Smiths City Market sees higher profit

Press, 18 August 1978, Page 7

Smiths City Market sees higher profit

Sales of Smiths City Mar-js ket. Ltd, increased 9 per t cent in the first three months of the current finan- | cial year, while those of Pa- < tenon and Barr, Ltd — the [ Dunedin company taken over last year — rose 30 per 1 cent in the same period. t Good increases were re- I corded for May and June, t says the chairman (Mr D. R. Smith) in the annual report < for the year to April 30, but t July sales show only a small margin over last year. ! i The directors are con-it fident that, provided there >c is no further decline in; economic activity, profits! t for the current year should; [ exceed those of last year, 1 < Mr Smith says. jc “It is apparent at this; stage that retailers, wholesalers, and manufacturers; 1 are reluctant to carry stocks;' until they know that thej’j Government will adopt somel I consistent policies in mone-ii tary and commercial mat-|I ters. Advice that the tax 1 allowance on stock holdings It will be continued would give! I all traders greater con-Is fidence in committing them-lp

selves to forward orders,” he says. The appliance department had a record year, with a great contribution from colour television because of the personal loan scheme. The building supplies and hardware departments continue to be among the most profitable areas in spite of the building down-turn. Income from the sport and camping department showed a significant increase. Auction commission sales increased satisfactorily, and the trade-in department also did well. The real estate and furniture and floorcoverings departments, and all branches suffered from the decline in demand. Frame Services, Ltd, did not operate at full capacity for the second successive year. Dundas Trading Company, Ltd, increased profitability during a difficult trading period. Paterson and Barr, Ltd, increased sales 12.5 per cent for the ten months it has been part of the group. This Dunedin subsidiary is being expanded.

| As announced, group net profit rose 4.9 per cent to $511,760, after providing $140,891 less for tax at $343,909, and $24,649 more for depreciation at $123,377. Fixed interest charges rose $120,092 to $357,244. The ’ benefit from the trading stock valuation adjustment was $79,000. After noting that since stock exchange listing dividend had been steadily raised from 84 to 12 per cent, Mr Smith says that under the present inflationary conditions the long-term interest requires that a reasonable proportion of profits be retained. The steady dividend of 12 per cent this year took $162,000, covered 3.2 times. Because capital was increased from SIM to SI.6M during the year, next year $192,000 will be required. The earnings rate on capital is 30.2 per cent, and that on average ordinary shareholders’ funds falls from 18.3 to 13.8 per cent. These figures allow for the preference dividend. I Net current assets increased from $3.3M to I 54.5 M; the current ratio is 3.3 to 1. Shareholders’ equity is 42.1 per cent; the funds increased from $2.9M to S4.IM during the year — they are i comprised of SI.6M ordinary capital, $400,000 preference i capital, $340,680 capital reserves, and SI.7M revenue reserves. The shares last sold at 132 c, for a dividend yield of 9.1 per cent, and an earnings yield of 22.9 per cent. The price-earnings ratio is 4.4, and the asset backing 231 c an ordinary 100 c share.