FORECAST: KRK: Profit forecast guidance

6 Aug 2010 4:30 pm

KRK 06/08/2010 FORECAST

REL: 1630 HRS Kirkcaldie & Stains Limited

FORECAST: KRK: Profit forecast guidance

Kirkcaldie & Stains Limited wishes to advise the market that it is forecasting a reduction in full year profit before tax from $1.53 million to $1.3 million, a decrease of 15 %.

This revised profit forecast reflects a reduction in sales and a decision to take further unplanned markdowns to ensure that our inventory remains clean for our financial year end position at 31 August 2010. The Company's balance sheet remains strong with shareholders funds in excess of $20 million.

The Government's budget announcement on 20 May 2010 removed the tax deductibility of depreciation for buildings with an expected life of 50 years or more and also reduced the corporate income tax rate from 30% to 28%. Both changes will apply to Kirkcaldie & Stains Limited and its subsidiaries from 1 September 2011. Kirkcaldie & Stains Limited has taken advice on the impact of the taxation amendments and based upon the provisional advice and the requirements of New Zealand Equivalent to International Accounting Standard 12, Kirkcaldie & Stains Limited anticipates that the August 2010 financial result will be impacted by a one off, non cash adjustment that will see the Group's deferred tax liability increase by approximately $3 million and the Group will report a reduction in the net profit after tax by a similar amount.

The one off, non cash tax adjustment has no impact on the cash flows, dividend policy or underlying profitability of operations in the current year.

Tax depreciation of approximately $0.6 million is currently claimed annually in relation to Group owned buildings. This depreciation will no longer be available from the year ending 31 August 2012 onwards.

ENDS

For further information please contact: Mr John Milford Managing Director Kirkcaldie & Stains Limited P:04 494 7260 E: john.milford@kirkcaldies.co.nz End CA:00198105 For:KRK Type:FORECAST Time:2010-08-06:16:30:20

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