Effect Of Taxes On Cement Profits

Northern Advocate, 27 June 1946, Page 4

Effect Of Taxes On Cement Profits

(Special) AUCKLAND. This Day. Although the profit for the year shows an improvement, it is still disappointing, said the chairman (Mr G. Winstone) at the annual meeting of Wilsons (N.Z.) Portland Cement, Ltd., yesterday. The net profit did not permit an adequate return to shareholders, nor was it commensurate with the large capital outlay and the risks involved in a heavy industry such as cement manufacturing.

Both manufacture and sales exceeded the tonnages of the previous year, but almost 75 per cent, of the increase in price allowed had been absorbed in taxation and higher costs of labour and materials. An early and substantial reduction in taxation was vitally essential to give fresh impetus to production and greater buoyancy to business. 70 P.C. FOR TAXES Referring to the reduction of security charges to 2- in the £l. Mr Winstone said that applied to the company's profits for the year resulted in a saving of only £l9lO. Figures for the past five years showed that the company’s taxation had absorbed £291.265. or 70.14 per cent, of the profits. Dividends paid to shareholders amounted to £122,500, an average yearly dividend of 4.08 per cent, on the nominal capital: or 3.09 per cent, on the actual capital employed, that was including the company’s reserves. The profit for the year ended March 31. 1939, was £98,532. Taxation absorbed £41.981. or 42.6 per cent, of the profit, leaving a net profit of £56.551. The dividend paid to shareholders was £45,000, equal to V. per cent, on the company's capital. That left a net balance of £11.551 lo be added to profit and loss appropriation account. CARRY FORWARD Over the past five years, continued Mr Winstone, even with reduced dividends the company was able to increase its carry forward by only £lsOl. That amount, when added to the 1941 balance, made the present figure of £39,721.

The directors, lie said, considered that the company was entitled to be put in a position no less favourable than that which obtained on September 1, 1939, when stabilisation of prices was introduced. That meant that the margin between cost and price should be restored to its pre-war monetary figure, thus enabling the undertaking to operate again on a sound financial basis.

The accounts were adopted. The retiring directors. Mr G. Winstone and Mr F. A. Hellaby, were re-elected.