Gazal's Bisley Workwear business perks up
Gazal Corporation Limited announced sales revenue from continuing operations for the financial year ended 30th June, 2011 increased 16.4% on the previous year to $267.2 million. During the period, after-tax profit from continuing operations was $10.3 million, an increase of 31.5% compared to the previous year.
The wholesale segment recorded solid sales growth. This was largely driven by strong growth from our Bisley Workwear business through its new protective fabrics programs and an improved in-stock position. Good sales growth was also achieved in our Van Heusen dress shirts and men's suits business. Profit margins in the wholesale business improved as a result of better gross margin management and ongoing overhead savings, particularly in warehousing and distribution costs.
Sales increased in the direct-to-consumer segment mainly as a result of additional investment in new outlets. The downturn in profit margins experienced in this segment in the first half were unfortunately sustained through the balance of the financial year as consumer sentiment remained cautious and the heavy discounting environment continued.
The focus on improving working capital management is a continuing priority for the Group. With the increased sales momentum in the business inventory levels rose slightly to $45.6 million at 30th June 2011 compared to $42.7 million at the same time last year. With improved management of trade receivables and payables, cash flows from operating activities were a healthy $19.5 million for the year. This compares to $31.3 million for the previous year when inventories were reduced in a period of relatively flat revenue in the 2010 financial year compared to the 2009 financial year.
In line with the Group's capital management initiatives, during the financial year the Company bought back and cancelled 3.5 million ordinary shares (5.8% of the opening shares on issue) for a total consideration of $7.1 million. After this outlay, closing net debt as at 30th June 2011 was $29.9 million compared to $26.3 million as at the same time last year.
During the year management and the Board focused on simplifying and streamlining its operating segments and in this process decided to divest certain assets. Included in discontinued operations are the Trent Nathan trade mark and licensing business (sold and announced in late June 2011), components of the Underwear wholesale division and the Brands United outlet stores.
The proceeds from the sale of Trent Nathan prior to year end exceeded the book value of related assets including intangibles. Subsequent to balance date, it was announced yesterday that the Brands United outlet stores (total of 12 stores) were sold and completion of the sale is due 31st August 2011. In relation to the assets held for sale at balance date including the Brands United intangible value, it was deemed prudent to recognise a non-cash impairment charge of $3.2 million against the carrying value of these assets. Excluding this charge, after-tax profits from discontinued operations for the year was $1.0 million. The Company should be in a position to update shareholders on the progress of the sale of the remaining assets in the coming months.