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New Image posts FY loss after one-off charge, impairment

Thursday 30th August 2012

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New Image, which makes colostrum-based health tonics, reported a full-year loss that met is guidance after taking one-time charges to write-down its Living Nature and Sleep Time brands.

The loss was $6.1 million in the 12 months ended June 30 from a profit of $2.3 million a year earlier, the Auckland-based company said in a statement. Sales fell 1.5 percent to $74.7 million, beating New Image's May guidance of $73 million.

The result included an impairment charge of $2.3 million against New Image's skincare brand, Living Nature, and its sleep-enhancing milk powder, Sleep Time. New Image's failed relationship with Natural Dairy resulted in a $1 million inventory charge, while the wind-up of the company's executive share scheme had a one-off cost of $600,000.

It also recognised a tax expense of $1.4 million on income earned outside New Zealand. Chairman Graeme Clegg said the result was "disappointing." The restructuring of the business over the past year coupled with capital expenditure on its manufacturing plant has "delivered not only valuable manufacturing assets, but also a solid platform for growing revenue."

The directors believe the company is well positioned to take advantage of the growing demand for dairy based products throughout Asia, while the direct selling division will continue to develop key markets and expects to see strong growth in Malaysia in the next financial year, Clegg said.

Taiwan and Malaysia made up about 90 percent of New Image's direct sales, down 10.8 percent on a year earlier to $55.9 million. The result was affected by the strength of the New Zealand dollar. The launch of a new product in Malaysia helped boost second-half sales following "difficult" trading conditions. Retail and contract manufacturing sales rose 43.5 percent to $18.8 million.

The increase includes capital expenditure on its new spray dry milk powder plant at Paerata and a can-making line installed in the Penrose factory. Shares in New Image last traded at 15 cents and are down 25 percent this year.

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