Financing difficult for Further Dev.

Press, 21 October 1989, Page 35

Financing difficult for Further Dev.

Statutory receiverships were making it difficult for Further Developments to arrange suitable loan terms with overseas financiers, said the chairman, Mr Nathan Chanesman, yesterday. Overseas financiers were reluctant to deal with New Zealand-based companies, as Further Developments sought funds to purchase the Ronstan marine fittings business.

Negotiations were continuing to buy the Ronstan business, as approved by shareholders at an extraordinary meeting on August 22. “Further Developments has more than SI.7M in cash and is ready to proceed with the Ronstan purchase just as soon as suitable funding was negotiated.”

The company’s name would be changed to Ronstan International when the funding was arranged. The directors were

doing everything possible to ensure the Ronstan deal went ahead. The objective was to rebuild the group either through buying Ronstan or some other viable business. The loss of the Commodore computer business had a significant effect on the annual result, Mr Chanesman said.

Further Developments, previously known as Commodore Computer Corporation, yesterday announced a total loss of $86,000, in the year ended June 30, compared with a profit of $854,000 in the previous corresponding period. In March, Commodore Computer International, the United States computer firm, announced it was buying the Commodore business in New Zealand.

The result of the sale was that Further Developments had to write off $1,239 million in goodwill. Other extraordinary losses

were $765,000 in a writedown of property valuations, and $1.222M in a previously disclosed subvention payment to Fortuna Corporation, the company’s 71 per cent owner.

The 22.7 per cent increase in turnover to $19.420M was because of inventory being cleared in preparation for the sale of the Commodore business, Mr Chanesman said.

These sales were either at cost or at low margins. Unsold inventory was stated at net realisable value.

Old and doubtful debts were written off because of the difficulty in collecting them as the Commodore business had been sold.

The company’s balance sheet shows that shareholders’ funds have fallen $3.35M to $1.642M after a deficit of $2.430M in revenue reserves. Issued capital is a steady $3.225M.

Working capital fell $1.296M to $340,000 and the current ratio declined from 1.4 to one to 1.1. T. The net asset backing a share is 13c (17c).

Further Developments audited result for year ended June 30 Gross revenue Pre-tax profit Taxation 1989 ($000) 19,420 229 315 1988 ($000) 15,833 1674 820 Trading result (86) 854 Minorities . , — — Equity earnings . . — —r Group net result.... • • A (86) 854 Extraordinary loss. . . (3266) (15) Total result (3352) 839