Ann: FLLYR: KMD: KMD: Media Release - July 2012

• Release Date: 20/09/12 11:54
• Summary: FLLYR: KMD: KMD: Media Release - July 2012
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KMD
20/09/2012 09:54
FLLYR

REL: 0954 HRS Kathmandu Holdings Limited

FLLYR: KMD: KMD: Media Release - July 2012

KATHMANDU HOLDINGS LIMITED (ASX/NZX: KMD)

ASX/NZX/Media Announcement
20 September 2012

Kathmandu Holdings announces FY12 full year results:

o Sales up $41.0m (13.4%) to NZ$347.1m,
o EBIT down 10.9% to NZ$57.0m,
o NPAT down 10.7% to NZ$34.9m.

Final dividend 7.0 cents per share, full year payout of 10.0 cents per share.

RESULTS OVERVIEW

Year ending 31 July 2012
NZ $m Growth
   FY12 FY11 NZ $m  %
Sales       347.1 306.1 41.0 13.4%
Gross Profit 219.5 200.6 18.9 9.4%
EBITDA  66.5 71.4 (4.9) (6.9%)
EBIT       57.0 64.0 (7.0) (10.9%)
NPAT       34.9 39.1 (4.2) (10.7%)

Kathmandu Holdings Limited Chief Executive Officer, Mr Peter Halkett said
"this was a solid result given the difficult economic environment. It was
pleasing to achieve positive same store sales growth throughout the year. The
second half year EBIT of $44.3m was an improvement on last year following a
difficult first half. It was also a year in which we lifted our investment
programme to deliver future growth."

For the full year same store sales growth was 5.7% (7.0% at comparable
exchange rates). Online sales are growing rapidly from a relatively small
base. The company opened ten new permanent stores and sales to Summit Club
members continued to rise at a faster rate than the overall rate of increase
in sales.

SALES, STORE NUMBERS AND GROSS PROFIT MARGIN

Year ending 31 July 2012 (NZ $m)
FY12 % of
Total Total sales
growth %*1 Same store
growth % FY12 # of
new stores
Sales - Australia 214.0 61.7% 15.8% 6.5% 6
Sales - New Zealand 126.1 36.3% 14.3% 9.2% 4
Sales - United Kingdom 7.0 2.0% (7.7%) (7.7%) 0
Total        347.1 100.0% 13.4% 5.7% 10
1  Calculated on local currency sales results (not affected by year-on-year
exchange rate variation)

New Zealand outperformed Australia in same store sales growth. As for the
first half of the year, Kathmandu's relative sales performance in Australia
has generally been weaker in those states not directly benefitting from
activity in the resource sector.

Permanent stores open 31 July 2012
 FY12 FY11
Australia 72 66
New Zealand 42 38
United Kingdom 6 6
Total Group 120 110

Kathmandu opened five new permanent stores in the second half (following five
in the first half), four in Australia and one in New Zealand:

o Australia: Tamworth, Shellharbour, The Rocks (Sydney) and Moorabbin DFO
(Melbourne).
o New Zealand: Masterton.

Additionally in New Zealand the Newmarket (Auckland) store was opened in a
new location and the refurbished Victoria St (Auckland) store was reopened
following a ten month closure.

In the first half of FY13, an accelerated store rollout programme will have
nine new stores open, all in Australia, compared to five in the same period
last year.

"To support our strong growth in online sales we are about to launch a new
platform to deliver an improved customer experience in existing markets, and
to enable us to pursue global sales opportunities through this channel" said
Peter Halkett. He commented further that future sales growth in the UK market
will be targeted via the online channel rather than building a larger store
network.

Year ending 31 July 2012
    FY12 FY11
Gross profit margin % 63.2% 65.5%

Gross profit margin reduced by c. 230bps, although it was still within
Kathmandu's target range of 62% - 64%. Margin reduction was primarily due to
the cost of a new loyalty incentive structure introduced in FY12 for our
Summit Club members. Summit Club membership grew by over 30% in the year.

OPERATING COSTS

Operating Expenses NZ $m & % of Sales
(excluding depreciation) FY12 FY11
Rent       39.6m 31.9m
% of Sales    11.4% 10.4%
Other operating costs     113.4m 97.3m
% of sales    32.7% 31.8%
Total       153.0m 129.2m
% of sales    44.1% 42.2%

Kathmandu's operating expenses increased by 190 bps as a % of sales. Expenses
in the second half year decreased as a % of sales by 30 bps. In the first
half, one off expenditure arose primarily from dealing with issues
encountered following the implementation of our new warehouse management
systems, as well as higher costs associated with relocation of key new
stores, including rent.

Peter Halkett said "we also took steps during FY12 to reduce our UK cost base
by outsourcing warehousing and distribution to a third party service provider
and restructuring our support functions. The expense incurred in FY12 as a
result of these actions was approximately $1m."

EBIT margin decreased from 20.9% to 16.4% of sales.

OTHER FINANCIAL INFORMATION

 NZ $m
Year ending 31 July 2012 FY12 FY11
Capital Expenditure     21.8 11.9
Operating Cashflow    32.5 39.8
Inventories      73.3 54.0
Net Debt   51.9 42.9
Net Debt : Net Debt + Equity 15.7% 14.4%

Interim Dividend (cents per share) 3 cents 3 cents
Final Dividend proposed (cents per share) 7 cents 7 cents

The increase in capital expenditure year on year has primarily been in store
relocations and refurbishments, along with an increased level of expenditure
on infrastructure and systems. Five stores have either been relocated or
refurbished during the period and the Perth store was in progress at 31 July.
Several other major infrastructure projects were completed during the year
including the new distribution centre for New Zealand. Our key systems
investment in FY12 was the new online platform (about to launch).

Total inventories increased by 35.7%, or NZ$19.3 million and by 21.6% on a $
per store basis. This was mainly as a result of the planned investment in
product range growth and earlier deliveries of new season product.

Total net debt at 31 July increased by 21.0% on the previous year as a result
of funding required for the earlier delivery of inventory. The ratio of net
debt to net debt plus equity has increased slightly to 15.7%.

FINAL DIVIDEND

Kathmandu confirms that a final dividend of NZ 7 cents will be paid, bringing
the total dividend payout for FY12 to 10 cents. The dividend will be fully
imputed for New Zealand shareholders and fully franked for Australian
shareholders. This payout is consistent with the 50%-60% range we are
targeting over the medium term in conjunction with our capital investment
programme.

FUTURE OUTLOOK

Peter Halkett confirmed Kathmandu's overall key growth strategies remain
consistent. "We will improve company performance by continuing to invest in
our store network through opening new stores and relocating or refurbishing
existing stores. Maximising the return on the investment made in inventory
will be a key focus, and operating costs will continue to be effectively
managed." Mr. Halkett noted that "Kathmandu's investment in systems to grow
our online sales, both within Australasia and globally, will continue given
the opportunity presented by this channel." He concluded by saying that
"providing there is no further deterioration in economic conditions,
Kathmandu expects an improvement in performance in FY13."

For further information please contact:

Peter Halkett, Chief Executive Officer or Mark Todd Chief Financial Officer

+64 3 3736110

Media Enquiries to Peter Brooks, Citadel PR +61 2 9290 3033
End CA:00227514 For:KMD    Type:FLLYR      Time:2012-09-20 09:54:36