New Image Group Limited: NEW
August 29, 2012
New Image experiences pain to achieve gain
Key FY2012 results (unaudited):
Full year FY12 revenues of $74.7 million (FY11 $75.8m)
EBITDA of Loss of $1.9 million (FY11 Profit $7.5m) and NPAT Loss of $6.1
million (FY11 profit $2.3m)
Underlying profit of $1.9m excluding non-recurring and one-off items
Shareholder funds $18.0 million (FY11 $23.0m), with an equity ratio of 46.9%
(FY11 52.9%).
No final dividend will be paid.
SUMMARY OF RESULTS
The Directors of New Image Group Limited (NEW) report the group''s operating
result has been negatively impacted by one-off charges and impairment
write-downs.
The unaudited final result, of revenues of $74.7 million and an underlying
profit of $1.9 million, is slightly ahead of the group''s advice to the market
in May. This follows total revenue in the second half increasing by 2.4%,
compared with the same period last year as the company''s strategies for
growth started delivering.
However, combined with a relatively soft first half, the overall revenue for
2012 was nearly flat with the previous year ($75.8m).
Impairment charges have been recognised on the company''s investments in
Living Nature ($1.8m), Sleep Time product ($0.5m) and on inventory as a
result of the failure of the manufacturing relationship with Natural Dairy
($1.0m). In addition, the wind-up of the executive share scheme resulted in
one-off costs of $0.6m.
Executive Chairman Graeme Clegg says the net profit after tax (NPAT) loss of
$6.1m, which includes a tax expense of $1.4m on income earned outside New
Zealand, is disappointing. However, the final result covers planned
restructuring of the business and consolidating the group''s manufacturing
base to build a profit centre in New Zealand.
REVIEW OF OPERATIONS
Direct Selling
Taiwan and Malaysia continue to make up approximately 90% of the Direct Sales
operations. Total direct selling revenue was $55.9m, down 10.8% on last
year. The strengthening New Zealand dollar impacted negatively on reported
revenue, as local currency revenue was only down 6%. Both key markets
experienced difficult trading conditions, although a new product launch in
Malaysia late in the financial year boosted that market.
Taiwan revenue was down 8.5% (4% in local currency terms) to $31.1m (FY11
$34.0m) after strong growth the previous year. Malaysia revenue was down
14.5% (9% in local currency terms) to $19.4m (FY11 $22.7m).
Retail/Wholesale
The retail and contract manufacturing business has again showed good growth
with revenue for the year of $18.8m (FY11 $13.1m), up 43.5% on prior year.
The consolidation of the group''s manufacturing base, includes capital
expenditure on the new spray dry milk powder plant at Paerata and a
can-making line installed in the Penrose factory.
Living Nature
The group is required to write down $1.8 million against its Living Nature
asset. The business has been restructured in the past few months with New
Image now taking full control of the company and action is being taken to
revamp the presentation of the product and launch in new international
markets, in particular USA and Hong Kong. New marketing opportunities are
being pursued to increase customer awareness of the product range to gain the
increased sales required to make this company a contributor to group profits.
The range of products manufactured under the BioRejuv brand by Living Nature
is being revamped to distribute it through the Direct Selling network. .
OUTLOOK
The Directors believe the company is now well positioned to take advantage of
the growing demand for dairy based products throughout Asia. Restructuring
during 2011-2012 coupled with capital expenditure on manufacturing plant has
delivered not only valuable manufacturing assets, but also a solid platform
for growing revenue.
Revenue in the first months of the new financial year is up on the previous
year.
The retail/wholesale division is dealing with key Asian customers who are
looking for the credibility and manufacturing integrity associated with an
experienced and fully compliant New Zealand manufacturer and exporter.
Infant Formula is a highly specialised business with varying compliance and
regulatory regimes. New Image is well advanced and now has significant
experience in key markets in meeting these requirements, working with a
pipeline of customers.
The direct selling division is continuing develop in key markets and expects
to see continued strong growth from Malaysia in the coming financial year.
Further guidance will be provided at the Annual General Meeting which will
take place in Auckland on 29th November. New Image''s Annual Report is due to
be released in late September.
Ends
For further information, contact:
Graeme Clegg?Executive Chairman?New Image Group Limited?Tel: +64 9 622
2388?Mob: +64 21 372 378
Media
Felicity Anderson
Trio Communications
Tel: +64 9 307 2213
Mob: +64 21 22 40 520
Email: felicity@triocommunications.co.nz
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