COMMERCIAL Chairman emphasises need for tax relief

Press, Volume CXI, Issue 32777, 30 November 1971, Page 23

COMMERCIAL Chairman emphasises need for tax relief

There would not be any bright news about share values until cost inflation abated, and until there was relief from the high level of taxation, the chairman of Haywrights, Ltd, (Sir Clifford Plimmer), told the annual meeting yesterday.

Unless investors received an adequate return on equity investment in industry and commerce, he said, they would continue to seek investment in other fields. Although few companies had shown any improvement in the rate of earnings to total tangible assets, and the : share prices of some compan-| ies had declined to a greater i extent, the fall of about 16] per cent in Haywrights shares] was a primary concern of the directors. Sir Clifford Plimmer drew the meeting’s attention to the high level of taxation, which might take as much as 75 per cent from the income of the> company and the shareholder. I This burden had become i heavier during the year. “The whole structure ofi company operation is ofi Such vital importance to all sectors of our economy that; to continue the procedures' which so heavily penalise] shareholders—who in any; case have suffered so much: from inflation—is nothing! short of suicidal. “Long before this time there should have been a realisation that company—both private and public—expansion is restricted, unless they and their shareholders are left with a greater share of profits for re-investment ; in their enterprise, if only to! meet the greater cost of re-i placing assets, also stock, and,

giving some relief to liquidityproblems.

"Current high interest rates are burdensome to profits. It is high time that there was a further redistribution of available income in favour of investors in equity shares, and of our primary producers, on whom falls so heavily the general escalation of costs,” Sir Clifford Plimmer said.

There were murmerings at Ministerial level that there was likely to be some tax relief to companies, he said. After mentioning the influence of industrial troubles on share prices, the chairman said that these troubles had not abated—indeed they had probably worsened during the year.

In this context, and in the light of the board’s concern with the interest of the shareholder, Sir Clifford Plimmer said that it would only be realistic to draw the meeting’s attention to the following facts:—

1. The shop assistants’ award is due for renegotiation in April, and further increases might be expectedattention had already been drawn to the effect on the company of the introduction of a national award.

2. The recently finalised! ;award of clerical workers! : with substantial increases ’ would bear heavily on the! company, as also would the!

gradual introduction of equal pay for female workers. 3. The expected general wage order based on the cost of living index early in the New Year.

“The increased costs resulting from the above just have to be accepted, and although they will place more spending power in the hands of the recipients, from which the retail trade should benefit, there is a limit to which they can be carried without further erosion of company profits.

“With our company, endeavours will be made to grapple with this cost/profit problem by the introduction of more self service, by some further reduction in services, by adding strength to marketing and buying procedures, by greater use of computer services, and by whatever other means can be devised.”

“The price justification scheme continues to limit gross margins,” Sir Clifford Plimmer said. Referring to the year ahead, he said that sales for the first quarter, excluding new stores, and after adjusting for food sales, showed a slight decline from last year, but this quarter was a high point last year. Although consumer spending was at a reduced level, the additional purchasing power in the community should produce a better performance in suc-j ceeding periods. ■