Greg Muir, the former chairman of defunct property lender Hanover Finance, was paid NZ$959,000 as managing director of Tru-Test in the year to March, which is equivalent to 64% of the agri-tech group's NZ$1.49 million annual profit.
Tru-Test's annual report shows Muir's remuneration in the year to March 2011, including salary and short-term and long-term incentives paid or accrued for the year, at NZ$959,000. That's up from NZ$685,000 in the previous year.
Tru-Test, which is chaired by John Loughlin who was chairman of Allied Farmers when it bought Hanover's finance book from owners Mark Hotchin and Eric Watson in December 2009, made a NZ$1.49 million profit in the year to March 2011, turning around a loss of NZ$7.6 million the previous year. Its profit after tax from continuing operations was slightly lower at NZ$1.2 million versus a loss of NZ$1.7 million in the year to March 2010.
Muir's salary represents 1.1% of Tru-Test's annual revenue of NZ$84.59 million, while Fletcher Building's chief executive Jonathan Ling received a salary last year of NZ$2.8 million, which represents 0.9% of net earnings of NZ$283 million and 0.04% of total revenues of NZ$7.416 billion.
Muir joined Tru-Test in February 2009 with Loughlin describing him as the "ideal candidate" to lead Tru-Test. Muir was chief operating officer of The Warehouse from 1999-2001 and then its chief executive from 2001-2003. The Warehouse founder Stephen Tindall is among Tru-Test's shareholders, alongside the Gallagher Group.
Muir, meanwhile, quit as chairman of children's clothing retailer Pumpkin Patch last November after pressure from some shareholders including Devon Asset Management's Paul Glass and Milford Asset Management's Brian Gaynor who were uncomfortable with his Hanover association. Muir said at the time it appeared his leadership of the Pumpkin Patch board was drawing attention away from the business itself.
The Pumpkin Patch resignation was hot on the heels of an unusual statement from the Securities Commission, when it announced it had nearly completed an investigation into the Hanover group of companies and might lay criminal charges against directors in the New Year.
Both the Financial Markets Authority, the Securities Commission's successor, and the Serious Fraud Office continue to investigate Hanover.
Property financier Hanover froze NZ$554 million owed to 16,500 investors in July 2008. Investors' subsequently approved a moratorium proposal that pledged to pay them back over five years. A year later, having got back just 6 cents in the dollar, Hanover investors again spurned the option of receivership and narrowly voted through Allied Farmers' debt for equity swap. Allied Farmers, led by managing director Rob Alloway and Loughlin, promised Hanover investors the opportunity of returns through future dividend payments and by an increase in the value of Allied Farmers' shares.
The deal saw the Hanover investors issued 1.9 billion Allied Farmers shares valued at 20.7c each which they swapped for their Hanover Finance, United Finance and Hanover Capital secured deposits, secured stock, subordinated notes and capital bonds. Allied Farmers shares, which are listed on the sharemarket, were today at just 0.5c.
Meanwhile, Tru-Test's annual report also reveals a "definition error" in the documentation for an ASB loan facility, which wasn't detected by either Tru-Test or ASB until after balance date, meaning Tru-Test was in breach of two loan covenants at its March 31 financial year end.
"On being advised of the breaches by the company the ASB Bank subsequently waived the breaches and is working proactively with the company to develop new documentation which accurately reflects the intentions of both parties. Despite this the International Financial Reporting Standards require us to disclose the (NZ$14.3 million) loans as a current liability on the balance sheet as at March 31, 2011 even though the loan is not expected to be repaid within 12 months," Tru-Test says.
Tru-Test's board also includes controversial Contact Energy independent director Phillip Pryke, who has twice been among Contact directors recommending minority shareholders accept ultimately unsuccessful takeover offers from majority owners Edison Mission Energy and Origin Energy. Tru-Test describes itself as the world’s leading manufacturer of livestock weigh scale indicators and milk metering equipment and a world leader in electric fencing and traditional fencing tools.