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Renaissance back in the black, no thanks to Apple or YOOBEE

Friday 27th April 2012

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Computer reseller and trainer Renaissance Corp. returned to profitability in the six months to March 31, declaring a $239,000 profit before tax and a $1.9 million post-tax operating surplus following receipt of $2.5 million in insurance payouts.

The business was hit by two major blows in 2010 and 2011 – the introduction of a second licenced Apple products reseller and the Christchurch earthquakes, which triggered insurance claim fo $5.2 million, of which recoveries of $3.6 million have been realised, much of it in the half-year under review.

However, total sales revenue was off 24 percent at $77.3 million in the first half of the current year compared to the same period a year earlier, reflecting poor execution of a name change for the MagnumMac stores to the Yoobee brand and sales lost to the new Apple supplier.

The Yoobee rebrand had been caught up in the Christchurch earthquake and had not been handled well, said chairman Colin Giffney in a statement to the NZX.

“To end the six month period of with earnings before interest, tax, depreciation and amortisation of $1.3 million, and ebit of nearly $500,000, nearly $400,000 ahead of budget, and a profit before tax of $240,000 was a good outcome,” he said, acknowledging the insurance recoveries were distorting the bottom line post-tax surplus.

While its education segment had outperformed expectations, total sales were 13 percent below budget and the retail segment was now “clearly focused under new leadership,” said Giffney.

Reducing sales caused by its Apple competitor had also seen the company face “reducing credit limits as Apple response to the earthquake effects” and “we have been delayed in reaching a satisfactory outcome on sale or retention” of the distribution business and hoped a conclusion would “soon be possible.”

With insurance receipts flowing, the company was confident of rapid balance sheet restoration, with the combined effects of new competition and the quakes fading over coming months. Renaissance shares fell 8.8 percent to 15.5 cents in late trading on the NZX.

Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond

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