Office products company, Staples Holdings Ltd., yesterday reported profits of $1,042,829 ($0.48 a share) for its first year as a public company to March 31, 1996, on revenues of $13.3 million.

SHL declared dividends of 45 cents per share payable September 30 to shareholders of record September 16. And company executives said preference shares were now offering a 10.51 percent dividend yield, unmatched by any other company on the Bermuda Stock Exchange.

The company reported a $4.91-million expense bill for the period, that included costs of the merger with Chips Ltd. and the IPO that took the firm public.

In the report to more than 300 preferred and more than 30 common shareholders, chairman William Midon and president Mark White reported that, in its fifth year of operation, Staples had recorded a gross profit of $5.95 million before those expenses.

"And this year,'' Mr. White said, "we anticipate quite a spurt, in growth, revenues, profits and staff. We have a very aggressive game plan and we are putting those pieces together now.'' When SHL acquired Staples Ltd. at March 31, 1995, it had a net book value of $1,499,701, consisting of total assets of $2,431,073 and total liabilities of $931,372. The company swapped 872,665 of its common shares for all of the outstanding shares of Staples Ltd.

Chips Ltd. cost $7,427,612. SHL acquired 1,127,708 or nearly 94 percent of Chips common shares (valued at $6.17 each) of a total of 1,200,000 issued shares in exchange for $6,957,955 in a combination of cash of $1,915,848, a promissory note of $4,292,110 and 83,333 non-voting 7.5% preferred shares of the company issued at $9 per share.

Also on March 31, 1995, SHL acquired 12,902 Chips common shares in exchange for 8,845 convertible redeemable 10% preferred shares of the company issued at $9 per share.

And last year September, the company acquired the remaining 59,390 Chips Ltd.

common shares in exchange for 40,675 newly issued convertible redeemable 10 percent preferred shares of SHL, issued at $9 per share.

The fair value of net assets acquired was listed at $2,423,708, consisting of assets of $3,159,437 and liabilities of $735,729.

The $5,003,904-excess of total consideration of $7,427,612 over the fair value of the net assets acquired has been capitalised as purchased goodwill.

The sale of the old Chips building on Laffan Street, now occupied by Bermuda Cablevision, netted $730,000.

SHL is in the process of taking over 1,350 square feet of space at the corner of Reid and Burnaby Streets, formerly occupied by Triminghams Too. A decision is imminent on whether or not they will retain their presence in the Washington Mall.

The move is seen as an opportunity for corporate expansion that will provide for the sale of bigger ticket items. They have also resolved to increase warehouse space by next month.

The report declared: "Subsequent to the purchase of Chips Ltd. and the completion of the IPO, management made the decision to accelerate the merger of the two operating companies with the belief that the one-off and short-term incremental costs, though significant, would pave the way to superior customer service, operational excellence and long-term economies of scale.

"Against the backdrop of the Independence referendum, change in government leadership and the sluggish Bermuda economy, the distractions and challenges were significant.'' During the period to the end of the fiscal year, dividends of $809,079 were paid and $250,000 of non-voting redeemable 7.5 percent cumulative preferred shares were redeemed.

The company spent $125,000 in employee training during 1996 and intend to continue spending on training as an investment.

The company supports charitable causes and has earmarked $60,000 in academic scholarship funds over a four year period.

The company plans to improve equity, maximise shareholder return and enlarge market share.

Staples said established firms had "regirded themselves, and several newcomers have emerged. All are focused on capturing market share.'' Staples' key office products are copiers and fax machines made by Sharp and Ricoh. They also intend to aggressively market 3M products. A medical sales subsidiary is due to be launched at the beginning of October to order inventory and distribute medical supplies.

Said Mr. White: "Our staff is expected to grow. By the year 2000, only four years away, our five-year plan indicates that we will have grown from the current 65 staff to more than 100.''