F. and P. looks to C.E.R.

Press, 9 July 1983, Page 23

F. and P. looks to C.E.R.

PA Auckland Fisher and Paykel Industries, Ltd, has prepared current cost accounts (CCA) in accordance with the new Society of Accountants standard, but has decided not to publish them in the annual report. The chairman, Mr Maurice Paykel, said in the report: “Until such accounts are more widely understood and accepted, the directors are of the opinion that no useful purpose is served by publishing them.” Fisher and Paykel thus joins a growing list of industry majors to have auditors qualify their report for not presenting supplementary current cost accounts.

In the directors’ report Mr Paykel lists further investments in subsidiary companies made during the year.

Along with increasing its investment in listed Henderson and Pollard, Ltd, to 43.79 per cent through purchase of shares and the sale of its remaining 30 per cent interest in Best-Wood, Ltd, to H. and P., Fisher and Paykel acquired all the shares in the Microcomputer Electronic Co., Ltd.

It also established a new company, Fisher and Paykel Medical' Inc., as a whollyowned company for distributing its medical products in the United States. This contributed to increased sales of New Zealand- designed medical equipment in America. A further investment of capital by the shareholders of Screencraft Manufacturing, Ltd, was required to support an increasing level of business and the needs of the professional and industrial electronics industry,

Mr Paykel said. F. and P. Finance, Ltd, also increased its equity in Dunedin Computer Bureau, Ltd, to 50 per cent. During the year Fisher and Paykel reached an agreement with Thorn EMI Domestic Electric Appliances, Ltd, of England, to terminate proceedings initiated several years ago after an alleged infringement of Fisher and Paykel clothes dryer patents in the United Kingdom. Fisher and Paykel’s managing director, Mr D. D. Rowlands, said that as a result earnings from royalties on its dryer technology was now protected. The report shows that overseas royalty earnings of the group rose from $744,000 to $1,209,000 in the year to March 31. Mr Rowlands said that the finalising of the Closer Economic Relations (C.E.R.) agreement was the major event of the year. “in marketing terms, we must now regard ourselves as an Australasian company and develop our future products with both New Zealand and Australian customers in mind. “Conscious of the constraints set by the size of the New Zealand market, we have been preparing for more open trade with Australia for many years.” By July, 1989, all white goods under C.E.R. would be traded free of tariffs. New Zealand white goods now had unrestricted entry to the Australian market and Australian whitegoods had increased access to New Zealand, starting with a level of between 6 per cent and 17 per cent this year, rising in two-yearly steps to reach licence-on-demand by

1989, he said. Of particular importance was the association built up with Kelvinator Australia and later Email, Ltd, of which F. and P. was now part. Also under C.E.R. F. and P. would import from Email a r ange of Austra-lian-made products to be distributed under the Westinghouse brand name, Mr Rowlands said.

“We will also import products from other Australian manufacturers to widen our current range of laundry products, dishwashers and electric cookers.”

Although local sales by the laundry division were on budget, exports of international compact clothes dryers suffered from the general downturn in Australia. The duty phase-down under C.E.R. would mean the position improved as the Australian market recovered, and substantial investments in new laundry products would provide greater export prospects. The refrigeration division continued to provide the major source of export income.

The depressed economy in Australia was partly countered by increased exports to the Middle East, Japan and the West Indies, Mr Rowlands said.

Increased export activity was a feature of “another successful year” for H. E. Shacklock, Ltd, with a range of electric heaters and rangettes exported in volume to a major distributor in Australia, in addition to exporting dishwashers. In New Zealand the electric range market became highly competitive, resulting in lower returns from this product. There were

plans to introduce new models this year and in 1984. A new porcelain enamelling facility was commissioned at the Taieri plant. Last year had marked the 20th anniversary of the company’s association with Matsushita Electrical Industries, of Japan. Locally manufactured and imported National brand products had again contributed substantially to results.

Since the balance date a contract has been concluded with Tokheim Corporation, of Fort Wayne, Indiana, granting it world distribution rights outside Australasia for Retron 80 digital petrol pump registers made by F. and P. under licence. This includes a manufacturing licence agreement in the United States.

A fluctuating market created excessive demands on working capital for the group and its retailers. Both stock and debtors’ levels increased markedly and were taking some time and effort to bring back to normal, he said.

As reported, consolidated net trading profit for the March year was $16,311,000 ($15,455,000 previously). The group share of associate company income rose from $545,000 to $1 million. Earnings as a percentage of revenue were 6.9 per cent (7.2 per cent) and the return on average shareholders’ funds was 20.6 per cent (24 per cent).

The consolidated balance sheet shows total shareholders’ funds of $87,381,000 ($70,850,000), current assets Of $72,542,000 ($70,712,000) and current liabilities of $38,722,000 ($39,756,000).