Londis’ Profits Increase 35% to €1.67M
Stonehouse membership and improved sales mix to further underpin 2014 performance. ADM Londis plc, the Irish symbol group owned by retailers for retailers, recorded a profit before tax of €1.67million for the year ended 31 December 2013, an increase of 35% on the prior year outturn of €1.23m. Organic (like for like) turnover – excluding low margin tobacco and call credit categories – grew by 1% in the period.
Profit from ordinary trading improved as a result of a more favourable mix of sales with reduced reliance on low margin categories and increased volumes through Londis’ higher margin chilled distribution network. The conclusion of a 10 year goodwill amortisation process for its Londis Top Shop acquisition in 2003 also delivered a year on year benefit to the business of €0.35m. Notwithstanding organic growth in core sales, total revenue in 2013 declined by 4.4% to €195m (2012: €204m), driven in the main by a decline in the tobacco and call credit categories and the closure of a small number of underperforming stores.
One of the Group’s major developments in 2013 was an agreement to join the Stonehouse Group and thereby leverage a combined buying power of close to €1.5billion at retail level. This strategic buying arrangement will be margin enhancing and will enable Londis’ retailers compete all the more aggressively with international multiples and discount chains. On the diversification front, through its subsidiary Genisis Innovative Software, the Group is exploring significant expressions of interest in its innovative ecommerce platform which was developed internally by the Group and which has delivered significant savings to the supply chain.
Despite a challenging market for independent retailers, Londis’ store recruitment gained traction in the second half of the year, culminating in seven new store openings by year end. These new stores will have a positive impact on 2014 turnover. This has been further boosted since year end following an extension (to 2019) of the Group’s partnership with the Griffin Group, one of the country’s largest symbol group retailers.
Total Shareholders’ funds increased by 7% to €20.4m (up from €19.1m in 2012) with net debt significantly reduced to €1.1m (from €3.0m in 2012). A dividend of 0.25c per share has been proposed for 2014. A successful share buy-back of 40,000 shares in 2013 saw the value of the company’s A Ordinary Shares (as at April 2013) increase by 19% to €28.71 since April 2012. The Company is seeking shareholder approval to further extend the share buy back in 2014.
Commenting on the Company’s 2013 performance and outlook for 2014, ADM Londis’ Chief Executive, Stephen O’Riordan said: “2013 was a very successful year for the group with profits up substantially, a sustainable increase in margins and further enhancements to our buying power, marketing execution and capital structure. Whilst overall retail sales are showing some growth in 2014, it will take some time before this is reflected in grocery market performance. We expect to see very little improvement in household finances in 2014 suggesting that consumers will remain acutely conscious of day to day spending. Notwithstanding, the Group is beginning to see the trading benefits of new stores recruited to the Group in 2013 and this has been further underpinned by our new partnership agreement with the Griffin Group post year end. We see this as a strong endorsement of the Group’s retailer offering and partnership approach. 2014 marks the Group’s 60th year of trading and we will embark on a significant campaign of consumer initiatives building on our ‘local like you’ brand campaign. Sustaining retailer margin will remain our overriding focus in 2014 as we continue to invest to unlock savings and efficiencies for our retailers. The Stonehouse agreement, finalised towards the end of 2013, will further bolster the Group’s retail offering bringing enhanced pricing for retailers and consumers alike” Mr O’Riordan added.