N.Z.M.C. In 12 Largest Listed Companies

Press, Volume CIX, Issue 32235, 2 March 1970, Page 10

N.Z.M.C. In 12 Largest Listed Companies

(New Zealand Press Association)

AUCKLAND, February 27.

The New Zealand Motor Corporation, Ltd—to be formed by the merger of the five companies which control, the assembly of Austin and Morris vehicles in New Zealand —will have shareholders’ funds of at least $2l million.

This will place it among the 12 largest companies listed on the stock exchange.

A combined balance sheet Is given in a report to share holders. The report outlines the merger proposals and in eludes the investigating ac countants' report It shows that average net earnings of the companies o> er the last three years were $1,773,000. Last year profit was 52.172.000, equal to 16.7 per cent on the proposed capi tai.

Dividend Projection

This figure does not take into account any savings which may be achieved, or any increased earnings which may result from the merger

It is reasonable to assume that this level of earnings can be maintained in the future, the report says.

Accordingly, a dividend of 9 per cent can be reasonably projected. The company’s shares would yield 5.6 per cent from this dividend at the public issue price of 160 c, and the earn ings yield would be 10.4 per cent. The combined balance sheet shows shareholders' funds to include 52.535.000 in share premium. Of this. $900,000 would arise from the public issue. Balance Sheet Capital reserves total $5,121,375, total term liabilities are $22243,885, and fixed assets are shown as $14,691. 022, with investments ol $2,346,381. i Among current items are cash of $646,042, debtors of*

$5,014,419, stocks $11,089,220 and $2,240,000 in short term depoists. Current liabilities include bank overdrafts of $1,181,802. Working capital is $6,251,509 In a letter to shareholders the chairman of Seabrook Fowlos (N.Z.), Ltd (Mr J. Seabrook) says the effect of the merger will be to improve the value of a holding of Seabrook Fowlds shares, compared with the price before the merger was announced. The market value before the announcement of 1000 Seabrook shares was around $l5OO

After the merger, this shareholder would have, instead, 500 New Zealand Motor Corporation shares ($800), 1000 Amalgamated Pacific Industries shares ($500) and 40c cash per share ($400). This gives a total of $l7OO. As the current market price of 200 c a share, a parcel of 1000 Seabrook Fowlds shares is worth $2OOO. No Div. This Year However, Mr Seabrook says it is expected that both New Zealand Motor Corporation shares and Amalgamated I Pacific Industries shares will have higher market prices than those at which they will I be offered to Seabrook ; Fowlds’ shareholders. After the merger Seabrook Fowlds—minus its motor division, and renamed Amalgamated Pacific Industries—will probably not pay a final dividend for the year to March 31. 1970. Mr Seabrook says this de-

cision is made in view <jf the cash payment shareholders will receive. As the New Zealand Motor Corporation will have a later balance date, dividends declared by it in respect of the current year will not be received until after March 31. The accounts for the year to March 31, 1971, will therefore reflect the result of company activities without the motor division. The directors are confident the company will then return to a sound dividend policy, Mr Seabrook says.