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Renaissance loss worse than forecast, flags possible capital raising

Tuesday 29th November 2011

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Renaissance Corp, which used to have a monopoly on national distribution of Apple products, has posted a worse-than-forecast annual loss and may have to raise new capital as it waits for insurance cover from the Christchurch earthquakes to refill its coffers.

The Christchurch-based company made a loss of $4.3 million, or 9.5 cents per share, in the 12 months ended Sept. 30, reflecting a $3.6 million loss of earnings from the Canterbury quakes.

Its pre-tax loss of $5.8 million was $1.8 million worse than the outer-limit flagged in a September forecast. Revenue was $181.2 million in the 12 month period, compared to $154.1 million in the previous nine months through Sept. 30. Renaissance changed its balance date during the year.

“The combined effects of the Christchurch earthquake and the changes introduced by Apple, but especially the introduction of a second distributor have made this year a ‘perfect storm,” chairman Colin Giffney said in a statement. “There is no doubt in the minds of the directors that Renaissance has a future.”

The company has struggled to find its feet after the building that housed its Natcoll Christchurch Campus and head office was condemned because of the Christchurch earthquake in February, and it faced competition after losing the sole rights to sell Apple computers in New Zealand.

Giffney said the company breached banking covenants though it is compliant with a new $12 million facility that reduces to $9.5 million in March next year before expiring in May 2012. As at Sept. 30, it owed $4.7 million in secured loans.

Renaissance has received $1 million as a part payment for insurance cover, but is still waiting to hear whether insurer QBE New Zealand has accepted its claims. It expects payments of at least $3.6 million.

“Without speedy restitution of our insured losses the company is under-capitalised,” Giffney said. “Some sort of recapitalisation may be necessary.”

The board assumed a ‘going concern’ status for Renaissance, with a note to the unaudited financial statements saying they expect “access to sufficient funding will be available beyond the facility expiry to meet group requirements.”

The company burned through cash in the year, with an operating outflow of $5.3 million and an investment outflow of $1.9 million. It held $598,000 as at Sept. 30, compared to $3 million a year earlier.

In September, Renaissance said it would entertain offers for its distribution business, but the board has yet to decide on what to do with the unit as “Apple continues to introduce changes to the distribution model, to the margin structure and to credit terms,” Giffney said.

No dividend was declared, and the shares were unchanged at 12.5 cents a share, having halved in value this year. Renaissance is worth $5.7 million by market capitalisation.

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