Net earnings for the year amounted to $702,710 as compared to $476,130 for the previous year. This equates to an increase of $226,580 or 47.6% year on year. Earnings from operations amounted to $300,145, an increase of $139,420 or 86.7% over last year. Earnings from the Company's investment in its affiliated company totaled $402,565, an increase of $87,160 or 27.6% over last year.
The Company continues to have a strong balance sheet with a current asset ratio of 6.5:1 to current liabilities. The Board decided to maintain the present dividend pay-out rate for the time being and to review it later in the year based on achievement of earnings projections.
During the first half of 1997, the Company was undergoing a major renovation and expansion at its Bull's Head facility. The interruptions and obstacles caused by the construction resulted in a major downturn in sales in the first five months of the financial period despite the fact that the Company managed to complete the project without closing the facility for even one day. The renovated facility was completed by the end of June, 1997 and the favourable reaction from customers translated into enhanced sales for the remainder of the financial year, hence the very satisfactory year end earnings.
With the remodeled and expanded facility, increased product lines and competitive pricing, coupled with a thriving construction business and vibrant economy, the Directors are cautiously optimistic that the 1998/99 financial year will produce even better earnings. The cautionary message relates to the second half of the year, for, as in most retail businesses, the greatest contribution to earnings occurs in the Christmas period. As long as there are no events which result in a downturn in consumer spending which would negatively affect our sales and earnings.
The Directors noted that the present bid price for shares in the Company does not reflect the fair value of such shares. The Directors have decided that the Company will repurchase up to 50,000 common shares over the next two years for this would be in the interests of all shareholders and particularly smaller shareholders.
Susan D. Wilson, C.A.,
President and Chief Executive Officer