30 May 2001
Bendon Group Limited
Preliminary Announcement
Additional Information For Year End 31 March 2001
NZSE 30 May 2001
The Directors of Bendon Group are pleased to advise shareholders that their trading company, Bendon Ltd, has shown very
good resilience in exceedingly difficult market conditions to post an earnings before non-recurring items, interest and
tax (EBIT) result of $5.336m for the year ending 31 March 2001. This result was achieved on sales of $78.036m giving an
EBIT:Sales ratio of 6.8% which compares favourably to benchmark data for international apparel companies.
The past year was one of transition for the Bendon Group as it took further steps to move from being a former
conglomerate to a single business company. Bendon Ltd, now has a single focus on designing, marketing and distributing
intimate apparel. The finalisation of the sale of New Zealand China Clays, the rationalisation of the Corporate
structure including the change of company name and progress toward a United Kingdom business have all been successfully
undertaken and each of these elements are discussed in following paragraphs.
BENDON
After a full year of sourcing all of its product offshore it is apparent that this was the right decision. Without the
competitiveness and flexibility gained from offshore sourcing, Bendon would not have been as successful as it has been
given the significant downturn in retail markets during the second half of the financial year. This is most apparent in
the Australian marketplace.
The downturn in the Australian consumer market has been well documented by other business commentators. Your Directors
drew your attention to this in their announcement of 28th February 2001.
New Zealand trading conditions were also difficult and the impending withdrawal of the retail chain "Deka" from the
market illustrates how competitive this marketplace now is. Exchange rate fluctuation continues to have an impact on the
business.
Nevertheless, Bendon has been able to maintain, or grow, its share in its targeted segments, albeit in an era of smaller
overall market revenues, to approximately 50% in New Zealand and 25% in Australia, in the sectors in which Bendon
trades. In New Zealand sales benefited from twelve months revenue from the Bennett and Bain stores, and the re-launch of
the Fayreform brand in the local market. The Directors believe that further market share growth in both countries will
be difficult and are looking to new opportunities such as the United Kingdom. At a time of relatively flat retailing
conditions Bendon has continued to hold costs and ensure the competitive position obtained from offshore sourcing is
maintained. Tight control of costs has not been allowed to detract from the innovative style and fashionability which is
associated with the Bendon brands.
UK VENTURE
Directors are pleased to confirm that orders have been received from major United Kingdom department stores for delivery
of the “Elle Macpherson Intimates” range of product into their stores in August/September of this year. This range of
product is the vehicle for the UK entry. Prior to delivery a major launch campaign will be undertaken with a combination
of media and press presentations supported by Elle herself.
Bendon has formed a number of alliances to effect its operations in the United Kingdom. Bendon will retain
responsibility for marketing and design.
Given Bendon's significant market share in New Zealand and Australia there is a continuing strong focus on successfully
establishing the United Kingdom business. There is a cost to entering a new market and, while the Bendon management team
has strived at all times to contain costs, one-off costs of $1.222m have been expensed in the accounts for 31 March 2001
as a non-recurring item. These costs were incurred in the initial market research, establishing strategic alliances,
developing product ranges for the UK market and presentation of these product ranges to potential buyers.
SALE OF NEW ZEALAND CHINA CLAYS
After approval from shareholders, the business of New Zealand China Clays was sold effective 1 July 2000. Trading for
the three months to 30 June produced an EBIT result of $1.682 million and the net profit on sale of the business was
$28.351 million.
NAME CHANGE
Following the decision to sell New Zealand China Clays the name of the holding company was changed on 1 June 2000 from
Ceramco Corporation Limited to Bendon Group Limited. The name change reflects the focus of the company going forward.
DIRECTORS
During the year, Mr S Marsters resigned from the Board following the disposal of New Zealand China Clays, Mr P E Hills
retired and Mrs J Withers did not stand for re-election. Mr Trevor Kerr was appointed as a Director in September 2000.
RESTRUCTURING OF BENDON GROUP LIMITED
The liquidation and rationalisation process is proceeding to plan. The company accounts show, as a non-recurring item,
re-organisation costs of $9.0m which were set aside in the September half year to cover the costs of liquidation and the
consequent crystallization of liabilities, such as tax on prior earnings of overseas subsidiaries. As an on-going
business it would not have been required to recognise these at this time. All costs and income associated with the
Corporate Office have been absorbed within this provision during the period, including interest income on invested
funds. Further details of the finalisation of the restructuring plan will be announced in due course.
CAPITAL AND BALANCE SHEET
Consequent to the sale of New Zealand China Clays the company cancelled 1 in every 4 shares held by shareholders
resulting in 10,275,644 shares being cancelled and $16.338m paid to shareholders, this being the most effective way to
return some of the proceeds from the sale of New Zealand China Clays. During the year 718,000 options to acquire shares
in the company were exercised, resulting in the issued capital being 30,886,165 shares as at 31 March 2001.
Shareholders' funds totalled $52.000m ($46.964m at 31 March 2000) representing an equity ratio of 76.2% (79.6%) on total
assets of $68.233m ($58.955m).
DIVIDEND
A special fully imputed dividend of 4.0 cents per share was paid to shareholders on 30 August 2000. An interim fully
imputed dividend of 5.0 cents per share was paid to shareholders on 20 December 2000.
Directors are mindful of their previously stated dividend policy of paying dividends equating to 75% of normalised tax
paid profits, subject to the capital and operating requirements of the Group.
After reviewing the results of the Bendon operations for the year ended 31 March 2001 the Directors have resolved to pay
a dividend of 4.0 cents per share fully imputed in respect of the past year. The total cost of the dividend will be
$1.235 m and will be paid on 11 July 2001 to shareholders on the register at the close of business on 6 July 2001. A
supplementary dividend of 0.7059 cents will be paid to non-resident shareholders.
ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders will be held at the Ellerslie Convention Centre (The Goldstar Room) 80-100 Ascot
Avenue, Greenlane at 2.30 pm on 26 September 2001.
RESULTS
A summary of the full Group result is outlined below. Further details are available in the Stock Exchange schedules.
Group Summary
NZ$ NZ$
Millions Millions
2001 2000
Apparel
- Revenues NZ 36.996 34.322
Australia 41.090 43.537
_____ _____
78.086 77.859
_____ _____
- Operating earnings (EBIT) b/f 5.336 6.213
non recurring items and taxation
- Non-recurring (1.222) (9.009)
______ ______
Apparel Pre-tax 4.114 (2.796)
______ ______
Other Activities
- Revenues 6.065 16.237
_____ ____
- Operating earnings (EBIT) b/f
non recurring items and taxation
Minerals 1.682 4.761
Corporate - (0.713)
- non recurring
Minerals - (1.806)
Corporate - (0.338)
Sale of Minerals Division 28.351 -
Reorganisation Costs (9.000)
- less included under Taxation 7.100 (1.900) -
______ ______
Other Pre-tax 28.133 1.904
______ ______
Group Surplus/(Deficit) before taxation 32.247 (0.892)
Interest Costs 0.013 0.259
Taxation Charge 8.974 0.280
______ ______
Net Surplus/(Deficit) for the period 23.260 (1.431)
after taxation ______ ______
OUTLOOK
Bendon Ltd has structured its business to operate profitably in the current market environment. Any further downturn in
the Australian economy will adversely affect business in the new financial year.
The business is poised however to take the utmost advantage of any rebound in the markets and as opportunities arise in
both New Zealand and Australia, Bendon will exploit these. The entry into the United Kingdom market will boost sales,
but will not begin to contribute to profitability until the year ended 31 March 2003.
I M Parton
CHAIRMAN
30 May 2001
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