Col. Motor sees lower profit

Press, 5 December 1985, Page 63

Col. Motor sees lower profit

Colonial Motor Company, Ltd, is maintaining its market share, albeit probably at the expense of profitability, according to the chairman, Mr Gordon Gibbons.

He told a well-attended annual meeting that profit projections were down on last year and that there was little prospect of profit increasing before balance date in May. However, Mr Gibbons said that the group expected to maintain the dividend rate on the enlarged capital after the one-for-five bonus issue. He told shareholders that it was estimated the fringe benefit tax would take $400,000 for the year “and that is straight off the bottom line.” “This added tax is for company cars and in the retail (car) business we have no option but to pay or have staff unable to demonstrate our product effectively,” he said. Mr Gibbons added that in his

opinion, in the car retail business, it was reasonable to expect some dispensation. Mr-Gibbons also mentioned the sale of the company’s Government stock which, in the accounts, is described as a loss.

He said that although probably technically a loss he preferred to think of it as a discount.

“The fact is that we sold that stock because we are better off than if we had held on to it. Although it was sold below (book value) in the long run, we are financially better off.”

Shareholders questioned directors about the valuation of the company’s properties, which several people felt were under-valued.

However, Mr Gibbons said he would not like the company to be in a position where it had property valuations above the realisable market value, which did occur in some cases.