Listed shower and tapware maker Methven booked a $2.7 million gain in its full-year net profit adjustments after cancelling an earnout agreement with the owner of the Chinese manufacturing facility it bought in 2014.
Two years ago the company bought Invention Sanitary, since renamed Methven Heshan, from Hui Zhuang. It reached agreement with him in May last year to cancel an earnout agreement despite hitting the required financial targets set out in the acquisition because working capital at the Chinese operation proved higher than anticipated during due diligence.
Zhuang retired from the business in December last year and then last month sold his 5.85 per cent stake in Methven.
Methven Heshan's production increased 10 per cent.
Methven reported a 31 per cent increase in full-year net profit for the year ended June 30 and $8.6m in net profit for the previous 15 months after changing its balance date from March to June. Adjusted net profit after one-off provisions was $8m, up from $6.4m the prior year.
Methven reported 12-month sales revenue of $105.8m, up 8.1 per cent on the prior year. Chief executive David Banfield said the company was now considering options for an employee share scheme for its 350 staff.
A partially imputed final dividend of 4.5c per share is payable on September 30, taking total dividends for the year to 9.5c.