Pre-tax profits at the Irish arm of consumer electronic and furniture retailer Harvey Norman last year decreased by 23% to €10.1m.
New accounts show that profits decreased at Harvey Norman Holdings Ltd as revenues increased slightly from €424.07m to €425.06m for the 12 months to the end of June 2024.
The directors state that revenues increased by 0.2% last year but point out that when compared against the pre-pandemic sales in FY19 of €236m there has been significant growth of €189m or 79.96% over that time.
They said that “during this period the brand has gone from strength to strength and has significantly grown market share in all its categories”.
They said that 2024 is the seventh straight year of profitability for the Irish business.
They also state that “the supply chain and transportation costs which hampered the business in the previous year have decreased and returned to acceptable levels and improvements in margins in the furniture business has started”.
“They expect these improvements to continue in the next 12 months,” they added.
At the end of June last, the group operated 16 stores in the Republic and two in Northern Ireland.
Profits were hit by a non-cash €1.73m write-down on its investment property portfolio and interest charges of €1.32m.
The group recorded post tax profits of €8.19m after incurring corporation tax charge of €1.9m.
They state that the group recognises that the economic headwinds which were present during FY24 will persist into FY25, but inflation has started to fall “and we expect that to continue throughout the next 12 months”.
The directors state the administrative expenses for last year were inclusive of intercompany brand licencing fees payable under a revised global transfer policy adopted this year.
That state that the profitability of the Irish group was reduced by €6.87m last year due to the brand licence fees payable under this policy.
They state that operating expenses increased last year with marketing, warehousing and distribution increasing year on year.
The profit last year takes account of non cash depreciation costs of €5.49m while lease costs decreased from €16.3m to €16.05m.
Staff costs increased from €56.5m to €58m as staff numbers dipped from 1,438 to 1,433. Directors’ pay including pension payments of €17,500 totalled €677,759.
The directors state that “the group also settled matters relating to an uncertain tax position arising from an Irish Revenue tax review for Harvey Norman Tallaght Ltd”.
In 2023, the group valued the uncertain tax provision at €218,081 and a note states that the matter giving rise to this uncertain provision was settled subsequent to year end date, and as such the provision has been reversed.
They state that the financial statements have been adjusted to reflect this subsequent event in accordance with relevant accounting standards.
In calculating the group’s overall corporation tax liability, the accounts included a tax settlement adjustment of €187,277.
At the end of June 2024, the group had shareholder funds of €71.89m. Cash funds increased from €8.43m to €13m.
Reporting by Gordon Deegan
