Annual Report 30 April 2011

Annual Report 30 April 2011

11 ANNUAL REPORT 30 APRIL 2011 TABLE OF CONTENTS Table Of Contents...........................................................................1 Company Directory.........................................................................3 Company Profile.............................................................................4-5 Chairman’s Review.........................................................................6-7 Managing Director’s Review...........................................................8-9 Directors’ Report...........................................................................10-13 Governance Report........................................................................14-17 Company Information....................................................................18-19 Trend Statement............................................................................20 Financial Information....................................................................21-55 Auditors’ Report............................................................................56 Our People 2011............................................................................57 Store Locations 2011 ....................................................................58 1 2 COMPANY DIRECTORY DIRECTORS AND OFFICERS CHAIRMAN Craig David Boyce DEPUTY CHAIRMAN John Allen Dobson DIRECTORS Gary Raymond Rohloff Sarah Christine Ottrey John William Holdsworth Richard Hellings MANAGING DIRECTOR Richard Hellings ALTERNATE DIRECTOR Gerald Haworth Willis REGISTERED OFFICE 550 Colombo Street Christchurch 8011 BANKERS ANZ National Bank of New Zealand P O Box 220 Christchurch AUDITORS KPMG Level 3, 62 Worcester Boulevard P O Box 1739 Christchurch 8011 SHARE REGISTRARS Link Market Services P O Box 384 Ashburton ADDRESS FOR COMMUNICATIONS POSTAL P O Box 2343, Christchurch TELEPHONE 03 9833000 FACSIMILE 03 9833031 EMAIL [email protected] WEBSITE www.smithscitygroup.co.nz 3 COMPANY PROFILE CORPORATE STRUCTURE Lifestyle Stores – Smiths City Smiths City Group Limited, based in The Smiths City chain retails kitchen appliances, Christchurch, is listed on the New Zealand Stock consumer electronics, indoor and outdoor Exchange and has approximately 2,200 furnishings, heating and flooring products for shareholders, 98% of whom are resident in New the home, and also includes sports departments Zealand. in many of its stores. Smiths City is the largest and oldest brand in the Group providing It is the parent of a number of subsidiary approximately 75% of the Group’s retail registered companies covering the range of turnover. business activities that the Company engages in. The chain comprises 17 stores in the South The Group was founded in Christchurch in 1918 Island and 10 in the North Island, all trading and continues to occupy the same site in under the Smiths City name. There are also four Colombo Street. Clearance Centres retailing a full range of affordable new product together with used and The Group is active in three complementary second hand items and a high-end furniture retail industry segments – retail, property and store in Christchurch trading under the brand consumer finance. It employs approximately Furniture Concepts. 650 full-time and 70 part-time staff. An experienced and focused purchasing and RETAIL marketing team has resulted in Smiths City having significant market share in a number of Brands product categories identified as strategically The Group recognises the importance of important. customer loyalty and market share, and focuses on achieving these through providing quality In addition to sourcing furniture from New brands and outstanding customer service in-store Zealand manufacturers and distributors, the and in the customer’s home. company operates a substantial import program handling in excess of 600 containers per annum The Group strongly supports some of New through its national Distribution Centre located Zealand’s best known brands including Fisher & in Christchurch. Paykel, Sleepyhead, and Cavalier Bremworth, along with international brands such as L G Specialist Appliance Chain – Powerstore and L Electronics, Samsung, Panasonic, Sony, Hewlett V Martin Packard, Acer and Electrolux. The Group has operated a chain of appliance only stores since 1997 trading primarily under The Group’s own retail brands of Smiths City, the brand Powerstore. L V Martin, a Wellington Powerstore and L V Martin are widely based appliance chain, was acquired from the recognised in the New Zealand market and in Martin family in 2004. the retail industry. The appliance chain sells a full range of kitchen The Customer Experience appliances, home entertainment and computer The customer experience is paramount in retail products specialising in well known brands and the Group will continue to offer a ‘full including Fisher & Paykel, Sony, Samsung, L G, service’ retail experience by providing quality Panasonic, Hewlett Packard and Acer. goods, outstanding in-store service from knowledgeable sales staff, home deliveries and The chain adds scale to the Group’s appliance installation, and flexible finance options buying and provides a point of difference to the provided by the Group’s own finance company. larger format department stores, who sell similar 4 COMPANY PROFILE products in the midst of other product ranges. history; and a small trade finance ledger to businesses where the Group sees an opportunity The appliance stores combine excellent store to add value. layout and staff with an outstanding level of product knowledge leading to a superior instore As at 30 April 2011 the consumer finance ledger shopping experience. value was approximately $87.9million and borrowing against the portfolio was The L V Martin brand is an institution in the approximately $75.2million. There were Wellington region having been a household approximately 76,000 active accounts at that name over the past 75 years. Throughout its time. history L V Martin has built an enviable reputation for its unwavering attention to after- The Group’s management and day-to-day sales service, and they have built a strong control of the consumer finance ledger gives the customer base recognising the value of expert retail brands a point of difference in the market advice, trust and service. and contributes to the value added by the full service retail model. Internet The use of the internet is widely recognised as a PROPERTY developing medium for retail and the Group regards the web as an important tool for sales Prime locations and superior store presentation growth in the future. L V Martin has, for several are critical to the success of any retail years, maintained a successful and popular organisation. website retailing its full range of instore products. The Group intends to build on this The Group places strategic importance on experience and success by further developing retaining ownership of its key Colombo Street the internet strategy in the year ahead. site. Based in central Christchurch, this location houses the Group’s largest retail store which, Appliance Servicing - Alectra until the earthquake of 22 February, contributed Alectra operates from six locations across New approximately 15% of the Group’s sales. The Zealand and provides a valuable component of buildings were substantially damaged in the the ‘full service retail’ model. Originally a earthquake and were, for a number of weeks, service arm of the retail stores providing repairs inside the central city cordon. The process of and installation support for kitchen appliances, returning the store to its full retail capability is Alectra has expanded into a separate business underway. unit and added electrical wiring, gas fitting and maintenance and installation of home heating This store will again offer, when fully products to its portfolio of services. functional, the best available range of big ticket product from any single retail site in New Alectra has built a reputation for providing Zealand. professional and quality work and services a large customer base including many outside the The Group’s property company is also used to Group’s own retail network. undertake developments for the retail business when appropriate opportunities arise. FINANCE ASSOCIATE COMPANY The finance business of the Group is divided into three parts – point-of-sale finance through The Group owns 30% of Adventure Brands. It secured fixed instalment or revolving credit is an importer and wholesaler of bicycles and customer accounts; the provision of unsecured fitness equipment. personal loans to customers with a proven credit 5 CHAIRMAN’S REVIEW SUMMARY OF FINANCIAL PERFORMANCE matters, a full policy on Disaster Recovery and a full Insurance Program. Whilst the September The audited operating surplus after taxation for the earthquake caused relatively minor damage the wide year to 30 April 2011 was $1.892million compared spread destruction experienced in February inflicted with $1.644million in the previous year – an increase damage on all Christchurch locations and major of 15.1%. damage to the Colombo Street building housing the Group administration office. Operating revenues for the 12 months decreased from $226.1million to $220.7million. A rapid deployment of the Disaster Recovery Plan meant the company was able to get those operations 12mths 12mths % designated as “critical” up and running within four 30.4.11 30.4.10 inc/dec working days. This included relocating Head Office TOTAL OPERATING REVENUE 220,700 226,093 -2.4% staff to the designated

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