Council firms lose $300,000 in six months

Ruapehu Bulletin, Volume 14, Issue 677, 11 March 1997, Page 2

Council firms lose $300,000 in six months

From page 1 financial year, ended 30 June 1997, with dividends being generated for the 1997/98 financial year and onwards. Reasons given for hopes for a better future were: • Directors with contracting experience had been appointed to the boards of the companies giving a much better insight into the nature of the business. • The appointment of a new General Manager experienced in the management of change and with wide experience of all aspects of the companies' business. • A commitment from staff and management at all levels to roll up their sleeves and really make the business work. Mr Kirton said the council' s holding company RDC Holdings Ltd is keeping a close watch on the situation and its board has been working closely with the boards of the two operating companies to effect change and bring the companies back to profitability. One option that is currently being considered is to merge the two

companies as from July, thus making savings in administration and compli- _ ance costs. The council may also look at ways of minimising its investment risk by such methods as share buy-back or selling some proportion of ' the shareholding. Mr Kirton said the council originally set up RCL to ensure that there was competitive tendering for roading and other works within the district as otherwise, because of remoteness there was a strong pos-

sibility that one or two major players would dominate the field with a consequent increase in costs to RDC. "This reason still holds good today and the position . has been strengthened by the addition of a good long term metal source," he said. "Whilst profitability over the last year has not been good, several years of highly competitive tendering have been achieved and the RCL has doubled its net worth to the council in addition to paying over substantial dividends."