E. Adams holding costs

Press, 10 July 1987, Page 12

E. Adams holding costs

Ernest Adams, Ltd, the Christchurch baker, was holding costs, said the managing director, Mr David Booth, in the annual report. Because of centralised buying, the company was able to reduce the impact of cost increases.

The outstanding feature of last year was the cost reductions that were achieved. Because of deregulation, efficient buying and the ability to buy well in a competitive market in New Zealand and overseas meant that there were substantial savings in many raw material costs.

The company had new plant on order, and was considering buying more to increase production in promising new lines and improve the presentation of popular existing products, he said. This included extending facilities for the fruit pud-

ding range. Export orders had already been received which would test the resources of the company. The new facilities would substantially increase the capacity to meet demand.

The Christmas range of products was well received. The presentation of this range was being revised and new products were being introduced.

The new financial yfear had started well with sales and production ahead of the previous year, Mr Booth said. As reported, the total group net profit rose 58.5 per cent to $1,309,838 in the year to March 31, compared with the previous corresponding period. Included in the result was $28,000 in capital profits from the sale of equipment (nil previously). Sales increased 11.4 per cent to $21,769,628, and

expenses rose 6.9 per cent to $18.5 million.

The profit was after providing $558,895 more for tax at $1,201,873, and $67,566 more for depreciation at $559,413.

A recommended final dividend of 3c a share increases the annual rate from 5.25 c to 6c a share (24 per cent). The dividend requirement is $394,921, and is covered 3.3 times by the profit.

Shareholders’ funds improved $1,338,477 to $7,561,016, including ordinary capital up $339,527 to $1,568,293 after five issues were made during the year, including those of the bonus share lieu in dividend scheme and a staff share issue.

Working capital felt 1 $97,182 to $171,073, and the current ratio fell from 1.1 to 1.04 to one.