Capital Mkts ahead

Press, 17 June 1988, Page 18

Capital Mkts ahead

Capital Markets increased its total profit 10.6 per cent to $36,265,000 in the year to March 31, and raised its annual dividend rate. The joint chief executive, Mr David Richwhite, said that the company itself had not incurred losses because of the sharemarket crash. However, its 28 per centowned associate, European Pacific Investments (EPI) had achieved a lower than expected result, mainly because it invested in Glynhill International, of Hong Kong, before the crash. Capital Markets had not deviated from investing in prime securities. Apart from the investment in associate companies, assets were in either cash deposits, or Government and bank securities, he said. Total assets, and conse-

quently total liabilities, had been reduced to the point where the proprietorship ratio was 73.7 per cent.

EPI had been restructured because of tax changes in Australia and New Zealand. The sale of its interest in Glynhjll, at a premium, left the associate in a strong cash position, Mr Richwhite said. Because of its reduced total assets and total liabilities, Capita! Markets was also in a strong cash position with low borrowings, at a time when market indicators suggested there were opportunities to buy quality assets at attractive prices. However, no acquisitions had been made. The temptation in the last two years to deviate from basic principles had seen a number of companies founder when diverting from mainstream activi-

Capital Markets had started the new financial year soundly because of its low gearing, the quality of profits, the availability of cash, and its assets, Mr Richwhite said. Included in the latest result were equity earnings, down 70.8 per cent, and extra-* ordinary profits of $1,345,000 (nil previously). Tax took $2,976,000 more at $5,591,00. Gross income rose 5.1 per cent to $62.5 million leaving a pre-tax profit of $39.8M, up 20.7 per cent. Total assets fell $240 million to $164.8M, and net shareholders’ funds improved $29.3M to $121.4M. A recommended .final dividend of 7.5 c a share increases the annual rate from 10c to 12.5 c a share (50 per cent). The dividend is payable on August 18.