PAGE B2 wi CH GAL dbl th iH) fg) HM ty y} jh i, P.W.A. ANNUAL ' REPORT REPORT OF THE PRESIDENT DONAL WAT- . 8ON TO. THE TWENTY- SEVENTH ANNUAL SHAREHOLDERS MEETING OF PACIFIC WESTERN AIRLINES LTD. APRIL ‘47, 174 ; There are perhaps several ways of describing the year 1973 but it would not be inap- propriate to'say the twelve month period was a difficult one. In the quarter we were beginning to see what we would experience at least in the next six months. There was a major departure from forecast on most mainline scheduled services| where growth nearly ,doubled the growth rate ‘forecast. This imposes serious strain on your organization due to shortages of skilled staff, facilities, aircraft aid related equipment. Cost nianagement under these conditions is extremely difficult aid a portion of the gain. in revenues is lost. The last quarter in the year did a tournaround a fell below forecast. The petroleum in- dustry in the Mackenzie River Delta who are served through Inuvik were forced to slow. thie operalions due ta ecological pressures and the need for a.’ positive energy policy. Un- precedented warm weather and rains in the Arctic Islands seriously hampered . the traditional «start-up = and economic. uncertainties in petroleum have. fimited. the dimension af” operations. - Your comapay was also beseiged in the last quarter by several unforecastable ‘in- creases in fuel costs and in some cases short supply. Not _only.did Canadian domestic “prices increase dramatically due to wellhead per barrel price of crude oil but United States paints served by your company made quantum jumps, tor example,Seatilé 16.4 cents per gallon to 66 per gallon and Honolulu 18 cents per gallon to 45 cents per gallon in the year. All manufacturers of goods used by your company whose production i is energy and labour intensive adjusted the price of their goods 10 us accordingly. The. cost of bank money in- creased in.excess of 50 percent’ during the year. Truly, it’ may be said that many of the traditional “Phantom” Profits: The profit made by Canadian business are ‘really only “phantom” profits because of ‘inflation, a leading Canadian chartered accountant said today. J.L. McPherson, president of * the Canadian Institute of Chartered Accountants, told Vancouver . Board of ‘Trade members that lbusiness has a poor image with the public and the politicians because it has nol properly explained ils profits, how they are made, and why they are necessary, “Government must jain with business in explaining the profit motive instead of criticizing it and threatening. the stability of governments,” MePherson said. . “Profits is nota dirty word~ it's a word that speels activity jobs, . opportunity,. social systems lo care for the han- dicapped, the sick, the under-.. priviledged-and ‘we as businessmen had better explain that to a lat of peuple in our society,”’ MePherson said he was concerned about two areas of profits - price level accounting and relurn. on investment. “Those -newspaper reports that told you that profits rose. last year by $7 per cent In Canada also told you that living costs went up by 10 per cent, food by 17 per. -cent. and wholesale prices and cosls of materials by 20 per cent plus,"- McPherson said. “In a word - inflation. Yat, none of these factors at present are built Into. company fiancial statements. stance, most companies figure the cost of their inventories on the basis of acquisition prices. “So, if prices rise before inventory if replaced, reported profits are inflated, These -in-. ventor profits can look healthy enough until the company, gets around to replacing the goods It ~- has sold or used. That's when - . equipment the winter. . government. | For in- © * management tools of as recently as fifteen months ago are no longer - adequate. Management |‘ must be resourceful and quick to respond to changes, Ina tightly regulated industry, the most- expeditious plans are often frustrated. In the sactal era where work stoppages of essential govern- ment services appears to be the popular thing (odo, it is difficult ladevelop a total atmosphere of oplimism. However, your mangement View 1974 a8 a year where the difficulties are to be resolved soon aS We are now well equipped with staff, and to handle the challenges ahead. Toward the end of the year, the Mackemie Delta will be active again, the Athabasca Tar Sands are bringing us increased activity every day. The Airbus con- tinues to exceed forecast and the interior of. British Columbia is exceeding expectations. . The first. quarter-.of 1974 unaudited financial results indicate th. avenues are $20,543,000 up. per cent fram $17,120,000 in 1973, Operating: income before depreciation and amortization at $2,679,000 for ’ 1974 is up 24 per cent over 1973. Net earnings before provision for. possible fulure axes, are $946,000 in 1974 and 14 per cent. improvement over 1973. After the provisions for future years’ taxes, the net earnings for the” first quarter are $460,000 up 13. per cent over the previous year, ©.” Earnings per.common share af 17 cents for the quarter were: achieved. The 1973 earnings per". common share were 15 cents, . Fully’ diluted earnings per’ ° common share were 17 cents for” 1974 and 15 cenls for 1973. .We regret we-are unable lo report any: majdr, turnaround insfso 3 Pacific Western ‘Trucking..The’ majority of reasoris'for’this are” indicated) in your Annual Report. [tis expected, however, that substantial new revenues ~ will be achieved when the Ath- in. With the. continued: en- thusiastie support and loyalty of your employees we are con- fident that we will successfully work our way through all of the challenges presented to us and © . that your company will continue - to be a forerunner in tran--. sportation. you realize that these profits are only phantom profits.”” McPherson said inflation alse distorts profits where coOmapnies ‘exercise depreciation to reflect the” gradual obsolescence of their buildings and equipment, Here, | - again, the basis used ‘in: ‘the ~ _ financial stalements is the criginal cost of the. items--not what the firms will have to. spend to replace them. - “Thus, In-a period of rising. ‘prices, the current depreciation . practices also resull in sub- stantial over-stalements ‘of - profits,” McPherson said. He sald business also has. to relate ils income (o the income the ordinary person receives on — his investments. “"": “A profil, however laree, in’. lerms of gross dollars Is: not satisfactory and never will be: satisfactory to the businessman ~ if itis Jess than the return that. : business could have got in’ a: risk-free. investment such. as": bonds,'’. Pherson said. , “A company making a per cenlage . rate of return thal... is less than the risk-free rate of return is, in fact, making a loss - : and not a profit at all.” The CICA president said also the businessman has to explain to the gavernment and: the public why some Industries are justified in having better-than- average profits in some years.’ ’ “He has to explain why these: profits are justified in light of previous years ‘when profits were less than the risk-free rate ,of return or even nil.” ; only the year. when profits rose”, 37 per cent, but it was a year — when business crented more basca Tar Sands begin ta phase : Me. ok McPherson sald 1973 was not: Okanagan Helicopter Annual Report " serviced. “The ‘merease® tn Revenue from amerabons of Okanagan Helicopters Ltd, and subsidary. companies rose to a record level for the year ended January. 91, 1974 but earnings alter taxes declined compared with last year. President Jehn W. Pitts sald thal preliminary: year - end figures show gross revenue rose ‘0: $17,062,788 compared with $12, 971,437 last year. The boost in revenue reflects Okanagan’s acquisition of Haida Helicopters _ Canadian north. _ $613,974 THE - HERALD, ,TERRACE, B.C. Ltd, and Lae §t, Jean Aviation ‘Liee. in 1973 and increased Okanagan activity in the operations ‘totalled a 30,071 __ ment and higher costs with no Okanagan is the largest helicopter operating company in Canada with bases from _ Pitts said. The same overall coast (a coast and north to the-— decline in utilization has been Arctic. : eX industry avross Canada, he Earnings after taxes were said, compared with $1,027,056 and the earings per share were 63 cents compared with $1.38, Funds provided by _ the drop in profit performance market that: has* been’ over- Lower utilization of equip: : increase in charter rales caused - compared with last year, Mr.” rienced in the helicopter. Ce eo, hopeful that there: will be a “This is a’ symplom_ ef a. he years. ahead, "he said.:: ‘ Wednesday, May ly 1974 e Alcan Dividends: : "A quarterly ‘dividend ‘of 42 cents. per share in. Canadian a currency was declared on the remaining ‘outstanding 44:. i percent preferred shares of $49 par value of the Company, payable .15 July :1974:‘to | preferred shareholders. of record at the close al; ‘business 28 June 1974, . ae wo The “Directors: of. Alcan 2 Aluminium . Limited . today :” declared a quarterly dividend of available helicopters: through. * 20 cents per share, U.S. funds, : the granting of “additlonal’’ on the common shares of the licences hag outstripped the Company, payable 5 June 1974 market growth and this has toshare holders of record at the been brought to the attention of close of business 7 May 1974. regulartory, authorities, « -... ‘This is an Increase from the 25 , cents rate which had been paid since: the third quarter of 1973 and represents a restoration of - the 30 cents rate which was paid in 1970. The number, of Alcan: Aluminium | Limited” common sates issued and outstanding - ay of -15 April 1974 was ae 97 436. “Tt appears. that. federal authorilies are now aware of this over-expansion and we are’ PROTEIN ECONOMY © Ground beef labelled “lean” or “exira Jean” may not! be the: hest buy’ hutritionally, reports Consumers’. Association ‘of = Canade “ oe eee more rational growth pattern in are expressing some strange ideas. Let's look at a few of them- _— “The mining sindusiry has been i in B. c. tor 100 yenre _. and hasn’t paid anything to the: people over that time" n fact'no Industry has contributed more: It was mining. ” . activity—on the Fraser,.in the Kootenays and the ~ Gariboo— which opened up this province, ‘which » caused dozens of communities to be formed. Today, -. _smining pays its way by returning more than $75 million: “to the province and municipalities each year in taxes, over. $178 million in yearly payrolls, and $58 million’: 0. ._In-taxes to the federal government. Most important, - mining provides roughly 50,000 British Columbians with jobs, Mining will mean even more in the future Me on but not ifit’s taxed out mensenee by Bi Bill a1 | than 100,000 new ‘Jobs In. the. economy : mCanada fas thrived “and “gurvived an ‘capilalism and: “profits are an integral part.of thal same system,” McF’hereea Laks said. ° “The Bill 31 super-royalty Is an excess profits tax” .. This. is absolute nonsense. ‘The “super royalty s proposed. in Bill 31 has nothing to do with profits. - It's. based on-gross preduction values and is so ‘excessive that it could take up to 100 percent- or even more — ~ of a mining company 's eamings. 7 = “We éan leave the ore in the ground for _ future generations”. : When the. Premier of B.C, made this remark, he had ta be kidding «. . because extracting and processing 5 mineral ores Is one of the biggest job providers i inou ‘province. If the Premier | is serious, maybe he'd like to tell all of us how he'll provide forthe 50,000. unemployed. his “idea” will create... and how tow ‘like Merritt, Princeton, Fraser Lake, Granisle and. : : Ashcroft will cope when mining | is wiped out ‘ining oily benefits foreign owners” a Wy een To justify Bill 31, 4 Provincial Government members Their investment has built mining in B.C: and created the major benefits of mining in B.C. are enjoyed by: Se people who live and work in this province. , barely scratched. The reason for this lies not only in: "=the vasiness of our province .. s techniques that allow lower and lower grades ¢ of ore. ; * , some. very, wrong: ideas about ut mining in B. Gs. thousands of Jobs for British Columbians. That’s why : “our minérals are in danger of running out” The truth is that B.C.'s mineral potential has been . but i in the: new mining tobe mined, thus increasing our potential. — ; tremendously. Bill 81 would actually cause our. mineral, ‘ reserves to shrink — first, because it would raise tax ‘and royalties 0 greatly that only higher grades: could be mined at any kind of profit. ~~ ower ‘grades would simply be left in ihe ‘ground’ or ‘discarded: But even worse, Bill 34 wotild make the’~ development of new minesites totally uneconomic ~ fear. of this: iegislation, exploration has already |. been drastically. reduced and jobs are disappearing: B.C." 3: mineral reserves: have an immense value to this * ‘orovinee — if they are mined. But we don't have a. monopoly on any of these minerals. If this government “ passes ‘tegislation which restricts and cripples. mining, exploration | money will simply @ go to areas outside : and ask | him to work for the’ repeal of Bill at. “ts a regressive piece of legislation vas based on.