Retailer Smiths City has delivered a surprising full-year result with its after-tax profit up 15%, despite having widespread exposure to damage caused by Christchurch's earthquakes.
While operating revenue for the 12 months to April decreased 2.4%, from $226.1 million to $220.7 million, after-tax profit rose 15.1%, from $1.64 million last year to $1.89 million.
After the announcement late yesterday afternoon, Smiths City shares were down 1c at 32c.
Smiths City chairman Craig Boyce said while the September earthquake caused relatively minor damage, "widespread destruction" was inflicted by the February quake on the company's Christchurch locations, including major damage to its Colombo St headquarters.
"A combination of insurance cover for business interruption on sites which the board saw as key to the group and material damage on assets owned has meant that the company has suffered no material loss in the area of closed stores or inventory," Mr Boyce said in a statement yesterday.
Smiths City has no tax payable for the year, as it carries forward tax losses of $18.8 million. With buildings no longer depreciable for tax purposes, there was a deferred tax liability adjustment made of $725,000, but that was offset by the tax losses carried forward with no effect on the full-year result.
The Colombo St South City property, valued at $20.5 million, was severely damaged and unoccupied, but insurance meant it would be rebuilt, he said.
"The company has for many years had a full risk management programme incorporating ... a full policy on disaster recovery and a full insurance programme," he said.
Mr Boyce said four investment properties adjacent to the Colombo St retail outlet had been signed off for demolition by the Canterbury Earthquake Recovery Authority, and are fully covered by insurance for replacement.
Smiths City managing director Rick Hellings said while the wider retail market was "expected to remain subdued", Smiths' increased presence in the Wellington region and Christchurch rebuilding meant positive sales and profit opportunities, in both the long and short term.
