Equitable faces loss in centennial year

Press, 29 October 1977, Page 21

Equitable faces loss in centennial year

PA Wellington The year to March 31 was one of the “most difficult and frustrating in the 99 years of the Equitable Building and Investment Company of Wellington, Ltd,” the chairman (Mr A. F. Mac Alister), said at the annual meeting. Prospects for the current year were not bright, and the company would probably report a loss for the six months to September 30, compared with a profit of $13,050 in the previous corresponding half-year. One of the principal activities of the company over recent years had been the development and sale of property, but during the last year higher interest rates, scarcity of mortgage moneys, and a consequent lack of activity in the property market had severely restricted this activity.

“The company holds fully developed residential properties in both Christchurch and Wellington for sale at prices which are both realistic and will show a fair return to the company. These properties are available to enable immediate re-entry into the market once it recovers, and their sale should make a major contribution to next year’s profits,” Mr Mac Alister said. Interest rates had made borrowing for development of property “doubtfully profitable. The directors have been concerned to preserve the company’s liquidity,” he said. “The level of borrowing has been substantially reduced, and it is interesting to note that deposits totalling $312,699 held in 1975 have been reduced to $130,731. In the latest accounts and mortgages over the company’s properties have been reduced from $221,000 to $144,600. “This has of course reduced the total money available for trading, but that action is fully justified as it ensures that we can operate within our own resources, and without reliance on deposits. “The total assets administered comprise 54.9 per cent of shareholders funds compared to 28.3 per cent in 1973.

“It is fair to say the company is in a sound financial

position, and is well placed to produce a satisfactory result for the current year if the property market becomes more active. “However, to date such an improvement has n,ot been apparent, and the half year’s results, when available, will disclose a loss. “The prospects for the current year are not bright, unless the Government’s announced intentions to stimulate the economy give some relief in our sector,” he said. The property speculation tax of 1973 has had a marked adverse effect on the company, because of the two year ownership stipulations, but this tax would not affect the company in the next few years, because most properties had been held for two years. If the tax were a permanent measure it could cause the directors to depart from the traditional field of purchase and resale. “At this stage we can only say that the directors are aware of the difficulty in continuing trade in our traditional manner and are already exploring other avenues of investment,” Mr Mac Alister said.

The company’s Centenary would be celebrated next year, and that every effort would be made to recognise this milestone, the current state of the market makes it unwise to make any specific promises or pediction, he said.