Transport (N.C.) financial position improves

Press, 14 August 1976, Page 16

Transport (N.C.) financial position improves

Commercial I

The financial position of Transport (North Canterbury) Holdings, Ltd, greatly improved during the last year, says the chairman (Mr A. C. Fraser) in the annual report.

The gross revenue of the, group rose 6.4 per cent to I SS.IM, and the cost of sala-i ries and wages increased 9.11 per cent, he says. “But, fortunately, the com-[ pany has held the cost ofj maintenance of vehicles and! plant at the same figure as I last year. “The cost of fuel, oil and j tyres has continued to rise, and cement, one of our larg-| est items of purchase, in-1 creased 91 per cent in the past year,” Mr Fraser says. “One of the matters which concerns a company, like this group, with a large percentage of its capital invested in vehicles and machinery, relates to the great increase in the capital cost of these items in recent years.” According to the reliable information, the cost of vehicles has about doubled during the past four years, he says. Large increases have also! occurred in the cost of! heavy machines used for contracting work, and spare parts are not only costly,! but often difficult to obtain. I Despite these factors, the! directors have found it pru-l dent to adopt a programme! of gradual replacement of I vehicles and plant, “These various purchases and the continuing inflationary trend place a strain on the company’s capital resources. In this connection, steps may be taken in due course to increase the capital structure of the company.” The shingle and contracting division again had a successful year, and the company has purchased a[ shingle and sand grading j plant and crusher for its; North End site.

Christchurch Readymix, Concrete, Ltd, again traded) profitably, but the downturn! iin the building industry had) some effect on the result.) 'Future activities may con-1 tinue to be affected in this | regard, he says. “One of the matters which) jhas been required to'be kept! : under constant review has! been the sharply increased) cost of cement and wages. A) number of applications have had to be made for approval for increased charges in respect of the company’s product in order to compensate for the substantial increases in costs.” There was a considerable improvement in the profit of the logging and debarking division. The division has been involved in the recovery of wind blown timber in the State Forests in the Hanmer Springs area because of the storm last August. I Another important development has been the erection of a fibreboard factory at Ashley, and the group i was involved in carting matI erial to the construction site, :and is now engaged in the cartage of logs to the mill Ifor processing. | “There has also been a considerable improvement in the results of the various cartgage branches of the group. Early in 1975, the

.farmers had an unsatisfactory harvest and cartage {suffered greatly. Fortunately I this year the harvest was {much larger and our ve{hides were busily em- ! ployed.” , As announced, group net {profit rose 21.7 per cent to [5242,552, from 6.5 per cent [higher gross revenue; expenses were well held. The result was after providing $195,727 more for taxation at $207,574 ($175,432 in deferred taxation), and $36,303 less for depreciation at $331,893. The earning rate on average shareholders’ funds increased from 13.3 to 14.5 per cent. The unchanged dividend of 9 per cent is covered 2.4 times by the profit. Liquidity improved: the working capital deficit was reduced from $402,451 to $164,220; the current ratio is 0.9:1. Shareholders’ equity is 35.9 per cent: the funds of $1,635,347 are made up of $1,126,925 capital, $286,720 capital reserves, and $221,702 revenue reserves. The shares last sold at 100 c, for a dividend yield of 9.0 per cent and an earnings yield of 21.5. per cent. The price-earnings ratio is 4.7 and the net tangible asset backing 124 c a 100 c share.