DIC has substantial tax-free reserves

Press, 18 November 1981, Page 27

DIC has substantial tax-free reserves

PA Wellington By selling its properties to a wholly-owned subsidiary. The DIC, Ltd, the Dunedinbased department store proprietors, has $4,509,000 available for tax-free distribution to shareholders, the annual report shows. It also shows that the costs incurred in strengthening the DlC's Lambton Quay building in Wellington ($2,869,750) are also tax-deductable in a five-year period. As reported, the group net profit fell 43.8 per cent to $769,366, in the 13 months to August 31. In his report, the chairman, Mr P. W. Fels, said future prospects must be viewed with some reserve. However, The DIC was in good shape to take advantage of any upturn in trade which might take place in the current year. From the finance angle we should be able to take advantage of such favourable buy-

ing opportunities which might occur.. . ’ “The stock position is good, .being a little more . than one third of one per cent higher than the previous year in dollar terms. The staffing level was lower than previously. (1004 at year end compared with 1135 in 1980). This was mainly achieved by a non.replacement policy. “Improved results will depend first on increased sales and second upon an increased rate of "gross profit. Remedial action has already commenced upon some areas of deficiency which have shown up in the past year,” he said. Excluded from the final result was an extraordinary loss of $1,293,293 which takes the total net loss for the vear to $496,293. The extraordinary items include costs associated with the strengthening of the Wellington building, amounting to $384.000 for stock

write-downs and $566,000 for additional pay-roll and other costs. The result for the month of August is also included as an extraordinary item because of a change of balance date. The traditionally weak trading month showed a loss of $546,000. Another extraordinary loss is redundancy payments of $18,728. Depreciation recovered on revaluation of properties added $221,704 to extraordinary items. A recommended final dividend of 9c a share gives a steady annual tax-free rate of 16c a share (16 per cent) payable after the annual meeting on November 25. The dividend requires $807,621. Shareholders' funds increased $2,447,876 to $17,262,029, and the earning rate on these funds slipped from 9.2 per cent to 4.6 per cent.