Business and Commerce News

The quarterly import trend has increased 14.2 percent since the September 2003 quarter, after being flat since the December 2000 quarter. The quarterly value of the New Zealand dollar, measured by the trade weighted index, fell 4.4 percent during the June 2004 quarter. This follows a 40.0 percent rise since the December 2000 quarter.

Intermediate goods were the main contributor to the rise in the seasonally adjusted value of imports for the June 2004 quarter, with an increase of 13.9 percent. Crude oil; iron and steel; and rubber were the main contributors. Diesel, jet fuel and partly refined petroleum; and electrical, office and other machinery also recorded increases during the quarter.

The quarterly value of capital transport equipment fell 55.8 percent, after rising 114.0 percent over the previous four quarters. Large aircraft were the main contributor to the fall in this category, with a value of $26 million in the June 2004 quarter, compared with $408 million in the previous quarter. With large aircraft excluded, this category would be 0.8 percent higher than the March 2004 quarter.

The provisional value of merchandise imports for the month of June 2004 is $3,101 million, up $605 million or 24.3 percent compared with June 2003. The main contributors to the higher value of imports for this month were petroleum and crude oil; machinery and equipment; and armoured motor vehicles. The estimated value of merchandise exports for June 2004 is $2,702 million, resulting in an estimated trade deficit of $399 million or 14.8 percent of exports.

Detailed exports information will be released on 5 August 2004.

Earnings per share for the same period amounted to 6.88cps compared to 6.58cps for the corresponding half year based on a weighted average number of shares on issue at the time.

The EBITDA, or cash earnings before interest and tax, for the half-year was $1.96 million, an increase of 53 per cent over the 2003 half-year figure.

Confidence in the company that won the large business sector award at the Environment Bay of Plenty Sustainable Business Awards in June is reflected in the current strong growth in its share price.

Announcing the result in his half-yearly report, Comvita chairman and recent recipient of the New Zealand Order of Merit, Bill Bracks, says the net profit was 7.5 per cent ahead of projections.

“It was a particularly satisfying result considering the fluctuating trading conditions generated by such events as exchange rates and international terrorism impacting on tourism,” he says.

“Although the 21 per cent increase in revenue was less than forecast, Comvita enjoyed better margins than expected, significant foreign exchange gains and reduced costs to deliver better than expected net earnings.”

Comvita’s Board has declared an interim dividend of 2cps (ex date August 13) payable on August 27. In line with expectations, this represents 38 per cent of net profit after tax. Full imputation credits will apply to the dividend. The Dividend Reinvestment Plan will be reinstated for the upcoming interim dividend after being suspended for the 2003 year final dividend payment during March, 2004. The DRP strike price is calculated at 95 per cent of the average price traded during the 60 days preceding the record date.

Cashflow generated during the six months was a deficit of $1.68 million – a result of increases in inventory and accounts receivable which in turn resulted from a record sales month in June.

Comvita’s strong result follows the successful completion on May 17 of an SPO (Subsequent Public Offering) of 3,658,537 shares. The SPO was managed by ABN AMRO Craigs and attracted wide interest, increasing the shareholder base from 255 to approximately 900.

The company issued a prospectus in April, projecting earnings of $1.58 million after tax for the full year. The Board remains optimistic that the prospectus forecasts will be met.

Bracks says the company’s move onto the NZAX proved timely and Comvita’s share price has seen strong growth since the SPO.

“The volume of shares trading since then has increased by more than 300 per cent. The main purpose of the capital raising was to strengthen the balance sheet, with the resulting shareholders funds ratio increasing from 33 per cent to 65 per cent.

“This positions the company well for growth in the short to medium term, with the Board actively seeking opportunities which are a strategic fit for the company.”

Acquisition of the Apimed medical honey business is yet to produce tangible benefits for shareholders. While Apimed continues to move toward commercial success, progress has been slowed by regulatory delays and increased operational and quality disciplines required for medical devices. Commercial returns are expected to show steady growth from next year.

Comvita’s UK partner, Brightwake Limited, successfully launched a manuka honey wound dressing in March. It has drug tariff approval through the National Health Service and is being successfully marketed to hospitals and pharmacies in the UK.

A new research programme between Comvita and Crop & Food Research Limited gained support from the Foundation for Research Science and Technology, and the acquisition of Bee & Herbal Limited has given Comvita greater operational flexibility in the procurement, storage and supply of its flag-bearer product, manuka honey.

Although beekeeper production of manuka honey last season was below average, Comvita’s policy of holding higher stocks will enable it to take advantage of increasing offshore demand.

Despite challenging domestic conditions in the first six months of 2004 with Asian tourism numbers down and a strong dollar impacting on purchasing power, strong growth in exports to Hong Kong, Taiwan and Japan demonstrated the success of Comvita’s export activity. Offshore highlights include securing the first order from China, where product will be retailed through duty free outlets, and opening a new office in Taiwan.

Bracks says while the general outlook remains fairly volatile, Comvita is confident of meeting its profit targets for the year.

“Exports to key markets continue to grow and new business development with Apimed wound dressings will continue to broaden our base.”

As part of the new Unbundled BitStream Service (UBS) to be launched in September, Telecom will contribute matched marketing funds of up to $15,000 to ISPs that meet certain criteria to assist with broadband promotions.

The new initiative follows industry consultation on UBS which will enable ISPs to develop and offer customers their own range of broadband plans including setting caps, overage rates and all-you-can-eat options.

During the past six weeks Telecom Wholesale has been meeting with ISPs and other carriers to outline the service and receive their feedback.

Other key changes include a 30 percent reduction in the cost of transferring existing customers to new services (churn fee) from $150 per customer to $101.75 and $105.50 for residential and business customers, respectively.

To further reduce cost, ISPs will now be able to purchase backhaul on a per user basis. Previously it was proposed ISPs would establish a handover point and two megabyte connection in each of the up to 33 areas where customers are based.

The point at which discount rates apply have been reduced from 200 new customers a month to 150 customers with a further discount for those ISPs who have more than 500 new customers a month.

Telecom Wholesale General Manager Tim Lusk said the consultation had resulted in a number of detailed and constructive suggestions to improve the service.

“The UBS, Unbundled Partial Circuits (UPC) and new Wholesale Service Agreements (WSA) will provide the base for Telecom’s new relationship with wholesale customers,” he said.

The new agreements will replace the existing partnering relationships where ISPs received a commission on their sale of Telecom services.

“We are looking forward to working with ISPs to develop their own products and services which will ultimately drive the uptake of broadband in New Zealand.”

The next step in the process will be to select trial partners for the new service, after which it will be commercially launched in September.

During the year, full import container volumes* rose 3% to 244,397 and full export container volumes were down 1% to 174,467, compared with the 12 months to end-June 2003. Auckland is a well-balanced port, with a 58:42 ratio total full import container volumes to total full export container volumes.

For the month of June, full import and full export container volumes were up 12% and 2% respectively, and total container volumes were up 3%, compared with June 2003.

Transhipments** increased by 8% for the 12 months to end-June 2004 and were up 2% for the month of June 2004.

Containers comprise approximately 70% of Ports of Auckland’s throughput and about 90% of business activity.

Breakbulk volumes at Ports of Auckland’s conventional wharves were unchanged at 4.6 million tonnes for the 12 months to end-June 2004.

Imported vehicles comprise a significant part of breakbulk volumes. For the 12 months to end-June 2004, vehicle volumes totalled 189,770, including new and used cars and large vehicles such as trucks and machinery. This is compared with 186,000 imported vehicles in 2002-2003.

For the month of June 2004, breakbulk volumes were down 15% on June 2003. Monthly breakbulk volumes can fluctuate significantly due to the arrival dates of individual ships carrying large loads.

* Container volumes are measured in TEUs (20-foot equivalent units – or the size of a standard 20-foot container).

** Transhipment containers are discharged at Auckland and reshipped on another vessel to international or other New Zealand destinations.

Ports of Auckland economic impact

Economic activity dependent on or facilitated by Ports of Auckland is worth over $10.6 billion annually in value added terms to the regional economy, according to an economic impact assessment of Ports of Auckland, conducted in 2000 by strategic consultants McDermott Fairgray Group. This amounts to 32% of the total economic activity and sustains about 173,000 in the region.

On a national level, the trade activity facilitated by or dependent on Ports of Auckland amounts to $13.2 billion in value added in the New Zealand economy. This activity represents about 13% of the country’s gross domestic product (GDP) and sustains nearly 210,000 jobs.

Bondor is involved in the manufacture of polystyrene blocks and sheets, polystyrene based architectural claddings and polystyrene insulated panels for use in temperature controlled structures.

Long International also manufactures polystyrene blocks and sheets, polystyrene based architectural claddings and polystyrene based insulated panels.

Chair Paula Rebstock said that the Commission could not be satisfied that the proposed acquisition would not have, nor be likely to have, the effect of substantially lessening competition in the South Island market for insulated panels.

Consumer Retail Packs with best before dates of APR 05 28, APR 05 29, and APR 05 located on the top of the box for the following pack sizes:

· 450g Kellogg’s Coco Pops Breakfast Cereal

· 785g Kellogg’s Coco Pops Breakfast Cereal

· 1.065kg Kellogg’s Coco Pops Breakfast Cereal

· 1.26kg Kellogg’s Coco Pops Breakfast Cereal

· 300g Kellogg’s Rice Bubbles Breakfast Cereal

· 530g Kellogg’s Rice Bubbles Breakfast Cereal

· 850g Kellogg’s Rice Bubbles Breakfast Cereal

Food Service Catering Packs with best before dates of 28 Jan 05, 29 Jan 05 and 30 Jan 05 located on the side of the carton for the following pack sizes:

· 6 x 1kg Kater Pak Coco Pops Breakfast Cereal

· 6 x 1kg Kater Pak Rice Bubbles Breakfast Cereal

IMPORTANT: This recall applies only to the products identified above. No other Kellogg products are affected by this recall.

Kellogg asks anyone with family and friends who may have purchased any of these products to contact them in case they may not be aware of this recall.

Consumers are asked to return any of the recalled packs to the store of purchase for a full refund or call the Kellogg Customer Contact Centre on 1800 000 474 in Australia and 0800 881 889 in New Zealand for further information or advice.

The brands include the ‘Fluffy brand’ for fabric softener, wool wash and tumble-dryer pads; the ‘Hurricane’ brand for laundry detergent and dishwashing liquid; the ‘Castle’ brand for laundry detergent and dishwashing liquid; and the ‘Love ‘n Care’ brand for laundry detergents.

Commission Chair Paula Rebstock said the Commission was satisfied that the proposed acquisition would not have, nor would be likely to have, the effect of substantially lessening competition in the New Zealand markets for the manufacture and supply of laundry detergent, dishwashing detergent, and fabric softener.

Director of Fair Trading Deborah Battell said the Commission was concerned about misleading advertising by a number of small phone card operators.

“The Commission is aware that there may be up to 50 different phone cards on the market, however the recurrent issues seem to largely relate to those deals advertised by some of the smaller operators.”

Ms Battell said that the issues the Commission’s inquiries have uncovered include:

. failure to clearly advertise prices as GST-exclusive;

. failure to disclose that prices are obtainable only to a limited number of main centres in the advertised countries (other centres attract much higher prices than those advertised);

. failure to disclose that cards must be fully used within a particular time period;

. additional per minute fees for calls made using the 0800 ‘toll-free’ numbers necessary to connect to the phone card supplier’s network;

. additional per minute fees for calling from or to a mobile phone;

. additional minutes used in connecting to various networks and relays; and

. phone card companies not being contactable on the advertised help lines.

“The overall effect of these issues is that in some cases calls are costing more than represented.

“In one recent example, a deal offering national calls for six cents per minute, could actually have cost the caller 24 cents per minute, when additional charges for using an 0800 ‘toll-free’ number and GST were added,” Ms Battell said.

“Because some companies are failing to provide consumers with accurate information, many people think they are getting a much better deal than they actually end up with.

“People should check the cards very carefully before buying them and ensure they read all the fine print,” she said

“Even then, the Commission is concerned that consumers may not avoid all potential problems. This is because of the numerous undisclosed conditions associated with some of the cards and the lack of customer assistance provided by a number of the phone companies.”