Woodcorp has $5.9M loss

Press, 2 November 1989, Page 42

Woodcorp has $5.9M loss

PA Wellington Woodcorp Holdings needs the continued support of its bankers to survive because its income is not covering its debt costs, the chairman, Mr Laurie Southwick, says. The company has announced a loss of $5,937,000 compounded by an unrealised loss of $6,458,000 on its properties for the year ended June 30. Mr Southwick said the directors were confident an agreement to sell Rotorua’s Woodcorp House to DFC in return for DFC cancelling its loan to Woodcorp would still proceed, even though the deal was made before DFC went into statutory management. The building has been valued at $l6 million, but

Mr Southwick did not specify the value of the deal. The company and its other bankers were working towards a restructuring agreement to let it permanently continue operating, he said. Mr Southwick said the company had a particularly difficult' trading year, losing $5,937,000 ($1,726,000 in 1988) despite almost doubling turnover to $4,148,000 ($2,131,000). Major influences on its result were the severe downturn in domestic tourism which hurt the potential sale of motel leases and franchises and the returns from motel operations, and the virtual disappearance of the commercial property market, which stopped Woodcorp House and other properties being

sold. Unrealised property revaluations and a further $50,000 loss on a joint venture took the over-all result to a bottom line loss of $12,445,000 ($2,123,000 profit). A further $4,360,000 unrealised development margin had also been reversed, Mr Southwick said. “Under these conditions total funding is out of line with currently depressed valuations of the com-

pany’s properties and its earnings have been insufficient to cover debtservicing requirements,” he said. “In light of these factors the company has focused on the management of its motel operations which were showing very encouraging revenue improvements by year end. “Prospects for the sale of non-essential properties were also much improved with two being sold after June 30.”

Woodcorp Holdings audited result for year ended 1 QQO June 30 Gross revenue 4148 2131 Pre-tax loss (5937) (1726; Taxation . . . — - Unrealised dev. margins . . . — 4360 Unrealised revaluat . . (6458) - Group net result . . . (12,395) 2634 Prelim, expenses written off .... . . . . — (511) Joint vent, loss (50) — Total result (12,445) 2123