MGL
29/02/2012 16:03
HALFYR
REL: 1603 HRS Mercer Group Limited
HALFYR: MGL: Mercer Group Limited- Half Year Results to 31 December 2011
NEWS RELEASE dated 29/2/12
MERCER GROUP LIMITED
FINANCIAL RESULTS for the 6 MONTHS ENDED
31 DECEMBER 2011
Mercer Group today announced its unaudited interim results for the 6 months
ended 31 December 2011. The group recorded a net deficit after tax of $1.1m
which is better than the $1.6m deficit for the corresponding period last
year.
During the period, Mercer has significantly restructured its business, and
included in the result is $0.4m of restructuring and one-offs and $0.6m of
losses from Australia before the restructuring which commenced on 30th
September 2011.
Normalised EBITDA (Operating earnings before interest, tax and depreciation
from the ongoing business) was a much improved positive $0.5m from a loss of
$0.8m last year. Revenue was $16.6m versus $16.0m in the prior period. For
further information please see the financial attachment.
The continuing businesses comprise:
Stainless Fabrication
This division comprises the fabrication workshops in Christchurch and New
Plymouth and a branch in Brisbane, Australia. The division is a fabricator
of equipment, predominantly in stainless steel.
The business had a good first half with the new dairy factory at Darfield
providing the backbone of work together with good sales of our proprietary PV
Valves and smaller tank work.
The current order book is strong with full workshops through until June,
hence we anticipate a good second half result from this division. We have
increased workshop staffing by around 5% in order to accommodate this
increased work.
Mercer Products
This division manufactures in New Zealand and supplies sinks, basins, tubs,
toilets, laminate, solid surface material and other similar products to
joiners, merchants, fabricators and other manufacturers in New Zealand.
The New Zealand business has continued to be affected by the continued
downturn in residential building activity and delays in the Christchurch
rebuild. Despite this, the performance of the business has been
unsatisfactory and we have recruited a new General Manager, Hayden Searle to
lead the change.
In Australia, Mercer has recently signed a distribution agreement with
Bathroom & Kitchen Supplies Pty Ltd (trading as Imperialware) which provides
Mercer with greater sales presence and leverage in the Australian market.
This arrangement commenced in February and we expect an uplift in sales and
profitability in coming years as a result.
Mercer Products' sales of kitchen, bathroom and laundry products were $0.7
million down on the same period last year. Although we are well positioned
for the rebuild activity in Christchurch, we believe this will not have a
material impact on our trading results until the next financial year.
Mercer Medical
Mercer Medical is a division supplying equipment and related products and
services for sterilization, washing and disinfection. During the period
Mercer has signed new distribution agreements with leading overseas
principals, including MMM Group, Dr Weigert and Warwick Sasco. The forward
order book for this division is relatively strong and hence we expect a solid
result for the second half. We are now working on opportunities for the
following financial year, including a focus on the servicing capability which
is a good opportunity and should be the backbone of this division.
Banking
The company successfully negotiated new bank facilities with BNZ, and is now
covenant compliant. The company also entered into a $1.3 million secured
shareholder loan facility to be drawn down as required, $850k was drawn down
at 31 December 2011. The company expects it will start to pay down some of
these loans in the coming months.
The company has recently hired Tobin Blathwayt as a full time CFO and this
will further strengthen the new management team and has provided confidence
to lenders.
Dividend
The Directors have determined that it is not appropriate to pay an interim
dividend.
Outlook
The company believes it has now worked its way out of the loss making
Australian divisions and has completed the restructuring that was needed to
turn the business around. Our previous guidance of $1m of normalised EBITDA
for the 12 month period (EBITDA excluding restructuring and one-offs) and
positive cash flows after excluding restructuring is still valid. The risk
to the result is the performance of the Mercer Products NZ division, which is
finding the current market conditions very challenging and continued delays
with the Christchurch rebuild have affected our results. Offsetting this
somewhat has been stronger than expected performance of the Stainless NZ
fabrication division.
For further information, please contact Rodger Shepherd, Group CEO on +649
837 7540
End CA:00220195 For:MGL Type:HALFYR Time:2012-02-29 16:03:11
