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Directors Report to Shareholders for the Year ended 28 February 2009
Key Points - Group Net Profit after Tax (excluding non trading items) was $11.7 million (12.1 cents per share), up $1.4 million or 13% on prior year, mainly because of the strong result for KFC.
- Reported Net Profit (including non trading items â€“ primarily Pizza Hut impairment charges) was $8.3 million (8.5 cents per share) compared to $8.4 million in the prior year.
- Total revenues for the company were $309.6 million, up $5.6 million on prior year with same store sales up 1.6%.
- KFC achieved yet another sales record at $211.5 million (up 4.1% on a same store basis) with Starbucks Coffee flat at $33.0 million (up 3.6% same store). These were partly offset by lower sales of $64.6 million for Pizza Hut (down 6.5% same store).
- The KFC brand transformation continued its roll out with significant sales growth in the 34 transformed stores.
- Bank debt was down by $8.2 million (on top of the $6.1 million reduction in the prior year) as the company continued its debt reduction programme in the current economic environment.
- A final full year fully imputed dividend of 4.0 cents per share has been declared making a full year dividend of 7.0 cents, up 0.5 cents on prior year.
Note 1. Results for the 2008/9 financial year are on a 53 week basis vs 52 weeks for the previous year. Because the company normally uses a 52 week (364 day) year, a â€œleapâ€ year is occasionally required; hence an extra week.
Note 2. A change in the companys accounting policy with respect to prepaid advertising and promotional expense following its adoption of the amendment to accounting standard NZ IAS38 now requires all advertising material (including television advertisements) to be expensed at time of production. This has meant a restatement of last yearâ€™s result and all comparatives are based on these restated numbers. (The net result was an increase in NPAT for 2008/9 of $0.7 million and a corresponding decrease NPAT in 2007/8).
Group Operating Results Directors are pleased to announce that the 2008/9 year has continued to be one of improved profitability for the company, primarily driven by further strong performance by the KFC business, although some benefit was derived from a change in accounting policy on prepaid advertising expenditure arising from the adoption of an amendment to the Accounting Standard relating to advertising.
Net Profit after Tax (excluding non trading items) was $11.7 million (12.1cps) compared to $10.4 million (10.7cps) in 2007/8.
Non trading costs of $5.0 million, being primarily impairment charges against goodwill in the Pizza Hut business brought reported NPAT (including non trading items) to $8.3 million (8.5cps), compared with $8.4 million (8.6cps) in the 2007/8 year.
Total store EBITDA for the year was down $0.5 million to $43.7 million. KFCâ€™s improvement of $2.1 million to $38.0 million was completely offset by EBITDA reductions in Pizza Hut of $1.7 million and Starbucks Coffee of $0.9 million respectively.
Other significant improvements on prior year were in G&A (above store overheads) of $0.4 million and funding costs of $1.0 million.
Total sales of $309.1 million were up $5.6 million up on the previous yearâ€™s sales. Same store sales for the group were up 1.6% (3.4% in 07/8). Both KFC and Starbucks Coffee demonstrated continuing same store sales growth, up 4.1% (7.7% in 07/8) and 3.6% (4.0% in 07/8) respectively, but Pizza Hut New Zealand saw annual same store sales drop 6.5% (7.0% down in 07/8).
Year end store numbers at 219 were nine down on February 2008 following four Pizza Hut store closures (mostly as part of the red roof exit strategy), two Starbucks Coffee closures and three KFC closures (all at lease end). All closures have been margin positive.
KFC KFC again grew both sales and margins with the momentum of the continuing brand transformation. Total sales reached a new record of $211.5 million, up $12.4 million on prior year and 4.1% on a same store basis (on top of 7.7% same store growth in 2007/8).
A further four stores were rebuilt over the year bringing total rebuilt or refurbished stores to 34, over one third of the total network. Store numbers reduced to 84 with the closure of loss making stores at Wainuiomata, Manners Mall (Wellington) and Howick (Auckland) all at lease end.
Earnings were also up, with EBITDA improving by $2.1 million (5.8%) to $38.0 million (18.0% of sales). The brand continued to improve its operational controls and benefit from volume growth leverage, despite the impact of substantial chicken price and labour cost increases.
Pizza Hut The Pizza Hut business continued to face tough trading conditions with slow progress in arresting sales decline and building profitability. Sales of $64.6 million for the year were down 6.5% on a same store basis.
The impact of the sales deleverage, together with continued cost increases and limited opportunity to pass these on saw further margin deterioration with the brand producing an EBITDA result of $2.8 million for the year, $1.7 million down on prior year.
Pizza Hut continued to focus on margin management at lower sales volumes and improving sales in a very competitive environment. New product releases such as More-4-All and Triple Dippers helped address the sales decline as the year progressed with same store sales in the last quarter of only -1.2%.
Four stores closed over the course of the year. These comprised two red roof restaurants in Tauranga and Invercargill as part of a wider exit strategy and two unprofitable delcos at Mana in Wellington and Mangere East in Auckland. Store numbers at year end totaled 93.
Starbucks Coffee Starbucks Coffee revenues were flat on prior year at $33.0 million with two store closures, but up by 3.6% on a same store basis. Two stores at Bayfair (Tauranga) and Pakuranga (Auckland) were closed (at lease end) over the year bringing store numbers at year end to 42.
Despite the satisfactory sales result, the Starbucks business was severely impacted by significant price increases for raw materials and continued increases in labour costs. The rapid deterioration in exchange rate significantly added to the cost of coffee and other imported materials. A number of initiatives are under way to address this problem for the new year.
The impact of higher costs on a flat sales base saw a reduction in EBITDA to $2.9 million, down 23.6% on prior year.
Corporate and Other Costs Above store overheads (G&A costs) at $10.6 million were down $0.4 million on prior year and are running at 3.4% of sales compared with 3.6% in 2007/8 and 3.8% in 2006/7. Reductions in staff costs accounted for most of the saving.
With a slowing of the tempo in KFC transformation capital expenditure depreciation charges for the year were held at a similar level as the previous year at $12.4 million.
Non trading charges of $5.0 million included $0.5 million in fixed asset write offs arising from the KFC transformation programme, $0.4 million in write offs from Pizza Hut store closures (largely red roofs) and a further $3.7 million in Pizza Hut goodwill impairment charges following a review of the carrying value of this investment.
Interest and funding costs at $3.9 million were $1.0 million down on prior year with the company benefiting from both lower debt levels and the continued fall in interest rates.
Cash Flow and Balance Sheet Despite the increase in reported profit, operating cash flows for the year at $23.3 million were down on prior year. This was largely because of working capital movements and increased taxation.
Investing cash flows of $8.1 million were $10.4 million down on prior year, reflecting a reduction in the pace of KFC transformation spend as the company faced up to the current economic environment and reached its contracted $35 million target with Yum. The capex levels in 2007/8 also had $3.1 million in franchise renewal fees that were not repeated in the current year.
The improved free cash flow position has meant that total bank borrowings reduced by $8.2 million over the year (in addition to the $6.1 million reduction in 2007/8) with closing bank debt of $34.3 million, well within current facility limits of $55 million.
Total assets at $101.1 million were down on the $112.0 million at last year end, reflecting the $3.7 million in Pizza Hut impairment charges and the differential between lower capital spend and depreciation expense over the year.
Franchise Renewals The company is close to finalising an agreement with Yum that will provide a positive way forward for the Pizza Hut business. An announcement is expected to be made within the next month.
Change in Accounting Policy With the issue of an amendment to NZ IAS38 (Intangible Assets) the company reviewed its policy on prepaid advertising expenditure. Whereas it previously treated expenditure on the development of advertising material such as television advertisements as a prepayment and spread the cost over the life of the advertisement, it now expenses these costs at the time the advertisement is made. This resulted in a transfer of these costs between the 2007/8 and 2008/9 years with a consequent restatement of last yearâ€™s trading results. The net impact in the 2008/9 year is an improvement in Net Profit After Tax of $0.7 million (and a corresponding reduction in the prior year result).
Directors After eight years on the board, Shawn Beck has decided to stand down as a director at the Annual Shareholdersâ€™ Meeting in June. The board acknowledges the excellent contribution he has made to the company during this time.
Dividend The company has produced an adequate overall performance for the current year (despite some continuing issues in the Pizza Hut and Starbucks operations). Directors believe that the continuing improved performance of the company should be reflected in an increased return to shareholders and have accordingly declared a final dividend of 4.0 cents per share. This brings the total dividend for the year to 7.0 cents from 6.5 cents last year.
The dividend will be paid on 26 June 2009 to all shareholders on the register as at 12 June 2009. A supplementary dividend of 0.70588 cents per share will also be paid to overseas shareholders on that date.
The dividend will be paid as fully imputed.
The dividend reinvestment plan will remain suspended for this dividend.
Outlook Whilst this year's trading results must be considered satisfactory in the current environment and continue to show improvement over the past two year's performance, directors remain cautious as to next year's outcomes.
Investment in the KFC brand transformation programme will continue (together with pursuing new store opportunities) and this business is expected to continue to deliver sales growth.
Pizza Hut is expected to return to positive same store sales growth over the year, but continued competitive pressures and cost increases will limit any significant profit recovery. The company will be evaluating some potential store sales to independent franchisees and will continue its programme of unprofitable store closures, particularly of the red roof stores.
Starbucks Coffee is expected to continue its steady same store sales growth and produce a margin improvement on the current year.
The 2008/9 year has seen some profit improvement driven purely by the KFC business. Continued improvement in bottom line results requires this momentum to be sustained and both of the other brands to demonstrate a solid turnaround in their bottom line performance. This will not be easy in the current environment.
Restaurant Brands has demonstrated resilience in economic downturn and this is expected to continue, however given the current uncertain climate and existence of continued cost pressures, directors are expecting a similar profit performance in the new financial year.
For further information please contact:
Russel Creedy Grant Ellis CEO CFO/Company Secretary Phone: 525 8722 Phone: 525 8722
RESTAURANT BRANDS GROUP Consolidated Income Statement Restated 28 February 2009 vs Prior 29 February 2008 Audited % Audited $NZ000's
Ratios Net Tangible Assets per security (Net Tangible Assets divided by number of shares) in cents 12.7c 5.9c
* Pizza Hut Victoria is a discontinued operation
Cost of Goods Sold are direct costs of operating stores: food, paper, freight, labour and store overheads Distribution Expenses are costs of distributing product from store Marketing Expenses are call centre, advertising and local store marketing expenses
General & Administration Expenses (G&A) are non store related overheads
Disclosure of Relevant Interests by Directors and Officers.pdf
Directors' Report to Shareholders for the year ended 28 February 2009.pdf
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HALFYR: SKC: Summary half year to 31/12/08 $54.8m ($1.3m) +4,156%, 9.0 cps
SUMMARY OF PRELIMINARY HALF YEAR ANNOUNCEMENT
Name of Listed Issuer: SKYCITY Entertainment Group Limited
For half year ended: 31 December 2008
CONSOLIDATED OPERATING STATEMENT Current Half Year NZ$’000; Up/Down %; Previous Corresponding Half Year NZ$’000
Total Revenue: $422,101; up 0.1%; $421,615
OPERATING SURPLUS BEFORE UNUSUAL ITEMS AND TAX: $73,611; down 10.9%; $82,616
Unusual items for separate disclosure: $0; down 100%; $60,000 Cinemas write-down
OPERATING SURPLUS BEFORE TAX: $73,611; up 225% (3.25 times); $22,616
Less tax on operating profit: $18,790; down 14.6%; $21,992
OPERATING SURPLUS AFTER TAX ATTRIBUTABLE TO MEMBERS OF LISTED ISSUER: $54,780; up 4,156%; $1,287
Extraordinary items after tax attributable to Members of the Listed Issuer: $0; nil%; $0
OPERATING SURPLUS AND EXTRAORDINARY ITEMS AFTER TAX ATTRIBUTABLE TO MEMBERS OF THE LISTED ISSUER: $54,780; up 4,156%; $1,287
Earnings per share: 11.6 cps; 0.3 cps
Interim distribution: 9.0 cps
Record Date: 4 March 2009. Date Payable: 27 March 2009
Half Year Results Announcement
Underlying Net Profit after Tax of $55.6 million
- Relatively resilient performance from New Zealand operations in spite of challenging economic environment - Solid performance from Australian casinos - Focus on prudent capital and debt management - 9.0 cents per share first half distribution - Future distribution payout ratio to be eased back to 60%-70% to retain capital for debt retirement
SKYCITY Entertainment Group today announced an underlying net profit after tax of $55.6 million for the half year ended 31 December 2008, compared to $55.9 million for the first half last year. Reported net profit of $54.8 million for the half year ended was well ahead of reported net profit for the previous half year of $1.3 million which was impacted by the Cinemas write-off.
Chief Executive Officer Nigel Morrison said: “Overall we view this as a satisfactory result.
“However, like others we’re cautious in our outlook in relation to the economies of both New Zealand and Australia, and our future performance will be influenced by how these economies unfold.
While underlying revenues were up 3% on prior year to $422 million, underlying EBITDA was down 1.5% from $152 million to $150 million, partially reflecting the increasing costs of operation and generating revenues in a more challenging economic environment.
New Zealand “There is no doubt that the economic environment in New Zealand is challenging. Focusing on revenue growth, we’re satisfied with the results achieved in Auckland particularly in the second quarter.
Both hotels in Auckland have to date maintained strong occupancy and conventions and events strategies have been successful in delivering sustained revenue flows.
“One of the major challenges facing the Auckland casino has been to improve the performance of the gaming machines business. Second quarter revenues from gaming machines improved following a significant re-layout and re-design of product, and focus on enhanced customer services.
“The cost of growing revenue whilst still providing value has seen margins soften somewhat, but, on balance, we’re satisfied with the performance of our Auckland property in the current environment.
The earnings from our other New Zealand interests (Hamilton, Christchurch and Queenstown) were steady with last year.
Australia “We’re pleased with the performance of our Australian businesses and the revenue growth achieved in both Adelaide and Darwin.
“Our Adelaide property has been a solid performer, delivering a 3% revenue growth and an 18% growth in EBITDA, in spite of the introduction of full smoking bans in November 2007.
“Darwin results are also encouraging with reasonable revenue growth achieved despite the extensive disruption from the stage 1 expansion, which concluded last week with the opening of the new Platinum VIP room and ‘Sandbar’ destination bar, following the earlier opening of our now acclaimed Italian restaurant ‘il Piatto.’ We look forward to a successful forthcoming dry season in Darwin with these exciting new additions.”
Cinemas “The Cinemas result has been pleasing with first half revenues up 15% and EBITDA up 25%. Our new management team is working hard to grow revenue, seen recently with the introduction of both Bollywood and Asian cinema movies into the Auckland market. New Auckland cinemas (10 screen complexes at Albany and Manukau) consolidate SKYCITY’s dominant exhibition position in Auckland (market share increase to over 65%).”
International Business Our International Business turnover levels have softened by 16% to $640 million, with our win rates substantially less at 1.3% (being at theoretical) compared to 3.2% last year. As a result of the very high win rate last year, gaming revenues from our International Business were down from $21.9 million last year to $7.6 million this year.
“The higher than theoretical win rate in 1H08 distorts the actual reported comparison to 1H09 which was in line with theoretical, but is adjusted for in determining underlying earnings.”
Capital Management Whilst SKYCITY has a sound balance sheet and debt position and is well placed to deal with the challenging environment which will confront businesses during the economic downturn, we have increased our focus on cautious and conservative capital management. To this end we are tightly controlling capital expenditure and have reviewed our future shareholder distribution policy.
In addition to the long-term debt facilities in place, SKYCITY has a $500 million unused but committed facility available from its senior banking syndicate.
Interim FY09 Distribution Consistent with our focus on prudent capital management, SKYCITY has declared an interim tax-effective profit distribution of 9.0 cents per share, payable on 27 March (record date 4 March). The 9.0cps distribution will be made via shares issued under the company’s Profit Distribution Plan (PDP) with cash buyback option. In addition, a 2.5% discount on the distribution shares will be provided to shareholders. This current distribution of 9.0cps represents an effective annualised pretax yield of approximately 9.5% at current share price levels.
Future Distributions Going forward, SKYCITY plans to reduce its distribution payout ratio to between 60%-70% of net profit after tax to retain additional capital for debt retirement.
Outlook “We are cautious about the balance of the 2009 financial year and our future performance will be influenced by how the New Zealand and Australian economies unfold. However our core operations objective for 2009 remains unchanged, that being to maximise the potential of our existing assets. Success for us lies in generating even more reasons to visit and our central focus for the six months ahead and beyond will be to ensure that we’re the entertainment destinations of choice in the cities in which we operate” said Mr Morrison.
Key Data - Normalised (Underlying) NPAT $55.6m (1H08 $55.9m) - Normalised earnings per share 11.7cps (1H08 12.2cps) - Reported NPAT $54.8m (1H08 $1.3m after Cinemas write down) - Group revenues up 0.1% at $422.1m (1H08 $421.5m) - Normalised (Underlying) EBITDA $149.7m (1H08 $152.0m) - Reported EBITDA $148.5m (1H08 $158.7m) - Debt balance reduced from $988m at 30/6/08 to $964m at 31/12/08 - Interim distribution 9.0cps under Profit Distribution Plan with 2.5 discount on bonus shares, payable on 27 March 2009 to those shareholders on the company’s share register on 4 March 2009.
For further information please contact:
Alistair Ryan Chief Financial Officer Phone +64 9 363 6247 Mobile +64 21 649 102
Final Dividend: Gross amount per share 3.50 cents Imputed amount per share 3.50 cents
Record Date: 9/04/2009 Payment Date: 01/05/2009 Imputation tax credit: $0.017239
The directors of Briscoe Group Limited announce an audited net profit after tax (NPAT) of $11.63 million for the year ending 25 January 2009
The result incorporates a second half NPAT of $8.54 million (last year $11.91 million), which represents a significant improvement on the NPAT of $3.09 million (last year $10.53 million) for the first half of the 2008-09 year. While in the current environment this was a reasonable performance for the second half, it is still a disappointing result for the full year when compared to the $22.44 million reported for the previous year.
The directors have resolved to pay a final dividend of 3.50 cents per share (cps). This compares to last year’s final dividend of 4.50 cps. The dividend is fully imputed and, when added to the interim payment of 1.00 cent per share, brings the total dividend for the year to 4.50 cps (previous year 8.00 cps) and represents 82% of the Group’s NPAT.
The final dividend will be paid on 1 May 2009. The share register will close to determine entitlements to the dividend at 5 pm on 9 April 2009.
The earnings were generated on sales revenue of $388.47 million, a decrease of 4.7% on the $407.75 million reported in the previous year.
The Group’s gross profit decreased 8.9% from $164.83 million to $150.09 million for the year, equating to a gross profit margin of 38.6% compared to 40.4% for the 2007-08 year.
Earnings before interest and taxation (EBIT) declined 52.4% from $31.77 million for 2007-08 to $15.11 million for the 2008-09 year.
Group Managing Director, Rod Duke, said “This year certainly proved difficult, in challenging trading conditions. We were very disappointed with our first half result and were determined to return a much stronger performance for the second half. During this period we micro-managed inventory levels and continually reviewed costs and processes to eliminate wastage. A combination of both cost reductions and efficiency improvements were made in many areas across the company including marketing, store operations and buying. We head into the new financial year with very clean inventories, and a refined management structure that is up for the likely challenges of what is clearly going to be another tough year for retailers.”
Total floor area of the Group’s homeware operations increased by 2.6% to 94,602 square metres across 57 stores. This reflected the opening of a Briscoes Homeware store in Masterton, three new Living and Giving stores in Invercargill, Atrium in Auckland City, Queensgate in Lower Hutt,and the closure of the Living and Giving store in Bayfair. The number of sporting goods stores remained unchanged at 32 with a total floor area of 53,714 square metres.
On a same-store basis, sales declined for the year by 6.66% for the Group. The homeware and sporting goods segments returned same store sales declines of 5.75% and 8.64% respectively.
During the year $2.95 million of capital investment was made including for the fit-out of four new stores and one store refurbishment across the Group.
Inventories totaled $57.46 million at year-end, being a $10.37 million decrease on last year, reflecting the focus on aligning inventory levels to the reduced consumer demand experienced as a result of the economic downturn.
Cash and bank balances as at 25 January 2009 were $63.29 million, compared to $49.36 million as at 27 January 2008.
Net cash inflows from operating activities were $28.10 million, $5.43 million above those of last year, primarily as a result of decreased income tax payments due to lower profits and a change in dates for provisional tax payments.
Net cash outflows from investing activities were $2.90 million reflecting investment made during the year in store fit-outs.
The results are for the period from 28 January 2008 to 25 January 2009.
Rod Duke said, “We are not counting on much (if any) improvement in the retail market over the coming year, but with the initiatives we have taken over the last six months in particular, we have positioned ourselves to improve our operating and financial performance. We are confident that Briscoe Group will strengthen its position as New Zealand’s leading retailer of homeware and sporting goods.
”Our store opening programme for 2009-10 remains on a lesser scale than for past years. A new Living & Giving store in Riccarton is planned to open in mid-May and we continue to look for opportunities in the main centres to enable us to replicate the success of our larger format Briscoes Homeware store at Panmure. .
“We are very aware of the uncertain and unpredictable nature of our market sectors. We take the view that success will ultimately be delivered by ensuring that the fundamental rules of retailing are focused on. Inventory management, in-store delivery and cost control will continue to be our key priorities. Important projects already commenced during this year will continue to ensure we are as efficient across all business processes as possible and that costs are managed closely.
“On behalf of the Board I would like to acknowledge the huge contribution again, from all the team across the Group and thank them for their continued support and effort over the past 12 months.”
Monday 16th March 2009
Contact for enquiries:
Rod Duke Group Managing Director Tel: (09) 815 3737
BGR - 1st Quarter Sales to 26 April 2009.pdf
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This report has been prepared in a manner which complies with generally accepted accounting practice and gives a true and fair view of the matters to which the report relates and is based on unaudited financial statements. These financial statements have been subject to an independent review by our auditors, PricewaterhouseCoopers.
CONSOLIDATED INCOME STATEMENT
Current Half Year NZ$'000: Up(Down)%; Previous Corresponding Half Year NZ$'000
OPERATING REVENUE: 177,392; 10%; 161,897
PROFIT BEFORE INTEREST AND INCOME TAX 31,492; 1%; 31,291
Net Interest & finance costs: 8,402; 25%; 6,754
Income tax: 6,198; (20%); 7,772
NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS 16,892; 1%; 16,765
Earnings per share: 13.12; 13.04
Interim Dividend (fully imputed) 8.0 cps; 9.5 cps Record date: 13 March 2009 Payment date: 31 March 2009 Appendix 7 is attached.
Detailed information: The Half Year Report December 2008 and presentation are attached and can also be located in the Investor Relations section of Freighways' website (http://www.freightways.co.nz).
HALF YEAR REVIEW From the Chairman and Managing Director
The Directors are pleased to present the financial results of Freightways Limited (Freightways) for the half year ended 31 December 2008. Freightways has delivered a sound result from its express package and business mail division and an outstanding result from its growing information management division. This result once again demonstrates the resilience of Freightways’ business model, the strength of its brand positioning and the importance of the successful execution of its strategic growth decisions in recent years.
Naturally the current economic downturn is impacting Freightways in various ways. This impact is discussed throughout this report in relation to each segment of Freightways’ operations.
Consolidated operating revenue of $177 million for the half year was 10% higher than the prior corresponding period.
Earnings before interest, tax, depreciation and goodwill amortisation (EBITDA) of $36 million for the half year was 3% higher than the prior corresponding period, while earnings before interest, tax and goodwill amortisation (EBITA) of $32 million for the half year was 1% higher than the prior corresponding period.
Consolidated net profit after tax (NPAT) of $17 million for the half year was 1% higher than the prior corresponding period.
Cash generated from operations before interest and tax of $33 million was 3% higher than the prior corresponding period.
The Directors have declared an interim dividend of $10.3 million which translates into 8.0 cents per share, and will be fully imputed at a tax rate of 33%.When determining the 2009 interim dividend Directors have given particular consideration to: - the current economic downturn, which has resulted in modest overall earnings growth, constrained by lower activity from some existing customers, and the difficulty in accurately forecasting near term operating performance; and - the overall funding requirements of the business, including the company’s investment in two significant capital projects during 2009 to provide future capacity for its operations and the completion of the acquisition of several businesses. These investments add immediate inherent value and are also expected to contribute to future growth in earnings, however they have naturally required an immediate stepped cash outlay for a future incremental cash benefit.
The Directors have therefore elected to take a more conservative approach than has been normal in recent years when determining the level of dividend to be paid for this interim period. This decision is considered prudent and appropriate at this stage of the year. In looking forward it is difficult to determine the impact of the economic turmoil on Freightways’ operating environment. Due to this uncertainty, Freightways will publish in April a Trading Update that will provide high level financial results for the third quarter. The interim dividend will be paid on 31 March 2009. The record date for determination of entitlement to the dividend is 13 March 2009.
REVIEW OF OPERATIONS
Express Package and Business Mail
The core express package business contributes the majority of Freightways’ revenue and earnings. Freightways operates the brands of New Zealand Couriers, Post Haste Couriers, Castle Parcels, NOW Couriers, SUB60, Security Express and Kiwi Express.
The earnings performance of Freightways’ express package business is slightly below the prior corresponding period.
The current economic downturn has translated into lower express package volumes from some of Freightways’ existing customers. In addition, volumes are continuing to fluctuate markedly month to month which creates difficulties when planning near term capacity.
Freightways first saw signs of slowing activity from existing customers in 2006. Since that time it has strengthened its competitive positioning through various acquisitions and alliances, introduced new service lines, implemented new customer interfacing technologies, increased the training and subsequent depth of knowledge and experience amongst its team of people, continued to improve its service quality and sought productivity gains wherever possible. While in recent years costs have been difficult to contain, particularly in regard to labour, occupancy and fuel, these pressures have started to abate in recent months. The success of the many initiatives associated with each of the above points has resulted in excellent customer retention, increased market share, pricing improvement and is evidenced in the delivery of this half year result. While Freightways’ express package division will naturally continue to be impacted by reduced activity from some of its customers, it is very well positioned with a highly variable cost base, a shared-risk business model and very experienced and highly motivated teams of people.
Freightways’ express package strategy is to continue to defend and extend its presence in the express package market and to actively develop the market opportunities that are expected to materialise in this more challenging operating environment.
DX Mail operates in New Zealand’s postal services market. In recent years, DX Mail has developed its own street delivery network in a number of regions around New Zealand to complement its traditional box-to-box document exchange business. DX Mail has gained real traction in the market and won several important new customers. This market support demonstrates the value customers attribute to DX Mail’s provision of a competitive postal service to that of the Government-owned NZ Post. DX Mail is closely integrated with Freightways’ express package business that performs the majority of its pick-up services.
DX Mail’s earnings contribution to Freightways is relatively small. These earnings, while still at a reasonable margin, are well down on the prior corresponding period.
The current economic downturn has primarily affected DX with reduced letter volumes, most noticeably in its traditional legal, travel and finance markets. In addition, some volume has transitioned from physical letters to electronic communication.
Partially offsetting the impact of these issues has been the outstanding growth that DX Mail has consistently achieved since entering the general postal market. While this is a lower margin product than its traditional box-to-box product, the size of the market opportunity remains significant.
DX Mail’s strategy is to continue to profitably grow and develop its presence across the NZ postal market.
Freightways entered the information management market in 1999. Since that time it has grown to be the leading operator in New Zealand in two of its three primary service lines and the number two operator in its third service line. In 2006 Freightways entered the Australian information management market. Since that time Freightways has acquired other businesses and started its own businesses to now have a presence in every major state of Australia. While there remain further business development opportunities in each of its service lines, the success of this growth strategy to date has been important in assisting the diversification and strengthening of Freightways overall earnings profile.
The earnings performance of Freightways’ information management division is well ahead of the prior corresponding period. In particular, growth in all service lines has remained very positive throughout the half year.
The current economic downturn has not had any noticeable effect upon either the data or document storage service lines. Demand for these services is expected to continue to grow due to businesses seeking to free up expensive office space by outsourcing document storage, businesses needing to professionally manage the growing volume of business information they are generating and businesses needing to meet their ever-increasing compliance requirements.
In regard to the document destruction service line, revenue is earned firstly through ‘service revenue’ related to the pickup, collection and secure destruction of paper and secondly through ‘paper sales revenue’ from the sale of the related paper to the recycling market. The current economic downturn has resulted in reduced global demand for recycled paper which has subsequently resulted in reduced prices for some of the paper sold by Freightways to recyclers. For this reason, Freightways’ New Zealand paper sales revenue is expected to decline in the second half of this financial year. Australian paper sales revenue is not expected to decline due to contracts which are in place until at least June 2009 and due to the majority of paper generated in Australia being used domestically rather than being exported. The majority of Freightways’ New Zealand volumes are exported.
A range of initiatives to offset the impact of lower paper prices for recycled paper are currently being implemented. These include sourcing alternative buyers, market pricing initiatives, stockpiling high grade paper in the expectation of improved prices in the near term and simplifying processes to sort paper into those specific grades where commercial demand remains, which in turn contributes to labour efficiencies. As demand for recycled paper returns it is expected that prices will recover. Overall the benefit of these offsetting initiatives will mean the impact on Freightways of lower paper sales revenue through until June 2009 is not expected to be material.
Having successfully established a sound operating platform across New Zealand and Australia, Freightways’ information management strategy is to now leverage this platform to realise the positive growth opportunities that exist in this market, including the introduction of new service lines, while continuing to seek out and investigate potential acquisition opportunities.
The information management business has contributed 18% of Freightways’ total operating earnings in this half year. The performance of this division has been outstanding.
Internal service providers
Fieldair Holdings Limited provides airfreight linehaul services, Parceline Express provides road linehaul services and Freightways Information Services provides IT support to the Freightways front line express package and business mail businesses. All three internal service providers have continued to deliver exceptional service.
Corporate costs have increased year on year, primarily to assist and support our Australian expansion.
Freightways’ finance facilities were re-negotiated in August 2007 and extend out to November 2010. Freightways has benefited from a lower NZ business tax environment and a lower cost of funds as interest rates have declined in recent months. The full benefit of lower interest rates has been impacted by the unfavourable, non-cash charge of $0.6 million relating to the accounting treatment required under NZ IFRS for certain financial instruments. Freightways hedges a significant portion of its current and forecast bank borrowings. As interest rates have declined Freightways has progressively increased its level of long-term hedging in particular, to ensure lower rates on offer today are locked in for the long-term benefit of the company.
The current economic downturn has not affected Freightways’ ability to finance its operations or growth initiatives. As Freightways seeks to renegotiate its finance facilities in the future, indications are that bank margins may increase, offsetting some of the benefit of lower interest rates.
Freightways has a very large customer base that is spread over many industry sectors which minimises its exposure to a single business or industry failure. While the risk of bad debts has increased for all Freightways businesses, its credit management policies and processes are well established with its customers and a material increase in its provision for doubtful debts is not anticipated at this stage. Credit control is actively managed across all Freightways businesses.
Freightways’ express package and business mail division is expected to continue to perform soundly overall, although fluctuating month on month volume such as has been experienced through until December 2008 makes it difficult to accurately forecast near term performance. Customer activity will ultimately determine volumes and revenues. Cost increases are expected to moderate in the near term across most expense lines.
Freightways’ information management businesses, both in New Zealand and Australia, are expected to continue their positive development. The completion of two significant developments in Queensland and Wellington during 2009 to provide increased capacity has contributed to a one-off stepped increase in Freightways’ capital expenditure. These new facilities will result in a near-term margin reduction, as will lower paper sales revenue, however overall earnings are expected to continue to increase as the benefit of growth initiatives are realised.
In recent years, Freightways has strengthened its earnings profile by diversifying its activities both geographically and deeper into the information management market. Freightways will continue to seek and investigate growth opportunities to support this strategy and will also explore other opportunities that complement its core capabilities.
Freightways will continue to be affected by the current economic downturn. In the medium to long-term, Freightways is exceptionally well positioned to reap the benefits of any improvement in the marketplace.
In a challenging operating environment, Freightways has delivered a sound result. Its core express package business has performed well and its information management business has delivered outstanding performance. This result has enabled Directors to declare the payment of an interim dividend of 8.0 cents per share, fully imputed at a tax rate of 33%. In light of the exceptional times we are currently operating in, a Trading Update will be provided in April to inform the market of third quarter results. Freightways expects to continue achieving positive performance for its shareholders and other stakeholders, subject to business factors beyond its control.
The Directors acknowledge the outstanding work and ongoing dedication of the Freightways team in this very difficult trading environment.
FRE - Disclosure of beginning to have substantial holding.pdf
FRE - Freightways Announces Capital Raising.pdf
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Reporting Period: 28 July 2008 to 25 January 2009 Previous Reporting Period: 30 July 2007 to 27 January 2008
CONSOLIDATED OPERATING STATEMENT 2009 Half Year Performance
REVENUE $923.490 million versus $950.588 million in 2008, a decrease of 2.9 %
OPERATING PROFIT $84.246 million versus $83.293 million in 2008, an increase of 1.1 %
EARNINGS BEFORE INTEREST AND TAX $74.503 million versus $92.247 million in 2008, a decrease of 19.2 %
PROFIT BEFORE TAX $69.610 million versus $89.542 million in 2008, a decrease of 22.3 %
PROFIT ATTRIBUTABLE TO PARENT SHAREHOLDERS $48.968 million versus $64.279 million in 2008, a decrease of 23.8 %
EARNINGS PER SHARE 15.9 cents per share versus 20.8 cents per share in 2008, a decrease of 23.6 %
Interim Dividend: 15.5 cps Record Date: 03 April 2009 Date Payable: 21 April 2009
Tax credits on interim dividend: Fully imputed for New Zealand residents; Supplementary dividend payable to non-residents.
THE WAREHOUSE GROUP ANNOUNCES INTERIM RESULTS
Earnings and Dividend Maintained
Auckland, 12 March 2009 – The board of The Warehouse Group today announced a net profit after tax for the half year ended 25 January 2009 of $56.8 million excluding unusual items, equal to the same period last year.
Net profit after tax attributable to shareholders was $49.0 million compared to $64.3 million last year. During the period a charge of $7.4 million after tax was taken in respect of the previously announced exit from fresh food and liquor.
Group sales for the half year were $923.5 million, down 2.9%.
The Directors have declared an interim dividend of 15.5 cents per share, unchanged from last year.
In announcing the result, Chairman Keith Smith says, “Given present economic circumstances this is a pleasing operating result and the company remains in a very strong financial position. The board is also very pleased to be able to maintain its dividend at a time of significant economic uncertainty”.
The Warehouse reported sales of $833.8 million for the half year, down 2.2% with same store sales down 2.0%. Second quarter same store sales were down 1.8%.
Operating profit for the half year was up 2.3% to $81.2 million.
Commenting on The Warehouse result Group Chief Executive Officer, Ian Morrice says that “changes we’ve made in response to the economic downturn have been effective in enabling us to compete vigorously and improve our market share position whilst maintaining margins. So long as the prospect of higher unemployment and low consumer confidence remains, the retail environment will continue to be challenging. Going forward we will continue to reinforce our price leadership position and provide for customers’ everyday needs”.
Subject to any further material adverse change in operating conditions the Directors expect adjusted net profit after tax for the full year to be similar to adjusted NPAT for F08.
Dividends will be paid on 21 April 2009 with the entitlement date being 3 April 2009.
Background: The Warehouse Group Limited
The Warehouse Group Limited comprises 85 Warehouse stores and 45 Warehouse Stationery stores in New Zealand. The company has a turnover of $1.7 billion and employs over 8,000 people.
Contact details regarding this announcement:
Investors and Analysts Luke Bunt Chief Financial Officer Telephone: +64 21 644 882 Media Ian Morrice, Group CEO to be contacted via Wendy Irving on +64 9 488 3231 Related Attachments
WHS sales report - 8 May 2009.docx
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HALLENSTEIN GLASSON HOLDINGS LIMITED RESULTS FOR ANNOUNCEMENT TO THE MARKET
Reporting period 6 months to 1 February 2009 Previous reporting period 6 months to 1 February 2008
Amount ($000's) Percentage change Revenue from ordinary activities:$95,713 -2.8% Profit from ordinary activities after tax attributable to security holders:$5,481 -40.7% Net surplus attributable to security holders: $5,481 -40.7%
Final Dividend Amount per security: Imputed amount per security: 10 cents; 4.92537 cents Record Date: 9 April 2009 Dividend Payment Date: 17 April 2009
The directors advise that unaudited net profit after tax for the 6 months ended 1 February 2009 was $5.481 million, down -40.7% on the prior year ($9.237 million). The result confirms guidance issued on the 4th February 2009. Group sales were $95.713 million, down -2.8% on the prior year ($98.500 million).
The retail environment has been exceptionally difficult, and the quest for the consumers’ dollar has been at the expense of margin. We have found it necessary to aggressively promote in order to maintain market share and ensure inventory levels are managed effectively. The gross profit on sales was 53.3%, down 2.7 points from 56.0% for the previous period. Notwithstanding a disappointing result, the group balance sheet remains very strong. Inventory levels at $12.180 million were below the prior period level of $16.678 million, again demonstrating the group’s ability to manage inventory.
During the 6 months period to 1 February 2009 a total of 3 new stores were added. In Australia Glassons opened a new store in August 2008 at Doncaster in Melbourne, and in New Zealand a further Glassons store was opened in late November at Blenheim. The Storm chain opened its fourth store at Milford (Auckland) in October 2008.
Further New Zealand site opportunities are being reviewed for each chain, and Hallensteins will open a new store in Masterton in late March 2009.
Future Outlook The retail environment is extremely difficult to predict. Rising unemployment and concerns over job security are clearly having a dampening effect on demand, yet falling interest rates, reduced taxes, and lower petrol prices are having a counterbalancing effect. Same store sales for the first 7 weeks of the winter season have been +7% on last year, but sales have been achieved on a lower gross margin than last year so that overall profitability is marginally below last year. These results indicate some resilience, but the key winter trading months have yet to come and it is much too early to make any pronouncement on earnings for the current period.
Dividend The directors have resolved to pay an interim dividend of 10 cents per share (last year 17 cents). The dividend will be fully imputed at the 33% tax rate or 4.925 cents per share. The dividend will consume $5.965 million dollars from total cash reserves of $20.275 million as at 1 February 2009.
The interim dividend will be paid on 17th April 2009 for shareholders registered as at 5pm 9th April 2009.
Release comment Feb 09.pdf
HLG - Appendix 7 Feb 09.pdf
HLG - Hallenstein Glasson 2009 Annual Report.pdf
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Reporting Period 6 months to 31 December 2008 Previous Reporting Period 6 months to 31 December 2007
Percentage Amount Change $NZ'000 % Revenue from ordinary activities 226,976 8.5% Profit from ordinary activities after tax attributable to members 65,614 236.8% Net profit for the period attributable to members 65,614 236.8%
Imputed Amount amount per security per security Interim dividend for half-year ended 31 December 2008 1.0c 0.428571c Record date 20 March 2009 Dividend payment date 2 April 2009
Michael Hill International Limited's accounts attached to this report have been reviewed and are not subject to any qualification. A copy of the review report applicable to the half year financial statements is attached to this announcement.
Profit Announcement Michael Hill International today announced an after tax profit of $65.614m for the six months ended 31 December 2008 compared to $19.480m for the previous corresponding period.
Summary of Key Points (all values stated in NZD unless stated otherwise) - Operating revenue of $226.976m up 8.5% - Same store sales 0.7% up on same period last year - EBIT of $21.317m down 30.8% on last year - Margin impacted by the 30% fall in the AUD:USD exchange rate in the last quarter of 2008 - US acquisition costs of $1.001m incurred in the period - US operating losses of $2.379m for the period - Restructure of group in December 2008 resulting in a deferred tax credit of $52.942m - Restructure consultancy costs of $1.162m expensed in the period - Net profit before tax of $17.892m down 37.2% on last year - Net profit after tax of $65.614m (includes the deferred tax credit of $52.942m) - 25 new stores opened during the six months, including 17 in the US, and 1 closed - Total of 234 stores open at 31 December 2008 - Fully imputed interim dividend of 1.0 cent per share
Reconciliation of profit before income tax for “abnormal” and “one-off” items 2008 2007 $000’s $000’s Profit before income tax 17,892 28,481 Add back: US acquisition costs 1,001 0 US trading losses for 4 months 2,379 0 Restructure costs 1,162 0 Margin loss on Xmas inventory orders due to fall in USD 4,274 0
“Adjusted" profit before income tax 26,708 28,481
New Zealand Retail Operations
The New Zealand retail segment revenue decreased by 7.6% to $49.585m for the six months with earnings before interest and tax (EBIT) of $6.846m, a decrease of 24.8% on the corresponding period last year. Same store sales during the six months decreased by 9.3% (last year 3.0% decrease). The operating surplus as a percentage of revenue decreased from 16.9% to 13.8%. Trading conditions continued to be difficult for the company throughout the six months as the economic conditions restrained retail spending. The company has focussed on cost control to limit the impact of reduced sales on the bottom line.
There were 53 stores operating in New Zealand as at 31 December 2008. - 1 new store opened in Masterton during the period.
Australian Retail Operations The Australian retail segment increased its revenue by 4.7% to A$125.068m for the six months with EBIT of A$15.504m compared to A$15.728m for the previous corresponding period, a decrease of 1.4%. Same store sales in local currency increased by 1.0% for the six months (last year 1.6% decrease). The operating surplus as a percentage of revenue decreased from 13.2% to 12.4%. The company is delighted at the performance of the Australian segment in light of such difficult trading conditions especially in the later part of the half.
5 new stores were opened in Australia during the period, as follows: - Toormina, NSW - Narellan, NSW - Marion, South Australia - Ballarat, Victoria - Bendigo, Victoria
One under performing store was closed during the period giving a total of 140 stores operating in Australia at 31 December 2008.
Canadian Retail Operations The Canadian retail segment improved its revenue 3.5% for the six months to C$13.966m. Same stores sales in local currency decreased 10.7% for the six months (last year 3.7% decrease). There was an operating loss of C$0.444m for the six months compared to a profit of C$0.387m for the previous corresponding period.
Trading conditions in Canada have been difficult throughout the 6 months due to the worsening economic climate in North America.
2 new stores were opened during the period: - Kildonan, Alberta - Pickering, Ontario
There were 24 stores open as at 31 December 2008.
US Retail Operations The company acquired 17 stores in Illinois and Missouri on the 3rd September 2008 from Whitehall Jewelers who were in Chapter 11 Bankruptcy. The US retail segment achieved revenue of US$4.091m for the 4 months and there was an operating loss of US$1.408m for the same period. Whilst trading conditions are difficult in the US the directors are still confident this acquisition represents a good opportunity for the future. There were 17 stores open as at 31 December 2008.
Group Restructure The transfer of the intellectual property comprising the Michael Hill Jeweller System from New Zealand to Australia was completed on 15 December 2008. The intellectual property was transferred from Michael & Co Ltd, to its Australian subsidiary, Michael Hill Franchise Pty Ltd, for $294m. Consulting and advisory costs amounted to $1.162m for the period ended 31 December 2008.
As a result of the transaction, a deferred tax asset of $52.942m was recognised for future Australian taxation deductions available for certain intellectual property rights acquired. Further tax benefits relating to the inter company funding arrangements implemented for the transfer of the intellectual property, amounted to $0.260m for the period ended 31 December 2008.
Interim Dividend The Directors are pleased to announce an interim dividend of 1.0ï¿½ per share (2008 – 1.2ï¿½), with full imputation credits attached for New Zealand shareholders and full franking credits for Australian shareholders. The dividend will be paid on Thursday, 2nd April 2009 with the record date being Friday, 20th March 2009.
Due to the internal restructuring of the group in December 2008, the company is unlikely to be in a position to fully impute dividends beyond 2009. Naturally this will depend on the performance of each segment in the future and also on the level of dividend to be paid in future periods.
Cash Flows / Balance Sheets The Group has reported net operating cash flows of $14.984m for the six months, compared to $5.648m for the previous year. The increased surplus from operations, compared to last year, is a direct result of managing our inventory levels more tightly.
The Group’s balance sheet continues to be sound with an equity ratio of 55.0% as at 31 December 2008 (42.5% in 2007) and a working capital ratio of 2.6:1 (1.8:1 in 2007).
Summary The directors were satisfied with the result for the 6 months in light of the deteriorating economic conditions during the period.
New Zealand and Canada in particular felt the brunt of the worsening global conditions however the Australia retail segment proved more resilient. The expansion into the US in September has adversely affected the half year result but the directors are confident this move will position the group well in the longer term.
The Group’s philosophy of controlled profitable growth will continue and further new stores are being evaluated in all markets however in the current economic climate only the very best opportunities will be considered. As a consequence, store growth may slow over the next 12 months until there are signs of an economic turn around.
The Directors remain confident in the continued growth and profitability of the group.
Net Tangible Assets Previous NET TANGIBLE ASSETS Current corresponding half year half year $ / Share $ / Share Net tangible assets $0.39 $0.22
Consolidated Statement of Cash flows Previous STATEMENT OF CASH FLOWS Current corresponding half year half year $NZ'000 $NZ'000
Cash flows from operating activities Receipts from customers (incl. GST) 245,010 229,220 Payments to suppliers and employees (incl. GST) (215,679) (210,377) Interest received 101 165 Other revenue 556 474 Interest paid (3,710) (2,518) Income tax paid (4,365) (3,261) Net goods and services tax paid (6,929) (8,055) Net cash inflow from operating activities 14,984 5,648
Cash flows from investing activities Proceeds from sale of property, plant and equipment 88 99 Payments for property, plant and equipment (6,034) (8,373) Payments for intangibles (109) Net cash outflow from investing activities (5,946) (8,383)
Cash flows from financing activities Proceeds from borrowings 48,152 35,844 Repayment of borrowings (40,929) (24,960) Share buyback (2,360) Proceeds from sale of treasury stock 149 Dividends paid to company's shareholders (7,661) (6,096) Net cash inflow (outflow) from financing activities (438) 2,577
Net (decrease) increase in cash and cash equivalents 8,600 (158) Cash and cash equivalents at the beginning of the financial year 10,013 8,426 Effects of exchange rate changes on cash and cash equivalents 1,322 383 Cash and cash equivalents at the end of the half year 19,935 8,651
Statement of Changes In Equity Previous STATEMENT OF CHANGES IN EQUITY Current corresponding half year half year $NZ'000 $NZ'000
Total equity at the beginning of the half year 91,001 72,504
Profit for the year 65,614 19,480 Exchange differences on translation of foreign operations 875 1,161 Total recognised income and expense for the half year 66,489 20,641
Transactions with equity holders in their capacity as equity holders Share buyback ( 2,360) Treasury stock movement 149 Dividends provided for or paid ( 7,661) ( 6,096) Option reserve movement 114 2
Total equity at the end of the half year 149,943 84,840
Issued Securities At end of At end of ISSUED AND QUOTED SECURITIES current previous half year half year No. of Shares No. of Shares Ordinary Shares: Fully Paid 383,053,190 381,053,190 Treasury stock held for employee share scheme ( 584,290) ( 584,290)
Issued Options: Issued Quoted Exercise Price Expiry Date Options issued 7 November 2007 4,750,000 $1.253 30/09/2017
Subsidiaries Previous SUBSIDIARIES Current corresponding half year half year % Ownership % Ownership
Name of Entity Country of Incorporation Michael Hill Jeweller Limited New Zealand 100% 100% Michael & Company Limited New Zealand 100% 100% Michael Hill Trustee Company Limited New Zealand 100% 100% MHJ (US) Limited New Zealand 100% Michael Hill Finance (NZ) Limited New Zealand 100% Michael Hill Franchise Holdings Limited New Zealand 100% Michael Hill Jeweller (Australia) Pty Limited Australia 100% 100% Michael Hill (Wholesale) Pty Limited Australia 100% 100% Michael Hill Manufacturing Pty Limited Australia 100% 100% Michael Hill Finance (A Limited Partnership) Australia 100% Michael Hill Finance Australia Pty Ltd Australia 100% Michael Hill Franchise Pty Ltd Australia 100% Michael Hill Franchise Services Pty Ltd Australia 100% Michael Hill Jeweller Limited Canada 100% 100% Michael Hill LLC United States 100%
Statement of Segmented Results for the six months ended 31 December 2008
Notes: 1 The company operates in 4 geographical segments; New Zealand, Australia, Canada and the United States of America and is managed on a global basis.
2 Michael Hill International Limited and its controlled entities operate predominantly in one business segment being the sale of jewellery and related services.
3 Inter segment pricing is at arm’s length or market value.
4 Unallocated expenses include all expense that do not relate directly to the relevant segment and include: manufacturing activities, warehouse and distribution, interest, company taxation and general corporate expenses.
Auckland, 12 February 2009 - Directors today announced the group’s unaudited interim results for the six months ended 31 December 2008. Net earnings were $172 million, compared with $235 million in the previous corresponding period. This is a reduction in earnings per share from 47 cents to 34 cents.
During the period the group’s operations were exposed to rapidly deteriorating economic conditions and a marked slowdown in residential and commercial construction markets globally. Significant volume declines were experienced across the business, particularly in New Zealand, the United States, Spain and the United Kingdom. Other parts of Europe saw demand levels fall away during the period while Australia also evidenced signs of a major slow-down. Higher input and energy costs also negatively impacted earnings.
As a consequence, operating earnings (earnings before interest and tax) fell to $303 million, compared with $394 million in the previous corresponding period. The Infrastructure, Distribution, Building Products and Laminates & Panels divisions all recorded lower operating earnings. The Steel division saw strong earnings growth due to higher steel prices and margins, and strong volumes during the half year.
Formica’s North American operations experienced significant improvements in operating efficiency at the Evendale plant, and a reduction in operating costs following the restructure of the United States operations. However, the rapid decline in demand in US and European markets negatively impacted the business.
The interim dividend of 24 cents per share has been maintained at the 2008 level, and is in line with guidance provided by the board at the annual shareholders’ meeting in November 2008. The dividend will carry imputation credits of six cents per share. Shareholders may elect to participate in the Dividend Reinvestment Plan and there will be a three percent discount applied to the price for shares issued under the Plan.
Total shareholder return was negative 4 percent for the half year, and was impacted by the continued deterioration in world equity markets during the period.
Group sales were 6 percent higher than the previous year, reflecting higher steel prices and volumes, growth in the metal roof tile business, strong demand for concrete pipe products in Australia, and record construction activity levels associated with infrastructure projects in New Zealand.
In response to the declining volumes, a number of cost reduction initiatives were undertaken during the period. Excluding the construction business in which activity levels are high, restructuring costs of $19 million were incurred with employee numbers reduced by nearly 1100 worldwide. In addition, there were other one-off costs of $10 million in Laminates & Panels during the half year.
The Chief Executive Officer, Mr Jonathan Ling said: “We have seen extremely tough trading conditions in most of our key markets over the past six months – particularly New Zealand, the United States, UK and Spain – and demand for building materials has fallen significantly. In light of this, the result for the half year is a reasonable one. Offsetting these weaker markets has been stronger infrastructure investment in New Zealand and Australia, and we continue to have a solid construction backlog in New Zealand of nearly $1.2 billion”.
“Looking forward, our current plans have as a base assumption lower activity levels, and in response to this we have a range of further cost reduction initiatives underway. Additionally, we are working to ensure that we scale manufacturing production volumes to meet expected demand levels. We have a strong financial position and we are focused on maintaining this and preserving financial flexibility,” Mr Ling said.
Key Points - Group sales up 6 percent to $3,757 million - Group net earnings down 27 percent to $172 million - Operating earnings down 23 percent to $303 million - Cashflow from operations down 15 percent to $208 million - Earnings per share down from 47 cents to 34 cents - Capital expenditure up 16 percent to $162 million - Interim dividend of 24 cents per share with partial New Zealand tax credits
For further information please contact:
Philip King General Manager Investor Relations Phone: + 64 9 525 9043 Mobile: + 64 27 444 0203 Related Attachments
FBU - Variation to share Top-UP Offer.pdf
FBU 2009 Half Year Results Announcement.pdf
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I attach the following documents in relation to the half year ended 31 December 2008:
- Appendix 4D – Half Year Report; - Commentary on results for the period (ASX/NZX Release); and - Condensed Half Year Financial Report, including the Directors’ Report, Financial Report and Independent Auditor’s Review Report.
The attached information should be read in conjunction with the Goodman Fielder Limited 2007/08 Annual Report.
The analyst briefing in connection with the half year results will follow later in the morning.
The attached information will be posted to Goodman Fielder’s website once released to the market.
Jonathon West Company Secretary
HALF YEAR REPORT PERIOD ENDED 31 DECEMBER 2008
RESULTS FOR ANNOUNCEMENT TO THE MARKET (All comparisons are to half year ended 31 December 2007)
Name of entity GOODMAN FIELDER LIMITED
ABN 51 116 399 430 Reporting period: Half year ended 31 December 2008
Direction of movement; % Change; $A Million Revenues: Up; 12.2%; 1,477.6 Profit from continuing operations after tax attributable to members: Down; 21.9%; 73.9 Net profit for the period attributable to members: Down; 21.9%; 73.9
DIVIDENDS Amount per security; Australian franked amount per security; New Zealand imputation amount per security Dividends on ordinary shares Interim dividend FY09: 4.5c; 1.395c at 30%; Nil at 30% Final dividend FY08: 7.5c; 3.0c at 30%; Nil at 33% Interim dividend FY08: 6.0c; 1.8c at 30%; Nil at 33%
On 25 February 2009, the Directors of the Company resolved to pay an interim dividend of 4.5 cents per share. The dividend will be franked to 31%, with nil imputation for New Zealand taxation purposes. The unfranked portion of the dividend is 3.105 cents per share. Of this amount, 0.5 cents per share is declared to be conduit foreign income.
The record date for entitlement to the dividend is 10 March 2009 and the dividend is expected to be paid on or around 8 April 2009.
The total amount of the interim dividend is $59.6 million.
A dividend reinvestment plan (DRP) was implemented in February 2009 and has been activated for the interim dividend to be paid in April 2009. The DRP is optional and offers eligible shareholders the opportunity to acquire ordinary shares in the Company free of transaction costs. Shares will be allotted under the DRP at a 2.5% discount to the average of the daily volume weighted average sale price of the Company’s shares traded on the ASX on each of the 15 consecutive trading days from and including the third trading day after the dividend record date, which is 10 March 2009. Election notices for participation in the DRP in relation to the interim dividend must be received by the Company’s share registry by 5.00pm Sydney time on 10 March 2009 to be effective for that dividend. The DRP will be underwritten to 50%.
EXPLANATION OF RESULTS
Please refer to the attached ASX Announcement for an explanation of the results.
This information should be read in conjunction with the Goodman Fielder Limited 2008 Annual Report.
This report and the attached condensed half-year financial report contain all the information required by ASX listing rule 4.2A.
OTHER NZX DISCLOSURES
There have been no major changes or trends in the Company’s business subsequent to the end of the financial period. There have been no significant changes in the value of assets.
25 February 2009
STRONG CASH FLOWS UNDERPIN GOODMAN FIELDER INTERIM RESULT F’09
For the six months to 31 December 2008 Goodman Fielder Limited posted a strong revenue result of $1477.6 million, a 12.2% increase over the prior corresponding period.
Net profit after tax for the period was $73.9 million, down 21.9% on the prior corresponding period, reflecting the very difficult trading environment that the company experienced during the period.
A feature of the period was continuing strong cash flows which delivered a cash realisation ratio of 115% and a free cash flow of $165 million.
The company has also preserved its strong balance sheet with a continuing focus on minimising working capital and maintaining a prudent capital expenditure profile. Goodman Fielder refinanced a $100 million bilateral debt facility during the period.
Despite significant increases in commodity costs and the impact on inventory values at period end, working capital was held to a similar level to that as at the close of the prior financial year.
There were two main contributory factors to the earnings decline: the extreme volatility of commodity costs and changing consumer buying patterns.
Although international commodity costs are now retreating from an extended period at record high levels, little benefit was realised in the period due to time lags inherent in purchasing contracts and in clearing higher cost inventory of grains and oils.
The high commodity costs impacted margins and added $120 million to the company’s cost base.
The continuing severe economic conditions have caused an erosion of consumer confidence and this has resulted in a drift to cheaper alternatives such as house brand products. This has impacted margins and had a negative effect on earnings which the company continues to combat by maintaining brand support and bringing new products to the market.
During the period the company also entered a sale agreement for two New Zealand brands, Diamond and DYC, for a price of NZ$12.0 million. While it was initially anticipated that the sale would be accounted for in the first half of the financial year, changes in the timing of the payment schedule now mean that the sale will be accounted for in the second half of the year.
The company continued to vigorously pursue internal savings through a continuing close attention to plant and other efficiencies. It is anticipated that this will result in a 5% reduction in employee numbers for the full year, predominantly through natural attrition. Restructuring costs incurred in the period amounted to $6.6 million.
The drive for increased manufacturing efficiency has seen the completion of the first stage in the closure of the Mascot (NSW) oils processing facility and the relocation of spreads processing to our Brisbane plant. The construction of the new packaged food plant at Erskine Park in Sydney’s west is proceeding well and the plant is expected to be commissioned by the end of this calendar year. This will result in the full closure of the Mascot facility.
The company has been exporting edible oil products to China for over 30 years and our recent move to source locally in the Chinese market, where Pilot is the leading brand, is progressing well. The Goodman Fielder range of margarines and shortenings is now being produced by a local manufacturing partner near Shanghai and the business is growing strongly, contributing to a solid result from our Asia-Pacific division.
The previously announced development of a new fresh and chilled baking plant in Brisbane is progressing, although the development is being staged to align with internal cash targets. When commissioned, this new plant will deliver lowest cost capability and allow the retirement of the less efficient La Famiglia and Carina facilities.
As reported at the release of the F’08 full year results, the company has embarked on an accelerated research and development program. This program is already returning results with new product launches such as Lawson’s premium bread which quickly won 5% of the market. It is now being produced at plants in Queensland, New South Wales and Victoria and will soon be available in all States. More recently a new Helga’s variant was launched in NSW and, based on its initial success, it will be rolled out nationally later in this calendar year. In addition the Country Life health bread range was reformulated and repackaged during the period.
In New Zealand, the total redevelopment of the company’s dairy product portfolio has been completed and this has led to margin improvement in a challenging trading environment. The successful development and launch of the new Tararua Iced Coffee has followed the reformulation and repackaging of the entire dairy product range.
To create even greater research and development capability, a new product development centre is being established at North Ryde in Sydney as part of the new corporate office development and will be operational later this calendar year.
The continuing higher level of research and development commitment is also realising a significant tax benefit to the company, contributing to a 4.2% reduction in the effective tax rate in the period.
Going forward the company will continue to confront the key challenges of the impact of a recessionary environment on consumers and the volatility of commodity costs.
We anticipate a softening of demand during the remainder of the financial year as our trading partners reduce inventory to preserve cash and to take advantage of falling commodity costs. As well, we expect a competitive pricing environment as industry participants endeavour to clear higher cost inventory.
The company will benefit from softening commodity costs as this will assist with margin recovery, particularly in our Baking, Dairy and Asia-Pacific businesses.
Over the next 12 months our focus will be on cash management and on completing a strategic review of the company’s operations to optimise future performance.
The company anticipates improved trading conditions in the second half of the financial year, with further improvement in the F’10 year. Net profit after tax for the current year is expected to be in the range of $170 million to $185 million.
BALANCE SHEET AND CASH FLOW
Goodman Fielder continues to preserve a conservatively geared balance sheet, with debt to [debt+equity] of 31% and debt to EBITDA of 2.9 times. The company is also continuing to generate strong cash flows and solid earnings, which are underpinned by effective financial management, capital expenditure disciplines and tight control of working capital.
The company is comfortable with its net debt level of $1.1 billion as at 31 December 2008. Replacement arrangements for all maturations that will occur within the balance of the financial year have been completed.
Directors announced an interim dividend of 4.5 cents per share, payable on 8 April 2009. The record date for entitlement to the dividend is 10 March 2009. The dividend will be 31% franked in Australia with nil imputation in New Zealand, reflecting the phasing of company taxation payments.
In determining the quantum of the dividend Directors have maintained the company’s stated policy of returning 80% of net profit after tax to shareholders.
DIVIDEND REINVESTMENT PLAN
As part of the company’s capital management plan Directors have approved the establishment of a Dividend Reinvestment Plan (DRP) which will provide shareholders with the opportunity to reinvest some or all of their dividends in Goodman Fielder shares without incurring brokerage or other transaction costs. The DRP will apply to the April 2009 interim dividend.
Shares will be allotted under the DRP at a 2.5% discount to the average of the daily volume weighted average sales price of the company’s shares traded on the ASX on each of the 15 consecutive trading days from and including the third trading day after the dividend record date, which is 10 March 2009.
Election notices to participate in the DRP must be received by the company’s share registry by 5.00pm Sydney time on 10 March 2009 to be effective for the interim dividend. The DRP will be underwritten to 50%.
- Total passenger movements up 2.0 per cent to 6,630,816.
- International passenger movements (including transits and transfers) up 0.5 per cent to 3,758,041. Excluding transits and transfers, international passenger movements down 1.2 per cent to 3,227,505.
- Domestic passenger movements up 4.1 per cent to 2,872,775.
- Aircraft movements up 2.2 per cent to 80,528.
- Total MCTOW up 2.8 per cent to 3,010,909 tonnes.
- Revenue up 6.8 per cent to $184.0 million.
- Operating EBITDA up 2.5 per cent to $138.7 million*
- Non-cash investment property fair value decrease of $41.8 million.
- Profit after tax down 79.4 per cent to $9.8 million.
- Excluding the investment property devaluation, profit after tax was up 8.3 per cent to $51.6 million.
- Fully imputed interim dividend of 3.75 cents per share to be paid on 27 March 2009.
Interim dividend decreased by 2.00 cents per share compared to the interim dividend last year. The interim dividend last year was higher to utilise surplus imputation credits that would have been lost due to a possible change in ownership.
Preliminary Half Year Report Announcement Six Months Ended 31 December 2008 Commentary
Introduction We are pleased to report on a sound half-year result for Auckland Airport, both financially and operationally. This was achieved despite the market pressures resulting from difficult global economic conditions and their subsequent flow-on impact on the demand for air travel. Another negative sign of the times is reflected in our decision to write-down the value of our investment property portfolio.
As the most important tourism and aviation hub for New Zealand and the Auckland region, Auckland Airport constantly strives to meet the needs of our many stakeholders. This includes delivery of an excellent airport experience for travellers and development of a great place to do business for our airline customers and other business partners. To support New Zealand trade and tourism, we must continually balance meeting the demands of today with preparing for the requirements of tomorrow, while creating long-term value for our shareholders. While we are not immune to the obvious short-term pressures, Auckland Airport has, to date, demonstrated resilience to the current economic downturn relative to global airport trends and is riding out the storm well. We have a strong balance sheet and business fundamentals; we have invested appropriately in infrastructure and capacity to meet the country’s needs; and we have placed even greater focus on managing costs and developing new business opportunities.
A number of key airport development projects have reached fruition during this period, including our new international pier that can accommodate the next generation of large aircraft. Our strategy to stimulate short-haul demand by welcoming new airlines to compete for business on the Tasman route has succeeded. Healthy competition and great travel deals have helped keep short-haul passenger volumes up sufficient to partially offset steeper declines in long-haul travel. Auckland Airport has also made a smooth transition to a new leadership team with fresh energy and drive to support new growth strategies and the targeting of opportunities as they evolve. As part of this change process we have restructured some of the business. As a result, we are in a position to deliver enhanced services to passengers and our airline customers. We have the confidence, ambition and capacity to deliver on our medium to long- term business goals, and we are well placed for the inevitable economic up-turn.
Summary of interim financial results
Another improved operating result was achieved for the six months to 31 December 2008, with revenue up 6.8 per cent to $184.0 million. This result was driven by good growth in non- aeronautical commercial activities, together with aeronautical and commercial pricing increases reflecting completed capital developments set out in the 2007 pricing round.
Operating earnings before interest, tax and depreciation, (Operating EBITDA) increased 2.5 per cent to $138.7 million, even after incurring $3.3 million of restructuring costs. Depreciation totalled $25.6 million ($22.4 million) for the first half of the year and interest costs were $40.0 million ($34.3 million). The increase in these expenses reflects the impact of spend on completed capital works to increase the capacity and quality of the airport over the last few years, as well as the related cost of funding.
Over the six month period the company’s net cash flow from operations was $82.9 million ($61.9 million) an increase of $21.0 million (33.9%).
The tax expense for the period was $21.5 million ($25.3 million).
In line with the company’s accounting policy to reflect the fair value of investment property at each reporting period, the directors requested the company’s independent valuer assess the impact of the current property downturn on the company’s investment property portfolio at the half year.
That review has seen the directors adopt a non-cash write-down of investment property values of $41.8 million. A full valuation of the investment property portfolio will be undertaken as at 30 June 2009, in line with normal practice for the year-end reporting. While it is difficult to predict future values for the portfolio, particularly given the lack of relevant sales evidence, the directors consider it is possible that the portfolio may be subject to further devaluations given the current trend of softening land values. Most importantly for shareholders, as movements in investment properties are non-cash adjustments they will not affect dividends to shareholders. Profit after tax, excluding the investment property devaluation, was up 8.3 per cent to $51.6 million ($47.6 million). Including the investment property devaluation, profit after tax was $9.8 million. Earnings per share before investment property devaluation were 4.21 cents (3.90 cents). Including the investment property devaluation, earnings per share were 0.80 cents.
The financial results have been reviewed, but not audited, by the company's auditors, Deloitte.
The $50 million international terminal Pier B project was officially opened by then Prime Minister, the Rt Hon Helen Clark, on 10 October 2008 and opened for travellers on 21 October.
The new pier allows the airport to handle more aircraft at peak times and makes it the only airport in the country that can accommodate the next generation large aircraft. This enables the airport to welcome A380 flights into Auckland, with Emirates services commencing on 2 February 2009. The new pier is a significant milestone for New Zealand’s gateway, adding to the airport’s ability to support the country’s tourism, travel and trade needs now and well into the future.
The announcement of new airline services, particularly on the trans-Tasman sector, has also contributed to passenger volume through healthy competition on service options and fares. Pacific Blue has commenced new trans-Tasman services already, and Jetstar is launching new trans-Tasman services out of Auckland starting 28 April 2009.
Considerable progress on the first stage of the northern runway has been made and the project remains on schedule, with the fine weather experienced this summer translating into a good construction season.
The Board has approved plans for a redesigned departure area at Auckland Airport that will bring a brand new departures experience for travellers, friends and family. The new and improved area will be a space that Kiwis can be proud of and will ensure international visitors’ last experience of New Zealand is a great one. Over the next two years, airport users will notice a complete revamp of the first floor departures area with many existing shops moving and some new and exciting stores coming in. Family and friends will also enjoy an improved cafe and dining space. The changes will create a more engaging and user-friendly environment with lighter, brighter and more modern interiors.
Continued surface-access improvements are making it easier for travellers to get to and from Auckland Airport. In particular, a new bus service from Manukau and increased Airbus services from the city offer cost-effective options for getting to the airport. We also welcome the improved access to New Zealand’s gateway resulting from the recent move by North Shore City Council to allow airport shuttle operators to use the northern busway.
December 2008 saw the launch of a new Park & Ride service that offers long-term, low-cost parking for all domestic and international travellers. This new service means that Auckland
Airport now has a full range of parking options to meet every customer need, from the long-term and low-cost option of Park & Ride, through to shorter-term deals such as the free 10-minute parking option for express pick-ups and drop-offs.
For the second year in a row, Auckland Airport was ranked the second best airport in the Australia Pacific region in the July 2008 independent Skytrax awards, with only Brisbane Airport receiving a higher ranking from within Australia, New Zealand and the Pacific. The awards continued in September 2008 when Auckland Airport was voted sixth favourite airport in the world in the Conde Nast Traveller Reader's Travel Awards 2008 (UK).
Improved communications arrived via our new website launched in December 2008, http://www.aucklandairport.co.nz. Always one of the most popular websites in New Zealand’s travel industry, our new website makes it even easier for website visitors to find their way around. Flight arrival and departure times are always the most popular part of the website, so that now has a prime position on the homepage. As the gateway to New Zealand, our online world now reflects our uniquely Kiwi welcome to the country. Travellers can visit online and take comfort in knowing all about the services on offer before they arrive so they can ensure their Auckland Airport experience is an outstanding one.
Auckland Airport is also taking its community responsibilities seriously. Just before Christmas, Auckland Airport distributed $120,000 to 12 different charities to spread some Christmas goodwill. The donations were possible because of the generosity of Auckland Airport’s travellers who have donated their foreign currency loose change in donation globes positioned throughout the airport. The response to this initiative from charities was overwhelming.
In August 2008, Auckland Airport provided a formal undertaking to the Commerce Commission to retain two operators for duty free until June 2015. This decision removed the uncertainty that had been created around international terminal building development projects currently being planned or in progress. Negotiations with duty-free operators for continuation of a dual operator model are progressing satisfactorily.
There have been recent changes to the Commerce Act (as a consequence of last year’s Commerce Amendment Bill) that subjects New Zealand’s three biggest airports to a new disclosure regime to be defined by the Commerce Commission before 2010. The Commerce Commission is consulting on how it will apply the new regime and Auckland Airport is working through the issues to understand the implications for the company. As part of this consultation, the Commerce Commission proposed to charge the airports $2.5 million for the cost of the Commission. In light of the Government’s recent announcement to retain the Whenuapai airbase for military use, Auckland Airport welcomes the common sense decision by Waitakere City Council to defer the scheduled February hearing on the proposed Waitakere City Council District Plan Change.
We think it is vital that Auckland achieves the best outcome from infrastructure investment and resources for the region as a whole, and the issue of whether a second commercial airport is justified needs to be viewed in this wider context.
We also look forward to the outcomes of the Royal Commission on Auckland Governance with interest. With Auckland’s expected growth, considerable infrastructure investment will be needed to meet additional demand and develop world-class transport services. Auckland Airport will play its part in continuing to develop the necessary airport infrastructure and improve the passenger experience and is keen to work with all other parties, including local and regional government.
Total passenger volumes rose 2.0 per cent to 6,630,816, driven by continuing growth in domestic travel. Total aircraft movements, also were up 2.2 per cent, reflecting new services, increased frequency, and smaller planes being utilised on the shorter sectors.
International passenger numbers (excluding transit and transfer passengers) were down 1.2 per cent. The current global economic environment, as reflected in the decline in international
passenger volumes for the period, particularly from the long haul flights from the Northern Hemisphere, has had an impact on Auckland Airport. The short-haul market, particularly trans- Tasman, has remained strong through the introduction of new capacity and airlines and the consequent competition on trans-Tasman airfares, which is helping to maintain passenger demand.
Despite the challenging economic climate Auckland Airport remains an attractive destination, which is reflected in the comparatively limited reduction in services to date and some significant new route and service announcements for the future including the Emirates A380 service which commenced in February and the Jet Star service from the Gold Coast and Sydney scheduled for April.
Domestic passenger numbers rose 4.1 per cent to 2,872,775 driven in particular by strong competition in the domestic market and a full six months of service from Pacific Blue compared with two months of service in the previous comparative period.
Passenger movements Six months ended % 31 December change International passengers - excl transits/transfers 3,227,505 3,267,504 -1.2% Transits & transfers 530,536 472,778 +12.2% Total international passengers 3,758,041 3,740,282 +0.5% Domestic passengers 2,872,775 2,759,261 +4.1% Total passenger movements 6,630,816 6,499,543 2.0% 2008 2007
New Zealand travellers remain the largest single category in terms of international arrivals, while Australian arrivals continue to grow strongly.
International arrivals at Auckland Airport (by country of last permanent residence) Six months ended 31 December 2008 2007 % change % of total
New Zealand 786,614 799,679 -1.6 47.9 Australia 286,503 274,222 +4.5 17.4 United Kingdom (incl. Ireland) 106,986 111,441 -4.0 6.5 United States of America 73,156 79,457 -7.9 4.5 China 49,496 58,348 -15.2 3.0 Japan 34,515 39,308 -12.2 2.1 Korea, Republic of 27,564 35,251 -21.8 1.7 Germany 25,969 23,630 +9.9 1.6 Canada 19,314 19,028 +1.5 1.2 Fiji 13,951 11,570 +20.6 0.8 Other 217,978 212,572 +2.5 13.3 Total 1,642,046 1,664,506 -1.3 100.0 Source: Statistics New Zealand
Revenue Non-aeronautical revenue increased 8.0 per cent to $100.7 million, a strong result driven by improved rentals from completed developments and rental reviews, combined with further revenue in utility services and general income. Use of money interest from income tax refunds and funds in money market also contributed to the increased revenue.
Aeronautical revenue increased 5.4 per cent to $83.3 million, representing 45.3 per cent (as against 45.9 per cent for the previous year’s period) of the company’s total revenue. Greater aircraft movements together with terminal service charge pricing adjustments associated with completed terminal developments have contributed to the increased aeronautical revenue.
Revenue streams Car parks 2008 2007 % 31 December $m $m change Aeronautical revenue Airfield 36.5 34.4 +5.9 Passenger services charge 32.6 32.8 -0.7 Terminal services charge 14.2 11.8 +20.8 83.3 79.0 +5.4 Non-aeronautical revenue Retail 51.8 51.0 +1.4 Property rentals 22.6 18.4 +22.6 Car parks 15.1 15.0 +1.3 Interest 1.0 - - Utilities and general 9.6 8.3 +16.3 Associated company 0.6 0.6 +0.5 100.7 93.3 +8.0 +6.8 Total revenue 184.0 172.3
Operating expenses for the half year increased 22.7 per cent to $45.3 million ($36.9 million).
Staff costs are higher than the prior half year by $6.0 million. The previous comparative period had a reduction in staff costs of $1.9 million in the provision for long-term incentive plans, given the reduction in the share price since 30 June 2007. In addition, costs increased by $3.3 million for restructuring and the transition from the former management team. This reflects a reconfiguration of the business, reductions in permanent staff levels and change in structure, consistent with the change in focus for future needs in the business. This process is not yet complete and further restructuring will occur over the next four months. Repairs and maintenance costs grew because of higher wastewater charges during the period, which were previously included with rates costs, increased electricity and cleaning costs because of commissioning completed developments, and raised charges from the power companies.
The increase in other costs resulted primarily from greater consultancy costs related to the Commerce Commission review, higher marketing expenses, and an increase in doubtful debt provision.
Operating expenses Six months ended 2008 2007 % 31 December $m $m change Staff costs 18.9 12.9 +46.5 Repairs and maintenance 13.7 12.5 +9.7 Rates and insurance 3.7 3.8 -2.4 Other 9.0 7.7 +16.3 Total operating expenses 45.3 36.9 +22.7
Operating EBITDA With the transition to New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS), the company adopted a new line in the income statement referring to Operating EBITDA. This refers to the operating earnings of the group prior to interest, tax, and depreciation, and prior to changes in the fair value of investment properties. The Operating EBITDA result will provide clarity as to the operating performance of the group on a normalised basis and is similar to the group’s normalised operating cash flow.
Operating EBITDA was $138.7 million, an increase of 2.5 per cent over the same period last year.
Total EBITDA Under NZ IFRS, changes in the valuation of the company’s investment properties are recognised directly in the income statement. These changes were previously recorded in equity directly to the investment property revaluation reserve. The company values its investment properties annually at year end but due to the current economic conditions, the directors, in line with the company’s accounting policy requested an independent assessment of the value of the company’s investment properties at the half year.
The fair value of the investment properties had declined by $41.8 million. As a result, the Total EBITDA decreased by $32.6 million or 25.2 per cent.
Financial position Recent months have seen dramatic contractions and volatility in global financial and credit markets resulting in a global economic downturn. The fortunes of New Zealand are inherently tied to growth in its key markets for export sales and tourism. The directors consider that maintaining a strong balance sheet position is important.
Auckland Airport’s financial position remains strong, with an investment grade credit rating from Standard & Poor’s of ‘A’ with a negative outlook. The negative outlook remains unchanged from the position taken by Standard & Poor’s as a result of the uncertainty regarding the status of the company’s ownership. Total assets at 31 December 2008 decreased $20.2 million to $3,072.7 million, compared with $3,092.9 million at 30 June 2008. Shareholders' equity decreased $49.6 million to $1,847.0 million ($1,896.6 million at 30 June 2008).
Capital expenditure was $49.5 million and is expected to be in the order of $70.0–80.0 million for the full 2009 year.
Total borrowings at 31 December 2008 increased $4.2 million to $1,046.7 million ($1,042.5 million at 30 June 2008), in line with financing of the current capital expenditure programme. Borrowings comprised bonds of $420.9 million, commercial paper of $75.5 million, bank facility borrowings of $505.0 million and money market borrowings of $1.2 million.
During the reporting period, the company raised $130.0 million through a very successful retail bond issue, which in part replaced $75.0 million of bonds that matured in November 2008. Subsequent to 31 December 2008, the company has also offered a $50.0 million retail bond, which closed fully subscribed on 5 February 2009. The rapid, successful closure of the two bond issuances reflects the ongoing confidence in the strength of the Airport.
Gearing, measured as debt-to-debt plus shareholders’ equity, was 36.2 per cent (35.5 per cent at 30 June 2008). Based on the market value of the company’s equity at 31 December 2008, the gearing was 34.5 per cent of enterprise value (30.4 per cent at 30 June 2008). At 31 December 2008, the company had $289.0 million of committed but undrawn funding lines.
Dividends The directors have announced a fully imputed dividend of 3.75 cents per share, compared with last year’s interim dividend of 5.75 cents per share. The prior year’s interim dividend, which paid part of the full year’s dividend in advance, was set at a level to utilise surplus imputation credits before a potential takeover bid. The 3.75 cents per share dividends reflect the normal historical level for the interim dividend.
The interim dividend has a record date of 13 March 2009 and will be paid to shareholders on 27 March 2009.
Governance The board membership did not change over the six months to 31 December 2008. In January 2009, Lloyd Morrison took a leave of absence from the board due to health reasons. The thoughts and best wishes of his fellow directors and all the team at Auckland Airport are very much with Lloyd and his family while he takes the necessary time to focus on his health.
Senior Leadership Changes
The six month period to 31 December 2008 has seen a significant change in the senior leadership team of Auckland Airport. Simon Moutter has been appointed chief executive officer following the retirement of Don Huse. In addition, the positions of chief financial officer (Jason Dale), general manager property (Peter Alexander), and general manager retail (Adrian Littlewood) have also been appointed and the positions of general manager business development (Glenn Wedlock) and strategic communications advisor (Andrew Pirie) have been created. This completes the changes at the leadership team level.
Outlook New Zealand’s Airport has an excellent future. We are confident we will remain the main gateway airport and that the demand for air travel will continue to grow over the longer term. In the short-term, however, the impact of the global macro-economic environment combined with a likely slowing in the domestic economy will likely put downward pressure on passenger volumes for the remainder of this year. The current global credit tightening may also be expected to further increase funding costs over time.
At this stage, Auckland Airport remains on track to deliver growth for the full year in revenue and in Operating EBITDA (excluding investment property revaluations). The full year net profit after tax for the company is still expected to be at the lower end of the previous guidance range of $100.0-$110.0 million before reflecting the impact of the non-cash devaluations in the investment property portfolio and any further unexpected one-off costs. As previously stated, the directors consider it is possible that the portfolio may be subject to further non-cash devaluations given the current trend of softening land values. In addition, there are further downside risks from passenger volume forecasts or airline withdrawals. As always, this guidance is subject to any other material adverse events, significant one-off expenses, deterioration due to the current global market conditions or other unforeseeable circumstances.
The long-term outlook for the company remains positive, reflecting international passenger number projections that are expected to increase over the longer term, reflecting New Zealand’s enduring popularity as one of the world’s leading tourism destinations Locally, competitive airfares may encourage New Zealanders to travel domestically and internationally, particularly trans-Tasman. We can expect a commensurate increase in retail, and overseas visitors, as a result of the declining value of the NZ dollar. The board and management are committed to the sustainable development of Auckland Airport and the creation of value for all of its stakeholders.
On behalf of the board and management
Tony Frankham Simon Moutter Chairman Chief Executive 19 February 2008 19 February 2008
Auckland Airport Interim Result Announcement.pdf
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Pumpkin Patch Limited Unaudited results for the 6 months ended 31 January 2009
The result has been prepared in a manner which complies with New Zealand International Financial Reporting Standards (NZIFRS) and is based on unaudited financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
Current Full Year NZ$'000; Up/ Down %; Previous Corresponding Full Year NZ$'000
TOTAL OPERATING REVENUE: $211,224; Up 3.0%; $205,042
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION: $26,043; Down 6.6%; $27,882
EARNINGS BEFORE INTEREST AND TAX: $17,540; Down 8.5%; $19,174
OPERATING SURPLUS BEFORE TAX: $14,116; Down 13.1%; $16,243
Less tax on operating result: $4,614; Down 23.4%; $6,022
OPERATING SURPLUS AFTER TAX ATTRIBUTABLE TO MEMBERS OF LISTED ISSUER: $9,502; Down 7.0%; $10,221
Final Dividend: 3.00 cps Record Date: 9th April 2009 Date Payable: 23rd April 2009
Tax credits on final dividend: Fully imputed for New Zealand residents; fully franked for Australian residents; supplementary dividend payable to non-residents.
Notes: - all references to dollars are NZ Dollars unless otherwise stated
Key Themes - Bank debt down 60% to $32.4m. Debt facilities in place until December 2010. - Inventory management strategies drive $15.0m reduction in stock holdings. - Strong sales and EBIT performances from Australia and New Zealand despite the challenging retail environment. - Continued sales and earnings growth from Wholesale and Direct. - Operating revenue $211.2m, up 3.0%. - Net profit after tax $9.5m (1H08: $10.2m). - EBIT excluding the United States up 9.5%. - Total store numbers are now 235 (Australia 110, New Zealand 54, United Kingdom 36, United States 35). - Interim dividend of 3.00 cents per share.
Pumpkin Patch Limited has today announced its unaudited result for the six months ended 31 January 2009
Overview Total group operating revenue increased 3.0% to $211.2m. The strength of the Pumpkin Patch brand lessened the impact of the very difficult retail environments in all markets. The Wholesale and Direct business continues to expand off a stable platform.
Pumpkin Patch has significantly strengthened its balance sheet by reducing debt and inventory and is comfortable that it is well placed to meet the challenges of an increasingly volatile global market.
Group NPAT was $9.5m, close to the first half last year of $10.2m. While the weaker trading conditions across all markets lead to increased promotional activity Pumpkin Patch held market share. The United States continues to be extremely volatile causing a disappointing drag on earnings. Excluding the United States group EBIT was up 9.5% on last year.
Australia Retail The strength of the Pumpkin Patch brand and the overall product offering reduced the impact of the softer retail conditions with sales only marginally down on last year.
A slightly lower segment EBIT of $19.5m (1H08: $20.6m) reflected increased promotional activity in a drive to build market share.
During the period 3 new stores opened (1H08: 2) taking total stores to 110.
New Zealand Retail The general retail environment in New Zealand was challenging during the period. However sales were down only 4.4% on last year which was a very credible performance.
Total segment EBIT margins were impacted by sales mix changes resulting from the opening since January 2008 of 4 Outlet stores which trade at lower EBIT margins than full priced Pumpkin Patch stores. As a result EBIT for the period was down on last year at $6.1m (1H08: $6.9m).
Three new stores have opened year to date (1H08: nil), taking store numbers to 54.
Wholesale and Direct Wholesale and Direct turnover was up 19.0% to $27.8m.
EBIT for the period was $7.8m up 28.5% on last year (1H08: $6.1m). Although some margin pressure was seen from overseas customers facing difficult trading conditions in their home markets the more favourable exchange rates helped offset the impact of this. As a result EBIT as a percentage of sales increased 2.1% to 28.0%.
Pumpkin Patch continued to develop its mail order and internet businesses which saw significant sales growth especially in Australia and New Zealand.
United Kingdom Retail United Kingdom retail sales conditions were very volatile throughout the period with most market leaders reporting significant deteriorations in trading results and in many cases undergoing major restructuring to survive the current downturn. Improved supply chain processes allowed for improved stock management and freer flow of stock into the market. Sales were down 5.6% which considering the state of the market place was a very solid result.
Overhead savings and supply chain efficiencies partially offset the deleveraging effect of the lower sales and the impact of the market wide increase in promotional activity. The EBIT loss for the period was $1.1m (1H08: $0.1m profit).
Of the 33 stores open longer than 12 months 20 stores generated positive EBIT contributions at store level.
During the period 1 new store was opened (1H08: 3) taking the total number of stores to 36.
United States Retail United States retail sales were up 43.9% to NZD21.7m driven mostly by new store growth since 1H08. The retail environment was extremely difficult as consumers struggled to cope with the economic chaos in the United States. The level of retail industry rationalisation increased dramatically with numerous retail chains either closing stores or ceasing operations fully. Many well established household brands have succumbed to the pressures caused by these extreme conditions.
As a result EBIT was significantly impacted with a loss of $6.2m (1H08: $2.5m loss) being generated. Overhead reduction measures were put in place but these were insufficient to counter the impact of lower sales. In addition the lower exchange rate negatively impacted the translation of the loss into NZD.
Pumpkin Patch is disappointed with the earnings result and is implementing strategies to minimise the impact of the difficult trading conditions.
During the period 1 new store opened (1H08: 10) taking total stores to 35.
Unallocated Overheads Unallocated overheads were $8.5m (1H08: $12.1m). Reductions in overheads across Head Office functions and lower unrealised foreign exchange losses on intercompany balances were experienced during the period. The result includes approximately $1.0m of one off restructuring costs.
Cash Flows and Balance Sheet Pumpkin Patch continues to maintain a very strong balance sheet with net assets of $162.6m, up 68% from July 2008.
Bank debt has reduced significantly, by $49.0m or 60% to $32.4m. This has been achieved through reduced stock holdings, the restructuring of the foreign exchange portfolio in November 2008, and continued strong cash flows from operations.
The inventory reduction strategies have lead to a lowering of stock levels since July. After adjusting for the impact of lower exchange rates on overseas inventory underlying inventory levels have reduced by approximately $15.0m since July. Ongoing reductions in inventory are expected to be achieved over the next 18 months.
Capital expenditure cash flows totalled $8.1m (1H08: $19.7m).
Dividend The Directors have approved the payment of an interim dividend for 2009 of 3.00 cents per share (2008: 4.00cps) to be paid 23rd April 2009, with a record date of 9th April 2009. The dividend will be fully imputed for New Zealand shareholders and will be fully franked for Australian shareholders. Non-resident shareholders will receive a supplementary dividend.
Foreign Currency As reported in November 2008 Pumpkin Patch realigned its foreign exchange cover portfolio to recognise both the changing retail market conditions and the volatility in foreign exchange markets. Movements in the NZD around that time lead to significant mark to market gains on foreign exchange cover.
Approximately $36m of mark to market gains were realised resulting in an immediate reduction in bank debt. At current exchange rates there remains additional unrealised mark to market gains of around $12m.
As outlined previously the realignment of cover will not materially impact earnings before interest and tax over the next 2 to 3 years. Under International Financial Reporting Standards (IFRS) the mark to market gains that have been realised are required to be held in reserves and taken to earnings in the period in which the original foreign currency contract was due to mature.
After adjusting for the release of the realised mark to market gains to earnings as above, the overall effective exchange rates are expected to be similar to the rates immediately before the realignment.
Outlook for 2H09 All markets remain extremely volatile. This volatility and long inventory lead times causes its own set of problems when forecasting for a global business. Pumpkin Patch has performed credibly in the last six months however there remains a great deal of uncertainty in all markets.
Australia Trading conditions are expected to remain difficult for the remainder of the year. However Pumpkin Patch is well positioned to deal with these challenges and will continue to be the leading speciality childrenswear offer in Australia.
Two stores are expected to open before year end.
New Zealand The retail environment is expected to remain difficult. However the strength of the Pumpkin Patch brand is expected to partially insulate it from the worst effects of any significant deterioration in retail activity.
Wholesale While wholesale customers are experiencing tougher trading conditions in their home markets Pumpkin Patch continues to invest in its already strong relationships with those wholesale customers.
Research continues into other Asian and European markets however it is unlikely that any new markets will be entered this year.
The Direct operations will continue to grow across all markets in particular Australia and New Zealand.
United Kingdom The very poor economic environment is expected to continue for the remainder of the financial year. Improvements made to the supply chain and the lower overhead base now in place will allow the operations to be better managed while the market remains so volatile. While market share may grow the seasonal nature of sales and earnings will increase losses in the short term.
United States The current volatile nature of retail conditions in the United States creates high levels of unpredictability as to possible near term trading results.
Reductions in the cost of doing business in the market will continue however these savings will not be sufficient enough to offset the impact of lower sales. Due to the seasonality of trading in the market losses will increase in the second half. The operation is being closely monitored on a store by store basis and changes will be implemented where deemed necessary.
Bank debt Based on current trading conditions and expected working capital movements over the remainder of the financial year total bank debt is expected to be between $30.0m and $40.0m at July 2009.
The bulk of the bank debt facilities are in place until December 2010.
Interest Due to the significant reduction in bank debt and lower interest rates a drop in interest charges in 2H09 is expected. Interest costs are expected to be between $5.5m and $6.0m for the full year to July 2009 (2008: $7.5m).
Summary During the last six months Pumpkin Patch faced unprecedented volatility in all of its markets. There appears to be no sign of this improving in the near term and Pumpkin Patch continues to adjust strategies to meet the daily challenges faced.
The Company embarked on a major debt reduction program which has significantly strengthened its balance sheet and positions it well for the challenging times that lay ahead.
Pumpkin Patch remains the leading specialty childrenswear offer in Australasia and will strengthen this position in these uncertain times. Even though trading conditions will remain very challenging in the United Kingdom and earnings will be impacted the brand continues to get stronger. The United States will continue to be a drag on earnings in the medium term.
We thank the entire team at Pumpkin Patch for a tremendous effort over the last six months.
On behalf of the Board of Directors
Maurice Prendergast Chief Executive Officer
Greg Muir Chairman
Pumpkin Patch Limited 24th February 2009 Related Attachments
PPL 1H09 Chief Executive Officer's statement.pdf
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Consolidated Operating Results for the Half Year to 31 December 2008
Reporting Period: 31 December 2008 Previous Reporting Period: 31 December 2007
Current period: $000; %Up/Down Revenue from ordinary activities: 273,787; +11% Net profit after tax attributable to security holders: 20,794; +143%
Current period; Previous period Earnings per share: 23.6 cps; 9.7 cps Net tangible assets per share: $1.52; $1.33
Interim dividend: 10 cps Imputation credit: 4.93 cps Supplementary dividend: 1.76 cps Record date: 13 March 2009 Payment date: 30 March 2009
The result for the six months ended 31 December 2008 was an unaudited after tax profit of $20.79 million. This compares with the $8.56 million recorded in the previous corresponding period in 2007.
This result includes an after tax provision for impairment of trade receivables of $3.18 million. The Directors have declared an interim dividend of 10 cents per share which will be paid on 30 March 2009 to holders of fully paid ordinary shares registered at 13 March 2009. The amount payable is $8.82 million. This dividend carries full imputation credits and a supplementary dividend of 1.76 cents will be paid to non-resident shareholders.
News Release The Company announced a first half trading result of $20.79 million after tax. This is an increase of $12.23 million when compared with the same period last year and consistent with the 1st quarter earnings announced in October 2008.
Sales increased by $28.23 million to $273.79 million due to the effect of higher steel prices.
A provision for impairment of trade receivables totalling $3.18 million after tax was made reflecting the difficult trading conditions being encountered.
In the same period last year a restructuring provision of $1.57 million after tax was made for the Hurricane Wire business.
The Company also announced that a fully imputed interim dividend of 10 cents per share will be paid on 30 March 2009.
Market Conditions In commenting on the Company’s operations for the half year the Chief Executive Officer Mr Nick Calavrias said,
The Company had variable market conditions to contend with during the period under review.
Construction activity over all was down led by a substantial drop in housing starts. Commercial construction activity however did not suffer to the same extent.
The strong demand for our goods and services from the manufacturing sector that we saw in the last quarter of our 2008 year continued into the early part of the new financial year. However, we have experienced a noticeable slowdown since November.
Demand from the rural communities however remained strong through out.
Performance The Distribution business comprising Steel Distribution, Stainless Steel, Fastening Systems, Piping Systems and Industrial Products on aggregate increased sales revenue by about 13% compared with the previous period with results substantially ahead of the same period last year.
Although the value of commercial building activity and infrastructure projects was ahead of the same period last year, the volume of building products consumed by this sector was lower once the effect of price increases was taken into consideration. Volume to the manufacturing sector also reduced as the year progressed although this was partially offset by strong demand from the rural areas.
Global demand for steel in the early part of the year led to substantial shortages with most products being on allocation by our suppliers. The division’s response to these trading conditions was to withdraw from high volume low margin indent business and to be more focused on the higher margin mix of products.
The Manufacturing business comprising Roofing Products, Reinforcing Fabrication and Hurricane Wire, increased its revenue by 11%.
The Reinforcing operation posted improved results due to a favorable mix of commercial contracts and strong demand from infrastructure projects. Roofing was able to replace lost revenue from the residential housing sector with higher sales to the light commercial sector and farm shed market.
The Hurricane Wire business showed significant improvement as a result of the restructuring that took place in early 2008.
Inventory Supply volatility for replacement inventory was encountered for most of calendar 2008. In the first half the combination of shortages and higher input costs for steel making, such as iron ore, coal and scrap metal forced the price of steel products up.
However the supply position improved rapidly in September at the same time as demand for steel began to stall, causing a substantial build up of inventory on hand with levels increasing by $46 million in this reporting period. We expect this to be reduced substantially by April and to be at normal operating levels by year end.
Outlook There is considerable uncertainty surrounding the extent and timing of the effect of the global economic slowdown on the economy of New Zealand.
The domestic economy has been in recessionary conditions for all of 2008 with the expectation that this will continue for most if not all of calendar 2009. Dairy farmers’ incomes for the 2009 year in aggregate are expected to fall by around $3 billion compared with last year as the price of milk powder retreats from its peak in July 2008.
Construction activity is expected to decline further during 2009. However with the Official Cash Rate now at the historic low of 3.5% pa, the construction industry could recover more quickly than previously anticipated.
Although exporters will be assisted by the substantial fall of the New Zealand currency, volumes are likely to be subdued until an upturn in global demand returns.
International steel prices and exchange rate volatility have had significant impact on the Company’s financial results over recent years. Global demand has stalled causing steel producers world wide to cut capacity to match current demand. Although global prices for steel are now in retreat in US dollar terms, the impact will be softened due to the substantial depreciation of the New Zealand dollar.
The government’s current action to counter some of the effects of the global financial crises by stimulating the domestic economy through tax cuts and an increase in infrastructure spending is expected to lessen the impact of the global recession.
In summary, we expect market conditions in the short term to be as tough as we have seen for a very long time with a good deal of uncertainty, and the deteriorating trading conditions are expected to reduce our second half result substantially.
For further information, please contact Mr Nick Calavrias, Chief Executive Officer, Steel & Tube Holdings Limited on (04)570-5001.
TELECOM'S KEY FINANCIALS ON TRACK, GROUP GUIDANCE MAINTAINED
Telecom New Zealand has today announced adjusted Earnings Before Interest, Taxation Depreciation and Amortisation (EBITDA) of NZ$884 million for the half year to 31 December 2008, within guidance and a 5.5% decline on the equivalent half in the prior year.
“The new management team has made good progress in a slowing economy and delivered strong operating metrics in our focus areas of broadband, mobile and ICT. As a result the key financials of EBITDA, capex and NPAT are on track,” said Paul Reynolds, CEO, Telecom New Zealand. “Revenue has been held constant, the business is managing its operational expenses responsibly, and our major capital investments are on schedule.”
When the one off impact of $101m of impairment charges is included, the EBITDA of $783m represents a decline of 16% on the first half of the prior year.
The $101m of impairment charges includes the previously announced impairment of $33m of GSM mobile equipment, relating to the decision to upgrade to W850 mobile technology, and a $68m write off of goodwill relating to PowerTel, as its carrying value is no longer supported by forecast earnings.
Guidance of Group NPAT of $460m to $500m for the full year is unchanged.
“The impact on Telecom of the economic slowdown does not appear to have accelerated this quarter, and revenues have remained relatively resilient with strong management focus.
“A strong focus on managing our costs was reflected in some key decisions, such as the closure of Ferrit, which will save the business $1m a month, a salary freeze for our senior leaders, and the proposal to off-shore some 250 New Zealand and 350 Australian contact centre and back office roles over the next 18 months. In addition, we have put in place a best practice procurement model, and reduced consultant spend by $5m.
“This tight focus on cost control will be further supported by the Right First Time programme during the rest of the year, which will focus on reducing re-work, improving the product delivery process and refining the sale provisioning and billing processes,” Dr Reynolds said.
“At the same time as we are closely managing our operational costs, our investments for growth are continuing, with capital expenditure of $632m during the half year. The W850 mobile build is on track, and we remain on schedule to launch New Zealand's largest and fastest 3G mobile network in June 2009.
The Fibre-To-The-Node (FTTN) programme is ahead of schedule, delivering average attainable speeds of 13mb/s to customers on the new cabinets, and the fixed line transformation is expected to see the first customers on the new voice over IP technology by the end of the year,” Dr Reynolds said.
Telecom has assessed the impact of the slowing economy to be up to $10m during the quarter, consistent with Q1.
“The economy continues to be volatile, and while Telecom is not immune to the effects of a downturn the impacts in Q2 were modest. Broadband and mobile growth rates are slowing but given these are both increasingly penetrated markets, it is hard to attribute this impact entirely to current economic conditions,” said Dr Reynolds.
Broadband penetration has now reached 50% of all access lines.
“The broadband market continues to grow, however it is growing at a slower rate than the first half of last year. We saw the impact of unbundling during the quarter as some ISPs focus on moving customers onto their own networks.
“After a flat first quarter in broadband the retail business has returned to growth during Q2 as the result of new marketing campaigns, securing 46% of broadband connections during the quarter. ”
High mobile penetration during Q2 resulted in slower growth, particularly in the post-paid market, where Telecom recorded 11,000 net connections. Christmas sales were strong in pre-paid, delivering 61,000 net pre-paid connections.
“While growth in the mobile voice market is slowing, mobile data continues to grow strongly. Telecom now has 126,000 mobile data customers, including 77,000 mobile data cards, such as the T-stick.
“Our focus during the second half of the financial year will be on ensuring the success of our launch of New Zealand's largest and fastest 3G network. This will bring more retail outlets, exclusive devices, better coverage, value added services that take advantage of the experience that only fibre backhaul can deliver, and simple pricing,” Dr Reynolds said.
Six months ended 31 December 2008 2007 Change $m $m %
Operating revenues and other gains Local service 527 532 (0.9) Calling 641 657 (2.4) Interconnection 91 90 1.1 Mobile 399 426 (6.3) Data 326 323 0.9 Broadband and internet 290 266 9.0 IT services 236 198 19.2 Resale 173 191 (9.4) Other operating revenue 154 137 12.4 Other gains - 7 NM 2,837 2,827 0.4 Operating expenses Labour 468 437 7.1 Intercarrier costs 638 617 3.4 Impairment 101 - NM Other operating expenses 847 838 1.1 2,054 1,892 8.6
Earnings before interest and tax 348 574 (39.4) Net finance expense (96) (62) 54.8 Share of associates' losses - (1) - Earnings before tax 252 511 (50.7) Income tax expense (89) (114) (21.9) Net earnings 163 397 (58.9)
EBITDA was down 13% in Q2 to $176m, due to a decline in revenues of 7%, which was partially offset by a reduction in costs of 3%.
“Highlights for the quarter were the reduction in home access churn, driven by Streetfighter and new better value bundles such as Totalhome,” said Alan Gourdie, CEO, Telecom Retail. “For the rest of the year we will focus on improving broadband quality and value, reducing churn in the office market, improving our online presence, and retaining customers and stimulating usage on the CDMA mobile network.”
“The launch of W850 in June will also be a pivotal moment for us, and we are committed to delivering an outstanding experience at launch.”
External Revenues were up 5% in Q2, with EBITDA down 3% to $118m in Q2.
“Gen-i saw $310m of client contracts closed in Q2, Mobile revenues holding, IT solutions revenue up 28% and IT solutions EBITDA has grown from $2m to $6m,” said Chris Quin, CEO Gen-i. “Many of our clients are focused on overall cost in their businesses and how to use ICT to enable change.
“In our own business we are managing cost and efficiency tightly with contractor headcount down by 70 in Q2 as an example. Looking forward the focus remains on delivery quality and cost, launching new services like Mobile IP Centrex and working with all of our clients to ensure ICT is addressing the cost pressures in their organisations.”
EBITDA was down 8% to $137m in Q2, partly reflecting the start-up costs of the business.
“Chorus had 214 cabinets installed at end of December and was delivering FTTN broadband to approximately 24,000 customers. In addition, UCLL continues to grow strongly, with 46 unbundled exchanges, primarily in Auckland, and three publicly launched UCLL operators,” said Mark Ratcliffe, CEO, Chorus.
“Our plans for the rest of the year include renegotiating contracts with the service companies, stepping up the FTTN roll out to around 100 cabinets per month, the fibre roll out for mobile networks and delivery of the Undertakings.”
WHOLESALE AND INTERNATIONAL
EBITDA in Q2 was flat at $113m, comprised of Wholesale EBITDA up 8% and International EBITDA down 21%.
“Wholesale has seen ongoing access and broadband growth, however LLU take up and Wholesale competition increased during the quarter,” said Matt Crockett, CEO Telecom Wholesale. “We have been rising to this challenge by putting real focus on strengthening our technology, service and commercial customer value proposition, including confirming we will be launching the world’s fastest DSL technology, VDSL2, in the second quarter of this calendar year.
This is part of our ongoing commitment to provide world-class Wholesale network services and to maintain our position as the preeminent wholesale provider in the New Zealand market.”
EBITDA was up 39% to A$18m in Q2, reflecting the success of cost reduction initiatives.
“The re-pricing of Consumer offers is largely complete and we have recommenced legacy system customer migration. To further drive Consumer customer acquisitions, we are commencing a targeted door-to-door campaign this month,” said Paul Broad, CEO, AAPT. “The rest of the year is expected to see the benefits from our off-shoring initiatives, completion of the re-pricing activities and a focus on on-net and data sales.”
TRANSFORMATION, REGULATION AND GUIDANCE
“Our five core transformation programmes are on schedule and we continue to meet our commitments to our stakeholders,” said Dr Reynolds. “We are engaged with the new Government on its super high speed broadband plans, and progress has been made on several regulatory issues, including mobile co-location and sub-loop unbundling, and we have submitted our undertaking on mobile termination rates.”
Guidance is unchanged, with adjusted Group EBITDA still expected to decline in the range of 5 to 8%. Dividend per share remains 6c for Q2, with no imputation credits.
“Despite the challenges of a slowing economy Telecom is on track, meeting its commitments and its guidance. We are investing $1.3bn this year for growth, to give New Zealanders access to world class mobile, broadband and ICT services, and which will be important foundations for the future growth of Telecom and of New Zealand,” said Dr Reynolds.
Contacts at Telecom NZ media relations:
Mark Watts, +64 (0)272 504 018 or Ian Bonnar, +64 (0)27 215 7564
Forward-Looking Statements This presentation includes forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 regarding future events and the future financial performance of Telecom. These forward-looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond Telecom’s control, and which may cause actual results to differ materially from those expressed in the statements contained in this presentation. Factors that could cause actual results or performance to differ materially from those expressed or implied in the forward-looking statements are discussed in the second quarter media release and management commentary and in the risk factors and forward-looking statement disclaimer in Telecom’s annual report on Form 20-F for the year ended 30 June 2008 filed with the U.S. Securities and Exchange Commission. Except as required by law or the listing rules of the stock exchanges on which Telecom is listed, Telecom undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
Non-GAAP Financial Measures Telecom results are reported under International Financial Reporting Standards (IFRS). The non-GAAP financial measures used in this presentation include: Earnings before interest, tax, depreciation and amortisation (‘EBITDA’). Telecom calculates EBITDA by adding back depreciation, amortisation, finance expense, share of associates’ losses and taxation expense to net earnings/(loss) from continuing operations less finance income; and Average Revenue per User (‘ARPU’). Telecom calculates ARPU as mobile voice and data revenue for the period divided by the average number of customers for the period. This is then divided by the number of months in the period to express the result as a monthly figure. Telecom believes that these non-GAAP financial measures provide useful information, but that they should not be viewed in isolation, nor considered as a substitute for measures reported in accordance with IFRS.
TEL - Telecom New Zealand Annual Report 2009.pdf
Telecom Q2 results - management commentary.pdf
Telecom Q2 results - condensed accounts.pdf
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DELEGAT’S GROUP LIMITED Results for announcement to the market Reporting Period 6 months to 31 December 2008 Previous Reporting Period 6 months to 31 December 2007
Amount (000s) Percentage change Revenue from ordinary activities $127,324 49% Profit from ordinary activities after tax attributable to shareholders $15,668 146% Net profit attributable to shareholders $15,668 146%
Audit The financial statements attached to this report have not been audited.
Comments Refer to the Chairman’s Report appended.
Interim Dividend Cents per share Cents per share (imputed) Not Applicable Not Applicable
Net Tangible Assets per share Current Year Previous corresponding year Net Tangible Assets per share $1.52 $1.29
DELEGAT’S GROUP LIMITED
CHAIRMAN’S REPORT FOR 6 MONTHS ENDED 31 DECEMBER 2008
On behalf of the Board of Directors I am pleased to report the unaudited results for Delegat’s Group Limited for the six months ended 31 December 2008. The Interim Report has been prepared in accordance with the New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) and should be read together with the published financial statements for the year ended 30 June 2008, particularly the notes to the financial statements.
Total Revenue for the period under review is $127.3 million, an increase of 49% on the $85.5 million generated in the same period last year. Earnings before interest, taxation, depreciation and amortisations (EBITDA), at $34.2 million is 54% ahead of the same period last year of $22.3 million. Net profit for the period of $15.7 million is 146% ahead of the $6.4 million earned in the same period last year.
Of particular note is the increase in the cash flow generated from operations of $23.4 million, up $16.0 million from the $7.4 million generated in the same period last year – an increase of 217%.
Having established itself as a global marketer of super premium wine Delegat’s continues to demonstrate its ability to achieve volume and value growth – testimony to the valuable niche that has been established for its Oyster Bay brand. While acknowledging the current international economic climate the Directors remain confident that strong global demand for Delegat’s wines will continue.
As at the date of this report, the outlook for the 2009 harvest is the best for many years. The spring growing conditions have been favourable and the anticipated yield and quality of the fruit is expected to be excellent.
In December 2008 the Company celebrated being awarded the prestigious Company of the Year Award in the Deloitte / Management Magazine Top 200 Awards, having been nominated in two separate categories for business excellence. Delegat’s joins an illustrious group of major New Zealand companies who have been past recipients.
RL Wilton Chairman 19 February 2009 Related Attachments
Half-Year Result 2008 - Analyst & Media Presentation.pdf
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