Successful year for Midland Coachlines

Press, Volume CXI, Issue 32720, 24 September 1971, Page 15

Successful year for Midland Coachlines

Midland Coachlines, Ltd, increased group net profit 65.0 per cent to $133,505 in the year to June 30—its first year of listing on the stock exchange.

The chairman (Mr L. K. Laugesen) said in his report that the directors considered the result most satisfactory, especially since it was achieved after much higher depreciation. The profit was reached after providing $94,505 more for depreciation at $406,063, and $60,262 more for tax at $145,380. Of the tax provision $15,272 was payroll tax, and $69,746 was a transfer to the provision for deferred tax. As announced, the dividend has been increased from 8 to 9 per cent The total income distribution rises from $36,400 to $63,350, coveted

more than twice by the\>rofit.

larly on time-table services. The position was aggravated by the Government’s withdrawal of the urban passenger grant in March. "It is evident that substantial fare increases will be necessary to provide sufficient revenue to cover the increased costs and to allow these services to show a modest return,” says Mr Laugesen. The tours and Charter sections showed a satisfactory growth rate in common with the.tourist industry, and prospects remain good.

The higher dividend was paid in part on higher ordinary capital, which was increased from $400,000 to $695,000 during the year.

The earning rate on the higher capital—after allowing for the preference divi-dend-eased from 20.2 per cent to 18.5 per cent, the rate on average ordinary shareholders* funds improved, from 13.9 per cent to 15.4 per cent. The balance sheet confirms the company’s rapid progress. Total assets increased from $2,649,749 to $34170,523, and shareholders* funds rose from $630,945 to $1,034,170. Liquidity improved considerably, and the working capital deficiency was substantially reduced; cash flow again increased during the year.

The Tasman Rent A Car subsidiary experienced a buoyant year, which resulted in a most satisfactory contribution to profitability.

As announced, Midland is making a one-for-three rights issue at par, 50c to be paid on application and 50c in May. Referring to the year’s activities Mr Laugesen said that the company acquired eight additional tour coaches from Johnston’s Blue Motors, Auckland, while a substantial minority interest was taken on a share exchange basis with Atlantic and Pacific Travel. An interest was also ac-. quired in Cross Country Rentals, Ltd, a company specialising in the hiring of fourwheel drive utility vehicles. He says that although a considerable increase in revenue was recorded by the coach division, the heavy increase in wages, spare parts and the payroll tax made it difficult to maintain a reasonable return in this sector—particu-