Jeweller Michael Hill International’s full year profit falls by more than a fifth in the wake of decreasing margins and a tax settlement.
Jeweller Michael Hill International’s annual profit has fallen 22 per cent after paying a settlement to the Australian Taxation Office.
its profit margin also declined.
The Brisbane-based retailer on Friday said its profit fell to $25 million in the 12 months to June 30, from $32.1 million for 2012/13.
The earnings include an almost $6 million payment to settle a dispute with the Australian tax office over the transfer of intellectual property to an Australian unit in 2008.
Michael Hill, which operates 278 Michael Hill stores and six Emma & Roe stores, increased its annual sales 9.9 per cent to $483.9m.
However, its profit margin declined with earnings before interest and tax (EBIT) as a percentage of sales falling to 8.7 per cent in 2013/14 from 9.1 per cent the previous earlier.
The company kept its annual dividend unchanged at 6.5 cents per share as its two largest units struggled to gain traction and it plans for future expansion.
“The decision to maintain dividends at the same level as 2012/13 reflects the flat trading conditions in our two most profitable markets, Australia and New Zealand,” chairman Michael Hill said in the statement.
“It also factors in the company’s ambitions for growth in the coming years for both Michael Hill and Emma & Roe brands.”
Michael Hill plans to open five new jewellery stores in Australia this year, taking the total in that country to 169, as well as opening three new Emma & Roe charm jewellery stores.
It will open one Emma & Roe store in New Zealand this year, 10 Michael Hill stores in Canada and one more in the US.
Michael Hill remains in dispute with New Zealand tax authorities regarding its financing arrangements between New Zealand and Australia through 2009 to 2013 when it claimed tax deductions of $31 million.