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Renaissance rises from a 'ghastly' 2012

Renaissance rises from a 'ghastly' 2012

Company says it is looking forward to 'a new normal'

After a ghastly 2012, training provider and Apple retailer Renaissance Corporation is looking forward to "a new normal" after several years of profound change and business upheaval.

Shares are trading around 20 cents, nearly double the price being paid a year ago, but in November the company announced it would go back to basics to define alternative business strategies and realise value for shareholders.

The company said it believed the current share price of the company was "substantially below the value of its component divisions".

"As a result, the company is vulnerable to a takeover offer, which may not adequately recognise the value inherent in the business," the directors told the NZX. "Various parties interested in acquiring the remaining operating divisions have also approached the company, although no formal offers have been received to date."

Grant Samuel & Associates has been appointed to assist in developing strategic alternatives in a process likely to take three months to complete.

Renaissance chairman Colin Giffney said a new relationship is emerging with one of its major partners, Apple. Renaissance was the sole distributor of Apple products in New Zealand but that has now ended. In fact, the company has exited the distribution business altogether and now relates to the global tech giant as its major New Zealand retailer through 10 Yoobee branded stores nationwide.

"2012 has been another year of upheaval for the company," Giffney said in his chairman's note in Renaissance's annual report, posted to the NZX just before Christmas.

"There has been lots of change. Businesses have been sold, activities shut down. Historic assets have been written out of the accounts.

"Now though, the balance sheet is stabilising. The business is ‘right-sized'. Focus has returned to the retail and education businesses and we have ended the year with a platform from which to grow."

For the year to September 30, Yoobee stores produced an ebit loss of $370,000, down from $920,000 in 2011, excluding one-offs.

"Yoobee Retail is different. It is not a big-box mover. It specialises in Apple devices and mobility. Apple . . . has been fully supportive of the approach we have taken and the relationship with Apple is entering a new era after the long one we experienced as their distributor in this country," Giffney wrote in his report.

The report also notes severe problems with the store point-of-sale system.

"Our current retail POS system was installed in December 2008. The initial switchover did not go well and then support for the product retreated to the UK. Users have grappled with the idiosyncrasies of the system and that has been a huge cost in both stock adjustments and diverted effort."

The supplier is now providing support again and the "integrity of the system seems to have been restored", the report noted.

Renaissance was also affected by the Christchurch earthquakes with its training campus finally being relocated in 2012 after being in temporary premises since February 2011. Outstanding insurance claims have also been settled.

Similarly the distribution business has been sold, to Auckland-based Exeed, in a process described in the annual report as "tortuous".

Indeed, legal action was looking likely around the sale, and was notified to the NZX, until a settlement was reached last September.

Renaissance has also shifted out of premises at Quay St in Auckland and its traditional distribution base in Onehunga. It has also abandoned PC assembly under the Insite brand.

It has closed five StudentIT stores and shifted to new premises in Hamilton, Wellington and Dunedin. New stores were opened in Cashel St Container Mall and Riccarton Mall in Christchurch and Sylvia Park in Auckland.

Staff numbers were reduced from 268 in September 2011 to 184 in September 2012, Renaissance's balance date.

The result for the year was a surplus after tax of $2 million, however, the report warned there are a lot of non-recurring items in that figure.

"The company looks forward with confidence now that the upheavals of the last two years are behind us," the chairman wrote.

Renaissance projects total revenue in 2013 of $63.8m, down from $80.6m, and ebit of $1.4m.


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