EBOS faced with loss of agency

Press, Volume CXIV, Issue 33517, 24 April 1974, Page 11

EBOS faced with loss of agency

The future profit of EBOS Dental and Surgical Supplies, Ltd, will be affected by the loss of the valuable Geigy agency.

The chairman, (Mr J. R. Maddren) said this in his report with the annual accounts. No indication of the extent to which the profit ■may suffer is given, but Mr Maddren says that the agency is a material part of The company’s operations, i “For many years the company has been ? New Zealand 'distributor of Geigy' Phar■maceuticals, but advice has

~been received that the curI rent distribution agreement will not be renewed at ext'Piry on June 30 (of this : 'year),’*" Mr Maddren says. ' ■| “The circumstances are : entirely beyond the comJpany’s control and arise ■'from an international merger ■ iof pharmaceutical coml panies. "This agency is a material . part of the company's operJations and its loss will affect future profits.” He says that strenuous efforts have been made for some time, and arg continuing to secure replacement agencies, and that some success has already been achieved. The directors are confident that any reduction in profits arising from the loss of this agency will be short term only. The merger referred to was between two major Swiss chemical manufacturers, Ciba and Geigy, in October, 1970; their New Zealand operations were merged six months later. Total sales of Ciba-Geigy are around $l5OO million a year.

Kempthorne Prosser and Company, Ltd, which held the Ciba agency, has gained the agency for Ciba-Geigy New Zealand, Ltd. As already reported in the preliminary statement, group net profit rose 21.6 per cent to $116,917, after providing $1456 more for depreciation at $28,019 and $13,635 more for tax at $79,985. The earning rate on average shareholders’ funds, after allowing for the prefer-, ence capital and dividend,' rose from 12.6 to 13.7 per cent.

. The ordinary dividend rate . has been maintained at 12| per cent on capital increased by last year’s ' 1:5 bonus issue; it takes $51,299 and is covered 2.3 times by the profit. The dividend on the $BOOO preference capital was raised from 6 to 7| per cent. Four/fifths of the year’s ordinary dividend is paid from realised capital profits. The balance sheet reflects the company’s customary strong financial position. Shareholders’ equitv improved to 56.6 per cent; the i ordinary capital of $410,393 ’compares with shareholders’ I funds of $886,258; this includes a downward adjustment of $70,871 on • the acquired shares of Oral Supplies, Ltd. i Working capital increased from $761,471 to $799,807: the current ratio is 3.2 to 1. The shares last sold at J 05c; on that basis they ■ yield 6.0 per cent from dividend, and 13.5 per cent from ; earnings; the price-earnings i ratio is 7.4, and the asset backing 108 c a 50c share. Mr Maddren says that the integration of the formerly separate trading activities of the wholly-owned subsidiary, Oral Supplies, Ltd, with those of the parent companv. was completed during the I year, and that the new combined trading unit is functioning very well. This is expected to continue, with the resultant economies assisting in containing costs.