New allowances will affect Midland

Press, Volume CXIV, Issue 33654, 2 October 1974, Page 21

New allowances will affect Midland

The change in investment allowances for the tourist industry would have an adverse effect on the net profit and liquidity of Midland Coachlines, Ltd, said the chairman (Mr L. K. Laugesen) in the annual report.

The Government should i allow generous depreciation; allowances by the tourist in-1 dustry, because of its direct i and indirect contribution toj New Zealand’s foreign-: exchange earnings, Mr' Laugesen said. Indications were that this! year would be one of con-: tinued growth, but finance might be a limiting factor, he said. Reservations from Austra-j lia were heavy, and an increase in American tourists I was expected. To meet reservations for: the current season, substan-1 tial funds have had to be provided for new cars and coaches. The new sales-tax rates j and higher prices, under) present monetary conditions,l had made financing more difficult. Although finance could probably be obtained, it was by no means assured, and investment in vehicles might have to be curtailed, Mr Laugesen said. A private debenture issue had been arranged to cover

iplanned capital expenditure, this year of ,$278,900. Cost in wages, I salaries, fuel, and other i direct costs would further increase the company’s cash I requirements, Mr Laugesen i said. The company had loan j commitments to rearrange in the immediate future, at a time of exceptional financial stringency, and substantial : additional investment in i vehicles was required, to reI alise the full potential of the ■ market. i During the year, Dalgety iNew Zealand, Ltd, acquired la 20 per cent interest in the I company. Mr D. C. MacDougal. a director and the genera! manager of Dalgety, (will join the board. As reported, the group net profit rose 54.7 per cent to $487,182, in the year to June 30. The profit was after providing $249,433 more at $684,311 for depreciation, and $27,121 more at $110,564 for tax. Only payroll tax of $6953 iwas payable, and so the

deferred taxation liability was $103,611 higher at $590,591. Interest on fixed loans was $9406 lower at $91,827. The directors have recommended a final ordinary dividend for the year of 5 per | cent, and a bonus dividend of 1 per cent, making 11 per cent (11c a share) for the year.; The shares issued during the year are entitled to onesixth of the 11 per cent dividend. The earning rate on average shareholders’ funds rose from 21.2 per cent to 25.3 per cent. Shareholders’ funds were $661,155 higher at $2.3m, including capital raised $231,666 to $1,238,333 by the premium issue. Working capital fell $196,998, leaving a deficit of $55,608. The current ratio fell from 1:3 to 0.94:1. The annual meeting, on October 18, will be asked to approve a one-for-10 bonus issue. At a price of 145 c, the ordinary shares yield 6.9 per cent from a 10 per cent dividend and have an earnings yield of 28.3 per cent. Beach costs Beach Petroleum, N.L. says that the total net cost of operation for the year to June 30, 1974, was $9,019,255, $797,218 more than for the previous year. Shareholders’ funds were $12,141,158, or $12,325,821, including intangibles.