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In its announcement to the market, the company said its results reflected the ‘‘resetting’’ of the company as it began a new strategy, as well as softening trading conditions in the first half of the year, which were further worsened by Covid-19 in the second half.
In July, the company announced it was ditching synthetics in favour of wool and other natural fibres, citing ‘‘negative impacts on people’s health and the planet’’.
It unveiled a new transformational strategy, saying it would transition away from the manufacture and supply of synthetic fibre carpets over the next 12 months and existing synthetic stocks would be sold down.
Revenue for the year was $118million, down 13% on the previous year, sales falling significantly in April-May, compared with the same period last year, due to the Covid-19 shutdown.
Since emerging from the lockdown, sales volumes had been stronger than initially expected. That had partly been led by pent-up demand and consumers spending money on their homes rather than on other discretionary items, as well as sales of synthetic carpets as retailers stocked up ahead of Cavalier’s transition away from those fibres.
Normalised earnings before interest, tax, depreciation and amortisation (ebitda) came to $2.3million, excluding non-trading adjustments of $11.2million pre-tax, which were primarily related to Cavalier’s strategic transformation and company reset.
Net debt fell to $14.5million as at the end of June and had further reduced since year-end to $7.2million as at the end of August.
The business was able to continue paying all salaried and waged staff throughout the shutdown period, supported by the Government’s wage subsidy, of which 46% of the $2.8million claimed was recognised in the full-year results. The remaining $1.5million would be recognised in the current financial year.
Cavalier said it had a comprehensive plan to increase value for shareholders through developing the wool flooring market, building demand for Cavalier’s woollen carpets and rugs, strengthening its presence in retail channels through expanded distribution and seeking other opportunities in the interior solutions sector.
Since year-end shareholders had approved the sale and leaseback of Cavalier’s Auckland property, which would put the company into a debt-free position and provide it with the financial strength to execute its transformational plans at pace.
Recent increases in woollen carpet sales had been encouraging, particularly in Australia.
Total sales revenue for the 2021 financial year was expected to fall as Cavalier exited its synthetic carpet business as well as due to Covid-19.
Investment costs would be incurred as its manufacturing and sales base was reset to reflect the new sales focus, and marketing spend and people costs would increase significantly to support the new strategic direction and enhance its market presence.