Sharp drop for Kidd-Garrett

Press, 2 September 1986, Page 29

Sharp drop for Kidd-Garrett

The Auckland-based engineering supplies merchants, Kidd Garrett Holdings, Ltd, has reported a sharp drop in tax-paid ' profit (after extraordinary items) to $728,271 for the latest full year, compared with $1,616,000 for the 1984-85 year.

The net profit was on higher turnover of $34,448,000 for the year ended June 30, compared with $26,455,000 for the previous year. Pre-tax profit of $2,000,758 for the latest year compared with $2,280,000 in 1984-85 was 10 per cent down.

Directors described the downturn in tax-paid profit as “a very disappointing result.”

Kidd Garrett’s New Zealand trading activities had been difficult, especially in 1986 and the first results from the company’s Australian subsidiary, Scruttons, Ltd, had produced a loss. The directors said they were not optimistic about an early improvement in the New Zealand economy, but added that they were confident that the company had “established strength, and market position with excellent products, distribution and staff. Given reasonable economic conditions, the Australian subsidiary should be a positive contributor to revenue in the current year. They recommended a final dividend of 5 per

cent (2.5 c a share), payable on October 30.

The directors pointed out that provision for tax, at $1,244,588, represented a substantial 62 per cent of pre-tax profits. They commented: “This anomolous situation arises principally because of the harsh Fringe Benefit Tax and the considerably disproportionate difference in accounting and taxation rates for motor vehicles in New Zealand companies. “These punitive tax measures are particularly savage in a trading company such as ours, where motor vehicles for sales representatives are a substantial, but unavoidable part of the company’s operations?’