Tulwest in ‘incongruous position’

Press, 22 June 1989, Page 28

Tulwest in ‘incongruous position’

PA Wellington Tulwest Corporation has been in the “incongruous position” of paying tax in Australia which could not be offset against its New Zealand losses, says the chief executive, Mr Kim Ellis, in the company’s latest annual report. Tulwest has pulled back from all its activities in the past year except health care, through its Greenwood Park housing development in Tauranga, and automotive accessories and machinery distribution through the Howard Group operations in New Zealand and Australia. Other activities, including property development, manufacturing and distribution, had either been sold by the December 31 balance date or shortly after that time. The company has also been seeking buyers for the Howard Group, but the chairman, Mr Alan Lockie, said yesterday that no sale had yet been confirmed. While Tulwest has reduced its interest-bearing debt exposure in the past 18 months from a peak of $26 million to

614 million, it says a successful sale of the Howard Group would almost extinguish the parent company’s debt.

While Tulwest had been expecting a hostile business environment in 1988, Mr Ellis says it underestimated the extent of the recession and its effect on the company’s business units. He says restructuring was taken further than originally intended and at considerably greater cost. He says the major impact on results was the decision to stop producing alloy wheels and to liquidate the Compass manufacturing plant. A bottom-line loss of $5.8 million to December 31 was swelled by extraordinary losses of $4.1 million, reflecting the total write-off of all balance sheet exposure to the wheel business.

The annual report gives balance sheet estimates at June, 1989, based on retaining the Howard Group, putting shareholders' funds of $8 million and gross assets at $45 million. Shareholders’ funds stood at $13.1 million at December, 1987, and total assets at $51.2 million.