Regina seeks capital

Press, 29 July 1978, Page 19

Regina seeks capital

Regina Confections, Ltd, Oarnaru, has reached the stage where the raising of additional long-term capital or loan money is urgent, says the chairman (Mr J. P. McNamara) in the latest annual report to shareholders. Mr McNamara says “few businesses have been able to . rope with the effects of i inflation on the cost of pro- | duction and sales without the injection of additional working capital of a permanent or long-term nature into the business.” He says that Regina Confections is no exception and that the directors are examining what options they have. An announcement will be made when a decision is finalised. Demand in the confectionery industry definitely turned down in 1978, Mr McNamara says, and it is expected to be some months ' before it improves. But the directors expect to i be able to reach at least last I year’s turnover, provided de- i mand will be indeed stimu- < lated by the recent Budget measures. I

Improved efficiency from the new plant will be of great assistance, as the results of the latest financial year — the first in which full use of the new plant was made — have clearly shown.

Elsewhere in his report Mr McNamara says that the i company strongly supports ’ the representation of the Otago Regional Development Council for the continuation of freight assurance grants tc soundly-based manufacturing businesses in priority development areas. More than two thirds of the outprt from Oarnaru is shipped to the North Island, and freight assistance grants enable the company to maintain competitive product pricing throughout New Zealand, he says. As announced, the company had a very good year: net profit almost trebled — from $35,652 to $99,060 in the year to March 31. It was after providing $1343 more for tax at $26,884; tax was reduced by $26,327 because of allowances. The dividend is increased from 9c a share to 11c (11

per cent), 8c a share being tax-free. The profit covers the dividend 3.0 times. The earning rate on average shareholders’ funds is 13.4 per cent.

Group profit before tax was equivalent to 5.6 per cent on turnover; last year the comparable figure was equivalent to 3.3 per cent of sales. These figures more clearly show the improvement in Regina’s manufacturing results. The provision was $2092 higher at $37,201.

Net current assets rose $26,174 to $253,133; the current ratio is 1.5 to 1.

Proprietorship is 54.5 per cent; shareholders’ funds of $833,876 are composed of $300,000 ordinary capital, $146,473 capital reserves, $285,344 revenue reserves, and $102,059 (of which $9063 is capital reserve) share of reserves of the associated company.

The shares last sold at 100 c for a dividend yield of 11 per cent and an earnings yield of 33 per cent. The price-earnings ratio is 3.0, and the asset backing 278 c a 100 c share.