CSR uncertain about fund raising

Press, Volume CXIV, Issue 33577, 4 July 1974, Page 11

CSR uncertain about fund raising

(N.Z. Press Association—Copyright) . * SYDNEY. Capital requirements for planned growth and the best way to raise additional funds in the rapidly changing financial climate in Australia are being studied, CSR, Ltd, says in the annual report.

CSR says that sl2m of| the sl7m debentures on issue fall due for repayment] during the .current year, and it is expected that holders: will be offered the opportunity to convert to a new security.

Of the maturing debt, $4.7m in 7 per cent debentures falls due on September 30 and the remainder on March 31, 1975. “The group’s debt-to-equity ratio is relatively moderate, and under appropriate conditions it will probably be raised,” the report says. CSR made a s4om unsecured note issue, carrying a 10 per cent interest rate, last December. Under current market conditions it would probably need to offer 13 per cent to attract debenture money. There was a $68.3m revaluation of land assets in the year to March 31. Large expansion The report points to a number of expansion plans requiring fairly substantial capital outlays over the next few years. CSR’s share of the sBsm programme to increase the annual capacity of the Mount Newman iron-ore project to 40.6 m tonnes by early 1976 will be mainly financed from cash-flow. There are plans for a major upgrading of the capacity of A and K Cement Holdings, Ltd, plant. Plans also include a large expansion, to one million tonnes, in capacity of the Hunter Valley coal mines in which CSR now has a 92.65

per cent interest, further development of the Mount Gunson copper, and continuing needs of the sugar and building materials activities. The accounts confirm that group net profit for the year to March 31 rose from $23.3m to a record $28.8m, but the two figures are not strictly comparable because of major accounting and taxation changes. Smaller output The result was after providing sB.3m for tax compared with the previous year’s tax provision of $16.1m. The dividend rate is being increased from 14 per cent to 15 per cent. As indicated in the preliminary statement, sugar accounted for s9.om of the profit ($7.2m in 1972-73) mining for $9.2m ($7.9m) materials for building and construction for sB.2m ($7.4m) and other interests for s2.lm ($800,000).

Higher prices for export sugar more than offset a reduction of about 8 per cent in Australian raw sugar production and the ending of its role as a miller in Fiji. Iron profitable

Building materials sales; were 12 per cent higher. There was no increase in profits, but earnings from concrete and quarrying were 29 per cent higher. The 50.3 per cent owned chemicals subsidiary, a poor performer in past years, contributed $378,653 to the group profit after the previous year’s loss of $278,432, but high molasses prices caused CSR’s distilleries to incur a loss. CSR enjoyed a substantial growth in the return from its large investments in iron ore and aluminium, but this was offset to some degree by large write-offs in its Pacminex Exploration Division. The 68 per cent-owned Pil-

i bara iron subsidiary (a 30 per cent joint venturer in the Mount Newman project), increased its contribution to group net earnings $3.5m to, ■sB.7m after the project increased its ore shipments to--27.6m dry tonnes. In the current year, exports are expected to be 33m tonnes. The 51 per cent-owned Gove Aluminia subsidiary .(which is entitled to 30 peri ;cent of the alumina and all lof the bauxite exports of the; 'Gove project), increased its ;contribution sl.2m to about: i sl.6m, although the report; i says that this profit was; , abnormally high because of; special pricing arrangements [ applying to the early years i . of the project. Copper on stream ■ Gove Alumina’s bauxite; exports increased 364,000; ' tonnes to 1,437,000 tonnes—a disappointingly small gain —but its share of alumina i shipments more than doubled; from 80,000 tonnes to 162,000 . tonnes.

This share is expected to be 300,000 tonnes during 197475, since the one million tonne capacity of the alumina refinery is expected to be

reached towards the end of. '1974. A profit contribution from the Mount Gunson copper imine is expected. Production ; from a new ore body will .begin late in August, and export shipments to Sumitomo, of Japan will begin towards the end of 1974. “The Australian and international business environ- , iment is rapidly changing, presenting new challenges’, and new opportunities for growth,” the report says. I - Wide exploration “In pursuing growth, we ' do not intend to alter the ' !essentially Australian character of the company. We do inot expect that our major I pines of business will go be- ( ;yond the broad areas in i which we already have di- ( verse interests and capabili- J Ities, mainly based on the ( i supply or upgrading of ( ’natural resources.

“But we seek consciously to anticipate and to be responsive to change; to think < and to plan ahead; and to explore widely rather than narrowly for opportunities for expansion,” the report says.