BRICK AND PIPE

Evening Post, Volume CXXX, Issue 5, 5 July 1940, Page 14

BRICK AND PIPE

LOWER DIVIDEND

PRESSURE OF TAXATION

I Heavy taxation of industries was referred to yestesday by Mr. R. J. Murphy, chairman of the annual meeting of Consolidated Brick and Pipe Investments, Ltd. In moving the adoption of the report and balance-sheet, Mr. Murphy said, "shareholders ./ould note that the recommendation of the directors in regard to the final dividend for the year was the payment of 1 per cent. With the interim dividend of 2| per cent, in December last, this gives a total return for the year of 3& per cent., as against 5 per cent, for I the previous year. "Shareholders should know," said Mr. Murphy, "that the redaction in the dividend rate is not the result of reduced turnover. Actually turnovers during the first six months of the financial year were more than in the comparative period of the previous year. Of necessity, business slackened considerably during the second half of the year due to war conditions; nevertheless aggregate sales of the trading companies during the year resulted in a net profit of £7272 15s in excess of the relative figure for the previous year,; that is profit without deduction of taxation."

As shown in the profit and loss appropriation account, he added, the balance of profit and loss transferred amounted to £19,548. This sum erroneously appeared in the report as £13,713, and the decrease, compared with the figures in the previous year should read £8874, instead of £14,708 as shown in the report. Economic conditions and in particular the increase in taxation had resulted in a reduction of the amount transferred to the profit and loss appropriation account.

"In respect of our trading companies," said Mr. Murphy, "taxation represents one of our largest costs. In view of the serious war position none of us must complain at being called upon to bear burdens in accordance with our capacity to pay; nevertheless I. would stress that these burdens should not be continued any longer than the emergency of present conditions demands. In trading concerns such as those owned by this company, it is essential that a iair part of the profit should be left available in the hands of the company to finance enterprise and expansion. Under present conditions this is impossible. Yet if the country is to progress, provision must be made in future to finance such progress."

Referring to subsidiaries, the chairman said the fireclay Works at Kamo were concentrating on production of high-grade ■ alumina materials for refractory work. In a substantial degree the output of Kamo is replacing imported goods. /Once again Kamo Potteries, Ltd., showed a reasonable profit which had been taken into account in the profits of Amalgamated Brick and Pipe Co., Ltd., Auckland. The branch of the Auckland business designed to manufacture floor tiles and sundry porcelain ware for electrical fittings had progressed according to plan and today was doing a substantial turnover.

As usual the report disclosed the amount writtenoff by the trading companies by way of depreciation, and also the amount spent during the year on repairs and replacements. Particular note was drawn to the amount of the amortisation funds now held by the trustees on behalf of debenture holders. At March 31 last this fund amounted to £65,475.

The chairman expressed his appre-1 ciation of the co-operation and help: given by fellow-co-directors and the executive and works staff of the trading companies. Total Auckland profits, excluding land, social security, and income tax, in 1940 were £2755 6s 7d higher than in 1939, and total Wellington profits were £4517 8s 5d greater than in 1939, a total increase of £7272 15s, but in Auckland taxation amounted to £16,542 10s 2d against £12,766 2s 9d the previous year, an increase of £3776 7s sd. In Wellington taxation was £20,653 14s 2d, against £14,479 3s in 1939, an increase of £6174 lls 2d. The taxation therefore of the Auckland and Wellington subsidiaries was £9950 18s 7d greater than in 1939. Land tax, social security, and income tax on the year's profits amount to £37,196, but this did not include new taxation provided for in the Budget. The shareholders, by receiving a dividend of 3£ per .cent., received £19,549. Subsidiary companies in Auckland had a credit balance to carry forward of £4130 0s 6d, and Wellington subsidiary companies £6228 9s 6d, a total of £10,358 10s. With this amount they could have paid a further dividend of If per cent, and left a credit balance of £583, but the directors had to provide for further expected taxation and decreased sales. ■. The new national security tax of 5 per cent., which must be paid by the subsidiary companies on 1940 profits, would amount to £1567 19s 7d in Auckland and £1958 Is 6d in Wellington, a total of £3526 Is Id. Sales in Auckland for the six months ending March 31, 1940, were £14,620 lower than the six months ending September 30, 1939, ariavin Wellington they were £14,970 lower, a total in Auckland and Wellington of £29,590. This had to be taken into consideration when the matter of dividend was discussed. The reduction in sales commenced immediately war was declared. During the year the company had to pay additional income tax on profits earned in the year ending March 31, 1939, in Auckland £2754, and in Wellington £3094, a total of £5848, more than sufficient to pay a 1 per cent, dividend to shareholders. The report and balance-sheet were adopted. The following directors were reelected:—A register: Messrs. T. E. Clark, Hendry Luke, R. O. Gardner, James Fletcher. B register: Messrs. R. J. Murphy, J. W. Murphy, W. Appleton, and C. F. Murphy. Messrs Gilfillan and Gentles, retiring auditors, were reappointed. Mr. A. C. Blair moved a vote of thanks to the directors. Mr. Fussell seconded. Carried.