Earnings Advisory / CEO steps down
20 May 2015
The Board of Cavalier Corporation advises that normalised earnings for the 14/15 year are likely to be at, or slightly below, the lower end of the previously advised earnings guidance range of $1 to $4 million tax-paid.
Earnings from its Australian broadloom carpet operations have been adversely affected by the very high cross rate with the Australian dollar that has prevailed since the beginning of 2015. At the same time, the transition plan for its Ontera tile business of supplementing its manufacturing with a substantial importing programme has been slow to materialise and is only now starting to gain traction.
The Board has overseen the preparation of an updated strategy and business plan for the Company that has been closely reviewed by a specialist team from Deloitte. This plan projects improved profitability in the 15/16 year together with a substantial reduction in bank debt, and a return to adequate levels of profitability, by the 16/17 year by focusing on its core businesses. Our bankers are fully apprised of this plan.
In reviewing the updated strategy and business plan, the Board has also been reviewing the carrying value of certain assets and anticipates that write downs will be required in the 14/15 financial statements. This exercise is ongoing, but the impact of these write downs, which will be largely non-cash, will turn the 14/15 normalised tax-paid profit into a loss. The Directors will further advise shareholders when they are in the position to do so.
With the new plan now in place, Managing Director and CEO, Colin McKenzie has expressed a desire to relinquish his roles. Accordingly, the Board has appointed CFO, Paul Alston, as interim CEO with immediate effect, whilst Colin will continue to work for the Board on certain projects during the duration of his notice period.
The Board takes this opportunity to thank Colin for guiding the Company through a period of the toughest trading conditions ever faced, and for initiating and overseeing a range of vital initiatives – including consolidation and rationalisation of manufacturing operations, the introduction of a highly successful range of synthetic carpets, and the creation of alliances with key global players in the carpet industry. These achievements form the foundation stones upon which the future of the Company is based.
For and on behalf of the Board of Directors