By Phil Boeyen, ShareChat Business News Editor
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Wednesday 6th March 2002 |
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The result for the first half ended December is a huge increase on the previous year's interim result of $542,000. Sales revenue was $12.19 million compared with $1.87 million the previous year.
Executive chairman, Graeme Wong, says SCL shareholders can be well satisfied that investment objectives have been, or are in the process of being, realised on a number of projects.
The company's investment in Tasman Agriculture has proved particularly lucrative.
It purchased 21.75% of the former listed dairy farm company last June for around $16 million and has received $17.5 million since liquidation plus 14.6 million shares in a new company, secondary-listed Tasman Farms (TFL).
Mr Wong says stake in Tasman Farms, which holds all of the Tasmanian farming interests previously resident within Tas Ag, is now being carried at valuation of 44 cents per share although the net asset backing is 61 cents per share.
"We believe that TFL's book value is conservative even given the recent fall in dairy commodity prices on the world markets.
"The dairy farms are held at around A$6,500/Ha and this compares with the recent sale of Tas Ag's South Island farms at NZ$17,000-$18,000/Ha."
Mr Wong says at the current carrying price there is substantial upside potential in TFL, notwithstanding cyclical moves in dairy prices.
Among its other investments the company reports around 20% of section titles on Stage 1b of its 42%-owned Omaha Beach development have been sold and all of its 100%-owned Frankton Road apartments in Queenstown have been settled.
Construction of Stage 2 of the 30%-owned Supa Centa north of Christchurch is reported to be well under way and work is also progressing on the plans for the Pegasus Bay town.
Mr Wong says since his last report in September the mussel industry has been turned upside down by the government's moratorium on new marine farms although the application made by Clifford Bay Marine Farms is not affected.
SCL owns 22% of the mussel company and says shareholders met recently to approve raising more capital to fund the research programme and provide working capital for general corporate purposes.
However Mr Wong reports that the hatchery at Lake Grassmere has ceased operations because of contamination from naturally occurring organisms.
"All attempts to isolate this organism and remove it as a source of contamination, including the efforts of several outside scientists, expert in this particular field, proved fruitless.
"Consequently, the decision was made in conjunction with the 50% joint venture partner to terminate spat nursery activities at the hatchery. The cost of this loss to Southern Capital will end up around $130,000 if no alternative use can be found for the facility."
Southern Capital says it is currently evaluating a number of further investment opportunities and "is hopeful that at least one will eventuate and provide excellent shareholder value gains."
The company's other investments include a 50% share in Goldsworthy Bay near Auckland which it plans to subdivide into 'country living' estates, plus 10.1% of listed biotech Blis Technologies (NZSE: BLT) and 8.32% of unlisted milk company A2 Corp (ATM).
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