Magnum reports $15.6M profit

Press, 21 February 1987, Page 26

Magnum reports $15.6M profit

PA Wellington Magnum Corp, Ltd, has reported an after-tax trading profit before extraordinary items for the six months ended December 31, 1986, of $15,625,000, a 48.6 per cent increase on the $10,513,000 earned in the six months to December 31, 1985. In addition, extraordinary profits totalling $64,488,000 ($3,147,000 in the corresponding period last year) arose from the sale of the tobacco business and several properties now surplus to the group’s trading requirements, including the Clarendon Hotel in Christchurch. The directors have announced an interim dividend of 15 per cent or 7.5 an ordinary share (in-

terim'dividend last year being 13.5 per cent or 6.75 ; a share). This interim dividend will be paid on April 21, 1987. Including the special interim dividend of 10 per cent (5 cents per share) paid in November 1986, dividends announced so far in respect of the current financial year total 25 per cent or 12.5 a share.

At almost $3OO million, total turnover for the six months period was down $26 million or 8 per cent on the corresponding period of the previous year. The reduction in turnover resulting from the sale of the tobacco business was to a large measure offset by significant sales growth achieved by a number of the group’s other trading

operations. : These results do not include any contribution from Dominion Breweries, Ltd, or Quill Humphreys, Ltd, both of which are currently the subject of takeover offers by the company.

DB and Quills did not become subsidiaries of Magnum until January 11 and February 17 this year respectively. Accordingly, the results of those two companies will be included for the first time in the second half of the current financial year. ’ Trading during the six months to December, 1986, was . particularly buoyant Consumer demand was especially strong immediately prior to both the Government budget of July, 1986, and the introduction of GST in October, 1986, the directors said. Given the sale of the tobacco business and other assets for cash, and the strong cash flow from most of its trading operations, the group has substantial funds surplus to immediate requirements.

While most divisions of thie Group traded beyond expectations, Corbans Wines, Ltd, in common with its wine industry competitors, did not achieve a satisfactory return despite substantial sales volume growth.

It is clear that for the group’s longer term best interest, Corbans should play some part in further rationalisation of the, local wine industry, the directors said.

, Accordingly, discussions are being held with Cooks McWiliiam’s, Ltd, in an endeavour to bring the operations of these two winemakers together. The company’s offers for the shares in DB and Quills are proceeding satisfactorily. Acceptances received to date under the offer for DB represent over 85 per cent of DB’s

total issued capital. Provided acceptances soon reach 90 per cent, the offer will be kept open and procedures commenced in due course for the compulsory acquisition of the outstanding DB shares. • ;

Acceptances received under the offer for Quills (which was sent to that company’s shareholders on February 13) represent more than.B6,per cent of Quills’ total issued capital. It is anticipated that in due course Quills will become a wholly owned subsidiary of Magnum.

With the inclusion of DB and Quills, the expanded group will have shareholders’ . funds off about $4BO million, total assets of $7OO million and an annual turnover approaching $1 billion.

The interim dividend to be paid on April 21 qualifies for the company’s bonus shares in lieu of dividends scheme.

The share price which will be used for the calculation of bonus share entitlements under the scheme is 5.47 c, being 90 per cent of the average market price of the company’s shares over the last five trading days.

Former shareholders of DB and Quills who have accepted the company’s offers for their shares, and who have received or will receive Magnum shares as consideration, will also receive the Magnum interim dividend payable in April.