SMITHS CITY HOLDS PROFIT AND DIVIDEND LEVELS
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Smiths City Group Limited (SCY) | 11:59 am, Friday 21 December 2007 | SCY | 0.310 |
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The Directors of Smiths City Group Limited, the listed Christchurch based
retailer, have announced an operating surplus after taxation of $1.759million
compared with $1.737million last year - an increase of 1.3%.
Operating revenues for the year increased from $135.1million to
$135.8million. Same stores sales revenue is also in line with previous
years.
The financial statements have been prepared under New Zealand International
Financial Reporting Standards (NZIFRS) basis for the first time. The change
to NZIFRS reporting has resulted in prior year comparatives being restated.
However, the net affect on reported profit when compared with reporting under
the previous standards is immaterial. Along with the adoption of NZIFRS the
Board has decided to change its reporting in that all supplier product
rebates are now included in the total cost of goods sold rather than taken
to revenue as in previous years.
The Directors have declared an unimputed half year dividend of 1.5cents per
share (last half year 1.5cents unimputed) to be paid on 15 February 2008.
For the purposes of the dividend the share register will close at 5.00pm on
Friday 8 February 2008 and reopen at 9.00am Monday 11 February 2008.
Commenting on the result, Chairman Craig Boyce said "Retail trading
conditions are challenging. The combined effect of Government and Reserve
Bank policies has led to reducing demand and increasing costs. In short,
consumer confidence is in decline and household budgets are under real
pressure as the cost of staple products - food, petrol, electricity and
interest rates - increases.
As a result we have seen increased promotions and offers in the market place
as the larger retailers, in particular, continue to protect their market
shares.
As a retail organisation we continue to work within the market as it exists
and ensure that we concentrate on improving those parts of our business that
are within our control. These are the customer experience offered in our
core retail operations, the offering from our finance company and identifying
those key sites which can be developed by our property company.
The most important success factors in big ticket retail are buying and
promotion. A key ingredient with regard to buying, in general, is that the
bigger you are the better you can buy. Whilst Smiths City is a reasonable
sized player in the South Island market, by national and, certainly,
Australasian combined standards we are a reasonably small player.
Having given due consideration to the size of our individual business units
the Board has made three key strategic decisions in the last six months:
- Exit the wholesale Building Supplies business in which we were not
large enough to compete with nationwide companies;
- Acquire the 20% minority shareholding in L V Martin thus giving
flexibility to maximise the benefits of a combined appliance business and
- Joined the buying group Narta New Zealand Limited - a subsidiary of
Narta International Pty Limited (NARTA) - the largest appliance buying group
in Australia. This is a key move for us, having been "on our own" for so
long. However, NARTA's appliance turnover in Australia is approximately
$2.6billion and being involved in a group like this will improve our ability
to compete aggressively in the New Zealand appliance market for the long
term.
Managing Director Rick Hellings said "We continue to respond to the
competitive retail conditions by matching offers in the market place to
ensure we hold market share across all product categories. Smiths City and
Powerstore have performed well given those trading conditions although the L
V Martin business has experienced erosion of margins and, hence,
profitability as a result of increased competition in the Wellington market.
Both Smithcorp Finance Limited and Smiths City Properties Limited have
contributed positively to the result. The purchase, development and sale of
our new store in Gore, completed in the first quarter of the financial year,
is a clear example of how we can successfully identify and develop store
locations for ourselves. We have negotiated funding lines to enable us to
take advantage of similar opportunities and in December we completed the
purchase of our store in Gisborne.
We remain committed to our strategy of providing long term sustainable
increases in shareholder value. In the short term profitability is hard to
predict given there are so many factors we do not control and we will
continue to concentrate on those core competencies that will lead to
increased customer satisfaction and loyalty."
This half year report was approved by Resolution of the Board of Directors on
21 December 2007.
R HELLINGS
MANAGING DIRECTOR
For further details contact Rick Hellings on 03 9833011
ENDS
