Wool Services Intl reports $2.2m profit

Name of Listed Issuer: New Zealand Wool Services International Limited (WSI)

Wool scourer and exporter New Zealand Wool Services International Ltd (WSI) is pleased to report a normalised after tax operating profit for the year to 30 June 2010 of $2.229 million.

After reporting a loss in the first six months WSI turned this position around recording a normalised after tax profit in the second six months of $2.909 million.

Consolidated Income Statement

Basis of Report: Preliminary audit clearance has been obtained in respect of the numbers included in this announcement pending final audit report to be issued following completion of Full Annual Report.

Reporting Period – 12 months to 30 June 2010
Previous Reporting Period – 12 months to 30 June 2009

Amount NZ$000

CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
Total operating revenue: 151,034 Last year 150,561

OPERATING SURPLUS BEFORE TAXATION: 3,240 Last year (3,821)
Plus/(Less) taxation (before one off deferred tax adjustment) on operating surplus: (1,011) Last year (559)

NORMALISED OPERATING SURPLUS AFTER TAX: 2,229 Last year (4,380)

One off items:
Deferred tax adjustment relating to 2010 Budget changes to tax depreciation on Buildings: (1,082)
Reported after tax profit: 1,147

Earnings per share (normalised): 3.2cps

Final Dividend: 1 Cent per Share fully imputed

The normalised result of $2.229 million has been affected by the one off non-cash adjustment of $1.082 million to the group’s tax expense as a result of the Government’s 2010 Budget changes to tax depreciation on buildings, leading to a reported accounting profit of $1.147 million.

Commentary
The directors consider this an excellent turnaround particularly in the current economic climate which is causing difficulties for many businesses.

Trading and processing results in the second half were very satisfactory. As mentioned in the interim report the improved demand for New Zealand wool continued with many users restocking an empty supply chain with "just in time deliveries". This trend continues into our new financial year and that coupled with reduced wool production means prices for NZ wool should continue to improve. We see this trend continuing for the foreseeable future. It is of note that NZ woolgrowers would be enjoying a much better price if not for the high value of the NZ dollar which continues to sit above 70c against the USD.

Outlook
We are on track to achieving a much improved result in the 2010/11 year with better margins in sales, greatly improved stock turn, higher productivity at the scours, much improved cash flow and lower borrowings which after refinancing are less expensive and more secure.

In addition a number of problems that have plagued us in the past are now behind us and in our view the wool industry in general worldwide is staging a healthy recovery.

Of course one must always be aware of the vagaries in international trading and temper forecasts with caution particularly in this climate. However WSI has improved its business operations significantly and looks forward with confidence to the future.

In recognition of the above your directors have approved a fully imputed dividend of 1c per share payable on November 11.

Pat Morrison - Chairman Michael Dwyer - Managing Director

ENDS

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