Fountain soundly placed

Press, 2 August 1977, Page 20

Fountain soundly placed

Commercial

PA Auckland The last year was a testing and difficult one for Fountain Corporation, Ltd. but the group is in a sound position and ready to take advantage of any improvement in *he economy, says the chairman (Mr B. L. Macedo) in the annual report. The board realised fully that inflation had yet to be brought down to acceptable levels and that trading would be difficult until this was achieved, he said. In the long-term, the directors were confident that the group would not only retain its position in the market but also increase profitability. As announced, net profit fell 47.5 per cent to $214,342 in the year to March in sp'te of a 15.7 pec cent rise in sales to sB>r Significart causes for the fall in profit were: Government economic measures during the year reducing consumer demand in most retail sectors; the necessary

development of more sophisticated stereo technology resulting in some production delays, the problems of which have now been solved; the erosion of profit, margins because of unavoi-j dable increases in overheads without corresponding price I increases. The managing director (Mr A. R. G. Brown) says that the company’s industry was among the first to feel the effects of Governmentinduced curtailment of consumer demand. Production from the group's high-fidelity manu-

■ facturing subsidiary fell in ■ value by 27 per cent. i This was entirely because f of development delays and i start-up problems with new : | stereo lines. I Mr Brown says that a : j significant factor was that • I the group’s total sales were spread over 10 divisions, • with no single one contrib- : uting more than 25 per cent ’ of the total. I The profit was after pro- • viding $160,718 less for tax at $189,466 but $22,042 more for depreciation at : $99,857. The dividend, unchanged ;

iat 15 per cent, required $137,017, compared with $106,568, because of an increase in paid capital from $710,456 to $913,443 resulting from the two-for-seven premium issue made during the year. The earning rate on capital was down from 57.5 per cent to 23.5 per cent and that on shareholders’ funds from 24.4 per cent to 10.5 per cent. Shareholders’ funds were $443,850 higher at $2,276,667. Term liabilities were up from $379,601 to $587,365.