Aurora disputes Feltex board seat

Press, 9 July 1983, Page 22

Aurora disputes Feltex board seat

PA Wellington The Wellington property company, Aurora Group. Ltd. is'disputing a board seat of its largest shareholder, Feltex New Zealand Ltd, the diversified manufacturer which late last year bought 24.9 per cent of Aurora. Mr Ray White, new chairman of Aurora and former governor of the Reserve Bank, says in the annual report that Feltex has been offered a directorship but subject only to its acceptance of conditions aimed at protecting the interests of the remaining shareholders.

Details of these conditions were still the subject of negotiations, Mr White said.

Although the nominee suggested by Feltex was acceptable as to his personal background and ability, the Aurora board was concerned to ensure that adequate safeguards existed to protect the interests of the remaining shareholders. Two issues were involved, Mr White said. “The first is the availability of corporate information to a major shareholder. This

could include information which is either not available or not yet available to other shareholders. “The second arises from the inadequaces of the law in New Zealand relating to take-overs. It is desirable that any offer which might be made for additional shares in the company to a level which might give effective control should be made in an appropriate manner and to all shareholders rather than on a ‘first-come, first-served’ basis.’’ Mr White says that his board considers that current cost accounts as recommended by the New Zealand Society of Accountants are not appropriate for a pro-

perty investment company. He said the Institute of Chartered Accountants for England and Wales specifically exempt property and investment companies from their current cost accounting standard. The company’s practice has been to treat the whole of the revaluation of assets as a separate item in the profit and loss account. Aurora reported a profit to March 31 of $7.7 million, up from $2.7 million in 1982. Revaluation of assets increased from $1.6 million last year to $6.6 million in 1983. Operating profit was down slightly, to $1,094,146 from $1,135,219. The revaluation of assets reserve is available for

bonus issues while the operating profit is the source of funds for payment of dividends.

The directors are proposing to the annual meeting an increase in directors' fees more appropriate to the size of the company and responsibility of directors. The proposal for new fees of a maximum of $42,000 a year (currently $28,000) will still be subject to approval under freeze regulations. Earning rate on shareholders' funds jumped to 21.1 per cent from 9.21 per cent last year. Dividend cover was 10.1 times profit — against 4.5 last year.