Interim Results
UNITED OVERSEAS GROUP PLC
7 September 1999
UNITED OVERSEAS GROUP PLC
Interim results for the six months ended 30 June 1999
United Overseas Group plc ('UOG'), Europe's largest specialist distributor of
excess inventories of branded consumer products to retail and wholesale
customers, announces interim results for the six months ended 30 June 1999.
UOG's range includes toys, games, toiletries and cosmetics, household goods,
sports and leisure wear. The results were produced against a background of
difficult trading conditions in the UK retail market.
Key points (comparatives are 6 month figures to 30 June 1998):
* Turnover £57.4m (1998: £47.1m)
* Pre-tax loss £0.3m (1998: £3.1m profit), after charging £0.3m goodwill
amortisation (1998: nil)
* Business of Toy Wizards combined with that of United Overseas Limited
* Stocks successfully reduced
* Dutch subsidiary acquired in Autumn 1998, contributed satisfactory profits
* The Directors are not declaring an interim dividend (1998: 0.43p)
* Completion in July of Sale and Leaseback of new 21,000 sq metre European
Distribution Centre in Holland has benefited gearing
* Facility will be focal point of UOG's European development
* Phil Green appointed to Board from Woolworths plc in August - brings
retailing expertise to Group
* Chairman to step down during next few months
Commenting on the results, Chairman Norman Riddell said:
'In an environment that has seen downward pressures on sales volumes in the
UK, the Group intensified its actions to successfully reduce stock holdings,
which by the half year were significantly below the 1998 year end levels.
Notwithstanding this, the operating environment in the UK, as predicted, has
remained very difficult.'
Regarding the outlook for the remainder of 1999, he added:
'The Board anticipates that the testing trading conditions in the UK will
continue during the rest of the year and in response to the challenges we face
the Group will undergo further changes and improvements to secure a successful
future. These developments will enable the Group, in association with its key
business partners to participate fully in the anticipated global growth of
discount retailing of branded consumer goods.'
Enquiries:
Norman Riddell, Chairman
Jeffrey Curtiss, Chief Executive
Terry Balkham, Finance Director, United Overseas Group plc
today only 0171 786 9600
thereafter 01733 362 300
Peter Binns
Paul Vann, Binns & Co PR Limited 0171 786 9600
Issued by Binns & Co PR Ltd Tel: 0171 786 9600
Chairman's Statement
The Group has previously indicated that trading conditions in the first half
of the year have been particularly difficult in the UK and in order to address
the challenges of the UK market place the Group has combined the business of
Toy Wizards with that of United Overseas Limited. In an environment that has
seen downward pressures on sales volumes in the UK, the Group intensified its
actions to successfully reduce stock holdings, which by the half year were
significantly below the 1998 year end levels. Notwithstanding this, the
operating environment in the UK, as predicted, has remained very difficult and
it is disappointing to report that the established UK businesses of the Group
traded at a loss. We are determined to continue to address the structural
challenges of improving operating efficiencies and believe that the
initiatives which are being implemented will ultimately prove rewarding.
We remain pleased with the progress of the integration of Intertrading which
contributed a satisfactory profit. The completion of the Sale and Leaseback
of the European Distribution Centre at Moerdijk, the Netherlands, took place
on 14 July 1999. Relocation of the Intertrading office, showroom and
warehousing activities to the new premises was successfully concluded during
August and the facility will now become the focal point for the Group's
European development. The repayment of the associated loan in July reduced
short-term borrowings by £5.8 million (NLG 19.5 million) with a significant
consequential benefit to the Group's gearing.
The Directors are committed to ensure that the Group's resources are focused
on developing a successful and efficient business. In the circumstances the
Directors do not propose to pay an interim dividend.
The Board anticipates that the testing trading conditions in the UK will
continue during the rest of the year and in response to the challenges we face
the Group will undergo further changes and improvements to secure a successful
future. These developments will enable the Group, in association with its key
business partners to participate fully in the anticipated global growth of
discount retailing of branded consumer goods.
It is with great pleasure that we welcome Phil Green to the Board. Phil
joined us from Woolworths plc on 2 August 1999. His primary responsibility is
as Managing Director of United Overseas Limited, the Group's principal
operating company in the UK. In addition, he will assist with the development
of our businesses internationally. Phil's extensive background of trading and
merchandising within a major retailing group and his specialist knowledge of
the toy and other relevant sectors will be of great benefit to the United
Overseas Group.
When I joined the Board of your Company I indicated to my colleagues that I
would not remain indefinitely as your Chairman, and I have now decided to step
down. I have agreed with my colleagues that I will leave your Board within
the next few months, during which time the Board is looking to appoint my
successor. I wish the Company and the Board continued success in building and
developing the Group's fortunes.
Norman Riddell
Chairman
6 September 1999
Consolidated Profit and Loss Account
For the period ended 30 June 1999
6 months 6 months 12 months
ended ended ended
30/06/99 30/06/98 31/12/98
(unaudited) (unaudited) (audited)
Note £'000 £'000 £'000
----------- ----------- -----------
Turnover 2 57,406 47,058 107,603
Cost of sales (44,840) (34,495) (82,972)
----------- ----------- -----------
Gross profit 12,566 12,563 24,631
Distribution costs (5,104) (3,586) (7,541)
Administrative costs (6,544) (4,988) (10,968)
Other operating income 163 4 83
Amortisation of goodwill 3 (252) - (166)
----------- ----------- -----------
Operating profit 829 3,993 6,039
Net interest payable (1,171) (942) (2,309)
----------- ----------- -----------
(Loss)/profit on
ordinary activities before
taxation (342) 3,051 3,730
Taxation 4 (158) (1,005) (1,482)
----------- ----------- -----------
(Loss)/profit on ordinary
activities after taxation (500) 2,046 2,248
Minority interests (118) (84) (126)
----------- ----------- -----------
(Loss)/profit attributable
to shareholders (618) 1,962 2,122
Dividends 5 - (533) (715)
----------- ----------- -----------
Retained (loss)/profit
for the period (618) 1,429 1,407
========= ========= =========
Earnings per share 6
- Basic (0.44)p 1.58p 1.64p
- Fully diluted (0.44)p 1.58p 1.64p
- Adjusted basic (0.26)p 1.58p 1.77p
----------- ----------- -----------
Dividends per share 5 - 0.43p 0.56p
========= ========= =========
Consolidated Balance Sheet
At 30 June 1999
At 30/06/99 At 30/06/98 At 31/12/98
(unaudited) (unaudited) (audited)
Note £'000 £'000 £'000
----------- ----------- -----------
Fixed assets
Intangible assets 9,698 90 9,939
Tangible assets 8,724 2,167 6,427
Investments 250 - 200
----------- ----------- -----------
18,672 2,257 16,566
========= ========= =========
Current assets
Stocks 38,735 40,301 42,604
Debtors 29,486 25,317 27,185
Cash at bank and in hand 1,066 978 1,356
----------- ----------- -----------
69,287 66,596 71,145
Creditors: amounts
falling due within one year (47, 879) (41,418) (42,632)
----------- ----------- -----------
Net current assets 21,408 25,178 28,513
----------- ----------- -----------
Total assets less
current liabilities 40,080 27,435 45,079
Creditors: amounts
falling due after more
than one year (2,386) (357) (6,676)
----------- ----------- -----------
Net assets 37,694 27,078 38,403
========= ========= =========
Capital and reserves
Called up share capital 13,990 12,403 13,990
Share premium account 55,207 45,763 55,207
Share capital to be issued - 1,000 -
Profit and loss account 3 (31,832) (32,257) (31,005)
----------- ----------- -----------
Equity shareholders' funds 37,365 26,909 38,192
Equity minority interests 329 169 211
----------- ----------- -----------
37,694 27,078 38,403
========= ========= =========
Consolidated Cash Flow Statement
For the period ended 30 June 1999
6 months 6 months 12 months
ended ended ended
30/06/99 30/06/98 31/12/98
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
----------- ----------- -----------
Net cash outflow)/inflow
from operating activities (1,671) (8,634) 4,906
----------- ----------- -----------
Returns on investments
and servicing of finance
Interest received 16 18 54
Interest paid and
similar charges (1,200) (936) (2,273)
Interest element of
hire purchase and
finance leases (26) (22) (51)
----------- ----------- -----------
Net cash outflow from
returns on investments
and servicing of finance (1,210) (940) (2,270)
----------- ----------- -----------
Taxation
UK corporation tax
received/(paid) 871 (1,080) (2,376)
Overseas taxation
received/(paid) 398 (445) (838)
----------- ----------- -----------
Net cash inflow/(outflow)
from taxation 1,269 (1,525) (3,214)
----------- ----------- -----------
Capital expenditure and
financial investment
Purchase of intangible
fixed assets - (23) (23)
Purchase of tangible
fixed assets (2,982) (176) (3,150)
Purchase of fixed
asset investments (50) - (200)
Sale of tangible fixed
assets 47 8 35
----------- ----------- -----------
Net cash outflow from
capital expenditure
and financial investment (2,985) (191) (3,338)
----------- ----------- -----------
Acquisitions and disposals
Purchase of subsidiary
undertakings (22) - (4,459)
Net cash acquired with
subsidiary undertakings - - (2,371)
----------- ----------- -----------
Net cash outflow from
acquisitions and disposals (22) - (6,830)
----------- ----------- -----------
Equity dividends paid (182) (943) (1,476)
----------- ----------- -----------
Cash outflow before
use of liquid resources
and financing (4,801) (12,233) (12,222)
----------- ----------- -----------
Financing
Expenses paid in
connection with share issues - - (715)
Capital element of
finance lease rentals (214) (264) (502)
New short term finance 1,776 - 7,428
----------- ----------- -----------
Net cash inflow/(outflow)
from financing 1,562 (264) 6,211
----------- ----------- -----------
Decrease in cash in
the period (3,239) (12,497) (6,011)
========= ========= =========
Reconciliation of Operating Profit to Net Cash Flow from Operating Activities
For the period ended 30 June 1999
6 months 6 months 12 months
ended ended ended
30/06/99 30/06/98 31/12/98
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
----------- ----------- -----------
Operating profit 829 3,993 6,039
Depreciation of fixed assets 380 271 637
Amortisation of trade marks 11 8 15
Amortisation of goodwill 252 - 166
Profit on sale of
tangible fixed assets (3) - (2)
Decrease/(increase)in stocks 3,869 (3,312) 2,550
Increase in debtors (2,828) (4,397) (1,391)
Decrease in creditors (4,161) (5,134) (2,951)
Profit on exchange in
respect of foreign
undertakings (20) (63) (157)
----------- ----------- -----------
Net (outflow)/inflow
from operating activities (1,671) (8,634) 4,906
========= ========= =========
Reconciliation of Net Cash Flow to Movement in Net Debt
For the period ended 30 June 1999
6 months 6 months 12 months
ended ended ended
30/06/99 30/06/98 31/12/98
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
----------- ----------- -----------
Decrease in cash in
the period (3,239) (12,497) (6,011)
Cash (inflow)/outflow
from decrease in debt
and finance leasing (1,562) 264 (6,926)
----------- ----------- -----------
Change in net funds
resulting from cash flows (4,801) (12,233) (12,937)
Loans and finance
leases acquired with
subsidiaries - - (898)
New finance leases (21) (371) (693)
----------- ----------- -----------
Movement in net debt (4,822) (12,604) (14,528)
========= ========= =========
Opening net debt (28,050) (13,522) (13,522)
Movement in net debt (4,822) (12,604) (14,528)
----------- ----------- -----------
Closing net debt (32,872) (26,126) (28,050)
========= ========= =========
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 1999.
The results for the six months ended 30 June 1998 and the year ended 31
December 1998, are extracted from the previous year's interim and final
accounts respectively. The analysis between expenses has been restated for
the six months ended 30 June 1998, in line with the analysis given in the
final accounts, as in the opinion of the Directors, this is more appropriate.
The results for the six months ended 30 June 1999 and 1998 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 1998 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
30/06/99 30/06/98 31/12/98
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
----------- ----------- -----------
Turnover by
destination:
United Kingdom 26,686 27,491 58,494
Rest of Europe 21,946 10,409 31,005
North America 8,774 9,158 18,104
----------- ----------- -----------
57,406 47,058 107,603
========= ========= =========
By origin:
United Kingdom 28,671 33,020 69,300
Rest of Europe 20,576 5,962 21,945
North America 8,159 8,076 16,358
----------- ----------- -----------
57,406 47,058 107,603
========= ========= =========
(Loss)/profit before
tax by origin:
United Kingdom (1,223) 2,273 2,629
Rest of Europe 845 244 610
North America 36 534 491
----------- ----------- -----------
(342) 3,051 3,730
========= ========= =========
Notes
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 1999 and 1998 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 1999 (1998
interim dividend of 0.43 pence per ordinary share).
6 EARNINGS PER SHARE
Basic earnings per share for the six months ended 30 June 1999 is calculated
by dividing the loss on ordinary activities after taxation and minority
interests of £618,000 by 139,496,709 (30 June 1998: profit £1,962,000 by
124,032,000; 31 December 1998: profit £2,122,000 by 129,199,267) 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 1999 is
calculated by dividing the loss on ordinary activities after taxation and
minority interests and before amortisation of goodwill of £366,000 by
139,496,709 (30 June 1998: profit £1,962,000 by 124,032,000; 31 December 1998:
profit £2,288,000 by 129,199,267) 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 1999
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 YEAR 2000
The Steering Committee, which reports to the Board, is co-ordinating the
necessary work throughout the Group's operations to address the Year 2000
issues. This work is predominantly complete, however given the complexity of
the issue, it is not possible for any organisation to be certain that no
problems relating to Year 2000 issues will occur. The Company is developing
contingency plans to deal promptly with any significant issues that it can
identify.
In accordance with the Urgent Issues Task Force Abstract number 20, the costs
relating to Year 2000 compliance have been written off to the Profit and Loss
Accounts of the individual companies.
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