Cavalier updates strategy and business plan
3 August 2015
Cavalier advises of a number of changes that support the re-focus on core business and debt reduction included in our updated strategy and business plan signalled to the market in our 20th May announcement.
Sale of Australian Tile Manufacturing Business
Cavalier has entered into a non-binding agreement to sell the assets of its Australian carpet tile manufacturer, Ontera Modular Carpets, to Milliken & Company, a 150 year old US based company whose wide ranging business interests include floor coverings. A sale and purchase agreement is in the process of being finalised and further information will be provided once the transaction is complete.
Outsourcing of Australian Broadloom Carpet Logistics
In addition to and complementing its stock reduction programme, Cavalier is outsourcing its Australian broadloom carpet warehousing and distribution operations to a specialist provider. This will increase efficiency and reduce costs, while paving the way for the sale of our Sydney premises.
Restructure of New Zealand Support Functions
A proposal for the restructure of our New Zealand based support functions was issued to our employees last week. While no decisions will be made until after a period of consultation with those affected, it is anticipated that the restructure will result in reduction of around 20 full time positions if the proposal is confirmed.
Debt Reduction Programme
Net bank debt has reduced by $6.0m in the six months to June, mainly as the result of the successful inventory reduction programme. The sale of our tile manufacturing business and Sydney premises referred to above will reduce debt further in the coming months.
Write Down of Assets
The announcement in May indicated we would be reviewing the carrying value of certain assets. While this exercise is still being finalised as part of our year-end process, the impact is likely to be in the $20m - $23m tax-paid range. The write downs are mainly non-cash, the bulk of which relate to the tile manufacturing business.
For and on behalf of the Board of Directors