Topic: Case study review

Order Description

1. What were the factors that led to the decline and fall of Horwood Bagshaw? Which was the most important?
2. Horwood Bagshaw got into trouble because of circumstances within, or beyond, its managers’ control?
3. The prime causes of their problems were external, elaborate how more effective managers have seen these coming and taken measures to ameliorate their impact?
4. What was the extent of the problems caused by management error, outline where in the management hierarchy did the prime responsibility rest?
5. What were the critical decisions where the wrong path was chosen, and why was the wrong approach selected?
6. Do you agree or disagree with the rejection of John Shearer’s takeover bid for Horwood Bagshaw in 1972 was a sensible option?
7. Was FAI justified in continuing to provide financial support for the company from 1981 to 1987?

Key areas for focus within the report.

1. Identify key problems area with Horwood Bagshaw organisation
2. Analyse the current asset performance and capacity of the Horwood Bagshaw organisation
3. Evaluate key business targets for Horwood Bagshaw during 1981 to 1987
4. Manage financial risk within the organisation
5. Monitoring financial projection

Please also refer

Brigham, E. & Houston, J . (2004), Fundamentals of Financial Management, 10th ed., Mason, Ohio : Thomson/South-Western.

HORWOOD  BAGSHA W
Cop y ri ght (C) 1990 by  Ro be rt S. Davie a nd Walte r  J.  Stamm.

The Age of November 2 2 , 1989 re ported that, just four  days  prio r to the South Australian state
electio n s to be hel d on  November 24 , the big insuranc e  com pany FAI ha d take n lega l action to
recover $4.55 million from the State Government.  FAI claim ed that the SA Gove rnment had, in 1983,
guaranteed an  advance of $2 million  made by FAI to the agricultural machin er y compa n y, Horwood
Bagsh a w.  It also claime d interest and costs.
Early background
Joh n  S. Bagshaw, who h ad  been traine d in England as  a mill wrig ht and mechan ical en gine er, arrived
in the Colo ny of South Australia in 1838, two years after the first white settlement .  The following year,
he e s tabli s hed  a  workshop  in Ad elaide   and  set ab out the m anufac tu re  of ag ri cult ural  implem en ts with
whic h, over t he years, he  was to have cons id erab le success, bot h in desi gn a nd in manu fa cture.  His
son, John A. Bags haw, who eve n tually  su cceeded   hi m in the busine ss, was  also  an  inn o vator; the
Bagsh a w bu siness continued to pro s per under his guidan ce.
Josep h   Horwood came to South Au stralia, a s  a  c h ild , with   h is par e n ts  in 18 48.  H e   w or ked as  a
mining engi neer in  bo th  Victoria an d  South Aust ra lia  befo r e establishing  hi mself  as  a consulting
engineer an d machin ery dealer in Adel aide and, in 1912, foundi ng J H Horwood and Company.   A
son, Hora ce  Horwo od, joi ned hi s father ‘s com pany  until, with th e formatio n  of Ho rwood Bagsh a w
Limited, he  b e cam e  a n  em ployee of the  new compa ny and, in  192 4, a di re ctor.  In 1927, the  company
introduced the first head er-har vester  into South Australia.
The Sheare r brothe rs, John  and David, who had arrived in the Col ony with their parents in 18 52, were
also  to be come involved i n  the man u fa cture of  agri c ultural machinery, In  187 7, as  partners,  they se t
up busine ss at Mannum,  a town on the River Murray  some fifty miles east of Adelaide, and began the
manufac ture  of agri cultur al equip men t.  When,  in 19 10,the partne rship   was di ssolve d, David
contin ued  to operate  the Mannu m works while Jo hn   took ove r  the Kilkenny (Adelaide) factory whi c h
had been e s tablished six years earlier.
The problem  years
By 1972, Horwoo d Bagsh a w was operating from two fa ctories, o ne in the inn e r Adelaide  suburb of
Mile End and  the other, a   few k ilometres f r om the city centre,  in the  suburb of Edward stown; It
produced a  range, whic h  needed upgrading, of tillage equi pme n t and headers and h ad also, since the
late 1960€² s, diversified into mining equipment whi c h was pr oduced at Edward stown.  It was also in
1972 that the  David Shea rer co mpa n y, whi c h produced se edin g  e quipmen t and headers, wa s plac ed
in receivershi p .
Mannum had  a population, at that time, of about two   thousand; th e possibility of the loss of its only
major indu stry was a seri ou s  problem  for th e to wn  and one whic h co uld  not be ignored  by the State
Government. Government was  keen to find an ap propriate buy er and to  facilitate the  purchase,
Horwo od Bagsh a w al so had a p r oble m involving th e Gove rnment; its fa ctory  site at Mile End  was
about to be a c quired to all o w for the construc tion of  a freeway interchan ge,
A win/win situation seem ed  likely, in that Horwood Bagsh a w could use th e m oney from its Mile End
sale to buy the David Shearer  bu sine ss in Mann um, Governm ent would ge t its freeway interchan ge
and solve the Mannum pr ob lem; the townshi p  woul d re tain its majo r indu stry and the employ ment in
it; and Horwo od Bags ha w would gain a  factory (i n ex cha nge fo r one), g a in a  product ra nge  simila r to
its own, b u t po ssibly in sli ghtly better sh ape, and gain  the gratitude  of Governm ent.  The arrangement
proc eeded.   Horwood Bagsha w moved its Mile  End operatio n s to Mannum but cont inued its
manufac turi ng  activities  at Edwa rd stown .  The main  st ream  of agri cultural e quip ment wa s pr oduced at
H o rwood- Bagsh aw  ca se    1
Mannum whil e at Edwardstown the com pany manufa c tu re d some  agri c ultu ral e quipmen t and all of its
mining equipment, as well as en gagi ng i n  some g ene ral engin eeri ng work.
The appointment of a new  managing director, M r  J Cart er, in 1972  led to a ch ange of emphasis in the
company’ s  operations  with  much grea ter attention being p a id  to importati on and le ss to local
manufac ture.  This situ ation continu ed un til 197 4, when Ca rter  was replaced as managing director by
Mr D Hill.
With the  app ointment of Hill, the emphas is once agai n turn ed to manufac turin g   as h e  trie d to  pull the
company back onto a sound base.   Like his pred ecessor, though,  he still had to contend with the
problems of two wi dely separated factories and a la ck of sufficient ca pital in the busine ss.  The
problems fa ci ng Horwo od Bagsh a w were well know n in the  indust ry; the pla n t  at both factories was
generally run  down, the ve nture i n to min ing equipme nt  was  not pr oduci ng the expected results an d at
the root of all the problems was  the la ck of capital.  Knowing the probl ems b u t reco gnising  some
inherent  pote n tial in cluding acce ss to ne w pr od uc ts  i n hea ders and ha rveste rs, John S hea re r  made a
tak eover offer; this  was rejected.
After four years of  effort, Hill, who had experienced problems with the Board,  was replaced as
managing director in 1 978 .  The n e w MD lasted about a yea r  be fore h e , too  was replac ed by Mr G
Sanford- Morg an who  served from  19 79  until 1982, Sanford €“ Morgan expanded the  role  of the
company by ing  ei ght retail ou tlets an d undertaking  the agg re ssive marketing, but not
manufac ture, of a  ran ge of tracto rs a nd increa sing  su bsta ntially the rang e of  impo rted a gr icultu ral
equipment to the point where impo rts  comprised so me forty per cent of the to tal sales of agricultural
equipment.  Efforts were also dire cted  at turning around the performan c e of the mining e qu ipment
area a s  this h ad continue d to be a major  disa ppointment.
The invol ve ment of FAI
By 1980, lack of an a deq uate capital b a se, a  seriou s problem th rough out the 1970€²s, had be coming
critical.  New  capital h ad to be found.
In May, 1981, FAI agreed to contrib u te $1.2 million of ordina ry capital in return  for effective control of
the Board of  Dire ctor s, Ei gh teen mo nths later it invest ed a furthe r  $3  million in  preferen ce shares a nd,
in 1983, provided a thre e year loan  of $2 million agai nst a  gua rant ee from the State Government.  As
part of that agree ment, Horwood Bagshaw was to provide a guarante ed minimum  level of
employme nt at Mannum.
In 1982 th rou gh the influe nce  of FAI, Mr B McDo na ld  was appo inted as  the new mana ging  director
with a brie f to tidy up the affairs of th e com pany  and get it back on its feet.  By disenta ngling the
company from its chroni cally unhealthy mining equipment ac tivities, McDonald was able to  stem one
sou r ce of fun d s leak age.  It also allowed him to transfer all ma nufa c turin g  op erat ions to Ma nnum and,
by 1984, sell  the company’ s  site at Edward stown.
Ration alisation of the company’s marke ting approa ch was attempt ed on two se parate o ccasi ons.  In
1983, agree ment was  re ach ed, with Napier Gras slan ds, fo r  Horwo od Bagsh a w to ma rket  NG
products  in southe rn Au stralia including that part of New South Wale s south of the River
Murrumbidge e while Napier  Gr assland s  would market   HB  products in th e no rth.   The sch e me laste d
only two yea rs, during  whic h time th e  Horwood  Ba gshaw market in  no rthern and ce ntral New South
Wales was  seriou sly and adversely affected.
In 1985, with  encouragem ent and ad vice from the Depa rtme nt of State Developmen t, there  was  a
further attem p t to rationali s e  Horwood   Bagsh a w’s ma rk eting and  to dispo s e of the costly an d la rgely
ineffective  reta il outlet s .  I n volving retail rep r es en tation of  Horwo od Bags ha w  by anoth e r company,
purchas e  by that comp an y of the Horwo od Bagsh a w retail outlets a n d a prod uc t swap of
compl e mentar y lines between the two groups, it also foundered .
Two  types of head ers  are in use  in   Australia, tho s e  whic h ha ve their o w n motive p o wer  (Self
Propelled Headers) and, u n ique to Au st ralia, tho s e  which  req u ire  an external p r ime m o ver  (tracto r)
H o rwood- Bagsh aw  ca se    2
and  which are refe rred to  as Po wer Ta ke Off Header s.  Fo r a typical  self-prop elled unit the  cost is o f
the order of  $135,000 while a po wer ta ke off head er of the same  size cost s about $65,00 0.   By the
mid-1980€² s it  appe ared  to the manage ment and  board of Horwood Bags haw  that it would soon
become th e  only manu facturer of PTO head ers.  Seeing  a po ssib le maj o r  marketin g oppo rtunity, a
deci s io n was  made to  produ ce over tw o  hundred PTO head ers, not again s t or ders but for plac ing  on
the dealer s’ floors.
The sch e me was optimi s tic and inflexib le.  The  first unfore s een probl em was the drought of 1983
whic h de pressed th e farm machin er y market; the second was the failure  of the farmin g co mmunity to
follow pa st practice and bu y machine r y after the dr ought; the third was the availability of PTO  headers
from comp anies, which ha d quit or we re about to  quit  manufac turi ng  PTO’S, selli ng off their re maining
stock.  Exhibi t 7 sh ows the impa ct  of the  dro ught a nd sub s eque nt e vents on hea der  sale s.  Horwood
Bagsh a w was in no state t o  handl e the probl ems.
Steady ero s io n of the  capital base saw the company, in early 1985, with ma ssive debts to le nders an d
cred itors.  O nce a gain, it was re scued  by FAI throug h a loa n  of $ 1 0 million  secured ag ains t th e assets
of the compan y.  As the  effective ban kers to  Horw ood Bag s haw, FAI continued to p r ovide  substa ntial
operating fund s un til later  that year  when it finally  b egan to ap ply the bra k es .  The  collapse of the
secon d  attempt at joint marketing in late  1986 spelt the beginn ing of the end,
Exhibits 1 an d 2 sh ow the financi a l po sition as  at June  30, 197 4; Exhibits 3 an d  4 are for 19 80  when
group ne t sal e s  were $24. 92 millio n; Exhibits  5 and 6 are statem ents fo r  yea r  ende d June 30, 1987,
On De cem b er  9, 1987 the  receiver  was appointed.
H o rwood- Bagsh aw  ca se    3

EXHIBIT 1
Profit And Loss Sta t ements €” Year e nded 30
th
June 1974
NET PROFIT  FROM TR ADING  1,034,06 7

Other ex penses taken into  accoun t in cal c ulation of profit
Dep r ec iation  on fixed asse ts  178,855
Interest Paid   145,972
Dire ctor €˜s Re muneration  17,500
Dire ctor €˜s Superannu ation  2,600
Auditor’s Remuneration -Auditing Services  26,500
Other Se rvices   3,500
Provision for Doub tful Debt s  6,082
Bad Debts ch arged to Provision  22,582
Provision for Long Se rvice  Leave  129,492
Provision for Annual Le ave   73,821
Provision for Sick Leave  (31,00 0)
Profit from dispos al of Fixed Assets  4,835
Total other expen ses  580,739

Abnorma l Item  279,000

NET PROFIT  BEFORE TAX  1,317,90 2

Provision for Incom e  Tax  39,809

NET PROFIT AFTER TAX  1,278,09 3
H o rwood- Bagsh aw  ca se    4
EXHIBIT 2
BALANCE SH EET 30
TH
J UNE 1974

Shareholders €˜ fund s
Subscribed capital  4,036,46 0
Reserv es
Capi tal   324,067
Reven ue  1,172,000
Contin gen cies   5 0 0 , 0 00
Accu mulated Pr of it s (L osses)  (618,2 9 7)
Total reserves   1,377,77 0

Surplu s on Consolidation  465,125
Equity of Outside Shar eholders  9,673
Total capi t al and reserv e s   5,889,02 8

Ass e ts
Fixed assets
Freehold L a nd  & Buildings
At Cost  47,143
Adjustment for indep end ent valuation 19 74  1,289,60 0
Less Depreci a tion  0
Total freeh old land and b u il ding s  1,336,74 3

Plant Machinery and Equi pment
At Cost  1,466,13 7
Adjustment for revaluation 1962  793,359
Provision for Depreciation  (1,235,4 4 0)
Total plant, machi nery and equipment  1,024,05 6

Motor Vehicles
At Cost  331,192
Provision for Depreciation  (126,8 2 7)
Total motor v ehicles  204,365

Furnitur e & Fi ttings
At Cost  151,770
Adjustment for revaluation 1962  47,336
Provision for Depreciation  (62,69 8)
Total furniture and fittings  136,408

Total fixed ass e ts   2,701,57 2

Intangible assets
Resea r ch & Development  Expenditure   87,750
Patent Rights  7,800
Total intangible assets  95,550

Curr en t as sets
Stocks on Hand  6,363,55 6
Trade Debtors (After provision for doubt ful debts) 1,815,96 8
Other Debtors & Prepaym ents  360,018
Cash on  Han d   22,572
Total c urrent ass e ts   8,562,11 4

Total as sets  11,359,2 36
H o rwood- Bagsh aw  ca se    5
EXHIBIT 3
Profit and Loss Sta t ements €” Year  Ended 30
th
June 198 0
1 9 8 0   1 9 7 9
$   $
Operating Profit before Income  Tax  492,687   1 1 3 , 0 03

Other ex penses taken into  accoun t in cal c ulation of profit
Dep r ec iation  on fixed asse ts  248,543  214,885
Interest pa id to other pe rso n s  1,231,83 3  1,022,35 9
Dire ctor s Remuneration  24,089  26,994
Dire ctor s Sup e ran nuatin g  3,667  18,480
Auditors Remuneration
Audit  56,000  57,000
0 t h e r   2 0 , 0 0 0   1 2 , 3 9 0
(Profit) loss o n  disposal of  fixed assets  (21,31 3) (21,58 0)
Total other expen ses  1,562,81 9  1,330,528

Income Ta x Expense  0  0
Net Profit after Inco me Tax  492,687   1 1 3 , 0 03

Capital p r ofit on sale  of rea l estate  24,000  0

Net pr ofit  516,687   1 1 3 , 0 03

Interest of mi nority shar eho lders  (60 ) 10,420
Interest of Ho rwo od Bags ha w sharehol de rs  516,747  102,583

Accumulated Losses Brou gh t Forward  (732,6 6 1) (798,3 1 0)
Transfer  from General Re serve  500,000  0
Available for allocation  284,086  (695,7 2 7)

Appro priatio ns
Dividen ds
Interim Dividend Paid
Preferen ce  18,467  18,467
Ordina r y   0   0
Final dividend provisi on
Preferen ce  18,467  18,467
Ordina r y   1 7 6 , 8 23   0
To ta l div idend  213,757   3 6 , 9 3 4

Transfer  to Capital Reserve  2 4 , 0 0 0   0
Total appr opriations  237,757   3 6 , 9 3 4

Accumulated Profits/(L osses) Carried Forwa r d  46,329  (732,6 6 1)

H o rwood- Bagsh aw  ca se    6
EXHIBIT 4
Balance shee t €” As at 30
th
June 198 0
Note 1 9 8 0   1 9 7 9
$   $
Equity
Subscribed capital    4,036,460  4,036,46 0

Reserv es
Ca p i t a l   1   371,489   347,489
Re v e nu e   1   435,066   935,066
Ac c umulated  Profits(Losse s )     4 6 , 3 2 9   (732,6 6 1)
Surplus  on Consol idat ion  1  464,564  464,564
Total reserves     1,317,448  1,014,45 8

Interest of Ho rwo od Bags ha w Sha r eholde rs    5,353,90 8  5,050,91 8
Interest of Mi nority Shareho lders    52,789  52,789
Total shar e  capital and reserves    5,406,697  5,103,76 7

Ass e ts
Fixed assets
Freehold L a nd  & Buildings
At Cost    522,415  461,341
Adjustment after indep end en t valuation 1 974    1,265,35 0  1,265,35 0
Less Provi s io n for Depr ec ia tion    (117,5 3 1) (88,94 7)
Total freeh old land and b u il ding s    1,670,23 4  1,637,74 4

Plant Machinery & Equipm ent
At Cost    2,032,70 8  2,024,41 2
Less Provi s io n for Depr ec ia tion    (1,143,9 5 2) (1,050,4 3 0)
Total plant, machi nery and equipment    888,756  973,982

Motor Vehicles
At Cost    330,370  103,628
Less Provi s io n for Depr ec ia tion    (76,33 7) (51,43 6)
Total motor v ehicles    254,033  52,192

Furnitur e & Fi ttings
At Cost    240,350  215,363
Less Provi s io n for Depr ec ia tion    (124,5 5 4) (113,9 2 2)
Total furniture & fittings    115,796  101,441

Total fixed ass e ts     2,928,819  2,765,35 9

Intangible assets  2
Resea r ch & Development  expenditure    120,000  125,500
Patent Rights    95,000  0
Total intangible assets    2 1 5 , 0 00   125,500

Curr en t as sets
Stocks on Hand  3  8,344,34 4  7,884,60 7
H o rwood- Bagsh aw  ca se    7
Trade Debtors (after p r ovision fo r doubtful debts)  4  3,460,67 0  2,545,40 0
Other Debtors & Prepaym ents    261,312  378,474
Cash at Bank    106,215  39,069
C ash on Han d     3 0 , 4 2 8   4 1 , 8 4 6
Total c urrent ass e ts     12,202,969  10,889,3 96

Total as sets    15,346,788  13,780,2 55

Liabilities
Current liabilities
Bank Over draft (Secu r ed)    2,429,94 2  2,522,74 5
Bills Payable  & Other Borrowing s    2,227,37 3  1,409,50 6
Trade  Creditors    2,470,49 7  2,297,34 9
Provisions & Accrued Liabi lities    1,381,44 9  1,142,91 8
Provision for Taxation    0  890
Provision for Final Dividend     195,290  18,467
Total current liabilities    8,704,551  7,391,87 5

Long term liabilities
Fixed Depo sit  Advance (s ec ured)     1,063,32 4  1,063,32 4
Mortgage Loans (sec ur ed )    172,216  221,289
Total long term  liabilities    1,235,540  1,284,61 3

Total liabilities    9,940,091  8,676,48 8

Net asse ts    5,406,697  5,103,76 7

Notes
1   R eserves
Capita l Re serves compri se:
Capital Profits Re serves
Balance as at 1st. July 197 9    94,616  94,616
Transfer  from un-ap propriated profit    24,000  0
Balance 30th. June 1980    118,616  94,616

A s s e t  Revaluation Reser v e     252,873   252,873

Total  capital rese rve    371,469  347,489

Reven ue Reserves  com p ri se:
General  Reserve
Balance 1st. July 1979    763,066  763,066
Transf er  t o  P r of it  &  Loss A ccou n t    (500,0 0 0) 0
Balance 30th. June 1980    263,066  763,066

Stock Reserv e    80,000  80,000

Dividend Equ a lisatio n Reserve    92,000  92,000

Total reserves     4 3 5 , 0 66   935,066

H o rwood- Bagsh aw  ca se    8
2   I n t a n g i b l e  ass e t s
Resea r ch & Development  expenditure at cost le ss a mounts  written off
.  Balance last  year    125,500  149,000
Capitalised fo r year    63,000  63,000
Written off for year    (68,50 0) (63,50 0)
Total capitalised re sea rch a nd develop ment    120,000  148,500

Patent Rights

Duri ng the year the Compa n y acquired t he patent
rights to manu facture ce rtain items of eq uipment.
The amo unt paid was $1 00 ,000 which is to be
written off over 10 yea r s).
Purchase cost of Rights    100,000  0
Written off for this year    5,000  0
Balance at 30
th
June 19 80    95,000  0

3  Stocks on ha nd
Raw Materi al & finished go ods    6,763,62 0  6,004,84 1
Work in Progress    2,291,199  2,222,73 0

Less amounts owing on fin ishe d  goo ds under
Belmont    (610,4 7 5) (242,9 6 4)
Less Provi s io n for Losse s    (100,0 0 0) (100,0 0 0)
Total sto c ks on hand    8,344,344  7,884,60 7

4  Provis io n for doubtful debts
Balance last  year    103,000  103,000
De b ts  written o f f     (10,00 0) 0
Additional Provision    12,000  0
Total pro v is io n for doubtful debts    1 0 5 , 0 00   103,000
H o rwood- Bagsh aw  ca se    9
EXHIBIT 5:
Profit and Loss Sta t ement €” Year en ded 30th. Ju ne 1987

1 9 8 7 1 9 8 6
Operating revenue
Sales Revenue  8,791,02 8  10,635,0 00
Other Revenue  605,474  30,329
Total operatin g  revenu e  9,396,50 2  10,665,329

Operating (los s) befor e Income Tax  (7,789,8 6 8) (2,975,7 4 9)

After Accounting for the Following:-
Dep r ec iation  of Fixed Assets  186,590  175,316
Lea se Rental Cost s  296,669  339,869
Interest pa id to other pe rso n s  88,027  391,263
Dire ctor s’ Remuneration
Auditors’ Remuneration
Audit Service s   84,000  84,000
Other Se rvices   3,900  5,430
Profit from dispos al of Fixed Assets  3,936  30,329
Loss on disposal of Fixed  Assets     1,420
Abnorma l Item (Note 1 )   3,554,55 0

Income Ta x Expense

Net (loss) after Inc ome Tax  (7,789,8 6 8) (2,975,7 4 9)
Capital Surplu s on di sposal of non-current assets 37,428
Net (lo s s)   (7,752,4 4 0) (2,975,7 4 9)

Accumulated (losses) bro ught forwar d  (9,442,2 4 6) (6,466,4 9 6)

Available for  appropriation   (17,19 4,686) ( 9,442,24 5)
Transfer  to Capital Reserve  37,428

Accumulated (losses) carri ed forward  (17,23 2,114) ( 9,442,24 5)

Note I:
Provision for stock returns,  recoveries  a nd losse s 731,000
Special Provision for Dou btful Debts an d
associated Costs  755,000
Losse s as  a result of Recoveries and
Rep o sse ssion s   2 , 0 6 8 , 5 50
Total abno rmal item  3,554,55 0
H o rwood- Bagsh aw  ca se    1 0
Horwood-Bagshaw case    11
EXHIBIT 6

Balance Sheet As at 30th June 1987
1987 1986
Funds employed
Share capital and reserves
Issued Capital  8,215,280  8,215,280
Reserves 1,829,152  1,791,724
Accumulated Losses  (17,232,114) (9,442,246)
Total share capital and reserves  (7,187,682) 564,758

Non-current liabilities
Fully Drawn Advance€”Secured  48,154  154,401
Mortgage Loans€”Secured    5,844
Long Term loan€”Secured  21,183,439  15,194,489
Total non-current liabilities  21,231,593  15,354,734

Current liabilities
Bank Overdraft    154,738
Bills Payable & Other Borrowings  24,877  24,103
Trade Creditors  2,201,511  2,554,446
Provisions & Accruals  1,931,466  1,041,833
Total current liabilities  4,157,854  3,775,120

Total funds employed  18,201,765 19,694,612

Represented by
Fixed assets  2,277,476  2,298,627
Intangible assets  597,500  474,000
Current assets
Inventories 11,861,307  9,302,563
Trade Debtors  2,615,931  7,120,582
Other Debtors & Prepayments  726,001  413,334
Cash at Bank  123,550  85,506
Total current assets  15,326,789  16,921,985

Total assets  18,201,765 19,694,612

EXHIBIT 7
Aus tr alian Head er Sales
0
200
400
600
800
1000
1200
1400
1600
1800
1980 1981 1982 1983 1984 1985 1986 1987 1988
PTO units
Self -pr opelled units
H o rwood- Bagsh aw  ca se    1 2