A.H.I. bonus issue still on

Press, 5 July 1977, Page 18

A.H.I. bonus issue still on

“Alex Harvey Industries, Ltd, still intends to make a bonus issue to shareholders but it is compelled to defer this, and any review of the dividend, until after the Limitation of Distributions Regulations are lifted on August 14,” says the chairman (Mr H. N. Avery) in his annual report to shareholders.

“During March the loan raised in 1975 for $U54,088,700 from Midland and International Banks, Ltd. was repaid, and a new loan from the same source for SUSSM for a 7 year term was negotiated. Repayments commence at the end of the third year. Apart from this it was not necessary to inject further long term funds during the year,” says Mr Avery. The book-value of properties as at March 31, was increased $5,522,157 as a result of the latest revaluation. The previous revaluation was in March 1975.

Dominion Seal Company, Ltd, is now a subsidiary of Alex Harvey Industries, Ltd, after the acquisition of one share bringing the holding to 51 per cent. Its results are included in the consolidated accounts. With the concurrence of th n Reserve Bank, the investment in AHI (Caribbean) Ltd, has been increased from 60 per cent to 90 per cent of the share capital. It is intended to revert to a 60 per cent holding as soon as acceptable partners are found, says Mr Avery. The proposed joint-venture with Barlo Group, Ltd, in Southern Ireland has not proceeded but a whollyowned subsidiary, AHI Roofing (U.K.) Ltd, will be formed to handle the importation and sale of roofing tiles throughout Europe. The agreement with Fletcher Industries, Ltd, for the sale of 25 per cent holding in Nylex Products (N.Z.) Ltd has been finalised and settlement was obtained in April. The success of the export drive by the company resulted in export sales of more than SIBM, an increase of 78 per cent, compared with the previous year’s figure, says the general manager of Alex Harvey Industries, Ltd, (Mr C. M. Cairns) in his report.

Exports to North America, Europe and the Gulf States have grown rapidly, and sales to each of the areas were more than SIM.

All companies in the group were active in exporting, and plans have been developed for continuing growth in export sales, says Mr Cairns. Domestic sales showed satisfactory growth, in real terms, over the previous year, and much of this was attributable to the introduction of new products.

“The increased level of activity, combined with increases in costs of raw materials, has necessitated ' a further large investment in working capital, despite efforts to control this consequence of inflation,” says Mr Cairns.

During the year, building commenced on the first stage of the new low-rise head office building at Manakau City, South Auckland, and construction of a 75,000 sq. ft warehousing and freight forwarding complex at Sylvia Park, Auckland.

The market for fabricated aluminium continues to be very competitive, but cost increases, and the price freeze reduced profitability, says Mr Cairns. “An improvement in the over-all financial results in the period was achieved, however, despite a decrease in the volume of new housing starts.” The export of aluminium joinery to the Pacific and extrusions to the Middle East has continued, and an increase in sales to Bahrain is envisaged. Roofing activities remain

strong; the decline in the new housing market being offset by interest in reroofing. This market should develop as the Government encourages the purchase and refurbishing of older homes.

Measures have been imIplemented this year to minI imise the problem of raw ; materials supply, and a new South Island tile plant based in Christchurch is scheduled for completion early in 1978. Export activities in this field have continued to grow and tiles are now shipped to the Pacific, Europe, the Middle East and Australia, says Mr Cairns. Results for New Zealand Fibre Glass, Ltd, were adversely affected by the cuts in the Government insulation loan scheme, and a downturn in the commercial insulation market. Increased public awareness of the necessity for Insulation is expected to sustain future demand, he says. Precision Engineering Company, Ltd, had a successful year, although a downturn in the office equipment market caused by reduced Government spending, was felt. “Alex Harvey Sheetmetal Products had a difficult trading year,” says Mr Cairns. “A product rationalisation programme, new product introductions, and increased export activitiy is expected to improve future results.

“Because of the lack of expansion in domestic sales of glass containers, a campaign to improve exports was undertaken, resulting in an export level four times greater than in 1975-76. An expansion in product development should result in a number of new products using glass packs in the im-

(mediate future,” says Mr Cairns. Crown Crystal Glass showed a substantial profit timprovement, almost entirely from the growth of export sales, which doubled to $2.6M. A major capital investment in plant is planned for Crown Crystal Glass over the next two years, costing about S4M, which includes a new glass melting furnace, and new processing equipment. Employee amenities will be improved and enlarged. A donation of $22,000 was made to the Neurological foundation for research, based on $1 for every tonne of cullet collected under the National Glass Reclamation Scheme. The donation will support the Multiple Sclerosis Society. Export sales of metal containers were increasing with the commissioning of an automated high-volume production line at A.H.L Metal Containers, Auckland, to manufacture preserving jar seals for export. New equipment for high speed manufacture of beverage and food containers has been installed; at Christchurch. "Results of the paper pro-' ducts group reflected higher sales, in real terms, in all; forms of paper board packaging, especially Arma-; Hte corrugated board sales! to the meat industry. “Plans were finalised to exEand the Wellington and evin paper corrugating' plants and combine them at Levin.” says Mr Cairns. “Construction work has begun on a 64,000 sq. ft factory for this purpose, scheduled for completion in 1978.” The Plastics Group showed

nreal growth in all divisions, particularly packaging. The s groups direct exports were t i doubled, with major suc--1 cesses achieved in the sale of f I dairy-shed equipment, agrili cultural and building products, says Mr Cairns. "Development of land 1 holdings continued, and a si further 1100 acres was . cleared for planting. Grazing - land, pending afforestation, ! has been utilised by increas 5 ing the investment in sheep ■ and cattle farming, with 1 satisfactory results.” says , Mr Cairns. s I As announced, group net ’(trading profit rose 44.8 per • cent to $13.8M in the year 3 to March 31; extraordinary s items — $191,242 higher at (■5274,375 — increased net *! profit to more than SI4M. " The earning rate on average shareholders' funds is 17.7 ' per cent. 1 The dividend of 16 per 1 cent takes $2,670,409, cov- ! ered 4.1 times by the net | profit. ?! The profit was after providing $29,704 more for (depreciation at $4.7M, Ji570,592 less for fixed interfiest charges at SI.7M, and I$l.lM less for taxation at j$6.BM. Net current assets rose I j from S42M to SSOM; the cur[(rent ratio is 2.4:1. Shareholders’ equity is . 155.8 per cent: the funds of |$B7.9M are comprised of ,)$21.6M ordinary and I ($544,000 preference capital, ,i$4l.4M capital reserves, and •1524.4 M revenue reserves. ’! The sharees last sold at ( 367 c for a dividend yield of . 4.4 per cent and an earnings , yield of 17.7 per cent. The , price-earnings ratio is 5.6 and the net asset backing 1 405 c a 100 c share.