Slump restrains Alex Harvey

Press, 4 July 1983, Page 16

Slump restrains Alex Harvey

PA Auckland Alex Harvey Industries, Ltd, has joined the lengthening list of front-rank listed companies whose directors have decided not to publish current cost accounts for the year to March 31. However, the company has continued its practice of setting aside a substantial sum against the replacement cost of fixed assets.

The chairman, Mr H. N. Avery, says in the annual report that careful consideration was given to the implications of adopting the recommendation of the Society of Accountants, and sample studies were conducted using data from certain group companies. After evaluating those studies the directors concluded that the preparation and publication of such information was not warranted at present. Mr Avery points out that as has been the company’s practice in past years, a calculation has been made of the additional depreciation on the estimated cost of replacing the group’s fixed assets. In respect of the year just ended, $ll million has been appropriated to the reserve for increased cost of replacement. This reserve now stands at $6l million.

The management direc-

tor, Mr S. D. Pasley, says in his review that the downturn in operating results suffered in the second half was directly attributable to the significant contraction of the economy. Although the downturn was forecast, he says, it was nevertheless surprising in terms of its severity. As reported, audited taxpaid trading profit of the group was $27,481,000 compared with $25,462,000 in the 1982 year. Total group sales advanced a marginal 1.9 per cent to $450.9 million but, for the first time since the group made its major thrust into exporting more than 10 years ago, export sales did not improve over the previous year. They declined by $1.5 million or 2.4 per cent to $60.8 million. Mr Pasley reports that during the year the forestry planting programme was continued with a further 858 hectares being planted. Total plantings to date are 2538 ha at Waipu, 670 ha at Te Kao and 175 ha at Ngatihine — the latter being the AHI share of plantings of the Ngatihine joint venture with Carter Holt Holdings, Ltd, and NZ Forest Products, Ltd. Total AHI holdings of land for forestry development are ll,looha.

Expansionary moves included the acquisition of a 56 per cent interest in AHI Plastics (Caribbean), Ltd, an increase from 50 to 100 per cent interest in AHI-St Regis (NZ), Ltd, and a 50 per cent interest acquired in Zanpro Lucerne (NZ), Ltd. Investments in associated companies included Golden Manufacturers, Ltd, Fiji (49 per cent); Oakley Seiko Aluminium Industries Pte, Ltd, Singapore, (25); Paper Coaters (NZ), Ltd (50); and Tetra Pak (NZ), Ltd, (50). The company’s interest in AHI (Caribbean), Ltd, was reduced from 95 to 56 per cent and the 51 per cent holding in Vacation Hotels, Ltd, was sold.

Mr Avery says that during the year the group had a positive trading cash flow, assisted by the sale of its investment in Vacation.

These factors, he says, precluded any requirement for new issues of shares or debentures in the period. Of the groups within the company, building products was significantly affected by the depressed trading conditions in the second half, and the price freeze. The flexible and paper products group is reported to have achieved improved results, while the glass products group achieved only a slight increase in sales.

Trading by the metal containers group was strong in the first half, but experienced depressed demand in the second half.

Sales of the plastic moulding group increased on both domestic and export markets, and what Mr Pasley describes as a much improved financial result was produced by the Turoa skifield.

The annual meeting on July 29 will be asked to sanction a directors’ recommendation that the company’s articles be altered to allow the payment of dividends from share premium account to those shareholders who so choose, and also to allow the directors to make bonus issues without having to obtain prior approval at a general meeting.

The consolidated balance sheet shows fixed assets of $141,335,000 ($154,177,000 in 1982); intangible assets of $12,164,000 ($10,898,000); investments of $35,187,000 ($28,982,000); and current assets of $151,839,000 ($167,287,000). Total shareholders’ funds were $182,417,000 ($163,777,000); term liabilities $61,339,000 ($64,118,000) and current liabilities $84,307,000 ($109,281,000). Dividends paid, an 8c interim in January and re-

commended 14c final, require $10,560,000, which is covered 2.6 times by net earnings. Earnings an ordinary 100 c share were 57.3 c (55.6); the earning rate on average shareholders’ funds was 15.9 per cent, compared with 17.6 per cent in 1982.