Alliance outlook good

Press, 18 November 1981, Page 27

Alliance outlook good

The immediate outlook of Alliance Textiles, Ltd, continued to be encouraging, sa id the directors in the company’s annual report. The level of forward orders, for both domestic and export orders, indicated a continuing high level of activity, and the group <vas budgeting for further increases in turnover and profits in the new financial ' ■ ... Management accounts in the first two months since, the July 31 balance date were in line with estimates, they said. “The full benefit of longer production runs and specialisation will not show in reduced costs until later in this year and next.” The long-term prospects for wool and wool-rich products, capable of efficient manufacture by the group, were excellent. “We are concentrating on particular markets for the goods which we are best at producing with emphasis on adequate margins. “Profits are going to be increasingly essential as we must face technological changes in the ensuing years to remain competitive,” they said.' The Alliance restructuring plan, approved by the Government last year, anticipated increases in efficiency in 1 the next four years, to

ensure the continuity of textile manufacture in New Zealand in the long-term — even after the effect of the bounty on woven fabric was reduced. The programme was both costly and essential for the company to remain efficient and competitive. However, the restructuring had been most successful to date, they said. “We are satisfied with progress to date and look forward to realising the many benefits to accrue from the streamlining still in progress.” At the time that the acquiring the assets of Mosgiel, Ltd, occurred, its production was low, and substantial losses were incurred as the production of these units was built up. “Over all, however, there has been some initial benefit, with major advantages still to accrue in this and future years,” the directors said. Export potential was a major factor in the planning of the group’s products and processes. Wool remained the main area of processing by Alliance and during the 1978-79 year carpet yarn accounted for 82 per cent of total exports. It was pleasing to note that other products had increased, and last year carpet yarn accounted for 56 per

cent of increased total exports. It had to be emphasised that manufactured exports by New’ Zealand companies (as well as for almost everywhere else) required Government encouragement to offset increased costs and the restrictive practices of importing countries. The long-established and successful export incentive schemes must not be allowes to be dismantled quickly, without compensation, because it would result in falling investment in farming and exports, the directors said. The comparisons with previous years were not valid because of the company’s changed structure ... “The 1981 accounts should be regarded as the first result of a new period in the company’s history, including in part a period of transition.” The total group net profit was $5,423,513 in the latest year compared with $904,043 previously. Extraordinary losses totalled $132,778, after allowing $688,722 for capital profits from the sale of assets, compared with a loss of $313,489 previously. Total groups sales increased 73.1 per cent to $55.6 million, including export sales up 42.3 per cent to $11.5M. The profit was after pro-

viding $736,212 more for depreciation at $1,764,898. No tax was payable, because of tax credits available. These were reduced $1,134,816 to $1,438,156. A recommended final dividend of 7c a share gives an annual rate of 11c a share (22 per cent), the same as last year. However, the shares arising from the proposed one-for-eight bonus issue are included in the final payment. The dividend requirement is $1,009,375 and it is covered 5.2 times after allowing for the preference dividends. Shareholders’ funds rose $7,853,904 to S2Q.SM, including issued capital up S2M to S6.IM, after the issuing of 2M 50c ordinary shares and 2M 50c preference shares. Working capital improved $9,621,000 to $19,177,000, and the current ratio eased from 2.7 to 2.6 to one. The net asset backing a 50c share rose from 195 c to 219 c.