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[CD_CHCH]

Smiths City names 'turnaround specialist' Roy Campbell as CEO - April 2015

https://www.nbr.co.nz/article/smiths...-ceo-bd-171399



Roy Campbell

CEO

Smiths City Group.

May 2015 – Present 5 years 1 month

Christchurch, New Zealand

I was recruited to give this NZX listed, troubled national retailer a last bid at profitability. Over my 5 year tenure I comprehensively restructured the business. I Introduced a customer centric focus, shed costs, united the retail team, recruited rising stars from within the NZ retail market and implemented significant innovation strategies to maximise the ROI for as long as possible. The first three years saw a significant shift in brand awareness, purchasing capability, balance sheet improvement and positive culture shift. SCG grew its store numbers, rebranded its major stores, implemented a smarter purchasing scheme and focussed on the NZ consumer. The close of my tenure was due to the selling of the business.

https://nz.linkedin.com/in/roycampbell




I was recruited to give this NZX listed, troubled national retailer a last bid at profitability.

14-Apr-15 The Board of Smiths City Group announced late last year that our Managing Director for the last 15 years – Rick Hellings – was stepping down and as a result a search process had commenced. We are pleased to announce the appointment of Roy Campbell as Chief Executive Officer. Roy will start on 1st May 2015. In welcoming Roy we also wish to acknowledge the successful leadership of Smiths City through many periods of disruption and intense competition by Rick Hellings, our outgoing Managing Director. Rick has been with us for 30 years, half that time as Managing Director.

Audited full year financial results to 30 April 2015 - Profit before tax of $9.3 million up from $4.7 million in the prior year. NTA per share 90.16 cents. 3.5 cents per share Gross Dividend paid. Share price 56 cents (Yahoo Finance) - Looks pretty profitable to me before Roy started

30-Oct-2015 Sale of Colombo St property for $20 million

19-Jan-2016 Smiths City (Southern) Limited (Southern) has entered into a conditional agreement (Conditional Agreement) to purchase the business and assets of both Panmure Furniture City 1983 Limited (Furniture City) and its logistics operation Lucky Dragon Limited (Lucky Dragon). Auckland based, Furniture City, has stores in Auckland and Whangarei. Purchase price - $5.85m plus GST (if any)

1-Apr-2016 Purchase of Panmure Furniture City and Lucky Dragon Ltd settles

The first three years saw ~ balance sheet improvement

17-Apr-2018 Smiths City trading update - Trading losses for the year are expected to range between $1.25 million and $1.75 million compared to a trading profit of $2.0 million last year. In addition to the trading loss, Smiths City expects to make an impairment provision of $4.8 million relating to the leases on stores that have consistently underperformed due to factors including: changing trading patterns, a shift in local conditions due to the opening of new retail hubs, and onerous leases. The net loss before tax is forecasted to range between $7.0 million and $8.0 million compared to a profit of $2.4 million in the same period last year. “Meanwhile, the disruptions to trading caused by the refurbishment and rebranding of the former Furniture City stores in Auckland and Whangarei and the closure of the Ngauranga Gorge store in Wellington in November have weighed heavily on the results. “The rebranded Auckland stores, which reopened at the start of December, are not yet delivering to our expectations. Although we are making strong sales of appliances – a category previously not available in the former Furniture City stores – furniture sales are yet to recover to levels prior to the rebrand.

Audited full year financial results to 30 April 2018 - Net loss before tax of $9.9 million down from a net profit of $2.0 million in the prior year. NTA down to 80 cents. Dividend cancelled. Share price 45 cents (Yahoo Finance) - 3 year change from $9.3 million profit to $9.9 million loss ($19.2 million variance) NTA reduced by 11.3%. Share price down 19.6%. Dividend down 100%.

The close of my tenure was due to the selling of the business.

May 2020 Smiths City enters receivership following the sale which involves the acquisition of all of Smiths City Finance and the great majority of Smiths City’s stores. Directors believe Smiths City’s ordinary shares will retain no value.

2 out the 3 Panmure Furniture Stores purchased in 2016 to be closed (Mount Wellington & Whangarei) The other Panmure Furniture Store in Wairau Park was closed Nov 2019. So a few years after paying $5.85 millon plus GST (if any) for the chain all the stores have been shut. Perhaps selling their major asset - the Colombo St site - was a really stupid idea.

Assuming the CEO to be the highest paid staff member and taking the lower of the salary band figures published in the 30-Apr-2016 to 30-Apr-2019 annual reports show that presumably Roy was paid at least $2.25 million during those 4 years excluding whatever he has been paid to 30-Apr-2020.

2016 $ 480,000
2017 $ 670,000
2018 $ 580,000
2019 $ 520,000
2020 $ ???
Total $ 2,250,000

Well the business was certainly 'turned around' - perhaps not quite in the direction the shareholders would have preferred. Question is did shareholders get value for money for the remuneration paid to the 'turnaround specialist' ?

‬

[blackcap]

If I were a shareholder I would want to know one thing.

At the last HY I note that there is cash in the bank of $9m and NTA of 67 cents per share. (being operationally cash flow positive as well albeit just)

What have the company done with that NTA and cash? Or if the NTA was not realistic, why have the auditors not said anything.

Either way there is a discrepancy or something very illogical going on.

[winner69]

Obviously not that much cash left in the kitty

Many have no job ....but some saved

https://www.stuff.co.nz/business/121...ff-in-the-cold

[CD_CHCH]

If I were a shareholder I would want to know one thing.

At the last HY I note that there is cash in the bank of $9m and NTA of 67 cents per share. (being operationally cash flow positive as well albeit just)

What have the company done with that NTA and cash? Or if the NTA was not realistic, why have the auditors not said anything.

Either way there is a discrepancy or something very illogical going on.

Smiths City Directors as follows:

Alastair Gibson Kerr - Chair
Tony Donald Allison
Benjamin John Powles
Antony David Karp

30-Apr-19 Audited Annual Report. NTA 77 cents per share. Shareholders’ equity as at 30 April 2019 $42.6 million

5-Sept-19 2019 ASM Speeches - Alastair Kerr "We remain well funded"

13-Dec-19 Smiths City Interim Financial Statements for the 6 months ending 31 October 2019. NTA 67 cents per share. Shareholders’ equity as at 31 October 2019 $37.4 million (Unaudited)

18-May-20 Directors believe Smiths City’s ordinary shares will retain no value following the sale.

So in the last year under the directors watch $42 million of shareholder's equity has been lost.

This is in addition to the creditors and landlords that are out of pocket, and the human cost of 115 hardworking loyal staff no longer employed, and according to the media article income reductions for others taken on by Smiths City (2020)

The directors should be ashamed of themselves.

[Ogg]

In the knowledge that shareholder value was extinguished, the Board’s duty became to preserve as much value as possible for creditors.

I question the legality of this statement.

There are ‘safe harbour’ provisions that legally protect companies from the effects of Covid-19. The government amended sections 135 and 136 of the Companies Act 1993

https://companies-register.companies...any-directors/

-the company was able to pay its debts as they fell due on 31 December 2019
-the company will be able to pay its debts as they fall due within 18 months

I am not a SCY shareholder but I believe a class action lawsuit against the directors of SCY may be warranted.

[nztx]

I question the legality of this statement.

There are ‘safe harbour’ provisions that legally protect companies from the effects of Covid-19. The government amended sections 135 and 136 of the Companies Act 1993

https://companies-register.companies...any-directors/

-the company was able to pay its debts as they fell due on 31 December 2019
-the company will be able to pay its debts as they fall due within 18 months

I am not a SCY shareholder but I believe a class action lawsuit against the directors of SCY may be warranted.

Yes - agree there .. small holder here but would seriously consider joining a Class Action Lawsuit on this

In the very least - the SCY Reporting & Directors' actions warrant investigation

[nztx]

From my analysis of SCY's actions over the past month, it appears to me that the Board have NOT tried very hard
and been more interested in divesting the whole business than protecting it and keeping things together in the listed company

Appointing Receivers so that the Sale can be shunted through pangs of a Board running from their responsibilities

If companies like KMD & SKT can easily do Cap Raises - then why did SCY's Board not do similar ?

Was not doing so in fact reckless behaviour on part of the Board of SCY contrary to their statements of
trying to preserve the business ? It further doesn't say much for a Board that obviously has now demonstated
that it had little interest in navigating a short period of choppy waters to the other side under their direction.

They had time to do a Cap Raise and the small number of issued shares would have facilitated a Cap Raise to more than
adequately provide sufficient boards to cover the Covid-19 gaping holes appearing in the floor.

What were they thinking in seeking to sell the crystal jewels at any price & wipe out all shareholder value ?

[blackcap]

Yes - agree there .. small holder here but would seriously consider joining a Class Action Lawsuit on this

In the very least - the SCY Reporting & Directors' actions warrant investigation

Totally agree, if I were a shareholder, small or large, I would be seeking legal redress.

[Southern Lad]

From my analysis of SCY's actions over the past month, it appears to me that the Board have NOT tried very hard
and been more interested in divesting the whole business than protecting it and keeping things together in the listed company

Appointing Receivers so that the Sale can be shunted through pangs of a Board running from their responsibilities

If companies like KMD & SKT can easily do Cap Raises - then why did SCY's Board not do similar ?

Was not doing so in fact reckless behaviour on part of the Board of SCY contrary to their statements of
trying to preserve the business ? It further doesn't say much for a Board that obviously has now demonstated
that it had little interest in navigating a short period of choppy waters to the other side under their direction.

They had time to do a Cap Raise and the small number of issued shares would have facilitated a Cap Raise to more than
adequately provide sufficient boards to cover the Covid-19 gaping holes appearing in the floor.

What were they thinking in seeking to sell the crystal jewels at any price & wipe out all shareholder value ?

From the SCY announcement of 18 May:

“In addition to taking steps to preserve cash and contain costs in the face of these new trading conditions, the Board has explored numerous options to secure an injection of new capital. These efforts have included discussions with our existing largest shareholders, and other potential strategic investors, to underwrite a broader capital raising. We have been helped throughout this wide-ranging process by our advisers PwC".

So we have:

• A one in a hundred (or three hundred) year economic shock
• Existing large shareholders not wanting too put in cash
• Trying to get a new strategic investor to underwrite a capital raising
• PwC doing their best to come up with a solution

Sounds to me like this is a long way from 'the Board have not tried very hard'.

[winner69]

Smiths City have been munted and on the slippery slope to oblivion for a few years ....and it was patently clear that thevslope was getting steeper.