KEY POINTS:
Life Pharmacy has confirmed advice from Monday of an annual net loss of $6.6 million, including a $6 million write-down on investments.
The reduction in the group's investment in associates followed an assessment of the last two years' trading and a review of the latest financial forecasts for associate companies, Life said yesterday.
The net loss before the $6 million write-down for the year to March 31 was $527,000, compared with a profit of $1.1 million the year before.
Life Pharmacy holds a 49 per cent shareholding in 17 pharmacy companies, representing 16 of the 21 Life Pharmacy stores in New Zealand.
It said the aggregate trading result for its stores was disappointing, with a 5 per cent reduction in store earnings before interest, tax, depreciation and amortisation (ebitda) on the prior period.
On a like-for-like stores basis, aggregate store ebitda was 3 per cent ahead of the prior period.
Directors were seeking a strong improvement in store profits in the current year, Life said.
Despite the disappointing trading for the year, the group had buoyant Christmas trading and a number of associates were trading strongly.
Christchurch stores at Riccarton, The Palms and Northlands continued to perform to expectations.
But it had taken longer than expected to build momentum in new and refurbished stores.
A significant improvement at the enlarged and refurbished Queensgate store in Lower Hutt had been expected during the year to March but had yet to come to fruition.
A new format discount store, SupaChem at Porirua, had taken some time to become established.
At new Auckland shopping centre Sylvia Park, sales had been disappointing during the staged development of the centre, Life said.
But since balance date, with the recent opening of stage three of the centre, there had been a surge of activity, especially on weekends.
Life said its previous year result had included a $572,000 gain from the sell-down of 51 per cent of the shares in Life Pharmacy Sylvia Park.
The board remained committed to developing and investing in the business to achieve scale benefits.
Life said it had signed a heads of agreement with Segoura, a company backed by businessman Andrew Bagnall and his associates, for Segoura to subscribe $5.25 million for a total of 7 million shares in Life at 75c a share.
Under the conditional agreement Life agreed to grant Segoura an option to subscribe for up to 50.1 per, cent of Life's entire issued share capital for up to two years. Life shares closed at 70c yesterday, having ranged between 98c and 50c in the past year.
- NZPA
