'Extraordinary items' contribute to Renaissance loss

'Extraordinary items' contribute to Renaissance loss

Renaissance Group has posted a before tax loss of $2.7 million ($2.2 million after tax) for the full 2009 year, saying one off expenses and write offs impacted its trading result.

The official results were in line with the preliminary unaudited loss of $2.721 million, and follow a before tax profit of $1.54 million in 2008. The 2008 result was down 70 percent on the 2007 profit of $5.13 million.

Operating revenue grew to $194,765 for the period, up from $189,577 last year.

“The underlying trading of the group for the last quarter was within the range predicted in management’s last guidance in September 2009. However, items that the board considers to be one-off and extraordinary impacted the trading result,” chairman Colin Giffney said in the company’s annual report, posted to the NZX on 1 April.

“The final result was a bottom line pre-tax loss of $2.7 million. Of this, no less than a net $3.4 million was in the category of extraordinary and by far the majority of these items were balance sheet adjustments that had no cash impact in the current year.”

$2.5 million of the $3.4 million in one-off expenses and write offs were dealt with before EBITDA was calculated, according to the report. Total EBITDA stood at $672,000.

These include $1.025 million in stock obsolescence and stocktake variances, slightly more than half a million dollars in costs associated with senior executive team changes and $0.7 million in final charges relating to discontinued operations Txttunes Widget and Renaisannce indemnity. The board also wrote off $0.79 million goodwill associated with hardware building subsidiary Insite Technology.

The loss from discontinued operations was $643,000.

Giffney said the group’s management had always expected a challenging 2009 due to the recession, unstable buying patterns and 2009 being the first full year of changes in the margin it was able to earn after Apple allowed direct buying from the vendor as well as through the distributor.

2009 was a horrible year, Giffney said, adding the performance of the MagnumMac retail chain was a particular disappointment.

It lost $1.6 million from trading during the year and another $0.7 million from stock adjustments and other one-off costs.

However, Renaissance says core Apple products are growing at an unprecented rate. It expects Magnum Mac could “ride the back of Apple growth” following the release of the iPad, and adds the retail chain has made progress reducing trading losses.

The company says its Natcoll tertiary design college business is continuing to perform well.

The new management team, including CEO Richard Webb, has completed a full review of the business. The business is now based on customer-facing teams, rather than product focused teams, it says.

Marketing has been centralised and the number of supported brands is being consolidated, the company says.

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