Magill gets his Feltex marching orders

Sam Magill

Former Feltex chief executive Sam Magill felt "morally obliged" to face up to Feltex shareholders at the carpet-maker's annual meeting in Auckland yesterday but those shareholders voted him off the board nonetheless.

Some 99 per cent of shareholders - who also heard they would receive no dividend next year - voted with the other directors for his removal.

Magill, a 36-year carpet industry veteran, stepped down as chief executive in June after two profit downgrades earlier in the year that saw shares in the company drop to as low as 39c from last year's issue price of $1.70.

Before he was voted off the board yesterday, Magill told shareholders: "Despite pressure from members of the board to accept the role as public scapegoat for decisions made by the whole board ... I believe it is my moral duty to offer myself for re-election for director.

"The easiest thing for me to do would have been to withdraw my candidature for re-election. It would have reduced a lot of grief and provided me with a better night's sleep."

Chairman Tim Saunders told shareholders trading conditions remained difficult, particularly in Australia, and were expected to continue for the rest of the year.

Its full-year result would be significantly affected by one-off costs of its recent restructuring and it would not pay a dividend until 2007 at the earliest.

Ignoring the one-off costs, net profit for the six months to December 31 was likely to be an improvement on the $807,000 earned in the last half of the last financial year, but significantly down on the $12.2 million for the first half of that year.

Saunders said the company was turning itself "upside down" in its determination to become more efficient. Benefits of the changes it had made would start to flow through in the second half of this financial year.

"We are optimists over the long-term future of the company, but it's not going to be easy for the short term," he said.

While the plan to merge with Australian rival Godfrey Hirst had fallen apart, Saunders said the board welcomed any proposal from Hirst or other parties that benefited Feltex shareholders "even if it is one that is in reality a reverse takeover".

New chief executive Peter Thomas, appointed this week, said the strategic review of the company's operations was nearly complete.

Although there would be more changes to improve performance, there would be no plant closures of the magnitude of the shutdown of the Braybrook Yarn plant in Melbourne in October, when 185 jobs were lost.

Feltex shares ended down 2c at 48c.

Magill said he alone had been unfairly blamed for the company's failure to meet its prospectus profit forecasts and its share price collapse.

"As CEO of Feltex, of course, I'm prepared to accept my portion of responsibility for a collapse in the share price."

As Feltex's sixth largest shareholder with 2.65 million shares, he said, he had also suffered from that.

He said factors beyond the board's control had caused difficulties for the carpet-maker.