A. and B. says no cause for despondency

Press, Volume CXVI, Issue 34129, 15 April 1976, Page 18

A. and B. says no cause for despondency

While the order books of Andrews and Beaven, Ltd. are somewhat down on last year, there is no immediate cause for despondency, says the chairman (Mr R. H. Clark) in a full half-yearly report to shareholders.

Fortunately, present tndi-u cations are that production is unlikely to fall drastically i in the foreseeable future, ' and the company has im- 1 portant contracts to full! in i supplying mobile equipment for the container ports. But, says Mr Clark, any 1 significant drop in sales! would have a marked effect! on profitability. It is there-! fore comforting to report! that sales during and February are in lineii with those for the first six; months of the financial year. j| As already reported, sales! for the period to December! ;31 rose 13.3 per cent to; more than sl7m, but despite! i this satisfactory perform-! ance. formula pre-tax profit! ;fell 11 per cent. ‘This erosion of! profitability because of ini'creasing costs, is a matter! ! for concern, and manage-j ment is keenly aware of uie need to control costs where this is possible.” The Government’s decision, ; to increase service charges,! (particularly related to freight, telephone and postal; 'costs, does nothing to ease! (the burdens already carried! :bv management, to preserve ! profitability at adequate : levels. Mt Clark says. “Although we are hopeful, !of keeping our works at near maximum capacity, fut- ! ure trading conditions are difficult to forecast. ,

“T're Imnort Deposit Scheme will effectively freeze quite large sums for periods up to six months without interest, ar a time when we are battling with; inflation. It is difficult to! understand the Minister’s! choice of products on wh’whi a deposit must be paid, for! these include such vital nommodities as components] for local manufacture and! replacement parts for equip-

ment already operating. “It is our belief that this scheme should be reviewed with the object of spreading the load more equitably and removing from the schedule those items which will support local employment and keep equipment for both primary and secondary production operational. We i have no quarrel with a policy aimed at conserving overseas funds, but we do I question the choice of prod- ; nets on which deposits must jbe paid.’’ Mr Clark says. 1 In December the company 'completed the purchase of the ; Christchurch-based foundry ;of R. Buchanan and Sons. Ltd, ! which is now a totally-owned ] subsidiary. This foundry is to be rebuilt at Maces Road at an estimated cost of $1 million, orders have been (placed for the necessary (equipment and a contract entered into for plant foundations and buildings. The Christchurch-based ; company of Hickmotts Farm (Equipment. Ltd, which has i been totallv-owned by the , group for some time, will be ‘established as a branch from Julv 1. “The recent well sunported secured convertible debenture (stock issue has enabled us to i sustain linuiditv at an acceptable level, but some change in the incidence of company taxation in the continuing climate of high inflation

- becomes increasingly impera- - tive. “Profits revealed by' tradi- ; tional methods are artificial ;'and while continued borrowliing for growth can be iusti- <■ fieri, continued borrowing to ii stand still, cannot. A higher I-plouah-back from retained •|profits through reduced taxaI tion is therefore a prerequinsite to sustaining emnlovment land trading viability,” Mr ■ Clark says.

! As announced, the interim 5 dividend is unchanged, at 5 1 per cent. ?! . " - J Stamp duty abolition "I The Life Offices’ Associa-i JI tion of Australia has urged' 0; State Governments to abol-; -fish stamp duties. The execu-! e tive director of L.O.A. (Mr! •'N E. Renton) said the pro-' ?(posed new tax system allow-, 3 ing State Governments to! -(collect income tax should enEable the duties to be abolished. The community would V welcome this as stamp dute ies were expensive to colect y both for Government and taxk payers, he said. Stamp duties u were currently costing life s officer about SAust.S.Om a 3 year, which would otherwise 1 be passed on to policy holdci ers in higher bonuses. y — ——