A. and B. explains need for funds

Press, Volume CXI, Issue 32568, 30 March 1971, Page 20

A. and B. explains need for funds

Andrews and Beaven, Ltd, had experienced exceptional growth, and was trading at twice the volume it was two years ago, said the chairman (Mr R. C. Neville) in a letter to shareholders yesterday.

The letter explains why the! directors thought it necessary! to make a cash issue of one' for eight at par, and gives further details of the way inj which the funds are to be used. Mr Neville said that there! are two major reasons why trading volume increased:! first, because Andrews and’ ! Beaven was today a large i group of companies under a) i unified administration, and | I the trading in all subsidiaries shad grown substantially ini the last 12 months, and sec-' (ond, because of three signi-l meant developments after! this expansion. The debenture and cash issues of November, 1969 and ! January, 1970, were made to . support the trading expansion of the enlarged group, Mr Neville said. However, . some of these funds were 'diverted to redeem the short term bridging finance arranged by General Accessory ; Company, Ltd, to finance its ‘exceptional growth. Other developments The three other developments were:— In the first place, the sharp increase in demand for capital equipment, especially in materials handling and construction, of which the group is a leading supplier. This required a boost in production, with more men and equipment, additional workshops, and a substantial increase in work in progress. In the second place, the company had the opportunity to take over the franchise for New Holland, one of the world’s largest suppliers of harvesting equipment, and a decision could not be delayed because of the need for sales and servicing through the 1970-71 harvesting season. This move, together with rising sales of the popular Fiat tractor range, resulted in the agricultural division doubling its turnover.

Third, probably as a result of the group’s distribution facilities, it also had the opportunity to accept the franchise of Bosch GmbH Stuttgart, Germany, which is among the most prominent manufacturers in the world of automotive electric equipment. Substantial scale All these additional activities required financing on a substantial scale, beyond that budgeted for at the start of the year, Mr Neville said. Turnover for the first six months of the current financial year was 12.8 per cent up on the corresponding period for the previous year, and there was reason to be in good heart, in spite of the difficulties, common to all .companies, in containing costs. Rationalisation was well advanced and continuing and would result in better staff utilisation and reduced costs, he said.

“Perhaps because of the origins of Andrews and Beaven, Ltd, and publicity attending the agricultural division, there is a widespread but erroneous belief that the company is primarily a manufacturer and supplier of agricultural equipment. In fact, that division’s sales comprise only 13 per .cent of turnover, whereas materials handling and construction equipment and also automotive and allied industries each account for 30 per cent, the remaining 27 per cent originating from merchandising lines other than automotive.

“The company is possibly the leading manufacturer of power transmission equipment. It is also the leading supplier of seed cleaning plant and a major manufacturer and supplier of industrial components, such as fans, valves and steam traps, to New Zealand’s processing industries,” Mr Neville said. The company is also engaged in major contracts for

the Bluff aluminium smelter, the New Plymouth power station and the container shipping terminals in the North Island.

The Group comprises the parent company, Andrews and Beaven, Ltd, which some years ago bought John Chambers and Son, Ltd. engineers’ merchants with national distribution facilities, [and more recently General ‘Accessory Company, Ltd, a ' distributor of automotive ‘parts, which, in turn, owned la number of subsidiaries. As a result of rationalisaition, the group trades through ! 14 selling divisions, all of which market their products through 32 branches and, in a few cases, through specialised dealers. A staff of about 1850 is employed in workshops, warehouses and administration and as representatives. The workshops are at Middleton and Moorhouse Avenue, in Christchurch, and Mount Wellington in Auckland, and are staffed by about 300 tradesmen of all skills. Additionally there are die making, brake and clutch bonding and automotive factories in Dunedin; an automotive muffler manufacturing plant in Christchurch; and engine reconditioning factories in Auckland, Rotorua, Hamilton, Palmerston North, Lower Hutt, Nelson, Christ-

church, Dunedin and Invercargill. Another subsidiary in Nelson specialises in serving fishing and coastal vessels. Moreover, the various trading divisions represented more than 100 of the world’s most prominent manufacturers of industrial products and equipment, Mr Neville said.