True to its profit warning (CI No 1,785), Rossendale, Lancashire-based P&P Plc has turned in an impoverished set of figures for its financial year to November 30 with profits down 95% at UKP711,000 following a poor performance in the second half. All divisions turned in pre-tax losses for the second half, even P&P Corporate Systems, traditionally the group’s most profitable business. Marketing and Communications manager Nick Melvin explains that when P&P entered the second half it realised that things were going to be tough, as customers began to tighten their belts, and consequently withdraw and delay their custom. On top of that, margins in general came under pressure, with the intensifying price wars between suppliers. And while all this was happening, P&P was undergoing some level of reorganisation, increasing its emphasis, and its ratio of staff, within its value-added services division, bumping up staff costs and overheads generally, to a total UKP14.1m in the second half. Staff levels at the company have been reduced once again to a current count of 820, down from 851 at December, and from a peak of 917 last August. And the group has closed down its London financial office, in a further attempt to control resources. Melvin says the current year is going to be another tough one, with no sign of an end to the recession, but group overheads shouldn’t be as high again. He places emphasis on P&P’s strong balance sheet, which now contains UKP9.9m cash. No specific plans for this as yet; it seems the group is just enjoying being liquid. If P&P was to look for further acquisitions, they would have to be low-risk, high-profit businesses in the UK and Europe. P&P insists that its Distribution business, which is as large in turnover terms as the Corporate Systems activity (the two together making up the bulk of P&P’s revenues), is not for sale, as has been speculated; the group notes that the Distribution operation was profitable for the full year overall.
