Wr. Stephenson profit hit by payroll tax

Press, Volume CXI, Issue 32737, 14 October 1971, Page 16

Wr. Stephenson profit hit by payroll tax

The proportionately much greater decline in tax paid profit than in profit before tax reflects mainly the impact of payroll tax, says the chairman of Wright Stephenson and Company, Ltd (Mr R. R. Trotter) in his review of the year to June 30.

The net profit for the year, declined by 7.7 per cent on: the previous year’s record: result, while the decline on) profit before tax was 1.3 per) cent; payroll tax took: $153,000. “Most of our activities: must, by their nature, be: (labour intensive and this tax I bears heavily on the company—it reduces the earning rate on ordinary share capital by more than 1 per cent and on shareholders' funds by 0.5 per cent,” says Mr Trotter.

Difficult year The earning rate on ordinary capital was 1.2 per cent lower than last year, at 12.4 per cent, and on ordinary shareholders’ funds 0.6 per cent lower, at 6.6 per cent. As already announced net profit for the year fell by $174,372 to $2,088,481. The company experienced a difficult year, marked by the economic problems of fanning and the widespread inflation which resulted in a rapid escalation of costs, Mr Trotter said. Profits from the stock and station activities, which represent somewhat more than half the total earnings, fell by 14 per cent before tax.

The national motor network produced an outstanding increase in sales, but profits did not fully reflect the increase, because of the costs of reorganisation and of upgrading the premises. Group turnover increased

:,by $13,630,288 or 6.5 per i cent; of this amount 1i55,301,221 was in the comi mission section and •I $8,329,067 in the trading t section. Total debtors increased by i $1,904,275 reflecting mainly

the increased support the company has given to its farmer clients in this area.

The retention of profits is $513,145 or 25 per cent. The result was after providing $53,612 more for depreciation at $1,352,798, and $33,619 less for tax at $1,994,860. Shareholders’ funds slightly increased, by $184,458 to $32,305,807. Working capital declined by $327,505 to $23,211,056. Tlie major increases in this sector are creditors up from $4,983,756 to $6,037,170, and bank overdraft from $1,937,487 to $6,145,531. As announced, a final dividend of 6 per cent is being paid, making a steady 9 per cent for the year; the final dividend will be paid from capital profits and will be tax free in shareholders’ hands. “The effect is to give shareholders the benefit of an appreciable increase in dividend, the amount of which will depend on the tax rates of individual shareholders,” says Mr Trotter.

A detailed examination in depth had been made of all aspects of “this very diversified business” and positive steps were being taken to improve profits and the return on funds, he said. “Profit planning for a much longer period than has been the practice in the past is being introduced.” “The year ahead shows signs of economic uncertainty, and inflation will continue; however, we approach it with confidence and enthusiasm,” says Mr Trotter.

“In the stock and station side of our business, two major matters will be the subject of public enquiry and debate. These are wool marketing and the provision of finance to farmers. Both matters are very vital issues for our company,” he says. New development Major new developments during the year were:— ■ The completion of reorganisation of the motor division. The purchase of a half interest in International Genetics, Ltd, formed to import and develop European breeds of cattle not previously

farmed here. Major factory extensions at Morrison Industries, Ltd. Completion of plans for a separate administered finance company sub-

sidiary. The transfer of debtor accounting to the computer, thus completing the integrated computer accounting programme.

J. Lysaght profit The unaudited group net profit of John Lysaght (Australia), Ltd, fell sl.9m to $2.9m in the six months to June 30, compared with the previous corresponding period. The profit was struck after providing $2.6m less for tax at s2.Bm and so.sm more for depreciation at $2.95m compared with the previous corresponding period. Net sales were s4.Bm lower at $106.3m.—(P.A.-Reuter).