Smiths City lifts profit

Media release

Monday 20th December 2004

Smiths City Group Ltd has announced an unaudited pre-tax profit from operations of $2.574 million for the six months to 31 October 2004 - an increase of 2.1% over the six months to October 2003. Operating revenue in the same period increased 2.6% from $100.856million to $103.516 million.

As a result of a taxation refund arising from the settlement of a tax dispute relating to the 1999 tax year, profit after taxation rose from $1.710 million for the six months to October 2003 to $3.945 million for the six months to October 2004.

An interim dividend (without imputation credits) of 1.5 cents per share up from the 1 cps paid last year has been declared. The previous years dividend had imputation credits attached to it. For purposes of the dividend the share register will close at 5.00pm Friday 4 February 2005 and reopen 9.00am Monday 7 February 2005 with payment being made on Friday 11 February 2005.

Commenting on the result chairman Craig Boyce said "The 2004 year has been a year of achievement for the Group. In particular the company has:

- Successfully reached agreement with the Inland Revenue Department on all outstanding taxation issues and in December paid a special one off dividend to shareholders of 1.5 cents per share.

- Successfully completed the process of transferring from the NZAX to the NZSX.

- Successfully completed acquisition of 80% of L V Martin & Son Limited which was the first part of a growth strategy designed to enhance shareholder value.

The company is now in a position to move forward positively particularly given the advantageous tax position it will have over the next few years."

Managing director Rick Hellings said "As has been widely reported trading conditions in the six months to October 2004 have not been easy. Whilst price deflation in many of the products we sell has stimulated demand it has also meant that we have been selling significantly more units to achieve the same dollar value in sales. When the additional costs generated in such trading conditions are combined with rising interest rates and increased costs of wages and petrol, the small gain we have made in operating profit is considered a satisfactory result.

The acquisition of L V Martin & Son Limited became effective from 1 November 2004 and the integration to date has gone very smoothly. We are confident it will prove to be a valuable addition to the Group.

November trading conditions were reasonably soft but December has started strongly. The outlook for the 2005 year is somewhat uncertain. Whilst parts of the economy are looking strong the prospect of a sustained high dollar, slowing building sector and possible further increases in interest rates will undoubtedly have an impact on the retail sector. The company feels that its strategy of offering full service and quality brands throughout all its operations will continue to serve it well."

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