Amuri goes cold on property

Press, 17 May 1989, Page 33

Amuri goes cold on property

Amuri Corporation: preliminary, unaudited statement for year ended March 31, 1989, with previous year’s audited results. $OOO $OOO . Turnover 44,991 43,453 Profit before tax 431 1,301 Income tax — 33 Profit after tax 431 1,334 Minority interests 141 — Profit before extraordinary items 572 1,334 Extraordinary items 73 466 Profit after extraordinary items 499 868 Surplus/(deficit) on investment property revaluations 435 7,136 Write-back of provision against a movement in property market trend 1,427 1,427 Group net profit 1,491 6,577

Amuri Corporation is changing the focus of its business from property developments to investment in companies that do and make things after a much poorer result in the year ended March 31.

church and the Volvo franchise in Wellington. The car business performed poorly in the 1987-88 year. Last year’s annual report said the motor business, which then accounted for 14 per cent of the company’s assets, faced a difficult trading year. The directors recommend a final dividend of 1c a share, making a total of 2.5 c a share, or 5 per cent of par value, for the year. This compares with a total of sc, or 10 per cent, the previous, maiden year. The latest dividend is payable on July 19. Amuri was listed on the Stock Exchange in 1986, its main assets being property and two motor franchises with operations in Christchurch and Wellington. Sir Roderick Weir, the chairman of Amuri, said yesterday: “It is now considered that the general direction of the company should be towards commercial activities with substantial cash flow and higher returns providing imputed dividends, the corollary of which means a reduction in emphasis on property transactions, at least in the medium term.” The environment contained

The company reports a bot-tom-line profit of $1,491,000, which compares with $6,577,000 in the previous year. And the latest result includes $1,427,000 written back, the whole of a provision set up the previous year against a movement in the property market trend. In 1987, the company’s business park in Mandeville Street, Riccarton, was heralded as marking the company’s transition into a property developer from a motor distributor that woke up to the value of its business sites. Since then, the company has taken a 50 per cent stake in Regina Confections, of Oamaru, and a 52 per cent holding in the Design Team, which provides interior design and furnishing services throughout the country. Amuri still has strong motor-industry investments, with a Mazda franchise in Wellington and Christchurch, the BMW franchise in Christ-

favourable indications of factors which should enable the company to provide better return and growth, he said. "Amuri has been in business for 79 years and has now survived three major world depressions. We will now need to change direction again. “We will concentrate on

profitable trading businesses with a good cash flow. “This change of direction will take some time to achieve but with financial strength and competent and experienced staff we trust that now the worst is over we will again enter a period of prosperity.” Sir Roderick said prospects

of making substantial profit margins on property development disappeared during the year. A major surplus of office and industrial space became available for lease and sale. “Early in the year it was apparent to the directors that very limited development should be undertaken in the property area in New Zealand until the havoc wrought by the sharemarket crash and subsequent failure of many major New Zealand property companies was resolved. “It followed from this that it was desirable to seek other avenues which would give the company appropriate returns on shareholders’ investment at a higher level than rental income.” The company’s traditional motor trading business showed improved profits from November, Sir Roderick said. Before this, the motor trade was suffering severely from the economic downturn and from liberalisation of import licensing and reduction of tariffs. "Once these changes had been absorbed and with the elimination from the market of many undercapitalised traders good earnings started

to appear and have been evident for the last five months of the financial year. ’

"Meanwhile Amuri has ac-. quired a 50 per cent shareholding in a new company formed in early 1988 to buy the assets of Regina Confections,” which has been a well known confectionery and bubblegum manufacturer for 52 years.”

The task of bringing the Regina subsidiary to full operation had taken eight months, and included the total reorganisation of virtually all functions. “The Regina directors consider there are good margins and profit expectations in this company and they expect it to make a significant contribution to the company’s profit in due course,” said Sir Roderick.

The Design Team, based in Christchurch, has been operating for 12 months and had built up a considerable following and market.

The directors report shareholders’ funds of S46M (which compares with $45.6M at March 31, 1988), a current ratio of 2.5:1 and a proprietorship ratio of 70 per cent.