L.W.R on the ball

Press, 25 October 1978, Page 25

L.W.R on the ball

The directors of Lane Walker Rudkin, Ltd, are planning future profitability in the context of static sales figures, says the chairman (Mr N. H. Rudkin) in the annual report. The company is budgeting a substantial improvement in pre-tax profits for the 1979 financial year, but expects this to be offset by an increase in taxation, he says. “Executives are planning that most loss areas should be eliminated. “The company’s emphasis is increasingly being placed on these activities where we are a market leader rather than in areas where we are one of many competitors. “At the time of writing, deliveries were running slightly behind budget, and it is expected that this will continue for the first six months to December 19. “Despite deliveries being slightly behind budget, the level of forward orders looks most encouraging and should have some positive effect in the second-half to June 19,” Mr Rudkin says. Three events influenced the results of L.W’.R. in 1978. First, the sale of Alford Forest Mills, Ltd, in October, 1977, so that only 3.5 months of sales and profit came from that source.

Second, the closing of Silknit (N.Z.), Ltd, and the tent division of Holiday World, Ltd, to'eliminate for the future, the considerable losses these activities gave rise to in the vear to June 19. 1978. Third, taxation was significantly reduced largely because of increased export tax incentives and the stock adjustment allowance, he says.

“Our savings from export tax incentives have been earned through a deliberate emphasis on exports in the normal planning of the company’s activities. “We plan to ensure that these export incentives increase.” Group net profit, before extraordinary items, rose 14.9 per cent to $2,316,000 in the year to June 19, on sales 3.1 ner cent down at $45. IM. The profit was after providing $890,000 less for current tax at $312,000, but $85,000 more for deferred tax at $146,000. Depreciation fell $163,000 to $795,000, while interest payments dropped $59,000 to $826,000. A recommended final dividend of 4c a share makes a steady 7c a share (14 per cent) for the year on capital increased by a one-for-five tax-free bonus issue. The

ordinary dividend requires $700,000 and is covered 3.2 times, excluding the preference dividend. Shareholders’ funds rose $2,879,000 to $22,317,000, including capital increased $1,874,000 to $5,995,000, $517,000 less for capital reserves at $4,134,000, but $1,513,000 more for revenue reserves at $12,468,000. The earning rate on average shareholders’ funds rose from 10.6 per cent to 10.9 per cent, while shareholders’ equity improved from 53.7 per cent to 61.2 per cent. Working capital rose $1,056,000 to $16,638,000, while the current ratio improved from 2.8 to 3.0 to one. The shares last sold for 83c for a dividend yield of 8.4 per cent and an earnings yield of 26.7 per cent. The price-earnings ratio is 3.7.