Godfrey Hirst pulls $50M dividend from profitable NZ business

Godfrey Hirst, which acquired failed carpet maker Feltex in 2006, has pulled a $50 million dividend from its New Zealand business while reporting annual sales growth and one-time gains from asset sales and purchases.

Profit was $10.8 million in the year ended June 30 for Hirst's Avon Pacific Holdings unit, from $10.3 million a year earlier, according to the Auckland-based company's financial statements. Sales rose to $154.7 million from $142.9 million.

The Australian woollen and synthetic carpet maker bought Feltex from its receivers in 2006 for a price reported at the time as sufficient to repay the target's banking facilities. Having listed at $1.70 a share, Feltex's stock had sunk to as little as 1 cent before being suspended. Godfrey Hirst was the only bidder.

Avon Pacific's year-earlier results were bulked out by a $21.4 million earthquake insurance payment. In the latest 12 months the company recognised a gain of about $6.5 million on the bargain purchase of Summit Wool Spinners, which had net assets of $11.6 million and was acquired for about $5.1 million cash. It also had a gain of about $3 million from the sale of property in Christchurch that was no longer fit for purpose.

Cost of sales rose to about $125 million from $122 million, marketing and distribution expenses rose to $13.8 million from $10 million, while administration costs fell to $13 million from $16.5 million.

In October, the group restructured its trans-Tasman banking facilities with Westpac Banking Corp and the New Zealand arm drew down $17 million of an $18 million working capital facility and $17 million of a $22.7 million amortising debt facility. The total $34 million debt is equal to the net $34 million dividend paid to its immediate parent.

Godfrey Hirst competes with NZX-listed Cavalier in the New Zealand market. Cavalier is bigger by sales, with $201.7 million of revenue in the year ended June 30, generating a more modest net profit of $3 million after one-time costs to consolidate its tufting operations.

Cavalier shares rose 1.2 percent $1.70 and are little changed this year.

(BusinessDesk)