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Tru-Test answers 'naive' critics

Nick Stride

Friday 14th November 2003

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Criticism of Tru-Test's financial performance over the past two years is "simplistic and naive", managing director Des Scott said yesterday.

Scott was responding to reports institutional shareholders were "in revolt" over the company's failure to meet forecasts accompanying a 2001 share issue. And over the postponement of an NZX listing.

The 2001 information memorandum predicted August 2002-year earnings before interest, tax, depreciation and amortisation of $18.4 millio.

The company made only $11.8 million.

But Scott said the shortfall was down to factors management couldn't control.

"We went back and reconciled the [not yet released] August 2003 accounts to the information memorandum.

"Quite simply, the exchange rate then was 41USc, now it's 62USc.

"No company in this country could accommodate that change and come out in the same shape as it went in."

The New Zealand agricultural environment had also taken a dive.

The rural merchandising arms of companies which sell Tru-Test equipment, such as Wrightson and Pyne Gould Guinness, had this year reported tough conditions.

"In Australia we had the worst drought in 108 years last year. The US economy since September 2001 has stopped and done a U-turn," Mr Scott said.

"It's simplistic and naive to criticise the company's performance without taking all these things into account."

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