Hotel expense higher

Press, 11 April 1978, Page 22

Hotel expense higher

There is no certainty that the result of Auckland Intercontinental Properties Ltd, in the current financial year to December 31, will be as satisfactory as that in the year just completed, says the chairman (Mr F. H. Renouf) in the annual report.

i The, depreciation charge will be doubled because of the change in the basis of accounting and the trading conditions encountered by the hotel lessee, Vacation Hotels, Ltd, for the remainder of the year will determine whether there will be a share of profits for Auckland Intercontinental Properties.

Factors in the company’s favour are that its properties are in good condition and should attract tenants. The demand for the hotel facilities remains high in relation to the accommodation available. The number of overseas visitors should increase as additional international flights are routed through Auckland, says Mr Renouf. As announced, group net trading profit was $220,965 compared with $39,008 before extraordinary items previously. The reasons for the increase include a higher base rental income paid by Vacation Hotels, $94,000 as a

share of Ue profits earned by Vacation from the hotel, and higher lease income from other properties. The improvement of bars and restaurants and other maintenance work during the year at a cost of $550,000 helped to increase trade. Some of the cost was borne by Vacation Hotels.

The result was after providing $968 more for depreciation at $57,843 and $BOOO more for interest charges at $408,325. No taxation was payable because losses incurred in previous years continued to be offset against current profits.

An asse revaluation has

placed $535,000 from land and $3,372,381 from buildings in the property asset revaluation reserve before allowing for accumulated losses. Shareholders’ funds were $1,175,447, including steady ordinary capital at $840,000 and net r. serves of $5.'5,447.

A recommended maiden dividend of 5c a share (5 per cent) will take $42,000 and will be covered 5.3 times by the profit. The working capital deficiency rose from $6"'’,306 to $1,027,424 after an increase in the bank overdr ft and sundry creditors.

Term liabilities fell $62,500 to $6,162,500.