Odlin chairman sees no season for pessimism

Press, Volume CXIV, Issue 33675, 26 October 1974, Page 15

Odlin chairman sees no season for pessimism

(New Zealand Press Association) WELLINGTON. Although there has been a dramatic change in the. economic outlook in the last year, no reason for pessimism can be seen by the chairman of the C. and A. Odlin Timber and Hardware Company, Ltd (Mr H. Hill).

“There is still an urgent for adequate housing. Fortunately, the Government is aware of this,” said Mr Hill, in the annual report. “With many of our operations centred on house building, we are extremely iwell placed to participate ■fully in the Government's policies in this regard; and Jas this is coupled with a ’diversification and spread of | our activities, the directors J have every confidence in t he J future prosperity of the i group,” he said. As reported, the group net ■ profit for the year to June • 30 rose 86.5 per cent to $2,909,732, and the earning : rate on shareholders’ funds • rose to 20.9 per cent ‘from i 13.1 per cent. There was a need for the Government to appreciate the increased financial requirements of industry, Mr Hill said. “In our own case, this evidence by an increase of almost s4m to $22,048,616 for stocks and debtors, while expenditure on additions, replacement of plant, and sawmill development amounted to $779,970. “This increase is necessary if we are to service adequately our trading requirement. Stocks are in good condition, although there are some shortages which are unavoidable. Debtors are under strict control, with ample provision made for doubtful accounts. “Plant has been well maintained, with replacements where necessary, and further modern equipment is on order to increase production. “Whether this increased working capital is financed by shareholders or by retained profits, or from borrowing, the provider of this finance is entitled to a reasonable return on his money, and this additional cost must therefore form part of the selling price of goods sold,” Mr Hill said. The company had increased its annual dividend from 11 per cent to 12J per cent, and was paying a special dividend of 2| per cent. The special dividend was in recognition of the years achievement, and the increase in ordinary dividend was intended to assist in offsetting the effect of inflation on shareholders’ incomes, Mr Hill said. The dividend requires $816,417 ($577,642) and was covered 3.6 times. Since balance date, a cash issue at a

ipremium of 50c was made in ithe ratio one-for-five. ! The profit wars after providing $425,920 ($389,106) for depreciation, and' '51,092,139 ($1,074,378) for ‘taxation. For every dollar of sales by the group, the employees ‘got 13.3 c, the “tax man” 4.3 c, and the shareholders 11.7 c, the report said. The consolidated balancesheet shows shareholders’ funds totalling $14,895,122 ($13,023,843 in 1973) including $1,487,118 (slm) in convertible notes. Total secured and term liabilities were reduced from $6,565,770 to $5,654,555. Current liabilities totalled $9,823,265 ($6,446,574). The main item under this heading is sundry creditors at $4,660,392 ($3,528,910). Current assets rose substantially, from $18,397,053 to $22,181,412, mainly because of an increase in stocks (from $11,184,859 to $13,711,156) and debtors ($7,133,454 to $8,337,460). Working capital rose $407,668 to $12.4m, but the current ratio fell from 2.8 to 2.3 to 1. At balance date, the 50c ordinary shares had a net! asset backing of 137 c.