NZI profit 69.4 p.c. up

Press, 6 November 1984, Page 24

NZI profit 69.4 p.c. up

NZI Corporation, Ltd, earned an unaudited consolidated net profit after tax of $37,818,000 for the six months ended September 30, on gross revenues of $518,197,000, up 28.7 per cent on the comparable period in 1983; the devaluation of the New Zealand dollar materially contributed to this increase, the directors say in their preliminary report. The improved trends shown in the last financial year have continued into the current year, with a further substantial increase in operating earnings. Total group operating earnings for the half year were $24,127,000 compared with $14,245,000 last year — an increase of 69.4 per cent, they say. In the general insurance division the measures taken to improve underwriting out-turn and reduce costs are now having their full effect and producing substantially improved results, in spite of a continuation of highly- competitive business conditions. The directors say that the group’s major territory, Australia, had produced a very pleasing result, while New Zealand, Malaysia, and Hong Kong have all shown considerable improvement.' Singapore had been disappointing, and in America it had suffered some serious losses during the run-off of former agency business.

The life insurance division had operating earnings of $1,565,000 and featured a particularly good performance in New Zealand. The finance companies division’s operating earnings continued to grow at a substantial rate, and at’ $3,898,000 are 77.3 per cent up on 1983. The realised gains on sale of investments for the division included $6,476,000 which arose from the sale of the interest in Bunting and Company, Ltd, to Brierley Investments, Ltd. Other divisions are all trading well and ahead of budget. The 20 per cent devaluation of the New Zealand dollar on July 18 contributed to a large

increase in the value of the group’s offshore net assets, overseas insurance exposures, and capital needs when expressed in New Zealand currency. Exchange fluctuations for the half year amounted to $67,888,000. With effect from April 1 the exchange fluctuations are accounted for in terms of a new accounting policy, whereby the net gains and losses arising from the translation of overseas currencies to New Zealand currency are taken direct to reserves and not through the earnings statement. During the half year the final instalments on the partlypaid shares under the 1983 cash issue to shareholders fell due for payment, a one-for-four bonus share issue was made, and 2,277,300 shares were issued to staff under the terms of an employee share purchase scheme. The issued capital of the company at September 30 totalled 318,479,977.fu11y-paid shares. After approval by shareholders at an extraordinary meeting on October 2, a convertible bond issue was launched on the Eurobond market to raise SUSSO million for offshore developments, and the issue closed fully subscribed on October 18. As the issue was launched after the end of the half year the expenses and proceeds of the issue are not included in the half year accounts under review. The directors announced on October 18 an interim dividend of 3.75 c (7% per cent) a share payable on November 7. The distribution is being made from the share premium account and is therefore free of tax to New Zealand shareholders.” We are advised that this is also tax-free to Australian shareholders and a ruling from the Australian taxation office is being obtained which will be advised to those shareholders,” the directors say. Commenting, the directors say that they expect that, in the absence of extraordinary claims affecting the general insurance division, and allowing for the non-recurring capital gain which arose from sale of the interest in Bunting and Company to Brierley Investments, earnings of the group should continue at a similar level in the second half-year.