Top Performer Profiles

Friday 8th December 2000

BAYCORP HOLDINGS

Keith McLaughlin

Baycorp Holdings has consistently rated among the country's best performing shares and this year is the only company to be awarded a gold medal in the NBR L.E.K. Shareholder Scorecard.

In the past year it improved shareholder returns by 130.3%, while its performance for three years was 75.7%, for five years 85.7% and for ten years 69.7% per year.

Managing director Keith McLaughlin (pictured) said the past year had been significant because the company had expanded into Australia and Asia while achieving record returns from its domestic businesses.

"The company strategy revolves around growth. Baycorp's strategy is to grow the business, grow profits and grow shareholder wealth. There's no secret about that," he said.

Baycorp was succeeding internationally because its sophisticated technology and systems were more advanced than potential competitors.

One challenge facing the company was managing the intense pressures on people that occur when a company is growing quickly. Baycorp has responded by enlarging the executive team, which was further assisting expansion.

Although the company is seen as a technology company, Mr McLaughlin insists the company merely uses technology to help it grow.

"Technology is a tool for making money and we will continue to use this tool to help us achieve the same sort of growth that we have achieved in the past."

THE WAREHOUSE GROUP

Greg Muir

The Ware-house Group is the sole silver medal winner in this year's Share-holder Scorecard. It produced a return to share-holders in the past year of 55.2% while its three-year return was 43.4% and its five-year return was 24% per year.

Chief operating officer Greg Muir, who is due to become chief executive in January when he succeeds founder Stephen Tindall, said growth was being driven by continual increases in new Warehouse outlets. The company had also positioned itself for international expansion through the recent purchase of Australian retail chains Crazy Clint's and Silly Solly's.

"New Zealand will continue to dominate earnings for the next two years while we focus on building the capacity of the Australian business to deliver tangible rewards after 2002," he said.

A strategy of gaining operating leverage by spreading costs over a bigger sales volume was paying off, although the companyís sheer size and market dominance meant its performance was influenced by movements in the economy.

However, Mr Muir is optimistic about the ability of the group to continue growing.

"The continued rollout of Warehouse and Warehouse Stationery stores will consolidate our position in New Zealand and provide earnings growth for the next few years. The move into Australia provides a significant growth opportunity for the medium to longer term."

DORCHESTER PACIFIC

Brent King

Dorchester Pacific has been one of the best performing com-panies outside the Top 40 in the past year, with a return of 74.9%. Over three years it has produced a benefit to shareholders of 59.2% and over five years has returned 29.1% per year.

Managing director Brent King (pictured) said these performances were the result of a growth strategy implemented several years ago.

"We sought to develop a distinctive New Zealand owned and managed financial services group able to offer a number of niche products to its clients," he said.

The company aims to grow by 35% a year and acquisitions form a major part of this strategy. However, Mr King is conscious that all acquisitions make a positive contribution.

"Our five year strategy has moved us to a point where our return on equity is in the top echelon of New Zealand companies and is sustainable. Our only concern is the health of the New Zealand economy, particularly relating to the incidence of bad debts and the impact on margins," he said.

The company is responding by finding under served niche markets and ensuring that its pricing is in keeping with the level of risk.

"Our challenge ahead is to ensure that we stay ahead of the pack and we continue to offer a broad range of financial services that are attractive to the New Zealand market."

MR CHIPS HOLDINGS

Jon Davison

Although one of the smaller companies on the New Zealand Stock Exchange, Mr Chips Holdings has delivered one of the largest returns to share holders this year.

The company has produced a 42.8% return for the past year, while its three-year result was 21.9% and its five-year return was 27.2% per year.

Chief executive Jon Davison said increased export sales and lower costs had boosted the companyís profitability, and this increasingly had been recognised in its share price.

"Last year we implemented a strategy of growth from increased export sales and expansion of domestic distribution channels. Performance has exceeded expectations, particularly with export sales and efficiencies gained from operating at capacity," he said.

This strategy would be maintained in the year ahead and he believes there is potential for considerably more growth.

This could not be achieved without some costs, however, and the company intended making installing new equipment early next year.

Mr Davison said the company faced challenges in maintaining margins given an intensely competitive market and rising costs for input costs such as packaging, fuel and freight. Managing the logistical demands that came from increased sales was also an issue.

However, the company saw considerable opportunity for growth by expanding to meet increased demand, especially from international markets.

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