XTRA-VISION MADE an operating profit of more than €1 million in the first four months following its purchase by the Dublin firm Birchall Investments.
But the performance of the home entertainment company fell short of the level at which Birchall would have had to pay the former owners, Blockbuster, an additional payment of €12 million.
Accounts for Birchall Investments, which owns 100 per cent of Xtra-vision, show that it made an operating profit of €1.1 million on turnover of €52.9 million in the period from August 18th, 2009, until January 3rd, 2010.
The pretax profit for the period was smaller at €155,000, as Birchall paid interest charges of €227,000 and a bank arrangement fee of €718,000.
Birchall Investments, a vehicle comprising of Dublin investment company Pageant Holdings and a fund run by NCB Stockbrokers, bought the home entertainment rental chain from US group Blockbuster in August 2009.
The accounts reveal that Xtra-vision was acquired by Birchall for €20 million. A price tag of €32 million was cited at the time of the sale, but €12 million of this consideration was contingent on the firm’s financial performance in the final quarter of 2009. However, business at the chain did not reach the level at which the higher payment would have been triggered.
“Based on the period end results, no further amount is payable,” the accounts state.
The directors noted the “difficult” economic background and climate of declining retail sales in Ireland during 2009.
Its performance in the period compares to a pretax profit of €6.2 million in the full year to January 2009.
Xtra-vision faces intensifying competition from the online download market, postal DVD services and lower sales prices for physical DVDs. In recent years, its computer game sales are likely to have been affected by the decision of high street games retailers to stock second-hand titles.
Xtra-vision employs more than 1,400 people in Ireland, with payroll costs totalling €7.9 million for the four-month period.
The directors of Birchall are Peter O’Grady Walshe, Nick Furlong, Michael Murphy and Leo Hamill.
The acquisition of Xtra-vision was part-funded by a €7 million bank loan. As certain liabilities were assumed by the new owner, the net consideration payable was reduced to €15.8 million. The company has since repaid €6 million of its debt.
Xtra-vision, which operates 184 retail stores in Ireland, is understood to be in talks to take over some stores operated by its financially troubled rival Chartbusters.
