S.C.M. sales ahead 14p.c.

Press, 30 August 1977, Page 26

S.C.M. sales ahead 14p.c.

“The turnover of Smiths’ >City Market, Ltd, for thej first three months of theyear to July 30, 1977, has I exceeded the previous cor-; responding period last year! by 14 per cent,” the chair-i man (Mr D. R. Smith) said! in the annual report to; shareholders. “This result is reasonably i satisfactory but, much; higher sales will need to be I recorded for the rest of the year to offset increased wages, salaries and other expense items. “It has been the company’s policy to maintain a good cash position at the expense of income, even though the group has recently been in a position to become further involved iin property finance and development.” he said. “The immediate future: should present opportunities for the purchase of excess i manufacturers’ production at: realistic prices which will ; provide benefits for consumers and the company. “The recent purchase of the shareholding of Paterson and Barr, Ltd, Dunedin hardware and appliance retailer, will widen the group’s retail activities, and possible expansion into other areas. The full benefits of such moves will not be felt until ; there is a real increase in consumer spending. “While there may be some i decline in profitability in the immediate future, the longer I term prospects are excellent,” Mr Smith believes. “Approval has been obtained for an increase in

directors’ fees for the year to April 30. to $7500. and it was pleasing to note that the expiration of the Companies (Limitation of Distribution) Regulations 1976 would allow a more realistic return on shareholders’ investments.” said Mr Smith. "The year under review had seen many changes in the pattern of trading. Stock controls were necessary, with the trend in many departments to a reduction in unit sales. “The overproduction and liquidity problems of manufacturers hau created excessive stock and the efforts by some to move this stock outside the normal retail channels, had been a cause of concern,” he said. “The appliance department had a successful year after a heavy demand for colour television and laundry equipment. “Sales of the retail building supplies and hardware departments have been gooc considering the state of the industry at present. “Sales were up but profitability down in the flooring department, a very competitive area now, as manufacturers are operating their own retail outlets ant gross margins have fallen,’

said Mr Smith. The sports and camping department has suffered a downturn, after bad weather prior to Christmas 1976 had an effect on turnover. A real increase in consumer spending is required to raise profitability to an adequate level. I “Both branch stores returned record sales and proifits, and consideration is be|ing given to long-term plans I for entry into other suburban I areas,” said Mr Smith. i “The economic conditions and recent major flood damage in Christchurch created an increase in the number of auctions but, the continued Shortage of mortgage finance ’made commission earnings (difficult for the land department of the company. : “Some large sales of comImercial properties were negotiated, however,” said Mr j Smith. I Group net profit rose 6.2 (per cent to $487,923 in the 'year to April 30. This com(pares with the unaudited profit of $488,947 made in the preliminary statement on June 21. Sales increased 15.44 4per cent to $13.8M, while trading and administrative expenses gained 15.8 per cent to 512.5 M. The profit was after pro-

viding $27,584 less for de preciation at $98,723, but $28,900 more for tax at $484,800. Interest payment; on fixed loans and deben tures rose $103,769 tc $237,152. The recommended fina dividend of 7c a share in creases the annual rate fron 11c a share to 12c a shan (12 per cent). The ordinary dividend requires $120,001 and is covered 3.8 times bj the profit minus the prefer ence dividend. Shareholders' funds tost $339,618 to $2,914,143. ant are comprised of steady capi ta) of SI.4M, . including $400,000 preference shares an increase of $3572 t< $87,337 in the capital reserve and $336,046 more at $ 1.41 V in the revenue reserves. The earning rate on ordin ary shareholders’ funds fel from 19.8 per cent to 18.3 pe cent, but the earning rate or (capital rose from 43.1 pe icent to 46 per cent. Working capital rosi $439,199 to $3,325,503. bu the current ratio fell from 2.' to 2.5 times to one. The shares last sold fo 127 c for a dividend yield o 9.4 and an earnings yield o 35.7 per cent. The price earnings ratio was 2.8, and the net asset backing an ordinary share was 251 c.