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Cavalier profit higher than forecast before impact of tax changes

Friday 16th July 2010

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Cavalier, the only listed carpet-maker in New Zealand, said full-year profit was higher than forecast though net income was eroded by the impact of changes to tax rules.

Profit was $16.3 million to $16.7 million in the year ended June 30, the company said in a statement. That tops its previous guidance for tax-paid earnings of between $14.5 million and $15.5 million and is as much as 22% up on the previous year’s $13.7 million.

Once the impact of the government’s 2010 Budget tax changes on the deferred tax position of the group are taken into account, though, net profit was reduced to between $11 million to $11.4 million, managing director W K Chung said.

“The adjustments to deferred tax are one-off accounting entries and have no impact on the group’s underlying profitability, cash flows and therefore its dividend policy or financing covenants,” Chung said.

“They will, however, have the effect of reducing the report tax-paid profit.”

Shares of Cavalier fell 0.4% to $2.45 on the NZX today and have declined 6% this year.

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