Solid earnings growth by Smiths City Market

Press, Volume CXII, Issue 32970, 17 July 1972, Page 18

Solid earnings growth by Smiths City Market

The forecast 81 per cent dividend on Smiths City Market shares •>ould have been more than three times covered by hist year’s profit, allowing for the preference dividend, shows the company’s prospectus for a public issue of 480,000 100 c shares at par.

Referring to the years ahead, the chairman (Mr D. R. Smith) says that although it is not expected that the future will be without difficulties, past results and the continued interest of the Smith family should enable the growth and prosperity of the company to continue. The group’s turnover, excluding commission sales, has risen to $5.2 million and in the last two years—which have proved difficult trading for retailers—the group profits have increased strongly, Mr Smith says. The directors are confident that under pre-

sent conditions these results can be improved upon. The purpose of the issue is to provide funds for continued rebuilding and renovation, which is essential if increases in turnover are to be maintained; to enable some of the company’s borrowings to be repaid; and to provide funds for the general expansion of the group in a controlled and moderate manner, says Mr Smith.

Figures for the year to April 30 show the company’s group net profit trend as follows:

1968 $124,545 1969 $134,887 1970 $165,110 1971 $187,977 1972 $240,309

A notional balance sheet shows that after the issue the company will have a paid capital of $1,200,000, consisting of 400,000 7 per cent redeemable preference shares of 100 c and 800,0000 100 c ordinaries. Shareholders’ funds will be $1,348,850. Current liabilities are shown at $901,477 and current assets at $2,006,309. Accounts receivable—less $60,000 doubtful debts provision and $147,730 unearned hire purchase profit—total $1,024,132, and stocks are entered at $916,590. Fixed assets total $943,056 and term liabilities $732,592. Mr Smith says that over the years most of the profits had been retained and reinvested in the group. During the last financial year a dividend of $789,760 was declared in order that the issue of shares could be made to the public at par. This had been reinvested by the Smith family as follows: An increase in ordinary capital from $123,400 to $320,000. Subscription to 400,000 redeemable preference shares. Advances to Smith City Market Ltd under second debenture. The issue will open on August 9, with shares payable in full on application. It is un-der-written by Sturge Wilson and Company, members of the Christchurch Stock Exchange. The directors are Messrs D. R. Smith, R. A. C. Smith, K. G. C. Smith, H. Beattie and C. L. Sturge.