Smiths City directors survive Brierley putsch, dangle bigger Christmas dividend

Thursday 8th September 2016

Smiths City Group chairman Craig Boyce and fellow directors Gary Rohloff and Tony Allison have survived an attempt by Ron Brierley's Mercantile Investments to oust them from the board.

Polling on the resolutions was forced by Mercantile director and Sandon Capital principal Gabriel Radzyminski who opposed the re-election of Boyce and Rohloff and the election of Allison at today's annual meeting in Christchurch. More than a third of votes cast opposed the three candidates.

Mercantile and Sandon have built up a 17.4 percent stake in the Christchurch-based retailer, or 9.2 million shares, since they emerged as a substantial shareholder last year, although Radzyminski declined to comment on the group's intentions during the meeting or afterwards.

Boyce told shareholders the company's other major shareholders, Don Campbell with 18.3 percent and Utilico Investors with 13.6 percent were both "very supportive of the company."

Allison was appointed to the board after being nominated by Utilico Investors and Boyce told shareholders he was a good fit as the retailer works out its succession plan.

The board's three-yearly external review of directors' fees recommended an increase, but Boyd said they decided to defer that decision until next year, "when we can hopefully present to you a much stronger position after this year's trading."

Smiths City is in the process of overhauling its business, winding down appliances-only Powerstore and LV Martin operations as it reduces the number of brands it operates while expanding its footprint in the North Island and Auckland in particular, and improving its customer experience through store upgrades.

Sales in the three months ended July 31 were 10 percent higher than the same period a year earlier, and "profit is tracking substantially above last year and ahead of budget," Boyce said.

Smiths City typically reports first-half results just before Christmas, and Boyce said if trading maintains its momentum, "the board wishes to provide an early Christmas present of an increased dividend."

The retailer has paid annual dividends of 3.5 cents per share for the past five years, and Boyce said they will start attracting imputation credits in the 2017 or 2018 once tax losses are carried forward next year.

Chief executive Roy Campbell said the retailer is looking to build its network across New Zealand and develop a strong Auckland presence, which he sees as providing untapped potential for growth.

Smiths City currently has 32 stores and four clearance outlets across the country, and Campbell said the ideal size for a national network is between 36 and 40 stores.

The company's shares last traded at 70 cents and have gained 25 percent so far this year.

BusinessDesk.co.nz

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