ARA move upsets NZMB plans

Press, 19 November 1981, Page 22

ARA move upsets NZMB plans

The decision by the Auckland Regional Authority to abandon its trolley bus project could seriously affect the profits of New Zealand Motor Bodies, Ltd, according to the chairman, Mr N. R. Moller, in the annual report. Urgent representations were being made to the Government and the ARA to ensure the company was not badly affected by what was an unexpected move. Extremely low demand had contributed to the $1,657,000 loss in the year to June 30, but more than $1 million had been used to write off all the costs involved in closing Emslie Consolidate Industries, Ltd, of Dunedin. Legal advice had been sought, claims formulated, and negotiations started with the previous owner of Emslie. The Emslie subsidiary had been bought to meet forecasts budgets, Mr Moller said. Government planning of transport needs was a vital ingredient of the company’s long-term strategy and profitability. “We still await firm policy decisions as to their longterm planning,” he said. A reconstruction of company finances had been undertaken to ensure adequate funding for home and export orders and that the Palmerston North property was better covered by long-term finance. Part of the financing arrangement would be the issue of a one-for-four specific preference issue at 100 c,

at 16.25 per cent interest, which would be announced shortly and would be underwritten by the major shareholders, Moller Holdings, Ltd, and TNL Group, Ltd. Full advantage would be available in future years for the estimated SI.SM in tax benefits, which arose because of the write-off in plant closures. “Such advantages will, of course, depend on future profits, but the directors feel that full recovery can be achieved,” Mr Moller said. The managing director, Mr S. B. King, said that while the company had retained half the domestic bus and coach bodies market, production fell 20 per cent because of declining demand: Rising costs in labour and materials led to considerable increases in chassis and body prices, and many coach operators were extending the life of their vehicles. The confirmation that Singapore Bus Services (1978), Ltd, would buy a further 250 NZMB bus-body kits would increase exports to about $5 million this financial year. Tenders had been invited for kits to several other overseas countries because of Motor Bodies’ Singapore service, he said. To expand the domestic base the company was increasing production of truck trays and agricultural products. This year’s objective was for half of the sales to come from areas other than bus and coach body work. Other major tasks were to

increase efficiency through model standardisation and to reduce overheads, the reason the Christchurch factory was sold since the balance date, he said. Turnover rose 48.7 per cent to $12.5M, but a pre-tax trading loss of $189,000 resulted, including allowing for operating losses of $50,379 incurred from a subsidiary company which was acquired during the year. A profit of $104,000 was earned in the previous year. The depreciation provision increased $34,000 to $194,000, but no tax was payable. The tax credits resulting from export incentives were not disclosed. No dividend was recommended in the latest year. The annual dividend rate last year was 10c a share (10 per cent). Shareholders’ funds fell $lO,OOO to $3,717,000, including ordinary capital up $lOO,OOO to S2.IM because Of the shares issued to acquire Emslie.