N.Z. United 'weathered difficult period’

Press, Volume CXI, Issue 32663, 20 July 1971, Page 17

N.Z. United 'weathered difficult period’

(New Zealand Press Association >

WELLINGTON, July 19.

The trading opportunities of some of the subsidiary companies of the N.Z. United Corporation, Ltd, were adversely affected by the March i tax draw-off. but the broader base of operation which had been established' enabled a difficult period to be weathered without undue strain oil resources, the chairman (Mr R. H. Renouf) said in his review of the' accounts for the year to March 31.

The official short-term money market experienced a difficult year largely because of its inability to compete effectively for deposits. In spite of a marked increase in the supply of available funds the average of deposits held by

Re-grouping by Boral

I The Bora! group -will rationalise its brick and pipe I manufacturing activities by selling its wholly owned subsidiary, Brittains Brick and Pipe, Ltd, to a partly owned subsidiary Glen Iris Brick Consolidated, Ltd. Glen Iris will purchase Brittains Brick and Pipe from Boral for $2,873,000 by issuing 3,380,000 50c shares at a premium of 35c a share to Boral. The shares to be issued will not rank for any final : dividend payable for the year ' to June 30. Similarly, the profits of Brittains Brick and Pipe for the year to June 30, will accrue to the Boral group. The 85c that Glen Iris is receiving for each share is above their market value. ' Glen Iris last sold on the Melbourne' Stock Exchange at 72c. At present, Boral has a 52.42 per cent interest ini Glen Iris. If the transaction; succeeds, its interest will rise to 74 per cent.

lithe market during the year i fell 20 per cent. Mr Renouf i said. Interest-bearing deposits > held by the trading banks, on • the other hand, rose an avers age of 36 per cent over the ' same period. Government control of monetary policy, to be ! effective, must be flexible, i and it was to be hoped that (the role of the trading banks ! would be further directed into the longer-term deposit in : which the official money market was not designed to oplj erate, Mr Renouf said. # : ! The level of activity in the ' group’s commercial money ! market subsidiary rose aplipreciably and profits earned 11 were a ( record, despite keen : i competition for funds. The nominal value of under- ! writings accepted was about 1 s7m or slm more than in the previous year. J “Local authority underwriting. despite a modest in- ; crease in the interest-rate structure, continues to pre- ! sent a dismal picture. It is not unnatural that underwriters and sub-underwriters are extremely reluctant to participate where local au-j thority stocks can be purchased on the open market at yields a full 1 per cent; above new issue rates,” Mr Renouf said. “On the question of dividend tax one should comment i that this has risen from nil ito 50 per cent in a matter iof 13 years, and is seen by many as slowing the growth potential of the great com-

r panies that New Zealand has f developed. “Dividend tax inevitably s lowers the return on risk capi ital, and New Zealand, as a - developing country, should s not pursue this form of tax, -which inhibits the raising of i risk capital,” he said. For the year to March 31, t the group had net earnings of > 26.2 c a share on capital which > was increased in the period 1 from $718,668 to $1,600,000. - The net profit increased 4.7 ■ per cent to $274,409, and the dividend rate was raised from > 12 to 13 per cent requiring I $130,000. The earning rate on ordin--1 ary shareholders’ funds was i 15.4 per cent. The profit figure was, reached after providing $924 i i | more at $3838 for deprecia,,tion, and $4592 more at' $212,796 for taxation. Shareholders’ funds in- ’ creased $321,392 to’ ; $1,872,220. ; Cunard bid raised > Trafalgar House Invest-; iiments has raised its bid for ■lCunard Steam Ship by more ■•than £lm to £25.3m, increas1 ing its offer by 13p to 198 p a :■ share. In a statement issued ' immediately after Trafalgar’s announcement Cunard ad-1 ■ vised shareholders to take no : action. The new terms were i complex, the directors said, ■ and no comment could be ■ made until they had received i mature consideration by all concerned.