NZ Refining seeks fees increase

Press, 14 May 1981, Page 18

NZ Refining seeks fees increase

PA Auckland New Zealand Refining Company. Ltd. is likelv to need an increase in the level of processing fees to cover higher operating costs and the substantial interest and allied charges associated with the fund-raising needed for expansion, the chairman. (Mr D. W. Kendell) savs in his annual review. He says that the company is budgeting for a substantial increase in costs because of the continuing effects of inflation. Increased costs, of imported materials, particularly lead components, and

several major repair items are scheduled for 1981. Also, to cover future needs, the company’s manpower needs will ' increase steadily” and a significant training effort will be required. both in New Zealand and overseas. He says that 1980 saw another year of substantial increases in operating costs. The major reasons for these were: Imported material price rises because of higher overseas price levels and a weak New Zealand dollar; higher maintenance costs with a major programme ($700,000 spent during the year) to repair a

large number of refinery tanks; the biennial overhaul during April: staff recruiting for expansion; the renegotiation of technical service fees. He says that total capital expenditure during the year, excluding expansion-reiat-work, cost $2,147,000. The intake of crude oil at the refinery was down from 3.072,000 tonnes to 2,915,000 tonnes because of the impact of the major overhaul in April and May. Feedstock from the Kapuni and Maui fields totalled 300,000 tonnes, or 10.3% of total intake. As reported, the company’s net profit for the year to December 31 more than doubled from $2,427,000 to $5,726,000 because of a revised processing formula

■ ' 7 ’ 3» negotiated with the Govern.! ment. Mr Rendell says that al restatement of the 1979 profit to reflect the new fee a comparative profit 55.4% ahead at $4,961,000. This restated . profit represents a return of 69% on average shareholders’ funds. The $5,726,000 profit inutile' accounts (after tax $2.867000 higher at $6,002,000 -and depreciation $190,000 unjat $2,382,000) represents a-ie-turn of 23.9 per cent capital and 8.1 per centra average shareholders’ funds In 1979 the return wasissE9 per cent on capital and'Sf per cent on funds. . ’p The dividend, up fronfeb per cent to 12 per cent, takes $720,000 more at $2,880,000* —