Ann: FLLYR: KRK: Market Announcement - 2015 Annual Results

• Release Date: 30/10/15 16:14
• Summary: FLLYR: KRK: Market Announcement - 2015 Annual Results
• Price Sensitive: No
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					KRK
30/10/2015 16:14
FLLYR
PRICE SENSITIVE
REL: 1614 HRS Kirkcaldie & Stains Limited

FLLYR: KRK: Market Announcement - 2015 Annual Results

The directors of Kirkcaldie & Stains Limited (the Company) announce the
audited results for the 52 weeks (year) ended 30 August 2015.

The group posted a pre-tax loss of $4,317,000 which compares with a pre-tax
loss of $6,583,000 in the prior year. Shareholders' funds dropped to
$26,169,000 (or $2.55 per share) from $30,626,000. At 30 August 2015 cash and
cash equivalents were $21,461,000.

The retail operations reported a pre-tax loss of $4,915,000 (2014:
$3,106,000) and the property operations reported a pre-tax profit of $563,000
(2014: $3,319,000 loss) mostly originated from the interest income earned on
the cash proceeds from the sale of the Harbour City Centre building (HCC).

The group's loss was largely caused by the impact on the Company's retail
operations of the proposed assignment of the Lambton Quay store lease to
David Jones. This is explained in more detail below.

The 2015 financial year has been a defining year for the Company. In
September 2014, the Company's shareholders approved the sale of the Harbour
City Centre building (HCC) and in July this year shareholders voted in favour
of the assignment of the Lambton Quay store lease and the sale of certain
assets to David Jones Pty Limited (David Jones).

The sale of the HCC settled on 7 October 2014, generating an immediate cash
inflow of $17,125,000 after repaying bank debt of $23,500,000. The last
instalment of $4,750,000 was received after balance date, on 7 October 2015.
As a result of the sale, in the 2015 financial statements, the property
operations have been classified as discontinued.

On 4 June 2015 the Company entered into a conditional Agreement for Sale and
Purchase with David Jones. The sale to David Jones was approved by the
Company's shareholders on 31 July 2015. The sale is still conditional on
David Jones receiving all necessary consents from the Overseas Investment
Office by 30 November 2015. As at today's date such consents are still
pending.
The sale to David Jones will ultimately result in the Company exiting its
retail business in January 2016. As such the financial statements for the
year ended 30 August 2015 have been prepared on a realisation basis with the
following  being recognised in respect of the retail operations:
o 'onerous contracts' provision of $1,478,000 in relation to certain
non-cancellable leases - most notably the lease of the Petone warehouse where
the lease term extends through to 30 April 2023
o Staff redundancy costs of $1,272,000 including those still to be incurred
as a result of completion of the David Jones transaction
o Additional inventory adjustments of $398,000 to reflect the likely stock
realisation value
o Impairment of plant and equipment of $322,000.
All of these items will be the subject to adjustments in the current year to
reflect the actual outcomes of our efforts to minimise costs and maximise the
realisation of assets and inventory.

As communicated to shareholders in the notice of meeting dated 14 July 2015,
the Company's inventory was not included in the sale to David Jones,
therefore immediately after the sale was approved by shareholders on 31 July
2015, we formulated a plan to progressively reduce the retail stock holding
and entered into negotiation with suppliers for possible 'sale or return'
arrangements. So far we have been successful in implementing these plans and
at 30 August 2015 our inventory holding (prior to inventory adjustments) was
$5,650,000 against the prior year of $8,178,000. Further inventory reductions
were achieved in September and October and on 18 October 2015, after a very
successful end of season sale, we closed the Interiors store in Thorndon
Quay.

The group is expected to incur further losses in the 2016 financial year due
to the costs associated with the closure of the store, the proposed capital
distribution approved by shareholders at the 31 July meeting and the ongoing
administrative costs of being a listed company.
The Board is well advanced in its thinking about the preferred method of
returning surplus capital of up to $19.354 million (equal to the Company's
available subscribed capital) to shareholders as approved at the meeting on
31 July 2015. It will almost certainly proceed by way of a Court approved
Scheme of Arrangement following completion of the David Jones transaction. We
expect to be able to provide an up-date to shareholders during November.

Following the distribution of the Company's surplus capital described above
and once the funds held in escrow under the David Jones agreement are
released, there will be a residual value available for distribution. The
final quantum of the funds available for distribution will depend on: the
final inventory realisation, the timing of the assignment of the remaining
non-cancellable leases and the length of the wind-down process. A formal
solvent liquidation process appears, at this stage, the most likely method of
returning value to shareholders in a tax effective manner but this is
sometime away and will be the subject of shareholder approval (as would
likely be the case in respect of any alternative proposal to realise
shareholder value).

On behalf of the Company, I would like to thank Kirks' staff for their
unconditional support and continuous commitment to customer service. I wish
everyone all the best for the future.

I also thank Kirks' loyal customers and shareholders for their support during
the years and we look forward to seeing everyone in the store before its
final closure in January 2016.

Falcon Clouston, Chairman
ENDS

For further information:
Falcon Clouston
P O Box 1494
Wellington 6140
End CA:00272621 For:KRK    Type:FLLYR      Time:2015-10-30 16:14:09