C.P.D. Earns More; Jump In Turnover

Press, Volume CX, Issue 32392, 3 September 1970, Page 14

C.P.D. Earns More; Jump In Turnover

' The group turnover of Cable Price Downer, Ltd, increased by 30.6 per cent to a record $59,136,351 in the year to March 31, the directors announced in the annual report.

This figure does not include returns from Downer and Company, Ltd, for its work in association with overseas partners on the $2O million Tokaanu No. 2 tunnel contract. At balance date this project was 30 per cent complete.

As previously announced, the net profit of §1,036,780 was 18.1 per cent higher than in the previous year, after providing $92,692 more for de preciation at $1,271,238, and §93,383 more for tax at §864,095. The directors recommend a final dividend of 5 per cent on ordinary shares, making a steady 10 per cent for the year, and requiring §657,134; it is covered 1.6 times.

The earning rate on average shareholders’ funds improved to 7.1 per cent; funds increased by §450,546 to §14,762,599. With C.P.D.’s 3751 employees, the chairman (Mr K. C. Campbell) estimated that the payroll tax will cost C.P.D. §220,000. “Much has been said and written in condemnation of this tax since it was announced and I agree with the general feelings expressed'by the business community,” says Mr Campbell. “As payroll tax is not deductible for income tax purposes, this must be viewed as a disposition of our tax-paid income. As such, it is equivalent to a dividend of almost 3 per cent to ordinary shareholders.”

He emphasised that the group’s greatest concern lies with the long-term contracts

which were entered into prior to the date of the Budget. “The payroll tax is an expense which was not foreseen and could not be allowed for when these contracts were tendered ...

“The level of the tax is such that it can seriously affect the profitability of any contract which was originally bid on a competitive basis.

“Must Raise Costs”

“The Minister has suggested that the payroll tax will not be passed on to the consumer. It is difficult to believe that he was serious in making this statement I consider that the payroll tax will ultimately be absorbed as part of the cost of prpduction and must inevitably be reflected in an increase in the cost of living ” The directors express dissatisfaction with the rate of increase in earnings compared with the rate of turn over increase.

They put the slower climb in profits down mainly to unsatisfactory returns from the production companies of the former national electric group which C.P.D. took over in 1967.

“The management and staffs of these companies have been I hampered by excessive diver-

sity of production and by the need to replace ageing plant," says the chairman, Mr K. C. Campbell. Mr Campbell also reported that the construction company has continued to perform at a high level. After a long hard struggle by the staffs, he says that many of the difficulties are being overcome and a more reasonable profit is expected in the future. Further factors retarding profit were shortage of skilled labour and industrial unrest in the group’s engineering companies. “Nevertheless they have continued to trade profitably albeit at somewhat lbwer levels than is considered desirable,” says Mr Campbell. Companies showing a marked increase in turnover and profits were engaged in engineering sales, electrical sales and automotive sales and service.

Republic Calls 20c

Republic Petroleum Corpn (N.Z.), Ltd, will make a final call of 20c per share on the contributing shares. Letters will be issued before October 16 giving a month’s notice with payment due on November 16.