UPDATE: Methven books $2.7M after cancelling earn-out 25 Aug 2016
Related articles
- Minister launches SmartGate in Wellington Travel
- Sick leave expected to increase during World Cup Sport
- Prime Minister to travel to South Africa News
- New Zealand-Russia begin FTA scoping discussions News
- Knowles quits as CEO of KiwiBank Business
- Snow on The Remarkables Living
- NZ manufacturing activity reaches highest since 04 Business
- Budget provides $321m for RS&T activities News
- NZ economy expands at fastest pace in two years Business
- Positive indicators in labour market Recruitment
Thursday 25 August 2016 01:11 PM
UPDATE: Methven books $2.7M after cancelling earn-out with Chinese factory owner
(Recasts with CEO comment)
By Fiona Rotherham
Aug. 25 (BusinessDesk) - Listed shower and tapware maker Methven booked a $2.7 million gain in its full-year net profit adjustments after cancelling an earnout agreement with the owner of the Chinese manufacturing facility it bought in 2014.
Two years ago the company bought Invention Sanitary, since renamed Methven Heshan, from Hui Zhuang. It reached agreement with him in May last year to cancel an earnout agreement despite hitting the required financial targets set out in the acquisition because working capital at the Chinese operation proved higher than anticipated during due diligence.
Zhuang retired from the business in December last year and then last month sold his 5.85 percent stake in Methven. Methven is currently trading at $1.31 per share, unchanged today but up 34 percent on a year ago.
Methven Heshan’s production increased 10 percent during the past year as the company ramped up sales though it doesn’t disclose the production split between its manufacturing hubs in New Zealand and China.
Methven reported a 31 percent increase in full-year net profit for the year endedJune 30 and $8.6 million in net profit for the previous 15 months after changing its balance date from March to June. Adjusted net profit after one-off provisions was $8 million, up from $6.4 million the prior year.
The Auckland-based company, which mainly sells into New Zealand, Australia, and the UK, cleared a record $1.4 million in slow and obsolete inventory during the year, which revealed its previous provisioning was inadequate. That led to a detailed review at all sites and a $1.7 million one-off provision to cover clearance of older inventory in China, New Zealand, and Australia.
Methven reported 12-month sales revenue of $105.8 million, up 8.1 percent on the prior year and in line with guidance. That was up 6 percent on a constant currency basis, its first material revenue growth since 2009.
Chief executive David Banfield says the company is now considering options for an employee share scheme for its 350 staff, to be introduced in the next couple of months because it wants employees to act like shareholders.
The directors have declared a partially imputed final dividend of 4.5 cents per share payable on Sept. 30, taking total dividends for the year to 9.5 cents.
Sales growth was highest in New Zealand, where it rose 11 percent to $35.7 million while earnings before income and tax excluding non-recurring items rose 17 percent to $4.7 million. Banfield said it had gained market share in New Zealand and Australia but wouldn’t divulge what that “market leading” share was.
In Australia, sales increased by 6.9 percent to $39.6 million with a strong performance in the showering category and a slight increase in earnings before interest and tax.
The UK market showed a strong earnings increase of 122 percent to $553,000 though revenue fell by 2.3 percent to just under $12 million and below expectation as the start of contracts won during the financial year were delayed.
Banfield said the company, which turns 130 next month, has significant momentum but still has a way to go to become a truly world-class enterprise.
It’s on track to meet its strategy target of raising revenue to $130 million and achieving net profit of 10 percent of sales by June 2018, he said. Shareholders last year criticised the strategy as not being aspirational enough.
The group is targeting revenue growth of at least 5 percent and net profit growth of 10-to-20 percent in constant currency for the 2017 financial year. Net profit is likely to be flat at the half-year compared to the previous period, which Banfield said was largely due to the timing of investment.
In March, Methven launched its new patented shower spray technology Aurajet, which has won more design awards than any other product in the company’s history. Methven now has two of the five global leading shower technologies with Aurajet and Satinjet and has reached the ‘design freeze’ stage – where it knows it can technically achieve what it wants to – with a new showering technology. Banfield wouldn’t say how soon that technology was likely to come to market.
Aurajet had delivered less cannabilisation of Satinjet sales than anticipated because it appeals to different customers and the latest technology would also be aimed at a new customer segment, he said.
(BusinessDesk)
News
Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students
29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more
New Zealand reaffirms support for Flight MH17 judicial process
7 Mar 2020 News
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more
Business
NZ Government's Economic package to fight COVID-19
17 Mar 2020 Business News
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more
NZ Government announces aviation relief package
19 Mar 2020 Business News
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more
Living
Diversity was Key at New Zealand Trade Tasting in London
6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall.
It was the first... more
Kiwi author stuns Behind the Butterfly Gate
12 Jan 2022 Arts
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...
New Zealand writer Merryn Corcoran’s... more
Property
Fairer rules for tenants and landlords
17 Nov 2019 Property
17 NOVEMBER 2019
The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more
New Zealand Government will not implement a Capital Gains Tax
17 Apr 2019 Property
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more
Migration
Boosting border security with electronic travel authority – now over 500,000 issued
19 Nov 2019 Migration
19 NOVEMBER 2019
We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more
Christchurch reinstated as refugee settlement location
18 Aug 2018 Migration
18 AUGUST 2018
HON IAIN LEES-GALLOWAY
The announcement that Christchurch can once again be a settlement location for refugees... more
Travel
Gallipoli Anzac Day services cancelled
19 Mar 2020 Travel & Tourism
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more
New Zealanders advised not to travel overseas
19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas
more
Sport
The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners
27 Oct 2019 Cricket
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more
PREVIEW: All Blacks v England semi-final
26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more
Columns
Gordon Campbell on the Gareth Morgan crusade
11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade
First published on Werewolf
The ghastly likes of Marine Le Pen in France and Geert ... more
Gordon Campbell on the US election outcome
10 Nov 2016 Opinion
Column - Gordon Campbell
Gordon Campbell on the US election outcome
Well um.. on the bright side, there (probably)... more
Kiwi Success
Congratulations to Loder Cup winner
26 Sep 2018 People
25 SEPTEMBER 2018
The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more
Appointments to New Zealand National Commission for UNESCO
16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO
HON JENNY SALESA
Associate Education Minister Jenny Salesa is... more
Recruitment
Historic pay equity settlement for education support workers
14 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more
Historic pay equity settlement for education support workers
22 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more