Kirkcaldies’ annual pre-tax loss more than doubles; abandons business split

Kirkcaldie & Stains [NZX: KRK], Wellington's upscale department store, has abandoned plans to split its retail and property businesses and reported a widening of its annual pre-tax loss.

The Wellington-based company's pre-tax loss more than doubled to $2.38 million in the 12 months ended Aug. 31 from $1.08 million a year earlier, it said in a statement. Still, the company posted a bottom line profit of $168,000, compared to a loss of $773,000 in 2013, after recognising a revaluation gain in the value of its Harbour City Centre building on Wellington's Lambton Quay, which released a $1.91 million tax liability. Revenue fell 4.7 percent to $36.5 million.

Kirkcaldie's board abandoned plans to separate its retail and property businesses after hiring advisers to investigate the idea in December last year, the company said. The review was prompted by a mystery buyer keen on buying the building who subsequently walked away.

The company's retail unit reported a 5.8 percent fall in sales to $32.6 million, and widened its loss before interest and tax to $1.9 million from $1.8 million a year earlier.

The property unit reported an 8.5 percent slide in sales to $4.3 million, while earnings before interest and tax sank to $715,000 from $1.9 million.

Kirkcaldie's burned through an annual $2.38 million in cash, leaving it with cash and equivalents of $2.75 million after increasing its bank loan by $5.25 million.

The company had bank debt of $22.95 million as at Aug. 31, up from $17.7 million a year earlier. Its lender Westpac Banking Corp granted it a waiver from testing whether earnings before interest, tax, depreciation and amortization was at least 2.5 times its interest cost between Feb. 28 and Aug. 31.

Kirkcaldie's equity got a $17.69 million boost from a revaluation of its Lambton Quay building after it was reclassified as an investment property, leaving it with total equity of $37.07 million at the end of the financial year.

The board didn't declare a dividend.

The shares were unchanged at $2, valuing the company at $20.4 million.

(BusinessDesk)