On Investments and Servicing Of Finance (130) 27
Taxation
Corporation tax paid (including ACT) (240) (574)
Capital Expenditure And Financial
Investments
Purchase of tangible fixed assets (1,228) (4,505)
Sale of tangible fixed assets - 882
Net Cash Outflow From Investing (1,228) (3,623)
Activities
Equity Dividends Paid (280) (93)
Financing
Issue of Ordinary Shares - 5,500
Share issue costs - (521)
Deferred ordinary share issue costs - (35)
Redemption of Deferred Ordinary shares - (1,967)
Repayments of capital element of finance
lease rentalsand hire purchase
contract payments (26) (39)
Repayment of loans - (320)
Net Cash (Outflow)/Inflow From Financing (26) 2,618
Decrease In Cash (348) (1,362)
Notes for the year ended 31 March 1999
1. Taxation 1999 1998
#'000 #'000
Based on the result for the
year:
UK corporation tax (160) 210
Deferred tax 9 114
(151) 324
Adjustments relating to
prior years:
Corporation tax over - (38)
provided in earlier periods
(151) 286
2. Earnings per share 1999 1998
#'000 #'000
The calculation of earnings
per ordinary share is based
upon the following:
(Loss) / Profit for the year
before ordinary dividends (549) 469
Weighted average number of
shares adjusted for the bonus
issue of shares in April 1997
(shares 000's) 18,667 18,385
(Loss) / Earnings per share -
basic and diluted (4.30p) 2.55p
3. Dividends
An interim dividend of 0.5p per ordinary share was paid
on 31st December 1998. The Directors are not
recommending a final dividend. Total dividends for the
year are 0.5p.
4. Exceptional items
Costs relating to the restructuring of the business
have been treated as exceptional costs before arriving
at operating profit.
1999 1998
#'000 #'000
Restructuring of product range 104 -
Store concept development and 302 -
board restructuring costs
406 -
5. Reconciliation of operating (loss) / profit to net
cash inflow from operating activities:
1999 1998
#'000 #'000
Operating (loss) / profit (825) 728
Depreciation 1,537 1,284
Amortisation of deferred income (469) 31
Profit on disposal of tangible
fixed assets - (4)
Increase in debtors (114) (450)
Increase in stocks (1,025) (1,193)
Increase/(decrease)in creditors 2,452 (113)
Net cash inflow from continuing
operating activities 1,556 283
6. NOTES TO THE CASH FLOW STATEMENT
Reconciliation of net cash flow to movement in net debt
1999 1998
#'000 #'000
Decrease in cash in the year
to 31 March (348) (1,362)
New finance leases - (65)
Cash used to repay finance
leases 26 39
Cash used to repay loans - 320
Change in net debt
Net debt at 1 April (322) (1,068)
(1,770) (702)
Net Debt at 31 March (2,092) (1,770)
Analysis of changes in net debt
At 1 April Cash At 31 March
1998 flows 1999
#'000 #'000 #'000
Cash in hand 57 1 58
Overdrafts (1,774) (349) (2,123)
(1,774) (348) (2,065)
Debt due within
one year (53) 26 (27)
Total (1,770) (322) (2,092)
7. Changes in Accounting Policy
The Group has adopted FRS10 'Goodwill and Intangible
Assets', FRS11 'Impairment of Fixed Assets and
Goodwill', FRS12 'Provisions and Contingencies', FRS13
'Derivatives and Other Financial Instruments' and FRS
14 'Earnings per Share'. Consistent accounting policies
have been applied with the exception of FRS10.
In order to adopt FRS 10 the Group has changed its
accounting policy for its treatment of Goodwill.
Goodwill written off to reserves under the Group's
previous policy, has been eliminated against the profit
and loss account as a prior year adjustment. There is
no effect on the Group's reported results from this
change in accounting policy on the results for 1998 and
1999. For acquisitions made on or after 1 April 1998
goodwill is capitalised as an intangible fixed asset
and amortised through the profit and loss account over
its useful economic life to a maximum of 20 years.
8. Annual Report 1999
The financial information set out above does not
constitute full accounts within the meaning of Section
240 of the Companies Act 1985 for the years ended 31
March 1999 or 31 March 1998. Statutory accounts for
1998 have been delivered to the Registrar of Companies:
those for 1999 will be delivered following the
Company's Annual General Meeting. The auditors have
reported on these accounts: their reports were
unqualified and did not contain statements under
Section 237(2) or (3) of the Companies Act 1985.
The annual report for the year ended 31 March 1999 will
be posted to shareholders on 24 June 1999 prior to the
Annual General Meeting. Copies of the annual report
will be available to members of the public from 25 June
1999 from the Company Secretary, Partners Holdings plc,
Savoy House, Savoy Road, Cheshire CW1 6NA.
END
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