Ann: HALFYR: KRK: Market Announcement - Half Year

• Release Date: 29/04/13 18:38
• Summary: HALFYR: KRK: Market Announcement - Half Year Results
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KRK
29/04/2013 16:38
HALFYR

REL: 1638 HRS Kirkcaldie & Stains Limited

HALFYR: KRK: Market Announcement - Half Year Results

2013 is a very significant year for Kirkcaldie & Stains Limited as the store
will have traded for 150 years in Wellington. Our big in-store birthday
celebrations will start on 1 June 2013 and will run for the full month.

As always we are committed to customer service and we are delighted to have
been named, for the second consecutive year, New Zealand Department Store of
the Year for Customer Satisfaction by Roy Morgan Research.

The six-month period ended 28 February 2013 continued to provide difficult
trading conditions for both the retail and the property operations. The
result for the Group showed a pre-tax loss of $741,000 (after tax $531,000)
for the six-month period ended 28 February 2013. This compares to a pre-tax
profit of $9,000 achieved during the same period last year.

The retail operations reported a pre-tax loss of $227,000 for the half year,
an improvement of 32.4% on the prior period pre-tax loss of $336,000. The
improvement was directly attributable to the ongoing cost reduction programme
with expenses 6% down on last year. However the retail operations continue to
face revenue challenges with sales 5.6% down on last year despite the number
of initiatives undertaken to drive sales and improve customer experience.

We consolidated our retail offer into the main store, reorganised and
refurbished the second floor and the new Cuisine store, the Pantry, opened on
the Ground floor.

The new website and on-line store were launched in January 2013 with a
limited number of cosmetics brands but constantly expanding. Our aim is to
have our full cosmetics offer online by the end of September 2013.

We have secured a location in Petone to host our back office and stock
storage functions.  Fit-out is currently underway and we expect to relocate
within the next two months.

The property operations reported a pre-tax loss of $398,000 for the half year
compared to a pre-tax profit of $462,000 in the prior period. The property
operations were impacted by the second phase of the redevelopment work on the
Harbour City Centre (HCC) building and by another substantial increase in
council rates and insurance premiums.

The redevelopment of levels 4 and 5 and common areas of the HCC started in
October 2012 and it is due for completion in May 2013. As part of this latest
project, to-date we incurred demolition costs of $420,000.

Despite the above, the Group balance sheet remains robust with shareholders'
funds of $18,601,000 which represent an equity ratio of 39%.

The Group held cash and cash equivalents of $3,639,000 at 28 February 2013;
however operating activities showed a cash outflow of $918,000 as a result of
lower sales, lower rent revenue and timing of payment to suppliers.

Given the continuing disappointing results, the directors resolved not to pay
an interim dividend for the six-month period ended 28 February 2013. Our
expectation for the full year to 31 August 2013, with one-off expenses, is a
loss significantly in excess of last year. On this basis the directors do not
expect to declare any dividends for the 2013 financial year.

As announced in December 2012, Kirkcaldie & Stains Limited appointed external
parties to provide advice on the options available to facilitate the
separation of Kirkcaldie & Stains Properties Limited which owns the HCC
building from its parent company, Kirkcaldie & Stains Limited which owns the
retail operations. Any restructuring will be subject to shareholder approval.
Plans remain at a preliminary stage.

The directors would like to thank 'Kirks' shareholders, customers and staff
for continuing to support their store, even in difficult times when results
continue to languish.

Falcon Clouston
Chairman

ENDS

For further information:
Mr John Milford
P O Box 1494
Wellington 6140
P: 04 494 7260
E: [email protected]
End CA:00235612 For:KRK    Type:HALFYR     Time:2013-04-29 16:38:56