Skellerup sees lower profit

Press, 25 October 1978, Page 25

Skellerup sees lower profit

The profit of Skellerup Industries, Ltd, was not expected to be maintained in the current financial year if the Government dropped the 5 per cent stock valuation adjustment allowance, says the chairman (Mr V. Skellerup) in the annual report. At the time of writing the report the allowance had not been dropped, but Mr Skellerup says in the report “if the Government decide that the allowance has fulfilled its purpose in just one year then I do not expect that the net profit for the year under review will be maintained during the current year. “Turnover in the first few months has barely reached 1977 levels in a number of companies, but that former period was one of healthy activity for the group generally,” he rays. The profit increase in the latest financial year could, at first glance, be attributed to general inflationary trends.

But, with more emphasis on production and promotion of industrial products successful trading was experienced by the Rotocure division of Atlas Rubber Company, Ltd, and Empire Rubber Mills, Ltd. Empire’s total turnover exceeded SIOM for the first time and another first was its export sales rose above SIM. “It has been a different story in the areas more concerned with consumer spending such as flooring, footwear and upholstery. “It has been difficult to maintain turnover at 1977 levels in money terms, let alone units sold, in these manufacturing and distribution areas. “During this period it was gratifying to observe the chain of retail outlets, Para

Rubber Company, Ltd, increasing its turnover, in most places in excess of the prevailing rate of inflation and still maintaining its rate of profitability,” Mr Skellerup says. Exports for the year exceeded S2M for the first time.

Group net equity profit rose 18.8 per cent to $4,091,562, in the year to March 31, on sales up 12.5 per cent to $77.9M. The profit was after providing $88,470 more for depreciation at $681,337, but $549,267 less for tax at $1,864,575. Interest payments on fixed loans rose $2509 to $432,029. A recommended final dividend of 5c a share makes a steady annual rate of 10c a share (20 per cent) on capital increased by a one-for-four bonus issue and a one-for-five cash issue. The dividend requires $701,690 and is covered 5.8 times excluding the preference dividend. Shareholders’ funds rose $3,947,737 to $28,207,392, including ordinary capital increased $1,169,484 to $3,508,452, $581,619 less for capital reserves at $1,956,714, but $3,359,872 more for revenue reserves at $22,342,226. The earning rate on average shareholders’ funds rose from 15.6 per cent to 16 per cent, while shareholders’ equity rose from 63 per cent to 68.4 per cent. Working capital rose $2,793,285 to $18,942,016 and the current ratio improved from 2.6 to 3.0 to one. The shares last sold for 245 c for a dividend yield of 4.1 per cent and an earnings yield of 23.8 per cent. The price-earnings ratio was 4.2 and the net asset backing a 50c share was 384 c.