Rada for 2.5c maiden div. after $22M profit

Press, 13 May 1987, Page 43

Rada for 2.5c maiden div. after $22M profit

Rada Corporation, Ltd, has announced an unaudited net profit of $22,170 million for the year ended March 31, 1987, and is paying a maiden dividend of 2.5 c a share (5 per cent). Rada’s chairman, Mr Bob Gunn, said the result represented a return on average shareholders funds during the year of about 16 per cent after tax.

“We expect to increase this rate of return on funds in the current year.”

The result compares with a net profit of $1,662 million for the four months to March 31 last year.

Rada reported a net profit of $7,347 million for the half year ended September 30, 1986, so nearly twice this amount was derived during the second six months.

The profit includes equity-accounted results for the first time for Crown Corporation, Ltd (40 per cent owned) and Newmans Group, Ltd (39 per cent owned), whereas only dividends received are taken into account from Rada’s major investment stakes in General Properties Corporation, Ltd (9.85 per cent) and N.Z. Forest Products, Ltd (24.2 per cent). The results for the 50 per cent owned subsidiary, Prorada Properties, Ltd, are consolidated for its first four months of operations. The profit excludes any results from Rada’s interest in North Broken Hill Holdings, Ltd. Mr Gunn expects shareholders will have the choice of receiving this dividend in cash or in bonus shares in lieu of dividends. “In addition, it is proposed that a free option be issued to all shareholders on a one for four entitlement basis to subscribe for further Rada shares during the next three years at a price of 1000 c a share. Shareholders will be issued free options at the

time of payment of the final dividend. The options will be issued, in the ratio of one option for every four ordinary shares held, to shareholders on the register on the books closing date for the final dividend. No consideration will be payable for the issue of the options. Each option may be exercised on either October 1, 1988, or October 1, 1989, or October 1, 1990, and will entitle the option holder to one ordinary share of 50c at a price of 100 c each. Option certificates will be mailed to shareholders together with dividend cheques or share certificates for shares issued under the proposed bonus shares in lieu of dividend plan. The options will participate on the same basis as ordinary shares in any cash issues and will carry entitlement to bonus issues made while the options are outstanding, and such bonus shares shall be issued upon exercise of the options. The ordinary shares issued upon exercise of the option will rank pari passu in all respects with the existing ordinary shares including entitlement to all dividends paid after the date of exercise.

The shareholders’ funds of the group rose 222 per cent during the year to $328 million, representing 44 per cent of year-end total assets.

During the year, Rada acquired a pivotal shareholding of 24.2 per cent of the issued capital of N.Z. Forest Products at a cost of over $5OO million: this purchase was funded by a rights issue raising about

$2OO million from shareholders and the balance in term borrowings. As previously reported in March, Rada has now entered into an option agreement with the Australian forest products company Amcor, Ltd, which, subject to various regulatory and shareholder approvals, will result in the sale of Rada’s parcel of shares in N.Z. Forest Products at a significant profit after all funding costs for Rada. If the sale is consummated, all of this related profit will be accounted in the 1987-88 financial year.

During the year, the other major investment stakes held by Rada have begun to perform well. The largest of these, a 14.99 per cent share in the Australian diversified resource group, North Broken Hill Holdings, (held equally with N.Z. Forest Products), has achieved a substantial profit, dividend and cash flow turnaround over the last 12 months. Rada expects this trend to continue in the current year, as further productivity gains are achieved by the company and world prices of base and precious metals (zinc, lead, copper, gold, silver) continue their recent rises.

Crown Corporation (now 41 per cent held) has divested itself of rural activities and is repositioning its business into international trading and financial services. It will also record a significant profit turnaround this year.

Newmans Group (now 45 per cent held) has experienced strong competition ’ in the tourism

industry, but has the management and asset base to achieve a satisfactory earnings increase in the year ahead. Property activities through our 50 per cent subsidiary Prorada Properties and its associate company, General Properties Corporation (now 35 per cent held), are progressing well. Both companies are trading actively on their own accounts: both will increasingly assist in the management and development of properties held by the other associate companies of Rada.

Equity trading activities continue to provide above average returns, with the investment emphasis since last year firmly in offshore markets, particularly Australia. Rada Crown Securities, Ltd, is also achieving well above expected returns in its specialised areas of fixed interest and forex trading. Directors say that they view the outlook for the present financial year with optimism, and believe the company is extremely well placed to fulfill market expectations.