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									                                                WEDNESDAY, AUGUST 20, 2003
METLIFECARE LIMITED
Metlifecare Limited has provided a Market Briefing presentation being held this morning at the Heritage, Auckland. The following is
an extract from this presentation; a full copy can be requested from lcr@nzx.com
Financial Highlights Financial for the 6 months to June 2003
- Net Surplus up 53% to $6.3m
- Revenue up 23% to $53.2m
- Operating Cash Flow up $8.5m to $15.6m
- Divestment of Epsom & Browns Bay completed early in 2003
- Total debt reduced from $51m to $35m
- No interim dividend
NATIONAL AUSTRALIA BANK LIMITED
Market speculation that National Australia Bank is exposed to a large corporate default in South Korea is not correct.
There are no lending exposures in South Korea causing concern to the National.
Earlier this month a former employee of the National in Seoul was indicted by the Seoul District Public Prosecutor on suspicion of
embezzlement from members of wealthy South Korean families. The National has filed a complaint with the Public Prosecutor
against the former employee in relation to the forgery of certificates of deposits and promissory notes of approximately A$77million
(KRW60 billion), which purport to be National Australia Bank documents. The holders of the forged documents are not clients of the
National. There was no involvement by the National, nor did any funds pass through the bank’s records in regard to the forged
documents. The National is not liable on those forged documents.
The National is fully cooperating with the South Korean authorities.
VENDING TECHNOLOGIES LIMITED
CONSOLIDATED OPERATING STATEMENT FOR THE FULL YEAR ENDED 30/06/2003
Audited (NZ$000)
                                                    Current             Previous
                                                     Period        Corresponding
                                                (15 months)               Period
                                                                     (12 months)
OPERATING REVENUE
 Sales revenue                                       26,564               19,466
 Other revenue                                        1,865                1,104
Total Operating Revenue                              28,429               20,570
OPERATING SURPLUS (DEFICIT)
 BEFORE UNUSUAL ITEMS AND TAX                         3,396                5,281
Unusual items
 for separate disclosure                                  -                    -
OPERATING SURPLUS (DEFICIT)
 BEFORE TAX                                           3,396                5,281
Less tax on operating surplus                             -                  446
Operating surplus (deficit)
 after tax but before minority
interest                                              3,396                5,727
Less minority interests                                   -                    -
Equity earnings                                       (130)                (304)
OPERATING SURPLUS (DEFICIT)
 AFTER TAX ATTRIBUTABLE
 TO MEMBERS OF LISTED ISSUER                          3,266                5,423
Extraordinary items after tax                             -                    -
Less minority interests                                   -                    -
Extraordinary items after tax
 attributable to members of the
 Listed Issuer                                            -                    -
TOTAL OPERATING SURPLUS
 (DEFICIT) AND
 EXTRAORDINARY ITEMS
 AFTER TAX                                            3,266                5,423
Operating Surplus (Deficit)
 and Extraordinary Items after
 Tax attributable to Minority
 Interest                                                                      -                        -
Operating Surplus (Deficit)
 and Extraordinary Items after
 Tax attributable to Members
 of the Listed Issuer                                                     3,266                   5,423
EPS                                                                         11.0                    18.3
SHAREHOLDERS' EQUITY
  ATTRIBUTABLE TO MEMBERS
 OF THE HOLDING COMPANY                                                  19,091                  15,850
VTL Reports Improved Result
Smart vending systems franchising company, Vending Technologies Ltd (NZSE:VTL), today announced an audited operating
surplus after tax of $3.3 million for the fifteen months ended 30 June 2003. Reporting fifteen month figures results from the change
of financial year-end from March to June, which was advised on 28 February 2003. The result was achieved on revenues of $26.6
million, up 36 percent on last year’s (12 month) revenues of $19.5 million.
On May 16 2003 VTL announced a net operating surplus of $2.6 million (unaudited) for the twelve months to 31 March 2003
compared to $5.4 million for the same period the previous year. This reduction was signaled in a profit warning issued to the market
on 15 January this year and explained by lower than expected Australian operator sales combined with a later than planned entry
into the US market. An 02/03 operational review resulted in the March year-end adverse short-term financial result, but it has also
seen the company successfully established as a franchisor and 24seven brand marketer in both the Australian and US markets.
Setting up a high standard franchise system has increased interest from potential Master Franchisees and independent Franchise
operators. The recent approval to sell franchises in California, has already been followed by announcements of both Master
Franchisee and operator franchise sales. VTL’s Chairman, Dr. Richard Janes says “The company, is pleased at the improved result
and believes the systems enhancements now incorporated as a franchisor are significant assets for growth”. The company
reaffirms its January statement of resumed strong growth in 2003/04.
FONTERRA CO-OPERATIVE GROUP LIMITED
For the purposes of Listing Rule 7.12.1, Fonterra Co-operative Group Limited advises that it has acquired the following securities:
a Class of security Capital Notes
ISIN NZFCGD0001S9
b Number acquired 500,000
c Nominal value
Acquisition price
$1.00 per Capital Note
$1.044 per Capital Note
d Payment terms Cash
e Amount paid up Not applicable
f Percentage of class of securities 0.13%
g Reason for acquisition To enable the Company to reduce its overall cost of funds.
h Authority for purchase Trust Deed dated 22 March 2001 (as amended and supplemented)
i Terms of issue Payment will be made in accordance with usual FASTER settlement procedures
j Number of securities in existence after acquisition 389,169,005
k Treasury stock The capital notes acquired will be held as Treasury Stock
l Date of purchase 19 August 2003.
NEW ZEALAND EXCHANGE LIMITED
We advise on behalf of New Zealand Exchange Limited (“NZX”) that a trading halt has been granted with respect to AMKPA. That
trading halt will commence from 10am on 20 August 2003 and will be removed upon the release of AMP’s announcement of its half
yearly results (we understand that this will take place on the morning of 20 August 2003).
AMP RESET PREFERRED SECURITIES TRUST
The New Zealand Exchange Limited (“NZX”) has advised that a trading halt has been granted with respect to AMKPA. That trading
halt will commence from 10am on 20 August 2003 and will be removed upon the release of AMP’s announcement of its half yearly
results (we understand that this will take place on the morning of 20 August 2003).
TEMPLETON EMERGING MARKETS PLC
The NTA of Templeton Emerging Markets Investment Trust as at close of business 15/08/2003 was:
Undiluted (Warrants unexercised) 156.52p (Cum-Income)
Fully diluted (Warrants exercised) 152.55p (Cum-Income)
Undiluted (Warrants unexercised) 153.85p (Ex-Income)
Fully diluted (Warrants exercised) 150.32p (Ex-Income)
MERRILL LYNCH EUROPEAN INVESTMENT TRUST PLC
The unaudited NTA of Merrill Lynch European Investment Trust as at close of business 18/08/2003 was 150.29p undiluted and
144.60p diluted.
THE BANKERS INVESTMENT TRUST PLC
The NTA of The Bankers Investment Trust as at close of business 18/08/2003 was 279.4p.
THE CITY OF LONDON INVESTMENT TRUST PLC
The NTA of The City of London Investment Trust as at close of business 18/08/2003 was 203.5p.
HENDERSON FAR EAST INCOME TRUST PLC
The NTA of Henderson Far East Income Trust plc as at close of business 18/08/2003 was 170.8p.
HENDERSON TR PACIFIC INVESTMENT TRUST PLC
The NTA of Henderson TR Pacific Investment Trust plc as at close of business 18/08/2003 was 84.0p.
ABERDEEN NEW DAWN INVESTMENT TRUST PLC
Aberdeen New Dawn Investment Trust Plc has provided notification of a shareholder having a major interest: Advance Developing
Markets Trust plc as at 15/08/2003. Total holding following this notification: 1,900,000 ordinary 25p shares.
FLETCHER BUILDING LIMITED
Fletcher Building announces that it has successfully completed the equity placement component of the funding package for its
acquisition of Tasman Building Products. The Chief Executive Officer, Mr Ralph Waters, said that the placement had been very
successful, with 25 million shares being placed at a price of NZ$4.10 per share, realising NZ$102.5 million in total. The shares are
expected to be issued on settlement on Wednesday, 27 August 2003. Mr Waters said support for the placement had been uniformly
strong amongst a broad range of institutional investors, particularly those that already held shares in Fletcher Building. The
underwritten placement was conducted by a global book-build lead and underwritten by JB Were.
The trading halt on Fletcher Building shares on the New Zealand and Australian Stock Exchanges will be lifted from the opening of
trading today.
BIL INTERNATIONAL LIMITED
BIL International Limited has been provided with a Notice of Substantial Shareholder's Interests, dated 19/08/2003
Name of substantial shareholder:
- Chip Lian Investments Pte Ltd, total number of shares now held: 120,337,848
- Chip Lian Private Limited and Mr Oel Hong Leong, total number of shares now held: 120,337,848
SKY NETWORK TELEVISION LIMITED
CONSOLIDATED OPERATING STATEMENT FOR THE FULL YEAR ENDED 30/06/2003
Audited (NZ$000)
                                                   Current              Previous
                                                    Period         Corresponding
                                                                           Period
OPERATING REVENUE
 Sales revenue                                     338,195               291,666
 Other revenue                                      53,077                 52,942
Total Operating Revenue                            391,272               344,608
OPERATING SURPLUS (DEFICIT)
 BEFORE UNUSUAL ITEMS AND TAX                          694               (30,058)
Unusual items
 for separate disclosure                                  -                     -
OPERATING SURPLUS (DEFICIT)
 BEFORE TAX                                            694               (30,058)
Less tax on operating surplus                          (17)                    58
Operating surplus (deficit)
 after tax but before minority
interest                                               711               (30,116)
Less minority interests                                  40                    58
Equity earnings                                           -                     -
OPERATING SURPLUS (DEFICIT)
 AFTER TAX ATTRIBUTABLE
 TO MEMBERS OF LISTED ISSUER                                                  671               (30,174)
Extraordinary items after tax                                                   -                       -
Less minority interests                                                         -                       -
Extraordinary items after tax
 attributable to members of the
 Listed Issuer                                                                  -                       -
TOTAL OPERATING SURPLUS
 (DEFICIT) AND
 EXTRAORDINARY ITEMS
 AFTER TAX                                                                    711               (30,116)
Operating Surplus (Deficit)
 and Extraordinary Items after
 Tax attributable to Minority
 Interest                                                                      40                     58
Operating Surplus (Deficit)
 and Extraordinary Items after
 Tax attributable to Members
 of the Listed Issuer                                                         671               (30,174)
EPS                                                                          0.17                   (7.8)
SHAREHOLDERS' EQUITY
  ATTRIBUTABLE TO MEMBERS
 OF THE HOLDING COMPANY                                                    56,183                 54,948
SKY TELEVISION ANNOUNCES IMPROVED END OF YEAR RESULT
SKY Television announced today a significantly improved result leading to a net profit after tax of $671,000, the first time SKY has
been profitable since the launch of the digital satellite network in 1998.
Total revenues of $391.3 million, were up by 13.6% over the previous year.
EBITDA (earnings before interest, tax, depreciation and amortization) increased by 39.4% to $150.8 million.
The increased earnings, signaled in the 21 May 2003 Earnings Guidance Update, were achieved by continuing improvements
across several areas of the business. John Fellet, SKY Television Chief Executive said, “Even without the full benefit of the recent
appreciation of the
New Zealand dollar, SKY has continued to improve its position by negotiating better programming arrangements with movie
distributors”. “These improved arrangements, together with a 4.9% increase in satellite ARPU (Average Revenue Per Unit) have
contributed to the improved result,” said Fellet. Subscriber revenue grew by 15.9%, advertising revenue rose by 18.8% to $19.6
million and commercial revenues grew 13.8% to $22.3 million. Total operating expenses, excluding unrealized foreign exchange,
increased by a modest 4.2% with programming costs as a percentage of revenue falling from 48.3% to 43%. SKY’s subscriber base
reached a new high of 542,891, a gain of 39,642 subscribers over the previous year. This breaks down into 421,473 digital
subscribers (77.6%), 119,321 UHF subscribers (22.0%) and 2,097 other commercial subscribers. Churn, the way subscribers who
disconnect their service are measured, remained low. Gross churn fell from 19.9% to 17.6% and net churn, calculated by removing
subscribers who reconnect, fell from 11.7% to 10.8%. On the programming front, a new sport news service, Sport 365, launches on
1 September 2003, with several other channels scheduled to launch later this year.
NATIONAL AUSTRALIA BANK LIMITED
National Australia Bank advises the on-market buyback of 150,000 ordinary shares on 20/08/2003. Highest price paid: A$32.80.
Lowest price paid: A$32.48. Approximate number of shares remaining to be bought back: 4,761,754.
SANTOS LIMITED
Santos have provided its half year result, the following is an extract, a full copy can be requested from lcr@nzx.com.
• First half profit up 2.2% before write-downs
• Net profit down 16.6% after write-downs
• 6.4% rise in sales revenue to $716.0 million
• Cash flow increased 35.6% to $421.7 million
• 350 PJ of gas commercialised in new contracts
• Leverage reduced to 25.3%
• 15 cents per share interim dividend
• Strong growth outlook
Santos Limited’s after-tax net profit increased 2.2% from $166.3 million to $170.0 million in the six months ended 30 June 2003
before write-downs of non current assets. The higher profit was achieved on sales revenue that rose 6.4% to $716.0 million from
$673.1 million. Net profit after tax and write-downs declined 16.6% from $162.6 million to $135.6 million or 22.3 cents per share
(24.8 cents per share in the previous corresponding period).
Steady 15 cent dividend The Directors have declared a steady fully franked interim dividend of 15 cents per ordinary share.
Cash flow up 35.6%. Cash flow from Santos’ operating activities increased 35.6% to $421.7 million (up from $310.9 million) after
interest and tax. The higher cash flow is the equivalent of 72.3 cents per share (previously 53.6 cents). Leverage (net debt to net
debt plus equity) was reduced to 25.3% from 31.0% for the previous opening half. Total savings in capital and operating expenditure
reached $113 million, surpassing the $100 million target announced last February. This target has now been increased to $130
million by the end of 2003. Total production costs fell by 4.1% to $131.0 million from $136.6 million in the 2002 first half. Production
costs per barrel of oil equivalent (boe) fell from $4.93 to $4.89.
 “A period of significance” – Managing Director
“This has been a period of significance for the Company, with progress on cornerstone projects and gas commercialisation having a
major impact on the future face of the Santos group,” Santos’ Managing Director, Mr John Ellice- Flint, said today. “Milestone
developments during the half-year on our Bayu-Undan, Mutineer- Exeter and South East Asian projects should all translate into
higher production for the Company within the next two to three years,” Mr Ellice-Flint said. "The improved profit, before write-downs,
and increased cash flow reflect a strong outcome from our key business units and reinforce the continuing underlying strength of the
expanding group assets."
Bayu-Undan
Mr Ellice-Flint said a highlight of the latest June half-year was the approval by the Timor Sea Designated Authority of the
development plan for the US$1.5 billion Bayu-Undan LNG project in the Timor Sea in which Santos (10.6% interest) is the only
Australian company involved. The LNG stage is due to be commissioned in 2006. "This has firmly cemented Santos' position on the
world LNG market and we look forward with great anticipation to production from the first stage, the liquids recycle project, in April
next year," Mr Ellice-Flint said.
Mutineer-Exeter; Santos, as operator of the Mutineer-Exeter joint venture participants, also announced today that it had short-listed
two contractors for major development work on the Mutineer-Exeter oil field, discovered last year in the Carnarvon Basin, offshore
Western Australia. A final decision is expected within the next couple of months on the letting of the major contract for the floating,
production, storage and offloading (FPSO) vessel for the Mutineer-Exeter field.
Exploration; Mr Ellice-Flint said Santos’ 2003 oil and gas search represented a major shift from the Company’s traditional low risk
but less material exploration focus. "It is not only one of our most diverse exploration programs but, for the first time, the majority of
the wells are offshore and involve higher risk, but potentially higher reward targets,” he said. Santos will drill 14 wildcat wells in the
second half. They include wells in the offshore Otway Basin, Indonesia's Kutei Basin and East Java.
Outlook: Mr Ellice-Flint said that the milestones achieved by the Company in the first half continued to strengthen Santos’ growth
outlook. “Production performance in 2003 and 2004 remains likely to be below that achieved in 2002. We expect production for 2003
to be around 54 to 55 million boe,” he said. “However, new projects are being fast tracked and we are having success with
opportunities to increase short-term production, such as the recent Legendre infill well.” Mr Ellice-Flint said that the Company’s
financial performance remained subject to oil prices and exchange rates. “For the second half of the year, a US$1 movement either
way in the oil price will affect Net Profit After Tax (NPAT) by A$6 million and a one cent change in the US dollar exchange rate will
affect NPAT by A$3 million,” he said. Santos Limited is a major Australian oil and gas exploration and production company with
interests in all Australian hydrocarbon provinces. The Santos group also operates in the USA, Indonesia and Papua New Guinea.
SPOTLESS GROUP LIMITED
Spotless Group Limited has provided its Results for the Full Year Ended 30th June, 2003. The following is an extract from these
result, a full copy can be requested from lcr@nzx.com
Announcement of Details of the unaudited trading results for the 12 months to 30th June, 2003. In addition, the following comments
on the activities of the Company for this period have been provded.
Summary of Results: Revenue from ordinary activities for the full year ended 30th June 2003 was $2.36 billion, some 8.1% above
the prior corresponding period (pcp). Net profit after taxation attributable to members (PATAM) was $51.6 million, an increase of
59.2% on the pcp. Some $14.2 million of this after tax profit result derives from an unrealised foreign exchange gain which has in
2003 been brought to account through the statement of financial performance in accord with the Accounting Standard requirements.
The notional net profit after taxation attributable to members which has been derived solely from 2003 trading activities is $37.4
million, providing an increase of 15.3% on the pcp. Directors have declared a fully franked final dividend of 12.5 cents per share
which brings the dividend payment from full year 2003 profits to 23 cents per share compared with the 22 cents paid as dividend for
2002. The 2003 Activities: During the year the Company has continued to operate in two main business segments. The Support
Services provided by the Company into the Australian and New Zealand markets centre upon the management and delivery of
various skilled labour based services into outsourcing markets, and the delivery of supply chain products to these sectors. The
Services are now managed into three broader market sectors of Food Services, Institutional Services and Property Services.
In the USA the Company provides a range of maintenance and emergency services to the property and physical environment
recovery market sector, through Windswept Environmental Group.
The markets available to the Support Services activities are large and the Company is
evolving successful business models to better service these demands.
The Retailer Services segment provides product, design and logistical services to the global retailer market. The Company’s
garment hanger systems, labels and packaging products are used in the manufacture, distribution and retail merchandising of
apparel and associated products. The Company has operated in the USA market for more than 16 years. In 2001 the acquisition of
Braitrim Holdings Limited of the United Kingdom (UK) provided stronger entry into the UK, European and Asian markets for these
products through offices in 12 countries. This business is based strongly on intellectual property in product patents and designs,
global marketing to the apparel industry, and effective e-business support systems for the management of global logistics to supply
products to manufacturers of garments in more than 50 countries.
The Company is now more effectively servicing this large and growing global market.
Financial Results – 2003: The Company has decided for a number of reasons to repatriate Hong Kong company earnings to
Australia as dividends rather than continue to receive these funds as long term loans. This decision requires that any associated
foreign currency exchange rate movements be included into the statement of financial performance. Previously the long term
investment nature of these loans required any foreign currency rate movements to be included in the foreign currency translation
reserve in the statement of financial position. The consequence of this change is that some $19.3 million before tax profit, is
included into the 2003 statement of financial performance. The financial results for the Company for 2003 include the foreign
exchange (FX) gain. They show revenues from ordinary activities at $2.36 billion, which is an increase of 8.1% on the pcp. Profit
before income tax expense, interest expense and amortisation of goodwill (EBITA) is $139.8 million which is 13.8% above the pcp.
Profit after tax attributable to members (PATAM) at $51.6 million is 59.2% above the pcp. Net profit after income tax but before
amortisation of goodwill (PATBAAM) at $81.5 million is 32.1% above the pcp. Trading Results from ordinary activities - 2003
Directors believe the trading results for 2003 have some unusual comparatives with the 2002 year, and shareholders will need to
look beneath the headline financial results to assess the real progress which has been made by the Company in its core business
activities in 2003.
The Appendix 4E Preliminary Final Report for 2003 contains the data required for this review, but shareholders are particularly
directed to the statement of financial performance on page 2 and the business segment report on page 11 for trading result detail.
Detail is on the Company’s website at www.spotless.com.au.
To enable shareholders to review the trading performance of the Company for 2003, the following commentary excludes the impact
of the foreign exchange gain. Shareholders are cautioned that the figures being presented and discussed below differ from those
which are included as the Company 2003 financial results in this report. The notional trading results from ordinary activities for 2003
shown in the segment report saw revenue grow 8.3% on the pcp to $2.36 billion. The group trading profit before income tax, interest
expense, and amortisation of goodwill (EBITA) at $120.5 million was 1.9% below the pcp. Net profit after tax attributable to members
of the parent entity (PATAM) was $37.4 million, some 15.3% above the pcp. The Company preferred measure of financial
performance is Net Profit after Tax attributable to members before amortisation of goodwill
(PATBAAM) which from 2003 trading activities was $67.3 million, some 9.0% above 2002.
Shareholders will see that while this group trading profit before income tax, interest expense and amortisation of goodwill (EBITA)
for 2003 was 1.9% below the pcp, changes to trading patterns produced lower costs for interest, taxation, and outside equity
interests, to provide an increase in net profit attributable to members from 2003 trading of 15.3% above 2002.
This trading performance was more favourable for 2003 than foreshadowed in the advice to shareholders on 16th May, 2003. This
advice suggested a profit (PATAM) result for 2003 about equal to that of 2002 in what was seen to be a negative trading and
currency environment for your company in the fourth quarter 2003 (4Q03). The segment report discussion to follow will confirm that
the pattern of 4Q03 trading produced a better profit after tax than was expected by Directors at 16th May 2003. These outcomes for
2003 confirm that the disclosure task for diligent Directors in a volatile trading environment is a difficult one.
The Appendix 4E financial information will confirm a number of significant 2003 trading differences with 2002 which impacted
results. Perhaps the most significant was the Support
Services USA (Windswept) result. In 2002, trading around the World Trade Center site assisted Windswept to produce profits. In
2003 no significant disaster recovery work was contracted which resulted in a trading loss, and a year on year EBITA turnaround
decrease for Windswept of $15.8 million. This was a major cause of the lower Group EBITA. It was a disappointing result in a non-
core business unit. This profit result also significantly reduced the 2003 profits which accrued to outside equity interests below the
pcp. The business segment report shows that EBITA from the American businesses was some $22.0 million lower in 2003 than in
2002 due to Windswept and lower profits for Plasti-form in the USA. This significantly lower American profit made a major impact on
the Group income tax expense because it is a high tax cost region. Tax rates for 2003 also benefited from the turnaround increase
in year on year profits earned in Europe ($8.4 million), particularly the United Kingdom where carry forward tax losses sheltered the
improved 2003 profits. These changes to the patterns of 2003 trading explain the 2003 lower EBITA and the favourable taxation ,
and outside equity interest results. Lower interest costs were achieved through effective focus on working capital management
throughout the year and this also supported the stronger cash flow generated for 2003.
The changes to these 2003 financial outcomes from trading have produced a more satisfactory outcome for shareholders than
expected in May 2003. The sections following discuss the divisional trading outcomes for 2003 to better advise shareholders of
progress made during the year.
Segment Results – 2003
Support Services – USA – Windswept: Trading results for Windswept for 2003 include two significant influences. The first was the
required downscaling of costs from the strong 2002 operating year which negatively impacted the 1H03 profit results from a
satisfactory sales performance. The 2H03 revenues were slow with no major incident related sales. Unfavourable economic
circumstances also resulted in a deferral of some discretionary remediation projects which had a negative impact on revenues
through FY03. Below breakeven revenues flowed into trading losses for 2H03 and FY03.
Support Services – New Zealand: New Zealand Support Services continued to generate very satisfactory progress in 2003 revenue
to be 15.6% above the pcp. This produced EBITA some 20.0% above the pcp. These outcomes were assisted by the stronger
NZ$:A$ FX rates to the extent of about 7.0% for the full year impact. Revenue grew strongly in the Food Services tourism and
leisure activities and in the Property Services sector. The EBITA performance was strong for Food Services and the Taylors Group
laundry activities. Trading margins for this business continued to improve during the 2003 year to produce a very satisfactory result.
Support Services – Australia: Australian Support Services revenue for 2003 saw strong growth of 13.3% above the pcp.
The stronger revenue growth came from the hospital pharmaceutical products distributor Clifford Hallam and from sales to major
new property and facilities management contracts for State and Federal government agencies. Each of these activities has large
“pass through” revenue and lower profit margins. Institutional revenues for 2003 were 15.9% above 2003 with Linen Services and
Education Services providing strong support for the Clifford Hallam
gains. Property and Facilities revenues were 20.2% above 2002 as these new markets were more effectively accessed. Food
Services revenue increased by 3.9% with new Airports and Events being the growth sectors. The EBITA for Australian Services for
2003 trading at $54.3 million was 10.5% above 2002. This outcome showed solid margin gains on the pcp across most of the
business units but 2H03 growth was affected by poor results from the Tourism and Leisure related food services. These Airport,
Functions and Conventions, Events and Venues produced a trading loss for this 2H03 period in very unusual market conditions. The
growth activities of Institutional Services produced strong EBITA gains for Garments and Linen Services, Education and Clifford
Hallam. Property Services generated strong EBITA gains for Asset Services, Open Space Management and Defence Services. The
Australian Services result shows strong progress from the newer markets which should be supported in 2004 by more usual
conditions in the food services markets. The new marketing structure is now settled and provides a sound base for further
development. Retailer Services: The Retailer Services Divisional revenue results for 2003 were significantly and negatively
influenced by the weakening of the US$ against the A$ and other world currencies. The decline of 5.0% in 2003 trading revenue to
$381.2 million is shown in the segment sales results. We estimate the currency impact on the 2003 mix of divisional sales has
changed a revenue gain of around 3.0% in local currencies into the 5.0% decline being reported. The through the year FX impact for
the US$:A$ ratio is around 14.0% negative on the USA and Hong Kong components of our sales mix. This notional local currencies
revenue estimate is important to permit shareholders to assess the progress being made in what has been a flat global market for
our product ranges. We estimate that the worldwide programs for Plastiform product ranges in 2003 produced US$ revenue some
12.0% above that of 2002, demonstrating continuing progress into an unresponsive market place. The Braitrim hanger
programs for 2003 have remained at about the 2002 levels in local currency terms, with lower outcomes from the discontinued
Braitrim Direct products and from some of the packaging product range. This revenue result for 2003 reflects continuing progress
into this global market with the newer regional offices producing improving results for each product range to provide a broader sales
platform to service any recovery in the apparel markets. The EBITA performance of Retailer Services for 2003 was $52.8 million.
This is an increase of 10.8% on the 2002 year. Again the FX impact on this result has been negative for 2003 trading perhaps by
around 10.0% on the 2002 currency ratios and the 2003 product mix.
Operating margins improved for the year. It is a measure of our ambition for this division that this strong profit performance is seen
to be below our target. It was expected that the world apparel market would recover in 2003 and our plans were based on stronger
demand trends than were available. The stronger 2003
EBITA results were won from leveraging the larger supply sourcing base to gain better purchase prices for product. Lower operating
costs, distribution costs and overheads produced net gains after higher legal expenses and resin prices.
The 2003 year also produced a more developed post-acquisition organisational and structure based upon the major regions of the
Americas, Europe, and Asia and the Subcontinent.
This structure is permitting more effective integration of the division’s product programs into all markets. The Plasti-form and Braitrim
product structures are no longer accounting units in a formal sense of separate product ranges and costs, as was foreshadowed in
earlier reports. Our estimates of EBITA outcomes for 2003 as a broad guide to shareholders would have Braitrim 2003 EBITA at
around 12.0% of sales to more than double the 2002 EBITA result. Plasti-form, as was reported for the first half year, absorbed high
legal and manufacturing costs to produce an EBITA result some 22.0% below 2002. Other justifiable allocations of costs and
margins between these sections could produce different outcomes for 2003. It is not proposed to attempt such estimates in the
future as the business has become one integrated trading activity across the world.
Forward Outlook – 2004: The present volatility of market conditions and the perils for making forward profit predictions to meet the
continuous disclosure rules have been sufficiently demonstrated in 003.
Your Directors believe the core business units of the Company are each operating successfully into their chosen markets. This
provides a solid base for sales revenue and profit improvement for 2004. Directors maintain constant supervision of business trends
and make judgments as to likely outcomes. When they become aware of information requiring disclosure to the market they do so
promptly. Final Dividend: Directors have declared a fully franked Final Dividend of 12.5 cents per share 2002 – 12.0 cents per
share), payable on 12 September, 2003. Entitlements to the dividend will be determined on the basis of the receipt of a proper
instrument of transfer received by Friday 5th September, 2003 up to 5.00 pm if paper based, or such later time permitted by SCH
Business Rules if CHESS approved. The Directors have decided to continue the Dividend Reinvestment Plan (the “Plan”) for this
dividend and advise that the price will be calculated in accordance with the Plan rules with no discount. Directors have also decided
the minimum number of shares that will be eligible to participate in the Plan for this dividend is 350 shares per shareholding.
Documentation will be provided on application to the Company’s Share Registry (Computershare Investor Services Pty. Ltd.) to
enable shareholders to change participation in the Plan.
LEND LEASE CORPORATION LIMITED
Lend Lease Corporation have provided its full year results, the following is an extract:
A$230.2 Million Operating Profit After Tax (A$714.8 million Loss After Tax following REI Write-down) Lend Lease Corporation
Limited (“Lend Lease”) today announced a net operating profit after tax of A$230.2 million for the year to 30 June 2003 and said it
expected to report an increased net operating profit after tax in the range of A$240 million – A$250 million in 2004. The outlook for
Lend Lease’s 2004 operating profit does not rely on contributions from the sale of any major assets or businesses. Lend Lease’s
reported full year result to June 2003 was a loss of A$714.8 million after tax. This includes a total A$945 million write-down in the
value of various Real Estate Investments (“REI”) businesses in the US, Asia and Europe, slightly lower than the amount announced
earlier this year. In accordance with its revised dividend policy as announced in May, the company declared a final dividend of 20
cents per share unfranked, compared to the 10 cents per share fully franked interim dividend paid in March and the 9 cents per
share fully franked final dividend for the 2002 financial year. Lend Lease Group CEO, Mr Greg Clarke, said the company had
dramatically reshaped its business model during the year and is now well placed to generate reliable earnings growth. “The decision
to exit the US REI business in an orderly way has certainly been expensive and painful, but it has been the right thing to do,” Mr
Clarke said. “Lend Lease’s future and its earnings visibility are a lot clearer today than this time last year. “The businesses that we
are going forward with are in very good shape, having achieved around 13% operating profit growth in 2003 with a better outlook in
2004. “Lend Lease is in a strong position financially. Our net debt is only A$17.4 million and we had A$867 million in cash at 30
June 2003. We expect to realise additional cash of approximately A$750 million as we complete the exit from the US REI
businesses. Most of this cash will have been received by the end of the calendar year,” he said. This excludes approximately A$400
million of co-investments that related to the businesses being exited, which Lend Lease is retaining and will realise over a period of
time. “With overall global economic conditions remaining challenging, we have secured A$88 million p.a. in sustainable, pre-tax
operating savings, and have focused on growth opportunities like integrated urban and community development and real estate
funds management here in Australia, healthcare PFIs in the UK and large military housing projects in the US,” Mr Clarke said. On a
global basis, Bovis Lend Lease produced an excellent result, with profit after tax up 19% to A$133.7 million, Backlog Gross Profit
Margin increasing 12% during the year to A$564 million and its profitability ratio up from 33% to 36%. Despite very challenging
conditions over the next 12 months in some of Bovis Lend Lease’s project management and construction markets, the business is
on track for 10% plus growth in profit after tax in 2004. With the operating earnings performance returning to growth and the US REI
exit well laid out, Lend Lease also implemented two capital management initiatives during the year to improve shareholder returns.
The company’s dividend policy was changed to lift the payout ratio to between 60% and 80%. The final dividend for 2003
announced today reflects a 73% payout ratio. In addition, Lend Lease also commenced a 10% share buyback program in June and
has so far bought back 2.9% of its shares. The buyback program was suspended in the lead-up to the results announcement. As the
company is currently in negotiations with its joint venture partners in respect of its investment in IBM Global Services Australia, the
buyback will remain suspended for the time being. Given the significant level of cash proceeds expected from the exit of the US REI
businesses, the Group expects to have surplus cash at the completion of the current buyback. Mr Clarke said he intended to seek
shareholder approval for a further 10% share buyback at the AGM in November this year. The company also announced that it was
suspending the annual allocation of 0.5% of its issued capital to the employee share plans, effective immediately. Mr Clarke said
employee share ownership has been and will remain an important part of the Lend Lease culture. “We will continue to reward
employees with Lend Lease shares. However, shares will be purchased on-market in the future. This will eliminate the dilutionary
impact of the annual allocation to employee share plans on existing shareholders,” he said.
OPERATIONS OVERVIEW
A key feature of Lend Lease’s 2003 result was the division between the continuing operations which will form the basis of Lend
Lease’s future earnings and the continuing operations being divested following the decision to exit the US REI and other related REI
businesses announced in May this year: The continuing businesses have performed very well and are well placed to deliver further
earnings growth going forward.
Key continuing operations results for 2003:
• Overall operations – up 13% to A$198.1 million (A$174.8 million June 2002).
• Bovis Lend Lease – up 19% to A$133.7 million (A$112.7 million June 2002).
• Integrated Development Services – down from A$40.6 million in 2002 to A$31.6 million at June 2003, but skewed by significant
PFI bid costs in the UK for the Allenby/Connaught project bid (bid costs of A$13.9 million after tax) and health care projects not yet
awarded. Australian development businesses performed very strongly and Actus Lend Lease in the US posted a 24% increase.
• Real Estate Investments – up 16.4% to A$93.1 million (A$80.0 million June 2002).
Discontinuing operations results: While the net profit contributions from the discontinuing REI businesses increased by $8.8 million
to $32.1 million in 2003, this was entirely due to reduced amortisation charges following the writedown of the carrying value of these
businesses announced during the year. Operating earnings before amortisation from the discontinuing businesses were flat at $60
million after tax in 2003. The outlook for these businesses, if they were to continue under Lend Lease ownership, would see them
continue to impede the company’s performance, underscoring the importance of the decision to exit.
FINANCIAL PERFORMANCE: In his profit analysis, Finance Director, Robert Tsenin, said that looking beyond the disappointment of
the REI write-down, there were a number of very pleasing factors in the 2003 result. “At the operating level, Lend Lease has
delivered a quality result, which clearly points to its earnings growth capacity as we remove the drag created by the various REI
businesses that has been so disappointing over the last two years,” Mr Tsenin said. “We have significantly reduced the contribution
of net non-recurring items to the operating profit. Such items are down to just $15.7 million after tax, from A$64.8 million after tax in
2002. “Continuing business operating earnings increased 32% to A$145.8 million after tax, while total investment income from
investments like Bluewater in the UK and King of Prussia in the US are up 13% to A$61.2 million,” Mr Tsenin said. “We are in very
good shape financially, with balance sheet capacity and very strong cashflows to give the company significant flexibility for its future
capital management strategies,” Mr Tsenin said.
Other financial highlights:
• Net interest expense improved as a result of higher average cash balances during the year, reduced by A$4.2 million after tax to
A$11.9 million after tax in 2003.
• Net foreign exchange hedge benefits up 34% to A$22.6 million after tax.
• Group restructuring costs of A$32.5 million after tax were effectively offset by tax benefits brought to account that were not
recognised in previous years and additional recoveries from the THI and Chelverton investments in the UK.
As previously announced, Mr Tsenin will retire from the Board and the company on 31 August 2003.
OUTLOOK: Mr Clarke said Lend Lease was well placed to achieve growth in both reported after tax earnings and on an earnings
per share basis in 2004. “There are a number of factors which will come into play,” he said. “The key point is that we expect our
continuing operations to produce earnings that will more than offset the lower earnings we could expect to achieve from the REI
businesses we are exiting. “With the benefit of the share buybacks, we are looking for reported eps growth in excess of 10% in
2004. “We still have lot of work to do in securing Lend Lease’s future performance over the longer term, but I think the steps we
have taken, and the operating result delivered in 2003, show that Lend Lease can and will do it.” Mr Clarke said.
AUSTRALIAN 20 LEADERS INDEX FUND (NS)
The NTA of The Australian 20 Leaders Index Fund as at close of business (Sydney) 19/08/2003 was $2.0557. The number of
shares on issue is 52,860,659.
AMP LIMITED
AMP Limited has provided its financial results for the half year ended 30/06/2003. The following is an extract from these results:
Writedowns leads to bottom line loss AMP Limited has today announced a bottom line loss of A$2,159 million, reflecting the impact
of writedowns and restructuring costs announced on 1 May 2003. Operating profit after tax but before other items was 7 per cent
lower at A$317 million, compared with A$341 million in the previous corresponding period.
The final audited result for UK writedowns was in line with the £900 million estimate anticipated on 1 May 2003.
AMP Chief Executive Officer Andrew Mohl said that while very disappointing, the bottom line loss had been well-flagged and
reflected the poor situation the company had encountered in its UK Life operations in the face of prolonged bear markets and ill-
timed acquisitions. “The underlying results show that our Australian financial services business remains resilient, reflecting its
strength in brand, distribution and scale,” Mr Mohl said. “In our asset management arm Henderson, the lagged effect of weak
investment markets continues to impact the business, although it is well positioned for market recovery. UK Financial Services made
a small operating loss in the half-year but is transitioning quickly to a closed book business with a strong focus on costs and
management of balance sheet risk.
“Looking ahead, this is the first six month period for four years in which global equity markets have finished the half at a higher level
than at the start of the period. This is an encouraging signal of a turn in the investment market cycle and our businesses are well
placed to benefit from a sustained upturn. “While the actions we have had to take since late 2002 – including a new Board and
management team, the closure of businesses, reduction in costs and risks, and ultimately the decision to demerge – have had
painful consequences, they are decisive steps aimed at putting AMP on a much stronger footing.” Mr Mohl said the demerger of the
company into two regionally based entities, announced on 1 May 2003, remained the best strategic solution for the company. “The
proposed demerged companies will be focused regional players, pursuing distinctive strategies, customer bases and growth
prospects, and operating in simpler, more transparent structures,” he said. “While a number of details are yet to be resolved,
implementation of the demerger is progressing.”
Summary of results: Australian Financial Services (AFS) The Australian retail financial services business showed its resilience with
operating margins down just 9 per cent to A$172 million for the half. New business fell by 20 per cent compared with the first half of
2002, reflecting the depressed industry environment. Outflows rose by 10 per cent. In the second half to date, net cash flows have
improved noticeably.
Persistency rates remained strong at 82.5 per cent. AMP has increased its customer retention efforts, which have included the
introduction of short-term planner incentives. The number of self-employed planners in AFS was up slightly to 1,976 in the first half
(1,927 in the previous corresponding half).
The benefit of strong cost management also contributed to the result.
Controllable costs were reduced by 16 per cent to A$255 million, while the cost to income ratio (excluding AMP Banking) was a
record low at 40 per cent.
Return on Invested Capital (RoIC) excluding AMP Banking was virtually steady at 14.8 per cent.
The restructuring of AMP Banking, which is now focusing on Australian mortgages and retail deposits, is paying off with operating
margins in this area up to a profit of A$2 million from a loss of A$5 million in the previous corresponding half. Following divestments
and an increased securitisation programme, discussions have now commenced with APRA regarding the timing of potential capital
releases, expected to total around A$300 million in the second half.
In New Zealand, underlying net profit was A$25.3 million (NZ$27.9 million) compared with A$21.9 million (NZ$26.4 million) in the
previous corresponding half. AMP’s relative market performance remains strong, with the business regaining its position as the
largest personal superannuation provider in the half.
The new business model implemented across AFS in the half, which makes business heads directly accountable for their operating
margins, return on capital and the value of the business, is now operating successfully.
UK Financial Services (UKFS): UKFS profit fell substantially in the first half, reflecting the impact of markets and the significant
restructuring of this business. UK Life Services recorded £9 million in operating margins for the half, offset by a £16 million loss in
UK Contemporary Financial Services operating margins. All UK life companies are now effectively closed to new business with the
closure of NPI Ltd, announced in June 2003.
Cost reduction is now one of the primary drivers of the UKFS business, with controllable expenditure in the first half down 26 per
cent on the previous corresponding half, due primarily to reduced employee numbers. In spite of this, the cost to income ratio
increased to 72 per cent due to a number of factors, including a cost overhang in the Service Company and the reduction in
revenue. However cost savings initiatives remain on target with £160 million in savings to be delivered in 2003 (against 2001 cost
numbers).
In terms of capital management, best estimates show that all UK life companies met minimum regulatory capital requirements at the
end of June 2003. Risk reduction initiatives in the UK life funds, which have reduced equity exposure, have ensured that capital
requirements will be less impacted by large swings in equity markets.
Persistency fell to 85 per cent from 88 per cent in the first half of 2002. With all books now closed to new business, segmentation of
the customer base is currently underway to ensure appropriate retention strategies are in place
Henderson Global Investors: The lag effect of bear markets continues to impact Henderson, with operating margins down 39 per
cent to A$62 million. This included a 50 per cent fall in
Henderson North margins to £11 million (A$28 million) and a 23 per cent decline in Henderson South margins to A$34 million.
In Henderson North, management expenses were reduced by £2 million to £80 million, which included lower investment
administration, employee and marketing costs. This was partially offset by an increase in systems costs.
There has been a significant improvement in investment performance, with 71 per cent of listed assets outperforming their
benchmarks in the first half. RoIC was lower at 5 per cent from 7.6 per cent in the previous corresponding half. Assets under
management were virtually steady from the end of 2002 at £69.4 billion but down 8 per cent on the first half of 2002.
In Henderson South, expenses were reduced by A$7 million in the half with the cost to income ratio only slightly higher at 59 per
cent. Henderson South experienced a loss on asset sales of a post-tax A$39 million for the half, due to the transfer of trust and
property management rights in the AMP Diversified Trust. The annualised operating profit impact of LPT changes from 2004 will be
a reduction of A$16.5 million. In terms of investment performance, 68 per cent of property assets, 58 per cent of listed assets and 99
per cent of fixed interest assets outperformed benchmarks for the year to 30 June 2003. RoIC was stable at 27.7 per cent while
assets under management were slightly lower at A$70.4 billion.
Discontinued businesses & Corporate: Discontinued businesses include the reinsurance and direct insurance run-off portfolios of
AMP, managed by Cobalt. This portfolio continues to be tightly managed, resulting in steady operating margins of A$19 million.
AMP is continuing to progress a sale of the Cobalt/Gordian business.
There was also an operating profit of A$11 million from the units of AMP Banking which have now been divested.
Tight controls contributed to a 55 per cent per cent fall in Corporate costs to A$20 million in the first half.
Other financial matters
Dividend & RPS: Directors have declared a dividend of A$0.07 for the half, 15 per cent franked, compared with A$0.26 in the
previous corresponding half. The dividend in the second half of 2002 was A$0.20. The record date for this dividend is 3 October
2003 while the payment date is 28 October 2003.
Mr Mohl said that despite the loss in the period, Directors had taken into account AMP’s large retail shareholder base in setting the
dividend, as well as the future prospects of ‘new’ AMP.
The next date for payment of the Reset Preferred Securities distribution of
A$4.32 per A$100 security is 24 October 2003. This amount is expected to be paid to holders registered on the record date of 8
October 2003. In addition, following the completion of AMP's A$1.7 billion capital raising earlier this year, the Board, having taken
external advice, has decided to increase the Minimum Conversion Number set out in the RPS Terms in accordance with Clause
3.12 of the RPS Terms. The Minimum Conversion Number has been increased from 5.1282 to 5.1620 with immediate effect as the
Board considered such an increase was consistent with the spirit of the RPS terms.
Writedowns & transformation costs: On 1 May 2003, AMP indicated that as a result of changes in strategy and the reduction of risk
in the UKLS business, significant writedowns were expected. Following audit and actuarial review, writedowns associated with risk
reduction initiatives were A$1,318 million while writedowns linked to strategy changes were A$950 million. In £ terms, the final
writedowns were £907 million compared to the 1 May estimate of £900 million. An increase in the valuation of Australian controlled
entities including Hillross and AMP Financial Planning of A$250 million resulted in the final valuation adjustments charge of A$2,018
million. Transformation costs include a A$233 million charge for restructuring costs, primarily in the UK, while a further A$111 million
reflects demerger costs incurred and provisions for further demerger and UK listing costs. Directors have also announced today that
if the proposed demerger proceeds, the net assets of the UK operations will be demerged from AMP Limited’s consolidated
statement of financial position at “fair market value”, as defined by Australian accounting principles for business separations of this
kind. This “fair market value” will be the market value of the UK operations at the time of the demerger, which is likely to be less than
their carrying value at that time.
Any difference will be reflected in AMP’s accounts for the year to 31 December
2003. Demerger update: Mr Mohl said that a number of steps towards the completion of the demerger had been achieved. As
previously advised, AMP is investigating an expedited listing for ‘new’ Henderson on the London Stock Exchange. A letter of
“Suitability for Listing” will be lodged with the UK Listing Authority, with a view to a UK listing by the end of 2003. This would allow
‘new’ Henderson the flexibility of listing on the LSE concurrent with the ASX listing.
Mr Mohl said that while total shareholder capital resources of A$11.5 billion were adequate to facilitate the demerger, the mix of
capital needed to change. “If the demerger proceeds, refinancing the RPS is both necessary and desirable to achieve regulatory,
ratings and tax efficiency,” Mr Mohl said. “A simple conversion of the RPS is not in the best interests of shareholders. Alternatives
being investigated involve refinancing the RPS into equity and/or other Tier 1 instruments in the ‘new’ AMP, subject to APRA
approval. “It is likely that the refinancing will be for the full amount of the RPS given UK asset sales such as NPI did not occur. Other
asset sales are still progressing and any proceeds from these sales will be taken into account in the final capital structure.
“In addition, we are investigating methods of achieving majority shareholder ownership of Henderson North, which is currently
owned by Pearl, given the decision to investigate the feasibility of a UK listing in 2003. This restructuring was not contemplated on 1
May 2003. Discussions with the UK regulator on this restructuring are continuing.” The final capital structure of both new entities
remains subject to ongoing discussions with regulators. Any refinancing of the RPS will also only take place with the approval of
AMP shareholders to the demerger proposal and would occur post the EGM.
In terms of the content in the Explanatory Memorandum (EM), it will include substantial new information including capital structures,
organisational structures, business strategies, historic pro formas, forecasts for ‘new’ AMP and outlook statements for both new
entities, more sophisticated embedded values for AFS and UKFS and the independent expert’s report.
Board changes: As flagged in February 2003 when the Board was significantly restructured, Directors Sir Malcolm Bates and Ian
Renard will retire from the AMP Limited Board with effect from 31 August 2003. Mr Renard will leave the AMP Bank Limited Board
the same day. However Sir Malcolm Bates will remain as Chairman of AMP (UK) Plc. Under AMP’s proposed demerger, AMP (UK)
Plc will become the listed public company, ‘new’ Henderson. Since ‘new’ Henderson may be listed on the
London Stock Exchange sooner than originally anticipated, it is considered more appropriate to have a UK-based Chairman. Sir
Malcolm Bates has agreed to take on this role. Australian-based AMP Director Pat Handley was originally proposed as ‘new’
Henderson Chairman. He will be a Director of ‘new’ Henderson and will remain on the AMP Limited Board.
Conclusion: Mr Mohl said that AMP shareholders had every right to feel frustrated and disappointed in light of the poor bottom line
result and share price performance. “Unfortunately there is no ‘quick fix’ for the mistakes of the past,” he said.
“It’s easy to lose sight of how much we have achieved in the last ten months. Many – if not most – of the decisions we have had to
make have sought to limit the damage to shareholder value from AMP’s exposure to UK equity markets and ill-timed acquisitions.
“It is also important to remember that AMP’s underlying businesses remain strong, with net profit before other items of more than
A$300 million in the first half. “The Board and management are determined to turn AMP around and our objective continues to be
maximising the long term value of our businesses.”
Directors’ Report and Financial Report for the Half Year Ended 30 June 2003
REVIEW OF OPERATIONS AND RESULTS
The result for the half year ended 30 June 2003 was a net loss after tax attributable to shareholders of $2,159 million compared to a
profit after tax of $303 million for the previous corresponding period. Operating profit after tax but before other items was $317
million, compared with $341 million in the previous corresponding half year. The most significant factors impacting this result were
$2,268 million writedowns of excess market value over net assets, writeoffs of goodwill, increases in policy liabilities and restructure
and demerger costs of $344 million totalling $2,612 million. These writedowns, additional provisions and restructuring costs resulted
from the decisions to:
• Change our UK investment strategy, to reduce exposure to equities
• Change our UK operational strategy
• Demerge AMP’s businesses along geographic lines - Australasia and the UK. Investment markets have continued to be volatile,
resulting in total investment gains (before tax) attributable to shareholders, policyholders and other equity interests of $3,150 million
for the half year ended 30 June 2003 compared to losses of $3,299 million for the six months to 30 June 2002.
Lower investment markets, bond yields and lower new business negatively impacted Australian Financial Services operating
margins, partially offset by expense savings, resulting in a decline of 11% in underlying operating profit from the prior period to $268
million for the six months to 30 June 2003. The valuations of the Australian distribution companies increased by $250 million.
Market movements and significant restructuring in the business negatively impacted UK Financial Services operating margins. The
UK Contemporary Financial Services business recorded a negative operating margin of £16 million in the half while UK Life Services
recorded a positive operating margin of £9 million for the same period. The lag effect of bear markets continues to impact AMP’s
asset management business, Henderson, with operating margins down 39% to $62 million. Total assets under management were
$239 billion, falling from $265 billion at 31 December 2002 mainly due to the adverse impact of a strengthening Australian dollar
against Sterling. As a result of significant restructuring activities towards the end of 2002 and also in 2003, including the sale of
some Banking assets, closure of the Pearl Direct Sales Force and other cost management programmes, staff numbers fell from
11,403 at 31 December 2002 to 8,770 at 30 June 2003. On 1 May 2003, AMP announced its intention to create two separate
regionally focused listed entities; “New AMP” in Australasia and “New Henderson” in the UK. Subject to regulatory and shareholder
approval, AMP management remains focused on the demerger and will release an Explanatory Memorandum to shareholders in
October. To facilitate our demerger, AMP successfully undertook a $1.2 billion institutional placement and a $500 million share
purchase plan. The share purchase plan will be included in equity in the second half of 2003. Sir Malcolm Bates and Mr Ian Renard
will retire from the AMP Limited Board on 31 August 2003. Capital and reserves of the Group have decreased to $7,025 million from
$8,533 million at 31 December 2002 as a result of the net operating loss offset by an increase in contributed equity, mainly from the
capital raising previously mentioned and the Dividend Reinvestment Plan.
NEW ASX CORPORATE GOVERNANCE COUNCIL PRINCIPLES AND RECOMMENDATIONS
On 31 March the Australian Stock Exchange (ASX) Corporate Governance Council released Principles of Good Corporate
Governance and Best Practice Recommendations. The ASX Listing Rules require companies to provide a statement on whether or
not they follow the recommendations, for their first financial year commencing after 1 January 2003. Although AMP is not required to
formally report on the ASX recommendations until its financial year ended 31 December 2004, AMP intends to include commentary
in the Annual Report for the financial year ended 31 December 2003. AMP endorses the 10 essential Corporate Governance
Principles and already follows most of the Best Practice Recommendations. AMP is developing a Corporate Governance section on
our www.ampgroup.com website which will be progressively updated this year. The website will include more information on the
company’s governance practices, including copies of relevant policies and terms of reference.
LIKELY FUTURE DEVELOPMENTS: On 1 May 2003, AMP Limited announced a major revision to its strategy for the UK operations
which has culminated in a decision to close the books of all of its life insurance operations to new business, significantly change its
asset investment strategy and (subject to regulatory, final Board and shareholder approval) undertake a programme to demerge.
Details of the proposed demerger will be set out in an Explanatory Memorandum (EM) to shareholders expected to be issued in
October 2003. At 30 June 2003 the net assets of the UK operations attributable to the shareholders of AMP Limited (£970 million;
$2,387 million) have been measured on the basis of a combination of market value, net present value, historic cost and Margin on
Services (MoS) principles as required by applicable Australian Accounting Standards. The proposed demerger, if executed, will
need to be accounted for on a different basis. The net assets of the UK operations will be demerged from AMP Limited’s
consolidated statement of financial position at “fair value” as defined under Australian Generally Accepted Accounting Principles for
business separations of this type. This value will be the market value of the UK operations at the time of demerger which is likely to
be less than their carrying value at that time. The difference will be reflected in AMP Limited’s consolidated statement of financial
performance for the year ended 31 December 2003. Pro-forma financial statements showing the estimated financial effect of the
demerger under specified assumptions will be included in the EM. At the date of this report, these pro-forma financial statements
have yet to be prepared. At the date of this report, the Directors are not aware of any matter or circumstance that has arisen since
the end of the half year which has significantly affected or may significantly affect the operations of the consolidated entity, the
results of its operations or its state of affairs, which is not already reflected in this report other than the following.
In July 2003, a further $500 million (less issue costs of $7 million) was raised under a Share Purchase Plan and will be included in
equity in the second half of 2003. On 30 July 2003, AMP agreed to sell its remaining Australian property finance and loan portfolio
comprising $232 million of construction and property finance loans to Suncorp-Metway. On 6 August 2003, AMP announced a
proposed restructure of the AMP Office Trust’s management through the creation of a new management company, Ronin Property
Group, which subject to unitholder approval will replace AMP Henderson as the Responsible Entity for the Trust. AMP Henderson
will continue to be Australasia’s largest manager of unlisted wholesale property assets with a portfolio in excess of $10 billion,
invested in the office, industrial and retail property sectors. On 11 August 2003, AMP announced that the final capital structure
under the demerger proposal is yet to be resolved and remains subject to ongoing discussions with regulators. It will also be
dependent on the outcome of asset sales, with the proceeds of any asset sales to be used to reduce the debt of ‘new’ AMP.
However a restructuring of the AMP Reset Preferred Securities as part of the demerger proposal is likely. AMP would only proceed
with any such restructuring with the approval of AMP shareholders to the demerger proposal. On 20 August 2003 AMP ruled out a
simple conversion of AMP Reset Preferred Securities to ordinary equity as it would not be in the best interests of AMP shareholders.
Alternatives being investigated involve refinancing the AMP Reset Preferred Securities into equity and / or other Tier 1 instruments
in New AMP subject to APRA approval.
DIVIDENDS: The Directors declare an interim dividend of 7 cents per share, down 13 cents per share on the 2002 final dividend to
be paid on 28 October 2003. The dividend is franked to 15%.
ROUNDING: In accordance with the Australian Securities and Investments Commission Class Order 98/0100, amounts in this
Directors’ Report and the accompanying Financial Report have been rounded off to the nearest million
Australian dollars, unless stated otherwise. Signed in accordance with a resolution of the Directors.
AMP RESET PREFERRED SECURITIES TRUST
AMP Henderson Global Investors, as Responsible Entity of the AMP Reset Preferred Securities Trust (RPS), draws the attention of
RPS Holders to the comments in the ASX statement lodged by AMP Limited today, specifically that:
1. Minimum conversion number adjustment
- The next date for payment of the Reset Preferred Securities distribution of A$4.32 per A$100 security is 24 October 2003. This
amount is expected to be paid to holders registered on the record date of 8 October 2003. - In addition, following the completion of
AMP's A$1.7 billion capital raising earlier this year, AMP’s Board, having taken external advice, has decided to increase the
Minimum Conversion Number set out in the RPS Terms in accordance with Clause 3.12 of the RPS Terms. The Minimum
Conversion Number has been increased from 5.1282 to 5.1620 with immediate effect as the AMP Board considered such an
increase was consistent with the spirit of the RPS Terms. As the Responsible Entity, AMP Henderson also confirms that, in
accordance with the RPS Terms, AMP Limited has notified AMP Henderson of the increase. The RPS Terms provides that the
increase in the Minimum Conversion Number is binding on AMP Henderson as Responsible Entity of the AMP Reset Preferred
Securities Trust (RPS) and all RPS Holders.
2. Demerger update
AMP Limited also said today:
- If the demerger proceeds, refinancing the RPS is both necessary and desirable to achieve regulatory, ratings and tax efficiency.
- A simple conversion of the RPS is not in the best interests of shareholders. Alternatives being investigated involve refinancing the
RPS into equity and/or other Tier 1 instruments in the ‘new’ AMP, subject to APRA approval.
- It is likely that the refinancing will be for the full amount of the RPS given UK asset sales such as NPI did not occur. Other asset
sales are still progressing and any proceeds from these sales will be taken into account in the final capital structure.
- In addition, AMP is investigating methods of achieving majority shareholder ownership of Henderson North, which is currently
owned by Pearl, given the decision to investigate the feasibility of a UK listing in 2003. This restructuring was not contemplated on 1
May 2003. Discussions with the UK regulator on this restructuring are continuing.
- The final capital structure of both new entities remains subject to ongoing discussions with regulators. Any refinancing of the RPS
will also only take place with the approval of AMP shareholders to the demerger proposal and would occur post the EGM. AMP
Henderson as the Responsible Entity of the AMP Reset Preferred Securities Trust will act in the interests of RPS Holders in relation
to any proposal concerning the RPS.
HENDERSON TR PACIFIC INVESTMENT TRUST PLC
Henderson TR Pacific Investment Trust has provided a copy of its printed Interim Report for the period ended 30/06/2003.
CAPITAL PROPERTIES NEW ZEALAND LIMITED
Capital Properties New Zealand Limited today announced a quarterly dividend of 1.90 cents per share with imputation credits
attached of 0.35 cents per share. This dividend represents the first interim dividend for the year ended 31 March 2004. The record
date for the dividend is 5 September 2003 and the payment will be made on 17 September 2003.
CAPRAL ALUMINIUM LIMITED
Capral Aluminium Limited have provided the Financial Results for the Half Year ended 30/06/2003. The following is an extract from
this release; Your directors present their report on the consolidated entity consisting of Capral Aluminium Limited and the entities it
controlled at the end of, or during, the half year ended 30 June 2003.
Review of Operations: Capral Aluminium Limited today announced a net loss after tax of $3.0m for the six months ending 30 June
2003, compared with a profit of $4.4m for the corresponding period last year. The Board has declared an interim fully franked
dividend of two cents per share. The record date is 2 September 2003. The trading result reflects the fixed cost nature of the
business and costs associated with managing the business through the transition stages. Funding: In July Capral announced the
closing of a $55 million loan package arranged by Australia and New Zealand Banking Group Ltd (ANZ). The loan will be used to
fund the development of Capral’s new manufacturing equipment to be installed at Bremer Park and Campbellfield. The loan
package incorporates Italian and German Government export credit guarantees, supporting Capral’s major equipment suppliers,
SMS Eumuco GMbH, Trevisan SpA and Cometal Engineering SpA. It will be repayable over the next 5 years.
Future: There has been considerable effort within Capral to reposition the business so that it is both profitable and competitive within
the sector. Although 2003 will be a disappointing year with regard to returns, a number of the transition initiatives will have been
completed and with the commissioning of Bremer Park in the second half of 2004 Capral’s transition will have been completed.
Over the coming 18 months Capral will execute the following strategies to significantly improve the cost base of the business:
(i) Overhead Reduction – with the introduction of the new SAP system to be completed in October 2003 a step change in costs will
be achieved over the following eight (8) months as the transition is completed and the duplicate systems retired.
(ii) Warehouse Rationalisation – Homebush, Port Melbourne and Scoresby will be closed during the December 2003 to January
2004 period. Eagle Farm and Murarrie will be closed in the fourth quarter of 2004.
(iii) Industrial Press Modernisation – the new industrial press at Campbellfield will be commissioned during September and October
2003. This facility has the capability to supply the output of the Yennora and Campbellfield industrial presses. The Yennora press is
scheduled for closure in November and the Campbellfield press will be directed towards additional volume during the transition to
Bremer Park.
(iv) Bremer Park – equipment installation is scheduled to commence in first quarter 2004 and for completion during the fourth
quarter. Commissioning will be phased commencing in April and to be completed by year-end.
The completion of these initiatives will substantially reduce the current cost base of Capral, whilst providing a higher quality product
and more reliable service. There is also the potential to increase volume due to the cost advantages that will be at the new facilities.
This report is made in accordance with a resolution of the directors.
PROVENCO GROUP LIMITED
Provenco Group Limited’s wholly-owned subsidiary, APL Plus Limited, has been advised by Air New Zealand that its applications
support contract with Air New Zealand will not be renewed. The Air New Zealand contract represents a material part of the APL Plus
business, although not for the Provenco group overall. The Air New Zealand support work will end after a transition period of 2 – 3
months. APL Plus is assessing the implications of Air New Zealand’s decision, and the company will make further announcements
as may be required in due course.
EBOS GROUP LIMITED
CONSOLIDATED OPERATING STATEMENT FOR THE FULL YEAR ENDED 30/06/2003
Audited (NZ$000)
                                                   Current              Previous
                                                    Period         Corresponding
                                                                          Period
OPERATING REVENUE
Sales revenue                                      224,017               206,418
Other revenue                                            -                     -
Total Operating Revenue                            224,017               206,418
OPERATING SURPLUS (DEFICIT)
BEFORE UNUSUAL ITEMS AND TAX                         9,214                 8,529
Equity Earnings                                        411                     -
Unusual items
 for separate disclosure                                                         -                       -
OPERATING SURPLUS (DEFICIT)
 BEFORE TAX                                                                9,625                    8,529
Less tax on operating surplus                                              3,099                    2,092
Operating surplus (deficit)
 after tax but before minority
interest                                                                   6,526                    6,437
Less minority interests                                                      110                      379
OPERATING SURPLUS (DEFICIT)
 AFTER TAX ATTRIBUTABLE
 TO MEMBERS OF LISTED ISSUER                                               6,416                    6,058
Extraordinary items after tax                                                    -                       -
Less minority interests                                                          -                       -
Extraordinary items after tax
 attributable to members of the
 Listed Issuer                                                                   -                       -
TOTAL OPERATING SURPLUS
 (DEFICIT) AND
 EXTRAORDINARY ITEMS
 AFTER TAX                                                                 6,526                    6,437
Operating Surplus (Deficit)
 and Extraordinary Items after
 Tax attributable to Minority
 Interest                                                                    110                      379
Operating Surplus (Deficit)
 and Extraordinary Items after
 Tax attributable to Members
 of the Listed Issuer                                                      6,416                    6,058
EPS                                                                        23.46                    22.32
SHAREHOLDERS' EQUITY
  ATTRIBUTABLE TO MEMBERS
 OF THE HOLDING COMPANY                                                   43,286                   40,553
Media statement: Strong Full Year Result for EBOS and increased Dividend: EBOS Group has reported another record result for the
12 months to 30 June 2003, whilst continuing to invest for longer term growth.
“Considering local and global pressures on health sector spending, the board is pleased to see trading profit at the EBIT level
improve by 17.9% to $11.775m compared with $9.982m the previous year”, says Mr Rick Christie, chairman of EBOS Group Ltd.
The 2003 EBIT includes the group’s share of associated company earnings from Global Science & Technology Ltd, in which EBOS
holds a 47.5% interest subsequent to the merger of our own science division with Global Science during the year.
Net profit after interest, tax and goodwill amortisation was $6.416m, up 5.9% on the previous year’s result of $6.06m.
This was achieved on gross revenue of $224.02m, which was 8.5% higher than the previous year’s $206.42m.
Noteworthy influences on the results are the significant increases in interest expense to $1.58m ($0.99m the previous year) and in
taxation to $3.099m, compared with $2.092m previously.
“Allowing for these increased charges, the underlying year-on-year trading result is therefore materially better than the net
percentage gain indicates, and continues the positive earnings trend in Net Profit which has more than doubled over the last 5
years” says Mr Christie.
Directors have declared an increased final dividend of 9.4 cents per share (last year 8.0 cents) making a total payment of 16.4 cents
per share this year (last year 14.5 cps). The dividend is fully imputed and is scheduled for payment 10 October 2003.
The managing director, Mr Mark Waller says, “Our long term sustained performance is attributable to a balanced mix of organic
growth and acquisition of compatible businesses and brands.
The 2003 year has seen positive cash flow from operations rise to $9.93m. This is greatly assisting with new acquisitions and
maintenance of a high dividend payout policy”.
Total assets stand at $92.6m as at 30 June 2003, compared with $90.4m in the previous year. They include current assets of
$62.16m ($67.5m in 2002) which importantly reflect a reduction in inventory to $31.87m from $34.97 in 2002.
Current liabilities are $38.7m ($35.2m) and total liabilities $48m ($44.4m). Shareholders’ interest increased to $43.286m from
$40.553m previously.
New initiatives during the year included:
• The acquisition of the remaining 26% of Health Support to take EBOS’ holding to 100%.
• The acquisition of the Natures Kiss business including the Antiflamme brand.
• The acquisition of the Allersearch brand of asthma products in Australia.
• The successful joint venture of our former Medic Scientific division with Global Science. EBOS holds 47.5% of the new merged
entity.
• The successful relocation of our Australian business – Richard Thomson Pty Ltd to new premises in Sydney to cater for future
growth.
• The installation of new computer hardware, backup recovery systems and internal networks for EBOS Group Ltd.
• The implementation of new systems for inventory control to further improve asset management and service levels.
Mr Waller says “our businesses have performed well across the board and have improved on the positive performance of the
previous year.
Global Science has benefited from strong demand from industry and the science community.
The Australian business is performing well in an equally competitive marketplace.”
Commenting on the future outlook, Mr Christie says, “The business results represent a robust trading outcome that highlights an
excellent spread of risk – both geographically and by market segment.
We expect solid results again in 2004, and continue to evaluate a number of new opportunities for further growth.”
SPECTRUM RESOURCES LIMITED
CONSOLIDATED OPERATING STATEMENT FOR THE FULL YEAR ENDED 30/06/2003
Audited (NZ$000)
                                                                     Current                Previous
                                                                      Period          Corresponding
                                                                                              Period
OPERATING REVENUE
 Sales revenue                                                         3,045                   4,193
 Other revenue                                                             90                     96
Total Operating Revenue                                                3,135                   4,289
OPERATING SURPLUS (DEFICIT)
 BEFORE UNUSUAL ITEMS AND TAX                                          (463)                   (541)
Unusual items
 for separate disclosure                                                    -                       -
OPERATING SURPLUS (DEFICIT)
 BEFORE TAX                                                            (463)                   (541)
Less tax on operating surplus                                            (20)                  (173)
Operating surplus (deficit)
 after tax but before minority
interest                                                               (483)                   (714)
Less minority interests                                                     -                       -
Equity earnings                                                             -                       -
OPERATING SURPLUS (DEFICIT)
 AFTER TAX ATTRIBUTABLE
 TO MEMBERS OF LISTED ISSUER                                           (483)                   (714)
Extraordinary items after tax                                               -                       -
Less minority interests                                                     -                       -
Extraordinary items after tax
 attributable to members of the
 Listed Issuer                                                              -                       -
TOTAL OPERATING SURPLUS
 (DEFICIT) AND
 EXTRAORDINARY ITEMS
 AFTER TAX                                                             (483)                   (714)
Operating Surplus (Deficit)
 and Extraordinary Items after
 Tax attributable to Minority
 Interest                                                                   -                       -
Operating Surplus (Deficit)
 and Extraordinary Items after
 Tax attributable to Members
 of the Listed Issuer                                                  (483)                   (714)
EPS                                                                   (0.16)                  (0.23)
SHAREHOLDERS' EQUITY
  ATTRIBUTABLE TO MEMBERS
 OF THE HOLDING COMPANY                                                3,774                   4,258
Spectrum Resources Releases Annual Results Numbers Highlight Profit in Second Half of Year
Spectrum Resources Ltd today reported annual revenues for the fiscal year ending 30 June 2003 of $3,135,000. Net loss before tax
and amortisation of goodwill is $171,000. Gavin Mitchell, CEO Spectrum Resources, said the numbers in the second half of the year
bode well for the company. During 2002/2003, the wholly owned subsidiary Kinetiq explored opportunities in new markets including
the United Kingdom and Europe while also significantly reduced operating costs. The total 2002/2003 operating deficit, after
goodwill and tax was $483,000, an improvement from the $714,000 deficit the year before. An increase in sales and a reduction in
expenses resulted in a profit before tax and amortisation of goodwill in the second half of the fiscal year of $336,000.
“We invested in opportunities within new markets while at the same time we implemented significant measures to reduce costs,”
Said Mr. Mitchell. “The numbers for the last six months of the year show that we taken the right approach and it’s paying off. We are
now on an upward trend and we have a positive outlook for the next year.” Spectrum’s cash position remains healthy with a closing
balance of $2,714,000 as a majority of the posted loss was related to non-cash items such as depreciation and amortisation of
goodwill.
NEW ZEALAND EXCHANGE LIMITED
Today NZX determined that the electronic messages originating from RMLT, one of the three New Zealand share registries that
manage the transfer of shares between brokers accounts and clients accounts, were faulty. The faults were due to a RMLT software
upgrade. NZX management accordingly decided to halt trading in the market. NZX has kept the market closed until it confirmed
conclusively that (i) all shareholder balances within the RMLT registry are correct and all client positions accurate; and that (ii) the
message uplift had been restored to NZX’s satisfaction.
The messaging failure meant that NZX was unable to confirm that transfers of shares were being properly recorded. The real time
inability to confirm trades against holdings compromised the integrity of the market. NZX has a zero risk tolerance policy and
determined the appropriate action was market suspension until market integrity had been restored.
Today’s closure was not the result of a failure of any NZX technology. Under the current system of share transfer, NZX is
dependent upon the efficient and consistent operation of New Zealand share registries. Conversely, in Australia the ASX controls
the entire chain of events and information required to ensure that trades can be internally matched against holdings.
NZX is absolutely committed to complete market integrity and is assessing all of its relationships in this context.
AMP NZ OFFICE TRUST
CONSOLIDATED OPERATING STATEMENT FOR THE FULL YEAR ENDED 30/06/2003
Audited (NZ$000)
                                                   Current              Previous
                                                    Period         Corresponding
                                                                          Period
OPERATING REVENUE
 Sales revenue                                           -                     -
 Other revenue                                      59,845                49,018
Total Operating Revenue                             59,845                49,018
OPERATING SURPLUS (DEFICIT)
 BEFORE UNUSUAL ITEMS AND TAX                       55,871                30,915
Unusual items
 for separate disclosure                                 -                     -
OPERATING SURPLUS (DEFICIT)
 BEFORE TAX                                         55,871                30,915
Less tax on operating surplus                            -                     -
Operating surplus (deficit)
 after tax but before minority
interest                                            55,871                30,915
Less minority interests                                  -                     -
Equity earnings                                          -                     -
OPERATING SURPLUS (DEFICIT)
 AFTER TAX ATTRIBUTABLE
 TO MEMBERS OF LISTED ISSUER                        55,871                30,915
Extraordinary items after tax                            -                     -
Less minority interests                                  -                     -
Extraordinary items after tax
 attributable to members of the
 Listed Issuer                                           -                     -
TOTAL OPERATING SURPLUS
 (DEFICIT) AND
 EXTRAORDINARY ITEMS
 AFTER TAX                                          55,871                30,915
Operating Surplus (Deficit)
 and Extraordinary Items after
 Tax attributable to Minority
 Interest                                                -                     -
Operating Surplus (Deficit)
 and Extraordinary Items after
 Tax attributable to Members
 of the Listed Issuer                                                      55,871                   30,915
EPS Basic                                                                   22.35                    12.37
EPS Diluted                                                                      -                     9.94
TOTAL SHAREHOLDERS' EQUITY                                                457,850                  419,104
AMP NZ Office Trust reports higher net surplus and $21.6 million gain in net asset values
AMP NZ Office Trust (ANZO) has reported a higher net surplus and gains in asset values in the full year to 30 June 2003.
ANZO is a unit trust listed on the New Zealand Exchange, which invests predominantly in prime CBD office properties in major New
Zealand cities. It owns seven of New Zealand’s premium office buildings – Auckland’s PricewaterhouseCoopers Tower, ANZ Centre,
IAG House and Quay Tower; and Wellington’s HP Tower, 125 The Terrace and No. 1 The Terrace.
Executive manager Robert Lang said ANZO’s assets had responded to strong investor demand for high-quality properties, with a
3.86 percent lift in values. ANZO had achieved record leasing levels, extending the portfolio Weighted Average Lease Term (WALT)
from 6.07 to 7.11 years. Costs had also been successfully managed. ANZO’s financial statements include the first full year’s
revenue and expenses associated with the PricewaterhouseCoopers Tower.
Total operating revenue including the PwC Tower was $59.85 million, an increase of 22.3%. Excluding the PwC Tower contribution,
total operating revenue slipped by 3.6%. Portfolio direct expenses including the PwC Tower were $12.54 million or $1.19 million
higher than in 2002. Excluding the PwC Tower, direct expenses for the core portfolio showed a reduction of 2.10% as a result of
ANZO’s continued focus on cost containment and operational efficiencies. During the year, ANZO changed its accounting policy
regarding gains and losses on revaluation to bring it more into line with current international accounting standards. An unrealised
revaluation gain was brought to account in deriving the net surplus for the period. ANZO’s net surplus before revaluations rose by
10.84% to $34.27 million. A gain in asset values of $21.60 million took the net surplus after revaluations to $55.87 million, an
80.72% increase in comparison to the previous year. The gross value of ANZO’s portfolio improved during the year from $555.9
million to $577.35 million. Net tangible asset backing increased from $0.855 to $0.898 cents per unit.
Mr Lang said ANZO’s investors will receive a final dividend distribution of 3.48 cents per unit, bringing the full-year distribution to
6.73 cpu. The record date is 19 September, 2003 and the application (payment) date is 26 September, 2003. While lower than the
previous year, the distribution is higher than forecast reflecting leasing success, better performance in rent reviews and cost savings
in the second half of the year.
AMP INVESTMENTS' WORLD INDEX FUND (NS)
The unaudited NTA of WiNZ (AMP Investments World Index Fund) as at close of business 20/08/2003 was $1.11417. The number
of shares on issue is: 366,734,260.
DORCHESTER PACIFIC LIMITED
Chairman's Address to the Annual Meeting held at the Tamaki Yacht Club on 20 August 2003 followed by the General Manager's
Speech: I am going to speak briefly on the past year and the year to date. Brent King will talk more specifically on the various
Dorchester entities and where he, as our managing director, sees the company going from here. I have no doubt he will explain as
you will have seen in the annual report that we had a good year in 2002/2003 with revenue up 20%, and profit up 8%. There were
no acquisitions during the year but assets increased by 29% to over $266 million, and as a result of the year's activities
shareholders' funds increased by 13% to nearly $23 million. That and the return on average shareholders equity of 18.6%
represents a year of achievement by our management and staff in a year that was by no means easy for some of our companies, as
you will have read in the managing director's review. In summary, the finance and insurance divisions performed well but the
consulting divisions had a disappointing year. Happily, the last few months have been much better for the consulting divisions. Part
of the consulting division was the funds management company, Sterling Portfolio Management Ltd. You will know that at the end of
the year we sold Sterling and you will have read in the annual report the reasons why we purchased and why we sold, and that will
be expanded on later. I said at last year's meeting that Sterling was a useful addition to our consulting sector but that proved, in a
difficult year for all fund managers, to not be the case. On the share capital side, we again did not issue any shares during the past
financial year for acquisitions and there were no issues of shares to directors or staff. However, as you will have read last week, we
have made recently a placement of 400,000 shares at full market price for the acquisition of the business of Energy Direct Ltd, and
we are proposing to issue further shares shortly to our staff share scheme, subject to approval of shareholders at this meeting. I will
also be announcing shortly a planned issue of warrants to all shareholders which WILL increase share capital in the future. On the
expenses side, I accept that it is not easy to make comparisons from year to year, often because of acquisitions, although not so
much this year. But since we don't stand still, and as we expand our entities and the operations of those entities in different ways
each year, direct expenses increase and overheads increase and with acquisitions and disposals, goodwill amortisation varies. And
as we expand, so our borrowing book increases with more investors in debentures and unsecured notes, we are able to lend more
and so our interest costs and revenue increase. On the lending side, we are exposed to interest rate pressures from competitors
and we have to accept market rates for investment of our cash reserves that can vary hugely from month to month. Bad debts show
in our accounts as a major expense but as I say every year, we are very much in the business of lending money and bad debts are
part of that business; particularly in the vehicle financing business, which is a large part of our lending. Bad debts still represent a
large cost but much work continues to be done on improving the quality of lending and credit control with the pleasing results. On a
brighter note, I am sure you will have been pleased that we increased the final dividend to 3.9 cents per share giving a total dividend
payout of 7.5 cents per share fully imputed this year compared with 6.6 cents per share last year. We have over 3 years of
imputation credits available at the current dividend payout rate. There is room for a higher dividend payout but as in the past we
have preferred a conservative dividend policy and a consequent higher retention to provide the capital to expand our activities. In
order to expand Dorchester Finance's borrowing the parent company Dorchester Pacific needs to keep increasing its investment in
Dorchester Finance to ensure trust deed ratio compliance. Retention of profit is used in this way. Overall then, I think Dorchester
had a very good year in very challenging times in most of our markets. As for the future, I will leave our managing director Brent
King to address you in detail on the various business sectors and, as chief executive of our company, his vision for the future.
Before doing that, and as alluded to earlier, I am pleased to announce that the directors have decided to issue pro-rata to all
shareholders, warrants to subscribe for ordinary shares in 2 and 3 years time. The issue of warrants (also known as options) at no
initial cost to shareholders will be in the ratio of 2 warrants for every 4 shares held, with 1 option exercisable in 2 years time to
subscribe for 1 share at $1.70, and 1 option exercisable in 3 years time, also at $1.70. In effect this is a deferred cash issue but at a
known price. The warrants will be traded on the Exchange and we hope they will create some trading interest and further interest in
our ordinary shares. As this issue is to all shareholders equally, it does not require the approval of shareholders. Mr King will give
you more information about the warrants and the rationale for their issue shortly. In conclusion, my thanks to all who have assisted
us during the past year and in particular to our staff who have again shown commendable loyalty and dedication and who continue
to do a great job ----- and my thanks to my fellow directors who are dedicated to the task and offer wise counsel. I am proud of what
has been achieved by Brent and his team over the last years and I now invite him to address you.
Address by Brent King, General Manager: Our Chairman has given a good overview of how the last 12 months have been. The
Annual Report is direct and honest and as to our successes and failures. I do not need to reiterate those matters. I do want to focus
on a number of key drivers of performance. Total Assets – our assets have shown consistent and measured growth, over the last 5
years. Total Equity – this has mirrored the growth in our total assets. Total equity is the value that you as shareholders have in this
business. Net Profit after Tax: You can see that by growing our assets and our equity we have been able to consistently increase
our profits. You will have noticed the correlation been growth in assets, equity and net profit. The benefit to you as shareholders is
that each share has gained in value. Your Earning per Share have increased and your Net Assets Per Share have increased. I am
very pleased with the major drivers of our business and we are showing that we can continue to perform year on year. Our record
relative to other companies on the New Zealand Stock Exchange is excellent and when reviewing our performance we should bear
in mind that we continue to be in the top echelon of NZ shares. When we talk to individual brokers and potential investors we
always receive very positive feedback on our trading performance. The one comment that we constantly receive is, “if the company
was bigger then you would receive more coverage and the support from the investing public would be stronger.” The Board of
Directors have discussed this matter numerous times over the last 12 months. How can we continue to grow our group? Clearly the
first step is to increase profits so that investors are prepared to pay a higher price for each share. This is an ongoing challenge.
Secondly we have recently issued shares to purchase assets. This has been a policy over the past 6 years and has worked well for
us, as we have acquired additional revenue streams. Thirdly, we have in the past and we are proposing to you today another share
issue to Directors and Staff. The issue this year is modest however we believe it does fulfil the object of increasing size and market
capitalisation of the Dorchester Group as well as aligning staff and shareholders interests. We are seeking other ways to reward
shareholders and grow the business. Our Chairman has stated that the directors have resolved to issue warrants to shareholders
and I will deal with these later.
Individual Subsidiaries
Consulting Division: The consulting division is now made up of Equity Investment Advisers, Direct Broking and Dorchester Capital.
We have with us today Brett Wright, General Manager of Equity Investment Advisers. Brett is responsible for the general
management of Equity and of course is responsible for the very popular NZ Investor Monthly. Copies of the magazine are available
at the back of the room. We have seen with Equity, an increase in profit in the last 3 or 4 months and a large component of that is
due to the improvement in the quality of the magazine. As shareholders we would welcome your input into articles and aspects of
the magazine you believe we could improve on. Please either raise matters with Brett or myself, if you can think of questions on
articles that we could include in future issues. Also please encourage family and friends to subscribe.
Direct Broking: We have with us today Nigel Wynn, Chris Lambert and David Speight, who are all executive directors of Direct
Broking. Direct Broking had a very tough year to March and the low trading volumes on the New Zealand Stock Exchange certainly
had significant impact on the group. Since March of this year we have seen improvement in revenue and that has been a significant
benefit to the trading of this group. David Speight and Chris Lambert had previously specialised in the fixed interest market,
particularly capital notes and other fixed interest securities. This business has been very good for us recently and we are looking to
continue the platform that we have developed. I would like to draw the shareholders attention to the Direct Broking website which
has been in the past few years an award winning site and continues to offer all the data and information that an informed investor
would want. Dorchester Capital: We have with us today, Mike Jensen and David Koni from Dorchester Capital. This division
arranges capita and finance packages for clients and it continues to produce very good income for the Dorchester group.
Summary: In summary the consulting division had a tough year last year but with the sale of Sterling last year, plus a very good start
to the new year by Equity, Direct and Dorchester Capital indicate this division will contribute significantly to this years result.
Finance Division: The finance division has been the mainstay of the group over the period. We continue to see strong growth in
revenue and in profits from this division and this will be the backbone of our group for the foreseeable future. Greg Pearce is our
General Manager. Greg has managed the overall development of Dorchester Finance and lending books. We are very pleased
with the development of our funding base and the loyalty of our investors, particularly the bowling fraternity and Korean investors.
We have continued to grow niche lending markets and to develop our regional branch network. We have rebranded our Tauranga
branch operation to Dorchester Finance (BOP) Ltd and we have with us today Mr Leigh Neilson, Area Manager. We have also
rebranded our Dunedin operation to Dorchester Finance (SI) Ltd. We have Stephen Reeve with us here today. Both of these
operations have continued their very positive trading performances for the group and they are going from strength to strength under
excellent management of Leigh and Stephen. Our Palmerston North operations will be operating under the names of Lynx Finance
and Senate Finance, effective from the 1st September we will have a combined operation operating under the name of Dorchester
Finance (Central) Ltd. I am pleased to announce that we will open a Dorchester Finance Christchurch office within the next month
and this office will be a start-up. We have with us today Mr Paul Murray, Paul is the manager of our new office and we welcome
Paul to the Dorchester GroupI also advise that we are in the process of opening a Hamilton office. We have always had Senate
Finance representation in Hamilton and we are now upgrading the representation to a full Dorchester office.
Senate Finance: Senate Finance has been a strong performer in the finance division. We have Mark Burn, Chief Executive of
Senate with us today. Senate had a strong year last year a significant contribution to the group and Senate has again started this
year very positively. Our strategy in the finance division has been to continue to diversify our income streams and our asset bases,
both client and also by region. We believe that, although this may not maximise profit in the short term it will give the group the most
solid result over the medium term and long term. The development of regional offices has increased the Dorchester brand and gives
the investing and borrowing public an opportunity to interact with our staff and to continue the very strong progress that we have
made in the finance group over the past 8 years. I know some of our competitors believe it is simply easy to lend money from a
central base however we believe that the New Zealand, economy is such that there are significant regional differences and to obtain
an ongoing return at these levels diversification is the key.
Insurance Division: Stephen Jonas, General Manager and Dave Mackay, General Manager, Sales & Marketing.
Save and Invest showed significant development in the last 12 months and was a star performer in the year to March. The business
is in a steady phase and we are looking for ways in which we can further develop this business. The business has been very sound
for us since acquisition and we see a very positive outlook for this group. The company is best known for its saving and investment
products plus its innovative RAM products. You may have noticed the television campaign we are running on TV3. Based on
current trading we expect another good year for SAI Life.
Other Matters: The Dorchester group has now reached critical mass and we are achieving solid results. The multiple income
streams mean that even in a situation where a problem occurs, such as Sterling last year, the group is sufficiently robust to absorb it
and continue to deliver quality returns to our shareholders.
Shareholder Value: Warrants: I want to now talk in detail about the warrants that the Chairman has announced.
The issue will be 1 warrant for every 4 shares that you own, maturing September 2005. There will be also be 1 warrant for every 4
shares that you own, maturing September 2006. The effect is that you will receive two separate warrants for each 4 shares you
own. The strike price of the warrants is $1.70c and the warrants will be traded on the NZX. We believe that this is of significant
value to all existing shareholders. All shareholders will receive the same, and hence a short form prospectus has now been lodged
at the company’s office. This matter does not require shareholder approval and is a matter that directors are able to approve as all
shareholders are being treated equally. What are the benefits to you as shareholders? If you do nothing and accept the warrants,
what will happen is you will have three different securities which you own and are able to trade. You may choose to sell any of
those 3 securities, i.e. either your head share, your 2005 warrant or your 2006 warrant. You may choose to buy more of any of
these. In short, you as the shareholder simply receive more opportunities to invest and become part of the Dorchester Group. The
strike price will be $1.70c. It is the current share price and hence there are no tax implications for you as shareholders. The major
issue for Dorchester is that we want to grow but we did not want to burden existing shareholders with a cash issue now. We believe
that the warrants will increase the total market capitalisation of the group and move it onto the radar screens of a number of other
investors including institutional investors.
Shareholders of Dorchester: Over time a number of issues have occurred which place various groups in conflict with each other.
There is a constant issue of staff versus director, vs. shareholder, vs. depositor’s interest. At any given point we have to deal with
issues such as how much should we pay investors, how much should we pay our staff, what level of dividends should be declare,
what level of directors fees should be pay. These are issues that we have to deal with every day and I believe that over time we
have consistently been as fair and as balanced as we possibly could. I want to state that I believe your directors have approached
each decision in a professional and ethical manner and have served you well.
Lets Turn to the Future
There is no question that we live in very unpredictable times, there are things occurring on our planet that are very unusual. To add
to that as well, we have a situation where with Swiss government has effectively reduced their interest rates to 0%. The impact of
that is unknown and is new territory. We are seeing the events of the last week in the United States and the ongoing reaction to
that. We must accept that the world is somewhat unsettled at the moment and we must think of Dorchester’s future in terms of that.
Dorchester is influenced by the international markets but not as significantly as other companies are. We are more effected by
domestic matters and the major factors I see are as follows:
• The NZ economy is continuing to show strength. At last years general meeting I stated the economy was misleadingly strong and
I continue to believe so.
• The consumer spending plus the strong property growth has meant the feel good factor of NZ has been extremely strong.
• On top of this we have had retail sales being approximately double NZ’s growth and seemingly to defy logic, although share prices
of our retail stocks are probably indicating that this cycle may be coming to an end.
The major concern for me is the increase in household debt and the numbers that are being bandied around that year on year the
household debt has increased in the vicinity of 10.9%. Of course most people believe that with low interest rates debt is more
affordable and hence increasing the commitment is not such a big issue. I can’t agree with that. I believe that the household debt
has grown to a level that it is of concern. We raised last year that we may seek to interact with some retailers to see if we could
obtain some retail lending. We have made the decision not to do so as the market appears to be over supplied plus we have
concerns about the credit risks that are emerging in this area. We will continue our retail funding in the motor vehicle sector
because of NZ’s transport system is based around the motorcar, cars are effectively a necessity as opposed to a luxury that many
other products are. So in these terms, there are some real risks within the NZ market, particularly in regards to property
development and the high level of personal debt. We should also cast our minds to political aspects. We seem to be forgetting why
our economy is performing well. The simple fact is that we have had an economy which is relatively free and open and hence the
basis of capitalism, i.e. capital flowing to the highest return has meant that our economy has functioned particularly well when many
of the constricted economies have not. We of course have a centre left government, which seems determined to reverse this and
we must understand that this will bring significant impediments into the market and it will reduce the operational efficiency of the
market. Each of these interventions of course will take us back to the times when our economy could not react to major events such
as Asian crisis, September 11 etc, etc. To summarise I see the two major influencers, i.e NZ’s domestic debt levels plus the
significant ongoing shift of our politicians to the left. Both of these aspects put a fast looming clouds on our horizon.
Dorchester’s Future: The first four months of the financial year have shown significant progress for all divisions of the Dorchester
Group. The key factor is our diversification and we are seeing a strong performance from all of the business units. The two issues
that I have listed earlier, of course have to be borne in mind for future profitability however, I believe that the strategy that we have
implemented will continue to increase profitability for our group.
Exciting Developments: You will have noted that the media have been reporting our relationship with 42 Below. In the last week
there was an announcement that 42 Below had appointed Dorchester to consider funding options. We cannot confirm final
recommendations however the Dorchester group will be the adviser to any offer or placement. Mr Geoff Ross is the creator and
founder of the company, he now has two excellent businessmen as partners, Mr Grant Baker and Mr Shane McKillan. These three
have moved the business from a very good concept to being a viable and well-structured business model, which has the
characteristics that I admire. These are:
1. The product is about high quality and as such the brand attracts a premium price.
2. There has been international acceptance of the quality of the vodka product.
3. There are two businessmen who have been very successful in a number of enterprises, who are committed to the success of the
venture..
4. The brand and products are able to build on the strengths of NZ, of its purity, of its freshness and it’s a premium image that NZ
has been able to generate internationally through other products such as wine, fashion, food.
The Dorchester group is very fortunate to be able to receive a mandate of this quality. We will advise you within 2 weeks as to the
result and any benefits to the Dorchester group.
Summary: Ladies and Gentlemen, in summary – it has been a very interesting 12 months since our last general meeting. The
group is in better heart than it has ever been. We as directors and staff have attempted to give you returns that reward your
support. We hope that the announcements today, including:-
• the strength of our trading in the first 4 months,
• the announcement of the exciting new warrants plus
• the involvement with 42 Below will show that we are growing and developing your company.
You have my commitment that over the next 12 months your directors and staff will be focussed on ways in which we can continue
to develop our group and reward you for your support. Last year we had a tough year and turned in increased profits. This year we
intend to do the better. We of course need your support. Please look at all of our products and services. Please use as many as
possible and recommend them to your friends and family. Ladies and Gentlemen, I enjoy my job and I really appreciate the support
I have had from you over time. I say this sincerely; it is an honour to lead your company.
CDL HOTELS NEW ZEALAND LIMITED
CDL Hotels New Zealand Limited (CDL) announces that Quality Hotels Limited (a wholly owned subsidiary of CDL’s majority
controlled subsidiary, Quantum Limited) has entered into an agreement to terminate its master franchise in New Zealand to operate
under the “Quality Hotel” brand.
The termination of the agreement with Choice Hotels International Inc, takes effect immediately but with a transition period of up to 6
months. CDL is rebranding existing “Quality” hotels to its new re established brand “Kingsgate” with the rebranding to take place
progressively over the next few months. In addition to the hotels owned or controlled by Quantum, existing sub franchisees will also
be joining the new brand group.
AMP LIMITED
AMP Limited has provided a Change of Director’s Interest Notice in respect of Meredith Hellicar.
No. of securities held after change: 13,686 Ordinary Shares held in the name of David Latrobe Foster & Meredith Hellicar Foster
ATF Kinnoul Super Fund.
AMP Limited has provided a Change of Director’s Interest Notice in respect of Roger Patrick Handley
Number of sercurities held after change:
- 1,600 Ordinary Shares held in the name of Crown Advisory Pty Limited ATF R.P. Handley & D.K. Handley;
- 4,472 AMP Reset Preferred Securities held in the name of Crown Advisory Pty Limited ATF R.P. Handley & D.K. Handley; and
- 2,628 Ordinary Shares held in the name of Crown Advisory Pty Limited ATF Superannuation Fund A/C.
AMP Limited has provided a Change of Director’s Interest Notice in respect of Richard John Grellman
Number of securities held after change: 10,149 ordinary shares.
AMP Limited has provided a Change of Director’s Interest Notice in respect of The Right Honourable Victor Miles George Aldous
Baron Killearn
Number of securities held after change:
- 13,840 Ordinary Shares held in the name of National Nominees Limited;
- 2,649 shares held in the name of the Director.
AMP Limited has provided a Change of Director’s Interest Notice in respect of Ian Andrew Renard
- 8,771 Ordinary Shares held in the name of the Director
- 50 AMP Income Securities held in the name of the Director.
AMP Limited has provided a Change of Director’s Interest Notice in respect of Ian Sir Malcom Bates
Number of securities held after change:
- 7,649 Ordinary Shares held in the name of the Director
AMP Limited has provided a Change of Director’s Interest Notice in respect of Peter John Wilcox
Number of securities held after change:
- 37,525 Ordinary Shares in the name of
Peter John Willcox + Mrs Suzanne Elizabeth Willcox ATF Peter John Willcox Superannuation Fund;
- 4,785 Ordinary Shares in the name of the Director;
- 2,500 AMP Income Securities in the name of Peter John Willcox + Mrs Suzanne Elizabeth Willcox ATF Peter John Willcox
Superannuation Fund; and
- 1,000 AMP Reset Preferred Securities in the name of Peter John Willcox + Mrs Suzanne Elizabeth Willcox ATF Peter John Willcox
Superannuation Fund.
CAPRAL ALUMINIUM LIMITED
Capral Aluminium Limited has provided an Analyst Presentation relating to the Half Year Results announced earlier today.

								
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