Renaissance breaches bank loan

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Renaissance Corporation says it has breached one of the terms of its bank loans and its new CEO is conducting a full review of the technology product distributor and retailer's operations.

Renaissance said today it was in breach of one of its bank covenants relating to interest cover. Details of its results for the 2009 calendar year, including a $2.7 million bottom line loss and the breach, had been discussed with its bank.

The company booked $3.4m worth of one-off costs and write-offs during the year. Excluding these it said annual earnings before interest and tax would have been $1.008m.

"Given that position and expectations for 2010 the board does not anticipate having to make any changes to be able to maintain positive interest cover going forward," Renaissance said.

New CEO Richard Webb, who recently replaced Paul Johnston, is reviewing Renaissance's operations. In his preliminary analysis Webb has recommended the group's structure should be realigned to better serve customers and to lift revenue growth, the company said.

As part of this realignment Renaissance's balance date will move to September 30 to improve the company's ability to forecast earnings given the December quarter is seasonally high and volatile.

Further detail of Webb's plans will be provided with March's annual report.

For the 2009 year, Renaissance's sales rose 3 percent to $194.8m. The group's write-offs included ones related to stock, costs associated with senior management changes and a $1.6m goodwill and intangible asset write-off. The $2.7m net loss compared to a $1.2m profit in 2008.

Renaissance was New Zealand's sole distributor of Apple products until 2006 when the US technology giant launched its own New Zealand-based Apple and iTunes websites.

The company added that its balance sheet showed net debt of $1.055m at December 31 and shareholder funds of $12.6m.

- © Fairfax NZ News