COMMERCIAL D.I.C. concerned by reduced liquidity

Press, Volume CXIII, Issue 33383, 15 November 1973, Page 18

COMMERCIAL D.I.C. concerned by reduced liquidity

(New Zealand Press Association) DUNEDIN, November 14. Price control measures could mean that the profit retained after . paying all expenses, tax and dividends, could be a “thin red line,” and this was a matter of great concern, the chairman of D.1.C., Ltd (Mr H. C. Harford) said at the annual meeting.

I The Dunedin-based retail : group, has increased its turn- ! over by 16| per cent for the I first quarter of the company’s - current trading year and sales | prospects were good, Mr Hari ford said. * Mr Harford said that the i changes in taxation to the P.A.Y.E. method is a subtle way for the Government to gain extra revenue, because tax is paid much earlier than previously. Payroll tax had ceased to be a charge from October, but there was now an additional burden to contend with, which would have an effect on the company’s liquidity, Mr Harford said. “The spreading of payments over the period will help to finance this liability, but we have to allocate funds to cover these payments, and our cash-flow is affected accordingly.” Mr Harford said that when P.A.Y.E. tax was instituted for individuals, one year’s tax was rebated. “Should not this privilege have been made to companies?” he asked. Retailers’ recent balance been buoyant, but profit figures on their own could be misleading and they did not

tell the full story unless related to the funds employed in business. Retailers recent balance sheets showed that the profit in every dollar of sales averaged only about 3c, out of which dividends were paid to shareholders and any balance retained for trading and future development. “Retailing is very competitive and margins in New Zealand are low in comparison with Australia, the United Kingdom and America so New Zealand retailers view with deep concern the recent Government statements on margins and price control. “Any price restrictions that may be imposed would be a problem when we take into account the increased costs to be faced this year with the introduction of the first step of equal pay for women. “The president of the New Zealand Retailers Federation estimated that this would cost the retail trade sl7m for a full year,” Mr Harford said.

“The recent 8.5 per cent wage order has thrown an additional burden on retailers along with other increased general overhead costs as is the case with other sections of the business community.” Mr Harford said it should be noted that the retail trade stands or falls on profitability. No subsidies

iwere paid to retailers if they Iran at a loss. I A report by the retailers federation says that retailing lis the third biggest employer of labour in this country, with an estimated annual wage bill of ssoom. “I think it is reasonable to pose the question that without the contribution by retailers and their staff in distributing the products of industry, just how would industry and the consumer get along? “It is obvious that for the retail trade to continue to play its part in New Zealand’s economic progress, there are limits to the trade’s capacity to absorb increased costs,” Mr Harford said.