TNL coping well

Press, 7 November 1978, Page 26

TNL coping well

j For the first time in many years TNL Group, Ltd, has ’suffered a setback in profits, ■says the managing director ’(Mr G. Butler) in the annual report. The main problem areas for the group were in contracting and some companies ; in the manufacturing division, together with reduced : returns from associated companies, he says. “Positive steps have been taken in each of these areas to improve the over-all ’profitability of the group. “The remaining divisions ■ have not been affected to i the sale extent, and conitinue to make adequate ’profits in the current econ)omic circumstances.” Profitability of the tours ’division had been reduced ’because of increased competition for a declining num’ber of in-bound tourists, he said. “In spite of a downturn in )the number of Australian I tourists into New Zealand Newman’s tour division was 'able to maintain last year's ’numbers, indicating an im- ’ proved share of the market. “The coach-line division had another record year, but the road-user charges began on April 1, and will have a significant effect on the full iyear.” ) All companies in the | freighting division had

’•worked profitably, although,t . margins were reduced. i! Sweeping Government pol- c riicy changes in the last 12 it I months had had important j consequences for the freight- i ( Ping division. !< These included the remov-I ] ; i al of the 65km limit for pro-, -,’duce and the new 150 km |, II limit for general freight, al-r . though the latter had not , had such a significant im-!' i pact for the division com-1, 5 pared with carriers in the 1 ,; I North Island with largej' cities up to 150 km apart. I ; Mr Butler is critical of the ■ , Road-User Charges Act andp - says, while not arguing with ’ 3 The philosophy of “user--1 pays,” it would be gratifying i |if the amounts the group II si pays were spent on the roads j 1! it used rather than on urban i - [ motorways of some of the; -! country’s larger cities. s'l The act has also caused I additional costs in the way ; i the act is levied, and addi-i i tional staff have been em-l 1 ployed to maintain distance! s records. I s Working capital is affect- j - ed because of the need to pay in advance, he saysi The group net profit fell t 16.7 per cent to $2,605,000 n in the year to June 30 on a; total gross revenue up 10.2 111 per cent to $46.4M. I The profit was after proe I viding $343,000 more for d i depreciation at $2,543,000,

but $760,000 less for tax at $379,000. Interest on fixed charges rose $163,000 to; $767,000. Trading expenses increased 11.4 per cent to $23.5M and wages and salaries 14.2 per cent to $11.7M. j ; Shareholders’ funds rose • $4,564,000 to $28.2M, including ordinary capital up >52,678,000 to $11,471,000, ; c a p i t a 1 reserves up i $1,581,000 to $10,367,000 and ! general reserves up $562,000 |to $7,858,000. I The earning rate on average shareholders’ funds fell' Ifiom 18.1 per cent to 9.9 per I cent, and on ordinary capital ;from 34.5 per cent to 19.4 [per cent. i Shareholders’ equity rose from 55.3 per cent to 57.5 per cent. The recommended final dividend of 3.5 c a share ; makes a steady 7c a share 1(14 per cent) for the year on I increased capital. The ordi- ! nary dividend requires SI.6M land is covered 1.4 times. I Working capital rose $5,158,000 to $5,452,000 and the current ratio increased from 1.0 to 1.6 to one. The 50c shares last sold for 81c for a dividend yield of 8.6 per cent and an earnings yield of 12 per cent. The price-earnings ratio was 8.3 and the net asset backing a share 108 c.