Sharechat Logo

Mercer Group widens annual loss on foregone tax assets, restructuring costs

Tuesday 29th August 2017

Text too small?

Mercer Group posted a wider loss as the cost of restructuring and foregone tax assets weighed on the bottom line. 

The Christchurch-based company reported a net loss of $7 million, or 16.96 cents per share, in the year ended June 30, from a loss of $6.5 million, or 39.15 cents, a year earlier, it said in a statement. The bottom line was weighed on by a $2.1 million tax expense after the firm gave up tax assets during a $7 million capital raise through a rights issue, which diluted the shares on issue and meant the earnings per share loss shrank. 

On an earnings before interest, tax, depreciation and amortisation basis, Mercer's loss was $3.5 million, compared to $3.2 million a year earlier, although that included $2.2 million of restructuring and impairment charges as Mercer repositioned the business into what it now sees as a holding company for three separate businesses: automated and robotic bulk foods handling system Haden & Custance; the still-to-be-commercialised medical sterilisation technology unit S-Clave; and the traditional stainless steel fabricator Mercer Stainless. Revenue gained 3 percent to $26.9 million. 

"While the annual result is not where we need or want it to be, the efforts of the past year have been focused on fundamental change to our operations and strategy," chair John Dennehy and chief executive Richard Rookes said. "We are forecasting a continuation of the improved operating performance for the 2018 financial year." 

Mercer has overhauled its business over the past year and a half, raising equity to repay debt and replacing related party loans from Gresham Finance, a vehicle affiliated with majority shareholder Humphrey Rolleston, with a banking facility with Bank of New Zealand. Of the company's $7.7 million of loans, $6.6 million is due to BNZ. 

The company's operations generated a cash outflow of $4.7 million in the year, compared to a $1.6 million deficit a year earlier. After investment and financing activities, the firm was $237,000 in overdraft at the June 30 balance date, a smaller overdraft than the $479,000 a year earlier. 

The company's board may look to raise more capital in the current financial year with a review scheduled for the first quarter. Dennehy and Rookes said each division has opportunities ahead of them and that they're open to more acquisitions and partnerships. 

"At a strategic level, we are comfortable with the businesses," Dennehy and Rookes said. "Robotics and automation (H&C) and medical technology (S-Clave) are highly relevant in today's world and we now have a settled structure and platform from which to grow in both of these space." 

The shares were unchanged at 36 cents, and have slipped 5.3 percent so far this year. 


Father's Day THIS WEEK END! Crazy Deals on ALL IRG Yearbooks - More than 50% OFF - $19.99 for 44th IRG Yearbook 2018-2019

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Govt clamps down on web service providers after data breach
NZ dollar rebounds in absence of feared yuan devaluation
Balanced consenting framework needed for renewables - Meridian
Lumpy imports drive bigger July trade deficit than expected
Freightways' net profit rises despite NZ slowdown
National floats company tax cut, recommits to higher pension age
Metlifecare lifts underlying annual net profit 4%
Chorus CEO McKenzie to leave this year as operating earnings decline as expected
Supreme Court to hold oral hearing on Synlait's Pokeno appeal
Meridian posts record profit on high production, prices

IRG See IRG research reports