Perth's Second Board Blues

Sydney Morning Herald

Monday October 3, 1988

By MARK DRUMMOND

PERTH: Perth's second board market has plunged $118 million into the red in the last financial year, with more than half its listings still to lodge trading reports.

Thirty of the 48 companies to have lodged trading reports for the year to June 30 posted bottom line losses totalling $118 million, with the remaining 18 companies recording combined profits of just $5.4 million.

The biggest losers included the sharemarket crash-ravaged Trans-Pacific Investment Corp ($34.98 million), Brian Rule's Rule Group ($9.7 million), Dochlyn ($13 million), Lindsay Sanford's Mining Technology ($4.8 million), Chequecard ($6.12 million), Skin Science ($4.3 million) and artificial emerald developer Equity Finance ($4.41 million).

The deadline for lodging trading reports for the year was last Friday, but many companies have been granted a 14-day extension by the Perth Stock Exchange.

Others to lose more than $1 million during the period included Castlefield, the State Government-backed Small Business Development Co, Newcap Holdings, Uni-Lab Telecommunications, Foodchain, Westvest, Breton Bay Land, stamp marketer International Philatelic, DGA Australia, Collins Motor and Valet International.

Chequecard's $6.12 million loss, which follows a $1.5 million deficit in the previous year, has prompted an undisclosed "reconstruction" of the company's finances by major backer and shareholder Rothwells.

Trading losses among the 48 companies totalled $57.3 million for the 12 months and extraordinary losses - chiefly massive write-downs on the book values of technology and listed securities - totalled $60.7 million.

The disastrous results have highlighted the financial crisis of the second board market, which has been abandoned by brokers, bankers, institutions and investors since last year's sharemarket crash.

Many companies floated with initial capital raisings of just $1 million, have limited or no cashflow, and little hope of raising additional funds.

The profit-makers ranged from an $8,000 surplus by Telecomputing Holdings to $1.71 million by Mr C.K. Yap's industrial and finance group Sunmark Corp.

Last month, the Melbourne-based Australian Second Board Consultants called for the abolition of the second board market concept in the wake of the Australian stock Exchange's decision to include second board stocks on the national SEATS screen trading system from October 17.

The National Companies and Securities Commission recently ruled against plans by Perth broker Eyres Reed McIntosh to establish a second board in Perth for small speculative mining companies.

A total of 31 Perth second board companies have graduated to the main board since the junior market concept was pioneered in Perth in 1984.

Twenty companies are now suspended or have been de-listed, mainly with liquidators or receivers appointed.