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 today.
The net loss before the $6m write-down for the year to March 31 was $527,000, compared to a profit of $1.1m 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.
A sell down of 51 per cent of its shareholding in Life Pharmacy Albany had been planned but had not happened yet because the franchise and contractual documents were not in place. It was expected the share sale would take place shortly.
The board remained committed to growing and investing in the business to achieve scale benefits.
Yesterday 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 $5.25m for a total of 7m 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 a period of up to two years.
The subscription price under the options was 75c a share in the first year and 82.5c in year two.
Earlier this year Life launched a takeover bid for the country's largest pharmacy group PharmacyBrands.
But later it said the offer was unlikely to be made after shareholders in PharmacyBrands, a public unlisted company, last month voted in favour of the acquisition of 676,000 PharmacyBrands shares by Pharmacy Retailing (NZ) Ltd.
Life shares closed at 71c yesterday, having ranged between 98c and 50c in the past year.
- NZPA
