G. Rentals Sees Lower Profit

Press, Volume CVI, Issue 31318, 14 March 1967, Page 21

G. Rentals Sees Lower Profit

Group Rentals New Zealand, Ltd., Wellington, expects to maintain its annual dividend of 7 per cent in spite of a likely reduction in group profit this year, says the chairman (Mr K. V. Coe) in his interim report.

The Group Communications subsidiary, formed to market electronic communications equipment, has not achieved its target result, he says. Although orders, particularly for rental equipment, are regarded as satisfactory, unforeseeable delays in converting orders to income producing installations have occurred and as a result expenses continue to exceed income. Tt would now appear that a break-even situation will not be achieved during the current year which ends on June 30, says Mr Coe. Adequate business in this field is available and the board is satisfied that this subsidiary can still provide the profitable diversification medium originally envisaged. Profitability Held The main operation, of television rentals has been

maintained profitability at forecasted levels, he says. The debenture issue, launched in an unfavourable borrowing climate, does not appear likely to provide the support the company has been seeking in the field of cheaper, long-term finance. Good Cash Flow Fortunately, the company has been operating long enough to generate a reasonable cash flow which should cushion the otherwise drastic restrictions now operative. Mr Coe says that, like the Government, Group Rentals is unable to evaluate, with certainty, the impact of Government moves on the company’s main field of operations in television rental. Last year, profit fell £558 to £17,649 but covered the dividend requirement of £6300 2.8 times.