OMPANY, LIMITED
Page 15
If you've noticed an error in this article please click here to report it so we can fix it.
channels of supply, the Zambian companies were called upon to undertake a massive fuel lift by road, as well as other special traffics, until the Zambian Government could set up its own organisation. These necessitated an increase in the fleet from 400 to 1,000 vehicles. The immediate result was a substantial increase in the 1966 profits of those companies. Owing, however, to the undue strain which was placed on their administrative and vehicle maintenance sections, the companies were obliged to make special provisions in 1967 for deferred repairs and other items, and a loss was incurred. Negotiations are currently proceeding with the Zambian Government whereby they are to become partners in our road transport interests in that country.
The first year of the partnership between United Transport Overseas and the Anglo-American Corporation has seen the extension of both road passenger and freight haulage interests in South Africa.
The operating companies in Rhodesia, Malawi, Uganda, Kenya and Tanzania continued to extend their interests, and both turnover and profits increased compared with the previous year.
In Australia, the process of building up an efficient and profitable freight organisation is continuing satisfactorily.
In last year's review, I referrred to the claim lodged with our associated company, Jamaica Omnibus Services, for higher rates of pay and improvements in other benefits. A negotiated settlement having proved impossible, the claim was referred to arbitration. The tribunal's decision was not made known until January this year. The award, which remains in force until the end of 1969, was back-dated to March 1967 and added close on £100,000 to the company's operating costs for the ten months, bringing about a substantial reduction in the net profit for 1967, compared with 1966.
During the whole of the fifteen years of its existence, the level of the Jamaica ompany's fares has remained unhanged, but this latest award has so aised costs that the company can no onger maintain adequate and efficient ervices and provide stockholders with a air return on their investment. Accordngly, an application for an increase in ares was lodged with the Public Pasenger Transport Board of Control in pnl last but, after five months, a ecision on the application is still waited.
The 1966 results of our subsidiary, anadian Motorways, were adversely ffected by a prolonged strike of haulage orkers in the Province of Ontario in the early part of that year, but I ventured to predict that the results for 1967 should comfortably exceed the 1965 record profit of £244,000, before tax. In the event, the Canadian company earned a pre-tax profit in 1967 of £560,000, before taking into account a credit of £80,000 arising from devaluation.
The trading profit for the current year to date shows an increase on the corresponding period of 1967. The present agreement between the employers and the union in Eastern Canada expires at the end of this month. Negotiations for a new agreement have been in progress for some time. At the date of this review a settlement would seem imminent, the cost of which should not affect the company too much during the rest of this year but which could, over the proposed three-year period of the agreement, prove to be a heavy burden.
ADVANCE LAUNDRIES In spite of economic conditions, Advance Laundries had a better year in 1967, and the profit, before tax, showed a recovery of approximately 22 per cent on the results for the previous year, in which the group had suffered a setback in its domestic laundering and dry cleaning business, particularly in the London region.
The improvement is due largely to the continued progress of the towel-cabinet and other commercial services, but the domestic laundry and dry cleaning services made a substantial recovery, the loss incurred in London in 1966 being largely eliminated. Since the end of the year, it has been completely eliminated.
In little more than ten years, the business of the Advance group has changed from predominantly domestic trade to commercial services, viz., towel-cabinet, linen and garment hire, office cleaning and allied activities. These now account for some 70 per cent of total turnover and as much as 80 per cent of group profit.
The Advance group's operations have continued to be affected by S.E.T. and the prices and incomes policy. It would be optimistic, therefore, to expect the group's results for 1968 to be better than those for 1967.
REDIFFUSION Rediffusion had a record year and profits, before tax, increased by 14 per cent compared with the previous year.
For the first five months of the financial year television rental business was restricted by the very stringent controls on hiring but some relaxation of these controls in September 1967 led to a considerable increase in demand.
With the official introduction of colour television on B.B.C.2 in December, the initial demand for colour receivers was greater than the manufacturers could meet. Ih November 1969, the three television services should be available over the greater part of the country on the new 625-line standard and all of them will give programmes in colour. The better reception of colour transmissions over wired networks and the cheaper cost of the wired receiver, should increase the popularity of Rediffusion wired services.
With the exception of Nigeria, where operations have been seriously affected by the civil war, and in Malaya, where a setback was suffered owing to a strike of employees, the overseas companies of the group, in general, had a satisfactory year.
Since the year-end, Rediffusion has purchased the relay networks of the Rank Organisation in England and Scotland. This acquisition, the need to provide for colour television and the continuing development of all branches of Rediffusion's business, make it necessary for the company to raise further capital.
BOULTON & PAUL The B.E.T. Group had for some time held an interest in the equity of Boulton & Paul but, in May this year, we purchased from the family trusts of Mr. J. H. Tresfon, the Chairman, a substantial number of ordinary shares, and some "A" non-voting shares, bringing our interest in the voting capital up to almost one half. Through subsequent further purchases of shares we now hold just over 50 per cent of the voting capital.
The origins of Boulton & Paul date back to 1797 and to the sale, and later the manufacture, of domestic ironware in Norwich, where it still has its headquarters. It is today a successful, wellmanaged company engaged principally in steel construction, builders' joinery, the manufacture of metal windows and the supply of builders' equipment and plant.
FUTURE PROSPECTS It is an even more difficult task than usual to attempt a forecast of our results for the current year. The Group is engaged in re-investing the £35 million received at the end of last year from the sale of its United Kingdom bus interests and in this respect we are in a transitional period. If the task is to be carried out to best advantage we must exercise discrimination in the choice of new investments and avoid the temptation to proceed too hastily.
With the consolidation of four of our new subsidiaries for a full year and further progress in our businesses generally, profits, before tax and minority interests, will show a substantial increase. However, pending the successful completion of the redeployment of our cash resources to produce franked income, taxation is expected to take a much larger slice of our profits and this may well hold back the advance in profits available for distribution.