Prime-West set to pay maiden dividend

Press, 28 July 1987, Page 29

Prime-West set to pay maiden dividend

The directors of PrimeWest Corporation, Ltd, see an excellent year ahead and are looking to a maiden dividend in the current financial year, the chairman, Mr Neil S. Blair, says in the company’s annual report for the year ended March 31.

The next interim profit will include revenue from 1 the sale of the White Heron Hotel in Auckland, Westpark Tower in Christchurch and development margins on the office block in Madras Street. The most recent acqui sition, Pan Pacifi Cameras, Ltd, Multi Pre ducts, Ltd, Phototron Pre cessors (Christchurch Ltd, and Bryma Holdings, Ltd, are expected to generate more than $750,000 in pre-tax earnings in their first full year, Mi Blair says. This year’s accounts bear little resemblance tc those of the previous year. An increase in Prime West assets from $i million to $63.7 million fc the major feature of the ten months since relisting, Mr Neil Blair says. Shareholders’ funds have also Increased, from $315,141 to $25,594,269, and the return on shareholders’ funds was 28 pei cent.

Net profit wa $7,271,365, a tumaroum from last year’s loss c $335,565. But property n valuations of $7,554,24 were included in tic profit and loss account. The company’s brtf history is a classic tale of the financial rationalise’s art.

Formerly Soveregn Gold Mines, Ltd, the pesent company is the resit of the backdoor listingof Westside Traders, Ltd, he holding company for he Smith and Anderon family retailing intersts on the West Coast.

Sovereign Gold Mies Issued 32,520,000 ordinry shares and 16,260,000 >ptions for all the sharesin Westside Traders, id. The par value of Svereign’s shares were tfen

reduced to 5c from 25c and the name changed to Prime West Corp, Ltd, in December, 1985. The company’s gold mining plant, equipment, and licences were sold off and the restructured company __ consisted of two main" subsidiaries involved in retailing, publishing, exporting, and management consultancy. The retailing interests consisted of Smith Bros Appliances which sold and serviced electrical products in Westport and Hokitika, Roy’s Furnishing, Ltd, a department store in Greymouth, Buller Radio and Electrical, Ltd, a furniture store in Greymouth, and Westside Renters, Ltd, which rented televisions and videos on the West Coast.

The interest in publishing was confined to the Guardian Times Company, Ltd, publishers of the Hokitika “Guardian,” the smallest circulation daily newspaper in the country. , Westland Management and Marketing, Ltd, supplied management services to gold mining partnerships in return for royalties on gold recovered, and 33 per cent owned West Star Mining, Ltd, owned and operated a gold mining claim at Hokitika.

All of these operations were sold off during the year resulting in an extraordinary loss of $1,071,578, reducing the operating profit before tax and extraordinary items to $120,117 from $1,071,578.

If it were not for this write-off, the operating profit of $1,071,578 would have compared very favourably with last year’s loss of $335,565, Mr Blair said. The group has now been restructured into three divisions: property development, investment banking, and importexport.

The only West Coast operation retained is Moss Processors, Ltd, which processes sphagnum moss for the export market and is now the core of the

new import-export division of the company. The new division is headed by Ms Sue Suckling, former More-Sperry Businesswoman of the Year, and previously manager of Waitaki International Ltd’s subsidiary Pacific Foods, Ltd.

After market research in Japan and Taiwan, the company believes the Hokitika product can be developed into an internationally recognised brand.

The import-export division is expected to contribute $500,000 to $1 million to group profit in the current year. A merchant banking subsidiary was formed in May last year which initially involved itself in financial packaging and foreign exchange trading. But merchant banking executives were forced to spend a lot of time on financial control of other parts of the group, and at the same time margins were eroding in the financial services sector. As a result in January the directors decided to concentrate more on investment banking. “The change of emphasis from earning fees to investing in profitable and growing companies and ventures has already proven to be successful and worth while,” Mr Blair said. The new investment banking division’s principal focus is on equity rather than debt transactions, though some foreign exchange, corporate advisory, and financial packaging activities are continuing. Equity investments have been made in Kerridge Odeon Garden City Bowl, a joint venture with Kerridge Odeon which operates a computerised ten pin bowling alley and leisure centre, Pan Pacific Cameras, Ltd, the second largest retailer of cameras and photographic equipment in New Zealand, Multi Products, Ltd, an importer and wholesaler of photographic equipment, electrical pro-

ducts and toys, and Bryma Holdings, Ltd, an importer and retailer of designer sunglasses. These subsidiaries are expected to generate more than $750,000 pretax earnings in the current year. But the major feature of the financial result for the year involved the property investment and development division. During 1986 the company acquired more than 20 properties in the central Christchurch business district, but sold the White Heron. Hotel in Parnell, Auckland.

• Property management is likely to play an important part in the Prime West property division, Mr Blair said. Rental income from the company’s own properties contributed $1,495,291 in the year just ended, in addition to revaluations of $7,554,248 included in the profit and loss account. Mr Ken Wikely, of Rainbow Properties, Ltd, joined the board during the year, and Rainbow Properties is the second largest shareholder of Prime West Corp, with 25 per cent.