A. Batteries future brighter

Press, 26 November 1977, Page 19

A. Batteries future brighter

Prospects appear reasonable for Amalgamated Batteries, Ltd, and it is expected that the profit for the year to August 31 will improve considerably says the chairman (Mr R. G. Compton) in the annual report.

There is no doubt that had it not been for the loss incurred in the first six months, because of the price freeze, the profit would have at least been in line with that of the previous year, he says. As announced, group net profit fell 30.3 per cent to $121,906; after half-year a loss of $3368 was incurred. “In times like the present it is very difficult to forecast future profits. AH shareholders are aware of the problems of inflation which beset New Zealand, and the company is doing its share towards increasing overseas earnings. As announced, group net profit veil 30.3 per rent to $121,906; after half-year a loss of $3368 was incurred. “In times like the present it is very difficult to forecast future profits. All shareholders are aware of the problems of inflation which beset New Zealand, and the company is doing its share towards increasing overseas earnings. “Total group turnover has

risen 12 per cent to $4,246,146 and although local sales did not increase at the same rate as in the previous year there has been a substantial rise in export sales,” he says. (Local sales rose 10.5 per cent to S3.BM, and export sales 26.3 per cent to $428,595.). “It is expected that there will be a further increase in overseas sales in the new year. “In last year’s report the installation of new plant from which a considerable improvement in production was expected was referred to. “For various reasons the installation was delayed until shortly before the end of the financial year. This plant is now working satisfactorily with a consequent improvement in output, quality, and working conditions.” The turnover of Amalgamated Batteries (Fiji), Ltd, continued to increase and the first dividend was paid to the parent company during the year. The net profit was after providing $91,506 less for tax at $29,451, $4060 less for minority interests at $4518, but $1234 more for depreciation at $55,652. Interest pay-

ments rose $26,583 to $47,536. The lower taxation provision is after making allowances for the appropriate incentives. There is a rider to taxation payable in the notes which states that no provisional tax is payable in respect of the 1978 year. A recommended final dividend of 8.5 c a share makes a steady annual rate of 13.5 c a share (13.5 per cent). The ordinary dividend takes $65,593 and is covered 1.8 times by the profit, after allowing for the preference)' dividend. In last year’s report it was said that the board would consider increasing the dividend, but the latest reduced result has prevented this. However, the directors are to take steps to make taxfree payments available from the share premium reserve, and a special meeting of shareholders will be called in the new year to alter the Articles of Association. Shareholders’ funds rose $71,901 to $1,488,595, including steady ordinary capita! of $501,515, $17,700 higher capital reserves at $231,552, and $54,201 higher revenue reserves at $755,528.

The earning rale on average shareholders’ funds fell from 12.8 per cent to 8.4 per cent. Working capital rose $195,342 to $1,282,255, and the current ratio rose from 2.3 to 2.4 to 1. Term liabilities increased $348,107 to $695,547, including additional borrowing for the capital expenditure programme from the Development Finance Corporation. Additional finance was also obtained from the Bank of New Zealand (secured), increasing the debt $103,056 to $268,134 which is listed under current liabilities. The shares last, sold for 135 c giving a divdend yield of 10 per cent, and an earnings yield of 18 per cent. The; price-earnings ratio was 5.5, | ‘and the net asset backing a 'share 297 c.