SCY
20/12/2012 13:14
HALFYR
REL: 1314 HRS Smiths City Group Limited
HALFYR: SCY: SMITHS CITY HOLDS HALF YEAR PROFIT FOR 2012
SMITHS CITY HOLDS HALF YEAR PROFIT FOR 2012
The Directors of Smiths City Group Limited, the Christchurch based retailers,
have announced an operating surplus after taxation for the six months to
October 2012 of $1.687million compared with $1.643million last year - an
increase of 2.6%.
Operating revenues for the six months were $109.675million, in line with
$109.859million in the previous year.
The Directors have declared an unimputed half year dividend of 1.0cent per
share (last year 1.0cent) to be paid on Friday 15th February 2013. For the
purposes of the dividend the share register will close at 5.00pm on Friday
8th February and reopen at 9.00am on the Monday 11th February 2013.
The summary of consolidated results is as follows:
6 MTHS
31.10.12 6 MTHS
31.10.11 %INC
/ DEC
Operating Revenue 109,675 109,859 -0.17%
Operating Surplus From Trading 1,722 1,739 -0.98%
Share Of Loss From Associate (35) (96)
Operating Surplus Before Taxation 1,687 1,643 +2.68%
Taxation - -
Operating Surplus After Taxation 1,687 1,643 +2.68%
Commenting on the result Chairman Craig Boyce said "Trading conditions in the
six months to 31 October have continued to be difficult. Household spending
is restrained, appliance prices have fallen leading to lower dollar margins,
competitor activity aggressive and business expenses, particularly occupancy
and insurance expenses, have risen considerably.
Given these conditions the Board is satisfied with the trading results
achieved to date and recognises that trading conditions - outside of
Christchurch - are expected to remain subdued.
In this environment it is essential that the company not only maximises the
trading opportunities available, for example the rebuild in Christchurch, but
also seeks alternative ways of reducing costs and improving efficiencies.
In Christchurch the reopened Colombo Street store is trading well - taking
into account the reduced size of the store. The Board continues to review
its options in regard to moving the Head Office facility back on site and to
engage with its insurer's representatives on a positive basis.
During the six months the company also reopened its last two closed
Christchurch stores - Furniture Concepts and Powerstore in the same building
on Moorhouse Avenue.
Finance company interest is a major expense to the Group. Our existing
facility has been in place since the mid-1980s and has stood the test of time
well as the company has successfully negotiated some very difficult business
cycles over that period. At all times the working relationship between
ourselves and our financier has been very positive.
In an environment of sustained lower interest rates, the Board has decided
that a change is in the best interests of the company. The company has
signed a committed terms agreement with a major trading bank and has given
notice to our existing financier of its intention to terminate the bulk
funding facility to Smithcorp Finance by January 2014 - the date specified in
the Facility Deed. When completed this move will result in significant
savings in interest costs for the Group. As discussions progress more
information will be made available."
Managing Director Rick Hellings added: "Whilst trading results in the July
quarter were reasonably strong, the October quarter was softer reflecting
ongoing price deflation and a more uncertain economy. Trading conditions
were particularly soft in the lower North Island.
Looking back over the six months management has concentrated on increasing
sales in its profitable lines - predominantly furniture and bedding -
reducing costs per transaction and completing the rebuild of its Christchurch
operations. The reopened stores on Moorhouse Avenue are the first of a much
larger big ticket retail precinct to open. The location is excellent and in
store display and fitout are of the highest quality. Customer feedback to
date has been very encouraging and both stores will further benefit once the
remainder of the complex is opened in late February 2013.
In addition the company has continued the development of its on-line and
commercial presence and experienced good increases in sales in both areas.
By product we continue to make significant gains in our furniture and bedding
sales and market shares. However the appliance market continues to face tough
times particularly in the consumer electronics area where - in the October
quarter - flat screen television prices fell by over 20%. Recent
rationalisation within the appliance sector reflects the difficulty in making
profits in such a challenging environment. Whilst we wait with interest to
see how these changes affect the relative market positions of our competitors
we are not anticipating any significant short term impact on our business.
Looking ahead the company does not expect to see any significant change in
the retail environment and is planning accordingly. The next new store
planned for the Group, on the Kapiti Coast, is not due to open until May
2013. Accordingly short term increases in profits will come from improving
profitability on a store by store / town by town basis, reducing operating
costs and continuing to build on the benefits of a strong dollar through our
predominantly furniture based import program.
Finally, I would like to acknowledge the efforts of all our staff,
particularly those in Christchurch. Whilst we have completed the retail
jigsaw in Christchurch our support office continues to work from temporary
facilities. Given that many are also fighting their own insurance/repair
battles at home their efforts for the company are extraordinary and very much
appreciated."
RICK HELLINGS
MANAGING DIRECTOR
0299833011
End CA:00231471 For:SCY Type:HALFYR Time:2012-12-20 13:14:49
