Chief Executive Officer Sue Morphet said: “Pacific Brands announced a reported net loss after tax of $450.7 million for the 12 months ended 30 June 2012. The loss was due to the impact of significant items relating to the non-cash write-down of goodwill in the Underwear, Homewares and Workwear businesses of $502.7 million, with no tax effect.
“EBIT before significant items of $129.1 million is at the upper end of our guidance range of $125-130 million. There were also cash restructuring costs associated with the Pacific Brands transformation program of $31.4 million ($22.0 million post tax) in line with guidance (ie c.$32 million) relating mainly to the integration of Bonds and Omni, distribution centre consolidation and other operational restructuring.
“Before significant items, net profit after tax was $72.8 million representing a 29.6% decline from the prior year. The earnings decline was driven by previously announced business divestments, the Kmart transition, cotton price volatility and continued challenging retail conditions.
“Reported sales were down 18.1% primarily due to business divestments, with underlying sales down 8.0% or 4.3% exclusive of sales to Kmart.”
Cash flow remained strong through effective working capital management resulting in cash conversion of 137%. As previously announced, the Company completed the sales of the Coolaroo and Kingsgrove surplus properties for $18.1 million. These factors enabled a $53.1m reduction in net debt from $242.2m at 31 December 2011 to $189.1m at 30 June 2012. The Company has a conservative capital structure with gearing8 at 1.4 times and interest cover8 at 5.2 times.
Ms Morphet said: “We are pleased that Bonds sales ex-Kmart were up, online continued to exhibit strong growth and the performance of our first retail stores has exceeded expectations. Sheridan grew with our new boutique and online stores performing strongly. Workwear, however, felt the effects late in the year of the decline in business confidence. In addition to the tough consumer and business environment, this year our businesses have also been managing the Kmart transition and cotton price volatility, but thankfully those issues are now largely behind us.
“It was disappointing to have to impair the goodwill in Homewares and Workwear. The Homewares impairment was due to structural market changes impacting the Tontine and DunlopFlooring businesses. The Workwear impairment was due to a number of factors including thoseimpacting sales through lower business confidence, a slowdown in the resource sector andreduced government spending.”
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