Ann: FLLYR: KMD: KMD: Media Release - July 2013

• Release Date: 24/09/13 12:00
• Summary: FLLYR: KMD: KMD: Media Release - July 2013
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					KMD
24/09/2013 10:00
FLLYR

REL: 1000 HRS Kathmandu Holdings Limited

FLLYR: KMD: KMD: Media Release - July 2013

KATHMANDU HOLDINGS LIMITED (ASX/NZX: KMD)

ASX/NZX/Media Announcement
24 September 2013

Kathmandu Holdings announces FY2013 full year results:

- Sales up $36.9m (10.6%) to NZ$384.0m,
- EBIT up 11.2% to NZ$63.4m,
- NPAT up 26.6% to NZ$44.2m,
- Earnings per share 22.1 cps, up 4.7c

Final dividend 9.0 cents per share, full year payout of 12.0 cents per share
(up 20%).

Kathmandu Holdings Limited (ASX/NZX: KMD) today announced earnings before
interest and tax (EBIT) of NZ$63.4 million, for the year ended 31 July 2013,
an increase of $6.4 million compared with the prior corresponding period. Net
profit after tax (NPAT) increased from NZ$34.9 million to NZ$44.2 million for
the same period.

RESULTS OVERVIEW

Year ending 31 July 2013
NZ $m Growth
 FY2013 FY2012 NZ $m %
Sales 384.0 347.1 36.9 10.6%
Gross Profit 242.0 219.5 22.5 10.3%
EBITDA 74.0 66.5 7.5 11.3%
EBIT 63.4 57.0 6.4 11.2%
NPAT 1 44.2 34.9 9.3 26.6%
1. FY2013 NPAT includes $3.1m taxation expense benefit from Australian
intercompany loan revaluation.

Kathmandu Holdings Limited Chief Executive Officer, Mr. Peter Halkett said
"this was a good result given the difficult retail environment. It was
pleasing to achieve positive same store sales growth over the year. Operating
expenses reduced as a % of sales compared to FY2012, which also contributed
to earnings growth."

For the full year same store sales growth was 5.6% at comparable exchange
rates (1.8% at actual exchange rates). The company opened seventeen new
permanent stores, eight of these in the second half. Online sales growth of
55% contributed over 4% of total sales.

SALES, STORE NUMBERS AND GROSS PROFIT MARGIN

Year ending 31 July 2013
NZ $m FY2013 % of Total Total sales growth %*1 Same store growth % FY2013 #
new stores
Sales - Australia 241.1 62.8% 19.5% 6.7% 14
Sales - New Zealand 137.0 35.7% 8.6% 4.4% 2
Sales - United Kingdom 5.9 1.5% (12.2%) (6.5%) 1
Total 384.0 100.0% 10.6% 5.6% 17
1  Calculated on local currency sales results (not affected by year-on-year
exchange rate variation)

Australia and New Zealand both performed strongly, delivering positive
comparable sales growth on the previous corresponding period.

Permanent stores open 31 July 2013
FY2013  FY2012
Australia 87 72
New Zealand 44 42
United Kingdom 5 6
Total Group 136 120

In the second half year Kathmandu opened eight new stores (following nine in
the first half) and closed two stores in the United Kingdom as part of the
re-organisation of that business:

- Australia: Eastgardens, Penrith (Sydney), The Glen, Nunawading (Melbourne)
and Hobart CBD.
- New Zealand: Pukekohe, Westgate (Auckland).
- United Kingdom: Kensington High Street (London) opened. Closed Berners St
(London) and Brighton.

During the year four stores were relocated; Richmond (Melbourne) and Perth in
Australia, Nelson and Invercargill in New Zealand. Major refurbishments were
completed in the Highpoint, Knox City (Melbourne), Bondi (Sydney) and Covent
Garden (London) stores.

In the first half of FY2014, seven new stores are confirmed, six of these in
Australia:

- West Lakes (Adelaide);
- Northland, Uni Hill, Emporium (Melbourne); and
- Jindalee, Indooroopilly (Brisbane)

The first New Zealand small format store opened at St Lukes in Auckland last
week.

The new online platform launched early in FY2013 has supported further strong
growth in this sales channel. "We expect the growth opportunities available
to us online to be enhanced further as we offer an improved customer
experience by utilising our CRM capabilities" said Peter Halkett. He further
commented that "sales growth in the UK and other markets globally will be
focused on driving brand awareness in the online channel, supported by
launching the Kathmandu brand in web based marketplaces such as Amazon, where
Kathmandu UK has just launched a selected product range."

Year ending 31 July 2013
FY2013 FY2012
Gross profit margin % 63.0% 63.2%

Gross profit margin remained within Kathmandu's target range of 62% to 64%.
Margins were slightly reduced in Australia (down 60 bps) and marginally
improved in New Zealand (up 10bps). Margins in the United Kingdom were lower
than FY2012 by 200 bps due to the impact of clearance activity associated
with store closures.

OPERATING COSTS

Operating Expenses NZ $m & % of Sales
(excluding depreciation) FY2013 FY2012
Rent 43.8m 39.6m
% of Sales 11.4% 11.4%
Other operating costs 124.2m 113.4m
% of sales 32.4% 32.7%
Total 168.0m 153.0m
% of sales 43.8% 44.1%

Kathmandu's operating expenses decreased by 30 bps as a % of sales. Expenses
in the second half year were consistent with the prior comparable period as a
% of sales. Although retail rent increased as a % of sales, this was offset
by leverage achieved in warehouse and office rent costs, and the effect of
exchange rate translation. Advertising and distribution costs reduced as a %
of sales, whilst operating costs related to sales activity, both retail and
online, increased due to continuing growth in the Australian domiciled
portion of the total business.

"We were successful in reducing operating costs as a % of sales. This
continues to be a key priority and we are confident Kathmandu will achieve
further efficiency improvements in the future" said Mr. Halkett.

EBIT margin increased from 16.4% to 16.5% of sales. Earnings per share grew
by 27.0% to 22.1 cents per share (FY2012: 17.4 cents per share).

OTHER FINANCIAL INFORMATION

NZ $m
Year ending 31 July 2013 FY2013 FY2012
Capital Expenditure 17.4 21.8
Operating Cashflow 45.7 32.5
Inventories 80.0 73.3
Net Debt 40.2 51.9
Net Debt : Net Debt + Equity 12.0% 15.7%
Interim Dividend (cents per share) 3 cents 3 cents
Final Dividend proposed (cents per share) 9 cents 7 cents

The decrease in capital expenditure year on year was a combination of timing,
with $2.2m of spend relating to store projects completed in FY2013 occurring
in FY2012, and efficiency improvements in our store rollout programme. In
addition to the seventeen permanent new stores opened in FY2013, eight stores
have either been relocated or refurbished during the period. Other capital
investment included reconfiguration of the Australian distribution centre and
the first modules of our new retail systems platform.

Total inventories have increased by $6.7m (9.1%), with early timing of summer
season deliveries contributing $2.5m of this increase.

Total net debt at 31 July decreased by 22.5% on the previous year as a result
of increased operating cash flow and reduced capital expenditure. The ratio
of net debt to net debt plus equity at 31 July decreased to 12.0%.

FINAL DIVIDEND

Kathmandu confirms that a final dividend of NZ 9.0 cents will be paid,
bringing the total dividend payout for FY2013 to 12.0 cents (FY2012: 10.0
cents). The dividend will be fully imputed for New Zealand shareholders and
fully franked for Australian shareholders.

FUTURE OUTLOOK

Peter Halkett confirmed Kathmandu's overall key growth strategies remain
consistent. "We will continue to invest in our store network through opening
new stores and relocating or refurbishing existing stores in Australia and
New Zealand. Maximising the return on the investment made in inventory and
store space remains a key focus while continuing to effectively manage
operating costs." Mr. Halkett noted that "Kathmandu will continue to invest
in systems infrastructure to grow our online sales, given the opportunity
presented by this channel." He concluded by saying that "providing there is
no deterioration in economic conditions, Kathmandu expects another solid
performance in FY2014."

For further information please contact:

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

+64 3 3736110

Media Enquiries to Helen McCombie, Citadel PR +61 2 9290 3033
End CA:00241478 For:KMD    Type:FLLYR      Time:2013-09-24 10:00:07