RNS Number:1315R
United Overseas Group PLC
19 September 2000
UNITED OVERSEAS GROUP PLC
Interim Results for the six months ended 30th June 2000
Strong recovery
Pre-tax profits of #1.6m; EPS of 0.54p (Basic); Turnover up 10 percent
Mr. Jeffrey Curtiss, founder, to retire in March 2001
United Overseas Group plc ("UOG"), Europe's largest group specialising in the
world-wide purchase, sale and distribution of excess inventory to retail and
wholesale customers, announces much improved results for the six months ended
30th June 2000 including a return to profitability and further strengthening
of its Balance Sheet.
Mr. Alex Watson, Chairman, said in his statement to shareholders:
"This turnaround in performance is particularly encouraging given that it is
against a background of the current retail trading conditions and justifies
the decisive management actions taken over the last twelve months".
Key points of the results and extracts from the Chairman's statement
* Turnover up 10 per cent to #63.1m (1999: #57.4m)
* Much improved performances in the UK (sales up 10 per cent) and North
America (sales up 34 per cent)
* Gross profit margin improved to 25 per cent (1999: 22 per cent)
* Pre-tax profit of #1.6 m (1999: #0.3m loss)
* Balance Sheet management a continuing priority; stock levels reduced by
#1m; creditors significantly lower; net current assets increased by
#2m year on year
* No interim dividend declared; Board will evaluate the Group's improving
position
* Further senior management appointments in North America and Europe
complete management restructuring commenced last year
* Jeffrey Curtiss to step down as Group Chief Executive to become Vice-
Chairman ahead of retirement in March 2001
Regarding prospects for the rest of the current year and beyond, Mr. Watson
added:
"We expect that the retail environment will remain challenging for the
foreseeable future. However, the Board is encouraged by the Group's
performance to date and.with our strengthened management team, we are
confident that we are well positioned for sustainable profitable growth over
the longer term."
Enquiries:
Michael Corke:- Group Chief Executive,
Phil Carr: - Group Finance Director,
United Overseas Group plc
Tel: 01733 362 300
Paul Vann: -
Binns & Co PR Limited
Tel: 020 7786 9600
CHAIRMAN'S STATEMENT
I am delighted to announce that the results for the six months to 30th June
2000 have shown a strong recovery over the corresponding six months period to
30th June 1999. The Group has achieved a pre-tax profit of #1.6 million
against a comparable loss of #0.3 million. Turnover has increased by 10% to
#63.1 million and the gross profit margin has improved from 22% to 25%. Stock
levels have been reduced by a further #1 million since 31st December making a
total reduction of #4 million over the last 12 months. In addition to the
reduction in stock levels the Group's creditors are significantly lower
resulting in a #2 million increase in net current assets over the position at
30 June 1999.
The most significant areas of improvement have been in our UK and North
American operations, both in terms of Profit performance and Balance Sheet
management. Sales in the United States have increased by 34% (now representing
17% of total Group sales) during the period as a result of strengthened buying
activity and increased sales to both national and regional chain stores. In
anticipation of future growth in the U.S. market, we are in the process of
expanding our existing showroom facilities and relocating our offices to new
premises adjacent to our warehousing facilities. United Overseas Limited, our
principal UK subsidiary, has experienced a sales growth of 10% and benefited
substantially from enhanced gross profit margins, resultant from improved
stock management, as well as greater efficiencies. Furthermore, our Dutch
operations have benefited from the operational efficiencies derived from the
new European Distribution Centre in Moerdijk, The Netherlands which became
fully functional in September 1999. This turnaround in performance is
particularly encouraging given that it is against a background of the
current retail trading conditions and justifies the decisive management actions
taken over the last twelve months.
As I announced at the Group's Annual General meeting in June, Phil Carr has
succeeded Terry Balkham as Group Financial Director. Phil has been with the
Group since 1997 and was previously Group Financial Controller. Bert Boersema
was appointed to the main Board as Managing Director, Northern Continental
Europe, assuming the responsibilities previously held by his late uncle, Eppe
Boersema. In addition, the Board appointed in April 2000 John Gordon and
Robert van den Heuvel as Non-Executive Directors, both of whom have taken up
duties on the Audit Committee and the Remuneration and Nominations Committee.
Both John and Robert bring a wealth of financial and international experience
that will benefit the Group.
Earlier this month we announced two senior appointments in The Netherlands and
the United States, which will enhance and consolidate our trading
opportunities in the important toy sector. Ries van Eijck was appointed to the
Board of Intertading Agencies Boersema BV, the Group's subsidiary based in
Moerdijk, The Netherlands and Chuck Miller was appointed Vice President of
Merchandising for UniTrade Marketing, our operating subsidiary based in the
United States. Both executives have extensive experience of the international
toy industry having worked for a number of well known toy retail chains
including Toys R US. These appointments, together with the earlier
appointments of Phil Green, who joined the Group as Managing Director, United
Overseas Limited in August 1999 and has 25 years retailing experience gained
at Woolworths plc and Michael Corke, who was appointed Group Managing Director
in November 1999, and has 28 years of senior international management
experience in marketing and distribution of branded consumer goods having
previously worked for Hutchinson Whampoa Ltd (Hong Kong) and Hagemeyer N.V.
(The Netherlands), complete the essential management restructuring, which
commenced last year.
Against the background of the Group's financial turnaround and substantially
improved trading performance, supported by a strengthened Executive and Non-
Executive management team, Jeffrey Curtiss, the Group's founder, has decided
to step down from his role of Chief Executive Officer and to take the position
of Vice Chairman, prior to retiring from the Board in March 2001. Michael
Corke, Group Managing Director, will assume Jeffrey's executive
responsibilities with immediate effect.
The Board is committed to the programme of change and the management of its
resources, and therefore, has decided not to declare an interim dividend at
this time, but will continue to monitor and evaluate the Group's improving
position with the intention of returning to dividend payments as soon as
practicable.
As previously announced the Group has appointed Williams de Broe as
stockbrokers and financial advisors, effective 1st September 2000.
We expect that the retail environment will remain challenging for the
foreseeable future. However, the Board is encouraged by the Group's
performance to date and, as Europe's leading international distributor of
excess branded consumer products, with our strengthened management team, we
are confident that we are well positioned for sustainable profit growth.
Alex Watson
Chairman
19 September 2000
Consolidated Profit and Loss Account
For the period ended 30 June 2000
6 months 6 months 12 months
ended ended ended
30/06/00 30/06/99 31/12/99
(unaudited) (unaudited) (audited)
Note #'000 #'000 #'000
---------- ---------- ---------
Turnover 2 63,060 57,406 113,192
Cost of sales (47,589) (44,840) (90,689)
---------- ---------- ---------
Gross profit 15,471 12,566 22,503
Distribution costs (5,012) (5,104) (10,576)
Administrative costs (7,526) (6,544) (13,639)
Other operating income 259 163 222
Amortisation of goodwill 3 (249) (252) (499)
---------- ---------- ---------
Operating profit/(loss) 2,943 829 (1,989)
Profit on disposal of property - - 192
Net interest payable (1,333) (1,171) (2,147)
---------- ---------- ---------
Profit/(loss) on ordinary
activities before taxation 1,610 (342) (3,944)
Taxation 4 (759) (158) (125)
---------- ---------- ---------
Profit/(loss) on ordinary
activities after taxation 851 (500) (4,069)
Minority interests (100) (118) (205)
---------- ---------- ---------
Profit/(loss) attributable to
shareholders 751 (618) (4,274)
Dividends 5 - - -
---------- ---------- ---------
Retained profit/(loss) for the
period 751 (618) (4,274)
---------- ---------- ---------
Earnings per share 6
- Basic 0.54p (0.44)p (3.07)p
- Fully diluted 0.54p (0.44)p (3.07)p
- Adjusted basic 0.72p (0.26)p (2.71)p
---------- ---------- ---------
Dividends per share 5 - - -
---------- ---------- ---------
Consolidated Balance Sheet
At 30 June 2000
At 30/06/00 At 30/06/99 At 31/12/99
(unaudited) (unaudited) (audited)
Note #'000 #'000 #'000
---------- ---------- ---------
Fixed assets
Intangible assets 9,539 9,698 9,800
Tangible assets 3,540 8,724 2,777
Investments 300 250 300
---------- ---------- ---------
13,379 18,672 12,877
---------- ---------- ---------
Current assets
Stocks 34,583 38,735 35,671
Debtors 29,218 29,486 22,544
Cash at bank and in hand 1,185 1,066 1,742
---------- ---------- ---------
64,986 69,287 59,957
Creditors: amounts falling due
within one year (41,582) (47,879) (36,777)
---------- ---------- ---------
Net current assets 23,404 21,408 23,180
---------- ---------- ---------
Total assets less current
liabilities 36,783 40,080 36,057
Creditors: amounts falling due
after more than one year (2,015) (2,386) (2,272)
---------- ---------- ---------
Net assets 34,768 37,694 33,785
---------- ---------- ---------
Capital and reserves
Called up share capital 13,990 13,990 13,990
Share premium account 55,207 55,207 55,207
Profit and loss account 3 (34,945) (31,832) (35,828)
---------- ---------- ---------
Equity shareholders' funds 34,252 37,365 33,369
Equity minority interests 516 329 416
---------- ---------- ---------
34,768 37,694 33,785
---------- ---------- ---------
Consolidated Cash Flow Statement
For the period ended 30 June 2000
6 months 6 months 12 months
ended ended ended
30/06/00 30/06/99 31/12/99
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
---------- ---------- ---------
Net cash (outflow)/inflow from
operating activities (13) (1,671) 4,170
---------- ---------- ---------
Returns on investments and servicing
of finance
Interest received 46 16 81
Interest paid and similar charges (1,215) (1,200) (2,095)
Interest element of hire purchase and
finance leases (39) (26) (60)
---------- ---------- ---------
Net cash outflow from returns on
investments and servicing of finance (1,208) (1,210) (2,074)
---------- ---------- ---------
Taxation
UK corporation tax (paid)/recovered (43) 871 323
Overseas taxation (paid)/recovered (931) 398 346
---------- ---------- ---------
Net cash (outflow)/inflow from
taxation (974) 1,269 669
---------- ---------- ---------
Capital expenditure and financial
investment
Purchase of intangible fixed assets - - (26)
Purchase of tangible fixed assets (764) (2,982) (4,132)
Purchase of fixed asset investments - (50) (100)
Sale of tangible fixed assets 23 47 7,434
---------- ---------- ---------
Net cash (outflow)/inflow from capital
expenditure and financial investment (741) (2,985) 3,176
---------- ---------- ---------
Acquisitions and disposals
Purchase of subsidiary undertakings - (22) -
---------- ---------- ---------
Net cash outflow from acquisitions and
disposals - (22) -
---------- ---------- ---------
Equity dividends paid - (182) (182)
---------- ---------- ---------
Cash (outflow)/inflow before use of
liquid resources and financing (2,936) (4,801) 5,759
---------- ---------- ---------
Financing
Loans repaid (683) - (7,600)
Capital element of finance lease
rentals (211) (214) (500)
New short term finance - 1,776 2,796
---------- ---------- ---------
Net cash (outflow)/inflow from
financing (894) 1,562 (5,304)
---------- ---------- ---------
(Decrease)/increase in cash in the
period (3,830) (3,239) 455
---------- ---------- ---------
Reconciliation of Operating Profit/(Loss) to Net Cash Flow
from Operating Activities
For the period ended 30 June 2000
6 months 6 months 12 months
ended ended ended
30/06/00 30/06/99 31/12/99
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
----------- ----------- ---------
Operating profit/(loss) 2,943 829 (1,989)
Depreciation of fixed assets 404 380 783
Amortisation of trade marks 9 11 44
Amortisation of goodwill 249 252 499
(Profit)/loss on sale of tangible
fixed assets (1) (3) 12
Decrease in stocks 1,440 3,869 6,032
(Increase)/decrease in debtors (7,187) (2,828) 4,217
Increase/(decrease) in creditors 2,097 (4,161) (5,374)
Exchange movements in respect of
foreign undertakings 33 (20) (54)
----------- ---------- ---------
Net (outflow)/inflow from operating
activities (13) (1,671) 4,170
----------- ---------- ---------
Reconciliation of Net Cash Flow to Movement in Net Debt
For the period ended 30 June 2000
6 months 6 months 12 months
ended ended ended
30/06/00 30/06/99 31/12/99
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
----------- ----------- ----------
(Decrease)/increase in cash in the
period (3,830) (3,239) 455
Cash outflow/(inflow) from decrease in
debt and finance leasing 894 (1,562) 5,304
----------- ----------- ----------
Change in net funds resulting from
cash flows (2,936) (4,801) 5,759
Foreign exchange movements (185) - 729
New finance leases (404) (21) (288)
----------- ----------- ----------
Movement in net debt (3,525) (4,822) 6,200
----------- ----------- ----------
Opening net debt (21,850) (28,050) (28,050)
Movement in net debt (3,525) (4,822) 6,200
----------- ----------- ----------
Closing net debt (25,375) (32,872) (21,850)
----------- ----------- ----------
Notes
1 Nature of the Financial Information
The Company prepares statutory accounts annually to 31 December. These are
the interim accounts covering the six months ended 30 June 2000.
The results for the six months ended 30 June 1999 and the year ended 31
December 1999, are extracted from the previous year's interim and final
accounts respectively.
The results for the six months ended 30 June 2000 and 1999 are unaudited, and
have been prepared in accordance with the accounting policies set out in the
Company's annual report.
The financial information set out above does not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985. The results for
the year ended 31 December 1999 are an abridged version of the full statutory
accounts that have an unqualified audit report and have been delivered to the
Registrar of Companies.
2 Turnover and Profit before Tax
6 months 6 months 12 months
ended ended ended
30/06/00 30/06/99 31/12/99
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
----------- ----------- ---------
Turnover by destination:
United Kingdom 29,582 26,686 55,086
Rest of Europe 21,618 21,946 41,491
North America 11,860 8,774 16,615
----------- ----------- ---------
63,060 57,406 113,192
----------- ----------- ---------
By origin:
United Kingdom 32,416 28,671 59,391
Rest of Europe 19,982 20,576 38,559
North America 10,662 8,159 15,242
----------- ----------- ---------
63,060 57,406 113,192
----------- ----------- ---------
Profit/(loss) before tax by origin:
United Kingdom 468 (1,223) (4,019)
Rest of Europe 783 845 230
North America 359 36 (155)
----------- ----------- ---------
1,610 (342) (3,944)
----------- ----------- ---------
Figures for the rest of the world have been incorporated within the category
for North America.
3 Profit and Loss Account
In accordance with Financial Reporting Standard 10 Goodwill and Intangible
Assets, goodwill arising from acquisitions before 1 January 1998 has been
written off to reserves. For acquisitions after this date, the goodwill
arising has been capitalised and is being amortised through the profit and
loss account over the Directors' estimate of their useful economic life.
4 Taxation
The taxation charge for the six months to 30 June 2000 and 1999 is based on
the anticipated tax position for the full year.
5 Dividends
No interim dividend is proposed for the six months ended 30 June 2000 (1999:
nil).
6 Earnings per Share
Basic earnings per share for the six months ended 30 June 2000 is calculated
by dividing the profit on ordinary activities after taxation and minority
interests of #751,000 by 139,903,939 (30 June 1999: loss #618,000 by
139,496,709; 31 December 1999: loss #4,274,000 by 139,364,613) being the
weighted average number of ordinary shares of 10 pence each in issue during
the period after taking account of the purchases of ordinary shares by the
Employee Share Ownership Plan (ESOP).
The adjusted basic earnings per share for the six months ended 30 June 2000 is
calculated by dividing the profit on ordinary activities after taxation and
minority interests and before amortisation of goodwill of #1,000,000 by
139,903,939 (30 June 1999: loss #366,000 by 139,496,709: 31 December 1999:
loss #3,775,000 by 139,364,613) being the weighted average number of ordinary
shares of 10 pence in issue during the period after taking account of the
purchases of ordinary shares by the ESOP.
No dilution arises as a result of the share options in issue, as the value at
which they were granted is in excess of both the market price at 30 June 2000
and the average market price for the six months, and therefore no options
would be exercised. Accordingly the fully diluted earnings per share is
identical to the basic earnings per share as stated above.
7 Interim Statement
Copies of the Interim Statement are being sent to shareholders and are
available from the Company Secretary, United Overseas Group Plc, United House,
Shrewsbury Avenue, Woodston, Peterborough PE2 7BZ.
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