Steady profit for AGC

Press, 4 November 1986, Page 25

Steady profit for AGC

PA Sydney An sAust4o million (SNZSO.B million) increase in bad debt losses to $72.9 million ($NZ92.6 million) and an 18.5 per cent increase in interest costs to sAustB4s.s million ($NZ1073.8 million) held Australian Guarantee Corporation, Ltd, to a less than one per cent rise in net annual profit. The contributions from property development projects of AGC subsidiaries also decreased because of investor uncertainty about negative gearing and the capital gains tax, directors said. Profit after tax and minority interests for the year ending September 30 totalled sAustlO7.3 million ($NZ136.27 million) from $106.6 million (5NZ135.38 million) the previous year, up only 0.65 per cent. The chairman, Eric Tait, was also pessimistic about AGC’s outlook, saying adverse economic conditions would limit its growth prospects, particularly in Australia. Demand for loans

would be reduced due to tax measures which had negatively affected corporate profitability and limited investment incentive. “The impact of these tax measures on AGC’s Australian operations, based on 1985-86 profits, would be to increase tax payments by sAust7 million (SNZB.9 million),” he said. “This is the equivalent of six per cent of this year’s after-tax profit for the entire group.” But Mr Tait said the overseas expansion of AGC — 76.8 per cent owned by the Westpac Banking Corporation — would counter reduced local prospects.

The directors said improved results this year came mainlyfrom AGC Insurances, which increased after-tax profit 50 per cent to sAustl3.3 million (SNZ 16.89 million), and the international division, which increased its profit contribution 15 per cent. AGC’s New Zealand operation increased its profit by 55 per cent.