Final Results

United Overseas Group PLC 5 April 2001 For Immediate Release 5 April 2000 UNITED OVERSEAS GROUP PLC FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2000 Substantial return to profitability - £7m turnaround Turnover of £118.4m; Pre-tax profits of £3.2m; Earnings per share of 1.36p United Overseas Group plc ('UOG'), which specialises in the worldwide distribution of branded consumer goods, announces final results for the year ended 31 December 2000, which demonstrate a substantial return to profitability. Mr. Alex Watson, Chairman, said in his Statement to shareholders: 'Our performance in the second half of the year built solidly on the progress we made in the first half, and we regard the outcome for the year as a whole as a satisfactory step forward in the development of the Group.' 'The management team, having achieved a major turnaround in trading performance in the year under review, is committed to implementing our development strategy to ensure long term sustainable growth and maximisation of Shareholder Value.' Key points and extracts from the Chairman's Statement: (comparatives are 12 month figures to 31 December 1999) * Turnover up 5% to £118.4m (1999: £113.2m) * Pre-tax profits of £3.2m (1999: £3.9m loss) * Earnings per share of 1.36p (1999: 3.07p loss) * Significant improvement in gross margins - up from 20% to 25% * Improved profitability across all geographical regions - major turnaround in UK * Stock position further improved with £1.4m reduction during year * Positive cashflow generated for second successive year * Board and senior management team further strengthened * Founder retires after 25 years with UOG Mr. Michael Corke, Group Chief Executive, added: 'The benefits of the decisive actions that were taken are beginning to filter through, and we will retain our focus on growing the business and improving operational performance.' -ends- Enquiries: Michael Corke, Group Chief Executive Phil Carr, Group Finance Director United Overseas Group PLC Tel: 01733-362300 Peter Binns/Paul Vann Binns & Co PR Limited Tel: 020 7786 9600 Chairman's Statement In my last statement to shareholders at the time of the Interim Results in September 2000, I stated the Board's conviction that having achieved a strong recovery in our fortunes in the first six months of the year, we were well positioned for sustainable profitable growth. Our performance in the second half built solidly on the progress we made in the first half, and we regard the outcome for the year as a whole as a satisfactory step forward in the development of the Group. There is much work still to be done, but the initial benefits of the management restructuring that we have undertaken over the past 18 months are now evident in the Group's all round improved performance. Results in brief In the year to 31 December 2000 turnover increased by 5% to £118.4m (1999: £ 113.2m), and pre tax profits of £3.2m compared to a pre tax loss of £3.9m in 1999. Earnings per share were 1.36p compared to a loss per share in 1999 of 3.07p. Dividend policy Although the financial results for 2000 represent a substantial turnaround from 1999 we are not proposing the payment of a final dividend in respect of the year under review. It is, however, the Board's intention to adopt a progressive dividend policy in the future, as soon as our operational performance and the overall financial position of the Group will allow. Business progress The performance in 1999 was the catalyst for some of the fundamental changes that your Board considered necessary, in particular the strengthening and broadening of the management structure. In 2000 we have seen the initial benefits of these changes, and we believe they will greatly assist the Group to deliver its full potential in the future. During the year greater focus on stock management and buying resulted in gross margins rising from 20% in 1999 to 25% in 2000, together with reduced stock levels and improved gearing. The results for the year therefore give us every indication that the first phase of the planned recovery is complete. Board changes and senior appointments Jeffrey Curtiss, the founder of the Group, stepped down from his role as Chief Executive Officer last September, prior to retiring from the Board in March 2001. Jeffrey has been the inspiration and the driving force behind the growth and development of United Overseas over the past 25 years and we shall all miss his foresight and vision. Jeffrey's overall contribution has been remarkable, but he recognises the Group has now entered a new era, and he has been instrumental in ensuring there is a strong and committed management team in place to oversee and guide the Group through the next stages of its development. We wish Jeffrey well in his retirement from the Group. As previously announced with the Interim Results John Gordon and Robert van den Heuvel were appointed as Non-Executive Directors in April 2000. Following Jeffrey's decision to step down as Chief Executive last September, Michael Corke was appointed Group Chief Executive. During the year, the following appointments to the Group's main board were also made: Bert Boersema, Managing Director, Northern Continental Europe in June 2000, Phil Carr, Group Finance Director in August 2000 and Bruce Salkin, President of UniTrade Marketing Group Inc., in November 2000. Additionally, the senior management appointments we have made in the United Kingdom, United States, and the Netherlands means that the team is now substantially in place to drive the Group forward. Stockbrokers Williams de Broe Plc were appointed as stockbrokers and financial advisors with effect from 1 September 2000. Key business drivers The Group specialises in the worldwide distribution of excess branded consumer goods. We have formed mutually beneficial long term relationships with both customers and suppliers, and it is these partnerships that form the basis for the Group's continued development in this dynamic sector. Both customers and suppliers are consulted regularly in order to ensure that our service is tailored to individual needs in order to provide added value. Our aim is for our trading partners, both customers and suppliers, to continue to confidently rely on our services, to meet local and international supply and demand fluctuations in an efficient manner. As Europe's leading operator in this growing market, the Group is well placed to maximise its position through on-going organic development, with strong customer demand internationally for discounted branded goods driving the expansion of discount retailing. Strategy Recent senior appointments in the United States are aimed at realising additional growth in this region, whilst Northern Europe continues to provide the Group with good opportunities in all our core categories of branded products. Selective expansion outside these core categories will also be considered, as and when profitable long term opportunities arise and expertise in these fields is identified. The move into computer and console software is a perfect example of how our traditional skills can be extended into new, high growth areas. The prospects for sustainable growth through continued development driven by a highly motivated management team, remain encouraging. Future growth will be supplemented by selected acquisitions in key markets, as and when suitable opportunities arise. The management team, having achieved a major turnaround in trading performance in the year under review, is committed to implementing the development strategy to ensure long term sustainable growth and maximisation of Shareholder Value. Outlook Trading in 2001 has begun slowly due to economic factors adversely impacting consumer confidence resulting in a slowdown in retail sales, particularly in the United Kingdom and United States. However, at the New York Toy Fair in February, a record value of orders were secured reflecting a stronger product offering. With continued focus on sales development and greater operational efficiency we expect growth to continue in the current year. The Group is at an exciting stage in its development and your Board views the future with confidence. Alex Watson - Non-Executive Chairman 4 April 2001 Consolidated Profit and Loss Account For the year ended 31 December 2000 2000 1999 £'000 £'000 ---------- ---------- Turnover 118,441 113,192 Cost of sales (89,111) (90,689) ---------- ---------- Gross profit 29,330 22,503 Distribution costs (9,991) (10,576) Administrative costs: other (13,686) (13,639) Administrative costs: amortisation of goodwill (520) (499) Other operating income 333 222 ---------- ---------- Operating profit/(loss) 5,466 (1,989) Profit on disposal of property - 192 Net interest payable (2,247) (2,147) ---------- ---------- Profit/(loss) on ordinary activities before taxation 3,219 (3,944) Taxation (1,162) (125) ---------- ---------- Profit/(loss) on ordinary activities after taxation 2,057 (4,069) Minority interests (169) (205) ---------- ---------- Profit/(loss) attributable to shareholders 1,888 (4,274) Dividends - - ---------- ---------- Retained profit/(loss) for the year 1,888 (4,274) ====== ====== Earnings/(loss) per share - Basic 1.36p (3.07p) - Diluted 1.36p (3.07p) - Adjusted basic 1.73p (2.71p) ====== ====== Dividends per share 0.00p 0.00p ====== ====== All of the above relate to continuing activities. Consolidated Statement of Total Recognised Gains and Losses 2000 1999 £'000 £'000 ---------- --------- Profit/(loss) for the year 1,888 (4,274) Net currency translation differences on foreign currency net investments 333 (549) ---------- --------- 2,221 (4,823) Total recognised gains and losses ====== ====== Balance Sheet At 31 December 2000 Group 2000 1999 £'000 £'000 ---------- ---------- Fixed assets Intangible assets 9,262 9,800 Tangible assets 3,181 2,777 Investments 300 300 ---------- ---------- 12,743 12,877 ====== ====== Current assets Stocks 34,306 35,671 Debtors - due within one year 26,916 22,544 Cash at bank and in hand 1,369 1,742 ---------- ---------- 62,591 59,957 Creditors: amounts falling due within one year (37,806) (36,777) ---------- ---------- Net current assets 24,785 23,180 ---------- ---------- Total assets less current liabilities 37,528 36,057 Creditors: amounts falling due after more than one (1,353) (2,272) year ---------- ---------- Net assets 36,175 33,785 ====== ====== Capital and reserves Called up share capital 13,990 13,990 Share premium account 55,207 55,207 Profit and loss account (33,607) (35,828) ---------- ---------- Equity shareholders' funds 35,590 33,369 Equity minority interests 585 416 ---------- ---------- 36,175 33,785 ====== ====== Approved on behalf of the Board on 4 April 2001 by: A E Watson M H R Corke Chairman Chief Executive Consolidated Cash Flow Statement For the year ended 31 December 2000 2000 1999 £'000 £'000 ---------- --------- Net cash inflow from operating activities 5,335 4,170 ---------- --------- Returns on investments and servicing of finance Interest received 128 81 Interest paid and similar charges (2,300) (2,095) Interest element of finance leases (50) (60) ---------- --------- Net cash outflow from returns on investments and servicing of finance (2,222) (2,074) ---------- --------- Taxation UK corporation tax recovered 398 323 Overseas taxation (paid)/recovered (1,912) 346 ---------- --------- Net cash (outflow)/inflow from taxation (1,514) 669 ---------- --------- Capital expenditure and financial investment Purchase of tangible fixed assets (961) (4,132) Purchase of intangible fixed assets - (26) Purchase of fixed asset investments - (100) Sale of tangible fixed assets 222 7,434 ---------- --------- Net cash (outflow)/inflow from capital expenditure and financial investment (739) 3,176 ---------- --------- Equity dividends paid - (182) ---------- --------- Cash inflow before use of liquid resources and financing 860 5,759 ---------- --------- Financing Loans repaid (685) (7,600) Finance lease capital payments (352) (500) New loans 573 2,796 ---------- --------- Net cash outflow from financing (464) (5,304) ---------- --------- Increase in cash in the year 396 455 ====== ====== All cash flows relate to continuing activities. Notes to the Accounts 1 STATUTORY ACCOUNTS FOR 2000 The financial information contained in the Preliminary Results does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The information for the year ended 31 December 2000 and 31 December 1999 is extracted from the audited accounts for the year ended 31 December 2000, which will be filed with the Registrar of Companies shortly, and upon which the Auditors have expressed an unqualified opinion. 2 TURNOVER AND PROFIT BEFORE TAX AND NET ASSETS Segmental information 2000 1999 £'000 £'000 ---------- ---------- a) Turnover By destination United Kingdom 55,259 55,086 Rest of Europe 42,585 41,491 North America 18,776 14,775 Rest of World 1,821 1,840 ---------- ---------- 118,441 113,192 ====== ====== By origin United Kingdom 59,899 59,391 Rest of Europe 39,356 38,559 North America and Asia 19,186 15,242 ---------- ---------- 118,441 113,192 ====== ====== b) Profit/(loss) before tax by origin United Kingdom 1,466 (4,019) Rest of Europe 1,309 230 North America and Asia 444 (155) ---------- ---------- 3,219 (3,944) ====== ====== c) Net assets by location United Kingdom 20,899 20,319 Rest of Europe 13,014 11,916 North America and Asia 2,262 1,550 ---------- ---------- 36,175 33,785 ====== ====== The Directors consider that the Group has only one class of business and consequently no further analysis of turnover or profit is given. 3 EARNINGS/(LOSS) PER SHARE Basic earnings/(loss) per Ordinary Share is calculated by dividing the profit after taxation and minority interests of £1,888,000 by 139,190,989 (1999: loss of £4,274,000 by 139,364,613), being the weighted average number of Ordinary Shares of 10 pence each in issue during the year after taking account of the purchase of Ordinary Shares by the Employee Share Ownership Plan (ESOP). In view of the significant impact of the amortisation of goodwill on earnings per share calculated in accordance with Financial Reporting Standard 14 - Earnings per Share, an adjusted earnings per share figure has been provided. The adjusted basic earnings/(loss) per Ordinary Share is calculated by dividing the profit after taxation and minority interests of £1,888,000 (1999: loss of £4,274,000) and before amortisation of goodwill of £520,000, (1999: £ 499,000) by 139,190,989 (1999: 139,364,613), being the weighted average number of Ordinary Shares of 10 pence each in issue during the year. No dilution arises as a result of share options in issue, as the value at which they were granted is in excess of the market price at 31 December 2000, and therefore no options would be exercised. Accordingly the diluted earnings/ (loss) per share is identical to the basic earnings/(loss) per share. A reconciliation of basic earnings/(loss) per share with adjusted basic earnings/(loss) per share is as follows: Pence per share 2000 Number of 1999 Number of Pence per shares shares share £'000 £'000 Basic earnings/(loss) per Ordinary Share 1,888 139,190,989 1.36p (4,274)139,364,613 (3.07p) Eliminate amortisation of goodwill 520 - 0.37p 499 - 0.36p --------- -------- -------- ------- --------- ------ Adjusted Basic earnings/ (loss) per Ordinary Share 2,408 139,190,989 1.73p (3,775) 139,364,613 (2.71p) ====== ======== ====== ====== ======== ====== 4 TAXATION ON PROFIT/(LOSS) ON ORDINARY ACTIVITIES 2000 1999 £'000 £'000 ---------- -------- United Kingdom corporation tax on profit/(loss) on ordinary activities at 30% 193 (520) Overseas taxation 969 645 ---------- -------- 1,162 125 ====== ====== The Group has taxable losses of £664,000 (1999: £1,400,000) available for offset against future UK taxable profits. 5 RECONCILIATION OF OPERATING PROFIT/(LOSS) TO NET CASH FLOW FROM OPERATING ACTIVITIES 2000 1999 £'000 £'000 ---------- ---------- Operating profit/(loss) 5,466 (1,989) Depreciation of fixed assets 863 783 Amortisation of trademarks 18 44 Amortisation of goodwill 520 499 (Profit)/loss on sale of tangible fixed assets (54) 12 Decrease in stocks 1,775 6,032 (Increase)/decrease in debtors (4,548) 4,217 Increase/(decrease) in creditors 1,122 (5,374) Exchange movements in respect of foreign undertakings 173 (54) ---------- ---------- Net cash inflow from operating activities 5,335 4,170 ====== ====== 6 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 2000 1999 £'000 £'000 ---------- ---------- Increase in cash in the year 396 455 Cash outflow from decrease in debt and lease 464 5,304 financing Changes in net funds resulting from cash flows 860 5,759 Foreign exchange movements (253) 729 New finance leases (454) (288) ---------- ---------- Movement in net debt 153 6,200 ====== ====== Net debt at 1 January 2000 (21,850) (28,050) Movement in net debt 153 6,200 ---------- ---------- Net debt at 31 December 2000 (21,697) (21,850) ====== ====== 7 ANALYSIS OF CHANGES IN NET DEBT Foreign exchange Other non-cash movements movements At 1 Jan At 31 Dec 2000 £'000 £'000 2000 Cash £'000 flow £'000 £'000 Cash at bank and 1,742 (398) 25 - 1,369 in hand Overdrafts (20,335) 794 (258) - (19,799) ---------- ---------- ---------- ------ ------- (18,593) 396 (233) - (18,430) ---------- ---------- ---------- ------ ------- Debt due within one year Bank loan (711) (1,003) (5) - (1,719) Finance lease (274) 339 - (260) (195) obligations ---------- ---------- ---------- ------- -------- (985) (664) (5) (260) (1,914) ---------- ---------- ---------- ------- -------- Debt due after one year Bank loan (2,131) 1,115 (15) - (1,031) Finance lease (141) 13 - (194) (322) obligations ---------- ---------- ---------- ------ ------- (2,272) 1,128 (15) (194) (1,353) ---------- ---------- ---------- ------ ------- Net debt (21,850) 860 (253) (454) (21,697) ---------- ---------- ---------- ------ --------- 8 ANNUAL REPORT AND ACCOUNTS Copies of the Report and Accounts are being mailed to shareholders shortly and will be made available upon request to members of the public at the Company's registered office at United House, Shrewsbury Avenue, Woodston, Peterborough, PE2 7BZ.

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