Smiths doubles share price ahead of listing

By Chris Hutching

Friday 16th July 2004

Some Smiths City shareholders have already enjoyed the benefits of the company's pending debut on the main board of the Stock Exchange as the share price has doubled over the past month to 80c a share.

Chairman Craig Boyce said he has been pleasantly surprised at the ease of moving the home supplies chain to a main board listing and said the share price performance on significant volumes was probably attributable to the higher public profile it is enjoying and the information being published by broking analysts.

Before the recent price rise the price to earnings ratio was just 5 but has now moved to 9.7 still a relatively modest level for a retail stock.

Some investing institutions have been active among the buyers, lifting the market capitalisation at the new price to just over $42 million.

Adding to the momentum was a strong annual profit after tax of $4.33 million ($6 million before tax) posted a fortnight ago.

Thirty per cent of the shares are owned by directors who built their stake by buying convertible notes that were part of a scheme of arrangement for creditors set up when the company went into receivership in 1991.

It did so after a period of rapid and unsustainable expansion into the North Island and after listing on the Stock Exchange just in time to be hit by the 1987 share market crash.

Smiths is one of the few large companies to have survived a receivership and part of the credit goes to the late Bill Revell, former chairman, who put in more than three years of unpaid work between 1991 and 1995.

Smiths has recently relocated its Christchurch flagship store from the old Smiths City Market site where Henry Smith in 1918 set up his grain and livestock auction yards to a smaller site over the road to the northern side of Dundas St on the corner of Colombo St.

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