N.Z. Steel Costs Up Further $3.5m

Press, Volume CVIII, Issue 31771, 30 August 1968, Page 14

N.Z. Steel Costs Up Further $3.5m

(New Zealand Press Association)

AUCKLANb, August 29.

Capital costs of New Zealand Steel, Ltd, are expected to rise a further s3{m to almost s43m, the directors say in their second annual report.

The latest figure is sBm, or nearly 23 per cent more than the original estimate made in 1966 of s3sm.

However, the directors say, estimates show that profitability, after allowing for the cost of servicing the additional capital, will still compare satisfactorily with, earlier estimates and support forecasts made in the 1966 prospectus. Earlier in May it was revealed that capital costs were expected to rise by $4Jm to s39im, partly as a result of devaluation. Reasons given for the latest rise are “further increases in some contracts and provision for a number of additional facilities, some of which will benefit operating costs.” Financial Position Financial arrangements were made, say the directors, to meet the original increase in capital costs, and loan money is being sought for the

extra amount of about s3jm now required. Pacific Steel, Ltd, in which New Zealand Steel has a 40 per cent interest, had a satisfactory year and made good progress with its wire rod mill project and the expansion of its existing facilities. The 2,820.000 $1 shares of Pacific Steel held by New Zealand Steel will rank for dividend from December 31, 1968. when payment of calls on these shares is due to be completed. Advance Made The payments are being made to Pacific Steel as ad-

vances, bearing interest at 6 per cent. In the balance-sheet as at March 31 the shareholders’ funds are shown at $6,831,879, including $331,875 for payments in advance of calls. Term liabilities are $13,278,669. Of this figure, $9,313,834 is represented by overseas loans and $3,964,835 by advances from the Government. Capital Work Capital work in progress is disclosed at $16,706,979 and fixed assets at $1,107,164. Capital commitments are put at $12,861,298 and there is a contingent liability of $552,743 for Customs duty on plant and machinery purchased from overseas suppliers.